UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-2841
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 |
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Date of reporting period: | October 31, 2011 |
Item 1. Reports to Stockholders
Fidelity®
Capital Appreciation
Fund
Annual Report
October 31, 2011
Contents
Chairman's Message | The Chairman's message to shareholders. | |
Performance | How the fund has done over time. | |
Management's Discussion of Fund Performance | The Portfolio Manager's review of fund performance and strategy. | |
Shareholder Expense Example | An example of shareholder expenses. | |
Investment Changes | A summary of major shifts in the fund's investments over the past six months. | |
Investments | A complete list of the fund's investments with their market values. | |
Financial Statements | Statements of assets and liabilities, operations, and changes in net assets, as well as financial highlights. | |
Notes | Notes to the financial statements. | |
Report of Independent Registered Public Accounting Firm |
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Trustees and Officers |
| |
Distributions |
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Board Approval of Investment Advisory Contracts and Management Fees |
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To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-800-544-8544 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company.
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, http://www.advisor.fidelity.com, or http://www.401k.com, as applicable.
NOT FDIC INSURED • MAY LOSE VALUE • NO BANK GUARANTEE
Neither the fund nor Fidelity Distributors Corporation is a bank.
Annual Report
Chairman's Message
(photo_of_James_C_Curvey)
Dear Shareholder:
Global equity markets began the fourth quarter on a strong note, sharply reversing course in October amid strong corporate earnings, better-than-expected economic news and the promise of a resolution to the sovereign debt crisis in Europe. The mini rally followed a third quarter marked by a significant downturn in July and August, which heightened investor anxiety and set off a wave of volatility that hampered most major asset classes through the end of September. Financial markets are difficult to predict, of course, but you can help put the odds in your favor by following these time-tested investment principles.
One of the basic tenets is to invest according to your time horizon. For long-term investors, riding out the markets' inevitable ups and downs has proven much more effective than making decisions based on short-term developments. If your goal is approaching, you can also benefit from patience and restraint, rather than attempting to time the market. No matter your time horizon, missing only a few of the markets' best days can significantly diminish returns. Patience also affords the benefits of compounding - earning interest on additional income or reinvested dividends and capital gains. While staying the course doesn't eliminate risk, it can considerably lessen the negative impact of short-term downturns.
Asset allocation is another principle to manage risk. As you spread your portfolio among the asset classes, be sure to consider your time horizon, risk tolerance and investment objectives. Younger investors may be better served by emphasizing equities, which historically have been the best-performing asset class over time. Investors who are nearing a specific goal, such as retirement or sending a child to college, may choose to favor bonds and other investments that have tended to be more stable. Studies indicate that asset allocation is the single most important determinant of a portfolio's long-term success. After deciding on a suitable allocation strategy, make sure your portfolio is adequately diversified, with exposure to stocks of small-, mid- and large-cap companies in a range of sectors, for example. And today, more than ever, geographic diversification should be taken into account.
Lastly, investing a certain amount of money on a regular basis - a principle known as dollar-cost averaging - can help lower the average cost of your purchases, while also giving you the discipline to avoid selling weak performers just prior to an upswing, or chasing a hot performer just before a correction.
We invite you to learn more by visiting us on the Internet, dropping by one of our Investor Centers or calling us by phone. It is our privilege to provide the resources you need to choose investments that are right for you.
Sincerely,
(The acting chairman's signature appears here.)
James C. Curvey
Acting Chairman
Annual Report
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' distributions from 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, 2011 | Past 1 | Past 5 | Past 10 |
Fidelity® Capital Appreciation Fund | 6.24% | 1.49% | 6.22% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Fidelity® Capital Appreciation Fund, a class of the fund, on October 31, 2001. The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
Annual Report
Management's Discussion of Fund Performance
Market Recap: U.S. stocks overcame a sharp summer drop to post a solid gain for the 12 months ending October 31, 2011. Bullishness pervaded the market during the first half of the period, only to be squelched by extreme volatility in the summer, as debate over the U.S. debt ceiling, Standard & Poor's subsequent downgrade of the country's long-term sovereign credit rating and deepening debt woes in Europe led to the worst calendar-quarter finish for the S&P 500® Index in almost three years. However, news of a possible solution to the eurozone debt crisis, along with better-than-expected U.S. economic data and strong corporate earnings, helped fuel an October rally that pushed the broad-based index up roughly 11% - its highest monthly return since December 1991. With that boost, the S&P 500® finished the year up 8.09%, while the blue-chip Dow Jones Industrial AverageSM added 10.39% and the technology-heavy Nasdaq Composite® Index gained 8.10%. Among sectors within the S&P 500®, only financials (-6%) posted a decline for the year, while energy (+19%) and utilities (+15%) fared best. Small and mid-sized stocks also rose, with the Russell 2000® and Russell Midcap® indexes adding 6.71% and 7.85%, respectively. The lengthy financial crisis in Europe continued to hamper foreign developed-markets equities, with the MSCI® EAFE® (Europe, Australasia, Far East) Index falling 3.97%.
Comments from Fergus Shiel, Portfolio Manager of Fidelity® Capital Appreciation Fund: For the year, the fund's Retail Class shares returned 6.24%, lagging the S&P 500. Versus the index, unrewarding security selection in industrials had the biggest negative influence on performance. Within that group, three out-of-index airline holdings - United Continental Holdings, US Airways Group and Delta Air Lines - accounted for virtually all of the damage. Surging fuel costs hampered airline stocks early in the period, while fear of slowing economic growth and a possible recession undermined them later on. Delta was sold from the fund during the period, and I reduced its other airline positions. Elsewhere, a combination of weak picks and an underweighting in energy worked against the fund's results. Stock selection in the mid-cap space detracted as well. Conversely, favorable positioning in consumer discretionary and a large underweighting in the weak-performing financials sector were beneficial, along with stock selection in health care. At the stock level, performance was bolstered by biotechnology firm Biogen Idec, which made progress in reducing costs and continued to dominate the market for drugs to treat multiple sclerosis. Minimal exposure to weak-performing index component Bank of America, which the fund didn't own at period end, also helped. Retailer TJX Companies added value 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 Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (May 1, 2011 to October 31, 2011).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.
Annual Report
| Annualized Expense Ratio | Beginning | Ending | Expenses Paid |
Capital Appreciation | .92% |
|
|
|
Actual |
| $ 1,000.00 | $ 933.40 | $ 4.48 |
Hypothetical A |
| $ 1,000.00 | $ 1,020.57 | $ 4.69 |
Class K | .76% |
|
|
|
Actual |
| $ 1,000.00 | $ 934.20 | $ 3.71 |
HypotheticalA |
| $ 1,000.00 | $ 1,021.37 | $ 3.87 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period).
Annual Report
Investment Changes (Unaudited)
Top Ten Stocks as of October 31, 2011 | ||
| % of fund's | % of fund's net assets |
United Continental Holdings, Inc. | 4.4 | 4.9 |
Apple, Inc. | 4.3 | 3.9 |
Virgin Media, Inc. | 3.7 | 4.1 |
Occidental Petroleum Corp. | 3.2 | 2.1 |
Lorillard, Inc. | 3.0 | 0.7 |
TJX Companies, Inc. | 2.8 | 2.0 |
PVH Corp. | 2.3 | 0.0 |
Biogen Idec, Inc. | 2.2 | 1.8 |
Bed Bath & Beyond, Inc. | 2.1 | 1.2 |
Reynolds American, Inc. | 2.0 | 0.4 |
| 30.0 | |
Top Five Market Sectors as of October 31, 2011 | ||
| % of fund's | % of fund's net assets |
Consumer Discretionary | 32.1 | 27.8 |
Information Technology | 16.7 | 11.9 |
Industrials | 15.6 | 22.5 |
Energy | 10.7 | 13.8 |
Financials | 9.7 | 5.3 |
Asset Allocation (% of fund's net assets) | |||||||
As of October 31, 2011* | As of April 30, 2011** | ||||||
![]() | Stocks 99.1% |
| ![]() | Stocks 96.9% |
| ||
![]() | Short-Term |
| ![]() | Short-Term |
| ||
* Foreign investments | 6.7% |
| ** Foreign investments | 16.1% |
|
Annual Report
Investments October 31, 2011
Showing Percentage of Net Assets
Common Stocks - 99.1% | |||
Shares | Value (000s) | ||
CONSUMER DISCRETIONARY - 32.1% | |||
Automobiles - 1.7% | |||
Ford Motor Co. (a) | 7,342,500 | $ 85,760 | |
Diversified Consumer Services - 1.6% | |||
Career Education Corp. (a)(d) | 1,419,577 | 22,898 | |
DeVry, Inc. | 567,987 | 21,402 | |
ITT Educational Services, Inc. (a)(d) | 658,337 | 40,791 | |
| 85,091 | ||
Hotels, Restaurants & Leisure - 6.2% | |||
Arcos Dorados Holdings, Inc. | 725,930 | 16,987 | |
Chipotle Mexican Grill, Inc. (a) | 154,977 | 52,091 | |
Las Vegas Sands Corp. (a) | 445,500 | 20,916 | |
McDonald's Corp. | 425,811 | 39,537 | |
Paddy Power PLC (Ireland) | 1,310,558 | 72,547 | |
Starbucks Corp. | 1,534,648 | 64,977 | |
Starwood Hotels & Resorts Worldwide, Inc. | 673,494 | 33,749 | |
Texas Roadhouse, Inc. Class A | 1,466,233 | 21,011 | |
| 321,815 | ||
Media - 6.6% | |||
Interpublic Group of Companies, Inc. | 9,099,672 | 86,265 | |
Time Warner, Inc. | 1,188,215 | 41,576 | |
Viacom, Inc. Class B (non-vtg.) | 445,600 | 19,540 | |
Virgin Media, Inc. (d) | 7,864,735 | 191,742 | |
| 339,123 | ||
Multiline Retail - 0.5% | |||
PPR SA | 178,154 | 27,835 | |
Specialty Retail - 10.6% | |||
Bed Bath & Beyond, Inc. (a) | 1,732,790 | 107,156 | |
DSW, Inc. Class A (d) | 1,769,363 | 92,608 | |
Express, Inc. | 1,719,310 | 38,839 | |
Limited Brands, Inc. | 861,554 | 36,797 | |
Tiffany & Co., Inc. | 643,513 | 51,307 | |
TJX Companies, Inc. | 2,425,890 | 142,958 | |
Ulta Salon, Cosmetics & Fragrance, Inc. (a) | 595,290 | 40,057 | |
Williams-Sonoma, Inc. | 1,019,921 | 38,288 | |
| 548,010 | ||
Textiles, Apparel & Luxury Goods - 4.9% | |||
Burberry Group PLC | 940,729 | 20,288 | |
Coach, Inc. | 940,568 | 61,203 | |
Oxford Industries, Inc. (e) | 1,014,141 | 40,059 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
CONSUMER DISCRETIONARY - continued | |||
Textiles, Apparel & Luxury Goods - continued | |||
PVH Corp. | 1,602,176 | $ 119,218 | |
VF Corp. | 99,000 | 13,684 | |
| 254,452 | ||
TOTAL CONSUMER DISCRETIONARY | 1,662,086 | ||
CONSUMER STAPLES - 9.4% | |||
Beverages - 0.5% | |||
Dr Pepper Snapple Group, Inc. | 663,256 | 24,839 | |
Food & Staples Retailing - 1.3% | |||
Fresh Market, Inc. (d) | 623,457 | 24,938 | |
Whole Foods Market, Inc. | 594,063 | 42,844 | |
| 67,782 | ||
Food Products - 0.3% | |||
Green Mountain Coffee Roasters, Inc. (a)(d) | 236,691 | 15,390 | |
Personal Products - 1.6% | |||
Elizabeth Arden, Inc. (a) | 552,749 | 18,948 | |
Nu Skin Enterprises, Inc. Class A | 1,258,886 | 63,612 | |
| 82,560 | ||
Tobacco - 5.7% | |||
Altria Group, Inc. | 1,286,960 | 35,456 | |
Lorillard, Inc. | 1,402,869 | 155,241 | |
Reynolds American, Inc. | 2,723,150 | 105,331 | |
| 296,028 | ||
TOTAL CONSUMER STAPLES | 486,599 | ||
ENERGY - 10.7% | |||
Energy Equipment & Services - 3.5% | |||
Baker Hughes, Inc. | 1,534,684 | 88,996 | |
National Oilwell Varco, Inc. | 831,999 | 59,346 | |
Oceaneering International, Inc. | 759,846 | 31,784 | |
| 180,126 | ||
Oil, Gas & Consumable Fuels - 7.2% | |||
Alpha Natural Resources, Inc. (a) | 1,293,622 | 31,099 | |
BP PLC sponsored ADR | 198,000 | 8,748 | |
Canadian Natural Resources Ltd. | 297,000 | 10,476 | |
Chevron Corp. | 950,441 | 99,844 | |
Hess Corp. | 198,000 | 12,387 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
ENERGY - continued | |||
Oil, Gas & Consumable Fuels - continued | |||
Occidental Petroleum Corp. | 1,793,806 | $ 166,716 | |
Royal Dutch Shell PLC Class A sponsored ADR | 455,446 | 32,296 | |
Suncor Energy, Inc. | 297,000 | 9,460 | |
| 371,026 | ||
TOTAL ENERGY | 551,152 | ||
FINANCIALS - 9.7% | |||
Capital Markets - 1.6% | |||
Goldman Sachs Group, Inc. | 198,000 | 21,691 | |
Morgan Stanley | 2,771,929 | 48,897 | |
UBS AG (a) | 791,970 | 10,012 | |
| 80,600 | ||
Commercial Banks - 4.1% | |||
BB&T Corp. | 1,089,000 | 25,417 | |
BNP Paribas SA | 945,600 | 42,988 | |
Comerica, Inc. | 1,089,000 | 27,824 | |
Intesa Sanpaolo SpA | 17,126,374 | 30,598 | |
SunTrust Banks, Inc. | 1,485,152 | 29,302 | |
Wells Fargo & Co. | 2,177,990 | 56,432 | |
| 212,561 | ||
Consumer Finance - 0.3% | |||
First Cash Financial Services, Inc. (a) | 417,230 | 17,315 | |
Diversified Financial Services - 2.2% | |||
Citigroup, Inc. | 2,375,935 | 75,056 | |
JPMorgan Chase & Co. | 495,000 | 17,206 | |
MSCI, Inc. Class A (a) | 612,682 | 20,457 | |
| 112,719 | ||
Real Estate Management & Development - 1.5% | |||
CBRE Group, Inc. (a) | 4,523,173 | 80,422 | |
TOTAL FINANCIALS | 503,617 | ||
HEALTH CARE - 4.1% | |||
Biotechnology - 3.4% | |||
Alexion Pharmaceuticals, Inc. (a) | 605,418 | 40,872 | |
Amgen, Inc. | 396,000 | 22,679 | |
Biogen Idec, Inc. (a) | 979,408 | 113,964 | |
| 177,515 | ||
Common Stocks - continued | |||
Shares | Value (000s) | ||
HEALTH CARE - continued | |||
Health Care Providers & Services - 0.3% | |||
Express Scripts, Inc. (a) | 297,000 | $ 13,582 | |
Pharmaceuticals - 0.4% | |||
Shire PLC | 713,000 | 22,382 | |
TOTAL HEALTH CARE | 213,479 | ||
INDUSTRIALS - 15.6% | |||
Aerospace & Defense - 1.7% | |||
Textron, Inc. | 4,483,833 | 87,076 | |
Airlines - 5.2% | |||
United Continental Holdings, Inc. (a)(d) | 11,677,704 | 225,609 | |
US Airways Group, Inc. (a)(d) | 7,865,868 | 45,386 | |
| 270,995 | ||
Commercial Services & Supplies - 0.7% | |||
Stericycle, Inc. (a) | 453,004 | 37,862 | |
Electrical Equipment - 1.1% | |||
Emerson Electric Co. | 643,685 | 30,974 | |
Rockwell Automation, Inc. | 356,490 | 24,117 | |
| 55,091 | ||
Industrial Conglomerates - 1.6% | |||
Danaher Corp. | 1,287,302 | 62,241 | |
General Electric Co. | 1,089,000 | 18,197 | |
| 80,438 | ||
Machinery - 4.1% | |||
Cummins, Inc. | 376,230 | 37,409 | |
Deere & Co. | 247,512 | 18,786 | |
Fiat Industrial SpA (a) | 990,000 | 8,638 | |
Greenbrier Companies, Inc. (a) | 744,097 | 13,848 | |
Joy Global, Inc. | 376,263 | 32,810 | |
Titan International, Inc. (d) | 1,059,300 | 23,834 | |
Trinity Industries, Inc. | 557,600 | 15,206 | |
Wabtec Corp. | 958,362 | 64,383 | |
| 214,914 | ||
Professional Services - 0.7% | |||
Robert Half International, Inc. | 1,287,329 | 34,024 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
INDUSTRIALS - continued | |||
Trading Companies & Distributors - 0.5% | |||
Air Lease Corp. Class A | 470,414 | $ 10,504 | |
WESCO International, Inc. (a) | 286,800 | 13,898 | |
| 24,402 | ||
TOTAL INDUSTRIALS | 804,802 | ||
INFORMATION TECHNOLOGY - 16.7% | |||
Computers & Peripherals - 4.5% | |||
Apple, Inc. (a) | 554,478 | 224,442 | |
SanDisk Corp. (a) | 128,400 | 6,506 | |
| 230,948 | ||
Electronic Equipment & Components - 0.3% | |||
Corning, Inc. | 1,089,000 | 15,562 | |
Littelfuse, Inc. | 12,010 | 588 | |
| 16,150 | ||
Internet Software & Services - 1.9% | |||
VeriSign, Inc. | 3,020,041 | 96,913 | |
IT Services - 1.3% | |||
Cognizant Technology Solutions Corp. Class A (a) | 588,010 | 42,778 | |
Paychex, Inc. | 841,719 | 24,528 | |
| 67,306 | ||
Semiconductors & Semiconductor Equipment - 2.5% | |||
Altera Corp. | 544,448 | 20,645 | |
ASML Holding NV | 643,470 | 26,981 | |
Entegris, Inc. (a) | 198,000 | 1,774 | |
Intel Corp. | 1,485,000 | 36,442 | |
KLA-Tencor Corp. | 445,550 | 20,981 | |
Teradyne, Inc. (a) | 1,592,081 | 22,799 | |
| 129,622 | ||
Software - 6.2% | |||
Ariba, Inc. (a) | 2,792,169 | 88,456 | |
Autodesk, Inc. (a) | 594,051 | 20,554 | |
Citrix Systems, Inc. (a) | 980,556 | 71,414 | |
FactSet Research Systems, Inc. | 136,814 | 13,602 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
INFORMATION TECHNOLOGY - continued | |||
Software - continued | |||
Intuit, Inc. | 1,344,450 | $ 72,157 | |
salesforce.com, Inc. (a) | 415,900 | 55,385 | |
| 321,568 | ||
TOTAL INFORMATION TECHNOLOGY | 862,507 | ||
MATERIALS - 0.6% | |||
Metals & Mining - 0.6% | |||
Freeport-McMoRan Copper & Gold, Inc. | 495,005 | 19,929 | |
United States Steel Corp. | 494,949 | 12,552 | |
| 32,481 | ||
TELECOMMUNICATION SERVICES - 0.2% | |||
Diversified Telecommunication Services - 0.2% | |||
Iliad SA | 92,774 | 10,859 | |
TOTAL COMMON STOCKS (Cost $4,856,517) | 5,127,582 | ||
Money Market Funds - 7.9% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.12% (b) | 160,183,794 | 160,184 | |
Fidelity Securities Lending Cash Central Fund, 0.11% (b)(c) | 251,071,675 | 251,072 | |
TOTAL MONEY MARKET FUNDS (Cost $411,256) | 411,256 | ||
TOTAL INVESTMENT PORTFOLIO - 107.0% (Cost $5,267,773) | 5,538,838 | ||
NET OTHER ASSETS (LIABILITIES) - (7.0)% | (363,677) | ||
NET ASSETS - 100% | $ 5,175,161 |
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
(e) Affiliated company |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 468 |
Fidelity Securities Lending Cash Central Fund | 1,451 |
Total | $ 1,919 |
Other Affiliated Issuers |
An affiliated company is a company in which the Fund has ownership of at least 5% of the voting securities. Fiscal year to date transactions with companies which are or were affiliates are as follows: |
Affiliate | Value, | Purchases | Sales Proceeds | Dividend Income | Value, |
Oxford Industries, Inc. | $ - | $ 34,022 | $ - | $ 356 | $ 40,059 |
Transcend Services, Inc. | 10,894 | - | 11,679 | - | - |
US Airways Group, Inc. | 117,710 | 18,734 | 43,762 | - | - |
Total | $ 128,604 | $ 52,756 | $ 55,441 | $ 356 | $ 40,059 |
Other Information |
The following is a summary of the inputs used, as of October 31, 2011, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities: | ||||
Equities: | ||||
Consumer Discretionary | $ 1,662,086 | $ 1,662,086 | $ - | $ - |
Consumer Staples | 486,599 | 486,599 | - | - |
Energy | 551,152 | 551,152 | - | - |
Financials | 503,617 | 493,605 | 10,012 | - |
Health Care | 213,479 | 191,097 | 22,382 | - |
Industrials | 804,802 | 804,802 | - | - |
Information Technology | 862,507 | 862,507 | - | - |
Materials | 32,481 | 32,481 | - | - |
Telecommunication Services | 10,859 | 10,859 | - | - |
Money Market Funds | 411,256 | 411,256 | - | - |
Total Investments in Securities: | $ 5,538,838 | $ 5,506,444 | $ 32,394 | $ - |
Income Tax Information |
At October 31, 2011, the Fund had a capital loss carryforward of approximately $131,261,000 all of which will expire in fiscal 2016. Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements
Statement of Assets and Liabilities
Amounts in thousands (except per-share amounts) | October 31, 2011 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $237,010) - See accompanying schedule: Unaffiliated issuers (cost $4,822,495) | $ 5,087,523 |
|
Fidelity Central Funds (cost $411,256) | 411,256 |
|
Other affiliated issuers (cost $34,022) | 40,059 |
|
Total Investments (cost $5,267,773) |
| $ 5,538,838 |
Receivable for investments sold | 186,077 | |
Receivable for fund shares sold | 3,591 | |
Dividends receivable | 605 | |
Distributions receivable from Fidelity Central Funds | 47 | |
Prepaid expenses | 19 | |
Other receivables | 285 | |
Total assets | 5,729,462 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 293,297 | |
Payable for fund shares redeemed | 5,736 | |
Accrued management fee | 3,172 | |
Other affiliated payables | 876 | |
Other payables and accrued expenses | 148 | |
Collateral on securities loaned, at value | 251,072 | |
Total liabilities | 554,301 | |
|
|
|
Net Assets | $ 5,175,161 | |
Net Assets consist of: |
| |
Paid in capital | $ 5,049,756 | |
Undistributed net investment income | 3,573 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (149,287) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 271,119 | |
Net Assets | $ 5,175,161 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Assets and Liabilities - continued
Amounts in thousands (except per-share amounts) | October 31, 2011 | |
|
|
|
Capital Appreciation: | $ 25.51 | |
|
|
|
Class K: | $ 25.57 |
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, 2011 | |
|
|
|
Investment Income |
|
|
Dividends (including $356 earned from other affiliated issuers) |
| $ 60,428 |
Interest |
| 2 |
Income from Fidelity Central Funds |
| 1,919 |
Total income |
| 62,349 |
|
|
|
Expenses | ||
Management fee | $ 30,450 | |
Performance adjustment | 5,844 | |
Transfer agent fees | 10,332 | |
Accounting and security lending fees | 1,165 | |
Custodian fees and expenses | 261 | |
Independent trustees' compensation | 30 | |
Registration fees | 82 | |
Audit | 66 | |
Legal | 23 | |
Miscellaneous | 60 | |
Total expenses before reductions | 48,313 | |
Expense reductions | (674) | 47,639 |
Net investment income (loss) | 14,710 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 496,334 | |
Other affiliated issuers | 3,318 |
|
Foreign currency transactions | (125) | |
Total net realized gain (loss) |
| 499,527 |
Change in net unrealized appreciation (depreciation) on: Investment securities | (175,537) | |
Assets and liabilities in foreign currencies | 69 | |
Total change in net unrealized appreciation (depreciation) |
| (175,468) |
Net gain (loss) | 324,059 | |
Net increase (decrease) in net assets resulting from operations | $ 338,769 |
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, | Year ended October 31, |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 14,710 | $ 9,579 |
Net realized gain (loss) | 499,527 | 44,743 |
Change in net unrealized appreciation (depreciation) | (175,468) | 1,258,883 |
Net increase (decrease) in net assets resulting | 338,769 | 1,313,205 |
Distributions to shareholders from net investment income | (5,716) | (5,772) |
Share transactions - net increase (decrease) | (540,966) | (834,386) |
Total increase (decrease) in net assets | (207,913) | 473,047 |
|
|
|
Net Assets | ||
Beginning of period | 5,383,074 | 4,910,027 |
End of period (including undistributed net investment income of $3,573 and distributions in excess of net investment income of $93, respectively) | $ 5,175,161 | $ 5,383,074 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Capital Appreciation
Years ended October 31, | 2011 | 2010 | 2009 | 2008 | 2007 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 24.03 | $ 18.71 | $ 16.68 | $ 32.13 | $ 27.41 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .06 | .04 | .04 | .16 | .11 |
Net realized and unrealized gain (loss) | 1.44 | 5.30 | 2.17 | (13.27) | 6.06 |
Total from investment operations | 1.50 | 5.34 | 2.21 | (13.11) | 6.17 |
Distributions from net investment income | (.02) | (.02) | (.18) | (.12) | (.11) |
Distributions from net realized gain | - | - | - | (2.22) | (1.34) |
Total distributions | (.02) | (.02) | (.18) | (2.34) | (1.45) |
Net asset value, end of period | $ 25.51 | $ 24.03 | $ 18.71 | $ 16.68 | $ 32.13 |
Total Return A | 6.24% | 28.57% | 13.54% | (43.80)% | 23.51% |
Ratios to Average Net Assets C,E |
|
|
|
|
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Expenses before reductions | .91% | .88% | .79% | .82% | .83% |
Expenses net of fee waivers, if any | .91% | .88% | .79% | .82% | .83% |
Expenses net of all reductions | .90% | .86% | .78% | .82% | .82% |
Net investment income (loss) | .25% | .16% | .25% | .67% | .36% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (in millions) | $ 4,319 | $ 4,672 | $ 4,627 | $ 4,794 | $ 10,139 |
Portfolio turnover rate D | 182% | 186% | 243% | 157% | 135% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
B Calculated based on average shares outstanding during the period.
C Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
D Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
E Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class K
Years ended October 31, | 2011 | 2010 | 2009 | 2008 G |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 24.09 | $ 18.73 | $ 16.69 | $ 25.11 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss) D | .10 | .08 | .08 | .03 |
Net realized and unrealized gain (loss) | 1.44 | 5.31 | 2.18 | (8.45) |
Total from investment operations | 1.54 | 5.39 | 2.26 | (8.42) |
Distributions from net investment income | (.06) | (.03) | (.22) | - |
Net asset value, end of period | $ 25.57 | $ 24.09 | $ 18.73 | $ 16.69 |
Total Return B,C | 6.41% | 28.80% | 13.85% | (33.53)% |
Ratios to Average Net Assets E,H |
|
|
|
|
Expenses before reductions | .75% | .70% | .55% | .66% A |
Expenses net of fee waivers, if any | .75% | .70% | .55% | .66% A |
Expenses net of all reductions | .74% | .68% | .54% | .65% A |
Net investment income (loss) | .41% | .34% | .49% | .41% A |
Supplemental Data |
|
|
|
|
Net assets, end of period (in millions) | $ 856 | $ 712 | $ 283 | $ 93 |
Portfolio turnover rate F | 182% | 186% | 243% | 157% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
D Calculated based on average shares outstanding during the period.
E Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
G For the period May 9, 2008 (commencement of sale of shares) to 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 reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended October 31, 2011
(Amounts in thousands except percentages)
1. Organization.
Fidelity Capital Appreciation Fund (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. The Fund offers Capital Appreciation and Class K shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent fees incurred. Certain expense reductions may also differ by class.
2. Investments in Fidelity Central Funds.
The Fund invests in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:
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. The Fund uses independent pricing services approved by the Board of Trustees to value its investments. When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include market or security specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The value used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the Fund's own assumptions based on the best information available)
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of October 31, 2011 is included at the end of the Fund's Schedule of Investments. Valuation techniques used to value the Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when significant market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-traded funds (ETFs) and certain indexes as well as quoted prices for similar securities are used and are categorized as Level 2 in the hierarchy in these circumstances. Utilizing these techniques may result in transfers between Level 1 and Level 2. For restricted equity securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and are categorized as Level 3 in the hierarchy.
Annual Report
Notes to Financial Statements - continued
(Amounts in thousands except percentages)
3. Significant Accounting Policies - continued
Security Valuation - continued
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy.
Foreign Currency. The Fund may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Annual Report
3. Significant Accounting Policies - continued
Expenses. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Deferred Trustee Compensation. Under a Deferred Compensation Plan (the Plan), independent Trustees may elect to defer receipt of a portion of their annual compensation. Deferred amounts are invested in a cross-section of Fidelity funds, are marked-to-market and remain in the Fund until distributed in accordance with the Plan. The investment of deferred amounts and the offsetting payable to the Trustees are included in the accompanying Statement of Assets and Liabilities.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company, including distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. As of October 31, 2011, the Fund did not have any unrecognized tax benefits in the financial statements. A fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are declared and recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to partnerships, foreign currency transactions, deferred trustees compensation, capital loss carryforwards and losses deferred due to wash sales.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $ 675,623 |
Gross unrealized depreciation | (422,585) |
Net unrealized appreciation (depreciation) on securities and other investments | $ 253,038 |
|
|
Tax Cost | $ 5,285,800 |
Annual Report
Notes to Financial Statements - continued
(Amounts in thousands except percentages)
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The tax-based components of distributable earnings as of period end were as follows:
Undistributed ordinary income | $ 3,659 |
Capital loss carryforward | $ (131,261) |
Net unrealized appreciation (depreciation) | $ 253,092 |
Under the recently enacted Regulated Investment Company Modernization Act of 2010 (the Act), the Fund will be permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to any losses incurred in pre-enactment taxable years, which generally expire after eight years from when they are incurred. Additionally, post-enactment capital losses that are carried forward will retain their character as either short-term or long-term capital losses rather than being considered all short-term as under previous law. The Fund's first fiscal year end subject to the Act will be October 31, 2012.
The tax character of distributions paid was as follows:
| October 31, 2011 | October 31, 2010 |
Ordinary Income | $ 5,716 | $ 5,772 |
New Accounting Pronouncement. In May 2011, the Financial Accounting Standards Board issued Accounting Standard Update No. 2011-04, Fair Value Measurement (Topic 820) - Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. The update changes the wording used to describe the requirements in GAAP for measuring fair value and for disclosing information about fair value measurements. The update is effective during interim and annual periods beginning after December 15, 2011. Management is currently evaluating the impact of the update's adoption on the Fund's financial statement disclosures.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $9,475,741 and $9,838,180, respectively.
Annual Report
5. 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 Capital Appreciation as compared to an appropriate benchmark index. For the period, the total annual management fee rate, including the performance adjustment, was .67% of the Fund's average net assets.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of Capital Appreciation. FIIOC receives an asset-based fee of Class K's average net assets. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, transfer agent fees for each class were as follows:
| Amount | % of |
Capital Appreciation | $ 9,914 | .21 |
Class K | 418 | .05 |
| $ 10,332 |
|
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 $438 for the period.
Annual Report
Notes to Financial Statements - continued
(Amounts in thousands except percentages)
6. Committed Line of Credit.
The Fund participates with other funds managed by FMR or an affiliate in a $4.0 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $17 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, there were no borrowings on this line of credit.
7. Security Lending.
The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. For equity securities, a lending agent is used and may loan securities to certain qualified borrowers, including Fidelity Capital Markets (FCM), a broker-dealer affiliated with the Fund. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Total security lending income during the period amounted to $1,451, including $51 from securities loaned to FCM.
8. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of the Fund provided services to the Fund in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $674 for the period.
Annual Report
9. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended October 31, | 2011 | 2010 |
From net investment income |
|
|
Capital Appreciation | $ 3,856 | $ 5,336 |
Class K | 1,860 | 436 |
Total | $ 5,716 | $ 5,772 |
10. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
Years ended October 31, | 2011 | 2010 | 2011 | 2010 |
Capital Appreciation |
|
|
|
|
Shares sold | 18,860 | 24,608 | $ 481,703 | $ 544,840 |
Reinvestment of distributions | 148 | 250 | 3,700 | 5,154 |
Shares redeemed | (44,166) | (77,678) | (1,127,770) | (1,707,314) |
Net increase (decrease) | (25,158) | (52,820) | $ (642,367) | $ (1,157,320) |
Class K |
|
|
|
|
Shares sold | 10,289 | 22,592 | $ 263,401 | $ 500,526 |
Reinvestment of distributions | 74 | 21 | 1,860 | 436 |
Shares redeemed | (6,424) | (8,191) | (163,860) | (178,028) |
Net increase (decrease) | 3,939 | 14,422 | $ 101,401 | $ 322,934 |
11. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
Annual Report
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Capital Trust and the Shareholders of Fidelity Capital Appreciation Fund:
In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Fidelity Capital Appreciation Fund (a fund of Fidelity Capital Trust) at October 31, 2011, 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 the financial highlights for each of the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fidelity Capital Appreciation Fund's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the 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 are free of material misstatement. An audit 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, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at October 31, 2011 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
December 13, 2011
Annual Report
Trustees and Officers
The Trustees, Members 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, oversee management of the risks associated with such activities and contractual arrangements, and review the fund's performance. Except for James C. Curvey, each of the Trustees oversees 226 funds advised by FMR or an affiliate. Mr. Curvey oversees 429 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 75th birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board Members 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.
Experience, Skills, Attributes, and Qualifications of the Fund's Trustees. The Governance and Nominating Committee has adopted a statement of policy that describes the experience, qualifications, attributes, and skills that are necessary and desirable for potential Independent Trustee candidates (Statement of Policy). The Board believes that each Trustee satisfied at the time he or she was initially elected or appointed a Trustee, and continues to satisfy, the standards contemplated by the Statement of Policy. The Governance and Nominating Committee also engages professional search firms to help identify potential Independent Trustee candidates who have the experience, qualifications, attributes, and skills consistent with the Statement of Policy. From time to time, additional criteria based on the composition and skills of the current Independent Trustees, as well as experience or skills that may be appropriate in light of future changes to board composition, business conditions, and regulatory or other developments, have also been considered by the professional search firms and the Governance and Nominating Committee. In addition, the Board takes into account the Trustees' commitment and participation in Board and committee meetings, as well as their leadership of standing and ad hoc committees throughout their tenure.
In determining that a particular Trustee was and continues to be qualified to serve as a Trustee, the Board has considered a variety of criteria, none of which, in isolation, was controlling. The Board believes that, collectively, the Trustees have balanced and diverse experience, qualifications, attributes, and skills, which allow the Board to operate effectively in governing the fund and protecting the interests of shareholders. Information about the specific experience, skills, attributes, and qualifications of each Trustee, which in each case led to the Board's conclusion that the Trustee should serve (or continue to serve) as a trustee of the fund, is provided below.
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Trustees and Officers - continued
Board Structure and Oversight Function. James C. Curvey is an interested person (as defined in the 1940 Act) and currently serves as Acting Chairman. The Trustees have determined that an interested Chairman is appropriate and benefits shareholders because an interested Chairman has a personal and professional stake in the quality and continuity of services provided to the fund. Independent Trustees exercise their informed business judgment to appoint an individual of their choosing to serve as Chairman, regardless of whether the Trustee happens to be independent or a member of management. The Independent Trustees have determined that they can act independently and effectively without having an Independent Trustee serve as Chairman and that a key structural component for assuring that they are in a position to do so is for the Independent Trustees to constitute a substantial majority for the Board. The Independent Trustees also regularly meet in executive session. Ned C. Lautenbach serves as Chairman of the Independent Trustees and as such (i) acts as a liaison between the Independent Trustees and management with respect to matters important to the Independent Trustees and (ii) with management prepares agendas for Board meetings.
Fidelity funds are overseen by different Boards of Trustees. The fund's Board oversees Fidelity's equity and high income funds and another Board oversees Fidelity's investment-grade bond, money market, and asset allocation funds. The asset allocation funds may invest in Fidelity funds overseen by the fund's Board. The use of separate Boards, each with its own committee structure, allows the Trustees of each group of Fidelity funds to focus on the unique issues of the funds they oversee, including common research, investment, and operational issues. On occasion, the separate Boards establish joint committees to address issues of overlapping consequences for the Fidelity funds overseen by each Board.
The Trustees operate using a system of committees to facilitate the timely and efficient consideration of all matters of importance to the Trustees, the fund, and fund shareholders and to facilitate compliance with legal and regulatory requirements and oversight of the fund's activities and associated risks. The Board, acting through its committees, has charged FMR and its affiliates with (i) identifying events or circumstances the occurrence of which could have demonstrably adverse effects on the fund's business and/or reputation; (ii) implementing processes and controls to lessen the possibility that such events or circumstances occur or to mitigate the effects of such events or circumstances if they do occur; and (iii) creating and maintaining a system designed to evaluate continuously business and market conditions in order to facilitate the identification and implementation processes described in (i) and (ii) above. Because the day-to-day operations and activities of the fund are carried out by or through FMR, its affiliates and other service providers, the fund's exposure to risks is mitigated but not eliminated by the processes overseen by the Trustees. While each of the Board's committees has responsibility for overseeing different aspects of the fund's activities, oversight is exercised primarily through the Operations, Audit, and Compliance Committees. In addition, the Independent Trustees have worked with FMR to enhance the Board's oversight of investment and financial risks, legal and regulatory risks, technology risks, and operational risks, including the development of additional risk reporting to the Board. For example, a working group comprised of Independent Trustees and FMR has worked and continues to work to review the Fidelity funds' valuation-related activities, reporting and risk management. Appropriate personnel, including but not limited to the fund's Chief Compliance Officer (CCO), FMR's internal auditor, the independent accountants, the fund's Treasurer and portfolio management personnel, make periodic reports to the Board's committees, as appropriate, including an annual review of FMR's risk management program for the Fidelity funds. The responsibilities of each standing committee, including their oversight responsibilities, are described further under "Standing Committees of the Fund's Trustees."
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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 Occupations and Other Relevant Experience+ | |
James C. Curvey (76) | |
| Year of Election or Appointment: 2007 Mr. Curvey is Trustee and Acting Chairman of the Board of Trustees of certain Trusts. Mr. Curvey also serves as Trustee (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of Fidelity Investments Money Management, Inc. (2009-present), Director of Fidelity Research & Analysis Co. (2009-present) and Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2007-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. Previously, Mr. Curvey was the Vice Chairman (2006-2007) and Director (2000-2007) of FMR Corp. |
Ronald P. O'Hanley (54) | |
| Year of Election or Appointment: 2011 Mr. O'Hanley is Director of FMR Co., Inc. (2010-present), Director of Fidelity Investments Money Management, Inc. (2010-present), Director of Fidelity Research & Analysis Company (2010-present), President of Fidelity Asset Management and Corporate Services and a member of Fidelity's Executive Committee (2010-present). Previously, Mr. O'Hanley served as President and Chief Executive Officer of BNY Mellon Asset Management (2007-2010). Mr. O'Hanley also served as Vice Chairman of Bank New York Mellon Corp. and a member of that firm's Executive Committee. Prior to the 2007 merger of The Bank of New York and Mellon Financial Corporation, he was Vice Chairman of Mellon Financial Corporation and President and Chief Executive Officer of Mellon Asset Management. He joined Mellon in February 1997. Mr. O'Hanley currently serves as Chairman of the Boston Public Library Foundation Board of Directors and sits on the Board of Directors of Beth Israel Deaconess Medical Center, the Board of Trustees of the Marine Biological Laboratory and the Advisory Board of the Maxwell School of Citizenship and Public Administration at Syracuse University. Mr. O'Hanley also chairs the Council on Asset Management for the Financial Services Roundtable and is a member of the Board of Directors of Institutional Investor's U.S. Institute. |
* 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.
+ The information above includes each Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Trustee's qualifications to serve as a Trustee, which led to the conclusion that each Trustee should serve as a Trustee for the fund.
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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 Occupations and Other Relevant Experience+ | |
Dennis J. Dirks (63) | |
| 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). He also served as President, Chief Operating Officer, and Board member of The Depository Trust Company (DTC) and President and Board member of the National Securities Clearing Corporation (NSCC). In addition, Mr. Dirks served as Chief Executive Officer and Board member of the Government Securities Clearing Corporation, Chief Executive Officer and Board member of the Mortgage-Backed Securities Clearing Corporation, as a Trustee and a member of the Finance Committee of Manhattan College (2005-2008), and as a Trustee and a member of the Finance Committee of AHRC of Nassau County (2006-2008). Mr. Dirks is a member of the Independent Directors Council (IDC) Governing Council (2010-Present) and Board of Directors for The Brookville Center for Children's Services, Inc. (2009-present). |
Alan J. Lacy (58) | |
| Year of Election or Appointment: 2008 Mr. Lacy serves as Senior Adviser (2007-present) of Oak Hill Capital Partners, L.P. (private equity). 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 Dave & Buster's, Inc. (restaurant and entertainment complexes, 2010-present), The Hillman Companies, Inc. (hardware wholesalers, 2010-present), and Bristol-Myers Squibb Company (global pharmaceuticals, 2007-present). Mr. Lacy is a member of the Board of Trustees of The National Parks Conservation Association (2006-Present). Previously, Mr. Lacy served as Chairman of the Board of Trustees of the National Parks Conservation Association (2008-2011) and as a member of the Board of Directors for the Western Union Company (global money transfer, 2006-2011). |
Ned C. Lautenbach (67) | |
| Year of Election or Appointment: 2000 Mr. Lautenbach is Chairman of the Independent Trustees of the Equity and High Income Funds (2006-present). Mr. Lautenbach currently serves as the Lead Director of the Eaton Corporation Board of Directors (diversified industrial, 1997-present). Mr. Lautenbach is also a member of the Board of Directors of the Philharmonic Center for the Arts in Naples, Florida (1999-present); a member of the Board of Trustees of Fairfield University (2005-present); and a member of the Council on Foreign Relations (1994-present). Previously, Mr. Lautenbach was a Partner/Advisory Partner at Clayton, Dubilier & Rice, LLC (private equity investment, 1998-2010), as well as a Director of Sony Corporation (2006-2007). |
Joseph Mauriello (67) | |
| Year of Election or Appointment: 2008 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, 1965-2005). Mr. Mauriello currently serves as a member of the Board of Directors of XL Group plc. (global insurance and re-insurance, 2006-present) and of Arcadia Resources Inc. (health care services and products, 2007-present). Previously, Mr. Mauriello served as a Director of the Hamilton Funds of the Bank of New York (2006-2007). |
Robert W. Selander (61) | |
| Year of Election or Appointment: 2011 Previously, Mr. Selander served as a Member of the Advisory Board of Fidelity's Equity and High Income Funds (2011), Executive Vice Chairman (2010), Chief Executive Officer (2009-2010), and President and Chief Executive Officer (1997-2009) of Mastercard, Inc. |
Cornelia M. Small (67) | |
| Year of Election or Appointment: 2005 Ms. Small is a member of the Board of Directors of the Teagle Foundation (2009-present). Ms. Small is also a member of the Investment Committee, and Chair (2008-present) and a member of the Board of Trustees of Smith College. In addition, Ms. Small 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. In addition, Ms. Small 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 (72) | |
| Year of Election or Appointment: 2002 Mr. Stavropoulos is Vice Chairman of the Independent Trustees of the Equity and High Income Funds (2006-present). Mr. Stavropoulos serves as President and Founder of the Michigan Baseball Foundation, the Great Lakes Loons (2007-present). 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, CEO (1995-2000; 2002-2004), Chairman of the Executive Committee (2000-2006), and as a member of the Board of Directors (1990-2006). Currently, Mr. Stavropoulos is Chairman of Univar (global distributor of commodity and specialty chemicals, 2010-present), 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, 2005-present). Mr. Stavropoulos is a special advisor to Clayton, Dubilier & Rice, LLC (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 (62) | |
| 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), and Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (61) | |
| Year of Election or Appointment: 2008 Mr. Wiley also serves as a Director of Asia Pacific Exploration Consolidated (international oil and gas exploration and production, 2008-present). Mr. Wiley serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), and a Director of Bill Barrett Corporation (exploration and production, 2005-present). In addition, Mr. Wiley also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-2010), as a Senior Energy Advisor of Katzenbach Partners, LLC (consulting, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production, 2001-2005). |
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Trustees and Officers - continued
+ The information above includes each Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Trustee's qualifications to serve as a Trustee, which led to the conclusion that each Trustee should serve as a Trustee for the fund.
Advisory Board Members and Executive Officers:
Correspondence intended for each executive officer, Edward C. Johnson 3d, and Peter S. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Edward C. Johnson 3d (81) | |
| Year of Election or Appointment: 2011 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Mr. Johnson serves as Chief Executive Officer, Chairman, and a Director of FMR LLC, and also serves as Chairman and Director of FIL Limited. Previously, Mr. Johnson served as a Trustee and Chairman of the Board of certain Fidelity Trusts, Chairman and a Director of FMR, Chairman and a Director of FMR Co., Inc., and President of FMR LLC (2006-2007). |
Peter S. Lynch (67) | |
| Year of Election or Appointment: 2003 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Mr. Lynch is Vice Chairman and a Director of FMR and FMR Co., Inc. In addition, Mr. Lynch 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 (42) | |
| Year of Election or Appointment: 2008 President and Treasurer of Fidelity's Equity and High Income Funds. Mr. Robins also serves as President and Treasurer (2010-present) and Assistant Treasurer (2009-present) of other Fidelity funds and is an employee of Fidelity Investments (2004-present). Previously, Mr. Robins served as Deputy Treasurer of the Fidelity funds (2005-2008) and Treasurer and Chief Financial Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2006-2008). |
Bruce T. Herring (46) | |
| Year of Election or Appointment: 2006 Vice President of certain Equity Funds. Mr. Herring also serves as Chief Investment Officer and Director of Fidelity Management & Research (U.K.) Inc. (2010-present) and Group Chief Investments Officer of FMR. Previously, Mr. Herring served as Vice President (2005-2006) and Senior Vice President (2006-2007) of Fidelity Management & Research Company, Vice President of FMR Co., Inc. (2001-2007) and as a portfolio manager for Fidelity U.S. Equity Funds. |
Brian B. Hogan (47) | |
| Year of Election or Appointment: 2009 Vice President of Equity and High Income Funds. Mr. Hogan also serves as President of FMR's Equity Division (2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager. |
Scott C. Goebel (43) | |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of the Fidelity funds. Mr. Goebel also serves as Secretary of Fidelity Investments Money Management, Inc. (FIMM) (2010-present) and Fidelity Research and Analysis Company (FRAC) (2010-present); Secretary and CLO of The North Carolina Capital Management Trust: Cash and Term Portfolios (2008-present); General Counsel, Secretary, and Senior Vice President of FMR (2008-present) and FMR Co., Inc. (2008-present); employed by FMR LLC or an affiliate (2001-present); Chief Legal Officer of Fidelity Management & Research (Hong Kong) Limited (2008-present) and Assistant Secretary of Fidelity Management & Research (Japan) Inc. (2008-present), and Fidelity Management & Research (U.K.) Inc. (2008-present). Previously, Mr. Goebel served as Assistant Secretary of FIMM (2008-2010), FRAC (2008-2010), and the Funds (2007-2008) and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007). |
William C. Coffey (42) | |
| Year of Election or Appointment: 2009 Assistant Secretary of Fidelity's Equity and High Income Funds. Mr. Coffey also serves as Senior Vice President and Deputy General Counsel of FMR LLC (2010-present), and is an employee of Fidelity Investments. Previously, Mr. Coffey served as Vice President and Associate General Counsel of FMR LLC (2005-2009). |
Holly C. Laurent (57) | |
| Year of Election or Appointment: 2008 Anti-Money Laundering (AML) Officer of the Fidelity funds. Ms. Laurent also serves as AML Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2008-present) and 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), and Senior Vice President, Deputy General Counsel and Group Head for FMR LLC (2005-2006). |
Christine Reynolds (53) | |
| 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. Ms. Reynolds served as Chief Operating Officer of FPCMS (2007-2008). Previously, Ms. Reynolds served as President, Treasurer, and Anti-Money Laundering officer of the Fidelity funds (2004-2007). |
Kenneth A. Rathgeber (64) | |
| 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), Pyramis Global Advisors, LLC (2005-present), and Strategic Advisers, Inc. (2005-present). |
Jeffrey S. Christian (50) | |
| Year of Election or Appointment: 2009 Deputy Treasurer of the Fidelity funds. Mr. Christian is an employee of Fidelity Investments. Previously, Mr. Christian served as Chief Financial Officer (2008-2009) of certain Fidelity funds and Senior Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (2004-2009). |
Joseph F. Zambello (54) | |
| Year of Election or Appointment: 2011 Deputy Treasurer of the Fidelity funds. Mr. Zambello is an employee of Fidelity Investments. Previously, Mr. Zambello served as Vice President of FMR's Program Management Group (2009-2011) and Vice President of the Transfer Agent Oversight Group (2005-2009). |
Adrien E. Deberghes (44) | |
| Year of Election or Appointment: 2008 Deputy Treasurer of Fidelity's Equity and High Income Funds. Mr. Deberghes also serves as Vice President and Assistant Treasurer of Fidelity Rutland Square Trust II and Fidelity Commonwealth Trust II (2011-present), Assistant Treasurer of other Fidelity funds (2010-present), and 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). |
Stephanie J. Dorsey (42) | |
| Year of Election or Appointment: 2010 Assistant Treasurer of Fidelity's Equity and High Income Funds. Ms. Dorsey also serves as Deputy Treasurer of other Fidelity funds (2008-present) and is an employee of Fidelity Investments (2008-present). Previously, Ms. Dorsey served as Treasurer (2004-2008) of the JPMorgan Mutual Funds and Vice President (2004-2008) of JPMorgan Chase Bank. |
John R. Hebble (53) | |
| Year of Election or Appointment: 2009 Assistant Treasurer of Fidelity's Equity and High Income Funds. Mr. Hebble also serves as President (2011-present), Treasurer, and Chief Financial Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2008-present), President and Treasurer of other Fidelity funds (2008-present) and is an employee of Fidelity Investments. |
Gary W. Ryan (53) | |
| 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). |
Jonathan Davis (43) | |
| Year of Election or Appointment: 2010 Assistant Treasurer of the Fidelity funds. Mr. Davis is also Assistant Treasurer of Fidelity Rutland Square Trust II and Fidelity Commonwealth Trust II. Mr. Davis is an employee of Fidelity Investments. Previously, Mr. Davis served as Vice President and Associate General Counsel of FMR LLC (2003-2010). |
Annual Report
Distributions (Unaudited)
Capital Appreciation Fund designates 100% of the dividends distributed during the fiscal year as qualifying for the dividends-received deduction for corporate shareholders.
Capital Appreciation Fund designates 100% of the dividends distributed 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 2012 of amounts for use in preparing 2011 income tax returns.
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees
Fidelity Capital Appreciation Fund
Each year, 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 relevant to the renewal of the Advisory Contracts throughout the year.
The Board meets regularly 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. The Board has established various 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. The Board, acting directly and through its Committees, requests and receives information concerning the annual consideration of the renewal of the fund's Advisory Contracts. The Board also meets as needed to consider matters specifically related to the Board's annual consideration of the renewal of Advisory Contracts. Members of the Board may also meet with trustees of other Fidelity funds through ad hoc joint committees to discuss certain matters relevant to the Fidelity funds.
At its July 2011 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 expense ratio; (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.
In considering whether to renew the Advisory Contracts for the fund, the Board 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 is in the best interests of the fund and its shareholders and that the compensation payable under the Advisory Contracts is fair and reasonable. The Board's decision to renew the Advisory Contracts was not based on any single factor, 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 Fidelity's competitors, and that the fund's shareholders, who have 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.
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Board Approval of Investment Advisory Contracts and
Management Fees - continued
Nature, Extent, and Quality of Services Provided. The Board considered the 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 to act in the best interests of the fund.
Resources Dedicated to Investment Management and Support Services. The Board and the Fund Oversight and Research Committees reviewed the general qualifications and capabilities of the Investment Advisers' investment staff, including its size, education, experience, and resources, as well as the Investment Advisers' approach to recruiting, training, managing, and compensating investment personnel. The Board also noted that FMR has devoted increased resources to non-U.S. offices. The Board noted that Fidelity's analysts have extensive resources, tools and capabilities which allow them to conduct sophisticated quantitative and fundamental analysis, as well as credit analysis of issuers, counterparties and enhancers. The Board also believes that Fidelity's investment professionals have sufficient access to global information and data so as to provide competitive investment results over time, and that those professionals also have access to sophisticated tools which permit them to assess portfolio construction and risk and performance attribution characteristics continuously, as well as to transmit new information and research conclusions rapidly around the world. Additionally, in their deliberations, the Board considered the Investment Advisers' trading capabilities and resources which are an integral part of the investment management process.
Shareholder and Administrative Services. The Board considered (i) the nature, extent, quality, and cost of advisory, administrative, 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 adviser's 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 noted that the growth of fund assets over time 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 telephone representatives and over the Internet, investor education materials and asset allocation tools, and the expanded availability of Fidelity Investor Centers, with 35 new branches opening since 2010.
Annual Report
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 a large variety of mutual fund investor services. The Board noted that Fidelity had taken, or had made recommendations that resulted in the Fidelity funds taking, a number of actions over the previous year that benefited particular funds, including (i) continuing to dedicate additional resources to investment research and support of the senior management team that oversees asset management; (ii) rationalizing product lines through the mergers of six funds into other funds; (iii) continuing to migrate the Freedom Funds to dedicated lower cost underlying funds; (iv) obtaining shareholder approval to broaden the investment strategies for Fidelity Consumer Finance Portfolio, Fidelity Emerging Asia Fund, and Fidelity Environment and Alternative Energy Portfolio; (v) contractually agreeing to reduce the management fees and impose other expense limitations on Spartan 500 Index Fund and U.S. Bond Index Fund in connection with launching new institutional classes of these funds; (vi) changing the name, primary and supplemental benchmarks, and investment policies of Fidelity Global Strategies Fund to support the fund's flexible investment mandate and global orientation; and (vii) reducing the transfer agency account fee rates on certain accounts.
Investment Performance. The Board considered whether the fund has operated in accordance with its investment objective, as well as its record of compliance with its investment restrictions. It also reviewed the fund's absolute investment performance for each class, as well as the fund's relative investment performance for each class measured over multiple periods against (i) a broad-based securities market index, and (ii) a custom peer group of mutual funds deemed appropriate by Fidelity and reviewed by the Board. The following charts considered by the Board show, over the one-, three-, and five-year periods ended December 31, 2010, as available, the cumulative total returns of Class K and the retail class of the fund, the cumulative total returns of a broad-based securities market index ("benchmark"), and a range of cumulative total returns of a custom peer group of mutual funds defined by FMR based on categories assigned by Morningstar, Inc. 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 numbers noted below each chart correspond to the percentile box and represent the percentage of funds in the peer group whose performance was equal to or lower than that of the class indicated. The fund's custom peer group, defined by FMR, is a peer group that FMR believes provides a more meaningful performance comparison than the peer group assigned by Morningstar, Inc., which assigns mutual funds to categories based on their investment styles as measured by their underlying portfolio holdings.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
Fidelity Capital Appreciation Fund
The Board reviewed the fund's relative investment performance against its peer group and noted that the performance of the retail class of the fund (the class with the longer performance record) was in the second quartile for all the periods shown. The Board also noted that the investment performance of the retail class of the fund compared favorably to its benchmark for all the periods shown. The Board considered that the variations in performance between the fund's classes reflect the variations in class expenses, which result in lower performance for the higher expense class. The Board also reviewed the fund's performance since inception as well as performance in the current year.
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 noted 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.
Based on its review, the Board concluded that the nature, extent, and quality of services provided to the fund under the Advisory Contracts should benefit the fund's shareholders.
Annual Report
Competitiveness of Management Fee and Total Expense Ratio. The Board considered the fund's management fee and total expense ratio 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 ratio comparisons by broadening the competitive group used for comparison and by reducing the number of universes to which various Fidelity funds are compared.
Management Fee. 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 10% means that 90% 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
Board Approval of Investment Advisory Contracts and
Management Fees - continued
Fidelity Capital Appreciation Fund
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 2010. 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.
Based on its review, the Board concluded that the fund's management fee is fair and reasonable in light of the services that the fund receives and the other factors considered.
Total Expense Ratio. In its review of each class's total expense ratio, the Board considered the fund's management fee as well as other fund or class expenses, as applicable, 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 the current and historical total expense ratios of each class of the fund compared to competitive fund median expenses. Each class of 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.
The Board noted that the total expense ratio of each class ranked below its competitive median for 2010. The Board considered that various factors, including 12b-1 fees, positive or negative performance adjustments, and relatively higher other expenses in the case of small fund size, can affect total expense ratios.
Annual Report
Fees Charged to Other Fidelity Clients. The Board also considered Fidelity fee structures and other information with respect to clients of FMR and its affiliates, such as other mutual funds advised or subadvised by FMR or its affiliates, pension plan clients, and other institutional clients. In March 2010, the Board created an ad hoc joint committee with the board of other Fidelity funds (the Committee) to review and compare Fidelity's institutional investment advisory business with its business of providing services to the Fidelity funds, including the differences in services provided, fees charged, and costs incurred, as well as competition in their respective marketplaces.
Based on its review of total expense ratios and fees charged to other Fidelity clients, the Board concluded that the total expense ratio of each class of the fund was reasonable in light of the services that the fund and its shareholders receive and the other factors considered, including the findings of the Committee.
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 books and records of Fidelity on which Fidelity's audited financial statements are based. 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 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 concluded that while other allocation methods may also be reasonable, Fidelity's profitability methodologies are reasonable in all material respects.
The Board also reviewed Fidelity's non-fund businesses and 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.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
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 was satisfied that the profitability was not excessive in the circumstances.
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 also noted that in 2009, it and the board of other Fidelity funds created an ad hoc committee (the Economies of Scale Committee) to analyze whether FMR attains economies of scale in respect of the management and servicing of the Fidelity funds, whether the Fidelity funds have appropriately benefited from such economies of scale, and whether there is potential for realization of any further economies of scale.
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 calculates the group fee rates based on a tiered asset "breakpoint" schedule that varies based on asset class. The Board considered that the group fee is designed to deliver the benefits of economies of scale to fund shareholders when total Fidelity 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 benefit from lower management fees as assets under FMR's management increase at the fund complex level, regardless of whether Fidelity achieves any such economies of scale.
The Board concluded, taking into account the analysis of the Economies of Scale Committee, that any potential economies of scale are being appropriately shared between fund shareholders and Fidelity.
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, actions to be taken by FMR to improve certain funds' overall performance, and Fidelity's long-term strategies for certain funds; (ii) portfolio manager changes that have occurred during the past year and length of portfolio manager tenure for different categories of funds over time; (iii) Fidelity's compensation structure for portfolio managers and other key personnel and strategies for attracting and retaining non-investment personnel; (iv) the amount of the investment that each portfolio manager has made in the Fidelity fund(s) that he or she manages; (v) historical trends in Fidelity's realization of fall-out benefits; (vi) Fidelity's group fee structures and the rationale for the individual fee rates of certain funds; (vii) fund profitability methodology and the impact of certain factors on fund profitability results; (viii) trends regarding industry use of performance fee structures and Fidelity's compliance practices with respect to performance adjustment calculations; (ix) the fee structures in place for certain other Fidelity clients; and (x) explanations regarding the relative total expense ratios of certain funds and classes, total expense competitive trends, and actions that might be taken by FMR to reduce total expense ratios for certain funds and classes.
Annual Report
Based on its evaluation of all of the conclusions noted above, and after considering all factors it believed relevant, 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.
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.
Fidelity's Web Site
www.fidelity.com
* When you call the quotes line, please remember that a fund's yield and return will vary and, except for money market funds, share price will also vary. This means that you may have a gain or loss when you sell your shares. There is no assurance that money market funds will be able to maintain a stable $1 share price; an investment in a money market fund is not insured or guaranteed by the U.S. government. Total returns are historical and include changes in share price, reinvestment of dividends and capital gains distributions, and the effects of any sales charges.
Annual Report
To Write Fidelity
We'll give your correspondence immediate attention and send you written confirmation upon completion of your request.
Making Changes
To Your Account
(such as changing name, address, bank, etc.)
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0002
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
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 Management & Research
(Hong Kong) Limited
Fidelity Management & Research
(Japan) Inc.
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Service Agents
Fidelity Investments Institutional
Operations Company, Inc.
Boston, MA
Fidelity Service Company, Inc.
Boston, MA
Custodian
Citibank, N.A.
New York, NY
The Fidelity Telephone Connection
Mutual Fund 24-Hour Service
Exchanges/Redemptions
and Account Assistance 1-800-544-6666
Product Information 1-800-544-6666
Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
Fidelity Automated Service
Telephone (FAST®) 1-800-544-5555
Automated line for quickest service
CAF-UANN-1211 1.784775.108
Fidelity®
Capital Appreciation
Fund -
Class K
Annual Report
October 31, 2011
Contents
Chairman's Message | The Chairman's message to shareholders. | |
Performance | How the fund has done over time. | |
Management's Discussion of Fund Performance | The Portfolio Manager's review of fund performance and strategy. | |
Shareholder Expense Example | An example of shareholder expenses. | |
Investment Changes | A summary of major shifts in the fund's investments over the past six months. | |
Investments | A complete list of the fund's investments with their market values. | |
Financial Statements | Statements of assets and liabilities, operations, and changes in net assets, as well as financial highlights. | |
Notes | Notes to the financial statements. | |
Report of Independent Registered Public Accounting Firm |
| |
Trustees and Officers |
| |
Distributions |
| |
Board Approval of Investment Advisory Contracts and Management Fees |
|
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-800-835-5092 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company.
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, http://www.advisor.fidelity.com, or http://www.401k.com, as applicable.
NOT FDIC INSURED • MAY LOSE VALUE • NO BANK GUARANTEE
Neither the fund nor Fidelity Distributors Corporation is a bank.
Annual Report
Chairman's Message
(photo_of_James_C_Curvey)
Dear Shareholder:
Global equity markets began the fourth quarter on a strong note, sharply reversing course in October amid strong corporate earnings, better-than-expected economic news and the promise of a resolution to the sovereign debt crisis in Europe. The mini rally followed a third quarter marked by a significant downturn in July and August, which heightened investor anxiety and set off a wave of volatility that hampered most major asset classes through the end of September. Financial markets are difficult to predict, of course, but you can help put the odds in your favor by following these time-tested investment principles.
One of the basic tenets is to invest according to your time horizon. For long-term investors, riding out the markets' inevitable ups and downs has proven much more effective than making decisions based on short-term developments. If your goal is approaching, you can also benefit from patience and restraint, rather than attempting to time the market. No matter your time horizon, missing only a few of the markets' best days can significantly diminish returns. Patience also affords the benefits of compounding - earning interest on additional income or reinvested dividends and capital gains. While staying the course doesn't eliminate risk, it can considerably lessen the negative impact of short-term downturns.
Asset allocation is another principle to manage risk. As you spread your portfolio among the asset classes, be sure to consider your time horizon, risk tolerance and investment objectives. Younger investors may be better served by emphasizing equities, which historically have been the best-performing asset class over time. Investors who are nearing a specific goal, such as retirement or sending a child to college, may choose to favor bonds and other investments that have tended to be more stable. Studies indicate that asset allocation is the single most important determinant of a portfolio's long-term success. After deciding on a suitable allocation strategy, make sure your portfolio is adequately diversified, with exposure to stocks of small-, mid- and large-cap companies in a range of sectors, for example. And today, more than ever, geographic diversification should be taken into account.
Lastly, investing a certain amount of money on a regular basis - a principle known as dollar-cost averaging - can help lower the average cost of your purchases, while also giving you the discipline to avoid selling weak performers just prior to an upswing, or chasing a hot performer just before a correction.
We invite you to learn more by visiting us on the Internet, dropping by one of our Investor Centers or calling us by phone. It is our privilege to provide the resources you need to choose investments that are right for you.
Sincerely,
(The acting chairman's signature appears here.)
James C. Curvey
Acting Chairman
Annual Report
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' distributions from 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, 2011 | Past 1 | Past 5 | Past 10 |
Class KA | 6.41% | 1.62% | 6.29% |
A The initial offering of Class K shares took place on May 9, 2008. Returns prior to May 9, 2008 are those of Fidelity® Capital Appreciation Fund, the original class of the fund.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Fidelity® Capital Appreciation Fund - Class K on October 31, 2001. The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index 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
Management's Discussion of Fund Performance
Market Recap: U.S. stocks overcame a sharp summer drop to post a solid gain for the 12 months ending October 31, 2011. Bullishness pervaded the market during the first half of the period, only to be squelched by extreme volatility in the summer, as debate over the U.S. debt ceiling, Standard & Poor's subsequent downgrade of the country's long-term sovereign credit rating and deepening debt woes in Europe led to the worst calendar-quarter finish for the S&P 500® Index in almost three years. However, news of a possible solution to the eurozone debt crisis, along with better-than-expected U.S. economic data and strong corporate earnings, helped fuel an October rally that pushed the broad-based index up roughly 11% - its highest monthly return since December 1991. With that boost, the S&P 500® finished the year up 8.09%, while the blue-chip Dow Jones Industrial AverageSM added 10.39% and the technology-heavy Nasdaq Composite® Index gained 8.10%. Among sectors within the S&P 500®, only financials (-6%) posted a decline for the year, while energy (+19%) and utilities (+15%) fared best. Small and mid-sized stocks also rose, with the Russell 2000® and Russell Midcap® indexes adding 6.71% and 7.85%, respectively. The lengthy financial crisis in Europe continued to hamper foreign developed-markets equities, with the MSCI® EAFE® (Europe, Australasia, Far East) Index falling 3.97%.
Comments from Fergus Shiel, Portfolio Manager of Fidelity® Capital Appreciation Fund: For the year, the fund's Class K shares returned 6.41%, lagging the S&P 500. Versus the index, unrewarding security selection in industrials had the biggest negative influence on performance. Within that group, three out-of-index airline holdings - United Continental Holdings, US Airways Group and Delta Air Lines - accounted for virtually all of the damage. Surging fuel costs hampered airline stocks early in the period, while fear of slowing economic growth and a possible recession undermined them later on. Delta was sold from the fund during the period, and I reduced its other airline positions. Elsewhere, a combination of weak picks and an underweighting in energy worked against the fund's results. Stock selection in the mid-cap space detracted as well. Conversely, favorable positioning in consumer discretionary and a large underweighting in the weak-performing financials sector were beneficial, along with stock selection in health care. At the stock level, performance was bolstered by biotechnology firm Biogen Idec, which made progress in reducing costs and continued to dominate the market for drugs to treat multiple sclerosis. Minimal exposure to weak-performing index component Bank of America, which the fund didn't own at period end, also helped. Retailer TJX Companies added value 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 Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (May 1, 2011 to October 31, 2011).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.
Annual Report
| Annualized Expense Ratio | Beginning | Ending | Expenses Paid |
Capital Appreciation | .92% |
|
|
|
Actual |
| $ 1,000.00 | $ 933.40 | $ 4.48 |
Hypothetical A |
| $ 1,000.00 | $ 1,020.57 | $ 4.69 |
Class K | .76% |
|
|
|
Actual |
| $ 1,000.00 | $ 934.20 | $ 3.71 |
HypotheticalA |
| $ 1,000.00 | $ 1,021.37 | $ 3.87 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period).
Annual Report
Investment Changes (Unaudited)
Top Ten Stocks as of October 31, 2011 | ||
| % of fund's | % of fund's net assets |
United Continental Holdings, Inc. | 4.4 | 4.9 |
Apple, Inc. | 4.3 | 3.9 |
Virgin Media, Inc. | 3.7 | 4.1 |
Occidental Petroleum Corp. | 3.2 | 2.1 |
Lorillard, Inc. | 3.0 | 0.7 |
TJX Companies, Inc. | 2.8 | 2.0 |
PVH Corp. | 2.3 | 0.0 |
Biogen Idec, Inc. | 2.2 | 1.8 |
Bed Bath & Beyond, Inc. | 2.1 | 1.2 |
Reynolds American, Inc. | 2.0 | 0.4 |
| 30.0 | |
Top Five Market Sectors as of October 31, 2011 | ||
| % of fund's | % of fund's net assets |
Consumer Discretionary | 32.1 | 27.8 |
Information Technology | 16.7 | 11.9 |
Industrials | 15.6 | 22.5 |
Energy | 10.7 | 13.8 |
Financials | 9.7 | 5.3 |
Asset Allocation (% of fund's net assets) | |||||||
As of October 31, 2011* | As of April 30, 2011** | ||||||
![]() | Stocks 99.1% |
| ![]() | Stocks 96.9% |
| ||
![]() | Short-Term |
| ![]() | Short-Term |
| ||
* Foreign investments | 6.7% |
| ** Foreign investments | 16.1% |
|
Annual Report
Investments October 31, 2011
Showing Percentage of Net Assets
Common Stocks - 99.1% | |||
Shares | Value (000s) | ||
CONSUMER DISCRETIONARY - 32.1% | |||
Automobiles - 1.7% | |||
Ford Motor Co. (a) | 7,342,500 | $ 85,760 | |
Diversified Consumer Services - 1.6% | |||
Career Education Corp. (a)(d) | 1,419,577 | 22,898 | |
DeVry, Inc. | 567,987 | 21,402 | |
ITT Educational Services, Inc. (a)(d) | 658,337 | 40,791 | |
| 85,091 | ||
Hotels, Restaurants & Leisure - 6.2% | |||
Arcos Dorados Holdings, Inc. | 725,930 | 16,987 | |
Chipotle Mexican Grill, Inc. (a) | 154,977 | 52,091 | |
Las Vegas Sands Corp. (a) | 445,500 | 20,916 | |
McDonald's Corp. | 425,811 | 39,537 | |
Paddy Power PLC (Ireland) | 1,310,558 | 72,547 | |
Starbucks Corp. | 1,534,648 | 64,977 | |
Starwood Hotels & Resorts Worldwide, Inc. | 673,494 | 33,749 | |
Texas Roadhouse, Inc. Class A | 1,466,233 | 21,011 | |
| 321,815 | ||
Media - 6.6% | |||
Interpublic Group of Companies, Inc. | 9,099,672 | 86,265 | |
Time Warner, Inc. | 1,188,215 | 41,576 | |
Viacom, Inc. Class B (non-vtg.) | 445,600 | 19,540 | |
Virgin Media, Inc. (d) | 7,864,735 | 191,742 | |
| 339,123 | ||
Multiline Retail - 0.5% | |||
PPR SA | 178,154 | 27,835 | |
Specialty Retail - 10.6% | |||
Bed Bath & Beyond, Inc. (a) | 1,732,790 | 107,156 | |
DSW, Inc. Class A (d) | 1,769,363 | 92,608 | |
Express, Inc. | 1,719,310 | 38,839 | |
Limited Brands, Inc. | 861,554 | 36,797 | |
Tiffany & Co., Inc. | 643,513 | 51,307 | |
TJX Companies, Inc. | 2,425,890 | 142,958 | |
Ulta Salon, Cosmetics & Fragrance, Inc. (a) | 595,290 | 40,057 | |
Williams-Sonoma, Inc. | 1,019,921 | 38,288 | |
| 548,010 | ||
Textiles, Apparel & Luxury Goods - 4.9% | |||
Burberry Group PLC | 940,729 | 20,288 | |
Coach, Inc. | 940,568 | 61,203 | |
Oxford Industries, Inc. (e) | 1,014,141 | 40,059 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
CONSUMER DISCRETIONARY - continued | |||
Textiles, Apparel & Luxury Goods - continued | |||
PVH Corp. | 1,602,176 | $ 119,218 | |
VF Corp. | 99,000 | 13,684 | |
| 254,452 | ||
TOTAL CONSUMER DISCRETIONARY | 1,662,086 | ||
CONSUMER STAPLES - 9.4% | |||
Beverages - 0.5% | |||
Dr Pepper Snapple Group, Inc. | 663,256 | 24,839 | |
Food & Staples Retailing - 1.3% | |||
Fresh Market, Inc. (d) | 623,457 | 24,938 | |
Whole Foods Market, Inc. | 594,063 | 42,844 | |
| 67,782 | ||
Food Products - 0.3% | |||
Green Mountain Coffee Roasters, Inc. (a)(d) | 236,691 | 15,390 | |
Personal Products - 1.6% | |||
Elizabeth Arden, Inc. (a) | 552,749 | 18,948 | |
Nu Skin Enterprises, Inc. Class A | 1,258,886 | 63,612 | |
| 82,560 | ||
Tobacco - 5.7% | |||
Altria Group, Inc. | 1,286,960 | 35,456 | |
Lorillard, Inc. | 1,402,869 | 155,241 | |
Reynolds American, Inc. | 2,723,150 | 105,331 | |
| 296,028 | ||
TOTAL CONSUMER STAPLES | 486,599 | ||
ENERGY - 10.7% | |||
Energy Equipment & Services - 3.5% | |||
Baker Hughes, Inc. | 1,534,684 | 88,996 | |
National Oilwell Varco, Inc. | 831,999 | 59,346 | |
Oceaneering International, Inc. | 759,846 | 31,784 | |
| 180,126 | ||
Oil, Gas & Consumable Fuels - 7.2% | |||
Alpha Natural Resources, Inc. (a) | 1,293,622 | 31,099 | |
BP PLC sponsored ADR | 198,000 | 8,748 | |
Canadian Natural Resources Ltd. | 297,000 | 10,476 | |
Chevron Corp. | 950,441 | 99,844 | |
Hess Corp. | 198,000 | 12,387 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
ENERGY - continued | |||
Oil, Gas & Consumable Fuels - continued | |||
Occidental Petroleum Corp. | 1,793,806 | $ 166,716 | |
Royal Dutch Shell PLC Class A sponsored ADR | 455,446 | 32,296 | |
Suncor Energy, Inc. | 297,000 | 9,460 | |
| 371,026 | ||
TOTAL ENERGY | 551,152 | ||
FINANCIALS - 9.7% | |||
Capital Markets - 1.6% | |||
Goldman Sachs Group, Inc. | 198,000 | 21,691 | |
Morgan Stanley | 2,771,929 | 48,897 | |
UBS AG (a) | 791,970 | 10,012 | |
| 80,600 | ||
Commercial Banks - 4.1% | |||
BB&T Corp. | 1,089,000 | 25,417 | |
BNP Paribas SA | 945,600 | 42,988 | |
Comerica, Inc. | 1,089,000 | 27,824 | |
Intesa Sanpaolo SpA | 17,126,374 | 30,598 | |
SunTrust Banks, Inc. | 1,485,152 | 29,302 | |
Wells Fargo & Co. | 2,177,990 | 56,432 | |
| 212,561 | ||
Consumer Finance - 0.3% | |||
First Cash Financial Services, Inc. (a) | 417,230 | 17,315 | |
Diversified Financial Services - 2.2% | |||
Citigroup, Inc. | 2,375,935 | 75,056 | |
JPMorgan Chase & Co. | 495,000 | 17,206 | |
MSCI, Inc. Class A (a) | 612,682 | 20,457 | |
| 112,719 | ||
Real Estate Management & Development - 1.5% | |||
CBRE Group, Inc. (a) | 4,523,173 | 80,422 | |
TOTAL FINANCIALS | 503,617 | ||
HEALTH CARE - 4.1% | |||
Biotechnology - 3.4% | |||
Alexion Pharmaceuticals, Inc. (a) | 605,418 | 40,872 | |
Amgen, Inc. | 396,000 | 22,679 | |
Biogen Idec, Inc. (a) | 979,408 | 113,964 | |
| 177,515 | ||
Common Stocks - continued | |||
Shares | Value (000s) | ||
HEALTH CARE - continued | |||
Health Care Providers & Services - 0.3% | |||
Express Scripts, Inc. (a) | 297,000 | $ 13,582 | |
Pharmaceuticals - 0.4% | |||
Shire PLC | 713,000 | 22,382 | |
TOTAL HEALTH CARE | 213,479 | ||
INDUSTRIALS - 15.6% | |||
Aerospace & Defense - 1.7% | |||
Textron, Inc. | 4,483,833 | 87,076 | |
Airlines - 5.2% | |||
United Continental Holdings, Inc. (a)(d) | 11,677,704 | 225,609 | |
US Airways Group, Inc. (a)(d) | 7,865,868 | 45,386 | |
| 270,995 | ||
Commercial Services & Supplies - 0.7% | |||
Stericycle, Inc. (a) | 453,004 | 37,862 | |
Electrical Equipment - 1.1% | |||
Emerson Electric Co. | 643,685 | 30,974 | |
Rockwell Automation, Inc. | 356,490 | 24,117 | |
| 55,091 | ||
Industrial Conglomerates - 1.6% | |||
Danaher Corp. | 1,287,302 | 62,241 | |
General Electric Co. | 1,089,000 | 18,197 | |
| 80,438 | ||
Machinery - 4.1% | |||
Cummins, Inc. | 376,230 | 37,409 | |
Deere & Co. | 247,512 | 18,786 | |
Fiat Industrial SpA (a) | 990,000 | 8,638 | |
Greenbrier Companies, Inc. (a) | 744,097 | 13,848 | |
Joy Global, Inc. | 376,263 | 32,810 | |
Titan International, Inc. (d) | 1,059,300 | 23,834 | |
Trinity Industries, Inc. | 557,600 | 15,206 | |
Wabtec Corp. | 958,362 | 64,383 | |
| 214,914 | ||
Professional Services - 0.7% | |||
Robert Half International, Inc. | 1,287,329 | 34,024 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
INDUSTRIALS - continued | |||
Trading Companies & Distributors - 0.5% | |||
Air Lease Corp. Class A | 470,414 | $ 10,504 | |
WESCO International, Inc. (a) | 286,800 | 13,898 | |
| 24,402 | ||
TOTAL INDUSTRIALS | 804,802 | ||
INFORMATION TECHNOLOGY - 16.7% | |||
Computers & Peripherals - 4.5% | |||
Apple, Inc. (a) | 554,478 | 224,442 | |
SanDisk Corp. (a) | 128,400 | 6,506 | |
| 230,948 | ||
Electronic Equipment & Components - 0.3% | |||
Corning, Inc. | 1,089,000 | 15,562 | |
Littelfuse, Inc. | 12,010 | 588 | |
| 16,150 | ||
Internet Software & Services - 1.9% | |||
VeriSign, Inc. | 3,020,041 | 96,913 | |
IT Services - 1.3% | |||
Cognizant Technology Solutions Corp. Class A (a) | 588,010 | 42,778 | |
Paychex, Inc. | 841,719 | 24,528 | |
| 67,306 | ||
Semiconductors & Semiconductor Equipment - 2.5% | |||
Altera Corp. | 544,448 | 20,645 | |
ASML Holding NV | 643,470 | 26,981 | |
Entegris, Inc. (a) | 198,000 | 1,774 | |
Intel Corp. | 1,485,000 | 36,442 | |
KLA-Tencor Corp. | 445,550 | 20,981 | |
Teradyne, Inc. (a) | 1,592,081 | 22,799 | |
| 129,622 | ||
Software - 6.2% | |||
Ariba, Inc. (a) | 2,792,169 | 88,456 | |
Autodesk, Inc. (a) | 594,051 | 20,554 | |
Citrix Systems, Inc. (a) | 980,556 | 71,414 | |
FactSet Research Systems, Inc. | 136,814 | 13,602 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
INFORMATION TECHNOLOGY - continued | |||
Software - continued | |||
Intuit, Inc. | 1,344,450 | $ 72,157 | |
salesforce.com, Inc. (a) | 415,900 | 55,385 | |
| 321,568 | ||
TOTAL INFORMATION TECHNOLOGY | 862,507 | ||
MATERIALS - 0.6% | |||
Metals & Mining - 0.6% | |||
Freeport-McMoRan Copper & Gold, Inc. | 495,005 | 19,929 | |
United States Steel Corp. | 494,949 | 12,552 | |
| 32,481 | ||
TELECOMMUNICATION SERVICES - 0.2% | |||
Diversified Telecommunication Services - 0.2% | |||
Iliad SA | 92,774 | 10,859 | |
TOTAL COMMON STOCKS (Cost $4,856,517) | 5,127,582 | ||
Money Market Funds - 7.9% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.12% (b) | 160,183,794 | 160,184 | |
Fidelity Securities Lending Cash Central Fund, 0.11% (b)(c) | 251,071,675 | 251,072 | |
TOTAL MONEY MARKET FUNDS (Cost $411,256) | 411,256 | ||
TOTAL INVESTMENT PORTFOLIO - 107.0% (Cost $5,267,773) | 5,538,838 | ||
NET OTHER ASSETS (LIABILITIES) - (7.0)% | (363,677) | ||
NET ASSETS - 100% | $ 5,175,161 |
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
(e) Affiliated company |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 468 |
Fidelity Securities Lending Cash Central Fund | 1,451 |
Total | $ 1,919 |
Other Affiliated Issuers |
An affiliated company is a company in which the Fund has ownership of at least 5% of the voting securities. Fiscal year to date transactions with companies which are or were affiliates are as follows: |
Affiliate | Value, | Purchases | Sales Proceeds | Dividend Income | Value, |
Oxford Industries, Inc. | $ - | $ 34,022 | $ - | $ 356 | $ 40,059 |
Transcend Services, Inc. | 10,894 | - | 11,679 | - | - |
US Airways Group, Inc. | 117,710 | 18,734 | 43,762 | - | - |
Total | $ 128,604 | $ 52,756 | $ 55,441 | $ 356 | $ 40,059 |
Other Information |
The following is a summary of the inputs used, as of October 31, 2011, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities: | ||||
Equities: | ||||
Consumer Discretionary | $ 1,662,086 | $ 1,662,086 | $ - | $ - |
Consumer Staples | 486,599 | 486,599 | - | - |
Energy | 551,152 | 551,152 | - | - |
Financials | 503,617 | 493,605 | 10,012 | - |
Health Care | 213,479 | 191,097 | 22,382 | - |
Industrials | 804,802 | 804,802 | - | - |
Information Technology | 862,507 | 862,507 | - | - |
Materials | 32,481 | 32,481 | - | - |
Telecommunication Services | 10,859 | 10,859 | - | - |
Money Market Funds | 411,256 | 411,256 | - | - |
Total Investments in Securities: | $ 5,538,838 | $ 5,506,444 | $ 32,394 | $ - |
Income Tax Information |
At October 31, 2011, the Fund had a capital loss carryforward of approximately $131,261,000 all of which will expire in fiscal 2016. Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements
Statement of Assets and Liabilities
Amounts in thousands (except per-share amounts) | October 31, 2011 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $237,010) - See accompanying schedule: Unaffiliated issuers (cost $4,822,495) | $ 5,087,523 |
|
Fidelity Central Funds (cost $411,256) | 411,256 |
|
Other affiliated issuers (cost $34,022) | 40,059 |
|
Total Investments (cost $5,267,773) |
| $ 5,538,838 |
Receivable for investments sold | 186,077 | |
Receivable for fund shares sold | 3,591 | |
Dividends receivable | 605 | |
Distributions receivable from Fidelity Central Funds | 47 | |
Prepaid expenses | 19 | |
Other receivables | 285 | |
Total assets | 5,729,462 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 293,297 | |
Payable for fund shares redeemed | 5,736 | |
Accrued management fee | 3,172 | |
Other affiliated payables | 876 | |
Other payables and accrued expenses | 148 | |
Collateral on securities loaned, at value | 251,072 | |
Total liabilities | 554,301 | |
|
|
|
Net Assets | $ 5,175,161 | |
Net Assets consist of: |
| |
Paid in capital | $ 5,049,756 | |
Undistributed net investment income | 3,573 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (149,287) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 271,119 | |
Net Assets | $ 5,175,161 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Assets and Liabilities - continued
Amounts in thousands (except per-share amounts) | October 31, 2011 | |
|
|
|
Capital Appreciation: | $ 25.51 | |
|
|
|
Class K: | $ 25.57 |
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, 2011 | |
|
|
|
Investment Income |
|
|
Dividends (including $356 earned from other affiliated issuers) |
| $ 60,428 |
Interest |
| 2 |
Income from Fidelity Central Funds |
| 1,919 |
Total income |
| 62,349 |
|
|
|
Expenses | ||
Management fee | $ 30,450 | |
Performance adjustment | 5,844 | |
Transfer agent fees | 10,332 | |
Accounting and security lending fees | 1,165 | |
Custodian fees and expenses | 261 | |
Independent trustees' compensation | 30 | |
Registration fees | 82 | |
Audit | 66 | |
Legal | 23 | |
Miscellaneous | 60 | |
Total expenses before reductions | 48,313 | |
Expense reductions | (674) | 47,639 |
Net investment income (loss) | 14,710 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 496,334 | |
Other affiliated issuers | 3,318 |
|
Foreign currency transactions | (125) | |
Total net realized gain (loss) |
| 499,527 |
Change in net unrealized appreciation (depreciation) on: Investment securities | (175,537) | |
Assets and liabilities in foreign currencies | 69 | |
Total change in net unrealized appreciation (depreciation) |
| (175,468) |
Net gain (loss) | 324,059 | |
Net increase (decrease) in net assets resulting from operations | $ 338,769 |
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, | Year ended October 31, |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 14,710 | $ 9,579 |
Net realized gain (loss) | 499,527 | 44,743 |
Change in net unrealized appreciation (depreciation) | (175,468) | 1,258,883 |
Net increase (decrease) in net assets resulting | 338,769 | 1,313,205 |
Distributions to shareholders from net investment income | (5,716) | (5,772) |
Share transactions - net increase (decrease) | (540,966) | (834,386) |
Total increase (decrease) in net assets | (207,913) | 473,047 |
|
|
|
Net Assets | ||
Beginning of period | 5,383,074 | 4,910,027 |
End of period (including undistributed net investment income of $3,573 and distributions in excess of net investment income of $93, respectively) | $ 5,175,161 | $ 5,383,074 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Capital Appreciation
Years ended October 31, | 2011 | 2010 | 2009 | 2008 | 2007 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 24.03 | $ 18.71 | $ 16.68 | $ 32.13 | $ 27.41 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .06 | .04 | .04 | .16 | .11 |
Net realized and unrealized gain (loss) | 1.44 | 5.30 | 2.17 | (13.27) | 6.06 |
Total from investment operations | 1.50 | 5.34 | 2.21 | (13.11) | 6.17 |
Distributions from net investment income | (.02) | (.02) | (.18) | (.12) | (.11) |
Distributions from net realized gain | - | - | - | (2.22) | (1.34) |
Total distributions | (.02) | (.02) | (.18) | (2.34) | (1.45) |
Net asset value, end of period | $ 25.51 | $ 24.03 | $ 18.71 | $ 16.68 | $ 32.13 |
Total Return A | 6.24% | 28.57% | 13.54% | (43.80)% | 23.51% |
Ratios to Average Net Assets C,E |
|
|
|
|
|
Expenses before reductions | .91% | .88% | .79% | .82% | .83% |
Expenses net of fee waivers, if any | .91% | .88% | .79% | .82% | .83% |
Expenses net of all reductions | .90% | .86% | .78% | .82% | .82% |
Net investment income (loss) | .25% | .16% | .25% | .67% | .36% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (in millions) | $ 4,319 | $ 4,672 | $ 4,627 | $ 4,794 | $ 10,139 |
Portfolio turnover rate D | 182% | 186% | 243% | 157% | 135% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
B Calculated based on average shares outstanding during the period.
C Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
D Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
E Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class K
Years ended October 31, | 2011 | 2010 | 2009 | 2008 G |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 24.09 | $ 18.73 | $ 16.69 | $ 25.11 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss) D | .10 | .08 | .08 | .03 |
Net realized and unrealized gain (loss) | 1.44 | 5.31 | 2.18 | (8.45) |
Total from investment operations | 1.54 | 5.39 | 2.26 | (8.42) |
Distributions from net investment income | (.06) | (.03) | (.22) | - |
Net asset value, end of period | $ 25.57 | $ 24.09 | $ 18.73 | $ 16.69 |
Total Return B,C | 6.41% | 28.80% | 13.85% | (33.53)% |
Ratios to Average Net Assets E,H |
|
|
|
|
Expenses before reductions | .75% | .70% | .55% | .66% A |
Expenses net of fee waivers, if any | .75% | .70% | .55% | .66% A |
Expenses net of all reductions | .74% | .68% | .54% | .65% A |
Net investment income (loss) | .41% | .34% | .49% | .41% A |
Supplemental Data |
|
|
|
|
Net assets, end of period (in millions) | $ 856 | $ 712 | $ 283 | $ 93 |
Portfolio turnover rate F | 182% | 186% | 243% | 157% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
D Calculated based on average shares outstanding during the period.
E Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
G For the period May 9, 2008 (commencement of sale of shares) to 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 reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended October 31, 2011
(Amounts in thousands except percentages)
1. Organization.
Fidelity Capital Appreciation Fund (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. The Fund offers Capital Appreciation and Class K shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent fees incurred. Certain expense reductions may also differ by class.
2. Investments in Fidelity Central Funds.
The Fund invests in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:
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. The Fund uses independent pricing services approved by the Board of Trustees to value its investments. When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include market or security specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The value used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the Fund's own assumptions based on the best information available)
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of October 31, 2011 is included at the end of the Fund's Schedule of Investments. Valuation techniques used to value the Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when significant market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-traded funds (ETFs) and certain indexes as well as quoted prices for similar securities are used and are categorized as Level 2 in the hierarchy in these circumstances. Utilizing these techniques may result in transfers between Level 1 and Level 2. For restricted equity securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and are categorized as Level 3 in the hierarchy.
Annual Report
Notes to Financial Statements - continued
(Amounts in thousands except percentages)
3. Significant Accounting Policies - continued
Security Valuation - continued
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy.
Foreign Currency. The Fund may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Annual Report
3. Significant Accounting Policies - continued
Expenses. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Deferred Trustee Compensation. Under a Deferred Compensation Plan (the Plan), independent Trustees may elect to defer receipt of a portion of their annual compensation. Deferred amounts are invested in a cross-section of Fidelity funds, are marked-to-market and remain in the Fund until distributed in accordance with the Plan. The investment of deferred amounts and the offsetting payable to the Trustees are included in the accompanying Statement of Assets and Liabilities.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company, including distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. As of October 31, 2011, the Fund did not have any unrecognized tax benefits in the financial statements. A fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are declared and recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to partnerships, foreign currency transactions, deferred trustees compensation, capital loss carryforwards and losses deferred due to wash sales.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $ 675,623 |
Gross unrealized depreciation | (422,585) |
Net unrealized appreciation (depreciation) on securities and other investments | $ 253,038 |
|
|
Tax Cost | $ 5,285,800 |
Annual Report
Notes to Financial Statements - continued
(Amounts in thousands except percentages)
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The tax-based components of distributable earnings as of period end were as follows:
Undistributed ordinary income | $ 3,659 |
Capital loss carryforward | $ (131,261) |
Net unrealized appreciation (depreciation) | $ 253,092 |
Under the recently enacted Regulated Investment Company Modernization Act of 2010 (the Act), the Fund will be permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to any losses incurred in pre-enactment taxable years, which generally expire after eight years from when they are incurred. Additionally, post-enactment capital losses that are carried forward will retain their character as either short-term or long-term capital losses rather than being considered all short-term as under previous law. The Fund's first fiscal year end subject to the Act will be October 31, 2012.
The tax character of distributions paid was as follows:
| October 31, 2011 | October 31, 2010 |
Ordinary Income | $ 5,716 | $ 5,772 |
New Accounting Pronouncement. In May 2011, the Financial Accounting Standards Board issued Accounting Standard Update No. 2011-04, Fair Value Measurement (Topic 820) - Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. The update changes the wording used to describe the requirements in GAAP for measuring fair value and for disclosing information about fair value measurements. The update is effective during interim and annual periods beginning after December 15, 2011. Management is currently evaluating the impact of the update's adoption on the Fund's financial statement disclosures.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $9,475,741 and $9,838,180, respectively.
Annual Report
5. 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 Capital Appreciation as compared to an appropriate benchmark index. For the period, the total annual management fee rate, including the performance adjustment, was .67% of the Fund's average net assets.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of Capital Appreciation. FIIOC receives an asset-based fee of Class K's average net assets. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, transfer agent fees for each class were as follows:
| Amount | % of |
Capital Appreciation | $ 9,914 | .21 |
Class K | 418 | .05 |
| $ 10,332 |
|
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 $438 for the period.
Annual Report
Notes to Financial Statements - continued
(Amounts in thousands except percentages)
6. Committed Line of Credit.
The Fund participates with other funds managed by FMR or an affiliate in a $4.0 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $17 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, there were no borrowings on this line of credit.
7. Security Lending.
The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. For equity securities, a lending agent is used and may loan securities to certain qualified borrowers, including Fidelity Capital Markets (FCM), a broker-dealer affiliated with the Fund. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Total security lending income during the period amounted to $1,451, including $51 from securities loaned to FCM.
8. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of the Fund provided services to the Fund in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $674 for the period.
Annual Report
9. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended October 31, | 2011 | 2010 |
From net investment income |
|
|
Capital Appreciation | $ 3,856 | $ 5,336 |
Class K | 1,860 | 436 |
Total | $ 5,716 | $ 5,772 |
10. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
Years ended October 31, | 2011 | 2010 | 2011 | 2010 |
Capital Appreciation |
|
|
|
|
Shares sold | 18,860 | 24,608 | $ 481,703 | $ 544,840 |
Reinvestment of distributions | 148 | 250 | 3,700 | 5,154 |
Shares redeemed | (44,166) | (77,678) | (1,127,770) | (1,707,314) |
Net increase (decrease) | (25,158) | (52,820) | $ (642,367) | $ (1,157,320) |
Class K |
|
|
|
|
Shares sold | 10,289 | 22,592 | $ 263,401 | $ 500,526 |
Reinvestment of distributions | 74 | 21 | 1,860 | 436 |
Shares redeemed | (6,424) | (8,191) | (163,860) | (178,028) |
Net increase (decrease) | 3,939 | 14,422 | $ 101,401 | $ 322,934 |
11. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
Annual Report
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Capital Trust and the Shareholders of Fidelity Capital Appreciation Fund:
In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Fidelity Capital Appreciation Fund (a fund of Fidelity Capital Trust) at October 31, 2011, 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 the financial highlights for each of the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fidelity Capital Appreciation Fund's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the 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 are free of material misstatement. An audit 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, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at October 31, 2011 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
December 13, 2011
Annual Report
Trustees and Officers
The Trustees, Members 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, oversee management of the risks associated with such activities and contractual arrangements, and review the fund's performance. Except for James C. Curvey, each of the Trustees oversees 226 funds advised by FMR or an affiliate. Mr. Curvey oversees 429 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 75th birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board Members 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.
Experience, Skills, Attributes, and Qualifications of the Fund's Trustees. The Governance and Nominating Committee has adopted a statement of policy that describes the experience, qualifications, attributes, and skills that are necessary and desirable for potential Independent Trustee candidates (Statement of Policy). The Board believes that each Trustee satisfied at the time he or she was initially elected or appointed a Trustee, and continues to satisfy, the standards contemplated by the Statement of Policy. The Governance and Nominating Committee also engages professional search firms to help identify potential Independent Trustee candidates who have the experience, qualifications, attributes, and skills consistent with the Statement of Policy. From time to time, additional criteria based on the composition and skills of the current Independent Trustees, as well as experience or skills that may be appropriate in light of future changes to board composition, business conditions, and regulatory or other developments, have also been considered by the professional search firms and the Governance and Nominating Committee. In addition, the Board takes into account the Trustees' commitment and participation in Board and committee meetings, as well as their leadership of standing and ad hoc committees throughout their tenure.
In determining that a particular Trustee was and continues to be qualified to serve as a Trustee, the Board has considered a variety of criteria, none of which, in isolation, was controlling. The Board believes that, collectively, the Trustees have balanced and diverse experience, qualifications, attributes, and skills, which allow the Board to operate effectively in governing the fund and protecting the interests of shareholders. Information about the specific experience, skills, attributes, and qualifications of each Trustee, which in each case led to the Board's conclusion that the Trustee should serve (or continue to serve) as a trustee of the fund, is provided below.
Annual Report
Trustees and Officers - continued
Board Structure and Oversight Function. James C. Curvey is an interested person (as defined in the 1940 Act) and currently serves as Acting Chairman. The Trustees have determined that an interested Chairman is appropriate and benefits shareholders because an interested Chairman has a personal and professional stake in the quality and continuity of services provided to the fund. Independent Trustees exercise their informed business judgment to appoint an individual of their choosing to serve as Chairman, regardless of whether the Trustee happens to be independent or a member of management. The Independent Trustees have determined that they can act independently and effectively without having an Independent Trustee serve as Chairman and that a key structural component for assuring that they are in a position to do so is for the Independent Trustees to constitute a substantial majority for the Board. The Independent Trustees also regularly meet in executive session. Ned C. Lautenbach serves as Chairman of the Independent Trustees and as such (i) acts as a liaison between the Independent Trustees and management with respect to matters important to the Independent Trustees and (ii) with management prepares agendas for Board meetings.
Fidelity funds are overseen by different Boards of Trustees. The fund's Board oversees Fidelity's equity and high income funds and another Board oversees Fidelity's investment-grade bond, money market, and asset allocation funds. The asset allocation funds may invest in Fidelity funds overseen by the fund's Board. The use of separate Boards, each with its own committee structure, allows the Trustees of each group of Fidelity funds to focus on the unique issues of the funds they oversee, including common research, investment, and operational issues. On occasion, the separate Boards establish joint committees to address issues of overlapping consequences for the Fidelity funds overseen by each Board.
The Trustees operate using a system of committees to facilitate the timely and efficient consideration of all matters of importance to the Trustees, the fund, and fund shareholders and to facilitate compliance with legal and regulatory requirements and oversight of the fund's activities and associated risks. The Board, acting through its committees, has charged FMR and its affiliates with (i) identifying events or circumstances the occurrence of which could have demonstrably adverse effects on the fund's business and/or reputation; (ii) implementing processes and controls to lessen the possibility that such events or circumstances occur or to mitigate the effects of such events or circumstances if they do occur; and (iii) creating and maintaining a system designed to evaluate continuously business and market conditions in order to facilitate the identification and implementation processes described in (i) and (ii) above. Because the day-to-day operations and activities of the fund are carried out by or through FMR, its affiliates and other service providers, the fund's exposure to risks is mitigated but not eliminated by the processes overseen by the Trustees. While each of the Board's committees has responsibility for overseeing different aspects of the fund's activities, oversight is exercised primarily through the Operations, Audit, and Compliance Committees. In addition, the Independent Trustees have worked with FMR to enhance the Board's oversight of investment and financial risks, legal and regulatory risks, technology risks, and operational risks, including the development of additional risk reporting to the Board. For example, a working group comprised of Independent Trustees and FMR has worked and continues to work to review the Fidelity funds' valuation-related activities, reporting and risk management. Appropriate personnel, including but not limited to the fund's Chief Compliance Officer (CCO), FMR's internal auditor, the independent accountants, the fund's Treasurer and portfolio management personnel, make periodic reports to the Board's committees, as appropriate, including an annual review of FMR's risk management program for the Fidelity funds. The responsibilities of each standing committee, including their oversight responsibilities, are described further under "Standing Committees of the Fund's Trustees."
Annual Report
The fund's Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-800-835-5092.
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 Occupations and Other Relevant Experience+ | |
James C. Curvey (76) | |
| Year of Election or Appointment: 2007 Mr. Curvey is Trustee and Acting Chairman of the Board of Trustees of certain Trusts. Mr. Curvey also serves as Trustee (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of Fidelity Investments Money Management, Inc. (2009-present), Director of Fidelity Research & Analysis Co. (2009-present) and Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2007-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. Previously, Mr. Curvey was the Vice Chairman (2006-2007) and Director (2000-2007) of FMR Corp. |
Ronald P. O'Hanley (54) | |
| Year of Election or Appointment: 2011 Mr. O'Hanley is Director of FMR Co., Inc. (2010-present), Director of Fidelity Investments Money Management, Inc. (2010-present), Director of Fidelity Research & Analysis Company (2010-present), President of Fidelity Asset Management and Corporate Services and a member of Fidelity's Executive Committee (2010-present). Previously, Mr. O'Hanley served as President and Chief Executive Officer of BNY Mellon Asset Management (2007-2010). Mr. O'Hanley also served as Vice Chairman of Bank New York Mellon Corp. and a member of that firm's Executive Committee. Prior to the 2007 merger of The Bank of New York and Mellon Financial Corporation, he was Vice Chairman of Mellon Financial Corporation and President and Chief Executive Officer of Mellon Asset Management. He joined Mellon in February 1997. Mr. O'Hanley currently serves as Chairman of the Boston Public Library Foundation Board of Directors and sits on the Board of Directors of Beth Israel Deaconess Medical Center, the Board of Trustees of the Marine Biological Laboratory and the Advisory Board of the Maxwell School of Citizenship and Public Administration at Syracuse University. Mr. O'Hanley also chairs the Council on Asset Management for the Financial Services Roundtable and is a member of the Board of Directors of Institutional Investor's U.S. Institute. |
* 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.
+ The information above includes each Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Trustee's qualifications to serve as a Trustee, which led to the conclusion that each Trustee should serve as a Trustee for the fund.
Annual Report
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 Occupations and Other Relevant Experience+ | |
Dennis J. Dirks (63) | |
| 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). He also served as President, Chief Operating Officer, and Board member of The Depository Trust Company (DTC) and President and Board member of the National Securities Clearing Corporation (NSCC). In addition, Mr. Dirks served as Chief Executive Officer and Board member of the Government Securities Clearing Corporation, Chief Executive Officer and Board member of the Mortgage-Backed Securities Clearing Corporation, as a Trustee and a member of the Finance Committee of Manhattan College (2005-2008), and as a Trustee and a member of the Finance Committee of AHRC of Nassau County (2006-2008). Mr. Dirks is a member of the Independent Directors Council (IDC) Governing Council (2010-Present) and Board of Directors for The Brookville Center for Children's Services, Inc. (2009-present). |
Alan J. Lacy (58) | |
| Year of Election or Appointment: 2008 Mr. Lacy serves as Senior Adviser (2007-present) of Oak Hill Capital Partners, L.P. (private equity). 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 Dave & Buster's, Inc. (restaurant and entertainment complexes, 2010-present), The Hillman Companies, Inc. (hardware wholesalers, 2010-present), and Bristol-Myers Squibb Company (global pharmaceuticals, 2007-present). Mr. Lacy is a member of the Board of Trustees of The National Parks Conservation Association (2006-Present). Previously, Mr. Lacy served as Chairman of the Board of Trustees of the National Parks Conservation Association (2008-2011) and as a member of the Board of Directors for the Western Union Company (global money transfer, 2006-2011). |
Ned C. Lautenbach (67) | |
| Year of Election or Appointment: 2000 Mr. Lautenbach is Chairman of the Independent Trustees of the Equity and High Income Funds (2006-present). Mr. Lautenbach currently serves as the Lead Director of the Eaton Corporation Board of Directors (diversified industrial, 1997-present). Mr. Lautenbach is also a member of the Board of Directors of the Philharmonic Center for the Arts in Naples, Florida (1999-present); a member of the Board of Trustees of Fairfield University (2005-present); and a member of the Council on Foreign Relations (1994-present). Previously, Mr. Lautenbach was a Partner/Advisory Partner at Clayton, Dubilier & Rice, LLC (private equity investment, 1998-2010), as well as a Director of Sony Corporation (2006-2007). |
Joseph Mauriello (67) | |
| Year of Election or Appointment: 2008 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, 1965-2005). Mr. Mauriello currently serves as a member of the Board of Directors of XL Group plc. (global insurance and re-insurance, 2006-present) and of Arcadia Resources Inc. (health care services and products, 2007-present). Previously, Mr. Mauriello served as a Director of the Hamilton Funds of the Bank of New York (2006-2007). |
Robert W. Selander (61) | |
| Year of Election or Appointment: 2011 Previously, Mr. Selander served as a Member of the Advisory Board of Fidelity's Equity and High Income Funds (2011), Executive Vice Chairman (2010), Chief Executive Officer (2009-2010), and President and Chief Executive Officer (1997-2009) of Mastercard, Inc. |
Cornelia M. Small (67) | |
| Year of Election or Appointment: 2005 Ms. Small is a member of the Board of Directors of the Teagle Foundation (2009-present). Ms. Small is also a member of the Investment Committee, and Chair (2008-present) and a member of the Board of Trustees of Smith College. In addition, Ms. Small 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. In addition, Ms. Small 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 (72) | |
| Year of Election or Appointment: 2002 Mr. Stavropoulos is Vice Chairman of the Independent Trustees of the Equity and High Income Funds (2006-present). Mr. Stavropoulos serves as President and Founder of the Michigan Baseball Foundation, the Great Lakes Loons (2007-present). 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, CEO (1995-2000; 2002-2004), Chairman of the Executive Committee (2000-2006), and as a member of the Board of Directors (1990-2006). Currently, Mr. Stavropoulos is Chairman of Univar (global distributor of commodity and specialty chemicals, 2010-present), 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, 2005-present). Mr. Stavropoulos is a special advisor to Clayton, Dubilier & Rice, LLC (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 (62) | |
| 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), and Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (61) | |
| Year of Election or Appointment: 2008 Mr. Wiley also serves as a Director of Asia Pacific Exploration Consolidated (international oil and gas exploration and production, 2008-present). Mr. Wiley serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), and a Director of Bill Barrett Corporation (exploration and production, 2005-present). In addition, Mr. Wiley also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-2010), as a Senior Energy Advisor of Katzenbach Partners, LLC (consulting, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production, 2001-2005). |
Annual Report
Trustees and Officers - continued
+ The information above includes each Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Trustee's qualifications to serve as a Trustee, which led to the conclusion that each Trustee should serve as a Trustee for the fund.
Advisory Board Members and Executive Officers:
Correspondence intended for each executive officer, Edward C. Johnson 3d, and Peter S. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Edward C. Johnson 3d (81) | |
| Year of Election or Appointment: 2011 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Mr. Johnson serves as Chief Executive Officer, Chairman, and a Director of FMR LLC, and also serves as Chairman and Director of FIL Limited. Previously, Mr. Johnson served as a Trustee and Chairman of the Board of certain Fidelity Trusts, Chairman and a Director of FMR, Chairman and a Director of FMR Co., Inc., and President of FMR LLC (2006-2007). |
Peter S. Lynch (67) | |
| Year of Election or Appointment: 2003 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Mr. Lynch is Vice Chairman and a Director of FMR and FMR Co., Inc. In addition, Mr. Lynch 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 (42) | |
| Year of Election or Appointment: 2008 President and Treasurer of Fidelity's Equity and High Income Funds. Mr. Robins also serves as President and Treasurer (2010-present) and Assistant Treasurer (2009-present) of other Fidelity funds and is an employee of Fidelity Investments (2004-present). Previously, Mr. Robins served as Deputy Treasurer of the Fidelity funds (2005-2008) and Treasurer and Chief Financial Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2006-2008). |
Bruce T. Herring (46) | |
| Year of Election or Appointment: 2006 Vice President of certain Equity Funds. Mr. Herring also serves as Chief Investment Officer and Director of Fidelity Management & Research (U.K.) Inc. (2010-present) and Group Chief Investments Officer of FMR. Previously, Mr. Herring served as Vice President (2005-2006) and Senior Vice President (2006-2007) of Fidelity Management & Research Company, Vice President of FMR Co., Inc. (2001-2007) and as a portfolio manager for Fidelity U.S. Equity Funds. |
Brian B. Hogan (47) | |
| Year of Election or Appointment: 2009 Vice President of Equity and High Income Funds. Mr. Hogan also serves as President of FMR's Equity Division (2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager. |
Scott C. Goebel (43) | |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of the Fidelity funds. Mr. Goebel also serves as Secretary of Fidelity Investments Money Management, Inc. (FIMM) (2010-present) and Fidelity Research and Analysis Company (FRAC) (2010-present); Secretary and CLO of The North Carolina Capital Management Trust: Cash and Term Portfolios (2008-present); General Counsel, Secretary, and Senior Vice President of FMR (2008-present) and FMR Co., Inc. (2008-present); employed by FMR LLC or an affiliate (2001-present); Chief Legal Officer of Fidelity Management & Research (Hong Kong) Limited (2008-present) and Assistant Secretary of Fidelity Management & Research (Japan) Inc. (2008-present), and Fidelity Management & Research (U.K.) Inc. (2008-present). Previously, Mr. Goebel served as Assistant Secretary of FIMM (2008-2010), FRAC (2008-2010), and the Funds (2007-2008) and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007). |
William C. Coffey (42) | |
| Year of Election or Appointment: 2009 Assistant Secretary of Fidelity's Equity and High Income Funds. Mr. Coffey also serves as Senior Vice President and Deputy General Counsel of FMR LLC (2010-present), and is an employee of Fidelity Investments. Previously, Mr. Coffey served as Vice President and Associate General Counsel of FMR LLC (2005-2009). |
Holly C. Laurent (57) | |
| Year of Election or Appointment: 2008 Anti-Money Laundering (AML) Officer of the Fidelity funds. Ms. Laurent also serves as AML Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2008-present) and 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), and Senior Vice President, Deputy General Counsel and Group Head for FMR LLC (2005-2006). |
Christine Reynolds (53) | |
| 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. Ms. Reynolds served as Chief Operating Officer of FPCMS (2007-2008). Previously, Ms. Reynolds served as President, Treasurer, and Anti-Money Laundering officer of the Fidelity funds (2004-2007). |
Kenneth A. Rathgeber (64) | |
| 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), Pyramis Global Advisors, LLC (2005-present), and Strategic Advisers, Inc. (2005-present). |
Jeffrey S. Christian (50) | |
| Year of Election or Appointment: 2009 Deputy Treasurer of the Fidelity funds. Mr. Christian is an employee of Fidelity Investments. Previously, Mr. Christian served as Chief Financial Officer (2008-2009) of certain Fidelity funds and Senior Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (2004-2009). |
Joseph F. Zambello (54) | |
| Year of Election or Appointment: 2011 Deputy Treasurer of the Fidelity funds. Mr. Zambello is an employee of Fidelity Investments. Previously, Mr. Zambello served as Vice President of FMR's Program Management Group (2009-2011) and Vice President of the Transfer Agent Oversight Group (2005-2009). |
Adrien E. Deberghes (44) | |
| Year of Election or Appointment: 2008 Deputy Treasurer of Fidelity's Equity and High Income Funds. Mr. Deberghes also serves as Vice President and Assistant Treasurer of Fidelity Rutland Square Trust II and Fidelity Commonwealth Trust II (2011-present), Assistant Treasurer of other Fidelity funds (2010-present), and 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). |
Stephanie J. Dorsey (42) | |
| Year of Election or Appointment: 2010 Assistant Treasurer of Fidelity's Equity and High Income Funds. Ms. Dorsey also serves as Deputy Treasurer of other Fidelity funds (2008-present) and is an employee of Fidelity Investments (2008-present). Previously, Ms. Dorsey served as Treasurer (2004-2008) of the JPMorgan Mutual Funds and Vice President (2004-2008) of JPMorgan Chase Bank. |
John R. Hebble (53) | |
| Year of Election or Appointment: 2009 Assistant Treasurer of Fidelity's Equity and High Income Funds. Mr. Hebble also serves as President (2011-present), Treasurer, and Chief Financial Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2008-present), President and Treasurer of other Fidelity funds (2008-present) and is an employee of Fidelity Investments. |
Gary W. Ryan (53) | |
| 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). |
Jonathan Davis (43) | |
| Year of Election or Appointment: 2010 Assistant Treasurer of the Fidelity funds. Mr. Davis is also Assistant Treasurer of Fidelity Rutland Square Trust II and Fidelity Commonwealth Trust II. Mr. Davis is an employee of Fidelity Investments. Previously, Mr. Davis served as Vice President and Associate General Counsel of FMR LLC (2003-2010). |
Annual Report
Distributions (Unaudited)
Class K designates 100% of the dividends distributed during the fiscal year as qualifying for the dividends-received deduction for corporate shareholders.
Class K designates 100% of the dividends distributed 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 2012 of amounts for use in preparing 2011 income tax returns.
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees
Fidelity Capital Appreciation Fund
Each year, 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 relevant to the renewal of the Advisory Contracts throughout the year.
The Board meets regularly 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. The Board has established various 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. The Board, acting directly and through its Committees, requests and receives information concerning the annual consideration of the renewal of the fund's Advisory Contracts. The Board also meets as needed to consider matters specifically related to the Board's annual consideration of the renewal of Advisory Contracts. Members of the Board may also meet with trustees of other Fidelity funds through ad hoc joint committees to discuss certain matters relevant to the Fidelity funds.
At its July 2011 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 expense ratio; (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.
In considering whether to renew the Advisory Contracts for the fund, the Board 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 is in the best interests of the fund and its shareholders and that the compensation payable under the Advisory Contracts is fair and reasonable. The Board's decision to renew the Advisory Contracts was not based on any single factor, 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 Fidelity's competitors, and that the fund's shareholders, who have 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
Board Approval of Investment Advisory Contracts and
Management Fees - continued
Nature, Extent, and Quality of Services Provided. The Board considered the 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 to act in the best interests of the fund.
Resources Dedicated to Investment Management and Support Services. The Board and the Fund Oversight and Research Committees reviewed the general qualifications and capabilities of the Investment Advisers' investment staff, including its size, education, experience, and resources, as well as the Investment Advisers' approach to recruiting, training, managing, and compensating investment personnel. The Board also noted that FMR has devoted increased resources to non-U.S. offices. The Board noted that Fidelity's analysts have extensive resources, tools and capabilities which allow them to conduct sophisticated quantitative and fundamental analysis, as well as credit analysis of issuers, counterparties and enhancers. The Board also believes that Fidelity's investment professionals have sufficient access to global information and data so as to provide competitive investment results over time, and that those professionals also have access to sophisticated tools which permit them to assess portfolio construction and risk and performance attribution characteristics continuously, as well as to transmit new information and research conclusions rapidly around the world. Additionally, in their deliberations, the Board considered the Investment Advisers' trading capabilities and resources which are an integral part of the investment management process.
Shareholder and Administrative Services. The Board considered (i) the nature, extent, quality, and cost of advisory, administrative, 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 adviser's 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 noted that the growth of fund assets over time 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 telephone representatives and over the Internet, investor education materials and asset allocation tools, and the expanded availability of Fidelity Investor Centers, with 35 new branches opening since 2010.
Annual Report
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 a large variety of mutual fund investor services. The Board noted that Fidelity had taken, or had made recommendations that resulted in the Fidelity funds taking, a number of actions over the previous year that benefited particular funds, including (i) continuing to dedicate additional resources to investment research and support of the senior management team that oversees asset management; (ii) rationalizing product lines through the mergers of six funds into other funds; (iii) continuing to migrate the Freedom Funds to dedicated lower cost underlying funds; (iv) obtaining shareholder approval to broaden the investment strategies for Fidelity Consumer Finance Portfolio, Fidelity Emerging Asia Fund, and Fidelity Environment and Alternative Energy Portfolio; (v) contractually agreeing to reduce the management fees and impose other expense limitations on Spartan 500 Index Fund and U.S. Bond Index Fund in connection with launching new institutional classes of these funds; (vi) changing the name, primary and supplemental benchmarks, and investment policies of Fidelity Global Strategies Fund to support the fund's flexible investment mandate and global orientation; and (vii) reducing the transfer agency account fee rates on certain accounts.
Investment Performance. The Board considered whether the fund has operated in accordance with its investment objective, as well as its record of compliance with its investment restrictions. It also reviewed the fund's absolute investment performance for each class, as well as the fund's relative investment performance for each class measured over multiple periods against (i) a broad-based securities market index, and (ii) a custom peer group of mutual funds deemed appropriate by Fidelity and reviewed by the Board. The following charts considered by the Board show, over the one-, three-, and five-year periods ended December 31, 2010, as available, the cumulative total returns of Class K and the retail class of the fund, the cumulative total returns of a broad-based securities market index ("benchmark"), and a range of cumulative total returns of a custom peer group of mutual funds defined by FMR based on categories assigned by Morningstar, Inc. 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 numbers noted below each chart correspond to the percentile box and represent the percentage of funds in the peer group whose performance was equal to or lower than that of the class indicated. The fund's custom peer group, defined by FMR, is a peer group that FMR believes provides a more meaningful performance comparison than the peer group assigned by Morningstar, Inc., which assigns mutual funds to categories based on their investment styles as measured by their underlying portfolio holdings.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
Fidelity Capital Appreciation Fund
The Board reviewed the fund's relative investment performance against its peer group and noted that the performance of the retail class of the fund (the class with the longer performance record) was in the second quartile for all the periods shown. The Board also noted that the investment performance of the retail class of the fund compared favorably to its benchmark for all the periods shown. The Board considered that the variations in performance between the fund's classes reflect the variations in class expenses, which result in lower performance for the higher expense class. The Board also reviewed the fund's performance since inception as well as performance in the current year.
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 noted 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.
Based on its review, the Board concluded that the nature, extent, and quality of services provided to the fund under the Advisory Contracts should benefit the fund's shareholders.
Annual Report
Competitiveness of Management Fee and Total Expense Ratio. The Board considered the fund's management fee and total expense ratio 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 ratio comparisons by broadening the competitive group used for comparison and by reducing the number of universes to which various Fidelity funds are compared.
Management Fee. 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 10% means that 90% 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
Board Approval of Investment Advisory Contracts and
Management Fees - continued
Fidelity Capital Appreciation Fund
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 2010. 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.
Based on its review, the Board concluded that the fund's management fee is fair and reasonable in light of the services that the fund receives and the other factors considered.
Total Expense Ratio. In its review of each class's total expense ratio, the Board considered the fund's management fee as well as other fund or class expenses, as applicable, 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 the current and historical total expense ratios of each class of the fund compared to competitive fund median expenses. Each class of 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.
The Board noted that the total expense ratio of each class ranked below its competitive median for 2010. The Board considered that various factors, including 12b-1 fees, positive or negative performance adjustments, and relatively higher other expenses in the case of small fund size, can affect total expense ratios.
Annual Report
Fees Charged to Other Fidelity Clients. The Board also considered Fidelity fee structures and other information with respect to clients of FMR and its affiliates, such as other mutual funds advised or subadvised by FMR or its affiliates, pension plan clients, and other institutional clients. In March 2010, the Board created an ad hoc joint committee with the board of other Fidelity funds (the Committee) to review and compare Fidelity's institutional investment advisory business with its business of providing services to the Fidelity funds, including the differences in services provided, fees charged, and costs incurred, as well as competition in their respective marketplaces.
Based on its review of total expense ratios and fees charged to other Fidelity clients, the Board concluded that the total expense ratio of each class of the fund was reasonable in light of the services that the fund and its shareholders receive and the other factors considered, including the findings of the Committee.
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 books and records of Fidelity on which Fidelity's audited financial statements are based. 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 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 concluded that while other allocation methods may also be reasonable, Fidelity's profitability methodologies are reasonable in all material respects.
The Board also reviewed Fidelity's non-fund businesses and 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.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
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 was satisfied that the profitability was not excessive in the circumstances.
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 also noted that in 2009, it and the board of other Fidelity funds created an ad hoc committee (the Economies of Scale Committee) to analyze whether FMR attains economies of scale in respect of the management and servicing of the Fidelity funds, whether the Fidelity funds have appropriately benefited from such economies of scale, and whether there is potential for realization of any further economies of scale.
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 calculates the group fee rates based on a tiered asset "breakpoint" schedule that varies based on asset class. The Board considered that the group fee is designed to deliver the benefits of economies of scale to fund shareholders when total Fidelity 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 benefit from lower management fees as assets under FMR's management increase at the fund complex level, regardless of whether Fidelity achieves any such economies of scale.
The Board concluded, taking into account the analysis of the Economies of Scale Committee, that any potential economies of scale are being appropriately shared between fund shareholders and Fidelity.
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, actions to be taken by FMR to improve certain funds' overall performance, and Fidelity's long-term strategies for certain funds; (ii) portfolio manager changes that have occurred during the past year and length of portfolio manager tenure for different categories of funds over time; (iii) Fidelity's compensation structure for portfolio managers and other key personnel and strategies for attracting and retaining non-investment personnel; (iv) the amount of the investment that each portfolio manager has made in the Fidelity fund(s) that he or she manages; (v) historical trends in Fidelity's realization of fall-out benefits; (vi) Fidelity's group fee structures and the rationale for the individual fee rates of certain funds; (vii) fund profitability methodology and the impact of certain factors on fund profitability results; (viii) trends regarding industry use of performance fee structures and Fidelity's compliance practices with respect to performance adjustment calculations; (ix) the fee structures in place for certain other Fidelity clients; and (x) explanations regarding the relative total expense ratios of certain funds and classes, total expense competitive trends, and actions that might be taken by FMR to reduce total expense ratios for certain funds and classes.
Annual Report
Based on its evaluation of all of the conclusions noted above, and after considering all factors it believed relevant, 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 workplace benefits (including your workplace savings plan, investments, and additional services) via your telephone or PC. You can access your plan and account information and research your investments 24 hours a day.
By Phone
Fidelity provides a single toll-free number to access plan information, account balances, positions, and quotes*. It's easy to navigate the service, and on your first call, the system will help you create a personal identification number (PIN) for security.
Fidelity Workplace
Investing
1-800-835-5092
By PC
Fidelity's web site on the Internet provides a wide range of information, including plan information, daily financial news, fund performance, interactive planning tools, and news about Fidelity products and services.
Fidelity's Web Site
www.401k.com
* When you call the quotes line, please remember that a fund's yield and return will vary and, except for money market funds, share price will also vary. This means that you may have a gain or loss when you sell your shares. There is no assurance that money market funds will be able to maintain a stable $1 share price; an investment in a money market fund is not insured or guaranteed by the U.S. government. Total returns are historical and include changes in share price, reinvestment of dividends and capital gains distributions, and the effects of any sales charges.
Annual Report
To Write Fidelity
We'll give your correspondence immediate attention and send you written confirmation upon completion of your request.
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
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 Management & Research
(Hong Kong) Limited
Fidelity Management & Research
(Japan) Inc.
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Service Agents
Fidelity Investments Institutional
Operations Company, Inc.
Boston, MA
Fidelity Service Company, Inc.
Boston, MA
Custodian
Citibank, N.A.
New York, NY
CAF-K-UANN-1211 1.863089.103
Fidelity®
Disciplined Equity
Fund
Annual Report
October 31, 2011
Contents
Chairman's Message | The Chairman's message to shareholders. | |
Performance | How the fund has done over time. | |
Management's Discussion of Fund Performance | The Portfolio Manager's review of fund performance and strategy. | |
Shareholder Expense Example | An example of shareholder expenses. | |
Investment Changes | A summary of major shifts in the fund's investments over the past six months. | |
Investments | A complete list of the fund's investments with their market values. | |
Financial Statements | Statements of assets and liabilities, operations, and changes in net assets, as well as financial highlights. | |
Notes | Notes to the financial statements. | |
Report of Independent Registered Public Accounting Firm |
| |
Trustees and Officers |
| |
Distributions |
| |
Board Approval of Investment Advisory Contracts and Management Fees |
|
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-800-544-8544 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company.
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, http://www.advisor.fidelity.com, or http://www.401k.com, as applicable.
NOT FDIC INSURED • MAY LOSE VALUE • NO BANK GUARANTEE
Neither the fund nor Fidelity Distributors Corporation is a bank.
Annual Report
Chairman's Message
(photo_of_James_C_Curvey)
Dear Shareholder:
Global equity markets began the fourth quarter on a strong note, sharply reversing course in October amid strong corporate earnings, better-than-expected economic news and the promise of a resolution to the sovereign debt crisis in Europe. The mini rally followed a third quarter marked by a significant downturn in July and August, which heightened investor anxiety and set off a wave of volatility that hampered most major asset classes through the end of September. Financial markets are difficult to predict, of course, but you can help put the odds in your favor by following these time-tested investment principles.
One of the basic tenets is to invest according to your time horizon. For long-term investors, riding out the markets' inevitable ups and downs has proven much more effective than making decisions based on short-term developments. If your goal is approaching, you can also benefit from patience and restraint, rather than attempting to time the market. No matter your time horizon, missing only a few of the markets' best days can significantly diminish returns. Patience also affords the benefits of compounding - earning interest on additional income or reinvested dividends and capital gains. While staying the course doesn't eliminate risk, it can considerably lessen the negative impact of short-term downturns.
Asset allocation is another principle to manage risk. As you spread your portfolio among the asset classes, be sure to consider your time horizon, risk tolerance and investment objectives. Younger investors may be better served by emphasizing equities, which historically have been the best-performing asset class over time. Investors who are nearing a specific goal, such as retirement or sending a child to college, may choose to favor bonds and other investments that have tended to be more stable. Studies indicate that asset allocation is the single most important determinant of a portfolio's long-term success. After deciding on a suitable allocation strategy, make sure your portfolio is adequately diversified, with exposure to stocks of small-, mid- and large-cap companies in a range of sectors, for example. And today, more than ever, geographic diversification should be taken into account.
Lastly, investing a certain amount of money on a regular basis - a principle known as dollar-cost averaging - can help lower the average cost of your purchases, while also giving you the discipline to avoid selling weak performers just prior to an upswing, or chasing a hot performer just before a correction.
We invite you to learn more by visiting us on the Internet, dropping by one of our Investor Centers or calling us by phone. It is our privilege to provide the resources you need to choose investments that are right for you.
Sincerely,
(The acting chairman's signature appears here.)
James C. Curvey
Acting Chairman
Annual Report
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' distributions from 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, 2011 | Past 1 | Past 5 | Past 10 |
Fidelity® Disciplined Equity Fund | 1.51% | -2.68% | 2.96% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Fidelity® Disciplined Equity Fund, a class of the fund, on October 31, 2001. The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
Annual Report
Management's Discussion of Fund Performance
Market Recap: U.S. stocks overcame a sharp summer drop to post a solid gain for the 12 months ending October 31, 2011. Bullishness pervaded the market during the first half of the period, only to be squelched by extreme volatility in the summer, as debate over the U.S. debt ceiling, Standard & Poor's subsequent downgrade of the country's long-term sovereign credit rating and deepening debt woes in Europe led to the worst calendar-quarter finish for the S&P 500® Index in almost three years. However, news of a possible solution to the eurozone debt crisis, along with better-than-expected U.S. economic data and strong corporate earnings, helped fuel an October rally that pushed the broad-based index up roughly 11% - its highest monthly return since December 1991. With that boost, the S&P 500® finished the year up 8.09%, while the blue-chip Dow Jones Industrial AverageSM added 10.39% and the technology-heavy Nasdaq Composite® Index gained 8.10%. Among sectors within the S&P 500®, only financials (-6%) posted a decline for the year, while energy (+19%) and utilities (+15%) fared best. Small and mid-sized stocks also rose, with the Russell 2000® and Russell Midcap® indexes adding 6.71% and 7.85%, respectively. The lengthy financial crisis in Europe continued to hamper foreign developed-markets equities, with the MSCI® EAFE® (Europe, Australasia, Far East) Index falling 3.97%.
Comments from Keith Quinton, Portfolio Manager of Fidelity® Disciplined Equity Fund: For the year, the fund's Retail Class shares returned 1.51%, significantly underperforming the S&P 500. Poor stock picking accounted for most of the weak showing, with the biggest hit coming from information technology, where a large stake in computer maker Hewlett-Packard was detrimental, and underexposure to industry overachiever and benchmark heavyweight Apple held back relative results. The fund also fared poorly with positioning in financials - including an overweighting in the weak diversified financials group -and consumer discretionary, where security selection in the retailing segment hurt. Other individual detractors were computer memory chip maker Micron Technology and retailer Best Buy, the latter of which I sold by period end. Energy was a bright spot, especially an overweighting in Marathon Oil, the Houston exploration/production firm spun off from the integrated oil company in June. An overweighting in health insurance provider Humana helped, as did avoiding financial giant and index component Bank of America.
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 Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (May 1, 2011 to October 31, 2011).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.
Annual Report
| Annualized | Beginning | Ending | Expenses Paid |
Disciplined Equity | .59% |
|
|
|
Actual |
| $ 1,000.00 | $ 873.00 | $ 2.79 |
HypotheticalA |
| $ 1,000.00 | $ 1,022.23 | $ 3.01 |
Class K | .43% |
|
|
|
Actual |
| $ 1,000.00 | $ 873.40 | $ 2.03 |
HypotheticalA |
| $ 1,000.00 | $ 1,023.04 | $ 2.19 |
Class F | .38% |
|
|
|
Actual |
| $ 1,000.00 | $ 873.70 | $ 1.79 |
HypotheticalA |
| $ 1,000.00 | $ 1,023.29 | $ 1.94 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period).
Annual Report
Investment Changes (Unaudited)
Top Ten Stocks as of October 31, 2011 | ||
| % of fund's | % of fund's net assets |
Chevron Corp. | 4.7 | 4.6 |
JPMorgan Chase & Co. | 4.0 | 4.5 |
General Electric Co. | 3.7 | 2.8 |
Hewlett-Packard Co. | 3.4 | 3.6 |
Wells Fargo & Co. | 3.3 | 0.9 |
Microsoft Corp. | 2.8 | 2.5 |
Philip Morris International, Inc. | 2.5 | 2.3 |
Vodafone Group PLC sponsored ADR | 2.5 | 2.8 |
Anheuser-Busch InBev SA NV | 2.4 | 2.6 |
MasterCard, Inc. Class A | 2.4 | 0.0 |
| 31.7 | |
Top Five Market Sectors as of October 31, 2011 | ||
| % of fund's | % of fund's net assets |
Information Technology | 19.3 | 17.3 |
Financials | 13.8 | 14.9 |
Energy | 11.8 | 13.0 |
Health Care | 11.3 | 11.3 |
Consumer Discretionary | 11.0 | 11.4 |
Asset Allocation (% of fund's net assets) | |||||||
As of October 31, 2011* | As of April 30, 2011** | ||||||
![]() | Stocks 98.2% |
| ![]() | Stocks 98.0% |
| ||
![]() | Short-Term |
| ![]() | Short-Term |
| ||
* Foreign investments | 12.6% |
| ** Foreign investments | 16.3% |
|
Annual Report
Investments October 31, 2011
Showing Percentage of Net Assets
Common Stocks - 96.5% | |||
Shares | Value (000s) | ||
CONSUMER DISCRETIONARY - 9.3% | |||
Auto Components - 0.8% | |||
TRW Automotive Holdings Corp. (a) | 1,950,356 | $ 82,110 | |
Diversified Consumer Services - 1.1% | |||
ITT Educational Services, Inc. (a)(d) | 118,024 | 7,313 | |
Weight Watchers International, Inc. | 1,300,000 | 97,006 | |
| 104,319 | ||
Household Durables - 0.4% | |||
Tempur-Pedic International, Inc. (a) | 586,957 | 39,948 | |
Media - 1.9% | |||
CBS Corp. Class B | 4,100,000 | 105,821 | |
Viacom, Inc. Class B (non-vtg.) | 2,000,000 | 87,700 | |
| 193,521 | ||
Specialty Retail - 3.6% | |||
AutoZone, Inc. (a) | 200,000 | 64,718 | |
Bed Bath & Beyond, Inc. (a) | 800,000 | 49,472 | |
Home Depot, Inc. | 4,200,000 | 150,360 | |
Limited Brands, Inc. | 2,298,115 | 98,152 | |
| 362,702 | ||
Textiles, Apparel & Luxury Goods - 1.5% | |||
VF Corp. | 1,100,000 | 152,042 | |
TOTAL CONSUMER DISCRETIONARY | 934,642 | ||
CONSUMER STAPLES - 10.9% | |||
Beverages - 2.9% | |||
Anheuser-Busch InBev SA NV | 4,438,240 | 246,163 | |
Dr Pepper Snapple Group, Inc. | 1,300,000 | 48,685 | |
| 294,848 | ||
Food Products - 0.6% | |||
Ralcorp Holdings, Inc. (a) | 700,000 | 56,588 | |
Household Products - 1.5% | |||
Procter & Gamble Co. | 2,300,000 | 147,177 | |
Tobacco - 5.9% | |||
Imperial Tobacco Group PLC | 2,800,000 | 102,397 | |
Japan Tobacco, Inc. | 15,004 | 75,002 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
CONSUMER STAPLES - continued | |||
Tobacco - continued | |||
Lorillard, Inc. | 1,500,000 | $ 165,990 | |
Philip Morris International, Inc. | 3,600,000 | 251,532 | |
| 594,921 | ||
TOTAL CONSUMER STAPLES | 1,093,534 | ||
ENERGY - 11.8% | |||
Energy Equipment & Services - 0.5% | |||
Helix Energy Solutions Group, Inc. (a) | 1,000,000 | 18,060 | |
National Oilwell Varco, Inc. | 400,000 | 28,532 | |
| 46,592 | ||
Oil, Gas & Consumable Fuels - 11.3% | |||
Chevron Corp. | 4,467,400 | 469,303 | |
CVR Energy, Inc. (a) | 1,100,000 | 27,236 | |
Exxon Mobil Corp. | 2,706,880 | 211,380 | |
Marathon Oil Corp. | 3,900,000 | 101,517 | |
Marathon Petroleum Corp. | 1,400,000 | 50,260 | |
Tesoro Corp. (a) | 6,877,000 | 178,389 | |
Valero Energy Corp. | 4,000,000 | 98,400 | |
| 1,136,485 | ||
TOTAL ENERGY | 1,183,077 | ||
FINANCIALS - 13.8% | |||
Commercial Banks - 3.8% | |||
U.S. Bancorp | 2,000,000 | 51,180 | |
Wells Fargo & Co. | 12,600,000 | 326,466 | |
| 377,646 | ||
Consumer Finance - 2.8% | |||
Capital One Financial Corp. | 5,230,300 | 238,815 | |
SLM Corp. | 3,200,000 | 43,744 | |
| 282,559 | ||
Diversified Financial Services - 4.3% | |||
JPMorgan Chase & Co. | 11,600,000 | 403,216 | |
KKR Financial Holdings LLC | 3,000,000 | 25,050 | |
| 428,266 | ||
Common Stocks - continued | |||
Shares | Value (000s) | ||
FINANCIALS - continued | |||
Insurance - 1.5% | |||
Hartford Financial Services Group, Inc. | 5,200,000 | $ 100,100 | |
Unum Group | 2,100,000 | 50,064 | |
| 150,164 | ||
Real Estate Investment Trusts - 1.3% | |||
American Capital Agency Corp. (d) | 3,893,800 | 107,118 | |
Two Harbors Investment Corp. | 2,800,000 | 26,180 | |
| 133,298 | ||
Real Estate Management & Development - 0.1% | |||
Brookfield Properties Corp. | 618,700 | 10,154 | |
TOTAL FINANCIALS | 1,382,087 | ||
HEALTH CARE - 11.3% | |||
Biotechnology - 3.5% | |||
Alexion Pharmaceuticals, Inc. (a) | 700,000 | 47,257 | |
Amgen, Inc. | 3,474,000 | 198,956 | |
Biogen Idec, Inc. (a) | 900,000 | 104,724 | |
| 350,937 | ||
Health Care Equipment & Supplies - 0.7% | |||
The Cooper Companies, Inc. | 1,012,453 | 70,163 | |
Health Care Providers & Services - 5.4% | |||
Aetna, Inc. | 2,800,000 | 111,328 | |
Humana, Inc. | 1,300,000 | 110,357 | |
McKesson Corp. | 300,000 | 24,465 | |
UnitedHealth Group, Inc. | 5,000,000 | 239,950 | |
WellPoint, Inc. | 800,000 | 55,120 | |
| 541,220 | ||
Pharmaceuticals - 1.7% | |||
Pfizer, Inc. | 9,000,000 | 173,340 | |
TOTAL HEALTH CARE | 1,135,660 | ||
INDUSTRIALS - 9.7% | |||
Aerospace & Defense - 1.1% | |||
United Technologies Corp. | 1,400,000 | 109,172 | |
Commercial Services & Supplies - 0.2% | |||
Pitney Bowes, Inc. (d) | 1,200,000 | 24,456 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
INDUSTRIALS - continued | |||
Construction & Engineering - 1.9% | |||
KBR, Inc. | 5,100,000 | $ 142,341 | |
MasTec, Inc. (a) | 2,400,000 | 51,888 | |
| 194,229 | ||
Electrical Equipment - 0.2% | |||
Harbin Electric, Inc. (a)(d) | 800,000 | 18,792 | |
Industrial Conglomerates - 3.7% | |||
General Electric Co. | 22,100,000 | 369,291 | |
Professional Services - 0.3% | |||
Towers Watson & Co. | 400,000 | 26,280 | |
Road & Rail - 2.3% | |||
CSX Corp. | 10,457,200 | 232,254 | |
TOTAL INDUSTRIALS | 974,474 | ||
INFORMATION TECHNOLOGY - 19.3% | |||
Communications Equipment - 1.6% | |||
Cisco Systems, Inc. | 2,800,000 | 51,884 | |
Motorola Solutions, Inc. | 2,300,000 | 107,893 | |
| 159,777 | ||
Computers & Peripherals - 3.4% | |||
Hewlett-Packard Co. | 12,950,000 | 344,600 | |
Internet Software & Services - 0.1% | |||
Facebook, Inc. Class B (e) | 493,371 | 12,334 | |
IT Services - 6.4% | |||
Alliance Data Systems Corp. (a)(d) | 1,600,000 | 163,904 | |
Amdocs Ltd. (a) | 900,000 | 27,018 | |
International Business Machines Corp. | 1,100,000 | 203,093 | |
MasterCard, Inc. Class A | 700,000 | 243,068 | |
| 637,083 | ||
Semiconductors & Semiconductor Equipment - 2.8% | |||
GT Advanced Technologies, Inc. (a)(d) | 3,300,000 | 27,060 | |
Micron Technology, Inc. (a) | 14,515,058 | 81,139 | |
Samsung Electronics Co. Ltd. | 182,977 | 156,930 | |
Teradyne, Inc. (a) | 849,410 | 12,164 | |
| 277,293 | ||
Software - 5.0% | |||
Check Point Software Technologies Ltd. (a) | 400,000 | 23,052 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
INFORMATION TECHNOLOGY - continued | |||
Software - continued | |||
Microsoft Corp. | 10,600,000 | $ 282,278 | |
Oracle Corp. | 5,900,000 | 193,343 | |
| 498,673 | ||
TOTAL INFORMATION TECHNOLOGY | 1,929,760 | ||
MATERIALS - 4.0% | |||
Chemicals - 2.2% | |||
BASF AG | 1,000,000 | 73,610 | |
CF Industries Holdings, Inc. | 907,700 | 147,292 | |
| 220,902 | ||
Metals & Mining - 1.8% | |||
Anglo American PLC (United Kingdom) | 2,000,000 | 73,768 | |
Newmont Mining Corp. | 1,526,100 | 101,989 | |
| 175,757 | ||
TOTAL MATERIALS | 396,659 | ||
TELECOMMUNICATION SERVICES - 3.0% | |||
Diversified Telecommunication Services - 0.5% | |||
BT Group PLC | 16,800,000 | 50,699 | |
Wireless Telecommunication Services - 2.5% | |||
Vodafone Group PLC sponsored ADR | 9,032,300 | 251,459 | |
TOTAL TELECOMMUNICATION SERVICES | 302,158 | ||
UTILITIES - 3.4% | |||
Electric Utilities - 1.0% | |||
El Paso Electric Co. | 2,090,000 | 66,943 | |
PNM Resources, Inc. | 1,891,212 | 34,004 | |
| 100,947 | ||
Gas Utilities - 1.1% | |||
ONEOK, Inc. | 1,400,000 | 106,470 | |
Independent Power Producers & Energy Traders - 1.3% | |||
The AES Corp. (a) | 11,674,600 | 130,989 | |
TOTAL UTILITIES | 338,406 | ||
TOTAL COMMON STOCKS (Cost $9,673,513) |
| ||
Nonconvertible Preferred Stocks - 1.7% | |||
Shares | Value (000s) | ||
CONSUMER DISCRETIONARY - 1.7% | |||
Automobiles - 1.7% | |||
Volkswagen AG (Cost $161,436) | 972,900 | $ 170,723 | |
Money Market Funds - 4.7% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.12% (b) | 306,721,295 | 306,721 | |
Fidelity Securities Lending Cash Central Fund, 0.11% (b)(c) | 167,701,618 | 167,702 | |
TOTAL MONEY MARKET FUNDS (Cost $474,423) |
| ||
TOTAL INVESTMENT PORTFOLIO - 102.9% (Cost $10,309,372) | 10,315,603 | ||
NET OTHER ASSETS (LIABILITIES) - (2.9)% | (294,321) | ||
NET ASSETS - 100% | $ 10,021,282 |
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
(e) Restricted securities - Investment in securities not registered under the Securities Act of 1933 (excluding 144A issues). At the end of the period, the value of restricted securities (excluding 144A issues) amounted to $12,334,000 or 0.1% of net assets. |
Additional information on each restricted holding is as follows: |
Security | Acquisition Date | Acquisition Cost (000s) |
Facebook, Inc. Class B | 3/31/11 - 5/19/11 | $ 12,338 |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 207 |
Fidelity Securities Lending Cash Central Fund | 3,829 |
Total | $ 4,036 |
Other Information |
The following is a summary of the inputs used, as of October 31, 2011, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the tables below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities: | ||||
Equities: | ||||
Consumer Discretionary | $ 1,105,365 | $ 1,105,365 | $ - | $ - |
Consumer Staples | 1,093,534 | 772,369 | 321,165 | - |
Energy | 1,183,077 | 1,183,077 | - | - |
Financials | 1,382,087 | 1,382,087 | - | - |
Health Care | 1,135,660 | 1,135,660 | - | - |
Industrials | 974,474 | 974,474 | - | - |
Information Technology | 1,929,760 | 1,760,496 | 156,930 | 12,334 |
Materials | 396,659 | 396,659 | - | - |
Telecommunication Services | 302,158 | 251,459 | 50,699 | - |
Utilities | 338,406 | 338,406 | - | - |
Money Market Funds | 474,423 | 474,423 | - | - |
Total Investments in Securities: | $ 10,315,603 | $ 9,774,475 | $ 528,794 | $ 12,334 |
The following is a reconciliation of Investments in Securities for which Level 3 inputs were used in determining value: |
(Amounts in thousands) |
|
Investments in Securities: | |
Beginning Balance | $ - |
Total Realized Gain (Loss) | - |
Total Unrealized Gain (Loss) | (4) |
Cost of Purchases | 12,338 |
Proceeds of Sales | - |
Amortization/Accretion | - |
Transfers in to Level 3 | - |
Transfers out of Level 3 | - |
Ending Balance | $ 12,334 |
The change in unrealized gain (loss) for the period attributable to Level 3 securities held at October 31, 2011 | $ (4) |
The information used in the above reconciliation represents fiscal year to date activity for any Investments in Securities identified as using Level 3 inputs at either the beginning or the end of the current fiscal period. Transfers in or out of Level 3 represent the beginning value of any Security or Instrument where a change in the pricing level occurred from the beginning to the end of the period. The cost of purchases and the proceeds of sales may include securities received or delivered through corporate actions or exchanges. Realized and unrealized gains (losses) disclosed in the reconciliation are included in Net Gain (Loss) on the Fund's Statement of Operations. |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 87.4% |
United Kingdom | 4.8% |
Belgium | 2.4% |
Germany | 2.4% |
Korea (South) | 1.6% |
Others (Individually Less Than 1%) | 1.4% |
| 100.0% |
Income Tax Information |
At October 31, 2011, the Fund had a capital loss carryforward of approximately $2,203,901,000 of which $205,717,000 and $1,998,184,000 will expire in fiscal 2016 and 2017, respectively. Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements
Statement of Assets and Liabilities
Amounts in thousands (except per-share amounts) | October 31, 2011 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $159,172) - See accompanying schedule: Unaffiliated issuers (cost $9,834,949) | $ 9,841,180 |
|
Fidelity Central Funds (cost $474,423) | 474,423 |
|
Total Investments (cost $10,309,372) |
| $ 10,315,603 |
Receivable for investments sold | 274,580 | |
Receivable for fund shares sold | 10,430 | |
Dividends receivable | 2,942 | |
Distributions receivable from Fidelity Central Funds | 960 | |
Prepaid expenses | 37 | |
Other receivables | 433 | |
Total assets | 10,604,985 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 408,836 | |
Payable for fund shares redeemed | 2,726 | |
Accrued management fee | 2,770 | |
Other affiliated payables | 1,377 | |
Other payables and accrued expenses | 292 | |
Collateral on securities loaned, at value | 167,702 | |
Total liabilities | 583,703 | |
|
|
|
Net Assets | $ 10,021,282 | |
Net Assets consist of: |
| |
Paid in capital | $ 12,167,377 | |
Undistributed net investment income | 102,810 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (2,255,030) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 6,125 | |
Net Assets | $ 10,021,282 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements - continued
Statement of Assets and Liabilities - continued
Amounts in thousands (except per-share amounts) | October 31, 2011 | |
|
|
|
Disciplined Equity: | $ 21.79 | |
|
|
|
Class K: | $ 21.81 | |
|
|
|
Class F: | $ 21.80 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Operations
Amounts in thousands | Year ended October 31, 2011 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 188,042 |
Interest |
| 4 |
Income from Fidelity Central Funds |
| 4,036 |
Total income |
| 192,082 |
|
|
|
Expenses | ||
Management fee | $ 59,695 | |
Performance adjustment | (21,137) | |
Transfer agent fees | 17,940 | |
Accounting and security lending fees | 1,337 | |
Custodian fees and expenses | 345 | |
Independent trustees' compensation | 59 | |
Registration fees | 44 | |
Audit | 85 | |
Legal | 45 | |
Interest | 2 | |
Miscellaneous | 119 | |
Total expenses before reductions | 58,534 | |
Expense reductions | (1,381) | 57,153 |
Net investment income (loss) | 134,929 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 675,531 | |
Foreign currency transactions | (802) | |
Total net realized gain (loss) |
| 674,729 |
Change in net unrealized appreciation (depreciation) on: Investment securities | (592,432) | |
Assets and liabilities in foreign currencies | (106) | |
Total change in net unrealized appreciation (depreciation) |
| (592,538) |
Net gain (loss) | 82,191 | |
Net increase (decrease) in net assets resulting from operations | $ 217,120 |
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 | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 134,929 | $ 93,970 |
Net realized gain (loss) | 674,729 | 1,049,236 |
Change in net unrealized appreciation (depreciation) | (592,538) | 1,045 |
Net increase (decrease) in net assets resulting | 217,120 | 1,144,251 |
Distributions to shareholders from net investment income | (105,872) | (121,330) |
Share transactions - net increase (decrease) | (532,409) | (1,369,605) |
Total increase (decrease) in net assets | (421,161) | (346,684) |
|
|
|
Net Assets | ||
Beginning of period | 10,442,443 | 10,789,127 |
End of period (including undistributed net investment income of $102,810 and undistributed net investment income of $76,361, respectively) | $ 10,021,282 | $ 10,442,443 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Disciplined Equity
Years ended October 31, | 2011 | 2010 | 2009 | 2008 | 2007 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 21.67 | $ 19.72 | $ 18.78 | $ 33.37 | $ 30.83 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .28 | .18 | .24 | .29 | .27 |
Net realized and unrealized gain (loss) | .05 | 1.99 | .96 | (12.19) | 4.95 |
Total from investment operations | .33 | 2.17 | 1.20 | (11.90) | 5.22 |
Distributions from net investment income | (.21) | (.22) | (.26) | (.26) | (.19) |
Distributions from net realized gain | - | - | - | (2.43) | (2.49) |
Total distributions | (.21) | (.22) | (.26) | (2.69) | (2.68) |
Net asset value, end of period | $ 21.79 | $ 21.67 | $ 19.72 | $ 18.78 | $ 33.37 |
Total Return A | 1.51% | 11.05% | 6.64% | (38.68)% | 18.42% |
Ratios to Average Net Assets C, E |
|
|
|
|
|
Expenses before reductions | .59% | .70% | .84% | .87% | .91% |
Expenses net of fee waivers, if any | .59% | .70% | .84% | .87% | .91% |
Expenses net of all reductions | .58% | .68% | .83% | .87% | .90% |
Net investment income (loss) | 1.22% | .85% | 1.37% | 1.10% | .88% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (in millions) | $ 7,233 | $ 8,943 | $ 10,530 | $ 9,804 | $ 11,482 |
Portfolio turnover rate D | 153% | 146% | 200% | 186% | 152% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
B Calculated based on average shares outstanding during the period.
C Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
D Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
E Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class K
Years ended October 31, | 2011 | 2010 | 2009 | 2008 G |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 21.69 | $ 19.74 | $ 18.79 | $ 27.38 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss) D | .31 | .22 | .28 | .12 |
Net realized and unrealized gain (loss) | .06 | 1.99 | .96 | (8.71) |
Total from investment operations | .37 | 2.21 | 1.24 | (8.59) |
Distributions from net investment income | (.25) | (.26) | (.29) | - |
Net asset value, end of period | $ 21.81 | $ 21.69 | $ 19.74 | $ 18.79 |
Total Return B, C | 1.68% | 11.25% | 6.92% | (31.37)% |
Ratios to Average Net Assets E, H |
|
|
|
|
Expenses before reductions | .43% | .52% | .61% | .71% A |
Expenses net of fee waivers, if any | .43% | .52% | .61% | .71% A |
Expenses net of all reductions | .42% | .51% | .60% | .71% A |
Net investment income (loss) | 1.38% | 1.03% | 1.59% | 1.30% A |
Supplemental Data |
|
|
|
|
Net assets, end of period (in millions) | $ 95 | $ 141 | $ 184 | $ 49 |
Portfolio turnover rate F | 153% | 146% | 200% | 186% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
D Calculated based on average shares outstanding during the period.
E Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
G For the period May 9, 2008 (commencement of sale of shares) to 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 reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class F
Years ended October 31, | 2011 | 2010 | 2009 G |
Selected Per-Share Data |
|
|
|
Net asset value, beginning of period | $ 21.69 | $ 19.74 | $ 17.52 |
Income from Investment Operations |
|
|
|
Net investment income (loss) D | .32 | .22 | .02 |
Net realized and unrealized gain (loss) | .05 | 2.00 | 2.20 |
Total from investment operations | .37 | 2.22 | 2.22 |
Distributions from net investment income | (.26) | (.27) | - |
Net asset value, end of period | $ 21.80 | $ 21.69 | $ 19.74 |
Total Return B, C | 1.70% | 11.31% | 12.67% |
Ratios to Average Net Assets E, H |
|
|
|
Expenses before reductions | .38% | .47% | .50% A |
Expenses net of fee waivers, if any | .38% | .47% | .50% A |
Expenses net of all reductions | .37% | .45% | .49% A |
Net investment income (loss) | 1.43% | 1.08% | .25% A |
Supplemental Data |
|
|
|
Net assets, end of period (in millions) | $ 2,693 | $ 1,359 | $ 75 |
Portfolio turnover rate F | 153% | 146% | 200% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
D Calculated based on average shares outstanding during the period.
E Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
G For the period June 26, 2009 (commencement of sale of shares) to October 31, 2009.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended October 31, 2011
(Amounts in thousands except percentages)
1. Organization.
Fidelity Disciplined Equity Fund (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. The Fund offers Disciplined Equity, Class K and Class F 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. Class F shares of the Fund are only available for purchase by mutual funds for which Fidelity Management & Research Company (FMR) or an affiliate serves as investment manager. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions may also differ by class.
2. Investments in Fidelity Central Funds.
The Fund invests in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by FMR and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of
Annual Report
3. Significant Accounting Policies - continued
the financial statements. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Fund uses independent pricing services approved by the Board of Trustees to value its investments. When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include market or security specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The value used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the Fund's own assumptions based on the best information available)
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of October 31, 2011, as well as a roll forward of Level 3 securities, is included at the end of the Fund's Schedule of Investments. Valuation techniques used to value the Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when significant market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-traded funds (ETFs) and certain indexes as well as quoted prices for similar securities are used and are categorized as Level 2 in the hierarchy in these circumstances. Utilizing these techniques may result in transfers between Level 1 and Level 2. For restricted equity securities and private placements where
Annual Report
Notes to Financial Statements - continued
(Amounts in thousands except percentages)
3. Significant Accounting Policies - continued
Security Valuation - continued
observable inputs are limited, assumptions about market activity and risk are used and are categorized as Level 3 in the hierarchy.
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy.
Foreign Currency. The Fund may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE, normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Annual Report
3. Significant Accounting Policies - continued
Expenses. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Deferred Trustee Compensation. Under a Deferred Compensation Plan (the Plan), independent Trustees may elect to defer receipt of a portion of their annual compensation. Deferred amounts are invested in a cross-section of Fidelity funds, are marked-to-market and remain in the Fund until distributed in accordance with the Plan. The investment of deferred amounts and the offsetting payable to the Trustees are included in the accompanying Statement of Assets and Liabilities.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company, including distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. As of October 31, 2011, the Fund did not have any unrecognized tax benefits in the financial statements. A fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are declared and recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, deferred trustees compensation, capital loss carryforwards and losses deferred due to wash sales.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $ 602,625 |
Gross unrealized depreciation | (647,524) |
Net unrealized appreciation (depreciation) on securities and other investments | $ (44,899) |
|
|
Tax Cost | $ 10,360,502 |
Annual Report
Notes to Financial Statements - continued
(Amounts in thousands except percentages)
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The tax-based components of distributable earnings as of period end were as follows:
Undistributed ordinary income | $ 103,010 |
Capital loss carryforward | $ (2,203,901) |
Net unrealized appreciation (depreciation) | $ (42,273) |
Under the recently enacted Regulated Investment Company Modernization Act of 2010 (the Act), the Fund will be permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to any losses incurred in pre-enactment taxable years, which generally expire after eight years from when they are incurred. Additionally, post-enactment capital losses that are carried forward will retain their character as either short-term or long-term capital losses rather than being considered all short-term as under previous law. The Fund's first fiscal year end subject to the Act will be October 31, 2012.
The tax character of distributions paid was as follows:
| October 31, 2011 | October 31, 2010 |
Ordinary Income | $ 105,872 | $ 121,330 |
New Accounting Pronouncement. In May 2011, the Financial Accounting Standards Board issued Accounting Standard Update No. 2011-04, Fair Value Measurement (Topic 820) - Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. The update changes the wording used to describe the requirements in GAAP for measuring fair value and for disclosing information about fair value measurements. The update is effective during interim and annual periods beginning after December 15, 2011. Management is currently evaluating the impact of the update's adoption on the Fund's financial statement disclosures.
4. Operating Policies.
Restricted Securities. The Fund may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities is included at the end of the Fund's Schedule of Investments.
Annual Report
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $16,150,422 and $16,685,390, respectively.
6. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and a group fee rate that averaged .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 Disciplined Equity as compared to an appropriate benchmark index. For the period, the total annual management fee rate, including the performance adjustment, was .36% of the Fund's average net assets.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of Disciplined Equity. FIIOC receives an asset-based fee of Class K's average net assets. FIIOC receives no fees for providing transfer agency services to Class F. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, transfer agent fees for each class were as follows:
| Amount | % of |
Disciplined Equity | $ 17,867 | .21 |
Class K | 73 | .05 |
| $ 17,940 |
|
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.
Annual Report
Notes to Financial Statements - continued
(Amounts in thousands except percentages)
6. Fees and Other Transactions with Affiliates - continued
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 $587 for the period.
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. The Fund's activity in this program during the period for which loans were outstanding was as follows:
Borrower or Lender | Average Daily | Weighted Average | Interest |
Borrower | $ 31,907 | .36% | $ 1 |
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR or an affiliate in a $4.0 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $33 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, there were no borrowings on this line of credit.
8. Security Lending.
The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. For equity securities, a lending agent is used and may loan securities to certain qualified borrowers, including Fidelity Capital Markets (FCM), a broker-dealer affiliated with the Fund. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. The value of securities loaned to FCM at period end was $1,170. Security lending
Annual Report
8. Security Lending - continued
income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Total security lending income during the period amounted to $3,829, including $189 from securities loaned to FCM.
9. Bank Borrowings.
The Fund is permitted to have bank borrowings for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity requirements. The Fund has established borrowing arrangements with certain banks. The interest rate on the borrowings is the bank's base rate, as revised from time to time. The average daily loan balance during the period for which loans were outstanding amounted to $23,904. The weighted average interest rate was .57%. The interest expense amounted to three hundred seventy-eight dollars under the bank borrowing program. At period end, there were no bank borrowings outstanding.
10. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of the Fund provided services to the Fund in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $1,381 for the period.
11. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended October 31, | 2011 | 2010 |
From net investment income |
|
|
Disciplined Equity | $ 86,646 | $ 116,715 |
Class K | 1,698 | 2,464 |
Class F | 17,528 | 2,151 |
Total | $ 105,872 | $ 121,330 |
Annual Report
Notes to Financial Statements - continued
(Amounts in thousands except percentages)
12. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
Years ended October 31, | 2011 | 2010 | 2011 | 2010 |
Disciplined Equity |
|
|
|
|
Shares sold | 41,487 | 48,761 | $ 933,066 | $ 1,024,807 |
Reinvestment of distributions | 3,881 | 5,559 | 85,889 | 115,802 |
Shares redeemed | (126,148) | (175,504) | (2,865,193) | (3,680,202) |
Net increase (decrease) | (80,780) | (121,184) | $ (1,846,238) | $ (2,539,593) |
Class K |
|
|
|
|
Shares sold | 2,553 | 5,579 | $ 58,670 | $ 117,922 |
Reinvestment of distributions | 77 | 118 | 1,698 | 2,464 |
Shares redeemed | (4,762) | (8,493) | (109,108) | (175,735) |
Net increase (decrease) | (2,132) | (2,796) | $ (48,740) | $ (55,349) |
Class F |
|
|
|
|
Shares sold | 75,199 | 65,890 | $ 1,686,077 | $ 1,373,135 |
Reinvestment of distributions | 793 | 103 | 17,528 | 2,151 |
Shares redeemed | (15,144) | (7,147) | (341,036) | (149,949) |
Net increase (decrease) | 60,848 | 58,846 | $ 1,362,569 | $ 1,225,337 |
13. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
At the end of the period, Fidelity Freedom 2020 was the owner of record of approximately 11% of the total outstanding shares of the Fund. The Fidelity Freedom and Freedom K Funds were owners of record, in aggregate, of approximately 79% of the total outstanding shares of the fund.
Annual Report
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Capital Trust and the Shareholders of Fidelity Disciplined Equity Fund:
In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Fidelity Disciplined Equity Fund (a fund of Fidelity Capital Trust) at October 31, 2011, 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 the financial highlights for each of the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fidelity Disciplined Equity Fund's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the 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 are free of material misstatement. An audit 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, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at October 31, 2011 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
December 9, 2011
Annual Report
Trustees and Officers
The Trustees, Members 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, oversee management of the risks associated with such activities and contractual arrangements, and review the fund's performance. Except for James C. Curvey, each of the Trustees oversees 226 funds advised by FMR or an affiliate. Mr. Curvey oversees 429 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 75th birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board Members 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.
Experience, Skills, Attributes, and Qualifications of the Fund's Trustees. The Governance and Nominating Committee has adopted a statement of policy that describes the experience, qualifications, attributes, and skills that are necessary and desirable for potential Independent Trustee candidates (Statement of Policy). The Board believes that each Trustee satisfied at the time he or she was initially elected or appointed a Trustee, and continues to satisfy, the standards contemplated by the Statement of Policy. The Governance and Nominating Committee also engages professional search firms to help identify potential Independent Trustee candidates who have the experience, qualifications, attributes, and skills consistent with the Statement of Policy. From time to time, additional criteria based on the composition and skills of the current Independent Trustees, as well as experience or skills that may be appropriate in light of future changes to board composition, business conditions, and regulatory or other developments, have also been considered by the professional search firms and the Governance and Nominating Committee. In addition, the Board takes into account the Trustees' commitment and participation in Board and committee meetings, as well as their leadership of standing and ad hoc committees throughout their tenure.
In determining that a particular Trustee was and continues to be qualified to serve as a Trustee, the Board has considered a variety of criteria, none of which, in isolation, was controlling. The Board believes that, collectively, the Trustees have balanced and diverse experience, qualifications, attributes, and skills, which allow the Board to operate effectively in governing the fund and protecting the interests of shareholders. Information about the specific experience, skills, attributes, and qualifications of each Trustee, which in each case led to the Board's conclusion that the Trustee should serve (or continue to serve) as a trustee of the fund, is provided below.
Annual Report
Board Structure and Oversight Function. James C. Curvey is an interested person (as defined in the 1940 Act) and currently serves as Acting Chairman. The Trustees have determined that an interested Chairman is appropriate and benefits shareholders because an interested Chairman has a personal and professional stake in the quality and continuity of services provided to the fund. Independent Trustees exercise their informed business judgment to appoint an individual of their choosing to serve as Chairman, regardless of whether the Trustee happens to be independent or a member of management. The Independent Trustees have determined that they can act independently and effectively without having an Independent Trustee serve as Chairman and that a key structural component for assuring that they are in a position to do so is for the Independent Trustees to constitute a substantial majority for the Board. The Independent Trustees also regularly meet in executive session. Ned C. Lautenbach serves as Chairman of the Independent Trustees and as such (i) acts as a liaison between the Independent Trustees and management with respect to matters important to the Independent Trustees and (ii) with management prepares agendas for Board meetings.
Fidelity funds are overseen by different Boards of Trustees. The fund's Board oversees Fidelity's equity and high income funds and another Board oversees Fidelity's investment-grade bond, money market, and asset allocation funds. The asset allocation funds may invest in Fidelity funds overseen by the fund's Board. The use of separate Boards, each with its own committee structure, allows the Trustees of each group of Fidelity funds to focus on the unique issues of the funds they oversee, including common research, investment, and operational issues. On occasion, the separate Boards establish joint committees to address issues of overlapping consequences for the Fidelity funds overseen by each Board.
The Trustees operate using a system of committees to facilitate the timely and efficient consideration of all matters of importance to the Trustees, the fund, and fund shareholders and to facilitate compliance with legal and regulatory requirements and oversight of the fund's activities and associated risks. The Board, acting through its committees, has charged FMR and its affiliates with (i) identifying events or circumstances the occurrence of which could have demonstrably adverse effects on the fund's business and/or reputation; (ii) implementing processes and controls to lessen the possibility that such events or circumstances occur or to mitigate the effects of such events or circumstances if they do occur; and (iii) creating and maintaining a system designed to evaluate continuously business and market conditions in order to facilitate the identification and implementation processes described in (i) and (ii) above. Because the day-to-day operations and activities of the fund are carried out by or through FMR, its affiliates and other service providers, the fund's exposure to risks is mitigated but not eliminated by the processes overseen by the Trustees. While each of the Board's committees has responsibility for overseeing different aspects of the fund's activities, oversight is exercised primarily through the Operations, Audit, and Compliance Committees. In addition, the Independent Trustees have worked with FMR to enhance the Board's oversight of investment and financial risks, legal and regulatory risks, technology risks, and operational risks, including the development of additional risk reporting to the Board. For example, a working group comprised of Independent Trustees and FMR has worked and continues to work to review the Fidelity funds' valuation-related activities, reporting and risk management. Appropriate personnel, including but not limited to the fund's Chief Compliance Officer (CCO), FMR's internal auditor, the independent accountants, the fund's Treasurer and portfolio management personnel, make periodic reports to the Board's committees, as appropriate, including an annual review of FMR's risk management program for the Fidelity funds. The responsibilities of each standing committee, including their oversight responsibilities, are described further under "Standing Committees of the Fund's Trustees."
Annual Report
Trustees and Officers - continued
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 Occupations and Other Relevant Experience+ | |
James C. Curvey (76) | |
| Year of Election or Appointment: 2007 Mr. Curvey is Trustee and Acting Chairman of the Board of Trustees of certain Trusts. Mr. Curvey also serves as Trustee (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of Fidelity Investments Money Management, Inc. (2009-present), Director of Fidelity Research & Analysis Co. (2009-present) and Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2007-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. Previously, Mr. Curvey was the Vice Chairman (2006-2007) and Director (2000-2007) of FMR Corp. |
Ronald P. O'Hanley (54) | |
| Year of Election or Appointment: 2011 Mr. O'Hanley is Director of FMR Co., Inc. (2010-present), Director of Fidelity Investments Money Management, Inc. (2010-present), Director of Fidelity Research & Analysis Company (2010-present), President of Fidelity Asset Management and Corporate Services and a member of Fidelity's Executive Committee (2010-present). Previously, Mr. O'Hanley served as President and Chief Executive Officer of BNY Mellon Asset Management (2007-2010). Mr. O'Hanley also served as Vice Chairman of Bank New York Mellon Corp. and a member of that firm's Executive Committee. Prior to the 2007 merger of The Bank of New York and Mellon Financial Corporation, he was Vice Chairman of Mellon Financial Corporation and President and Chief Executive Officer of Mellon Asset Management. He joined Mellon in February 1997. Mr. O'Hanley currently serves as Chairman of the Boston Public Library Foundation Board of Directors and sits on the Board of Directors of Beth Israel Deaconess Medical Center, the Board of Trustees of the Marine Biological Laboratory and the Advisory Board of the Maxwell School of Citizenship and Public Administration at Syracuse University. Mr. O'Hanley also chairs the Council on Asset Management for the Financial Services Roundtable and is a member of the Board of Directors of Institutional Investor's U.S. Institute. |
* 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.
+ The information above includes each Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Trustee's qualifications to serve as a Trustee, which led to the conclusion that each Trustee should serve as a Trustee for the fund.
Annual Report
Trustees and Officers - continued
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 Occupations and Other Relevant Experience+ | |
Dennis J. Dirks (63) | |
| 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). He also served as President, Chief Operating Officer, and Board member of The Depository Trust Company (DTC) and President and Board member of the National Securities Clearing Corporation (NSCC). In addition, Mr. Dirks served as Chief Executive Officer and Board member of the Government Securities Clearing Corporation, Chief Executive Officer and Board member of the Mortgage-Backed Securities Clearing Corporation, as a Trustee and a member of the Finance Committee of Manhattan College (2005-2008), and as a Trustee and a member of the Finance Committee of AHRC of Nassau County (2006-2008). Mr. Dirks is a member of the Independent Directors Council (IDC) Governing Council (2010-Present) and Board of Directors for The Brookville Center for Children's Services, Inc. (2009-present). |
Alan J. Lacy (58) | |
| Year of Election or Appointment: 2008 Mr. Lacy serves as Senior Adviser (2007-present) of Oak Hill Capital Partners, L.P. (private equity). 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 Dave & Buster's, Inc. (restaurant and entertainment complexes, 2010-present), The Hillman Companies, Inc. (hardware wholesalers, 2010-present), and Bristol-Myers Squibb Company (global pharmaceuticals, 2007-present). Mr. Lacy is a member of the Board of Trustees of The National Parks Conservation Association (2006-Present). Previously, Mr. Lacy served as Chairman of the Board of Trustees of the National Parks Conservation Association (2008-2011) and as a member of the Board of Directors for the Western Union Company (global money transfer, 2006-2011). |
Ned C. Lautenbach (67) | |
| Year of Election or Appointment: 2000 Mr. Lautenbach is Chairman of the Independent Trustees of the Equity and High Income Funds (2006-present). Mr. Lautenbach currently serves as the Lead Director of the Eaton Corporation Board of Directors (diversified industrial, 1997-present). Mr. Lautenbach is also a member of the Board of Directors of the Philharmonic Center for the Arts in Naples, Florida (1999-present); a member of the Board of Trustees of Fairfield University (2005-present); and a member of the Council on Foreign Relations (1994-present). Previously, Mr. Lautenbach was a Partner/Advisory Partner at Clayton, Dubilier & Rice, LLC (private equity investment, 1998-2010), as well as a Director of Sony Corporation (2006-2007). |
Joseph Mauriello (67) | |
| Year of Election or Appointment: 2008 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, 1965-2005). Mr. Mauriello currently serves as a member of the Board of Directors of XL Group plc. (global insurance and re-insurance, 2006-present) and of Arcadia Resources Inc. (health care services and products, 2007-present). Previously, Mr. Mauriello served as a Director of the Hamilton Funds of the Bank of New York (2006-2007). |
Robert W. Selander (61) | |
| Year of Election or Appointment: 2011 Previously, Mr. Selander served as a Member of the Advisory Board of Fidelity's Equity and High Income Funds (2011), Executive Vice Chairman (2010), Chief Executive Officer (2009-2010), and President and Chief Executive Officer (1997-2009) of Mastercard, Inc. |
Cornelia M. Small (67) | |
| Year of Election or Appointment: 2005 Ms. Small is a member of the Board of Directors of the Teagle Foundation (2009-present). Ms. Small is also a member of the Investment Committee, and Chair (2008-present) and a member of the Board of Trustees of Smith College. In addition, Ms. Small 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. In addition, Ms. Small 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 (72) | |
| Year of Election or Appointment: 2002 Mr. Stavropoulos is Vice Chairman of the Independent Trustees of the Equity and High Income Funds (2006-present). Mr. Stavropoulos serves as President and Founder of the Michigan Baseball Foundation, the Great Lakes Loons (2007-present). 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, CEO (1995-2000; 2002-2004), Chairman of the Executive Committee (2000-2006), and as a member of the Board of Directors (1990-2006). Currently, Mr. Stavropoulos is Chairman of Univar (global distributor of commodity and specialty chemicals, 2010-present), 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, 2005-present). Mr. Stavropoulos is a special advisor to Clayton, Dubilier & Rice, LLC (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 (62) | |
| 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), and Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (61) | |
| Year of Election or Appointment: 2008 Mr. Wiley also serves as a Director of Asia Pacific Exploration Consolidated (international oil and gas exploration and production, 2008-present). Mr. Wiley serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), and a Director of Bill Barrett Corporation (exploration and production, 2005-present). In addition, Mr. Wiley also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-2010), as a Senior Energy Advisor of Katzenbach Partners, LLC (consulting, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production, 2001-2005). |
Annual Report
+ The information above includes each Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Trustee's qualifications to serve as a Trustee, which led to the conclusion that each Trustee should serve as a Trustee for the fund.
Advisory Board Members and Executive Officers:
Correspondence intended for each executive officer, Edward C. Johnson 3d, and Peter S. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Edward C. Johnson 3d (81) | |
| Year of Election or Appointment: 2011 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Mr. Johnson serves as Chief Executive Officer, Chairman, and a Director of FMR LLC, and also serves as Chairman and Director of FIL Limited. Previously, Mr. Johnson served as a Trustee and Chairman of the Board of certain Fidelity Trusts, Chairman and a Director of FMR, Chairman and a Director of FMR Co., Inc., and President of FMR LLC (2006-2007). |
Peter S. Lynch (67) | |
| Year of Election or Appointment: 2003 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Mr. Lynch is Vice Chairman and a Director of FMR and FMR Co., Inc. In addition, Mr. Lynch 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 (42) | |
| Year of Election or Appointment: 2008 President and Treasurer of Fidelity's Equity and High Income Funds. Mr. Robins also serves as President and Treasurer (2010-present) and Assistant Treasurer (2009-present) of other Fidelity funds and is an employee of Fidelity Investments (2004-present). Previously, Mr. Robins served as Deputy Treasurer of the Fidelity funds (2005-2008) and Treasurer and Chief Financial Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2006-2008). |
Bruce T. Herring (46) | |
| Year of Election or Appointment: 2006 Vice President of certain Equity Funds. Mr. Herring also serves as Chief Investment Officer and Director of Fidelity Management & Research (U.K.) Inc. (2010-present) and Group Chief Investments Officer of FMR. Previously, Mr. Herring served as Vice President (2005-2006) and Senior Vice President (2006-2007) of Fidelity Management & Research Company, Vice President of FMR Co., Inc. (2001-2007) and as a portfolio manager for Fidelity U.S. Equity Funds. |
Brian B. Hogan (47) | |
| Year of Election or Appointment: 2009 Vice President of Equity and High Income Funds. Mr. Hogan also serves as President of FMR's Equity Division (2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager. |
Scott C. Goebel (43) | |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of the Fidelity funds. Mr. Goebel also serves as Secretary of Fidelity Investments Money Management, Inc. (FIMM) (2010-present) and Fidelity Research and Analysis Company (FRAC) (2010-present); Secretary and CLO of The North Carolina Capital Management Trust: Cash and Term Portfolios (2008-present); General Counsel, Secretary, and Senior Vice President of FMR (2008-present) and FMR Co., Inc. (2008-present); employed by FMR LLC or an affiliate (2001-present); Chief Legal Officer of Fidelity Management & Research (Hong Kong) Limited (2008-present) and Assistant Secretary of Fidelity Management & Research (Japan) Inc. (2008-present), and Fidelity Management & Research (U.K.) Inc. (2008-present). Previously, Mr. Goebel served as Assistant Secretary of FIMM (2008-2010), FRAC (2008-2010), and the Funds (2007-2008) and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007). |
William C. Coffey (42) | |
| Year of Election or Appointment: 2009 Assistant Secretary of Fidelity's Equity and High Income Funds. Mr. Coffey also serves as Senior Vice President and Deputy General Counsel of FMR LLC (2010-present), and is an employee of Fidelity Investments. Previously, Mr. Coffey served as Vice President and Associate General Counsel of FMR LLC (2005-2009). |
Holly C. Laurent (57) | |
| Year of Election or Appointment: 2008 Anti-Money Laundering (AML) Officer of the Fidelity funds. Ms. Laurent also serves as AML Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2008-present) and 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), and Senior Vice President, Deputy General Counsel and Group Head for FMR LLC (2005-2006). |
Christine Reynolds (53) | |
| 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. Ms. Reynolds served as Chief Operating Officer of FPCMS (2007-2008). Previously, Ms. Reynolds served as President, Treasurer, and Anti-Money Laundering officer of the Fidelity funds (2004-2007). |
Kenneth A. Rathgeber (64) | |
| 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), Pyramis Global Advisors, LLC (2005-present), and Strategic Advisers, Inc. (2005-present). |
Jeffrey S. Christian (50) | |
| Year of Election or Appointment: 2009 Deputy Treasurer of the Fidelity funds. Mr. Christian is an employee of Fidelity Investments. Previously, Mr. Christian served as Chief Financial Officer (2008-2009) of certain Fidelity funds and Senior Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (2004-2009). |
Joseph F. Zambello (54) | |
| Year of Election or Appointment: 2011 Deputy Treasurer of the Fidelity funds. Mr. Zambello is an employee of Fidelity Investments. Previously, Mr. Zambello served as Vice President of FMR's Program Management Group (2009-2011) and Vice President of the Transfer Agent Oversight Group (2005-2009). |
Adrien E. Deberghes (44) | |
| Year of Election or Appointment: 2008 Deputy Treasurer of Fidelity's Equity and High Income Funds. Mr. Deberghes also serves as Vice President and Assistant Treasurer of Fidelity Rutland Square Trust II and Fidelity Commonwealth Trust II (2011-present), Assistant Treasurer of other Fidelity funds (2010-present), and 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). |
Stephanie J. Dorsey (42) | |
| Year of Election or Appointment: 2010 Assistant Treasurer of Fidelity's Equity and High Income Funds. Ms. Dorsey also serves as Deputy Treasurer of other Fidelity funds (2008-present) and is an employee of Fidelity Investments (2008-present). Previously, Ms. Dorsey served as Treasurer (2004-2008) of the JPMorgan Mutual Funds and Vice President (2004-2008) of JPMorgan Chase Bank. |
John R. Hebble (53) | |
| Year of Election or Appointment: 2009 Assistant Treasurer of Fidelity's Equity and High Income Funds. Mr. Hebble also serves as President (2011-present), Treasurer, and Chief Financial Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2008-present), President and Treasurer of other Fidelity funds (2008-present) and is an employee of Fidelity Investments. |
Gary W. Ryan (53) | |
| 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). |
Jonathan Davis (43) | |
| Year of Election or Appointment: 2010 Assistant Treasurer of the Fidelity funds. Mr. Davis is also Assistant Treasurer of Fidelity Rutland Square Trust II and Fidelity Commonwealth Trust II. Mr. Davis is an employee of Fidelity Investments. Previously, Mr. Davis served as Vice President and Associate General Counsel of FMR LLC (2003-2010). |
Annual Report
Distributions (Unaudited)
Disciplined Equity designates 100% of the dividends distributed during the fiscal year as qualifying for the dividends-received deduction for corporate shareholders.
Disciplined Equity designates 100% of the dividend 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 2012 of amounts for use in preparing 2011 income tax returns.
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees
Fidelity Disciplined Equity Fund
Each year, 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 relevant to the renewal of the Advisory Contracts throughout the year.
The Board meets regularly 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. The Board has established various 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. The Board, acting directly and through its Committees, requests and receives information concerning the annual consideration of the renewal of the fund's Advisory Contracts. The Board also meets as needed to consider matters specifically related to the Board's annual consideration of the renewal of Advisory Contracts. Members of the Board may also meet with trustees of other Fidelity funds through ad hoc joint committees to discuss certain matters relevant to the Fidelity funds.
At its July 2011 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 expense ratio; (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.
In considering whether to renew the Advisory Contracts for the fund, the Board 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 is in the best interests of the fund and its shareholders and that the compensation payable under the Advisory Contracts is fair and reasonable. The Board's decision to renew the Advisory Contracts was not based on any single factor, 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 Fidelity's competitors, and that the fund's shareholders, who have 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 the 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 to act in the best interests of the fund.
Resources Dedicated to Investment Management and Support Services. The Board and the Fund Oversight and Research Committees reviewed the general qualifications and capabilities of the Investment Advisers' investment staff, including its size, education, experience, and resources, as well as the Investment Advisers' approach to recruiting, training, managing, and compensating investment personnel. The Board also noted that FMR has devoted increased resources to non-U.S. offices. The Board noted that Fidelity's analysts have extensive resources, tools and capabilities which allow them to conduct sophisticated quantitative and fundamental analysis, as well as credit analysis of issuers, counterparties and enhancers. The Board also believes that Fidelity's investment professionals have sufficient access to global information and data so as to provide competitive investment results over time, and that those professionals also have access to sophisticated tools which permit them to assess portfolio construction and risk and performance attribution characteristics continuously, as well as to transmit new information and research conclusions rapidly around the world. Additionally, in their deliberations, the Board considered the Investment Advisers' trading capabilities and resources which are an integral part of the investment management process.
Shareholder and Administrative Services. The Board considered (i) the nature, extent, quality, and cost of advisory, administrative, 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 adviser's 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 noted that the growth of fund assets over time 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 telephone representatives and over the Internet, investor education materials and asset allocation tools, and the expanded availability of Fidelity Investor Centers, with 35 new branches opening since 2010.
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 a large variety of mutual fund investor services. The Board noted that Fidelity had taken, or had made recommendations that resulted in the Fidelity funds taking, a number of actions over the previous year that benefited particular funds, including (i) continuing to dedicate additional resources to investment research and support of the senior management team that oversees asset management; (ii) rationalizing product lines through the mergers of six funds into other funds; (iii) continuing to migrate the Freedom Funds to dedicated lower cost underlying funds; (iv) obtaining shareholder approval to broaden the investment strategies for Fidelity Consumer Finance Portfolio, Fidelity Emerging Asia Fund, and Fidelity Environment and Alternative Energy Portfolio; (v) contractually agreeing to reduce the management fees and impose other expense limitations on Spartan 500 Index Fund and U.S. Bond Index Fund in connection with launching new institutional classes of these funds; (vi) changing the name, primary and supplemental benchmarks, and investment policies of Fidelity Global Strategies Fund to support the fund's flexible investment mandate and global orientation; and (vii) reducing the transfer agency account fee rates on certain accounts.
Investment Performance. The Board considered whether the fund has operated in accordance with its investment objective, as well as its record of compliance with its investment restrictions. It also reviewed the fund's absolute investment performance for each class, as well as the fund's relative investment performance for each class measured over multiple periods against (i) a broad-based securities market index, and (ii) a peer group of mutual funds deemed appropriate by Fidelity and reviewed by the Board. The following charts considered by the Board show, over the one-, three-, and five-year periods ended December 31, 2010, as available, the cumulative total returns of Class F and the retail class of the fund, 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 returns of Class F and the retail class show the performance of the highest and lowest performing classes, respectively (based on one-year performance). 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 numbers noted below each chart correspond to the percentile box and represent the percentage of funds in the peer group whose performance was equal to or lower than that of the class indicated.
Annual Report
Fidelity Disciplined Equity Fund
The Board reviewed the fund's relative investment performance against its peer group and noted that the performance of the retail class of the fund (the class with the longest performance record) was in the fourth quartile for all the periods shown. The Board also noted that the investment performance of the fund was lower than its benchmark for all the periods shown. The Board considered that the variations in performance among the fund's classes reflect the variations in class expenses, which result in lower performance for higher expense classes. The Board discussed with FMR actions that have been taken by FMR to improve the fund's disappointing performance relative to its peer group and benchmark. The Board noted that this fund had underperformed in 2009 and discussed with FMR its disappointment with the continued underperformance of the fund. The Board also reviewed the fund's performance since inception as well as performance in the current year. The Board will continue to closely monitor the performance of the fund in the coming year and discuss with FMR other appropriate actions to address the performance of the fund.
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 noted 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.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
Based on its review, the Board concluded that the nature, extent, and quality of services provided to the fund under the Advisory Contracts should benefit the fund's shareholders.
Competitiveness of Management Fee and Total Expense Ratio. The Board considered the fund's management fee and total expense ratio 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 ratio comparisons by broadening the competitive group used for comparison and by reducing the number of universes to which various Fidelity funds are compared.
Management Fee. 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 10% means that 90% 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 Disciplined Equity Fund
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 2010. The Board also noted the effect of the fund's negative 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.
Based on its review, the Board concluded that the fund's management fee is fair and reasonable in light of the services that the fund receives and the other factors considered.
Total Expense Ratio. In its review of each class's total expense ratio, the Board considered the fund's management fee as well as other fund or class expenses, as applicable, 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 the current and historical total expense ratios of each class of the fund compared to competitive fund median expenses. Each class of 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.
The Board noted that the total expense ratio of each class ranked below its competitive median for 2010. The Board considered that various factors, including 12b-1 fees, positive or negative performance adjustments, and relatively higher other expenses in the case of small fund size, can affect total expense ratios.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
Fees Charged to Other Fidelity Clients. The Board also considered Fidelity fee structures and other information with respect to clients of FMR and its affiliates, such as other mutual funds advised or subadvised by FMR or its affiliates, pension plan clients, and other institutional clients. In March 2010, the Board created an ad hoc joint committee with the board of other Fidelity funds (the Committee) to review and compare Fidelity's institutional investment advisory business with its business of providing services to the Fidelity funds, including the differences in services provided, fees charged, and costs incurred, as well as competition in their respective marketplaces.
Based on its review of total expense ratios and fees charged to other Fidelity clients, the Board concluded that the total expense ratio of each class of the fund was reasonable in light of the services that the fund and its shareholders receive and the other factors considered, including the findings of the Committee.
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 books and records of Fidelity on which Fidelity's audited financial statements are based. 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 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 concluded that while other allocation methods may also be reasonable, Fidelity's profitability methodologies are reasonable in all material respects.
The Board also reviewed Fidelity's non-fund businesses and 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.
Annual Report
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 was satisfied that the profitability was not excessive in the circumstances.
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 also noted that in 2009, it and the board of other Fidelity funds created an ad hoc committee (the Economies of Scale Committee) to analyze whether FMR attains economies of scale in respect of the management and servicing of the Fidelity funds, whether the Fidelity funds have appropriately benefited from such economies of scale, and whether there is potential for realization of any further economies of scale.
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 calculates the group fee rates based on a tiered asset "breakpoint" schedule that varies based on asset class. The Board considered that the group fee is designed to deliver the benefits of economies of scale to fund shareholders when total Fidelity 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 benefit from lower management fees as assets under FMR's management increase at the fund complex level, regardless of whether Fidelity achieves any such economies of scale.
The Board concluded, taking into account the analysis of the Economies of Scale Committee, that any potential economies of scale are being appropriately shared between fund shareholders and Fidelity.
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, actions to be taken by FMR to improve certain funds' overall performance, and Fidelity's long-term strategies for certain funds; (ii) portfolio manager changes that have occurred during the past year and length of portfolio manager tenure for different categories of funds over time; (iii) Fidelity's compensation structure for portfolio managers and other key personnel and strategies for attracting and retaining non-investment personnel; (iv) the amount of the investment that each portfolio manager has made in the Fidelity fund(s) that he or she manages; (v) historical trends in Fidelity's realization of fall-out benefits; (vi) Fidelity's group fee structures and the rationale for the individual fee rates of certain funds; (vii) fund profitability methodology and the impact of certain factors on fund profitability results; (viii) trends regarding industry use of performance fee structures and Fidelity's compliance practices with respect to performance adjustment calculations; (ix) the fee structures in place for certain other Fidelity clients; and (x) explanations regarding the relative total expense ratios of certain funds and classes, total expense competitive trends, and actions that might be taken by FMR to reduce total expense ratios for certain funds and classes.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
Based on its evaluation of all of the conclusions noted above, and after considering all factors it believed relevant, 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
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Fidelity Management & Research
(U.K.) Inc.
Fidelity Management & Research
(Japan) Inc.
Fidelity Management & Research
(Hong Kong) Limited
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Service Agents
Fidelity Investments Institutional
Operations Company, Inc. (FIIOC)
Boston, MA
Fidelity Service Company, Inc.
Boston, MA
Custodian
State Street Bank and Trust Company
Quincy, 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
FDE-UANN-1211 1.784777.108
Fidelity®
Disciplined Equity
Fund -
Class F
Annual Report
October 31, 2011
Contents
Performance | How the fund has done over time. | |
Management's Discussion of Fund Performance | The Portfolio Manager's review of fundperformance and strategy. | |
Shareholder Expense Example | An example of shareholder expenses. | |
Investment Changes | A summary of major shifts in the fund's investments over the past six months. | |
Investments | A complete list of the fund's investments with their market values. | |
Financial Statements | Statements of assets and liabilities, operations, and changes in net assets, as well as financial highlights. | |
Notes | Notes to the financial statements. | |
Report of Independent Registered Public Accounting Firm |
| |
Trustees and Officers |
| |
Distributions |
| |
Board Approval of Investment Advisory Contracts and Management Fees |
|
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-800-835-5092 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company.
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, http://www.advisor.fidelity.com, or http://www.401k.com, as applicable.
NOT FDIC INSURED • MAY LOSE VALUE • NO BANK GUARANTEE
Neither the fund nor Fidelity Distributors Corporation is a bank.
Annual Report
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' distributions from 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, 2011 | Past 1 | Past 5 | Past 10 |
Class F A | 1.70% | -2.58% | 3.02% |
A The initial offering of Class F shares took place on June 26, 2009. Returns prior to June 26, 2009 are those of Fidelity® Disciplined Equity Fund, the original class of the fund.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Fidelity® Disciplined Equity Fund - Class F on October 31, 2001. The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period. The initial offering of Class F took place on June 26, 2009. See above for additional information regarding the performance of Class F.
Annual Report
Management's Discussion of Fund Performance
Market Recap: U.S. stocks overcame a sharp summer drop to post a solid gain for the 12 months ending October 31, 2011. Bullishness pervaded the market during the first half of the period, only to be squelched by extreme volatility in the summer, as debate over the U.S. debt ceiling, Standard & Poor's subsequent downgrade of the country's long-term sovereign credit rating and deepening debt woes in Europe led to the worst calendar-quarter finish for the S&P 500® Index in almost three years. However, news of a possible solution to the eurozone debt crisis, along with better-than-expected U.S. economic data and strong corporate earnings, helped fuel an October rally that pushed the broad-based index up roughly 11% - its highest monthly return since December 1991. With that boost, the S&P 500® finished the year up 8.09%, while the blue-chip Dow Jones Industrial AverageSM added 10.39% and the technology-heavy Nasdaq Composite® Index gained 8.10%. Among sectors within the S&P 500®, only financials (-6%) posted a decline for the year, while energy (+19%) and utilities (+15%) fared best. Small and mid-sized stocks also rose, with the Russell 2000® and Russell Midcap® indexes adding 6.71% and 7.85%, respectively. The lengthy financial crisis in Europe continued to hamper foreign developed-markets equities, with the MSCI® EAFE® (Europe, Australasia, Far East) Index falling 3.97%.
Comments from Keith Quinton, Portfolio Manager of Fidelity® Disciplined Equity Fund: For the year, the fund's Class F shares returned 1.70%, significantly underperforming the S&P 500. Poor stock picking accounted for most of the weak showing, with the biggest hit coming from information technology, where a large stake in computer maker Hewlett-Packard was detrimental, and underexposure to industry overachiever and benchmark heavyweight Apple held back relative results. The fund also fared poorly with positioning in financials - including an overweighting in the weak diversified financials group - and consumer discretionary, where security selection in the retailing segment hurt. Other individual detractors were computer memory chip maker Micron Technology and retailer Best Buy, the latter of which I sold by period end. Energy was a bright spot, especially an overweighting in Marathon Oil, the Houston exploration/production firm spun off from the integrated oil company in June. An overweighting in health insurance provider Humana helped, as did avoiding financial giant and index component Bank of America.
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 Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (May 1, 2011 to October 31, 2011).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.
Annual Report
| Annualized | Beginning | Ending | Expenses Paid |
Disciplined Equity | .59% |
|
|
|
Actual |
| $ 1,000.00 | $ 873.00 | $ 2.79 |
HypotheticalA |
| $ 1,000.00 | $ 1,022.23 | $ 3.01 |
Class K | .43% |
|
|
|
Actual |
| $ 1,000.00 | $ 873.40 | $ 2.03 |
HypotheticalA |
| $ 1,000.00 | $ 1,023.04 | $ 2.19 |
Class F | .38% |
|
|
|
Actual |
| $ 1,000.00 | $ 873.70 | $ 1.79 |
HypotheticalA |
| $ 1,000.00 | $ 1,023.29 | $ 1.94 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period).
Annual Report
Investment Changes (Unaudited)
Top Ten Stocks as of October 31, 2011 | ||
| % of fund's | % of fund's net assets |
Chevron Corp. | 4.7 | 4.6 |
JPMorgan Chase & Co. | 4.0 | 4.5 |
General Electric Co. | 3.7 | 2.8 |
Hewlett-Packard Co. | 3.4 | 3.6 |
Wells Fargo & Co. | 3.3 | 0.9 |
Microsoft Corp. | 2.8 | 2.5 |
Philip Morris International, Inc. | 2.5 | 2.3 |
Vodafone Group PLC sponsored ADR | 2.5 | 2.8 |
Anheuser-Busch InBev SA NV | 2.4 | 2.6 |
MasterCard, Inc. Class A | 2.4 | 0.0 |
| 31.7 | |
Top Five Market Sectors as of October 31, 2011 | ||
| % of fund's | % of fund's net assets |
Information Technology | 19.3 | 17.3 |
Financials | 13.8 | 14.9 |
Energy | 11.8 | 13.0 |
Health Care | 11.3 | 11.3 |
Consumer Discretionary | 11.0 | 11.4 |
Asset Allocation (% of fund's net assets) | |||||||
As of October 31, 2011* | As of April 30, 2011** | ||||||
![]() | Stocks 98.2% |
| ![]() | Stocks 98.0% |
| ||
![]() | Short-Term |
| ![]() | Short-Term |
| ||
* Foreign investments | 12.6% |
| ** Foreign investments | 16.3% |
|
Annual Report
Investments October 31, 2011
Showing Percentage of Net Assets
Common Stocks - 96.5% | |||
Shares | Value (000s) | ||
CONSUMER DISCRETIONARY - 9.3% | |||
Auto Components - 0.8% | |||
TRW Automotive Holdings Corp. (a) | 1,950,356 | $ 82,110 | |
Diversified Consumer Services - 1.1% | |||
ITT Educational Services, Inc. (a)(d) | 118,024 | 7,313 | |
Weight Watchers International, Inc. | 1,300,000 | 97,006 | |
| 104,319 | ||
Household Durables - 0.4% | |||
Tempur-Pedic International, Inc. (a) | 586,957 | 39,948 | |
Media - 1.9% | |||
CBS Corp. Class B | 4,100,000 | 105,821 | |
Viacom, Inc. Class B (non-vtg.) | 2,000,000 | 87,700 | |
| 193,521 | ||
Specialty Retail - 3.6% | |||
AutoZone, Inc. (a) | 200,000 | 64,718 | |
Bed Bath & Beyond, Inc. (a) | 800,000 | 49,472 | |
Home Depot, Inc. | 4,200,000 | 150,360 | |
Limited Brands, Inc. | 2,298,115 | 98,152 | |
| 362,702 | ||
Textiles, Apparel & Luxury Goods - 1.5% | |||
VF Corp. | 1,100,000 | 152,042 | |
TOTAL CONSUMER DISCRETIONARY | 934,642 | ||
CONSUMER STAPLES - 10.9% | |||
Beverages - 2.9% | |||
Anheuser-Busch InBev SA NV | 4,438,240 | 246,163 | |
Dr Pepper Snapple Group, Inc. | 1,300,000 | 48,685 | |
| 294,848 | ||
Food Products - 0.6% | |||
Ralcorp Holdings, Inc. (a) | 700,000 | 56,588 | |
Household Products - 1.5% | |||
Procter & Gamble Co. | 2,300,000 | 147,177 | |
Tobacco - 5.9% | |||
Imperial Tobacco Group PLC | 2,800,000 | 102,397 | |
Japan Tobacco, Inc. | 15,004 | 75,002 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
CONSUMER STAPLES - continued | |||
Tobacco - continued | |||
Lorillard, Inc. | 1,500,000 | $ 165,990 | |
Philip Morris International, Inc. | 3,600,000 | 251,532 | |
| 594,921 | ||
TOTAL CONSUMER STAPLES | 1,093,534 | ||
ENERGY - 11.8% | |||
Energy Equipment & Services - 0.5% | |||
Helix Energy Solutions Group, Inc. (a) | 1,000,000 | 18,060 | |
National Oilwell Varco, Inc. | 400,000 | 28,532 | |
| 46,592 | ||
Oil, Gas & Consumable Fuels - 11.3% | |||
Chevron Corp. | 4,467,400 | 469,303 | |
CVR Energy, Inc. (a) | 1,100,000 | 27,236 | |
Exxon Mobil Corp. | 2,706,880 | 211,380 | |
Marathon Oil Corp. | 3,900,000 | 101,517 | |
Marathon Petroleum Corp. | 1,400,000 | 50,260 | |
Tesoro Corp. (a) | 6,877,000 | 178,389 | |
Valero Energy Corp. | 4,000,000 | 98,400 | |
| 1,136,485 | ||
TOTAL ENERGY | 1,183,077 | ||
FINANCIALS - 13.8% | |||
Commercial Banks - 3.8% | |||
U.S. Bancorp | 2,000,000 | 51,180 | |
Wells Fargo & Co. | 12,600,000 | 326,466 | |
| 377,646 | ||
Consumer Finance - 2.8% | |||
Capital One Financial Corp. | 5,230,300 | 238,815 | |
SLM Corp. | 3,200,000 | 43,744 | |
| 282,559 | ||
Diversified Financial Services - 4.3% | |||
JPMorgan Chase & Co. | 11,600,000 | 403,216 | |
KKR Financial Holdings LLC | 3,000,000 | 25,050 | |
| 428,266 | ||
Common Stocks - continued | |||
Shares | Value (000s) | ||
FINANCIALS - continued | |||
Insurance - 1.5% | |||
Hartford Financial Services Group, Inc. | 5,200,000 | $ 100,100 | |
Unum Group | 2,100,000 | 50,064 | |
| 150,164 | ||
Real Estate Investment Trusts - 1.3% | |||
American Capital Agency Corp. (d) | 3,893,800 | 107,118 | |
Two Harbors Investment Corp. | 2,800,000 | 26,180 | |
| 133,298 | ||
Real Estate Management & Development - 0.1% | |||
Brookfield Properties Corp. | 618,700 | 10,154 | |
TOTAL FINANCIALS | 1,382,087 | ||
HEALTH CARE - 11.3% | |||
Biotechnology - 3.5% | |||
Alexion Pharmaceuticals, Inc. (a) | 700,000 | 47,257 | |
Amgen, Inc. | 3,474,000 | 198,956 | |
Biogen Idec, Inc. (a) | 900,000 | 104,724 | |
| 350,937 | ||
Health Care Equipment & Supplies - 0.7% | |||
The Cooper Companies, Inc. | 1,012,453 | 70,163 | |
Health Care Providers & Services - 5.4% | |||
Aetna, Inc. | 2,800,000 | 111,328 | |
Humana, Inc. | 1,300,000 | 110,357 | |
McKesson Corp. | 300,000 | 24,465 | |
UnitedHealth Group, Inc. | 5,000,000 | 239,950 | |
WellPoint, Inc. | 800,000 | 55,120 | |
| 541,220 | ||
Pharmaceuticals - 1.7% | |||
Pfizer, Inc. | 9,000,000 | 173,340 | |
TOTAL HEALTH CARE | 1,135,660 | ||
INDUSTRIALS - 9.7% | |||
Aerospace & Defense - 1.1% | |||
United Technologies Corp. | 1,400,000 | 109,172 | |
Commercial Services & Supplies - 0.2% | |||
Pitney Bowes, Inc. (d) | 1,200,000 | 24,456 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
INDUSTRIALS - continued | |||
Construction & Engineering - 1.9% | |||
KBR, Inc. | 5,100,000 | $ 142,341 | |
MasTec, Inc. (a) | 2,400,000 | 51,888 | |
| 194,229 | ||
Electrical Equipment - 0.2% | |||
Harbin Electric, Inc. (a)(d) | 800,000 | 18,792 | |
Industrial Conglomerates - 3.7% | |||
General Electric Co. | 22,100,000 | 369,291 | |
Professional Services - 0.3% | |||
Towers Watson & Co. | 400,000 | 26,280 | |
Road & Rail - 2.3% | |||
CSX Corp. | 10,457,200 | 232,254 | |
TOTAL INDUSTRIALS | 974,474 | ||
INFORMATION TECHNOLOGY - 19.3% | |||
Communications Equipment - 1.6% | |||
Cisco Systems, Inc. | 2,800,000 | 51,884 | |
Motorola Solutions, Inc. | 2,300,000 | 107,893 | |
| 159,777 | ||
Computers & Peripherals - 3.4% | |||
Hewlett-Packard Co. | 12,950,000 | 344,600 | |
Internet Software & Services - 0.1% | |||
Facebook, Inc. Class B (e) | 493,371 | 12,334 | |
IT Services - 6.4% | |||
Alliance Data Systems Corp. (a)(d) | 1,600,000 | 163,904 | |
Amdocs Ltd. (a) | 900,000 | 27,018 | |
International Business Machines Corp. | 1,100,000 | 203,093 | |
MasterCard, Inc. Class A | 700,000 | 243,068 | |
| 637,083 | ||
Semiconductors & Semiconductor Equipment - 2.8% | |||
GT Advanced Technologies, Inc. (a)(d) | 3,300,000 | 27,060 | |
Micron Technology, Inc. (a) | 14,515,058 | 81,139 | |
Samsung Electronics Co. Ltd. | 182,977 | 156,930 | |
Teradyne, Inc. (a) | 849,410 | 12,164 | |
| 277,293 | ||
Software - 5.0% | |||
Check Point Software Technologies Ltd. (a) | 400,000 | 23,052 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
INFORMATION TECHNOLOGY - continued | |||
Software - continued | |||
Microsoft Corp. | 10,600,000 | $ 282,278 | |
Oracle Corp. | 5,900,000 | 193,343 | |
| 498,673 | ||
TOTAL INFORMATION TECHNOLOGY | 1,929,760 | ||
MATERIALS - 4.0% | |||
Chemicals - 2.2% | |||
BASF AG | 1,000,000 | 73,610 | |
CF Industries Holdings, Inc. | 907,700 | 147,292 | |
| 220,902 | ||
Metals & Mining - 1.8% | |||
Anglo American PLC (United Kingdom) | 2,000,000 | 73,768 | |
Newmont Mining Corp. | 1,526,100 | 101,989 | |
| 175,757 | ||
TOTAL MATERIALS | 396,659 | ||
TELECOMMUNICATION SERVICES - 3.0% | |||
Diversified Telecommunication Services - 0.5% | |||
BT Group PLC | 16,800,000 | 50,699 | |
Wireless Telecommunication Services - 2.5% | |||
Vodafone Group PLC sponsored ADR | 9,032,300 | 251,459 | |
TOTAL TELECOMMUNICATION SERVICES | 302,158 | ||
UTILITIES - 3.4% | |||
Electric Utilities - 1.0% | |||
El Paso Electric Co. | 2,090,000 | 66,943 | |
PNM Resources, Inc. | 1,891,212 | 34,004 | |
| 100,947 | ||
Gas Utilities - 1.1% | |||
ONEOK, Inc. | 1,400,000 | 106,470 | |
Independent Power Producers & Energy Traders - 1.3% | |||
The AES Corp. (a) | 11,674,600 | 130,989 | |
TOTAL UTILITIES | 338,406 | ||
TOTAL COMMON STOCKS (Cost $9,673,513) |
| ||
Nonconvertible Preferred Stocks - 1.7% | |||
Shares | Value (000s) | ||
CONSUMER DISCRETIONARY - 1.7% | |||
Automobiles - 1.7% | |||
Volkswagen AG (Cost $161,436) | 972,900 | $ 170,723 | |
Money Market Funds - 4.7% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.12% (b) | 306,721,295 | 306,721 | |
Fidelity Securities Lending Cash Central Fund, 0.11% (b)(c) | 167,701,618 | 167,702 | |
TOTAL MONEY MARKET FUNDS (Cost $474,423) |
| ||
TOTAL INVESTMENT PORTFOLIO - 102.9% (Cost $10,309,372) | 10,315,603 | ||
NET OTHER ASSETS (LIABILITIES) - (2.9)% | (294,321) | ||
NET ASSETS - 100% | $ 10,021,282 |
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
(e) Restricted securities - Investment in securities not registered under the Securities Act of 1933 (excluding 144A issues). At the end of the period, the value of restricted securities (excluding 144A issues) amounted to $12,334,000 or 0.1% of net assets. |
Additional information on each restricted holding is as follows: |
Security | Acquisition Date | Acquisition Cost (000s) |
Facebook, Inc. Class B | 3/31/11 - 5/19/11 | $ 12,338 |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 207 |
Fidelity Securities Lending Cash Central Fund | 3,829 |
Total | $ 4,036 |
Other Information |
The following is a summary of the inputs used, as of October 31, 2011, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the tables below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities: | ||||
Equities: | ||||
Consumer Discretionary | $ 1,105,365 | $ 1,105,365 | $ - | $ - |
Consumer Staples | 1,093,534 | 772,369 | 321,165 | - |
Energy | 1,183,077 | 1,183,077 | - | - |
Financials | 1,382,087 | 1,382,087 | - | - |
Health Care | 1,135,660 | 1,135,660 | - | - |
Industrials | 974,474 | 974,474 | - | - |
Information Technology | 1,929,760 | 1,760,496 | 156,930 | 12,334 |
Materials | 396,659 | 396,659 | - | - |
Telecommunication Services | 302,158 | 251,459 | 50,699 | - |
Utilities | 338,406 | 338,406 | - | - |
Money Market Funds | 474,423 | 474,423 | - | - |
Total Investments in Securities: | $ 10,315,603 | $ 9,774,475 | $ 528,794 | $ 12,334 |
The following is a reconciliation of Investments in Securities for which Level 3 inputs were used in determining value: |
(Amounts in thousands) |
|
Investments in Securities: | |
Beginning Balance | $ - |
Total Realized Gain (Loss) | - |
Total Unrealized Gain (Loss) | (4) |
Cost of Purchases | 12,338 |
Proceeds of Sales | - |
Amortization/Accretion | - |
Transfers in to Level 3 | - |
Transfers out of Level 3 | - |
Ending Balance | $ 12,334 |
The change in unrealized gain (loss) for the period attributable to Level 3 securities held at October 31, 2011 | $ (4) |
The information used in the above reconciliation represents fiscal year to date activity for any Investments in Securities identified as using Level 3 inputs at either the beginning or the end of the current fiscal period. Transfers in or out of Level 3 represent the beginning value of any Security or Instrument where a change in the pricing level occurred from the beginning to the end of the period. The cost of purchases and the proceeds of sales may include securities received or delivered through corporate actions or exchanges. Realized and unrealized gains (losses) disclosed in the reconciliation are included in Net Gain (Loss) on the Fund's Statement of Operations. |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 87.4% |
United Kingdom | 4.8% |
Belgium | 2.4% |
Germany | 2.4% |
Korea (South) | 1.6% |
Others (Individually Less Than 1%) | 1.4% |
| 100.0% |
Income Tax Information |
At October 31, 2011, the Fund had a capital loss carryforward of approximately $2,203,901,000 of which $205,717,000 and $1,998,184,000 will expire in fiscal 2016 and 2017, respectively. Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements
Statement of Assets and Liabilities
Amounts in thousands (except per-share amounts) | October 31, 2011 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $159,172) - See accompanying schedule: Unaffiliated issuers (cost $9,834,949) | $ 9,841,180 |
|
Fidelity Central Funds (cost $474,423) | 474,423 |
|
Total Investments (cost $10,309,372) |
| $ 10,315,603 |
Receivable for investments sold | 274,580 | |
Receivable for fund shares sold | 10,430 | |
Dividends receivable | 2,942 | |
Distributions receivable from Fidelity Central Funds | 960 | |
Prepaid expenses | 37 | |
Other receivables | 433 | |
Total assets | 10,604,985 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 408,836 | |
Payable for fund shares redeemed | 2,726 | |
Accrued management fee | 2,770 | |
Other affiliated payables | 1,377 | |
Other payables and accrued expenses | 292 | |
Collateral on securities loaned, at value | 167,702 | |
Total liabilities | 583,703 | |
|
|
|
Net Assets | $ 10,021,282 | |
Net Assets consist of: |
| |
Paid in capital | $ 12,167,377 | |
Undistributed net investment income | 102,810 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (2,255,030) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 6,125 | |
Net Assets | $ 10,021,282 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements - continued
Statement of Assets and Liabilities - continued
Amounts in thousands (except per-share amounts) | October 31, 2011 | |
|
|
|
Disciplined Equity: | $ 21.79 | |
|
|
|
Class K: | $ 21.81 | |
|
|
|
Class F: | $ 21.80 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Operations
Amounts in thousands | Year ended October 31, 2011 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 188,042 |
Interest |
| 4 |
Income from Fidelity Central Funds |
| 4,036 |
Total income |
| 192,082 |
|
|
|
Expenses | ||
Management fee | $ 59,695 | |
Performance adjustment | (21,137) | |
Transfer agent fees | 17,940 | |
Accounting and security lending fees | 1,337 | |
Custodian fees and expenses | 345 | |
Independent trustees' compensation | 59 | |
Registration fees | 44 | |
Audit | 85 | |
Legal | 45 | |
Interest | 2 | |
Miscellaneous | 119 | |
Total expenses before reductions | 58,534 | |
Expense reductions | (1,381) | 57,153 |
Net investment income (loss) | 134,929 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 675,531 | |
Foreign currency transactions | (802) | |
Total net realized gain (loss) |
| 674,729 |
Change in net unrealized appreciation (depreciation) on: Investment securities | (592,432) | |
Assets and liabilities in foreign currencies | (106) | |
Total change in net unrealized appreciation (depreciation) |
| (592,538) |
Net gain (loss) | 82,191 | |
Net increase (decrease) in net assets resulting from operations | $ 217,120 |
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 | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 134,929 | $ 93,970 |
Net realized gain (loss) | 674,729 | 1,049,236 |
Change in net unrealized appreciation (depreciation) | (592,538) | 1,045 |
Net increase (decrease) in net assets resulting | 217,120 | 1,144,251 |
Distributions to shareholders from net investment income | (105,872) | (121,330) |
Share transactions - net increase (decrease) | (532,409) | (1,369,605) |
Total increase (decrease) in net assets | (421,161) | (346,684) |
|
|
|
Net Assets | ||
Beginning of period | 10,442,443 | 10,789,127 |
End of period (including undistributed net investment income of $102,810 and undistributed net investment income of $76,361, respectively) | $ 10,021,282 | $ 10,442,443 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Disciplined Equity
Years ended October 31, | 2011 | 2010 | 2009 | 2008 | 2007 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 21.67 | $ 19.72 | $ 18.78 | $ 33.37 | $ 30.83 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .28 | .18 | .24 | .29 | .27 |
Net realized and unrealized gain (loss) | .05 | 1.99 | .96 | (12.19) | 4.95 |
Total from investment operations | .33 | 2.17 | 1.20 | (11.90) | 5.22 |
Distributions from net investment income | (.21) | (.22) | (.26) | (.26) | (.19) |
Distributions from net realized gain | - | - | - | (2.43) | (2.49) |
Total distributions | (.21) | (.22) | (.26) | (2.69) | (2.68) |
Net asset value, end of period | $ 21.79 | $ 21.67 | $ 19.72 | $ 18.78 | $ 33.37 |
Total Return A | 1.51% | 11.05% | 6.64% | (38.68)% | 18.42% |
Ratios to Average Net Assets C, E |
|
|
|
|
|
Expenses before reductions | .59% | .70% | .84% | .87% | .91% |
Expenses net of fee waivers, if any | .59% | .70% | .84% | .87% | .91% |
Expenses net of all reductions | .58% | .68% | .83% | .87% | .90% |
Net investment income (loss) | 1.22% | .85% | 1.37% | 1.10% | .88% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (in millions) | $ 7,233 | $ 8,943 | $ 10,530 | $ 9,804 | $ 11,482 |
Portfolio turnover rate D | 153% | 146% | 200% | 186% | 152% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
B Calculated based on average shares outstanding during the period.
C Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
D Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
E Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class K
Years ended October 31, | 2011 | 2010 | 2009 | 2008 G |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 21.69 | $ 19.74 | $ 18.79 | $ 27.38 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss) D | .31 | .22 | .28 | .12 |
Net realized and unrealized gain (loss) | .06 | 1.99 | .96 | (8.71) |
Total from investment operations | .37 | 2.21 | 1.24 | (8.59) |
Distributions from net investment income | (.25) | (.26) | (.29) | - |
Net asset value, end of period | $ 21.81 | $ 21.69 | $ 19.74 | $ 18.79 |
Total Return B, C | 1.68% | 11.25% | 6.92% | (31.37)% |
Ratios to Average Net Assets E, H |
|
|
|
|
Expenses before reductions | .43% | .52% | .61% | .71% A |
Expenses net of fee waivers, if any | .43% | .52% | .61% | .71% A |
Expenses net of all reductions | .42% | .51% | .60% | .71% A |
Net investment income (loss) | 1.38% | 1.03% | 1.59% | 1.30% A |
Supplemental Data |
|
|
|
|
Net assets, end of period (in millions) | $ 95 | $ 141 | $ 184 | $ 49 |
Portfolio turnover rate F | 153% | 146% | 200% | 186% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
D Calculated based on average shares outstanding during the period.
E Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
G For the period May 9, 2008 (commencement of sale of shares) to 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 reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class F
Years ended October 31, | 2011 | 2010 | 2009 G |
Selected Per-Share Data |
|
|
|
Net asset value, beginning of period | $ 21.69 | $ 19.74 | $ 17.52 |
Income from Investment Operations |
|
|
|
Net investment income (loss) D | .32 | .22 | .02 |
Net realized and unrealized gain (loss) | .05 | 2.00 | 2.20 |
Total from investment operations | .37 | 2.22 | 2.22 |
Distributions from net investment income | (.26) | (.27) | - |
Net asset value, end of period | $ 21.80 | $ 21.69 | $ 19.74 |
Total Return B, C | 1.70% | 11.31% | 12.67% |
Ratios to Average Net Assets E, H |
|
|
|
Expenses before reductions | .38% | .47% | .50% A |
Expenses net of fee waivers, if any | .38% | .47% | .50% A |
Expenses net of all reductions | .37% | .45% | .49% A |
Net investment income (loss) | 1.43% | 1.08% | .25% A |
Supplemental Data |
|
|
|
Net assets, end of period (in millions) | $ 2,693 | $ 1,359 | $ 75 |
Portfolio turnover rate F | 153% | 146% | 200% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
D Calculated based on average shares outstanding during the period.
E Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
G For the period June 26, 2009 (commencement of sale of shares) to October 31, 2009.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended October 31, 2011
(Amounts in thousands except percentages)
1. Organization.
Fidelity Disciplined Equity Fund (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. The Fund offers Disciplined Equity, Class K and Class F 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. Class F shares of the Fund are only available for purchase by mutual funds for which Fidelity Management & Research Company (FMR) or an affiliate serves as investment manager. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions may also differ by class.
2. Investments in Fidelity Central Funds.
The Fund invests in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by FMR and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of
Annual Report
3. Significant Accounting Policies - continued
the financial statements. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Fund uses independent pricing services approved by the Board of Trustees to value its investments. When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include market or security specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The value used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the Fund's own assumptions based on the best information available)
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of October 31, 2011, as well as a roll forward of Level 3 securities, is included at the end of the Fund's Schedule of Investments. Valuation techniques used to value the Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when significant market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-traded funds (ETFs) and certain indexes as well as quoted prices for similar securities are used and are categorized as Level 2 in the hierarchy in these circumstances. Utilizing these techniques may result in transfers between Level 1 and Level 2. For restricted equity securities and private placements where
Annual Report
Notes to Financial Statements - continued
(Amounts in thousands except percentages)
3. Significant Accounting Policies - continued
Security Valuation - continued
observable inputs are limited, assumptions about market activity and risk are used and are categorized as Level 3 in the hierarchy.
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy.
Foreign Currency. The Fund may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE, normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Annual Report
3. Significant Accounting Policies - continued
Expenses. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Deferred Trustee Compensation. Under a Deferred Compensation Plan (the Plan), independent Trustees may elect to defer receipt of a portion of their annual compensation. Deferred amounts are invested in a cross-section of Fidelity funds, are marked-to-market and remain in the Fund until distributed in accordance with the Plan. The investment of deferred amounts and the offsetting payable to the Trustees are included in the accompanying Statement of Assets and Liabilities.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company, including distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. As of October 31, 2011, the Fund did not have any unrecognized tax benefits in the financial statements. A fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are declared and recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, deferred trustees compensation, capital loss carryforwards and losses deferred due to wash sales.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $ 602,625 |
Gross unrealized depreciation | (647,524) |
Net unrealized appreciation (depreciation) on securities and other investments | $ (44,899) |
|
|
Tax Cost | $ 10,360,502 |
Annual Report
Notes to Financial Statements - continued
(Amounts in thousands except percentages)
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The tax-based components of distributable earnings as of period end were as follows:
Undistributed ordinary income | $ 103,010 |
Capital loss carryforward | $ (2,203,901) |
Net unrealized appreciation (depreciation) | $ (42,273) |
Under the recently enacted Regulated Investment Company Modernization Act of 2010 (the Act), the Fund will be permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to any losses incurred in pre-enactment taxable years, which generally expire after eight years from when they are incurred. Additionally, post-enactment capital losses that are carried forward will retain their character as either short-term or long-term capital losses rather than being considered all short-term as under previous law. The Fund's first fiscal year end subject to the Act will be October 31, 2012.
The tax character of distributions paid was as follows:
| October 31, 2011 | October 31, 2010 |
Ordinary Income | $ 105,872 | $ 121,330 |
New Accounting Pronouncement. In May 2011, the Financial Accounting Standards Board issued Accounting Standard Update No. 2011-04, Fair Value Measurement (Topic 820) - Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. The update changes the wording used to describe the requirements in GAAP for measuring fair value and for disclosing information about fair value measurements. The update is effective during interim and annual periods beginning after December 15, 2011. Management is currently evaluating the impact of the update's adoption on the Fund's financial statement disclosures.
4. Operating Policies.
Restricted Securities. The Fund may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities is included at the end of the Fund's Schedule of Investments.
Annual Report
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $16,150,422 and $16,685,390, respectively.
6. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and a group fee rate that averaged .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 Disciplined Equity as compared to an appropriate benchmark index. For the period, the total annual management fee rate, including the performance adjustment, was .36% of the Fund's average net assets.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of Disciplined Equity. FIIOC receives an asset-based fee of Class K's average net assets. FIIOC receives no fees for providing transfer agency services to Class F. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, transfer agent fees for each class were as follows:
| Amount | % of |
Disciplined Equity | $ 17,867 | .21 |
Class K | 73 | .05 |
| $ 17,940 |
|
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.
Annual Report
Notes to Financial Statements - continued
(Amounts in thousands except percentages)
6. Fees and Other Transactions with Affiliates - continued
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 $587 for the period.
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. The Fund's activity in this program during the period for which loans were outstanding was as follows:
Borrower or Lender | Average Daily | Weighted Average | Interest |
Borrower | $ 31,907 | .36% | $ 1 |
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR or an affiliate in a $4.0 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $33 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, there were no borrowings on this line of credit.
8. Security Lending.
The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. For equity securities, a lending agent is used and may loan securities to certain qualified borrowers, including Fidelity Capital Markets (FCM), a broker-dealer affiliated with the Fund. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. The value of securities loaned to FCM at period end was $1,170. Security lending
Annual Report
8. Security Lending - continued
income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Total security lending income during the period amounted to $3,829, including $189 from securities loaned to FCM.
9. Bank Borrowings.
The Fund is permitted to have bank borrowings for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity requirements. The Fund has established borrowing arrangements with certain banks. The interest rate on the borrowings is the bank's base rate, as revised from time to time. The average daily loan balance during the period for which loans were outstanding amounted to $23,904. The weighted average interest rate was .57%. The interest expense amounted to three hundred seventy-eight dollars under the bank borrowing program. At period end, there were no bank borrowings outstanding.
10. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of the Fund provided services to the Fund in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $1,381 for the period.
11. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended October 31, | 2011 | 2010 |
From net investment income |
|
|
Disciplined Equity | $ 86,646 | $ 116,715 |
Class K | 1,698 | 2,464 |
Class F | 17,528 | 2,151 |
Total | $ 105,872 | $ 121,330 |
Annual Report
Notes to Financial Statements - continued
(Amounts in thousands except percentages)
12. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
Years ended October 31, | 2011 | 2010 | 2011 | 2010 |
Disciplined Equity |
|
|
|
|
Shares sold | 41,487 | 48,761 | $ 933,066 | $ 1,024,807 |
Reinvestment of distributions | 3,881 | 5,559 | 85,889 | 115,802 |
Shares redeemed | (126,148) | (175,504) | (2,865,193) | (3,680,202) |
Net increase (decrease) | (80,780) | (121,184) | $ (1,846,238) | $ (2,539,593) |
Class K |
|
|
|
|
Shares sold | 2,553 | 5,579 | $ 58,670 | $ 117,922 |
Reinvestment of distributions | 77 | 118 | 1,698 | 2,464 |
Shares redeemed | (4,762) | (8,493) | (109,108) | (175,735) |
Net increase (decrease) | (2,132) | (2,796) | $ (48,740) | $ (55,349) |
Class F |
|
|
|
|
Shares sold | 75,199 | 65,890 | $ 1,686,077 | $ 1,373,135 |
Reinvestment of distributions | 793 | 103 | 17,528 | 2,151 |
Shares redeemed | (15,144) | (7,147) | (341,036) | (149,949) |
Net increase (decrease) | 60,848 | 58,846 | $ 1,362,569 | $ 1,225,337 |
13. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
At the end of the period, Fidelity Freedom 2020 was the owner of record of approximately 11% of the total outstanding shares of the Fund. The Fidelity Freedom and Freedom K Funds were owners of record, in aggregate, of approximately 79% of the total outstanding shares of the fund.
Annual Report
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Capital Trust and the Shareholders of Fidelity Disciplined Equity Fund:
In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Fidelity Disciplined Equity Fund (a fund of Fidelity Capital Trust) at October 31, 2011, 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 the financial highlights for each of the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fidelity Disciplined Equity Fund's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the 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 are free of material misstatement. An audit 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, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at October 31, 2011 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
December 9, 2011
Annual Report
Trustees and Officers
The Trustees, Members 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, oversee management of the risks associated with such activities and contractual arrangements, and review the fund's performance. Except for James C. Curvey, each of the Trustees oversees 226 funds advised by FMR or an affiliate. Mr. Curvey oversees 429 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 75th birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board Members 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.
Experience, Skills, Attributes, and Qualifications of the Fund's Trustees. The Governance and Nominating Committee has adopted a statement of policy that describes the experience, qualifications, attributes, and skills that are necessary and desirable for potential Independent Trustee candidates (Statement of Policy). The Board believes that each Trustee satisfied at the time he or she was initially elected or appointed a Trustee, and continues to satisfy, the standards contemplated by the Statement of Policy. The Governance and Nominating Committee also engages professional search firms to help identify potential Independent Trustee candidates who have the experience, qualifications, attributes, and skills consistent with the Statement of Policy. From time to time, additional criteria based on the composition and skills of the current Independent Trustees, as well as experience or skills that may be appropriate in light of future changes to board composition, business conditions, and regulatory or other developments, have also been considered by the professional search firms and the Governance and Nominating Committee. In addition, the Board takes into account the Trustees' commitment and participation in Board and committee meetings, as well as their leadership of standing and ad hoc committees throughout their tenure.
In determining that a particular Trustee was and continues to be qualified to serve as a Trustee, the Board has considered a variety of criteria, none of which, in isolation, was controlling. The Board believes that, collectively, the Trustees have balanced and diverse experience, qualifications, attributes, and skills, which allow the Board to operate effectively in governing the fund and protecting the interests of shareholders. Information about the specific experience, skills, attributes, and qualifications of each Trustee, which in each case led to the Board's conclusion that the Trustee should serve (or continue to serve) as a trustee of the fund, is provided below.
Annual Report
Board Structure and Oversight Function. James C. Curvey is an interested person (as defined in the 1940 Act) and currently serves as Acting Chairman. The Trustees have determined that an interested Chairman is appropriate and benefits shareholders because an interested Chairman has a personal and professional stake in the quality and continuity of services provided to the fund. Independent Trustees exercise their informed business judgment to appoint an individual of their choosing to serve as Chairman, regardless of whether the Trustee happens to be independent or a member of management. The Independent Trustees have determined that they can act independently and effectively without having an Independent Trustee serve as Chairman and that a key structural component for assuring that they are in a position to do so is for the Independent Trustees to constitute a substantial majority for the Board. The Independent Trustees also regularly meet in executive session. Ned C. Lautenbach serves as Chairman of the Independent Trustees and as such (i) acts as a liaison between the Independent Trustees and management with respect to matters important to the Independent Trustees and (ii) with management prepares agendas for Board meetings.
Fidelity funds are overseen by different Boards of Trustees. The fund's Board oversees Fidelity's equity and high income funds and another Board oversees Fidelity's investment-grade bond, money market, and asset allocation funds. The asset allocation funds may invest in Fidelity funds overseen by the fund's Board. The use of separate Boards, each with its own committee structure, allows the Trustees of each group of Fidelity funds to focus on the unique issues of the funds they oversee, including common research, investment, and operational issues. On occasion, the separate Boards establish joint committees to address issues of overlapping consequences for the Fidelity funds overseen by each Board.
The Trustees operate using a system of committees to facilitate the timely and efficient consideration of all matters of importance to the Trustees, the fund, and fund shareholders and to facilitate compliance with legal and regulatory requirements and oversight of the fund's activities and associated risks. The Board, acting through its committees, has charged FMR and its affiliates with (i) identifying events or circumstances the occurrence of which could have demonstrably adverse effects on the fund's business and/or reputation; (ii) implementing processes and controls to lessen the possibility that such events or circumstances occur or to mitigate the effects of such events or circumstances if they do occur; and (iii) creating and maintaining a system designed to evaluate continuously business and market conditions in order to facilitate the identification and implementation processes described in (i) and (ii) above. Because the day-to-day operations and activities of the fund are carried out by or through FMR, its affiliates and other service providers, the fund's exposure to risks is mitigated but not eliminated by the processes overseen by the Trustees. While each of the Board's committees has responsibility for overseeing different aspects of the fund's activities, oversight is exercised primarily through the Operations, Audit, and Compliance Committees. In addition, the Independent Trustees have worked with FMR to enhance the Board's oversight of investment and financial risks, legal and regulatory risks, technology risks, and operational risks, including the development of additional risk reporting to the Board. For example, a working group comprised of Independent Trustees and FMR has worked and continues to work to review the Fidelity funds' valuation-related activities, reporting and risk management. Appropriate personnel, including but not limited to the fund's Chief Compliance Officer (CCO), FMR's internal auditor, the independent accountants, the fund's Treasurer and portfolio management personnel, make periodic reports to the Board's committees, as appropriate, including an annual review of FMR's risk management program for the Fidelity funds. The responsibilities of each standing committee, including their oversight responsibilities, are described further under "Standing Committees of the Fund's Trustees."
Annual Report
Trustees and Officers - continued
The fund's Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-800-835-5092.
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 Occupations and Other Relevant Experience+ | |
James C. Curvey (76) | |
| Year of Election or Appointment: 2007 Mr. Curvey is Trustee and Acting Chairman of the Board of Trustees of certain Trusts. Mr. Curvey also serves as Trustee (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of Fidelity Investments Money Management, Inc. (2009-present), Director of Fidelity Research & Analysis Co. (2009-present) and Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2007-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. Previously, Mr. Curvey was the Vice Chairman (2006-2007) and Director (2000-2007) of FMR Corp. |
Ronald P. O'Hanley (54) | |
| Year of Election or Appointment: 2011 Mr. O'Hanley is Director of FMR Co., Inc. (2010-present), Director of Fidelity Investments Money Management, Inc. (2010-present), Director of Fidelity Research & Analysis Company (2010-present), President of Fidelity Asset Management and Corporate Services and a member of Fidelity's Executive Committee (2010-present). Previously, Mr. O'Hanley served as President and Chief Executive Officer of BNY Mellon Asset Management (2007-2010). Mr. O'Hanley also served as Vice Chairman of Bank New York Mellon Corp. and a member of that firm's Executive Committee. Prior to the 2007 merger of The Bank of New York and Mellon Financial Corporation, he was Vice Chairman of Mellon Financial Corporation and President and Chief Executive Officer of Mellon Asset Management. He joined Mellon in February 1997. Mr. O'Hanley currently serves as Chairman of the Boston Public Library Foundation Board of Directors and sits on the Board of Directors of Beth Israel Deaconess Medical Center, the Board of Trustees of the Marine Biological Laboratory and the Advisory Board of the Maxwell School of Citizenship and Public Administration at Syracuse University. Mr. O'Hanley also chairs the Council on Asset Management for the Financial Services Roundtable and is a member of the Board of Directors of Institutional Investor's U.S. Institute. |
* 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.
+ The information above includes each Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Trustee's qualifications to serve as a Trustee, which led to the conclusion that each Trustee should serve as a Trustee for the fund.
Annual Report
Trustees and Officers - continued
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 Occupations and Other Relevant Experience+ | |
Dennis J. Dirks (63) | |
| 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). He also served as President, Chief Operating Officer, and Board member of The Depository Trust Company (DTC) and President and Board member of the National Securities Clearing Corporation (NSCC). In addition, Mr. Dirks served as Chief Executive Officer and Board member of the Government Securities Clearing Corporation, Chief Executive Officer and Board member of the Mortgage-Backed Securities Clearing Corporation, as a Trustee and a member of the Finance Committee of Manhattan College (2005-2008), and as a Trustee and a member of the Finance Committee of AHRC of Nassau County (2006-2008). Mr. Dirks is a member of the Independent Directors Council (IDC) Governing Council (2010-Present) and Board of Directors for The Brookville Center for Children's Services, Inc. (2009-present). |
Alan J. Lacy (58) | |
| Year of Election or Appointment: 2008 Mr. Lacy serves as Senior Adviser (2007-present) of Oak Hill Capital Partners, L.P. (private equity). 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 Dave & Buster's, Inc. (restaurant and entertainment complexes, 2010-present), The Hillman Companies, Inc. (hardware wholesalers, 2010-present), and Bristol-Myers Squibb Company (global pharmaceuticals, 2007-present). Mr. Lacy is a member of the Board of Trustees of The National Parks Conservation Association (2006-Present). Previously, Mr. Lacy served as Chairman of the Board of Trustees of the National Parks Conservation Association (2008-2011) and as a member of the Board of Directors for the Western Union Company (global money transfer, 2006-2011). |
Ned C. Lautenbach (67) | |
| Year of Election or Appointment: 2000 Mr. Lautenbach is Chairman of the Independent Trustees of the Equity and High Income Funds (2006-present). Mr. Lautenbach currently serves as the Lead Director of the Eaton Corporation Board of Directors (diversified industrial, 1997-present). Mr. Lautenbach is also a member of the Board of Directors of the Philharmonic Center for the Arts in Naples, Florida (1999-present); a member of the Board of Trustees of Fairfield University (2005-present); and a member of the Council on Foreign Relations (1994-present). Previously, Mr. Lautenbach was a Partner/Advisory Partner at Clayton, Dubilier & Rice, LLC (private equity investment, 1998-2010), as well as a Director of Sony Corporation (2006-2007). |
Joseph Mauriello (67) | |
| Year of Election or Appointment: 2008 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, 1965-2005). Mr. Mauriello currently serves as a member of the Board of Directors of XL Group plc. (global insurance and re-insurance, 2006-present) and of Arcadia Resources Inc. (health care services and products, 2007-present). Previously, Mr. Mauriello served as a Director of the Hamilton Funds of the Bank of New York (2006-2007). |
Robert W. Selander (61) | |
| Year of Election or Appointment: 2011 Previously, Mr. Selander served as a Member of the Advisory Board of Fidelity's Equity and High Income Funds (2011), Executive Vice Chairman (2010), Chief Executive Officer (2009-2010), and President and Chief Executive Officer (1997-2009) of Mastercard, Inc. |
Cornelia M. Small (67) | |
| Year of Election or Appointment: 2005 Ms. Small is a member of the Board of Directors of the Teagle Foundation (2009-present). Ms. Small is also a member of the Investment Committee, and Chair (2008-present) and a member of the Board of Trustees of Smith College. In addition, Ms. Small 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. In addition, Ms. Small 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 (72) | |
| Year of Election or Appointment: 2002 Mr. Stavropoulos is Vice Chairman of the Independent Trustees of the Equity and High Income Funds (2006-present). Mr. Stavropoulos serves as President and Founder of the Michigan Baseball Foundation, the Great Lakes Loons (2007-present). 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, CEO (1995-2000; 2002-2004), Chairman of the Executive Committee (2000-2006), and as a member of the Board of Directors (1990-2006). Currently, Mr. Stavropoulos is Chairman of Univar (global distributor of commodity and specialty chemicals, 2010-present), 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, 2005-present). Mr. Stavropoulos is a special advisor to Clayton, Dubilier & Rice, LLC (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 (62) | |
| 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), and Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (61) | |
| Year of Election or Appointment: 2008 Mr. Wiley also serves as a Director of Asia Pacific Exploration Consolidated (international oil and gas exploration and production, 2008-present). Mr. Wiley serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), and a Director of Bill Barrett Corporation (exploration and production, 2005-present). In addition, Mr. Wiley also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-2010), as a Senior Energy Advisor of Katzenbach Partners, LLC (consulting, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production, 2001-2005). |
Annual Report
+ The information above includes each Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Trustee's qualifications to serve as a Trustee, which led to the conclusion that each Trustee should serve as a Trustee for the fund.
Advisory Board Members and Executive Officers:
Correspondence intended for each executive officer, Edward C. Johnson 3d, and Peter S. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Edward C. Johnson 3d (81) | |
| Year of Election or Appointment: 2011 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Mr. Johnson serves as Chief Executive Officer, Chairman, and a Director of FMR LLC, and also serves as Chairman and Director of FIL Limited. Previously, Mr. Johnson served as a Trustee and Chairman of the Board of certain Fidelity Trusts, Chairman and a Director of FMR, Chairman and a Director of FMR Co., Inc., and President of FMR LLC (2006-2007). |
Peter S. Lynch (67) | |
| Year of Election or Appointment: 2003 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Mr. Lynch is Vice Chairman and a Director of FMR and FMR Co., Inc. In addition, Mr. Lynch 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 (42) | |
| Year of Election or Appointment: 2008 President and Treasurer of Fidelity's Equity and High Income Funds. Mr. Robins also serves as President and Treasurer (2010-present) and Assistant Treasurer (2009-present) of other Fidelity funds and is an employee of Fidelity Investments (2004-present). Previously, Mr. Robins served as Deputy Treasurer of the Fidelity funds (2005-2008) and Treasurer and Chief Financial Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2006-2008). |
Bruce T. Herring (46) | |
| Year of Election or Appointment: 2006 Vice President of certain Equity Funds. Mr. Herring also serves as Chief Investment Officer and Director of Fidelity Management & Research (U.K.) Inc. (2010-present) and Group Chief Investments Officer of FMR. Previously, Mr. Herring served as Vice President (2005-2006) and Senior Vice President (2006-2007) of Fidelity Management & Research Company, Vice President of FMR Co., Inc. (2001-2007) and as a portfolio manager for Fidelity U.S. Equity Funds. |
Brian B. Hogan (47) | |
| Year of Election or Appointment: 2009 Vice President of Equity and High Income Funds. Mr. Hogan also serves as President of FMR's Equity Division (2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager. |
Scott C. Goebel (43) | |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of the Fidelity funds. Mr. Goebel also serves as Secretary of Fidelity Investments Money Management, Inc. (FIMM) (2010-present) and Fidelity Research and Analysis Company (FRAC) (2010-present); Secretary and CLO of The North Carolina Capital Management Trust: Cash and Term Portfolios (2008-present); General Counsel, Secretary, and Senior Vice President of FMR (2008-present) and FMR Co., Inc. (2008-present); employed by FMR LLC or an affiliate (2001-present); Chief Legal Officer of Fidelity Management & Research (Hong Kong) Limited (2008-present) and Assistant Secretary of Fidelity Management & Research (Japan) Inc. (2008-present), and Fidelity Management & Research (U.K.) Inc. (2008-present). Previously, Mr. Goebel served as Assistant Secretary of FIMM (2008-2010), FRAC (2008-2010), and the Funds (2007-2008) and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007). |
William C. Coffey (42) | |
| Year of Election or Appointment: 2009 Assistant Secretary of Fidelity's Equity and High Income Funds. Mr. Coffey also serves as Senior Vice President and Deputy General Counsel of FMR LLC (2010-present), and is an employee of Fidelity Investments. Previously, Mr. Coffey served as Vice President and Associate General Counsel of FMR LLC (2005-2009). |
Holly C. Laurent (57) | |
| Year of Election or Appointment: 2008 Anti-Money Laundering (AML) Officer of the Fidelity funds. Ms. Laurent also serves as AML Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2008-present) and 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), and Senior Vice President, Deputy General Counsel and Group Head for FMR LLC (2005-2006). |
Christine Reynolds (53) | |
| 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. Ms. Reynolds served as Chief Operating Officer of FPCMS (2007-2008). Previously, Ms. Reynolds served as President, Treasurer, and Anti-Money Laundering officer of the Fidelity funds (2004-2007). |
Kenneth A. Rathgeber (64) | |
| 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), Pyramis Global Advisors, LLC (2005-present), and Strategic Advisers, Inc. (2005-present). |
Jeffrey S. Christian (50) | |
| Year of Election or Appointment: 2009 Deputy Treasurer of the Fidelity funds. Mr. Christian is an employee of Fidelity Investments. Previously, Mr. Christian served as Chief Financial Officer (2008-2009) of certain Fidelity funds and Senior Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (2004-2009). |
Joseph F. Zambello (54) | |
| Year of Election or Appointment: 2011 Deputy Treasurer of the Fidelity funds. Mr. Zambello is an employee of Fidelity Investments. Previously, Mr. Zambello served as Vice President of FMR's Program Management Group (2009-2011) and Vice President of the Transfer Agent Oversight Group (2005-2009). |
Adrien E. Deberghes (44) | |
| Year of Election or Appointment: 2008 Deputy Treasurer of Fidelity's Equity and High Income Funds. Mr. Deberghes also serves as Vice President and Assistant Treasurer of Fidelity Rutland Square Trust II and Fidelity Commonwealth Trust II (2011-present), Assistant Treasurer of other Fidelity funds (2010-present), and 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). |
Stephanie J. Dorsey (42) | |
| Year of Election or Appointment: 2010 Assistant Treasurer of Fidelity's Equity and High Income Funds. Ms. Dorsey also serves as Deputy Treasurer of other Fidelity funds (2008-present) and is an employee of Fidelity Investments (2008-present). Previously, Ms. Dorsey served as Treasurer (2004-2008) of the JPMorgan Mutual Funds and Vice President (2004-2008) of JPMorgan Chase Bank. |
John R. Hebble (53) | |
| Year of Election or Appointment: 2009 Assistant Treasurer of Fidelity's Equity and High Income Funds. Mr. Hebble also serves as President (2011-present), Treasurer, and Chief Financial Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2008-present), President and Treasurer of other Fidelity funds (2008-present) and is an employee of Fidelity Investments. |
Gary W. Ryan (53) | |
| 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). |
Jonathan Davis (43) | |
| Year of Election or Appointment: 2010 Assistant Treasurer of the Fidelity funds. Mr. Davis is also Assistant Treasurer of Fidelity Rutland Square Trust II and Fidelity Commonwealth Trust II. Mr. Davis is an employee of Fidelity Investments. Previously, Mr. Davis served as Vice President and Associate General Counsel of FMR LLC (2003-2010). |
Annual Report
Distributions (Unaudited)
Class F designates 100% of the dividends distributed during the fiscal year as qualifying for the dividends-received deduction for corporate shareholders.
Class F designates 100% of the dividend 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 2012 of amounts for use in preparing 2011 income tax returns.
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees
Fidelity Disciplined Equity Fund
Each year, 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 relevant to the renewal of the Advisory Contracts throughout the year.
The Board meets regularly 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. The Board has established various 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. The Board, acting directly and through its Committees, requests and receives information concerning the annual consideration of the renewal of the fund's Advisory Contracts. The Board also meets as needed to consider matters specifically related to the Board's annual consideration of the renewal of Advisory Contracts. Members of the Board may also meet with trustees of other Fidelity funds through ad hoc joint committees to discuss certain matters relevant to the Fidelity funds.
At its July 2011 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 expense ratio; (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.
In considering whether to renew the Advisory Contracts for the fund, the Board 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 is in the best interests of the fund and its shareholders and that the compensation payable under the Advisory Contracts is fair and reasonable. The Board's decision to renew the Advisory Contracts was not based on any single factor, 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 Fidelity's competitors, and that the fund's shareholders, who have 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 the 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 to act in the best interests of the fund.
Resources Dedicated to Investment Management and Support Services. The Board and the Fund Oversight and Research Committees reviewed the general qualifications and capabilities of the Investment Advisers' investment staff, including its size, education, experience, and resources, as well as the Investment Advisers' approach to recruiting, training, managing, and compensating investment personnel. The Board also noted that FMR has devoted increased resources to non-U.S. offices. The Board noted that Fidelity's analysts have extensive resources, tools and capabilities which allow them to conduct sophisticated quantitative and fundamental analysis, as well as credit analysis of issuers, counterparties and enhancers. The Board also believes that Fidelity's investment professionals have sufficient access to global information and data so as to provide competitive investment results over time, and that those professionals also have access to sophisticated tools which permit them to assess portfolio construction and risk and performance attribution characteristics continuously, as well as to transmit new information and research conclusions rapidly around the world. Additionally, in their deliberations, the Board considered the Investment Advisers' trading capabilities and resources which are an integral part of the investment management process.
Shareholder and Administrative Services. The Board considered (i) the nature, extent, quality, and cost of advisory, administrative, 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 adviser's 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 noted that the growth of fund assets over time 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 telephone representatives and over the Internet, investor education materials and asset allocation tools, and the expanded availability of Fidelity Investor Centers, with 35 new branches opening since 2010.
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 a large variety of mutual fund investor services. The Board noted that Fidelity had taken, or had made recommendations that resulted in the Fidelity funds taking, a number of actions over the previous year that benefited particular funds, including (i) continuing to dedicate additional resources to investment research and support of the senior management team that oversees asset management; (ii) rationalizing product lines through the mergers of six funds into other funds; (iii) continuing to migrate the Freedom Funds to dedicated lower cost underlying funds; (iv) obtaining shareholder approval to broaden the investment strategies for Fidelity Consumer Finance Portfolio, Fidelity Emerging Asia Fund, and Fidelity Environment and Alternative Energy Portfolio; (v) contractually agreeing to reduce the management fees and impose other expense limitations on Spartan 500 Index Fund and U.S. Bond Index Fund in connection with launching new institutional classes of these funds; (vi) changing the name, primary and supplemental benchmarks, and investment policies of Fidelity Global Strategies Fund to support the fund's flexible investment mandate and global orientation; and (vii) reducing the transfer agency account fee rates on certain accounts.
Investment Performance. The Board considered whether the fund has operated in accordance with its investment objective, as well as its record of compliance with its investment restrictions. It also reviewed the fund's absolute investment performance for each class, as well as the fund's relative investment performance for each class measured over multiple periods against (i) a broad-based securities market index, and (ii) a peer group of mutual funds deemed appropriate by Fidelity and reviewed by the Board. The following charts considered by the Board show, over the one-, three-, and five-year periods ended December 31, 2010, as available, the cumulative total returns of Class F and the retail class of the fund, 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 returns of Class F and the retail class show the performance of the highest and lowest performing classes, respectively (based on one-year performance). 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 numbers noted below each chart correspond to the percentile box and represent the percentage of funds in the peer group whose performance was equal to or lower than that of the class indicated.
Annual Report
Fidelity Disciplined Equity Fund
The Board reviewed the fund's relative investment performance against its peer group and noted that the performance of the retail class of the fund (the class with the longest performance record) was in the fourth quartile for all the periods shown. The Board also noted that the investment performance of the fund was lower than its benchmark for all the periods shown. The Board considered that the variations in performance among the fund's classes reflect the variations in class expenses, which result in lower performance for higher expense classes. The Board discussed with FMR actions that have been taken by FMR to improve the fund's disappointing performance relative to its peer group and benchmark. The Board noted that this fund had underperformed in 2009 and discussed with FMR its disappointment with the continued underperformance of the fund. The Board also reviewed the fund's performance since inception as well as performance in the current year. The Board will continue to closely monitor the performance of the fund in the coming year and discuss with FMR other appropriate actions to address the performance of the fund.
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 noted 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.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
Based on its review, the Board concluded that the nature, extent, and quality of services provided to the fund under the Advisory Contracts should benefit the fund's shareholders.
Competitiveness of Management Fee and Total Expense Ratio. The Board considered the fund's management fee and total expense ratio 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 ratio comparisons by broadening the competitive group used for comparison and by reducing the number of universes to which various Fidelity funds are compared.
Management Fee. 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 10% means that 90% 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 Disciplined Equity Fund
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 2010. The Board also noted the effect of the fund's negative 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.
Based on its review, the Board concluded that the fund's management fee is fair and reasonable in light of the services that the fund receives and the other factors considered.
Total Expense Ratio. In its review of each class's total expense ratio, the Board considered the fund's management fee as well as other fund or class expenses, as applicable, 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 the current and historical total expense ratios of each class of the fund compared to competitive fund median expenses. Each class of 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.
The Board noted that the total expense ratio of each class ranked below its competitive median for 2010. The Board considered that various factors, including 12b-1 fees, positive or negative performance adjustments, and relatively higher other expenses in the case of small fund size, can affect total expense ratios.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
Fees Charged to Other Fidelity Clients. The Board also considered Fidelity fee structures and other information with respect to clients of FMR and its affiliates, such as other mutual funds advised or subadvised by FMR or its affiliates, pension plan clients, and other institutional clients. In March 2010, the Board created an ad hoc joint committee with the board of other Fidelity funds (the Committee) to review and compare Fidelity's institutional investment advisory business with its business of providing services to the Fidelity funds, including the differences in services provided, fees charged, and costs incurred, as well as competition in their respective marketplaces.
Based on its review of total expense ratios and fees charged to other Fidelity clients, the Board concluded that the total expense ratio of each class of the fund was reasonable in light of the services that the fund and its shareholders receive and the other factors considered, including the findings of the Committee.
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 books and records of Fidelity on which Fidelity's audited financial statements are based. 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 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 concluded that while other allocation methods may also be reasonable, Fidelity's profitability methodologies are reasonable in all material respects.
The Board also reviewed Fidelity's non-fund businesses and 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.
Annual Report
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 was satisfied that the profitability was not excessive in the circumstances.
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 also noted that in 2009, it and the board of other Fidelity funds created an ad hoc committee (the Economies of Scale Committee) to analyze whether FMR attains economies of scale in respect of the management and servicing of the Fidelity funds, whether the Fidelity funds have appropriately benefited from such economies of scale, and whether there is potential for realization of any further economies of scale.
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 calculates the group fee rates based on a tiered asset "breakpoint" schedule that varies based on asset class. The Board considered that the group fee is designed to deliver the benefits of economies of scale to fund shareholders when total Fidelity 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 benefit from lower management fees as assets under FMR's management increase at the fund complex level, regardless of whether Fidelity achieves any such economies of scale.
The Board concluded, taking into account the analysis of the Economies of Scale Committee, that any potential economies of scale are being appropriately shared between fund shareholders and Fidelity.
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, actions to be taken by FMR to improve certain funds' overall performance, and Fidelity's long-term strategies for certain funds; (ii) portfolio manager changes that have occurred during the past year and length of portfolio manager tenure for different categories of funds over time; (iii) Fidelity's compensation structure for portfolio managers and other key personnel and strategies for attracting and retaining non-investment personnel; (iv) the amount of the investment that each portfolio manager has made in the Fidelity fund(s) that he or she manages; (v) historical trends in Fidelity's realization of fall-out benefits; (vi) Fidelity's group fee structures and the rationale for the individual fee rates of certain funds; (vii) fund profitability methodology and the impact of certain factors on fund profitability results; (viii) trends regarding industry use of performance fee structures and Fidelity's compliance practices with respect to performance adjustment calculations; (ix) the fee structures in place for certain other Fidelity clients; and (x) explanations regarding the relative total expense ratios of certain funds and classes, total expense competitive trends, and actions that might be taken by FMR to reduce total expense ratios for certain funds and classes.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
Based on its evaluation of all of the conclusions noted above, and after considering all factors it believed relevant, 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 workplace benefits (including your workplace savings plan, investments, and additional services) via your telephone or PC. You can access your plan and account information and research your investments 24 hours a day.
By Phone
Fidelity provides a single toll-free number to access plan information, account balances, positions, and quotes*. It's easy to navigate the service, and on your first call, the system will help you create a personal identification number (PIN) for security.
Fidelity Workplace
Investing
1-800-835-5092
By PC
Fidelity's web site on the Internet provides a wide range of information, including plan information, daily financial news, fund performance, interactive planning tools, and news about Fidelity products and services.
Fidelity's Web Site
www.401k.com
* When you call the quotes line, please remember that a fund's yield and return will vary and, except for money market funds, share price will also vary. This means that you may have a gain or loss when you sell your shares. There is no assurance that money market funds will be able to maintain a stable $1 share price; an investment in a money market fund is not insured or guaranteed by the U.S. government. Total returns are historical and include changes in share price, reinvestment of dividends and capital gains distributions, and the effects of any sales charges.
Annual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Fidelity Management & Research
(U.K.) Inc.
Fidelity Management & Research
(Hong Kong) Limited
Fidelity Management & Research
(Japan) Inc.
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Service Agents
Fidelity Investments Institutional
Operations Company, Inc. (FIIOC)
Boston, MA
Fidelity Service Company, Inc.
Boston, MA
Custodian
State Street Bank and Trust Company
Quincy, MA
FDE-F-ANN-1211 1.891696.102
Fidelity®
Disciplined Equity
Fund -
Class K
Annual Report
October 31, 2011
Contents
Chairman's Message | The Chairman's message to shareholders. | |
Performance | How the fund has done over time. | |
Management's Discussion of Fund Performance | The Portfolio Manager's review of fundperformance and strategy. | |
Shareholder Expense Example | An example of shareholder expenses. | |
Investment Changes | A summary of major shifts in the fund's investments over the past six months. | |
Investments | A complete list of the fund's investments with their market values. | |
Financial Statements | Statements of assets and liabilities, operations, and changes in net assets, as well as financial highlights. | |
Notes | Notes to the financial statements. | |
Report of Independent Registered Public Accounting Firm |
| |
Trustees and Officers |
| |
Distributions |
| |
Board Approval of Investment Advisory Contracts and Management Fees |
|
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-800-835-5092 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company.
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, http://www.advisor.fidelity.com, or http://www.401k.com, as applicable.
NOT FDIC INSURED • MAY LOSE VALUE • NO BANK GUARANTEE
Neither the fund nor Fidelity Distributors Corporation is a bank.
Annual Report
Chairman's Message
(photo_of_James_C_Curvey)
Dear Shareholder:
Global equity markets began the fourth quarter on a strong note, sharply reversing course in October amid strong corporate earnings, better-than-expected economic news and the promise of a resolution to the sovereign debt crisis in Europe. The mini rally followed a third quarter marked by a significant downturn in July and August, which heightened investor anxiety and set off a wave of volatility that hampered most major asset classes through the end of September. Financial markets are difficult to predict, of course, but you can help put the odds in your favor by following these time-tested investment principles.
One of the basic tenets is to invest according to your time horizon. For long-term investors, riding out the markets' inevitable ups and downs has proven much more effective than making decisions based on short-term developments. If your goal is approaching, you can also benefit from patience and restraint, rather than attempting to time the market. No matter your time horizon, missing only a few of the markets' best days can significantly diminish returns. Patience also affords the benefits of compounding - earning interest on additional income or reinvested dividends and capital gains. While staying the course doesn't eliminate risk, it can considerably lessen the negative impact of short-term downturns.
Asset allocation is another principle to manage risk. As you spread your portfolio among the asset classes, be sure to consider your time horizon, risk tolerance and investment objectives. Younger investors may be better served by emphasizing equities, which historically have been the best-performing asset class over time. Investors who are nearing a specific goal, such as retirement or sending a child to college, may choose to favor bonds and other investments that have tended to be more stable. Studies indicate that asset allocation is the single most important determinant of a portfolio's long-term success. After deciding on a suitable allocation strategy, make sure your portfolio is adequately diversified, with exposure to stocks of small-, mid- and large-cap companies in a range of sectors, for example. And today, more than ever, geographic diversification should be taken into account.
Lastly, investing a certain amount of money on a regular basis - a principle known as dollar-cost averaging - can help lower the average cost of your purchases, while also giving you the discipline to avoid selling weak performers just prior to an upswing, or chasing a hot performer just before a correction.
We invite you to learn more by visiting us on the Internet, dropping by one of our Investor Centers or calling us by phone. It is our privilege to provide the resources you need to choose investments that are right for you.
Sincerely,
(The acting chairman's signature appears here.)
James C. Curvey
Acting Chairman
Annual Report
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' distributions from 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, 2011 | Past 1 | Past 5 | Past 10 |
Class KA | 1.68% | -2.55% | 3.03% |
A The initial offering of Class K shares took place on May 9, 2008. Returns prior to May 9, 2008 are those of Fidelity® Disciplined Equity Fund, the original class of the fund.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Fidelity® Disciplined Equity Fund - Class K on October 31, 2001. The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index 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
Management's Discussion of Fund Performance
Market Recap: U.S. stocks overcame a sharp summer drop to post a solid gain for the 12 months ending October 31, 2011. Bullishness pervaded the market during the first half of the period, only to be squelched by extreme volatility in the summer, as debate over the U.S. debt ceiling, Standard & Poor's subsequent downgrade of the country's long-term sovereign credit rating and deepening debt woes in Europe led to the worst calendar-quarter finish for the S&P 500® Index in almost three years. However, news of a possible solution to the eurozone debt crisis, along with better-than-expected U.S. economic data and strong corporate earnings, helped fuel an October rally that pushed the broad-based index up roughly 11% - its highest monthly return since December 1991. With that boost, the S&P 500® finished the year up 8.09%, while the blue-chip Dow Jones Industrial AverageSM added 10.39% and the technology-heavy Nasdaq Composite® Index gained 8.10%. Among sectors within the S&P 500®, only financials (-6%) posted a decline for the year, while energy (+19%) and utilities (+15%) fared best. Small and mid-sized stocks also rose, with the Russell 2000® and Russell Midcap® indexes adding 6.71% and 7.85%, respectively. The lengthy financial crisis in Europe continued to hamper foreign developed-markets equities, with the MSCI® EAFE® (Europe, Australasia, Far East) Index falling 3.97%.
Comments from Keith Quinton, Portfolio Manager of Fidelity® Disciplined Equity Fund: For the year, the fund's Class K shares returned 1.68%, significantly underperforming the S&P 500. Poor stock picking accounted for most of the weak showing, with the biggest hit coming from information technology, where a large stake in computer maker Hewlett-Packard was detrimental, and underexposure to industry overachiever and benchmark heavyweight Apple held back relative results. The fund also fared poorly with positioning in financials - including an overweighting in the weak diversified financials group - and consumer discretionary, where security selection in the retailing segment hurt. Other individual detractors were computer memory chip maker Micron Technology and retailer Best Buy, the latter of which I sold by period end. Energy was a bright spot, especially an overweighting in Marathon Oil, the Houston exploration/production firm spun off from the integrated oil company in June. An overweighting in health insurance provider Humana helped, as did avoiding financial giant and index component Bank of America.
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 Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (May 1, 2011 to October 31, 2011).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.
Annual Report
| Annualized | Beginning | Ending | Expenses Paid |
Disciplined Equity | .59% |
|
|
|
Actual |
| $ 1,000.00 | $ 873.00 | $ 2.79 |
HypotheticalA |
| $ 1,000.00 | $ 1,022.23 | $ 3.01 |
Class K | .43% |
|
|
|
Actual |
| $ 1,000.00 | $ 873.40 | $ 2.03 |
HypotheticalA |
| $ 1,000.00 | $ 1,023.04 | $ 2.19 |
Class F | .38% |
|
|
|
Actual |
| $ 1,000.00 | $ 873.70 | $ 1.79 |
HypotheticalA |
| $ 1,000.00 | $ 1,023.29 | $ 1.94 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period).
Annual Report
Investment Changes (Unaudited)
Top Ten Stocks as of October 31, 2011 | ||
| % of fund's | % of fund's net assets |
Chevron Corp. | 4.7 | 4.6 |
JPMorgan Chase & Co. | 4.0 | 4.5 |
General Electric Co. | 3.7 | 2.8 |
Hewlett-Packard Co. | 3.4 | 3.6 |
Wells Fargo & Co. | 3.3 | 0.9 |
Microsoft Corp. | 2.8 | 2.5 |
Philip Morris International, Inc. | 2.5 | 2.3 |
Vodafone Group PLC sponsored ADR | 2.5 | 2.8 |
Anheuser-Busch InBev SA NV | 2.4 | 2.6 |
MasterCard, Inc. Class A | 2.4 | 0.0 |
| 31.7 | |
Top Five Market Sectors as of October 31, 2011 | ||
| % of fund's | % of fund's net assets |
Information Technology | 19.3 | 17.3 |
Financials | 13.8 | 14.9 |
Energy | 11.8 | 13.0 |
Health Care | 11.3 | 11.3 |
Consumer Discretionary | 11.0 | 11.4 |
Asset Allocation (% of fund's net assets) | |||||||
As of October 31, 2011* | As of April 30, 2011** | ||||||
![]() | Stocks 98.2% |
| ![]() | Stocks 98.0% |
| ||
![]() | Short-Term |
| ![]() | Short-Term |
| ||
* Foreign investments | 12.6% |
| ** Foreign investments | 16.3% |
|
Annual Report
Investments October 31, 2011
Showing Percentage of Net Assets
Common Stocks - 96.5% | |||
Shares | Value (000s) | ||
CONSUMER DISCRETIONARY - 9.3% | |||
Auto Components - 0.8% | |||
TRW Automotive Holdings Corp. (a) | 1,950,356 | $ 82,110 | |
Diversified Consumer Services - 1.1% | |||
ITT Educational Services, Inc. (a)(d) | 118,024 | 7,313 | |
Weight Watchers International, Inc. | 1,300,000 | 97,006 | |
| 104,319 | ||
Household Durables - 0.4% | |||
Tempur-Pedic International, Inc. (a) | 586,957 | 39,948 | |
Media - 1.9% | |||
CBS Corp. Class B | 4,100,000 | 105,821 | |
Viacom, Inc. Class B (non-vtg.) | 2,000,000 | 87,700 | |
| 193,521 | ||
Specialty Retail - 3.6% | |||
AutoZone, Inc. (a) | 200,000 | 64,718 | |
Bed Bath & Beyond, Inc. (a) | 800,000 | 49,472 | |
Home Depot, Inc. | 4,200,000 | 150,360 | |
Limited Brands, Inc. | 2,298,115 | 98,152 | |
| 362,702 | ||
Textiles, Apparel & Luxury Goods - 1.5% | |||
VF Corp. | 1,100,000 | 152,042 | |
TOTAL CONSUMER DISCRETIONARY | 934,642 | ||
CONSUMER STAPLES - 10.9% | |||
Beverages - 2.9% | |||
Anheuser-Busch InBev SA NV | 4,438,240 | 246,163 | |
Dr Pepper Snapple Group, Inc. | 1,300,000 | 48,685 | |
| 294,848 | ||
Food Products - 0.6% | |||
Ralcorp Holdings, Inc. (a) | 700,000 | 56,588 | |
Household Products - 1.5% | |||
Procter & Gamble Co. | 2,300,000 | 147,177 | |
Tobacco - 5.9% | |||
Imperial Tobacco Group PLC | 2,800,000 | 102,397 | |
Japan Tobacco, Inc. | 15,004 | 75,002 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
CONSUMER STAPLES - continued | |||
Tobacco - continued | |||
Lorillard, Inc. | 1,500,000 | $ 165,990 | |
Philip Morris International, Inc. | 3,600,000 | 251,532 | |
| 594,921 | ||
TOTAL CONSUMER STAPLES | 1,093,534 | ||
ENERGY - 11.8% | |||
Energy Equipment & Services - 0.5% | |||
Helix Energy Solutions Group, Inc. (a) | 1,000,000 | 18,060 | |
National Oilwell Varco, Inc. | 400,000 | 28,532 | |
| 46,592 | ||
Oil, Gas & Consumable Fuels - 11.3% | |||
Chevron Corp. | 4,467,400 | 469,303 | |
CVR Energy, Inc. (a) | 1,100,000 | 27,236 | |
Exxon Mobil Corp. | 2,706,880 | 211,380 | |
Marathon Oil Corp. | 3,900,000 | 101,517 | |
Marathon Petroleum Corp. | 1,400,000 | 50,260 | |
Tesoro Corp. (a) | 6,877,000 | 178,389 | |
Valero Energy Corp. | 4,000,000 | 98,400 | |
| 1,136,485 | ||
TOTAL ENERGY | 1,183,077 | ||
FINANCIALS - 13.8% | |||
Commercial Banks - 3.8% | |||
U.S. Bancorp | 2,000,000 | 51,180 | |
Wells Fargo & Co. | 12,600,000 | 326,466 | |
| 377,646 | ||
Consumer Finance - 2.8% | |||
Capital One Financial Corp. | 5,230,300 | 238,815 | |
SLM Corp. | 3,200,000 | 43,744 | |
| 282,559 | ||
Diversified Financial Services - 4.3% | |||
JPMorgan Chase & Co. | 11,600,000 | 403,216 | |
KKR Financial Holdings LLC | 3,000,000 | 25,050 | |
| 428,266 | ||
Common Stocks - continued | |||
Shares | Value (000s) | ||
FINANCIALS - continued | |||
Insurance - 1.5% | |||
Hartford Financial Services Group, Inc. | 5,200,000 | $ 100,100 | |
Unum Group | 2,100,000 | 50,064 | |
| 150,164 | ||
Real Estate Investment Trusts - 1.3% | |||
American Capital Agency Corp. (d) | 3,893,800 | 107,118 | |
Two Harbors Investment Corp. | 2,800,000 | 26,180 | |
| 133,298 | ||
Real Estate Management & Development - 0.1% | |||
Brookfield Properties Corp. | 618,700 | 10,154 | |
TOTAL FINANCIALS | 1,382,087 | ||
HEALTH CARE - 11.3% | |||
Biotechnology - 3.5% | |||
Alexion Pharmaceuticals, Inc. (a) | 700,000 | 47,257 | |
Amgen, Inc. | 3,474,000 | 198,956 | |
Biogen Idec, Inc. (a) | 900,000 | 104,724 | |
| 350,937 | ||
Health Care Equipment & Supplies - 0.7% | |||
The Cooper Companies, Inc. | 1,012,453 | 70,163 | |
Health Care Providers & Services - 5.4% | |||
Aetna, Inc. | 2,800,000 | 111,328 | |
Humana, Inc. | 1,300,000 | 110,357 | |
McKesson Corp. | 300,000 | 24,465 | |
UnitedHealth Group, Inc. | 5,000,000 | 239,950 | |
WellPoint, Inc. | 800,000 | 55,120 | |
| 541,220 | ||
Pharmaceuticals - 1.7% | |||
Pfizer, Inc. | 9,000,000 | 173,340 | |
TOTAL HEALTH CARE | 1,135,660 | ||
INDUSTRIALS - 9.7% | |||
Aerospace & Defense - 1.1% | |||
United Technologies Corp. | 1,400,000 | 109,172 | |
Commercial Services & Supplies - 0.2% | |||
Pitney Bowes, Inc. (d) | 1,200,000 | 24,456 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
INDUSTRIALS - continued | |||
Construction & Engineering - 1.9% | |||
KBR, Inc. | 5,100,000 | $ 142,341 | |
MasTec, Inc. (a) | 2,400,000 | 51,888 | |
| 194,229 | ||
Electrical Equipment - 0.2% | |||
Harbin Electric, Inc. (a)(d) | 800,000 | 18,792 | |
Industrial Conglomerates - 3.7% | |||
General Electric Co. | 22,100,000 | 369,291 | |
Professional Services - 0.3% | |||
Towers Watson & Co. | 400,000 | 26,280 | |
Road & Rail - 2.3% | |||
CSX Corp. | 10,457,200 | 232,254 | |
TOTAL INDUSTRIALS | 974,474 | ||
INFORMATION TECHNOLOGY - 19.3% | |||
Communications Equipment - 1.6% | |||
Cisco Systems, Inc. | 2,800,000 | 51,884 | |
Motorola Solutions, Inc. | 2,300,000 | 107,893 | |
| 159,777 | ||
Computers & Peripherals - 3.4% | |||
Hewlett-Packard Co. | 12,950,000 | 344,600 | |
Internet Software & Services - 0.1% | |||
Facebook, Inc. Class B (e) | 493,371 | 12,334 | |
IT Services - 6.4% | |||
Alliance Data Systems Corp. (a)(d) | 1,600,000 | 163,904 | |
Amdocs Ltd. (a) | 900,000 | 27,018 | |
International Business Machines Corp. | 1,100,000 | 203,093 | |
MasterCard, Inc. Class A | 700,000 | 243,068 | |
| 637,083 | ||
Semiconductors & Semiconductor Equipment - 2.8% | |||
GT Advanced Technologies, Inc. (a)(d) | 3,300,000 | 27,060 | |
Micron Technology, Inc. (a) | 14,515,058 | 81,139 | |
Samsung Electronics Co. Ltd. | 182,977 | 156,930 | |
Teradyne, Inc. (a) | 849,410 | 12,164 | |
| 277,293 | ||
Software - 5.0% | |||
Check Point Software Technologies Ltd. (a) | 400,000 | 23,052 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
INFORMATION TECHNOLOGY - continued | |||
Software - continued | |||
Microsoft Corp. | 10,600,000 | $ 282,278 | |
Oracle Corp. | 5,900,000 | 193,343 | |
| 498,673 | ||
TOTAL INFORMATION TECHNOLOGY | 1,929,760 | ||
MATERIALS - 4.0% | |||
Chemicals - 2.2% | |||
BASF AG | 1,000,000 | 73,610 | |
CF Industries Holdings, Inc. | 907,700 | 147,292 | |
| 220,902 | ||
Metals & Mining - 1.8% | |||
Anglo American PLC (United Kingdom) | 2,000,000 | 73,768 | |
Newmont Mining Corp. | 1,526,100 | 101,989 | |
| 175,757 | ||
TOTAL MATERIALS | 396,659 | ||
TELECOMMUNICATION SERVICES - 3.0% | |||
Diversified Telecommunication Services - 0.5% | |||
BT Group PLC | 16,800,000 | 50,699 | |
Wireless Telecommunication Services - 2.5% | |||
Vodafone Group PLC sponsored ADR | 9,032,300 | 251,459 | |
TOTAL TELECOMMUNICATION SERVICES | 302,158 | ||
UTILITIES - 3.4% | |||
Electric Utilities - 1.0% | |||
El Paso Electric Co. | 2,090,000 | 66,943 | |
PNM Resources, Inc. | 1,891,212 | 34,004 | |
| 100,947 | ||
Gas Utilities - 1.1% | |||
ONEOK, Inc. | 1,400,000 | 106,470 | |
Independent Power Producers & Energy Traders - 1.3% | |||
The AES Corp. (a) | 11,674,600 | 130,989 | |
TOTAL UTILITIES | 338,406 | ||
TOTAL COMMON STOCKS (Cost $9,673,513) |
| ||
Nonconvertible Preferred Stocks - 1.7% | |||
Shares | Value (000s) | ||
CONSUMER DISCRETIONARY - 1.7% | |||
Automobiles - 1.7% | |||
Volkswagen AG (Cost $161,436) | 972,900 | $ 170,723 | |
Money Market Funds - 4.7% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.12% (b) | 306,721,295 | 306,721 | |
Fidelity Securities Lending Cash Central Fund, 0.11% (b)(c) | 167,701,618 | 167,702 | |
TOTAL MONEY MARKET FUNDS (Cost $474,423) |
| ||
TOTAL INVESTMENT PORTFOLIO - 102.9% (Cost $10,309,372) | 10,315,603 | ||
NET OTHER ASSETS (LIABILITIES) - (2.9)% | (294,321) | ||
NET ASSETS - 100% | $ 10,021,282 |
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
(e) Restricted securities - Investment in securities not registered under the Securities Act of 1933 (excluding 144A issues). At the end of the period, the value of restricted securities (excluding 144A issues) amounted to $12,334,000 or 0.1% of net assets. |
Additional information on each restricted holding is as follows: |
Security | Acquisition Date | Acquisition Cost (000s) |
Facebook, Inc. Class B | 3/31/11 - 5/19/11 | $ 12,338 |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 207 |
Fidelity Securities Lending Cash Central Fund | 3,829 |
Total | $ 4,036 |
Other Information |
The following is a summary of the inputs used, as of October 31, 2011, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the tables below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities: | ||||
Equities: | ||||
Consumer Discretionary | $ 1,105,365 | $ 1,105,365 | $ - | $ - |
Consumer Staples | 1,093,534 | 772,369 | 321,165 | - |
Energy | 1,183,077 | 1,183,077 | - | - |
Financials | 1,382,087 | 1,382,087 | - | - |
Health Care | 1,135,660 | 1,135,660 | - | - |
Industrials | 974,474 | 974,474 | - | - |
Information Technology | 1,929,760 | 1,760,496 | 156,930 | 12,334 |
Materials | 396,659 | 396,659 | - | - |
Telecommunication Services | 302,158 | 251,459 | 50,699 | - |
Utilities | 338,406 | 338,406 | - | - |
Money Market Funds | 474,423 | 474,423 | - | - |
Total Investments in Securities: | $ 10,315,603 | $ 9,774,475 | $ 528,794 | $ 12,334 |
The following is a reconciliation of Investments in Securities for which Level 3 inputs were used in determining value: |
(Amounts in thousands) |
|
Investments in Securities: | |
Beginning Balance | $ - |
Total Realized Gain (Loss) | - |
Total Unrealized Gain (Loss) | (4) |
Cost of Purchases | 12,338 |
Proceeds of Sales | - |
Amortization/Accretion | - |
Transfers in to Level 3 | - |
Transfers out of Level 3 | - |
Ending Balance | $ 12,334 |
The change in unrealized gain (loss) for the period attributable to Level 3 securities held at October 31, 2011 | $ (4) |
The information used in the above reconciliation represents fiscal year to date activity for any Investments in Securities identified as using Level 3 inputs at either the beginning or the end of the current fiscal period. Transfers in or out of Level 3 represent the beginning value of any Security or Instrument where a change in the pricing level occurred from the beginning to the end of the period. The cost of purchases and the proceeds of sales may include securities received or delivered through corporate actions or exchanges. Realized and unrealized gains (losses) disclosed in the reconciliation are included in Net Gain (Loss) on the Fund's Statement of Operations. |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 87.4% |
United Kingdom | 4.8% |
Belgium | 2.4% |
Germany | 2.4% |
Korea (South) | 1.6% |
Others (Individually Less Than 1%) | 1.4% |
| 100.0% |
Income Tax Information |
At October 31, 2011, the Fund had a capital loss carryforward of approximately $2,203,901,000 of which $205,717,000 and $1,998,184,000 will expire in fiscal 2016 and 2017, respectively. Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements
Statement of Assets and Liabilities
Amounts in thousands (except per-share amounts) | October 31, 2011 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $159,172) - See accompanying schedule: Unaffiliated issuers (cost $9,834,949) | $ 9,841,180 |
|
Fidelity Central Funds (cost $474,423) | 474,423 |
|
Total Investments (cost $10,309,372) |
| $ 10,315,603 |
Receivable for investments sold | 274,580 | |
Receivable for fund shares sold | 10,430 | |
Dividends receivable | 2,942 | |
Distributions receivable from Fidelity Central Funds | 960 | |
Prepaid expenses | 37 | |
Other receivables | 433 | |
Total assets | 10,604,985 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 408,836 | |
Payable for fund shares redeemed | 2,726 | |
Accrued management fee | 2,770 | |
Other affiliated payables | 1,377 | |
Other payables and accrued expenses | 292 | |
Collateral on securities loaned, at value | 167,702 | |
Total liabilities | 583,703 | |
|
|
|
Net Assets | $ 10,021,282 | |
Net Assets consist of: |
| |
Paid in capital | $ 12,167,377 | |
Undistributed net investment income | 102,810 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (2,255,030) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 6,125 | |
Net Assets | $ 10,021,282 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements - continued
Statement of Assets and Liabilities - continued
Amounts in thousands (except per-share amounts) | October 31, 2011 | |
|
|
|
Disciplined Equity: | $ 21.79 | |
|
|
|
Class K: | $ 21.81 | |
|
|
|
Class F: | $ 21.80 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Operations
Amounts in thousands | Year ended October 31, 2011 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 188,042 |
Interest |
| 4 |
Income from Fidelity Central Funds |
| 4,036 |
Total income |
| 192,082 |
|
|
|
Expenses | ||
Management fee | $ 59,695 | |
Performance adjustment | (21,137) | |
Transfer agent fees | 17,940 | |
Accounting and security lending fees | 1,337 | |
Custodian fees and expenses | 345 | |
Independent trustees' compensation | 59 | |
Registration fees | 44 | |
Audit | 85 | |
Legal | 45 | |
Interest | 2 | |
Miscellaneous | 119 | |
Total expenses before reductions | 58,534 | |
Expense reductions | (1,381) | 57,153 |
Net investment income (loss) | 134,929 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 675,531 | |
Foreign currency transactions | (802) | |
Total net realized gain (loss) |
| 674,729 |
Change in net unrealized appreciation (depreciation) on: Investment securities | (592,432) | |
Assets and liabilities in foreign currencies | (106) | |
Total change in net unrealized appreciation (depreciation) |
| (592,538) |
Net gain (loss) | 82,191 | |
Net increase (decrease) in net assets resulting from operations | $ 217,120 |
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 | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 134,929 | $ 93,970 |
Net realized gain (loss) | 674,729 | 1,049,236 |
Change in net unrealized appreciation (depreciation) | (592,538) | 1,045 |
Net increase (decrease) in net assets resulting | 217,120 | 1,144,251 |
Distributions to shareholders from net investment income | (105,872) | (121,330) |
Share transactions - net increase (decrease) | (532,409) | (1,369,605) |
Total increase (decrease) in net assets | (421,161) | (346,684) |
|
|
|
Net Assets | ||
Beginning of period | 10,442,443 | 10,789,127 |
End of period (including undistributed net investment income of $102,810 and undistributed net investment income of $76,361, respectively) | $ 10,021,282 | $ 10,442,443 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Disciplined Equity
Years ended October 31, | 2011 | 2010 | 2009 | 2008 | 2007 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 21.67 | $ 19.72 | $ 18.78 | $ 33.37 | $ 30.83 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .28 | .18 | .24 | .29 | .27 |
Net realized and unrealized gain (loss) | .05 | 1.99 | .96 | (12.19) | 4.95 |
Total from investment operations | .33 | 2.17 | 1.20 | (11.90) | 5.22 |
Distributions from net investment income | (.21) | (.22) | (.26) | (.26) | (.19) |
Distributions from net realized gain | - | - | - | (2.43) | (2.49) |
Total distributions | (.21) | (.22) | (.26) | (2.69) | (2.68) |
Net asset value, end of period | $ 21.79 | $ 21.67 | $ 19.72 | $ 18.78 | $ 33.37 |
Total Return A | 1.51% | 11.05% | 6.64% | (38.68)% | 18.42% |
Ratios to Average Net Assets C, E |
|
|
|
|
|
Expenses before reductions | .59% | .70% | .84% | .87% | .91% |
Expenses net of fee waivers, if any | .59% | .70% | .84% | .87% | .91% |
Expenses net of all reductions | .58% | .68% | .83% | .87% | .90% |
Net investment income (loss) | 1.22% | .85% | 1.37% | 1.10% | .88% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (in millions) | $ 7,233 | $ 8,943 | $ 10,530 | $ 9,804 | $ 11,482 |
Portfolio turnover rate D | 153% | 146% | 200% | 186% | 152% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
B Calculated based on average shares outstanding during the period.
C Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
D Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
E Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class K
Years ended October 31, | 2011 | 2010 | 2009 | 2008 G |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 21.69 | $ 19.74 | $ 18.79 | $ 27.38 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss) D | .31 | .22 | .28 | .12 |
Net realized and unrealized gain (loss) | .06 | 1.99 | .96 | (8.71) |
Total from investment operations | .37 | 2.21 | 1.24 | (8.59) |
Distributions from net investment income | (.25) | (.26) | (.29) | - |
Net asset value, end of period | $ 21.81 | $ 21.69 | $ 19.74 | $ 18.79 |
Total Return B, C | 1.68% | 11.25% | 6.92% | (31.37)% |
Ratios to Average Net Assets E, H |
|
|
|
|
Expenses before reductions | .43% | .52% | .61% | .71% A |
Expenses net of fee waivers, if any | .43% | .52% | .61% | .71% A |
Expenses net of all reductions | .42% | .51% | .60% | .71% A |
Net investment income (loss) | 1.38% | 1.03% | 1.59% | 1.30% A |
Supplemental Data |
|
|
|
|
Net assets, end of period (in millions) | $ 95 | $ 141 | $ 184 | $ 49 |
Portfolio turnover rate F | 153% | 146% | 200% | 186% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
D Calculated based on average shares outstanding during the period.
E Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
G For the period May 9, 2008 (commencement of sale of shares) to 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 reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class F
Years ended October 31, | 2011 | 2010 | 2009 G |
Selected Per-Share Data |
|
|
|
Net asset value, beginning of period | $ 21.69 | $ 19.74 | $ 17.52 |
Income from Investment Operations |
|
|
|
Net investment income (loss) D | .32 | .22 | .02 |
Net realized and unrealized gain (loss) | .05 | 2.00 | 2.20 |
Total from investment operations | .37 | 2.22 | 2.22 |
Distributions from net investment income | (.26) | (.27) | - |
Net asset value, end of period | $ 21.80 | $ 21.69 | $ 19.74 |
Total Return B, C | 1.70% | 11.31% | 12.67% |
Ratios to Average Net Assets E, H |
|
|
|
Expenses before reductions | .38% | .47% | .50% A |
Expenses net of fee waivers, if any | .38% | .47% | .50% A |
Expenses net of all reductions | .37% | .45% | .49% A |
Net investment income (loss) | 1.43% | 1.08% | .25% A |
Supplemental Data |
|
|
|
Net assets, end of period (in millions) | $ 2,693 | $ 1,359 | $ 75 |
Portfolio turnover rate F | 153% | 146% | 200% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
D Calculated based on average shares outstanding during the period.
E Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
G For the period June 26, 2009 (commencement of sale of shares) to October 31, 2009.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended October 31, 2011
(Amounts in thousands except percentages)
1. Organization.
Fidelity Disciplined Equity Fund (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. The Fund offers Disciplined Equity, Class K and Class F 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. Class F shares of the Fund are only available for purchase by mutual funds for which Fidelity Management & Research Company (FMR) or an affiliate serves as investment manager. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions may also differ by class.
2. Investments in Fidelity Central Funds.
The Fund invests in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by FMR and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of
Annual Report
3. Significant Accounting Policies - continued
the financial statements. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Fund uses independent pricing services approved by the Board of Trustees to value its investments. When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include market or security specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The value used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the Fund's own assumptions based on the best information available)
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of October 31, 2011, as well as a roll forward of Level 3 securities, is included at the end of the Fund's Schedule of Investments. Valuation techniques used to value the Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when significant market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-traded funds (ETFs) and certain indexes as well as quoted prices for similar securities are used and are categorized as Level 2 in the hierarchy in these circumstances. Utilizing these techniques may result in transfers between Level 1 and Level 2. For restricted equity securities and private placements where
Annual Report
Notes to Financial Statements - continued
(Amounts in thousands except percentages)
3. Significant Accounting Policies - continued
Security Valuation - continued
observable inputs are limited, assumptions about market activity and risk are used and are categorized as Level 3 in the hierarchy.
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy.
Foreign Currency. The Fund may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE, normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Annual Report
3. Significant Accounting Policies - continued
Expenses. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Deferred Trustee Compensation. Under a Deferred Compensation Plan (the Plan), independent Trustees may elect to defer receipt of a portion of their annual compensation. Deferred amounts are invested in a cross-section of Fidelity funds, are marked-to-market and remain in the Fund until distributed in accordance with the Plan. The investment of deferred amounts and the offsetting payable to the Trustees are included in the accompanying Statement of Assets and Liabilities.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company, including distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. As of October 31, 2011, the Fund did not have any unrecognized tax benefits in the financial statements. A fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are declared and recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, deferred trustees compensation, capital loss carryforwards and losses deferred due to wash sales.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $ 602,625 |
Gross unrealized depreciation | (647,524) |
Net unrealized appreciation (depreciation) on securities and other investments | $ (44,899) |
|
|
Tax Cost | $ 10,360,502 |
Annual Report
Notes to Financial Statements - continued
(Amounts in thousands except percentages)
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The tax-based components of distributable earnings as of period end were as follows:
Undistributed ordinary income | $ 103,010 |
Capital loss carryforward | $ (2,203,901) |
Net unrealized appreciation (depreciation) | $ (42,273) |
Under the recently enacted Regulated Investment Company Modernization Act of 2010 (the Act), the Fund will be permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to any losses incurred in pre-enactment taxable years, which generally expire after eight years from when they are incurred. Additionally, post-enactment capital losses that are carried forward will retain their character as either short-term or long-term capital losses rather than being considered all short-term as under previous law. The Fund's first fiscal year end subject to the Act will be October 31, 2012.
The tax character of distributions paid was as follows:
| October 31, 2011 | October 31, 2010 |
Ordinary Income | $ 105,872 | $ 121,330 |
New Accounting Pronouncement. In May 2011, the Financial Accounting Standards Board issued Accounting Standard Update No. 2011-04, Fair Value Measurement (Topic 820) - Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. The update changes the wording used to describe the requirements in GAAP for measuring fair value and for disclosing information about fair value measurements. The update is effective during interim and annual periods beginning after December 15, 2011. Management is currently evaluating the impact of the update's adoption on the Fund's financial statement disclosures.
4. Operating Policies.
Restricted Securities. The Fund may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities is included at the end of the Fund's Schedule of Investments.
Annual Report
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $16,150,422 and $16,685,390, respectively.
6. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and a group fee rate that averaged .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 Disciplined Equity as compared to an appropriate benchmark index. For the period, the total annual management fee rate, including the performance adjustment, was .36% of the Fund's average net assets.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of Disciplined Equity. FIIOC receives an asset-based fee of Class K's average net assets. FIIOC receives no fees for providing transfer agency services to Class F. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, transfer agent fees for each class were as follows:
| Amount | % of |
Disciplined Equity | $ 17,867 | .21 |
Class K | 73 | .05 |
| $ 17,940 |
|
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.
Annual Report
Notes to Financial Statements - continued
(Amounts in thousands except percentages)
6. Fees and Other Transactions with Affiliates - continued
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 $587 for the period.
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. The Fund's activity in this program during the period for which loans were outstanding was as follows:
Borrower or Lender | Average Daily | Weighted Average | Interest |
Borrower | $ 31,907 | .36% | $ 1 |
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR or an affiliate in a $4.0 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $33 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, there were no borrowings on this line of credit.
8. Security Lending.
The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. For equity securities, a lending agent is used and may loan securities to certain qualified borrowers, including Fidelity Capital Markets (FCM), a broker-dealer affiliated with the Fund. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. The value of securities loaned to FCM at period end was $1,170. Security lending
Annual Report
8. Security Lending - continued
income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Total security lending income during the period amounted to $3,829, including $189 from securities loaned to FCM.
9. Bank Borrowings.
The Fund is permitted to have bank borrowings for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity requirements. The Fund has established borrowing arrangements with certain banks. The interest rate on the borrowings is the bank's base rate, as revised from time to time. The average daily loan balance during the period for which loans were outstanding amounted to $23,904. The weighted average interest rate was .57%. The interest expense amounted to three hundred seventy-eight dollars under the bank borrowing program. At period end, there were no bank borrowings outstanding.
10. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of the Fund provided services to the Fund in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $1,381 for the period.
11. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended October 31, | 2011 | 2010 |
From net investment income |
|
|
Disciplined Equity | $ 86,646 | $ 116,715 |
Class K | 1,698 | 2,464 |
Class F | 17,528 | 2,151 |
Total | $ 105,872 | $ 121,330 |
Annual Report
Notes to Financial Statements - continued
(Amounts in thousands except percentages)
12. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
Years ended October 31, | 2011 | 2010 | 2011 | 2010 |
Disciplined Equity |
|
|
|
|
Shares sold | 41,487 | 48,761 | $ 933,066 | $ 1,024,807 |
Reinvestment of distributions | 3,881 | 5,559 | 85,889 | 115,802 |
Shares redeemed | (126,148) | (175,504) | (2,865,193) | (3,680,202) |
Net increase (decrease) | (80,780) | (121,184) | $ (1,846,238) | $ (2,539,593) |
Class K |
|
|
|
|
Shares sold | 2,553 | 5,579 | $ 58,670 | $ 117,922 |
Reinvestment of distributions | 77 | 118 | 1,698 | 2,464 |
Shares redeemed | (4,762) | (8,493) | (109,108) | (175,735) |
Net increase (decrease) | (2,132) | (2,796) | $ (48,740) | $ (55,349) |
Class F |
|
|
|
|
Shares sold | 75,199 | 65,890 | $ 1,686,077 | $ 1,373,135 |
Reinvestment of distributions | 793 | 103 | 17,528 | 2,151 |
Shares redeemed | (15,144) | (7,147) | (341,036) | (149,949) |
Net increase (decrease) | 60,848 | 58,846 | $ 1,362,569 | $ 1,225,337 |
13. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
At the end of the period, Fidelity Freedom 2020 was the owner of record of approximately 11% of the total outstanding shares of the Fund. The Fidelity Freedom and Freedom K Funds were owners of record, in aggregate, of approximately 79% of the total outstanding shares of the fund.
Annual Report
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Capital Trust and the Shareholders of Fidelity Disciplined Equity Fund:
In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Fidelity Disciplined Equity Fund (a fund of Fidelity Capital Trust) at October 31, 2011, 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 the financial highlights for each of the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fidelity Disciplined Equity Fund's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the 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 are free of material misstatement. An audit 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, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at October 31, 2011 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
December 9, 2011
Annual Report
Trustees and Officers
The Trustees, Members 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, oversee management of the risks associated with such activities and contractual arrangements, and review the fund's performance. Except for James C. Curvey, each of the Trustees oversees 226 funds advised by FMR or an affiliate. Mr. Curvey oversees 429 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 75th birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board Members 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.
Experience, Skills, Attributes, and Qualifications of the Fund's Trustees. The Governance and Nominating Committee has adopted a statement of policy that describes the experience, qualifications, attributes, and skills that are necessary and desirable for potential Independent Trustee candidates (Statement of Policy). The Board believes that each Trustee satisfied at the time he or she was initially elected or appointed a Trustee, and continues to satisfy, the standards contemplated by the Statement of Policy. The Governance and Nominating Committee also engages professional search firms to help identify potential Independent Trustee candidates who have the experience, qualifications, attributes, and skills consistent with the Statement of Policy. From time to time, additional criteria based on the composition and skills of the current Independent Trustees, as well as experience or skills that may be appropriate in light of future changes to board composition, business conditions, and regulatory or other developments, have also been considered by the professional search firms and the Governance and Nominating Committee. In addition, the Board takes into account the Trustees' commitment and participation in Board and committee meetings, as well as their leadership of standing and ad hoc committees throughout their tenure.
In determining that a particular Trustee was and continues to be qualified to serve as a Trustee, the Board has considered a variety of criteria, none of which, in isolation, was controlling. The Board believes that, collectively, the Trustees have balanced and diverse experience, qualifications, attributes, and skills, which allow the Board to operate effectively in governing the fund and protecting the interests of shareholders. Information about the specific experience, skills, attributes, and qualifications of each Trustee, which in each case led to the Board's conclusion that the Trustee should serve (or continue to serve) as a trustee of the fund, is provided below.
Annual Report
Board Structure and Oversight Function. James C. Curvey is an interested person (as defined in the 1940 Act) and currently serves as Acting Chairman. The Trustees have determined that an interested Chairman is appropriate and benefits shareholders because an interested Chairman has a personal and professional stake in the quality and continuity of services provided to the fund. Independent Trustees exercise their informed business judgment to appoint an individual of their choosing to serve as Chairman, regardless of whether the Trustee happens to be independent or a member of management. The Independent Trustees have determined that they can act independently and effectively without having an Independent Trustee serve as Chairman and that a key structural component for assuring that they are in a position to do so is for the Independent Trustees to constitute a substantial majority for the Board. The Independent Trustees also regularly meet in executive session. Ned C. Lautenbach serves as Chairman of the Independent Trustees and as such (i) acts as a liaison between the Independent Trustees and management with respect to matters important to the Independent Trustees and (ii) with management prepares agendas for Board meetings.
Fidelity funds are overseen by different Boards of Trustees. The fund's Board oversees Fidelity's equity and high income funds and another Board oversees Fidelity's investment-grade bond, money market, and asset allocation funds. The asset allocation funds may invest in Fidelity funds overseen by the fund's Board. The use of separate Boards, each with its own committee structure, allows the Trustees of each group of Fidelity funds to focus on the unique issues of the funds they oversee, including common research, investment, and operational issues. On occasion, the separate Boards establish joint committees to address issues of overlapping consequences for the Fidelity funds overseen by each Board.
The Trustees operate using a system of committees to facilitate the timely and efficient consideration of all matters of importance to the Trustees, the fund, and fund shareholders and to facilitate compliance with legal and regulatory requirements and oversight of the fund's activities and associated risks. The Board, acting through its committees, has charged FMR and its affiliates with (i) identifying events or circumstances the occurrence of which could have demonstrably adverse effects on the fund's business and/or reputation; (ii) implementing processes and controls to lessen the possibility that such events or circumstances occur or to mitigate the effects of such events or circumstances if they do occur; and (iii) creating and maintaining a system designed to evaluate continuously business and market conditions in order to facilitate the identification and implementation processes described in (i) and (ii) above. Because the day-to-day operations and activities of the fund are carried out by or through FMR, its affiliates and other service providers, the fund's exposure to risks is mitigated but not eliminated by the processes overseen by the Trustees. While each of the Board's committees has responsibility for overseeing different aspects of the fund's activities, oversight is exercised primarily through the Operations, Audit, and Compliance Committees. In addition, the Independent Trustees have worked with FMR to enhance the Board's oversight of investment and financial risks, legal and regulatory risks, technology risks, and operational risks, including the development of additional risk reporting to the Board. For example, a working group comprised of Independent Trustees and FMR has worked and continues to work to review the Fidelity funds' valuation-related activities, reporting and risk management. Appropriate personnel, including but not limited to the fund's Chief Compliance Officer (CCO), FMR's internal auditor, the independent accountants, the fund's Treasurer and portfolio management personnel, make periodic reports to the Board's committees, as appropriate, including an annual review of FMR's risk management program for the Fidelity funds. The responsibilities of each standing committee, including their oversight responsibilities, are described further under "Standing Committees of the Fund's Trustees."
Annual Report
Trustees and Officers - continued
The fund's Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-800-835-5092.
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 Occupations and Other Relevant Experience+ | |
James C. Curvey (76) | |
| Year of Election or Appointment: 2007 Mr. Curvey is Trustee and Acting Chairman of the Board of Trustees of certain Trusts. Mr. Curvey also serves as Trustee (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of Fidelity Investments Money Management, Inc. (2009-present), Director of Fidelity Research & Analysis Co. (2009-present) and Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2007-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. Previously, Mr. Curvey was the Vice Chairman (2006-2007) and Director (2000-2007) of FMR Corp. |
Ronald P. O'Hanley (54) | |
| Year of Election or Appointment: 2011 Mr. O'Hanley is Director of FMR Co., Inc. (2010-present), Director of Fidelity Investments Money Management, Inc. (2010-present), Director of Fidelity Research & Analysis Company (2010-present), President of Fidelity Asset Management and Corporate Services and a member of Fidelity's Executive Committee (2010-present). Previously, Mr. O'Hanley served as President and Chief Executive Officer of BNY Mellon Asset Management (2007-2010). Mr. O'Hanley also served as Vice Chairman of Bank New York Mellon Corp. and a member of that firm's Executive Committee. Prior to the 2007 merger of The Bank of New York and Mellon Financial Corporation, he was Vice Chairman of Mellon Financial Corporation and President and Chief Executive Officer of Mellon Asset Management. He joined Mellon in February 1997. Mr. O'Hanley currently serves as Chairman of the Boston Public Library Foundation Board of Directors and sits on the Board of Directors of Beth Israel Deaconess Medical Center, the Board of Trustees of the Marine Biological Laboratory and the Advisory Board of the Maxwell School of Citizenship and Public Administration at Syracuse University. Mr. O'Hanley also chairs the Council on Asset Management for the Financial Services Roundtable and is a member of the Board of Directors of Institutional Investor's U.S. Institute. |
* 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.
+ The information above includes each Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Trustee's qualifications to serve as a Trustee, which led to the conclusion that each Trustee should serve as a Trustee for the fund.
Annual Report
Trustees and Officers - continued
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 Occupations and Other Relevant Experience+ | |
Dennis J. Dirks (63) | |
| 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). He also served as President, Chief Operating Officer, and Board member of The Depository Trust Company (DTC) and President and Board member of the National Securities Clearing Corporation (NSCC). In addition, Mr. Dirks served as Chief Executive Officer and Board member of the Government Securities Clearing Corporation, Chief Executive Officer and Board member of the Mortgage-Backed Securities Clearing Corporation, as a Trustee and a member of the Finance Committee of Manhattan College (2005-2008), and as a Trustee and a member of the Finance Committee of AHRC of Nassau County (2006-2008). Mr. Dirks is a member of the Independent Directors Council (IDC) Governing Council (2010-Present) and Board of Directors for The Brookville Center for Children's Services, Inc. (2009-present). |
Alan J. Lacy (58) | |
| Year of Election or Appointment: 2008 Mr. Lacy serves as Senior Adviser (2007-present) of Oak Hill Capital Partners, L.P. (private equity). 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 Dave & Buster's, Inc. (restaurant and entertainment complexes, 2010-present), The Hillman Companies, Inc. (hardware wholesalers, 2010-present), and Bristol-Myers Squibb Company (global pharmaceuticals, 2007-present). Mr. Lacy is a member of the Board of Trustees of The National Parks Conservation Association (2006-Present). Previously, Mr. Lacy served as Chairman of the Board of Trustees of the National Parks Conservation Association (2008-2011) and as a member of the Board of Directors for the Western Union Company (global money transfer, 2006-2011). |
Ned C. Lautenbach (67) | |
| Year of Election or Appointment: 2000 Mr. Lautenbach is Chairman of the Independent Trustees of the Equity and High Income Funds (2006-present). Mr. Lautenbach currently serves as the Lead Director of the Eaton Corporation Board of Directors (diversified industrial, 1997-present). Mr. Lautenbach is also a member of the Board of Directors of the Philharmonic Center for the Arts in Naples, Florida (1999-present); a member of the Board of Trustees of Fairfield University (2005-present); and a member of the Council on Foreign Relations (1994-present). Previously, Mr. Lautenbach was a Partner/Advisory Partner at Clayton, Dubilier & Rice, LLC (private equity investment, 1998-2010), as well as a Director of Sony Corporation (2006-2007). |
Joseph Mauriello (67) | |
| Year of Election or Appointment: 2008 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, 1965-2005). Mr. Mauriello currently serves as a member of the Board of Directors of XL Group plc. (global insurance and re-insurance, 2006-present) and of Arcadia Resources Inc. (health care services and products, 2007-present). Previously, Mr. Mauriello served as a Director of the Hamilton Funds of the Bank of New York (2006-2007). |
Robert W. Selander (61) | |
| Year of Election or Appointment: 2011 Previously, Mr. Selander served as a Member of the Advisory Board of Fidelity's Equity and High Income Funds (2011), Executive Vice Chairman (2010), Chief Executive Officer (2009-2010), and President and Chief Executive Officer (1997-2009) of Mastercard, Inc. |
Cornelia M. Small (67) | |
| Year of Election or Appointment: 2005 Ms. Small is a member of the Board of Directors of the Teagle Foundation (2009-present). Ms. Small is also a member of the Investment Committee, and Chair (2008-present) and a member of the Board of Trustees of Smith College. In addition, Ms. Small 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. In addition, Ms. Small 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 (72) | |
| Year of Election or Appointment: 2002 Mr. Stavropoulos is Vice Chairman of the Independent Trustees of the Equity and High Income Funds (2006-present). Mr. Stavropoulos serves as President and Founder of the Michigan Baseball Foundation, the Great Lakes Loons (2007-present). 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, CEO (1995-2000; 2002-2004), Chairman of the Executive Committee (2000-2006), and as a member of the Board of Directors (1990-2006). Currently, Mr. Stavropoulos is Chairman of Univar (global distributor of commodity and specialty chemicals, 2010-present), 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, 2005-present). Mr. Stavropoulos is a special advisor to Clayton, Dubilier & Rice, LLC (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 (62) | |
| 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), and Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (61) | |
| Year of Election or Appointment: 2008 Mr. Wiley also serves as a Director of Asia Pacific Exploration Consolidated (international oil and gas exploration and production, 2008-present). Mr. Wiley serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), and a Director of Bill Barrett Corporation (exploration and production, 2005-present). In addition, Mr. Wiley also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-2010), as a Senior Energy Advisor of Katzenbach Partners, LLC (consulting, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production, 2001-2005). |
Annual Report
+ The information above includes each Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Trustee's qualifications to serve as a Trustee, which led to the conclusion that each Trustee should serve as a Trustee for the fund.
Advisory Board Members and Executive Officers:
Correspondence intended for each executive officer, Edward C. Johnson 3d, and Peter S. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Edward C. Johnson 3d (81) | |
| Year of Election or Appointment: 2011 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Mr. Johnson serves as Chief Executive Officer, Chairman, and a Director of FMR LLC, and also serves as Chairman and Director of FIL Limited. Previously, Mr. Johnson served as a Trustee and Chairman of the Board of certain Fidelity Trusts, Chairman and a Director of FMR, Chairman and a Director of FMR Co., Inc., and President of FMR LLC (2006-2007). |
Peter S. Lynch (67) | |
| Year of Election or Appointment: 2003 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Mr. Lynch is Vice Chairman and a Director of FMR and FMR Co., Inc. In addition, Mr. Lynch 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 (42) | |
| Year of Election or Appointment: 2008 President and Treasurer of Fidelity's Equity and High Income Funds. Mr. Robins also serves as President and Treasurer (2010-present) and Assistant Treasurer (2009-present) of other Fidelity funds and is an employee of Fidelity Investments (2004-present). Previously, Mr. Robins served as Deputy Treasurer of the Fidelity funds (2005-2008) and Treasurer and Chief Financial Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2006-2008). |
Bruce T. Herring (46) | |
| Year of Election or Appointment: 2006 Vice President of certain Equity Funds. Mr. Herring also serves as Chief Investment Officer and Director of Fidelity Management & Research (U.K.) Inc. (2010-present) and Group Chief Investments Officer of FMR. Previously, Mr. Herring served as Vice President (2005-2006) and Senior Vice President (2006-2007) of Fidelity Management & Research Company, Vice President of FMR Co., Inc. (2001-2007) and as a portfolio manager for Fidelity U.S. Equity Funds. |
Brian B. Hogan (47) | |
| Year of Election or Appointment: 2009 Vice President of Equity and High Income Funds. Mr. Hogan also serves as President of FMR's Equity Division (2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager. |
Scott C. Goebel (43) | |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of the Fidelity funds. Mr. Goebel also serves as Secretary of Fidelity Investments Money Management, Inc. (FIMM) (2010-present) and Fidelity Research and Analysis Company (FRAC) (2010-present); Secretary and CLO of The North Carolina Capital Management Trust: Cash and Term Portfolios (2008-present); General Counsel, Secretary, and Senior Vice President of FMR (2008-present) and FMR Co., Inc. (2008-present); employed by FMR LLC or an affiliate (2001-present); Chief Legal Officer of Fidelity Management & Research (Hong Kong) Limited (2008-present) and Assistant Secretary of Fidelity Management & Research (Japan) Inc. (2008-present), and Fidelity Management & Research (U.K.) Inc. (2008-present). Previously, Mr. Goebel served as Assistant Secretary of FIMM (2008-2010), FRAC (2008-2010), and the Funds (2007-2008) and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007). |
William C. Coffey (42) | |
| Year of Election or Appointment: 2009 Assistant Secretary of Fidelity's Equity and High Income Funds. Mr. Coffey also serves as Senior Vice President and Deputy General Counsel of FMR LLC (2010-present), and is an employee of Fidelity Investments. Previously, Mr. Coffey served as Vice President and Associate General Counsel of FMR LLC (2005-2009). |
Holly C. Laurent (57) | |
| Year of Election or Appointment: 2008 Anti-Money Laundering (AML) Officer of the Fidelity funds. Ms. Laurent also serves as AML Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2008-present) and 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), and Senior Vice President, Deputy General Counsel and Group Head for FMR LLC (2005-2006). |
Christine Reynolds (53) | |
| 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. Ms. Reynolds served as Chief Operating Officer of FPCMS (2007-2008). Previously, Ms. Reynolds served as President, Treasurer, and Anti-Money Laundering officer of the Fidelity funds (2004-2007). |
Kenneth A. Rathgeber (64) | |
| 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), Pyramis Global Advisors, LLC (2005-present), and Strategic Advisers, Inc. (2005-present). |
Jeffrey S. Christian (50) | |
| Year of Election or Appointment: 2009 Deputy Treasurer of the Fidelity funds. Mr. Christian is an employee of Fidelity Investments. Previously, Mr. Christian served as Chief Financial Officer (2008-2009) of certain Fidelity funds and Senior Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (2004-2009). |
Joseph F. Zambello (54) | |
| Year of Election or Appointment: 2011 Deputy Treasurer of the Fidelity funds. Mr. Zambello is an employee of Fidelity Investments. Previously, Mr. Zambello served as Vice President of FMR's Program Management Group (2009-2011) and Vice President of the Transfer Agent Oversight Group (2005-2009). |
Adrien E. Deberghes (44) | |
| Year of Election or Appointment: 2008 Deputy Treasurer of Fidelity's Equity and High Income Funds. Mr. Deberghes also serves as Vice President and Assistant Treasurer of Fidelity Rutland Square Trust II and Fidelity Commonwealth Trust II (2011-present), Assistant Treasurer of other Fidelity funds (2010-present), and 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). |
Stephanie J. Dorsey (42) | |
| Year of Election or Appointment: 2010 Assistant Treasurer of Fidelity's Equity and High Income Funds. Ms. Dorsey also serves as Deputy Treasurer of other Fidelity funds (2008-present) and is an employee of Fidelity Investments (2008-present). Previously, Ms. Dorsey served as Treasurer (2004-2008) of the JPMorgan Mutual Funds and Vice President (2004-2008) of JPMorgan Chase Bank. |
John R. Hebble (53) | |
| Year of Election or Appointment: 2009 Assistant Treasurer of Fidelity's Equity and High Income Funds. Mr. Hebble also serves as President (2011-present), Treasurer, and Chief Financial Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2008-present), President and Treasurer of other Fidelity funds (2008-present) and is an employee of Fidelity Investments. |
Gary W. Ryan (53) | |
| 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). |
Jonathan Davis (43) | |
| Year of Election or Appointment: 2010 Assistant Treasurer of the Fidelity funds. Mr. Davis is also Assistant Treasurer of Fidelity Rutland Square Trust II and Fidelity Commonwealth Trust II. Mr. Davis is an employee of Fidelity Investments. Previously, Mr. Davis served as Vice President and Associate General Counsel of FMR LLC (2003-2010). |
Annual Report
Distributions (Unaudited)
Class K designates 100% of the dividends distributed during the fiscal year as qualifying for the dividends-received deduction for corporate shareholders.
Class K designates 100% of the dividend 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 2012 of amounts for use in preparing 2011 income tax returns.
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees
Fidelity Disciplined Equity Fund
Each year, 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 relevant to the renewal of the Advisory Contracts throughout the year.
The Board meets regularly 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. The Board has established various 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. The Board, acting directly and through its Committees, requests and receives information concerning the annual consideration of the renewal of the fund's Advisory Contracts. The Board also meets as needed to consider matters specifically related to the Board's annual consideration of the renewal of Advisory Contracts. Members of the Board may also meet with trustees of other Fidelity funds through ad hoc joint committees to discuss certain matters relevant to the Fidelity funds.
At its July 2011 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 expense ratio; (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.
In considering whether to renew the Advisory Contracts for the fund, the Board 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 is in the best interests of the fund and its shareholders and that the compensation payable under the Advisory Contracts is fair and reasonable. The Board's decision to renew the Advisory Contracts was not based on any single factor, 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 Fidelity's competitors, and that the fund's shareholders, who have 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 the 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 to act in the best interests of the fund.
Resources Dedicated to Investment Management and Support Services. The Board and the Fund Oversight and Research Committees reviewed the general qualifications and capabilities of the Investment Advisers' investment staff, including its size, education, experience, and resources, as well as the Investment Advisers' approach to recruiting, training, managing, and compensating investment personnel. The Board also noted that FMR has devoted increased resources to non-U.S. offices. The Board noted that Fidelity's analysts have extensive resources, tools and capabilities which allow them to conduct sophisticated quantitative and fundamental analysis, as well as credit analysis of issuers, counterparties and enhancers. The Board also believes that Fidelity's investment professionals have sufficient access to global information and data so as to provide competitive investment results over time, and that those professionals also have access to sophisticated tools which permit them to assess portfolio construction and risk and performance attribution characteristics continuously, as well as to transmit new information and research conclusions rapidly around the world. Additionally, in their deliberations, the Board considered the Investment Advisers' trading capabilities and resources which are an integral part of the investment management process.
Shareholder and Administrative Services. The Board considered (i) the nature, extent, quality, and cost of advisory, administrative, 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 adviser's 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 noted that the growth of fund assets over time 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 telephone representatives and over the Internet, investor education materials and asset allocation tools, and the expanded availability of Fidelity Investor Centers, with 35 new branches opening since 2010.
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 a large variety of mutual fund investor services. The Board noted that Fidelity had taken, or had made recommendations that resulted in the Fidelity funds taking, a number of actions over the previous year that benefited particular funds, including (i) continuing to dedicate additional resources to investment research and support of the senior management team that oversees asset management; (ii) rationalizing product lines through the mergers of six funds into other funds; (iii) continuing to migrate the Freedom Funds to dedicated lower cost underlying funds; (iv) obtaining shareholder approval to broaden the investment strategies for Fidelity Consumer Finance Portfolio, Fidelity Emerging Asia Fund, and Fidelity Environment and Alternative Energy Portfolio; (v) contractually agreeing to reduce the management fees and impose other expense limitations on Spartan 500 Index Fund and U.S. Bond Index Fund in connection with launching new institutional classes of these funds; (vi) changing the name, primary and supplemental benchmarks, and investment policies of Fidelity Global Strategies Fund to support the fund's flexible investment mandate and global orientation; and (vii) reducing the transfer agency account fee rates on certain accounts.
Investment Performance. The Board considered whether the fund has operated in accordance with its investment objective, as well as its record of compliance with its investment restrictions. It also reviewed the fund's absolute investment performance for each class, as well as the fund's relative investment performance for each class measured over multiple periods against (i) a broad-based securities market index, and (ii) a peer group of mutual funds deemed appropriate by Fidelity and reviewed by the Board. The following charts considered by the Board show, over the one-, three-, and five-year periods ended December 31, 2010, as available, the cumulative total returns of Class F and the retail class of the fund, 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 returns of Class F and the retail class show the performance of the highest and lowest performing classes, respectively (based on one-year performance). 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 numbers noted below each chart correspond to the percentile box and represent the percentage of funds in the peer group whose performance was equal to or lower than that of the class indicated.
Annual Report
Fidelity Disciplined Equity Fund
The Board reviewed the fund's relative investment performance against its peer group and noted that the performance of the retail class of the fund (the class with the longest performance record) was in the fourth quartile for all the periods shown. The Board also noted that the investment performance of the fund was lower than its benchmark for all the periods shown. The Board considered that the variations in performance among the fund's classes reflect the variations in class expenses, which result in lower performance for higher expense classes. The Board discussed with FMR actions that have been taken by FMR to improve the fund's disappointing performance relative to its peer group and benchmark. The Board noted that this fund had underperformed in 2009 and discussed with FMR its disappointment with the continued underperformance of the fund. The Board also reviewed the fund's performance since inception as well as performance in the current year. The Board will continue to closely monitor the performance of the fund in the coming year and discuss with FMR other appropriate actions to address the performance of the fund.
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 noted 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.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
Based on its review, the Board concluded that the nature, extent, and quality of services provided to the fund under the Advisory Contracts should benefit the fund's shareholders.
Competitiveness of Management Fee and Total Expense Ratio. The Board considered the fund's management fee and total expense ratio 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 ratio comparisons by broadening the competitive group used for comparison and by reducing the number of universes to which various Fidelity funds are compared.
Management Fee. 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 10% means that 90% 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 Disciplined Equity Fund
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 2010. The Board also noted the effect of the fund's negative 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.
Based on its review, the Board concluded that the fund's management fee is fair and reasonable in light of the services that the fund receives and the other factors considered.
Total Expense Ratio. In its review of each class's total expense ratio, the Board considered the fund's management fee as well as other fund or class expenses, as applicable, 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 the current and historical total expense ratios of each class of the fund compared to competitive fund median expenses. Each class of 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.
The Board noted that the total expense ratio of each class ranked below its competitive median for 2010. The Board considered that various factors, including 12b-1 fees, positive or negative performance adjustments, and relatively higher other expenses in the case of small fund size, can affect total expense ratios.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
Fees Charged to Other Fidelity Clients. The Board also considered Fidelity fee structures and other information with respect to clients of FMR and its affiliates, such as other mutual funds advised or subadvised by FMR or its affiliates, pension plan clients, and other institutional clients. In March 2010, the Board created an ad hoc joint committee with the board of other Fidelity funds (the Committee) to review and compare Fidelity's institutional investment advisory business with its business of providing services to the Fidelity funds, including the differences in services provided, fees charged, and costs incurred, as well as competition in their respective marketplaces.
Based on its review of total expense ratios and fees charged to other Fidelity clients, the Board concluded that the total expense ratio of each class of the fund was reasonable in light of the services that the fund and its shareholders receive and the other factors considered, including the findings of the Committee.
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 books and records of Fidelity on which Fidelity's audited financial statements are based. 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 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 concluded that while other allocation methods may also be reasonable, Fidelity's profitability methodologies are reasonable in all material respects.
The Board also reviewed Fidelity's non-fund businesses and 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.
Annual Report
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 was satisfied that the profitability was not excessive in the circumstances.
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 also noted that in 2009, it and the board of other Fidelity funds created an ad hoc committee (the Economies of Scale Committee) to analyze whether FMR attains economies of scale in respect of the management and servicing of the Fidelity funds, whether the Fidelity funds have appropriately benefited from such economies of scale, and whether there is potential for realization of any further economies of scale.
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 calculates the group fee rates based on a tiered asset "breakpoint" schedule that varies based on asset class. The Board considered that the group fee is designed to deliver the benefits of economies of scale to fund shareholders when total Fidelity 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 benefit from lower management fees as assets under FMR's management increase at the fund complex level, regardless of whether Fidelity achieves any such economies of scale.
The Board concluded, taking into account the analysis of the Economies of Scale Committee, that any potential economies of scale are being appropriately shared between fund shareholders and Fidelity.
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, actions to be taken by FMR to improve certain funds' overall performance, and Fidelity's long-term strategies for certain funds; (ii) portfolio manager changes that have occurred during the past year and length of portfolio manager tenure for different categories of funds over time; (iii) Fidelity's compensation structure for portfolio managers and other key personnel and strategies for attracting and retaining non-investment personnel; (iv) the amount of the investment that each portfolio manager has made in the Fidelity fund(s) that he or she manages; (v) historical trends in Fidelity's realization of fall-out benefits; (vi) Fidelity's group fee structures and the rationale for the individual fee rates of certain funds; (vii) fund profitability methodology and the impact of certain factors on fund profitability results; (viii) trends regarding industry use of performance fee structures and Fidelity's compliance practices with respect to performance adjustment calculations; (ix) the fee structures in place for certain other Fidelity clients; and (x) explanations regarding the relative total expense ratios of certain funds and classes, total expense competitive trends, and actions that might be taken by FMR to reduce total expense ratios for certain funds and classes.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
Based on its evaluation of all of the conclusions noted above, and after considering all factors it believed relevant, 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
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Fidelity Management & Research
(U.K.) Inc.
Fidelity Management & Research
(Hong Kong) Limited
Fidelity Management & Research
(Japan) Inc.
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Service Agents
Fidelity Investments Institutional
Operations Company, Inc. (FIIOC)
Boston, MA
Fidelity Service Company, Inc.
Boston, MA
Custodian
State Street Bank and Trust Company
Quincy, MA
FDE-K-UANN-1211 1.863074.103
Fidelity®
Focused Stock
Fund
Annual Report
October 31, 2011
Contents
Chairman's Message | The Chairman's message to shareholders. | |
Performance | How the fund has done over time. | |
Management's Discussion of Fund Performance | The Portfolio Manager's review of fundperformance and strategy. | |
Shareholder Expense Example | An example of shareholder expenses. | |
Investment Changes | A summary of major shifts in the fund's investments over the past six months. | |
Investments | A complete list of the fund's investments with their market values. | |
Financial Statements | Statements of assets and liabilities, operations, and changes in net assets, | |
Notes | Notes to the financial statements. | |
Report of Independent Registered Public Accounting Firm |
| |
Trustees and Officers |
| |
Board Approval of Investment Advisory Contracts and Management Fees |
|
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-800-544-8544 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company.
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, http://www.advisor.fidelity.com, or http://www.401k.com, as applicable.
NOT FDIC INSURED • MAY LOSE VALUE • NO BANK GUARANTEE
Neither the fund nor Fidelity Distributors Corporation is a bank.
Annual Report
Chairman's Message
(photo_of_James_C_Curvey)
Dear Shareholder:
Global equity markets began the fourth quarter on a strong note, sharply reversing course in October amid strong corporate earnings, better-than-expected economic news and the promise of a resolution to the sovereign debt crisis in Europe. The mini rally followed a third quarter marked by a significant downturn in July and August, which heightened investor anxiety and set off a wave of volatility that hampered most major asset classes through the end of September. Financial markets are difficult to predict, of course, but you can help put the odds in your favor by following these time-tested investment principles.
One of the basic tenets is to invest according to your time horizon. For long-term investors, riding out the markets' inevitable ups and downs has proven much more effective than making decisions based on short-term developments. If your goal is approaching, you can also benefit from patience and restraint, rather than attempting to time the market. No matter your time horizon, missing only a few of the markets' best days can significantly diminish returns. Patience also affords the benefits of compounding - earning interest on additional income or reinvested dividends and capital gains. While staying the course doesn't eliminate risk, it can considerably lessen the negative impact of short-term downturns.
Asset allocation is another principle to manage risk. As you spread your portfolio among the asset classes, be sure to consider your time horizon, risk tolerance and investment objectives. Younger investors may be better served by emphasizing equities, which historically have been the best-performing asset class over time. Investors who are nearing a specific goal, such as retirement or sending a child to college, may choose to favor bonds and other investments that have tended to be more stable. Studies indicate that asset allocation is the single most important determinant of a portfolio's long-term success. After deciding on a suitable allocation strategy, make sure your portfolio is adequately diversified, with exposure to stocks of small-, mid- and large-cap companies in a range of sectors, for example. And today, more than ever, geographic diversification should be taken into account.
Lastly, investing a certain amount of money on a regular basis - a principle known as dollar-cost averaging - can help lower the average cost of your purchases, while also giving you the discipline to avoid selling weak performers just prior to an upswing, or chasing a hot performer just before a correction.
We invite you to learn more by visiting us on the Internet, dropping by one of our Investor Centers or calling us by phone. It is our privilege to provide the resources you need to choose investments that are right for you.
Sincerely,
(The acting chairman's signature appears here.)
James C. Curvey
Acting Chairman
Annual Report
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's distributions from 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, 2011 | Past 1 | Past 5 | Past 10 |
Fidelity® Focused Stock Fund A | 12.75% | 4.82% | 4.08% |
A Prior to December 29, 2001, Fidelity Focused Stock Fund operated under certain different investment policies. The fund's historical performance may not represent its current investment policies.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Fidelity® Focused Stock Fund on October 31, 2001. The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
Annual Report
Management's Discussion of Fund Performance
Market Recap: U.S. stocks overcame a sharp summer drop to post a solid gain for the 12 months ending October 31, 2011. Bullishness pervaded the market during the first half of the period, only to be squelched by extreme volatility in the summer, as debate over the U.S. debt ceiling, Standard & Poor's subsequent downgrade of the country's long-term sovereign credit rating and deepening debt woes in Europe led to the worst calendar-quarter finish for the S&P 500® Index in almost three years. However, news of a possible solution to the eurozone debt crisis, along with better-than-expected U.S. economic data and strong corporate earnings, helped fuel an October rally that pushed the broad-based index up roughly 11% its highest monthly return since December 1991. With that boost, the S&P 500® finished the year up 8.09%, while the blue-chip Dow Jones Industrial AverageSM added 10.39% and the technology-heavy Nasdaq Composite® Index gained 8.10%. Among sectors within the S&P 500®, only financials (-6%) posted a decline for the year, while energy (+19%) and utilities (+15%) fared best. Small and mid-sized stocks also rose, with the Russell 2000® and Russell Midcap® indexes adding 6.71% and 7.85%, respectively. The lengthy financial crisis in Europe continued to hamper foreign developed-markets equities, with the MSCI® EAFE® (Europe, Australasia, Far East) Index falling 3.97%.
Comments from Stephen DuFour, Portfolio Manager of Fidelity® Focused Stock Fund: For the year, the fund returned 12.75%, outpacing the S&P 500. Security selection was strong, particularly in health care, consumer staples and information technology, while underweighting financials also helped. The fund, in general, benefited from capitalizing on market volatility, as I bought and sold stocks that hit my price targets. Individual contributors included beauty products company Estee Lauder, whose stock gains were fueled by new product launches, the elimination of unprofitable lines, improved distribution and growing demand. Card processor MasterCard was helped by strong volume growth, while Green Mountain Coffee Roasters was aided by the introduction of a new Keurig® coffee machine and new single-serve coffee brands. A small cash position detracted, as did positioning in materials and stock picking in industrials. Disappointments included untimely ownership of commercial roofing supplier Carlisle Companies and France-based telecom equipment provider Alcatel-Lucent, whose stock declined during the summer when the company failed to execute on its turnaround plan. Some of the stocks mentioned were not in the index, and some were not in the portfolio at period end.
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 Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (May 1, 2011 to October 31, 2011).
Actual Expenses
The first line of the accompanying table 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 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 provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.
Annual Report
| Annualized | Beginning | Ending | Expenses Paid |
Actual | .91% | $ 1,000.00 | $ 915.50 | $ 4.39 |
Hypothetical (5% |
| $ 1,000.00 | $ 1,020.62 | $ 4.63 |
* Expenses are equal to the Fund's annualized expense ratio, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period).
Annual Report
Investment Changes (Unaudited)
Top Ten Stocks as of October 31, 2011 | ||
| % of fund's | % of fund's net assets |
Intuit, Inc. | 5.2 | 3.0 |
Citigroup, Inc. | 5.0 | 0.0 |
Edwards Lifesciences Corp. | 4.3 | 2.6 |
Exxon Mobil Corp. | 4.1 | 4.0 |
EQT Corp. | 4.0 | 0.0 |
Keyera Corp. | 3.8 | 1.9 |
MasterCard, Inc. Class A | 3.8 | 1.5 |
Union Pacific Corp. | 3.6 | 0.0 |
Prologis, Inc. | 3.5 | 0.0 |
Apple, Inc. | 3.5 | 2.8 |
| 40.8 | |
Top Five Market Sectors as of October 31, 2011 | ||
| % of fund's | % of fund's net assets |
Information Technology | 19.7 | 21.1 |
Energy | 16.4 | 18.2 |
Financials | 15.9 | 9.4 |
Health Care | 13.8 | 18.8 |
Consumer Discretionary | 12.5 | 17.4 |
Asset Allocation (% of fund's net assets) | |||||||
As of October 31, 2011* | As of April 30, 2011** | ||||||
![]() | Stocks 99.9% |
| ![]() | Stocks 99.3% |
| ||
![]() | Short-Term |
| ![]() | Short-Term |
| ||
* Foreign investments | 6.7% |
| ** Foreign investments | 15.6% |
|
Annual Report
Investments October 31, 2011
Showing Percentage of Net Assets
Common Stocks - 99.9% | |||
Shares | Value | ||
CONSUMER DISCRETIONARY - 12.5% | |||
Hotels, Restaurants & Leisure - 4.8% | |||
McDonald's Corp. | 128,400 | $ 11,921,940 | |
Starbucks Corp. | 417,000 | 17,655,780 | |
| 29,577,720 | ||
Household Durables - 2.1% | |||
iRobot Corp. (a)(d) | 225,777 | 7,644,809 | |
PulteGroup, Inc. (a) | 1,088,000 | 5,635,840 | |
| 13,280,649 | ||
Internet & Catalog Retail - 0.7% | |||
Amazon.com, Inc. (a) | 19,000 | 4,056,690 | |
Media - 1.8% | |||
Sirius XM Radio, Inc. (a)(d) | 6,350,000 | 11,366,500 | |
Specialty Retail - 2.1% | |||
TJX Companies, Inc. | 216,000 | 12,728,880 | |
Textiles, Apparel & Luxury Goods - 1.0% | |||
Fossil, Inc. (a) | 3,680 | 381,469 | |
G-III Apparel Group Ltd. (a) | 203,457 | 5,735,453 | |
| 6,116,922 | ||
TOTAL CONSUMER DISCRETIONARY | 77,127,361 | ||
CONSUMER STAPLES - 5.9% | |||
Food Products - 0.7% | |||
Smithfield Foods, Inc. (a) | 187,000 | 4,274,820 | |
Personal Products - 3.6% | |||
Estee Lauder Companies, Inc. Class A | 131,100 | 12,906,795 | |
Nu Skin Enterprises, Inc. Class A | 190,000 | 9,600,700 | |
| 22,507,495 | ||
Tobacco - 1.6% | |||
British American Tobacco PLC sponsored ADR | 108,900 | 10,046,025 | |
TOTAL CONSUMER STAPLES | 36,828,340 | ||
ENERGY - 16.4% | |||
Energy Equipment & Services - 1.7% | |||
National Oilwell Varco, Inc. | 74,000 | 5,278,420 | |
Schlumberger Ltd. | 75,000 | 5,510,250 | |
| 10,788,670 | ||
Oil, Gas & Consumable Fuels - 14.7% | |||
Chevron Corp. | 167,000 | 17,543,350 | |
Common Stocks - continued | |||
Shares | Value | ||
ENERGY - continued | |||
Oil, Gas & Consumable Fuels - continued | |||
EQT Corp. | 384,000 | $ 24,384,000 | |
Exxon Mobil Corp. | 321,500 | 25,105,935 | |
Keyera Corp. | 515,970 | 23,535,292 | |
| 90,568,577 | ||
TOTAL ENERGY | 101,357,247 | ||
FINANCIALS - 15.9% | |||
Capital Markets - 0.2% | |||
Ameriprise Financial, Inc. | 27,000 | 1,260,360 | |
Commercial Banks - 1.5% | |||
Fifth Third Bancorp | 545,000 | 6,545,450 | |
KeyCorp | 417,000 | 2,944,020 | |
| 9,489,470 | ||
Consumer Finance - 3.4% | |||
American Express Co. | 209,400 | 10,599,828 | |
Discover Financial Services | 439,700 | 10,359,332 | |
| 20,959,160 | ||
Diversified Financial Services - 5.0% | |||
Citigroup, Inc. | 969,800 | 30,635,982 | |
Insurance - 2.3% | |||
ACE Ltd. | 35,000 | 2,525,250 | |
Lincoln National Corp. | 465,000 | 8,858,250 | |
Torchmark Corp. | 63,000 | 2,578,590 | |
| 13,962,090 | ||
Real Estate Investment Trusts - 3.5% | |||
Prologis, Inc. | 729,300 | 21,703,968 | |
TOTAL FINANCIALS | 98,011,030 | ||
HEALTH CARE - 13.8% | |||
Biotechnology - 4.1% | |||
Alexion Pharmaceuticals, Inc. (a) | 212,000 | 14,312,120 | |
Biogen Idec, Inc. (a) | 94,300 | 10,972,748 | |
| 25,284,868 | ||
Health Care Equipment & Supplies - 4.3% | |||
Edwards Lifesciences Corp. (a) | 348,800 | 26,306,496 | |
Health Care Providers & Services - 2.2% | |||
UnitedHealth Group, Inc. | 290,100 | 13,921,899 | |
Common Stocks - continued | |||
Shares | Value | ||
HEALTH CARE - continued | |||
Pharmaceuticals - 3.2% | |||
Perrigo Co. | 218,000 | $ 19,681,040 | |
TOTAL HEALTH CARE | 85,194,303 | ||
INDUSTRIALS - 9.4% | |||
Electrical Equipment - 1.2% | |||
Polypore International, Inc. (a) | 145,000 | 7,605,250 | |
Machinery - 3.1% | |||
Cummins, Inc. | 192,300 | 19,120,389 | |
Road & Rail - 5.1% | |||
CSX Corp. | 429,000 | 9,528,090 | |
Union Pacific Corp. | 222,000 | 22,104,540 | |
| 31,632,630 | ||
TOTAL INDUSTRIALS | 58,358,269 | ||
INFORMATION TECHNOLOGY - 19.7% | |||
Computers & Peripherals - 3.5% | |||
Apple, Inc. (a) | 52,900 | 21,412,862 | |
Internet Software & Services - 0.7% | |||
Google, Inc. Class A (a) | 7,000 | 4,148,480 | |
IT Services - 4.2% | |||
Cognizant Technology Solutions Corp. Class A (a) | 38,000 | 2,764,500 | |
MasterCard, Inc. Class A | 67,000 | 23,265,080 | |
| 26,029,580 | ||
Semiconductors & Semiconductor Equipment - 1.4% | |||
RF Micro Devices, Inc. (a) | 1,222,200 | 8,970,948 | |
Software - 9.9% | |||
Citrix Systems, Inc. (a) | 147,940 | 10,774,470 | |
Informatica Corp. (a) | 220,700 | 10,041,850 | |
Intuit, Inc. | 600,000 | 32,202,000 | |
salesforce.com, Inc. (a) | 62,000 | 8,256,540 | |
| 61,274,860 | ||
TOTAL INFORMATION TECHNOLOGY | 121,836,730 | ||
MATERIALS - 4.4% | |||
Chemicals - 3.4% | |||
W.R. Grace & Co. (a) | 499,000 | 20,853,210 | |
Common Stocks - continued | |||
Shares | Value | ||
MATERIALS - continued | |||
Metals & Mining - 1.0% | |||
Freeport-McMoRan Copper & Gold, Inc. | 152,000 | $ 6,119,520 | |
TOTAL MATERIALS | 26,972,730 | ||
UTILITIES - 1.9% | |||
Electric Utilities - 1.9% | |||
PPL Corp. | 396,000 | 11,630,520 | |
TOTAL COMMON STOCKS (Cost $565,644,524) |
| ||
Money Market Funds - 3.2% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.12% (b) | 5,488,037 | 5,488,037 | |
Fidelity Securities Lending Cash Central Fund, 0.11% (b)(c) | 13,934,800 | 13,934,800 | |
TOTAL MONEY MARKET FUNDS (Cost $19,422,837) |
| ||
TOTAL INVESTMENT PORTFOLIO - 103.1% (Cost $585,067,361) | 636,739,367 | ||
NET OTHER ASSETS (LIABILITIES) - (3.1)% | (19,013,961) | ||
NET ASSETS - 100% | $ 617,725,406 |
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 23,488 |
Fidelity Securities Lending Cash Central Fund | 66,168 |
Total | $ 89,656 |
Other Information |
All investments are categorized as Level 1 under the Fair Value Hierarchy. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Income Tax Information |
At October 31, 2011, the Fund had a capital loss carryforward of approximately $25,857,276 of which $3,174,311, $7,629,478 and $15,053,487 will expire in fiscal 2016, 2017 and 2019, respectively. Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements
Statement of Assets and Liabilities
| October 31, 2011 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $12,596,498) - See accompanying schedule: Unaffiliated issuers (cost $565,644,524) | $ 617,316,530 |
|
Fidelity Central Funds (cost $19,422,837) | 19,422,837 |
|
Total Investments (cost $585,067,361) |
| $ 636,739,367 |
Receivable for investments sold | 22,761,277 | |
Receivable for fund shares sold | 1,610,525 | |
Dividends receivable | 142,679 | |
Distributions receivable from Fidelity Central Funds | 9,420 | |
Prepaid expenses | 2,989 | |
Other receivables | 38,478 | |
Total assets | 661,304,735 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 27,708,622 | |
Payable for fund shares redeemed | 1,478,568 | |
Accrued management fee | 297,121 | |
Other affiliated payables | 125,867 | |
Other payables and accrued expenses | 34,351 | |
Collateral on securities loaned, at value | 13,934,800 | |
Total liabilities | 43,579,329 | |
|
|
|
Net Assets | $ 617,725,406 | |
Net Assets consist of: |
| |
Paid in capital | $ 598,742,579 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (32,689,470) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 51,672,297 | |
Net Assets, for 44,231,622 shares outstanding | $ 617,725,406 | |
Net Asset Value, offering price and redemption price per share ($617,725,406 ÷ 44,231,622 shares) | $ 13.97 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements - continued
Statement of Operations
| Year ended October 31, 2011 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 3,853,704 |
Interest |
| 4 |
Income from Fidelity Central Funds |
| 89,656 |
Total income |
| 3,943,364 |
|
|
|
Expenses | ||
Management fee | $ 2,322,175 | |
Performance adjustment | 280,665 | |
Transfer agent fees | 959,461 | |
Accounting and security lending fees | 162,784 | |
Custodian fees and expenses | 42,968 | |
Independent trustees' compensation | 2,120 | |
Registration fees | 85,824 | |
Audit | 39,821 | |
Legal | 1,277 | |
Miscellaneous | 1,926 | |
Total expenses before reductions | 3,899,021 | |
Expense reductions | (71,581) | 3,827,440 |
Net investment income (loss) | 115,924 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | (21,490,109) | |
Foreign currency transactions | (83,607) | |
Total net realized gain (loss) |
| (21,573,716) |
Change in net unrealized appreciation (depreciation) on: Investment securities | 27,268,927 | |
Assets and liabilities in foreign currencies | (474) | |
Total change in net unrealized appreciation (depreciation) |
| 27,268,453 |
Net gain (loss) | 5,694,737 | |
Net increase (decrease) in net assets resulting from operations | $ 5,810,661 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 115,924 | $ (323,910) |
Net realized gain (loss) | (21,573,716) | 14,261,896 |
Change in net unrealized appreciation (depreciation) | 27,268,453 | 11,817,613 |
Net increase (decrease) in net assets resulting | 5,810,661 | 25,755,599 |
Distributions to shareholders from net investment income | - | (648,249) |
Share transactions | 637,822,609 | 48,342,517 |
Reinvestment of distributions | - | 616,010 |
Cost of shares redeemed | (173,576,728) | (49,177,002) |
Net increase (decrease) in net assets resulting from share transactions | 464,245,881 | (218,475) |
Total increase (decrease) in net assets | 470,056,542 | 24,888,875 |
|
|
|
Net Assets | ||
Beginning of period | 147,668,864 | 122,779,989 |
End of period | $ 617,725,406 | $ 147,668,864 |
Other Information Shares | ||
Sold | 44,763,038 | 4,217,175 |
Issued in reinvestment of distributions | - | 56,494 |
Redeemed | (12,450,034) | (4,428,825) |
Net increase (decrease) | 32,313,004 | (155,156) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights
Years ended October 31, | 2011 | 2010 | 2009 | 2008 | 2007 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 12.39 | $ 10.17 | $ 9.82 | $ 15.35 | $ 12.32 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss)B | -F | (.03) | .06 | .09 | .06 |
Net realized and unrealized gain (loss) | 1.58 | 2.31 | .36 | (4.27) | 2.98 |
Total from investment operations | 1.58 | 2.28 | .42 | (4.18) | 3.04 |
Distributions from net investment income | - | (.06) | (.07) | (.06) | (.01) |
Distributions from net realized gain | - | - | - | (1.29) | - |
Total distributions | - | (.06) | (.07) | (1.35) | (.01) |
Net asset value, end of period | $ 13.97 | $ 12.39 | $ 10.17 | $ 9.82 | $ 15.35 |
Total ReturnA | 12.75% | 22.44% | 4.39% | (29.58)% | 24.70% |
Ratios to Average Net AssetsC,E |
|
|
|
|
|
Expenses before reductions | .93% | 1.11% | 1.09% | 1.20% | 1.20% |
Expenses net of fee waivers, | .93% | 1.00% | 1.00% | 1.00% | 1.00% |
Expenses net of all reductions | .92% | 1.00% | .99% | .99% | .99% |
Net investment income (loss) | .03% | (.26)% | .63% | .70% | .47% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 617,725 | $ 147,669 | $ 122,780 | $ 96,870 | $ 97,388 |
Portfolio turnover rateD | 277% | 275% | 363% | 491% | 343% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
B Calculated based on average shares outstanding during the period.
C Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
D Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
E Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund 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 Fund.
F Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended October 31, 2011
1. Organization.
Fidelity Focused Stock Fund (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.
2. Investments in Fidelity Central Funds.
The Fund invests in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm are available on the SEC web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Fund uses independent pricing services approved by the Board of Trustees to value its investments. When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include market or security specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The value used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
Annual Report
3. Significant Accounting Policies - continued
Security Valuation - continued
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the Fund's own assumptions based on the best information available)
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. Valuation techniques used to value the Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when significant market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-traded funds (ETFs) and certain indexes as well as quoted prices for similar securities are used and are categorized as Level 2 in the hierarchy in these circumstances. Utilizing these techniques may result in transfers between Level 1 and Level 2. For restricted equity securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and are categorized as Level 3 in the hierarchy.
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy.
Foreign Currency. The Fund may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Foreign Currency - continued
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company, including distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. As of October 31, 2011, the Fund did not have any unrecognized tax benefits in the financial statements. A fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Annual Report
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
Distributions are declared and recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. In addition, the Fund claimed a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, capital loss carryforwards and losses deferred due to wash sales.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $ 56,930,689 |
Gross unrealized depreciation | (12,090,878) |
Net unrealized appreciation (depreciation) on securities and other investments | $ 44,839,811 |
|
|
Tax Cost | $ 591,899,556 |
The tax-based components of distributable earnings as of period end were as follows:
Capital loss carryforward | $ (25,857,276) |
Net unrealized appreciation (depreciation) | $ 44,840,102 |
Under the recently enacted Regulated Investment Company Modernization Act of 2010 (the Act), the Fund will be permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to any losses incurred in pre-enactment taxable years, which generally expire after eight years from when they are incurred. Additionally, post-enactment capital losses that are carried forward will retain their character as either short-term or long-term capital losses rather than being considered all short-term as under previous law. The Fund's first fiscal year end subject to the Act will be October 31, 2012.
The tax character of distributions paid was as follows:
| October 31, 2011 | October 31, 2010 |
Ordinary Income | $ - | $ 648,249 |
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
New Accounting Pronouncement. In May 2011, the Financial Accounting Standards Board issued Accounting Standard Update No. 2011-04, Fair Value Measurement (Topic 820) - Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. The update changes the wording used to describe the requirements in GAAP for measuring fair value and for disclosing information about fair value measurements. The update is effective during interim and annual periods beginning after December 15, 2011. Management is currently evaluating the impact of the update's adoption on the Fund's financial statement disclosures.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $1,593,633,007 and $1,126,159,405, respectively.
5. 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 Fund's relative investment performance as compared to an appropriate benchmark index. For the period, the total annual management fee rate, including the performance adjustment, was .62% of the Fund's average net assets.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the Fund's transfer, dividend disbursing and shareholder servicing agent. FIIOC receives account fees and asset-based fees that vary according to account size and type of account. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, the transfer agent fees were equivalent to an annual rate of .23% of average net assets.
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.
Annual Report
5. Fees and Other Transactions with Affiliates - continued
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 $67,043 for the period.
6. Committed Line of Credit.
The Fund participates with other funds managed by FMR or an affiliate in a $4.0 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $1,094 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, there were no borrowings on this line of credit.
7. Security Lending.
The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. For equity securities, a lending agent is used and may loan securities to certain qualified borrowers, including Fidelity Capital Markets (FCM), a broker-dealer affiliated with the Fund. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Total security lending income during the period amounted to $66,168. During the period, there were no securities loaned to FCM.
Annual Report
Notes to Financial Statements - continued
8. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of the Fund provided services to the Fund in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $71,542 for the period. In addition, through arrangements with the Fund's custodian, credits realized as a result of uninvested cash balances were used to reduce the Fund's expenses. During the period, these credits reduced the Fund's custody expenses by $39.
9. 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.
At the end of the period, FMR or its affiliates were the owners of record of 13% of the total outstanding shares of the Fund.
Annual Report
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Capital Trust and the Shareholders of Fidelity Focused Stock Fund:
In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Fidelity Focused Stock Fund (a fund of Fidelity Capital Trust) at October 31, 2011, 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 the 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. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fidelity Focused Stock Fund's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the 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 are free of material misstatement. An audit 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, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at October 31, 2011 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
December 15, 2011
Annual Report
Trustees and Officers
The Trustees Members 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, oversee management of the risks associated with such activities and contractual arrangements, and review the fund's performance. Except for James C. Curvey, each of the Trustees oversees 226 funds advised by FMR or an affiliate. Mr. Curvey oversees 429 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 75th birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board Members 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.
Experience, Skills, Attributes, and Qualifications of the Fund's Trustees. The Governance and Nominating Committee has adopted a statement of policy that describes the experience, qualifications, attributes, and skills that are necessary and desirable for potential Independent Trustee candidates (Statement of Policy). The Board believes that each Trustee satisfied at the time he or she was initially elected or appointed a Trustee, and continues to satisfy, the standards contemplated by the Statement of Policy. The Governance and Nominating Committee also engages professional search firms to help identify potential Independent Trustee candidates who have the experience, qualifications, attributes, and skills consistent with the Statement of Policy. From time to time, additional criteria based on the composition and skills of the current Independent Trustees, as well as experience or skills that may be appropriate in light of future changes to board composition, business conditions, and regulatory or other developments, have also been considered by the professional search firms and the Governance and Nominating Committee. In addition, the Board takes into account the Trustees' commitment and participation in Board and committee meetings, as well as their leadership of standing and ad hoc committees throughout their tenure.
In determining that a particular Trustee was and continues to be qualified to serve as a Trustee, the Board has considered a variety of criteria, none of which, in isolation, was controlling. The Board believes that, collectively, the Trustees have balanced and diverse experience, qualifications, attributes, and skills, which allow the Board to operate effectively in governing the fund and protecting the interests of shareholders. Information about the specific experience, skills, attributes, and qualifications of each Trustee, which in each case led to the Board's conclusion that the Trustee should serve (or continue to serve) as a trustee of the fund, is provided below.
Annual Report
Board Structure and Oversight Function. James C. Curvey is an interested person (as defined in the 1940 Act) and currently serves as Acting Chairman. The Trustees have determined that an interested Chairman is appropriate and benefits shareholders because an interested Chairman has a personal and professional stake in the quality and continuity of services provided to the fund. Independent Trustees exercise their informed business judgment to appoint an individual of their choosing to serve as Chairman, regardless of whether the Trustee happens to be independent or a member of management. The Independent Trustees have determined that they can act independently and effectively without having an Independent Trustee serve as Chairman and that a key structural component for assuring that they are in a position to do so is for the Independent Trustees to constitute a substantial majority for the Board. The Independent Trustees also regularly meet in executive session. Ned C. Lautenbach serves as Chairman of the Independent Trustees and as such (i) acts as a liaison between the Independent Trustees and management with respect to matters important to the Independent Trustees and (ii) with management prepares agendas for Board meetings.
Fidelity funds are overseen by different Boards of Trustees. The fund's Board oversees Fidelity's equity and high income funds and another Board oversees Fidelity's investment-grade bond, money market, and asset allocation funds. The asset allocation funds may invest in Fidelity funds overseen by the fund's Board. The use of separate Boards, each with its own committee structure, allows the Trustees of each group of Fidelity funds to focus on the unique issues of the funds they oversee, including common research, investment, and operational issues. On occasion, the separate Boards establish joint committees to address issues of overlapping consequences for the Fidelity funds overseen by each Board.
The Trustees operate using a system of committees to facilitate the timely and efficient consideration of all matters of importance to the Trustees, the fund, and fund shareholders and to facilitate compliance with legal and regulatory requirements and oversight of the fund's activities and associated risks. The Board, acting through its committees, has charged FMR and its affiliates with (i) identifying events or circumstances the occurrence of which could have demonstrably adverse effects on the fund's business and/or reputation; (ii) implementing processes and controls to lessen the possibility that such events or circumstances occur or to mitigate the effects of such events or circumstances if they do occur; and (iii) creating and maintaining a system designed to evaluate continuously business and market conditions in order to facilitate the identification and implementation processes described in (i) and (ii) above. Because the day-to-day operations and activities of the fund are carried out by or through FMR, its affiliates and other service providers, the fund's exposure to risks is mitigated but not eliminated by the processes overseen by the Trustees. While each of the Board's committees has responsibility for overseeing different aspects of the fund's activities, oversight is exercised primarily through the Operations, Audit, and Compliance Committees. In addition, the Independent Trustees have worked with FMR to enhance the Board's oversight of investment and financial risks, legal and regulatory risks, technology risks, and operational risks, including the development of additional risk reporting to the Board. For example, a working group comprised of Independent Trustees and FMR has worked and continues to work to review the Fidelity funds' valuation-related activities, reporting and risk management. Appropriate personnel, including but not limited to the fund's Chief Compliance Officer (CCO), FMR's internal auditor, the independent accountants, the fund's Treasurer and portfolio management personnel, make periodic reports to the Board's committees, as appropriate, including an annual review of FMR's risk management program for the Fidelity funds. The responsibilities of each standing committee, including their oversight responsibilities, are described further under "Standing Committees of the Fund's Trustees."
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Trustees and Officers - continued
The fund's Statement of Additional Informaion (SAI) includes more information about the Trustees. To request a 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 Occupations and Other Relevant Experience+ | |
James C. Curvey (76) | |
| Year of Election or Appointment: 2007 Mr. Curvey is Trustee and Acting Chairman of the Board of Trustees of certain Trusts. Mr. Curvey also serves as Trustee (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of Fidelity Investments Money Management, Inc. (2009-present), Director of Fidelity Research & Analysis Co. (2009-present) and Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2007-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. Previously, Mr. Curvey was the Vice Chairman (2006-2007) and Director (2000-2007) of FMR Corp. |
Ronald P. O'Hanley (54) | |
| Year of Election or Appointment: 2011 Mr. O'Hanley is Director of FMR Co., Inc. (2010-present), Director of Fidelity Investments Money Management, Inc. (2010-present), Director of Fidelity Research & Analysis Company (2010-present), President of Fidelity Asset Management and Corporate Services and a member of Fidelity's Executive Committee (2010-present). Previously, Mr. O'Hanley served as President and Chief Executive Officer of BNY Mellon Asset Management (2007-2010). Mr. O'Hanley also served as Vice Chairman of Bank New York Mellon Corp. and a member of that firm's Executive Committee. Prior to the 2007 merger of The Bank of New York and Mellon Financial Corporation, he was Vice Chairman of Mellon Financial Corporation and President and Chief Executive Officer of Mellon Asset Management. He joined Mellon in February 1997. Mr. O'Hanley currently serves as Chairman of the Boston Public Library Foundation Board of Directors and sits on the Board of Directors of Beth Israel Deaconess Medical Center, the Board of Trustees of the Marine Biological Laboratory and the Advisory Board of the Maxwell School of Citizenship and Public Administration at Syracuse University. Mr. O'Hanley also chairs the Council on Asset Management for the Financial Services Roundtable and is a member of the Board of Directors of Institutional Investor's U.S. Institute. |
* 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.
+ The information above includes each Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Trustee's qualifications to serve as a Trustee, which led to the conclusion that each Trustee should serve as a Trustee for the fund.
Annual Report
Trustees and Officers - continued
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 Occupations and Other Relevant Experience+ | |
Dennis J. Dirks (63) | |
| 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). He also served as President, Chief Operating Officer, and Board member of The Depository Trust Company (DTC) and President and Board member of the National Securities Clearing Corporation (NSCC). In addition, Mr. Dirks served as Chief Executive Officer and Board member of the Government Securities Clearing Corporation, Chief Executive Officer and Board member of the Mortgage-Backed Securities Clearing Corporation, as a Trustee and a member of the Finance Committee of Manhattan College (2005-2008), and as a Trustee and a member of the Finance Committee of AHRC of Nassau County (2006-2008). Mr. Dirks is a member of the Independent Directors Council (IDC) Governing Council (2010-Present) and Board of Directors for The Brookville Center for Children's Services, Inc. (2009-present). |
Alan J. Lacy (58) | |
| Year of Election or Appointment: 2008 Mr. Lacy serves as Senior Adviser (2007-present) of Oak Hill Capital Partners, L.P. (private equity). 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 Dave & Buster's, Inc. (restaurant and entertainment complexes, 2010-present), The Hillman Companies, Inc. (hardware wholesalers, 2010-present), and Bristol-Myers Squibb Company (global pharmaceuticals, 2007-present). Mr. Lacy is a member of the Board of Trustees of The National Parks Conservation Association (2006-Present). Previously, Mr. Lacy served as Chairman of the Board of Trustees of the National Parks Conservation Association (2008-2011) and as a member of the Board of Directors for the Western Union Company (global money transfer, 2006-2011). |
Ned C. Lautenbach (67) | |
| Year of Election or Appointment: 2000 Mr. Lautenbach is Chairman of the Independent Trustees of the Equity and High Income Funds (2006-present). Mr. Lautenbach currently serves as the Lead Director of the Eaton Corporation Board of Directors (diversified industrial, 1997-present). Mr. Lautenbach is also a member of the Board of Directors of the Philharmonic Center for the Arts in Naples, Florida (1999-present); a member of the Board of Trustees of Fairfield University (2005-present); and a member of the Council on Foreign Relations (1994-present). Previously, Mr. Lautenbach was a Partner/Advisory Partner at Clayton, Dubilier & Rice, LLC (private equity investment, 1998-2010), as well as a Director of Sony Corporation (2006-2007). |
Joseph Mauriello (67) | |
| Year of Election or Appointment: 2008 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, 1965-2005). Mr. Mauriello currently serves as a member of the Board of Directors of XL Group plc. (global insurance and re-insurance, 2006-present) and of Arcadia Resources Inc. (health care services and products, 2007-present). Previously, Mr. Mauriello served as a Director of the Hamilton Funds of the Bank of New York (2006-2007). |
Robert W. Selander (61) | |
| Year of Election or Appointment: 2011 Previously, Mr. Selander served as a Member of the Advisory Board of Fidelity's Equity and High Income Funds (2011), Executive Vice Chairman (2010), Chief Executive Officer (2009-2010), and President and Chief Executive Officer (1997-2009) of Mastercard, Inc. |
Cornelia M. Small (67) | |
| Year of Election or Appointment: 2005 Ms. Small is a member of the Board of Directors of the Teagle Foundation (2009-present). Ms. Small is also a member of the Investment Committee, and Chair (2008-present) and a member of the Board of Trustees of Smith College. In addition, Ms. Small 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. In addition, Ms. Small 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 (72) | |
| Year of Election or Appointment: 2002 Mr. Stavropoulos is Vice Chairman of the Independent Trustees of the Equity and High Income Funds (2006-present). Mr. Stavropoulos serves as President and Founder of the Michigan Baseball Foundation, the Great Lakes Loons (2007-present). 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, CEO (1995-2000; 2002-2004), Chairman of the Executive Committee (2000-2006), and as a member of the Board of Directors (1990-2006). Currently, Mr. Stavropoulos is Chairman of Univar (global distributor of commodity and specialty chemicals, 2010-present), 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, 2005-present). Mr. Stavropoulos is a special advisor to Clayton, Dubilier & Rice, LLC (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 (62) | |
| 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), and Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (61) | |
| Year of Election or Appointment: 2008 Mr. Wiley also serves as a Director of Asia Pacific Exploration Consolidated (international oil and gas exploration and production, 2008-present). Mr. Wiley serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), and a Director of Bill Barrett Corporation (exploration and production, 2005-present). In addition, Mr. Wiley also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-2010), as a Senior Energy Advisor of Katzenbach Partners, LLC (consulting, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production, 2001-2005). |
Annual Report
+ The information above includes each Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Trustee's qualifications to serve as a Trustee, which led to the conclusion that each Trustee should serve as a Trustee for the fund.
Advisory Board Members and Executive Officers:
Correspondence intended for each executive officer, Edward C. Johnson 3d, and Peter S. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Edward C. Johnson 3d (81) | |
| Year of Election or Appointment: 2011 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Mr. Johnson serves as Chief Executive Officer, Chairman, and a Director of FMR LLC, and also serves as Chairman and Director of FIL Limited. Previously, Mr. Johnson served as a Trustee and Chairman of the Board of certain Fidelity Trusts, Chairman and a Director of FMR, Chairman and a Director of FMR Co., Inc., and President of FMR LLC (2006-2007). |
Peter S. Lynch (67) | |
| Year of Election or Appointment: 2003 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Mr. Lynch is Vice Chairman and a Director of FMR and FMR Co., Inc. In addition, Mr. Lynch 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 (42) | |
| Year of Election or Appointment: 2008 President and Treasurer of Fidelity's Equity and High Income Funds. Mr. Robins also serves as President and Treasurer (2010-present) and Assistant Treasurer (2009-present) of other Fidelity funds and is an employee of Fidelity Investments (2004-present). Previously, Mr. Robins served as Deputy Treasurer of the Fidelity funds (2005-2008) and Treasurer and Chief Financial Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2006-2008). |
Bruce T. Herring (46) | |
| Year of Election or Appointment: 2006 Vice President of certain Equity Funds. Mr. Herring also serves as Chief Investment Officer and Director of Fidelity Management & Research (U.K.) Inc. (2010-present) and Group Chief Investments Officer of FMR. Previously, Mr. Herring served as Vice President (2005-2006) and Senior Vice President (2006-2007) of Fidelity Management & Research Company, Vice President of FMR Co., Inc. (2001-2007) and as a portfolio manager for Fidelity U.S. Equity Funds. |
Brian B. Hogan (47) | |
| Year of Election or Appointment: 2009 Vice President of Equity and High Income Funds. Mr. Hogan also serves as President of FMR's Equity Division (2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager. |
Scott C. Goebel (43) | |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of the Fidelity funds. Mr. Goebel also serves as Secretary of Fidelity Investments Money Management, Inc. (FIMM) (2010-present) and Fidelity Research and Analysis Company (FRAC) (2010-present); Secretary and CLO of The North Carolina Capital Management Trust: Cash and Term Portfolios (2008-present); General Counsel, Secretary, and Senior Vice President of FMR (2008-present) and FMR Co., Inc. (2008-present); employed by FMR LLC or an affiliate (2001-present); Chief Legal Officer of Fidelity Management & Research (Hong Kong) Limited (2008-present) and Assistant Secretary of Fidelity Management & Research (Japan) Inc. (2008-present), and Fidelity Management & Research (U.K.) Inc. (2008-present). Previously, Mr. Goebel served as Assistant Secretary of FIMM (2008-2010), FRAC (2008-2010), and the Funds (2007-2008) and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007). |
William C. Coffey (42) | |
| Year of Election or Appointment: 2009 Assistant Secretary of Fidelity's Equity and High Income Funds. Mr. Coffey also serves as Senior Vice President and Deputy General Counsel of FMR LLC (2010-present), and is an employee of Fidelity Investments. Previously, Mr. Coffey served as Vice President and Associate General Counsel of FMR LLC (2005-2009). |
Holly C. Laurent (57) | |
| Year of Election or Appointment: 2008 Anti-Money Laundering (AML) Officer of the Fidelity funds. Ms. Laurent also serves as AML Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2008-present) and 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), and Senior Vice President, Deputy General Counsel and Group Head for FMR LLC (2005-2006). |
Christine Reynolds (53) | |
| 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. Ms. Reynolds served as Chief Operating Officer of FPCMS (2007-2008). Previously, Ms. Reynolds served as President, Treasurer, and Anti-Money Laundering officer of the Fidelity funds (2004-2007). |
Kenneth A. Rathgeber (64) | |
| 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), Pyramis Global Advisors, LLC (2005-present), and Strategic Advisers, Inc. (2005-present). |
Jeffrey S. Christian (50) | |
| Year of Election or Appointment: 2009 Deputy Treasurer of the Fidelity funds. Mr. Christian is an employee of Fidelity Investments. Previously, Mr. Christian served as Chief Financial Officer (2008-2009) of certain Fidelity funds and Senior Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (2004-2009). |
Joseph F. Zambello (54) | |
| Year of Election or Appointment: 2011 Deputy Treasurer of the Fidelity funds. Mr. Zambello is an employee of Fidelity Investments. Previously, Mr. Zambello served as Vice President of FMR's Program Management Group (2009-2011) and Vice President of the Transfer Agent Oversight Group (2005-2009). |
Adrien E. Deberghes (44) | |
| Year of Election or Appointment: 2008 Deputy Treasurer of Fidelity's Equity and High Income Funds. Mr. Deberghes also serves as Vice President and Assistant Treasurer of Fidelity Rutland Square Trust II and Fidelity Commonwealth Trust II (2011-present), Assistant Treasurer of other Fidelity funds (2010-present), and 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). |
Stephanie J. Dorsey (42) | |
| Year of Election or Appointment: 2010 Assistant Treasurer of Fidelity's Equity and High Income Funds. Ms. Dorsey also serves as Deputy Treasurer of other Fidelity funds (2008-present) and is an employee of Fidelity Investments (2008-present). Previously, Ms. Dorsey served as Treasurer (2004-2008) of the JPMorgan Mutual Funds and Vice President (2004-2008) of JPMorgan Chase Bank. |
John R. Hebble (53) | |
| Year of Election or Appointment: 2009 Assistant Treasurer of Fidelity's Equity and High Income Funds. Mr. Hebble also serves as President (2011-present), Treasurer, and Chief Financial Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2008-present), President and Treasurer of other Fidelity funds (2008-present) and is an employee of Fidelity Investments. |
Gary W. Ryan (53) | |
| 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). |
Jonathan Davis (43) | |
| Year of Election or Appointment: 2010 Assistant Treasurer of the Fidelity funds. Mr. Davis is also Assistant Treasurer of Fidelity Rutland Square Trust II and Fidelity Commonwealth Trust II. Mr. Davis is an employee of Fidelity Investments. Previously, Mr. Davis served as Vice President and Associate General Counsel of FMR LLC (2003-2010). |
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees
Fidelity Focused Stock Fund
Each year, 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 relevant to the renewal of the Advisory Contracts throughout the year.
The Board meets regularly 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. The Board has established various 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. The Board, acting directly and through its Committees, requests and receives information concerning the annual consideration of the renewal of the fund's Advisory Contracts. The Board also meets as needed to consider matters specifically related to the Board's annual consideration of the renewal of Advisory Contracts. Members of the Board may also meet with trustees of other Fidelity funds through ad hoc joint committees to discuss certain matters relevant to the Fidelity funds.
At its July 2011 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 expense ratio; (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.
In considering whether to renew the Advisory Contracts for the fund, the Board 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 is in the best interests of the fund and its shareholders and that the compensation payable under the Advisory Contracts is fair and reasonable. The Board's decision to renew the Advisory Contracts was not based on any single factor, 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 Fidelity's competitors, and that the fund's shareholders, who have 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
Board Approval of Investment Advisory Contracts and
Management Fees - continued
Nature, Extent, and Quality of Services Provided. The Board considered the 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 to act in the best interests of the fund.
Resources Dedicated to Investment Management and Support Services. The Board and the Fund Oversight and Research Committees reviewed the general qualifications and capabilities of the Investment Advisers' investment staff, including its size, education, experience, and resources, as well as the Investment Advisers' approach to recruiting, training, managing, and compensating investment personnel. The Board also noted that FMR has devoted increased resources to non-U.S. offices. The Board noted that Fidelity's analysts have extensive resources, tools and capabilities which allow them to conduct sophisticated quantitative and fundamental analysis, as well as credit analysis of issuers, counterparties and enhancers. The Board also believes that Fidelity's investment professionals have sufficient access to global information and data so as to provide competitive investment results over time, and that those professionals also have access to sophisticated tools which permit them to assess portfolio construction and risk and performance attribution characteristics continuously, as well as to transmit new information and research conclusions rapidly around the world. Additionally, in their deliberations, the Board considered the Investment Advisers' trading capabilities and resources which are an integral part of the investment management process.
Shareholder and Administrative Services. The Board considered (i) the nature, extent, quality, and cost of advisory, administrative, 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 adviser's 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 noted that the growth of fund assets over time 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 telephone representatives and over the Internet, investor education materials and asset allocation tools, and the expanded availability of Fidelity Investor Centers, with 35 new branches opening since 2010.
Annual Report
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 a large variety of mutual fund investor services. The Board noted that Fidelity had taken, or had made recommendations that resulted in the Fidelity funds taking, a number of actions over the previous year that benefited particular funds, including (i) continuing to dedicate additional resources to investment research and support of the senior management team that oversees asset management; (ii) rationalizing product lines through the mergers of six funds into other funds; (iii) continuing to migrate the Freedom Funds to dedicated lower cost underlying funds; (iv) obtaining shareholder approval to broaden the investment strategies for Fidelity Consumer Finance Portfolio, Fidelity Emerging Asia Fund, and Fidelity Environment and Alternative Energy Portfolio; (v) contractually agreeing to reduce the management fees and impose other expense limitations on Spartan 500 Index Fund and U.S. Bond Index Fund in connection with launching new institutional classes of these funds; (vi) changing the name, primary and supplemental benchmarks, and investment policies of Fidelity Global Strategies Fund to support the fund's flexible investment mandate and global orientation; and (vii) reducing the transfer agency account fee rates on certain accounts.
Investment Performance. The Board considered whether the fund has operated in accordance with 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 over multiple periods against (i) a broad-based securities market index, and (ii) a custom peer group of mutual funds deemed appropriate by Fidelity and reviewed by the Board. The following charts considered by the Board show, over the one-, three-, and five-year periods ended December 31, 2010, 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 custom peer group of mutual funds defined by FMR based on categories assigned by Morningstar, Inc. 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. The fund's custom peer group, defined by FMR, is a peer group that FMR believes provides a more meaningful performance comparison than the peer group assigned by Morningstar, Inc., which assigns mutual funds to categories based on their investment styles as measured by their underlying portfolio holdings.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
Fidelity Focused Stock Fund
The Board reviewed the fund's relative investment performance against its peer group and noted that the performance of the fund was in the first quartile for all the periods shown. The Board also noted that the investment performance of the fund compared favorably to its benchmark for all the periods shown. The Board also reviewed the fund's performance since inception as well as performance in the current year.
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 noted 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.
Based on its review, the Board concluded that the nature, extent, and quality of services provided to the fund under the Advisory Contracts should benefit the fund's shareholders.
Competitiveness of Management Fee and Total Expense Ratio. The Board considered the fund's management fee and total expense ratio 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 ratio comparisons by broadening the competitive group used for comparison and by reducing the number of universes to which various Fidelity funds are compared.
Annual Report
Management Fee. 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 10% means that 90% 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.
Fidelity Focused Stock Fund
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
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 2010. 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.
Based on its review, the Board concluded that the fund's management fee is fair and reasonable in light of the services that the fund receives and the other factors considered.
Total Expense Ratio. In its review of the fund's total expense ratio, 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 the current and historical total expense ratios 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.
The Board noted that the fund's total expense ratio ranked below its competitive median for 2010. The Board considered that various factors, including 12b-1 fees, positive or negative performance adjustments, and relatively higher other expenses in the case of small fund size, can affect total expense ratios.
Fees Charged to Other Fidelity Clients. The Board also considered Fidelity fee structures and other information with respect to clients of FMR and its affiliates, such as other mutual funds advised or subadvised by FMR or its affiliates, pension plan clients, and other institutional clients. In March 2010, the Board created an ad hoc joint committee with the board of other Fidelity funds (the Committee) to review and compare Fidelity's institutional investment advisory business with its business of providing services to the Fidelity funds, including the differences in services provided, fees charged, and costs incurred, as well as competition in their respective marketplaces.
Based on its review of total expense ratios and fees charged to other Fidelity clients, the Board concluded that the fund's total expense ratio was reasonable in light of the services that the fund and its shareholders receive and the other factors considered, including the findings of the Committee.
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.
Annual Report
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 books and records of Fidelity on which Fidelity's audited financial statements are based. 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 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 concluded that while other allocation methods may also be reasonable, Fidelity's profitability methodologies are reasonable in all material respects.
The Board also reviewed Fidelity's non-fund businesses and 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 was satisfied that the profitability was not excessive in the circumstances.
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 also noted that in 2009, it and the board of other Fidelity funds created an ad hoc committee (the Economies of Scale Committee) to analyze whether FMR attains economies of scale in respect of the management and servicing of the Fidelity funds, whether the Fidelity funds have appropriately benefited from such economies of scale, and whether there is potential for realization of any further economies of scale.
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 calculates the group fee rates based on a tiered asset "breakpoint" schedule that varies based on asset class. The Board considered that the group fee is designed to deliver the benefits of economies of scale to fund shareholders when total Fidelity 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 benefit from lower management fees as assets under FMR's management increase at the fund complex level, regardless of whether Fidelity achieves any such economies of scale.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
The Board concluded, taking into account the analysis of the Economies of Scale Committee, that any potential economies of scale are being appropriately shared between fund shareholders and Fidelity.
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, actions to be taken by FMR to improve certain funds' overall performance, and Fidelity's long-term strategies for certain funds; (ii) portfolio manager changes that have occurred during the past year and length of portfolio manager tenure for different categories of funds over time; (iii) Fidelity's compensation structure for portfolio managers and other key personnel and strategies for attracting and retaining non-investment personnel; (iv) the amount of the investment that each portfolio manager has made in the Fidelity fund(s) that he or she manages; (v) historical trends in Fidelity's realization of fall-out benefits; (vi) Fidelity's group fee structures and the rationale for the individual fee rates of certain funds; (vii) fund profitability methodology and the impact of certain factors on fund profitability results; (viii) trends regarding industry use of performance fee structures and Fidelity's compliance practices with respect to performance adjustment calculations; (ix) the fee structures in place for certain other Fidelity clients; and (x) explanations regarding the relative total expense ratios of certain funds and classes, total expense competitive trends, and actions that might be taken by FMR to reduce total expense ratios for certain funds and classes.
Based on its evaluation of all of the conclusions noted above, and after considering all factors it believed relevant, 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.
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.
Fidelity's Web Site
www.fidelity.com
* When you call the quotes line, please remember that a fund's yield and return will vary and, except for money market funds, share price will also vary. This means that you may have a gain or loss when you sell your shares. There is no assurance that money market funds will be able to maintain a stable $1 share price; an investment in a money market fund is not insured or guaranteed by the U.S. government. Total returns are historical and include changes in share price, reinvestment of dividends and capital gains distributions, and the effects of any sales charges.
Annual Report
To Write Fidelity
We'll give your correspondence immediate attention and send you written confirmation upon completion of your request.
Making Changes
To Your Account
(such as changing name, address, bank, etc.)
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0002
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Accounts
Buying shares
Fidelity Investments
P.O. Box 770001
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Fidelity Investments
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Selling shares
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General Correspondence
Fidelity Investments
P.O. Box 500
Merrimack, NH 03054-0500
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.
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(U.K.) Inc.
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JPMorgan Chase Bank
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The Fidelity Telephone Connection
Mutual Fund 24-Hour Service
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and Account Assistance 1-800-544-6666
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(9 a.m. - 9 p.m. Eastern time)
Fidelity Automated Service
Telephone (FAST®) 1-800-544-5555
Automated line for quickest service
TQG-UANN-1211 1.784778.108
Fidelity®
Stock Selector Small Cap
Fund
Annual Report
October 31, 2011
Contents
Chairman's Message | The Chairman's message to shareholders. | |
Performance | How the fund has done over time. | |
Management's Discussion of Fund Performance | The Portfolio Managers' review of fundperformance and strategy. | |
Shareholder Expense Example | An example of shareholder expenses. | |
Investment Changes | A summary of major shifts in the fund's investments over the past six months. | |
Investments | A complete list of the fund's investments with their market values. | |
Financial Statements | Statements of assets and liabilities, operations, and changes in net assets, | |
Notes | Notes to the financial statements. | |
Report of Independent Registered Public Accounting Firm |
| |
Trustees and Officers |
| |
Distributions |
| |
Board Approval of Investment Advisory Contracts and Management Fees |
|
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-800-544-8544 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company.
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, http://www.advisor.fidelity.com, or http://www.401k.com, as applicable.
NOT FDIC INSURED • MAY LOSE VALUE • NO BANK GUARANTEE
Neither the fund nor Fidelity Distributors Corporation is a bank.
Annual Report
Chairman's Message
(photo_of_James_C_Curvey)
Dear Shareholder:
Global equity markets began the fourth quarter on a strong note, sharply reversing course in October amid strong corporate earnings, better-than-expected economic news and the promise of a resolution to the sovereign debt crisis in Europe. The mini rally followed a third quarter marked by a significant downturn in July and August, which heightened investor anxiety and set off a wave of volatility that hampered most major asset classes through the end of September. Financial markets are difficult to predict, of course, but you can help put the odds in your favor by following these time-tested investment principles.
One of the basic tenets is to invest according to your time horizon. For long-term investors, riding out the markets' inevitable ups and downs has proven much more effective than making decisions based on short-term developments. If your goal is approaching, you can also benefit from patience and restraint, rather than attempting to time the market. No matter your time horizon, missing only a few of the markets' best days can significantly diminish returns. Patience also affords the benefits of compounding - earning interest on additional income or reinvested dividends and capital gains. While staying the course doesn't eliminate risk, it can considerably lessen the negative impact of short-term downturns.
Asset allocation is another principle to manage risk. As you spread your portfolio among the asset classes, be sure to consider your time horizon, risk tolerance and investment objectives. Younger investors may be better served by emphasizing equities, which historically have been the best-performing asset class over time. Investors who are nearing a specific goal, such as retirement or sending a child to college, may choose to favor bonds and other investments that have tended to be more stable. Studies indicate that asset allocation is the single most important determinant of a portfolio's long-term success. After deciding on a suitable allocation strategy, make sure your portfolio is adequately diversified, with exposure to stocks of small-, mid- and large-cap companies in a range of sectors, for example. And today, more than ever, geographic diversification should be taken into account.
Lastly, investing a certain amount of money on a regular basis - a principle known as dollar-cost averaging - can help lower the average cost of your purchases, while also giving you the discipline to avoid selling weak performers just prior to an upswing, or chasing a hot performer just before a correction.
We invite you to learn more by visiting us on the Internet, dropping by one of our Investor Centers or calling us by phone. It is our privilege to provide the resources you need to choose investments that are right for you.
Sincerely,
(The acting chairman's signature appears here.)
James C. Curvey
Acting Chairman
Annual Report
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' distributions from 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, 2011 | Past 1 | Past 5 | Past 10 |
Fidelity® Stock Selector Small Cap Fund | 11.03% | 0.71% | 5.55% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Fidelity® Stock Selector Small Cap Fund, a class of the fund, on October 31, 2001. The chart shows how the value of your investment would have changed, and also shows how the Russell 2000® Index performed over the same period.
Annual Report
Management's Discussion of Fund Performance
Market Recap: U.S. stocks overcame a sharp summer drop to post a solid gain for the 12 months ending October 31, 2011. Bullishness pervaded the market during the first half of the period, only to be squelched by extreme volatility in the summer, as debate over the U.S. debt ceiling, Standard & Poor's subsequent downgrade of the country's long-term sovereign credit rating and deepening debt woes in Europe led to the worst calendar-quarter finish for the S&P 500® Index in almost three years. However, news of a possible solution to the eurozone debt crisis, along with better-than-expected U.S. economic data and strong corporate earnings, helped fuel an October rally that pushed the broad-based index up roughly 11% - its highest monthly return since December 1991. With that boost, the S&P 500® finished the year up 8.09%, while the blue-chip Dow Jones Industrial AverageSM added 10.39% and the technology-heavy Nasdaq Composite® Index gained 8.10%. Among sectors within the S&P 500®, only financials (-6%) posted a decline for the year, while energy (+19%) and utilities (+15%) fared best. Small and mid-sized stocks also rose, with the Russell 2000® and Russell Midcap® indexes adding 6.71% and 7.85%, respectively. The lengthy financial crisis in Europe continued to hamper foreign developed-markets equities, with the MSCI® EAFE® (Europe, Australasia, Far East) Index falling 3.97%.
Comments from Rayna Lesser and Morgen Peck, Co-Portfolio Managers of Fidelity® Stock Selector Small Cap Fund, along with Charles Myers, Shadman Riaz, Richard Thompson and Patrick Venanzi: For the year, the fund's Retail Class shares rose 11.03%, solidly outpacing the Russell 2000® Index. Consistent with the fund's core objective, individual stock picking accounted for most of the fund's outperformance versus the Russell index, mainly in health care, consumer discretionary and the software/services industry within information technology. Industry positioning within consumer discretionary and tech also helped. Our top individual contributors included premium bedding manufacturer Tempur-Pedic International, independent oil and gas firm SM Energy, cloud-computing services provider Terremark Worldwide - which was acquired by Verizon in April and sold from the fund in February - and beauty retailer Ulta Salon Cosmetics & Fragrance. Conversely, we had unproductive picks in financials, especially banks and real estate, and in the capital goods area of industrials. The fund's modest cash position also nicked results. Travelzoo, an online travel deals publisher, was the biggest individual detractor, while stakes in optical components manufacturer Fabrinet and Camelot Information Systems, a domestic provider of financial tech services in China, also were misses. Some stocks we mentioned were out-of-benchmark positions.
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, including sales charges (loads) on purchase payments or redemption proceeds, redemption fees, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (May 1, 2011 to October 31, 2011).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Annual Report
| Annualized | Beginning | Ending | Expenses Paid |
Class A | 1.23% |
|
|
|
Actual |
| $ 1,000.00 | $ 860.40 | $ 5.77 |
HypotheticalA |
| $ 1,000.00 | $ 1,019.00 | $ 6.26 |
Class T | 1.48% |
|
|
|
Actual |
| $ 1,000.00 | $ 859.10 | $ 6.94 |
HypotheticalA |
| $ 1,000.00 | $ 1,017.74 | $ 7.53 |
Class B | 1.99% |
|
|
|
Actual |
| $ 1,000.00 | $ 856.90 | $ 9.31 |
HypotheticalA |
| $ 1,000.00 | $ 1,015.17 | $ 10.11 |
Class C | 1.98% |
|
|
|
Actual |
| $ 1,000.00 | $ 857.00 | $ 9.27 |
Hypothetical A |
| $ 1,000.00 | $ 1,015.22 | $ 10.06 |
Stock Selector Small Cap | .94% |
|
|
|
Actual |
| $ 1,000.00 | $ 862.00 | $ 4.41 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.47 | $ 4.79 |
Institutional Class | .98% |
|
|
|
Actual |
| $ 1,000.00 | $ 861.30 | $ 4.60 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.27 | $ 4.99 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period).
Annual Report
Investment Changes (Unaudited)
Top Ten Stocks as of October 31, 2011 | ||
| % of fund's | % of fund's net assets |
National Penn Bancshares, Inc. | 1.3 | 1.1 |
National Retail Properties, Inc. | 1.3 | 0.6 |
Highwoods Properties, Inc. (SBI) | 1.3 | 0.8 |
Home Properties, Inc. | 1.3 | 0.7 |
Franklin Street Properties Corp. | 1.1 | 1.0 |
Teledyne Technologies, Inc. | 1.1 | 0.9 |
ProAssurance Corp. | 1.1 | 0.0 |
Quantum Corp. | 1.1 | 0.8 |
CapitalSource, Inc. | 1.1 | 0.9 |
SM Energy Co. | 1.1 | 0.8 |
| 11.8 | |
Top Five Market Sectors as of October 31, 2011 | ||
| % of fund's | % of fund's net assets |
Financials | 20.2 | 18.1 |
Information Technology | 18.8 | 18.6 |
Industrials | 14.5 | 15.0 |
Consumer Discretionary | 14.0 | 13.3 |
Health Care | 11.1 | 11.7 |
Asset Allocation (% of fund's net assets) | |||||||
As of October 31, 2011* | As of April 30, 2011** | ||||||
![]() | Stocks 96.6% |
| ![]() | Stocks and Equity |
| ||
![]() | Convertible |
| ![]() | Convertible |
| ||
![]() | Short-Term |
| ![]() | Short-Term |
| ||
* Foreign investments | 7.4% |
| ** Foreign investments | 8.3% |
|
Annual Report
Investments October 31, 2011
Showing Percentage of Net Assets
Common Stocks - 96.6% | |||
Shares | Value (000s) | ||
CONSUMER DISCRETIONARY - 14.0% | |||
Auto Components - 0.9% | |||
Tenneco, Inc. (a) | 460,414 | $ 15,065 | |
Hotels, Restaurants & Leisure - 1.5% | |||
Cracker Barrel Old Country Store, Inc. | 152,088 | 6,447 | |
Vail Resorts, Inc. (d) | 158,900 | 7,081 | |
WMS Industries, Inc. (a) | 153,500 | 3,363 | |
Wyndham Worldwide Corp. | 279,215 | 9,401 | |
| 26,292 | ||
Household Durables - 2.3% | |||
iRobot Corp. (a) | 342,370 | 11,593 | |
La-Z-Boy, Inc. (a) | 546,610 | 5,554 | |
Meritage Homes Corp. (a) | 401,300 | 7,123 | |
Tempur-Pedic International, Inc. (a) | 230,694 | 15,701 | |
| 39,971 | ||
Media - 0.4% | |||
MDC Partners, Inc. Class A (sub. vtg.) | 449,800 | 7,575 | |
Multiline Retail - 0.6% | |||
Dollarama, Inc. | 253,434 | 9,539 | |
Specialty Retail - 5.5% | |||
Ascena Retail Group, Inc. (a) | 388,080 | 11,216 | |
Body Central Corp. | 224,363 | 4,712 | |
Cabela's, Inc. Class A (a)(d) | 518,762 | 12,928 | |
DSW, Inc. Class A | 298,302 | 15,613 | |
Fourlis Holdings SA (a) | 517,430 | 2,234 | |
GameStop Corp. Class A (a) | 369,900 | 9,458 | |
Shoe Carnival, Inc. (a) | 462,347 | 12,617 | |
Signet Jewelers Ltd. | 294,300 | 12,687 | |
Ulta Salon, Cosmetics & Fragrance, Inc. (a) | 194,792 | 13,108 | |
| 94,573 | ||
Textiles, Apparel & Luxury Goods - 2.8% | |||
Deckers Outdoor Corp. (a) | 92,267 | 10,633 | |
G-III Apparel Group Ltd. (a) | 505,900 | 14,261 | |
PVH Corp. | 166,300 | 12,374 | |
Vera Bradley, Inc. (d) | 229,502 | 10,396 | |
| 47,664 | ||
TOTAL CONSUMER DISCRETIONARY | 240,679 | ||
Common Stocks - continued | |||
Shares | Value (000s) | ||
CONSUMER STAPLES - 2.6% | |||
Beverages - 0.6% | |||
Hansen Natural Corp. (a) | 83,000 | $ 7,394 | |
Primo Water Corp. (d) | 412,800 | 2,510 | |
| 9,904 | ||
Food & Staples Retailing - 0.6% | |||
Casey's General Stores, Inc. | 119,871 | 5,940 | |
Crumbs Bake Shop, Inc. (a) | 95,085 | 504 | |
United Natural Foods, Inc. (a) | 114,145 | 4,167 | |
| 10,611 | ||
Food Products - 0.8% | |||
Chiquita Brands International, Inc. (a) | 279,170 | 2,479 | |
Diamond Foods, Inc. (d) | 48,400 | 3,182 | |
Green Mountain Coffee Roasters, Inc. (a)(d) | 134,103 | 8,719 | |
| 14,380 | ||
Personal Products - 0.6% | |||
Elizabeth Arden, Inc. (a) | 271,916 | 9,321 | |
TOTAL CONSUMER STAPLES | 44,216 | ||
ENERGY - 6.7% | |||
Energy Equipment & Services - 1.4% | |||
Newpark Resources, Inc. (a) | 1,072,972 | 9,582 | |
Superior Energy Services, Inc. (a) | 336,000 | 9,448 | |
Willbros Group, Inc. (a) | 1,119,264 | 5,697 | |
| 24,727 | ||
Oil, Gas & Consumable Fuels - 5.3% | |||
Atlas Pipeline Partners, LP | 392,613 | 13,663 | |
Berry Petroleum Co. Class A | 309,700 | 10,700 | |
Cloud Peak Energy, Inc. (a) | 597,100 | 13,703 | |
Energen Corp. | 66,462 | 3,261 | |
Petroleum Development Corp. (a) | 409,250 | 10,686 | |
SM Energy Co. | 217,136 | 18,003 | |
Targa Resources Corp. | 294,000 | 9,920 | |
Whiting Petroleum Corp. (a) | 215,130 | 10,014 | |
| 89,950 | ||
TOTAL ENERGY | 114,677 | ||
Common Stocks - continued | |||
Shares | Value (000s) | ||
FINANCIALS - 20.2% | |||
Capital Markets - 2.3% | |||
Affiliated Managers Group, Inc. (a) | 63,500 | $ 5,881 | |
Duff & Phelps Corp. Class A | 1,134,646 | 14,399 | |
Knight Capital Group, Inc. Class A (a) | 984,048 | 12,291 | |
Waddell & Reed Financial, Inc. Class A | 266,459 | 7,389 | |
| 39,960 | ||
Commercial Banks - 5.3% | |||
Associated Banc-Corp. | 1,125,123 | 12,545 | |
CapitalSource, Inc. | 2,912,476 | 18,523 | |
Cathay General Bancorp | 628,346 | 8,791 | |
City National Corp. | 275,300 | 11,678 | |
Nara Bancorp, Inc. (a) | 577,300 | 4,896 | |
National Penn Bancshares, Inc. | 2,909,300 | 22,692 | |
PacWest Bancorp | 649,361 | 11,455 | |
| 90,580 | ||
Insurance - 3.7% | |||
Alterra Capital Holdings Ltd. | 718,600 | 15,579 | |
Amerisafe, Inc. (a) | 809,400 | 17,443 | |
Endurance Specialty Holdings Ltd. | 321,300 | 11,952 | |
ProAssurance Corp. | 249,520 | 19,101 | |
| 64,075 | ||
Real Estate Investment Trusts - 7.9% | |||
American Assets Trust, Inc. | 866,800 | 17,570 | |
Franklin Street Properties Corp. | 1,521,700 | 19,326 | |
Glimcher Realty Trust | 1,772,540 | 16,236 | |
Highwoods Properties, Inc. (SBI) | 710,500 | 22,011 | |
Home Properties, Inc. | 368,958 | 21,732 | |
National Retail Properties, Inc. | 814,000 | 22,182 | |
Ramco-Gershenson Properties Trust (SBI) | 1,626,250 | 15,693 | |
| 134,750 | ||
Thrifts & Mortgage Finance - 1.0% | |||
Washington Federal, Inc. | 553,706 | 7,558 | |
WSFS Financial Corp. | 222,393 | 8,840 | |
| 16,398 | ||
TOTAL FINANCIALS | 345,763 | ||
HEALTH CARE - 11.0% | |||
Biotechnology - 2.5% | |||
Achillion Pharmaceuticals, Inc. (a) | 600,884 | 3,810 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
HEALTH CARE - continued | |||
Biotechnology - continued | |||
Ardea Biosciences, Inc. (a) | 193,205 | $ 3,847 | |
ARIAD Pharmaceuticals, Inc. (a) | 571,177 | 6,643 | |
ArQule, Inc. (a) | 502,458 | 2,919 | |
BioMarin Pharmaceutical, Inc. (a) | 136,506 | 4,656 | |
Chelsea Therapeutics International Ltd. (a)(d) | 712,901 | 3,229 | |
Dynavax Technologies Corp. (a) | 1,613,741 | 4,389 | |
Infinity Pharmaceuticals, Inc. (a)(d) | 322,373 | 2,440 | |
Pharmasset, Inc. (a) | 62,788 | 4,420 | |
Targacept, Inc. (a) | 137,359 | 2,418 | |
Telik, Inc. (a) | 1,287,447 | 348 | |
Theravance, Inc. (a) | 198,281 | 4,408 | |
| 43,527 | ||
Health Care Equipment & Supplies - 1.7% | |||
Analogic Corp. | 168,299 | 9,102 | |
Cerus Corp. (a)(d) | 538,132 | 1,437 | |
Conceptus, Inc. (a) | 215,314 | 2,480 | |
Endologix, Inc. (a) | 348,980 | 3,800 | |
Sirona Dental Systems, Inc. (a) | 180,700 | 8,656 | |
Uroplasty, Inc. (a)(d) | 749,409 | 3,380 | |
| 28,855 | ||
Health Care Providers & Services - 4.8% | |||
Air Methods Corp. (a) | 119,440 | 9,653 | |
Catalyst Health Solutions, Inc. (a) | 99,091 | 5,447 | |
Centene Corp. (a) | 133,592 | 4,696 | |
Corvel Corp. (a) | 146,666 | 7,564 | |
HealthSpring, Inc. (a) | 274,925 | 14,829 | |
Humana, Inc. | 112,428 | 9,544 | |
MEDNAX, Inc. (a) | 144,675 | 9,520 | |
Omnicare, Inc. | 172,507 | 5,144 | |
PSS World Medical, Inc. (a) | 394,531 | 8,778 | |
Wellcare Health Plans, Inc. (a) | 148,625 | 7,284 | |
| 82,459 | ||
Health Care Technology - 0.8% | |||
Epocrates, Inc. (a) | 698,900 | 6,080 | |
Omnicell, Inc. (a) | 454,212 | 6,790 | |
| 12,870 | ||
Life Sciences Tools & Services - 0.3% | |||
eResearchTechnology, Inc. (a) | 876,272 | 4,478 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
HEALTH CARE - continued | |||
Pharmaceuticals - 0.9% | |||
Cardiome Pharma Corp. (a) | 433,357 | $ 1,435 | |
Columbia Laboratories, Inc. (a) | 708,568 | 1,793 | |
Endocyte, Inc. | 192,200 | 1,866 | |
Questcor Pharmaceuticals, Inc. (a) | 178,696 | 7,257 | |
XenoPort, Inc. (a) | 582,300 | 3,552 | |
| 15,903 | ||
TOTAL HEALTH CARE | 188,092 | ||
INDUSTRIALS - 14.5% | |||
Aerospace & Defense - 1.4% | |||
Alliant Techsystems, Inc. | 97,800 | 5,680 | |
Teledyne Technologies, Inc. (a) | 350,742 | 19,105 | |
| 24,785 | ||
Air Freight & Logistics - 0.4% | |||
UTI Worldwide, Inc. | 504,500 | 7,371 | |
Building Products - 1.6% | |||
A.O. Smith Corp. | 173,989 | 6,465 | |
AAON, Inc. (d) | 469,050 | 9,930 | |
Armstrong World Industries, Inc. | 250,158 | 10,654 | |
| 27,049 | ||
Commercial Services & Supplies - 1.5% | |||
Swisher Hygiene, Inc. | 986,560 | 4,301 | |
Sykes Enterprises, Inc. (a) | 544,102 | 8,668 | |
United Stationers, Inc. | 380,884 | 12,116 | |
| 25,085 | ||
Construction & Engineering - 0.9% | |||
Foster Wheeler AG (a) | 384,772 | 8,203 | |
Shaw Group, Inc. (a) | 322,287 | 7,496 | |
| 15,699 | ||
Electrical Equipment - 1.3% | |||
General Cable Corp. (a) | 463,315 | 12,991 | |
GrafTech International Ltd. (a) | 631,147 | 9,915 | |
| 22,906 | ||
Industrial Conglomerates - 0.5% | |||
Carlisle Companies, Inc. | 216,100 | 9,016 | |
Machinery - 3.1% | |||
Actuant Corp. Class A | 450,721 | 10,141 | |
Altra Holdings, Inc. (a) | 424,787 | 6,244 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
INDUSTRIALS - continued | |||
Machinery - continued | |||
CLARCOR, Inc. | 290,514 | $ 14,084 | |
Greenbrier Companies, Inc. (a) | 322,400 | 6,000 | |
TriMas Corp. (a) | 338,822 | 6,604 | |
Wabtec Corp. | 143,629 | 9,649 | |
| 52,722 | ||
Professional Services - 2.4% | |||
Advisory Board Co. (a) | 188,005 | 11,515 | |
Equifax, Inc. | 301,700 | 10,605 | |
Manpower, Inc. | 99,600 | 4,297 | |
Stantec, Inc. (a) | 350,600 | 8,620 | |
Towers Watson & Co. | 96,300 | 6,327 | |
| 41,364 | ||
Trading Companies & Distributors - 1.4% | |||
Interline Brands, Inc. (a) | 584,807 | 8,714 | |
Watsco, Inc. (d) | 240,423 | 14,824 | |
| 23,538 | ||
TOTAL INDUSTRIALS | 249,535 | ||
INFORMATION TECHNOLOGY - 18.8% | |||
Communications Equipment - 2.7% | |||
Brocade Communications Systems, Inc. (a) | 3,819,545 | 16,730 | |
DG FastChannel, Inc. (a) | 366,451 | 6,831 | |
Ixia (a) | 1,133,787 | 12,846 | |
NETGEAR, Inc. (a) | 174,732 | 6,196 | |
Oclaro, Inc. (a)(d) | 1,066,684 | 4,384 | |
| 46,987 | ||
Computers & Peripherals - 3.5% | |||
NCR Corp. (a) | 530,500 | 10,101 | |
Quantum Corp. (a) | 7,103,227 | 18,539 | |
Super Micro Computer, Inc. (a) | 969,125 | 15,506 | |
Synaptics, Inc. (a)(d) | 468,085 | 15,817 | |
| 59,963 | ||
Electronic Equipment & Components - 0.7% | |||
DDi Corp. | 125,133 | 1,150 | |
Fabrinet (a) | 834,161 | 10,344 | |
| 11,494 | ||
Internet Software & Services - 3.2% | |||
Constant Contact, Inc. (a)(d) | 297,711 | 6,026 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
INFORMATION TECHNOLOGY - continued | |||
Internet Software & Services - continued | |||
InfoSpace, Inc. (a) | 463,601 | $ 4,061 | |
Rackspace Hosting, Inc. (a) | 287,901 | 11,916 | |
Travelzoo, Inc. (a)(d) | 262,242 | 8,355 | |
VeriSign, Inc. | 365,101 | 11,716 | |
Web.com, Inc. (a)(d) | 1,320,070 | 12,752 | |
| 54,826 | ||
IT Services - 1.2% | |||
Camelot Information Systems, Inc. ADR (a)(d) | 683,497 | 2,228 | |
Cardtronics, Inc. (a) | 332,788 | 8,296 | |
Euronet Worldwide, Inc. (a) | 313,636 | 6,075 | |
HiSoft Technology International Ltd. ADR (a) | 396,576 | 4,910 | |
| 21,509 | ||
Semiconductors & Semiconductor Equipment - 2.8% | |||
Advanced Micro Devices, Inc. (a) | 559,739 | 3,263 | |
Cymer, Inc. (a) | 112,100 | 4,871 | |
Entegris, Inc. (a) | 602,870 | 5,402 | |
Marvell Technology Group Ltd. (a) | 620,344 | 8,679 | |
Micron Technology, Inc. (a) | 1,016,912 | 5,685 | |
ON Semiconductor Corp. (a) | 601,768 | 4,555 | |
RF Micro Devices, Inc. (a) | 1,392,000 | 10,217 | |
Spansion, Inc. Class A (a) | 92,067 | 947 | |
TriQuint Semiconductor, Inc. (a) | 723,194 | 3,847 | |
| 47,466 | ||
Software - 4.7% | |||
Aspen Technology, Inc. (a) | 389,431 | 6,753 | |
BroadSoft, Inc. (a) | 203,304 | 7,319 | |
JDA Software Group, Inc. (a) | 326,648 | 10,410 | |
Kenexa Corp. (a) | 301,735 | 6,901 | |
Magma Design Automation, Inc. (a) | 816,771 | 4,313 | |
Micro Focus International PLC | 1,820,293 | 9,941 | |
Nuance Communications, Inc. (a) | 205,300 | 5,436 | |
Parametric Technology Corp. (a) | 708,170 | 14,751 | |
SolarWinds, Inc. (a) | 155,735 | 4,495 | |
Synchronoss Technologies, Inc. (a) | 322,656 | 9,699 | |
| 80,018 | ||
TOTAL INFORMATION TECHNOLOGY | 322,263 | ||
Common Stocks - continued | |||
Shares | Value (000s) | ||
MATERIALS - 4.5% | |||
Chemicals - 1.2% | |||
Cabot Corp. | 301,900 | $ 9,111 | |
Rockwood Holdings, Inc. (a) | 236,900 | 10,907 | |
| 20,018 | ||
Containers & Packaging - 1.0% | |||
Aptargroup, Inc. | 146,900 | 7,047 | |
Rock-Tenn Co. Class A | 169,490 | 10,032 | |
| 17,079 | ||
Metals & Mining - 2.3% | |||
Carpenter Technology Corp. | 241,386 | 13,691 | |
Coeur d'Alene Mines Corp. (a) | 376,600 | 9,630 | |
Compass Minerals International, Inc. | 141,900 | 10,794 | |
HudBay Minerals, Inc. | 540,000 | 5,915 | |
| 40,030 | ||
TOTAL MATERIALS | 77,127 | ||
TELECOMMUNICATION SERVICES - 1.1% | |||
Diversified Telecommunication Services - 0.3% | |||
AboveNet, Inc. | 56,533 | 3,355 | |
VocalTec Communications Ltd. (a)(d) | 48,783 | 1,205 | |
| 4,560 | ||
Wireless Telecommunication Services - 0.8% | |||
Clearwire Corp. Class A (a)(d) | 6,265,795 | 12,030 | |
NII Holdings, Inc. (a) | 80,543 | 1,895 | |
| 13,925 | ||
TOTAL TELECOMMUNICATION SERVICES | 18,485 | ||
UTILITIES - 3.2% | |||
Electric Utilities - 1.7% | |||
Cleco Corp. | 272,700 | 10,054 | |
Empire District Electric Co. | 227,603 | 4,545 | |
Great Plains Energy, Inc. | 321,800 | 6,674 | |
IDACORP, Inc. | 206,807 | 8,351 | |
| 29,624 | ||
Gas Utilities - 1.1% | |||
Northwest Natural Gas Co. (d) | 207,589 | 9,699 | |
Piedmont Natural Gas Co., Inc. (d) | 275,378 | 9,002 | |
| 18,701 | ||
Common Stocks - continued | |||
Shares | Value (000s) | ||
UTILITIES - continued | |||
Multi-Utilities - 0.4% | |||
NorthWestern Energy Corp. | 206,100 | $ 7,100 | |
TOTAL UTILITIES | 55,425 | ||
TOTAL COMMON STOCKS (Cost $1,587,861) |
| ||
Convertible Preferred Stocks - 0.1% | |||
|
|
|
|
HEALTH CARE - 0.1% | |||
Pharmaceuticals - 0.1% | |||
Merrimack Pharmaceuticals, Inc. Series G (e) (Cost $2,738) | 391,134 |
|
U.S. Treasury Obligations - 0.0% | ||||
| Principal Amount (000s) |
| ||
U.S. Treasury Bills, yield at date of purchase 0% to 0.02% 11/25/11 to 12/8/11 | $ 725 |
|
Money Market Funds - 6.8% | |||
Shares |
| ||
Fidelity Cash Central Fund, 0.12% (b) | 52,024,581 | 52,025 | |
Fidelity Securities Lending Cash Central Fund, 0.11% (b)(c) | 64,021,792 | 64,022 | |
TOTAL MONEY MARKET FUNDS (Cost $116,047) |
| ||
TOTAL INVESTMENT PORTFOLIO - 103.5% (Cost $1,707,371) | 1,775,772 | ||
NET OTHER ASSETS (LIABILITIES) - (3.5)% | (60,708) | ||
NET ASSETS - 100% | $ 1,715,064 |
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
(e) Restricted securities - Investment in securities not registered under the Securities Act of 1933 (excluding 144A issues). At the end of the period, the value of restricted securities (excluding 144A issues) amounted to $2,738,000 or 0.2% of net assets. |
Additional information on each restricted holding is as follows: |
Security | Acquisition Date | Acquisition Cost (000s) |
Merrimack Pharmaceuticals, Inc. Series G | 3/31/11 | $ 2,738 |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 68 |
Fidelity Securities Lending Cash Central Fund | 897 |
Total | $ 965 |
Other Information |
The following is a summary of the inputs used, as of October 31, 2011, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the tables below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities: | ||||
Equities: | ||||
Consumer Discretionary | $ 240,679 | $ 240,679 | $ - | $ - |
Consumer Staples | 44,216 | 44,216 | - | - |
Energy | 114,677 | 114,677 | - | - |
Financials | 345,763 | 345,763 | - | - |
Health Care | 190,830 | 188,092 | - | 2,738 |
Industrials | 249,535 | 249,535 | - | - |
Information Technology | 322,263 | 322,263 | - | - |
Materials | 77,127 | 77,127 | - | - |
Telecommunication Services | 18,485 | 18,485 | - | - |
Utilities | 55,425 | 55,425 | - | - |
U.S. Government and Government Agency Obligations | 725 | - | 725 | - |
Money Market Funds | 116,047 | 116,047 | - | - |
Total Investments in Securities: | $ 1,775,772 | $ 1,772,309 | $ 725 | $ 2,738 |
The following is a reconciliation of Investments in Securities for which Level 3 inputs were used in determining value: |
(Amounts in thousands) |
|
Investments in Securities: | |
Beginning Balance | $ - |
Total Realized Gain (Loss) | - |
Total Unrealized Gain (Loss) | - |
Cost of Purchases | 2,738 |
Proceeds of Sales | - |
Amortization/Accretion | - |
Transfers in to Level 3 | - |
Transfers out of Level 3 | - |
Ending Balance | $ 2,738 |
The change in unrealized gain (loss) for the period attributable to Level 3 securities held at October 31, 2011 | $ - |
The information used in the above reconciliation represents fiscal year to date activity for any Investments in Securities identified as using Level 3 inputs at either the beginning or the end of the current fiscal period. Transfers in or out of Level 3 represent the beginning value of any Security or Instrument where a change in the pricing level occurred from the beginning to the end of the period. The cost of purchases and the proceeds of sales may include securities received or delivered through corporate actions or exchanges. Realized and unrealized gains (losses) disclosed in the reconciliation are included in Net Gain (Loss) on the Fund's Statement of Operations. |
Income Tax Information |
At October 31, 2011, the Fund had a capital loss carryforward of approximately $267,892,000 all of which will expire in fiscal 2017. Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements
Statement of Assets and Liabilities
Amounts in thousands (except per-share amounts) | October 31, 2011 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $59,747) - See accompanying schedule: Unaffiliated issuers (cost $1,591,324) | $ 1,659,725 |
|
Fidelity Central Funds (cost $116,047) | 116,047 |
|
Total Investments (cost $1,707,371) |
| $ 1,775,772 |
Receivable for investments sold | 16,202 | |
Receivable for fund shares sold | 1,793 | |
Dividends receivable | 1,163 | |
Distributions receivable from Fidelity Central Funds | 284 | |
Prepaid expenses | 8 | |
Other receivables | 80 | |
Total assets | 1,795,302 | |
|
|
|
Liabilities | ||
Payable to custodian bank | $ 2,494 | |
Payable for investments purchased | 9,552 | |
Payable for fund shares redeemed | 2,623 | |
Accrued management fee | 1,076 | |
Distribution and service plan fees payable | 3 | |
Other affiliated payables | 422 | |
Other payables and accrued expenses | 46 | |
Collateral on securities loaned, at value | 64,022 | |
Total liabilities | 80,238 | |
|
|
|
Net Assets | $ 1,715,064 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,916,521 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (269,858) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 68,401 | |
Net Assets | $ 1,715,064 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Assets and Liabilities - continued
Amounts in thousands (except per-share amounts) | October 31, 2011 | |
|
|
|
Calculation of Maximum Offering Price | $ 17.87 | |
|
|
|
Maximum offering price per share (100/94.25 of $17.87) | $ 18.96 | |
Class T: | $ 17.68 | |
|
|
|
Maximum offering price per share (100/96.50 of $17.68) | $ 18.32 | |
Class B: | $ 17.43 | |
|
|
|
Class C: | $ 17.38 | |
|
|
|
|
|
|
Stock Selector Small Cap: | $ 18.05 | |
|
|
|
Institutional Class: | $ 18.07 |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements - continued
Statement of Operations
Amounts in thousands | Year ended October 31, 2011 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 15,976 |
Special dividends |
| 3,755 |
Interest |
| 2 |
Income from Fidelity Central Funds |
| 965 |
Total income |
| 20,698 |
|
|
|
Expenses | ||
Management fee | $ 11,042 | |
Performance adjustment | (1,036) | |
Transfer agent fees | 4,620 | |
Distribution and service plan fees | 33 | |
Accounting and security lending fees | 568 | |
Custodian fees and expenses | 77 | |
Independent trustees' compensation | 10 | |
Registration fees | 144 | |
Audit | 59 | |
Legal | 8 | |
Miscellaneous | 17 | |
Total expenses before reductions | 15,542 | |
Expense reductions | (134) | 15,408 |
Net investment income (loss) | 5,290 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 248,238 | |
Foreign currency transactions | (99) | |
Futures contracts | 1,242 | |
Total net realized gain (loss) |
| 249,381 |
Change in net unrealized appreciation (depreciation) on: Investment securities | (126,111) | |
Assets and liabilities in foreign currencies | (1) | |
Futures contracts | 8 | |
Total change in net unrealized appreciation (depreciation) |
| (126,104) |
Net gain (loss) | 123,277 | |
Net increase (decrease) in net assets resulting from operations | $ 128,567 |
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 | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 5,290 | $ 3,129 |
Net realized gain (loss) | 249,381 | 280,256 |
Change in net unrealized appreciation (depreciation) | (126,104) | 94,882 |
Net increase (decrease) in net assets resulting | 128,567 | 378,267 |
Distributions to shareholders from net investment income | (9,149) | (976) |
Share transactions - net increase (decrease) | 183,503 | (349,513) |
Redemption fees | 776 | 175 |
Total increase (decrease) in net assets | 303,697 | 27,953 |
|
|
|
Net Assets | ||
Beginning of period | 1,411,367 | 1,383,414 |
End of period (including undistributed net investment income of $0 and $2,128, respectively) | $ 1,715,064 | $ 1,411,367 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended October 31, | 2011 | 2010 | 2009 | 2008 | 2007 K |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 16.20 | $ 12.53 | $ 11.24 | $ 24.79 | $ 23.20 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) E | -H, M | (.01) I | - M | (.04) | (.07) J |
Net realized and unrealized gain (loss) | 1.73 | 3.68 | 1.31 | (10.77) | 1.66 |
Total from investment operations | 1.73 | 3.67 | 1.31 | (10.81) | 1.59 |
Distributions from net investment income | (.07) | - M | (.02) | - | - |
Distributions from net realized gain | - | - | - | (2.74) | - |
Total distributions | (.07) | -M | (.02) | (2.74) | - |
Redemption fees added to paid in capital E | .01 | - M | - M | - M | -M |
Net asset value, end of period | $ 17.87 | $ 16.20 | $ 12.53 | $ 11.24 | $ 24.79 |
Total Return B, C, D | 10.71% | 29.32% | 11.69% | (48.52)% | 6.85% |
Ratios to Average Net AssetsF, L |
|
|
|
|
|
Expenses before reductions | 1.15% | 1.00% | 1.03% | 1.24% | 1.27% A |
Expenses net of fee waivers, if any | 1.15% | 1.00% | 1.03% | 1.24% | 1.27% A |
Expenses net of all reductions | 1.14% | .99% | 1.01% | 1.23% | 1.26% A |
Net investment income (loss) | -%H, N | (.07)% I | (.03)% | (.24)% | (.57)%A, J |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (in millions) | $ 4 | $ 3 | $ 3 | $ 2 | $ 1 |
Portfolio turnover rate G | 73% | 138% | 135% | 101% | 84% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
H Investment income per share reflects a special dividend which amounted to $.04 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.21)%.
I Investment income per share reflects a special dividend which amounted to $.01 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.16)%.
J Investment income per share reflects a special dividend which amounted to $.01 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.66)%.
K For the period May 2, 2007 (commencement of sale of shares) to October 31, 2007.
L Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
M Amount represents less than $.01 per share.
N Amount represents less than .01%.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class T
Years ended October 31, | 2011 | 2010 | 2009 | 2008 | 2007 K |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 16.07 | $ 12.45 | $ 11.19 | $ 24.74 | $ 23.20 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) E | (.05) H | (.05) I | (.03) | (.08) | (.10) J |
Net realized and unrealized gain (loss) | 1.70 | 3.67 | 1.30 | (10.76) | 1.64 |
Total from investment operations | 1.65 | 3.62 | 1.27 | (10.84) | 1.54 |
Distributions from net investment income | (.05) | - | (.01) | - | - |
Distributions from net realized gain | - | - | - | (2.71) | - |
Total distributions | (.05) | - | (.01) | (2.71) | - |
Redempti on fees added to paid in capital E | .01 | - M | - M | - M | - M |
Net asset value, end of period | $ 17.68 | $ 16.07 | $ 12.45 | $ 11.19 | $ 24.74 |
Total Return B, C, D | 10.34% | 29.08% | 11.42% | (48.70)% | 6.64% |
Ratios to Average Net AssetsF, L |
|
|
|
|
|
Expenses before reductions | 1.42% | 1.27% | 1.30% | 1.50% | 1.53% A |
Expenses net of fee waivers, if any | 1.42% | 1.27% | 1.30% | 1.50% | 1.53% A |
Expenses net of all reductions | 1.41% | 1.26% | 1.29% | 1.49% | 1.52% A |
Net investment income (loss) | (.27)% H | (.33)% I | (.31)% | (.50)% | (.83)%A, J |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 1,539 | $ 723 | $ 550 | $ 409 | $ 420 |
Portfolio turnover rate G | 73% | 138% | 135% | 101% | 84% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
H Investment income per share reflects a special dividend which amounted to $.04 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.48)%.
I Investment income per share reflects a special dividend which amounted to $.01 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.43)%.
J Investment income per share reflects a special dividend which amounted to $.01 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.92)%.
K For the period May 2, 2007 (commencement of sale of shares) to October 31, 2007.
L Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
M Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class B
Years ended October 31, | 2011 | 2010 | 2009 | 2008 | 2007 K |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 15.87 | $ 12.36 | $ 11.15 | $ 24.69 | $ 23.20 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) E | (.14) H | (.12) I | (.08) | (.17) | (.15) J |
Net realized and unrealized gain (loss) | 1.69 | 3.63 | 1.30 | (10.73) | 1.64 |
Total from investment operations | 1.55 | 3.51 | 1.22 | (10.90) | 1.49 |
Distributions from net investment income | - | - | (.01) | - | - |
Distributions from net realized gain | - | - | - | (2.64) | - |
Total distributions | - | - | (.01) | (2.64) | - |
Redemption fees added to paid in capital E | .01 | - M | - M | - M | - M |
Net asset value, end of period | $ 17.43 | $ 15.87 | $ 12.36 | $ 11.15 | $ 24.69 |
Total Return B, C, D | 9.83% | 28.40% | 10.92% | (48.94)% | 6.42% |
Ratios to Average Net AssetsF, L |
|
|
|
|
|
Expenses before reductions | 1.90% | 1.76% | 1.77% | 1.99% | 2.07% A |
Expenses net of fee waivers, if any | 1.90% | 1.76% | 1.77% | 1.99% | 2.05% A |
Expenses net of all reductions | 1.90% | 1.75% | 1.75% | 1.99% | 2.04% A |
Net investment income (loss) | (.76)% H | (.82)% I | (.78)% | (1.00)% | (1.32)% A, J |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 246 | $ 220 | $ 219 | $ 199 | $ 419 |
Portfolio turnover rate G | 73% | 138% | 135% | 101% | 84% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
D Total returns do not include the effect of the contingent deferred sales charge.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
H Investment income per share reflects a special dividend which amounted to $.04 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.96)%.
I Investment income per share reflects a special dividend which amounted to $.01 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.92)%.
J Investment income per share reflects a special dividend which amounted to $.01 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (1.41)%.
K For the period May 2, 2007 (commencement of sale of shares) to October 31, 2007.
L Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
M Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class C
Years ended October 31, | 2011 | 2010 | 2009 | 2008 | 2007 K |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 15.82 | $ 12.33 | $ 11.12 | $ 24.71 | $ 23.20 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) E | (.14) H | (.12) I | (.09) | (.17) | (.15) J |
Net realized and unrealized gain (loss) | 1.69 | 3.61 | 1.31 | (10.72) | 1.66 |
Total from investment operations | 1.55 | 3.49 | 1.22 | (10.89) | 1.51 |
Distributions from net investment income | - | - | (.01) | - | - |
Distributions from net realized gain | - | - | - | (2.70) | - |
Total distributions | - | - | (.01) | (2.70) | - |
Redemption fees added to paid in capital E | .01 | -M | -M | -M | - M |
Net asset value, end of period | $ 17.38 | $ 15.82 | $ 12.33 | $ 11.12 | $ 24.71 |
Total Return B, C, D | 9.86% | 28.30% | 10.96% | (48.95)% | 6.51% |
Ratios to Average Net AssetsF, L |
|
|
|
|
|
Expenses before reductions | 1.90% | 1.75% | 1.76% | 2.00% | 1.98% A |
Expenses net of fee waivers, if any | 1.90% | 1.75% | 1.76% | 2.00% | 1.98% A |
Expenses net of all reductions | 1.89% | 1.74% | 1.75% | 1.99% | 1.97% A |
Net investment income (loss) | (.76)% H | (.81)% I | (.77)% | (1.01)% | (1.27)% A, J |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 1,370 | $ 820 | $ 428 | $ 183 | $ 294 |
Portfolio turnover rate G | 73% | 138% | 135% | 101% | 84% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
D Total returns do not include the effect of the contingent deferred sales charge.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
H Investment income per share reflects a special dividend which amounted to $.04 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.96)%.
I Investment income per share reflects a special dividend which amounted to $.01 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.91)%.
J Investment income per share reflects a special dividend which amounted to $.01 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (1.36)%.
K For the period May 2, 2007 (commencement of sale of shares) to October 31, 2007.
L Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
M Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Stock Selector Small Cap
Years ended October 31, | 2011 | 2010 | 2009 | 2008 | 2007 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 16.35 | $ 12.61 | $ 11.28 | $ 24.81 | $ 22.23 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .05 E | .03 F | .02 | .01 | (.04) G |
Net realized and unrealized gain (loss) | 1.74 | 3.72 | 1.33 | (10.82) | 5.01 |
Total from investment operations | 1.79 | 3.75 | 1.35 | (10.81) | 4.97 |
Distributions from net investment income | (.10) | (.01) | (.02) | - | (.05) |
Distributions from net realized gain | - | - | - | (2.72) | (2.34) |
Total distributions | (.10) | (.01) | (.02) | (2.72) | (2.39) |
Redemption fees added to paid in capital B | .01 | - I | - I | - I | - I |
Net asset value, end of period | $ 18.05 | $ 16.35 | $ 12.61 | $ 11.28 | $ 24.81 |
Total Return A | 11.03% | 29.75% | 12.05% | (48.42)% | 24.42% |
Ratios to Average Net Assets C, H |
|
|
|
|
|
Expenses before reductions | .85% | .73% | .77% | .95% | 1.01% |
Expenses net of fee waivers, if any | .85% | .73% | .77% | .95% | 1.00% |
Expenses net of all reductions | .85% | .72% | .75% | .94% | .99% |
Net investment income (loss) | .29% E | .21% F | .22% | .05% | (.20)% G |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (in millions) | $ 1,698 | $ 1,406 | $ 1,379 | $ 1,292 | $ 2,602 |
Portfolio turnover rate D | 73% | 138% | 135% | 101% | 84% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
B Calculated based on average shares outstanding during the period.
C Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
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 $.04 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been .09%.
F Investment income per share reflects a special dividend which amounted to $.01 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been .12%.
G Investment income per share reflects a special dividend which amounted to $.02 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.29)%.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
I Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Institutional Class
Years ended October 31, | 2011 | 2010 | 2009 | 2008 | 2007 J |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 16.39 | $ 12.63 | $ 11.29 | $ 24.82 | $ 23.20 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) D | .05 G | .05 H | .04 | .02 | (.03) I |
Net realized and unrealized gain (loss) | 1.74 | 3.72 | 1.32 | (10.82) | 1.65 |
Total from investment operations | 1.79 | 3.77 | 1.36 | (10.80) | 1.62 |
Distributions from net investment income | (.12) | (.01) | (.02) | - | - |
Distributions from net realized gain | - | - | - | (2.73) | - |
Total distributions | (.12) | (.01) | (.02) | (2.73) | - |
Redemption fees added to paid in capital D | .01 | - L | - L | - L | - L |
Net asset value, end of period | $ 18.07 | $ 16.39 | $ 12.63 | $ 11.29 | $ 24.82 |
Total Return B, C | 10.99% | 29.89% | 12.14% | (48.36)% | 6.98% |
Ratios to Average Net Assets E, K |
|
|
|
|
|
Expenses before reductions | .86% | .63% | .63% | .84% | .94% A |
Expenses net of fee waivers, if any | .86% | .63% | .63% | .84% | .94% A |
Expenses net of all reductions | .85% | .62% | .62% | .84% | .93% A |
Net investment income (loss) | .29% G | .31% H | .36% | .15% | (.24)% A, I |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 10,038 | $ 680 | $ 413 | $ 376 | $ 162 |
Portfolio turnover rateF | 73% | 138% | 135% | 101% | 84% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
D Calculated based on average shares outstanding during the period.
E Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
G Investment income per share reflects a special dividend which amounted to $.04 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been .08%.
H Investment income per share reflects a special dividend which amounted to $.01 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been .21%.
I Investment income per share reflects a special dividend which amounted to $.01 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.33) %.
J For the period May 2, 2007 (commencement of sale of shares) to October 31, 2007.
K Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
L Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended October 31, 2011
1. Organization.
Fidelity Stock Selector Small Cap Fund (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. The Fund offers Class A, Class T, Class C, Stock Selector Small Cap and Institutional Class shares, each of which, along with Class B shares, has equal rights as to assets and voting privileges. Effective after the close of business on September 1, 2010, Class B shares were closed to new accounts and additional purchases, except for exchanges and reinvestments by existing shareholders. Each class has exclusive voting rights with respect to matters that affect that class. In order to disclose class level financial information dollar amounts presented in the notes are unrounded. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions may also differ by class.
2. Investments in Fidelity Central Funds.
The Fund invests in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC web site or upon request.
Annual Report
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Fund uses independent pricing services approved by the Board of Trustees to value its investments. When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include market or security specific events, changes in interest rates and credit quality. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The value used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the Fund's own assumptions based on the best information available)
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of October 31, 2011, as well as a roll forward of Level 3 securities, is included at the end of the Fund's Schedule of Investments. Valuation techniques used to value the Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when significant market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs),
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Security Valuation - continued
futures contracts, Exchange-traded funds (ETFs) and certain indexes as well as quoted prices for similar securities are used and are categorized as Level 2 in the hierarchy in these circumstances. Utilizing these techniques may result in transfers between Level 1 and Level 2. For restricted equity securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and are categorized as Level 3 in the hierarchy.
Debt securities, including restricted securities, are valued based on evaluated prices received from independent pricing services or from dealers who make markets in such securities. For U.S. government and government agency obligations, pricing services utilize matrix pricing which considers yield or price of bonds of comparable quality, coupon, maturity and type as well as dealer supplied prices and are generally categorized as Level 2 in the hierarchy. When independent prices are unavailable or unreliable, debt securities may be valued utilizing pricing matrices which consider similar factors that would be used by independent pricing services. These are generally categorized as Level 2 in the hierarchy but may be Level 3 depending on the circumstances.
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy.
Foreign Currency. The Fund may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on
Annual Report
3. Significant Accounting Policies - continued
Investment Transactions and Income - continued
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. Large, non-recurring dividends recognized by the Fund are presented separately on the Statement of Operations as "Special Dividends" and the impact of these dividends is presented in the Financial Highlights. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company, including distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. As of October 31, 2011, the Fund did not have any unrecognized tax benefits in the financial statements. A fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are declared and recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, partnerships, deferred trustees compensation and capital loss carryforwards.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $ 246,207,121 |
Gross unrealized depreciation | (179,772,367) |
Net unrealized appreciation (depreciation) on securities and other investments | $ 66,434,754 |
|
|
Tax Cost | $ 1,709,337,694 |
The tax-based components of distributable earnings as of period end were as follows:
Capital loss carryforward | $ (267,891,888) |
Net unrealized appreciation (depreciation) | $ 66,434,485 |
Under the recently enacted Regulated Investment Company Modernization Act of 2010 (the Act), the Fund will be permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to any losses incurred in pre-enactment taxable years, which generally expire after eight years from when they are incurred. Additionally, post-enactment capital losses that are carried forward will retain their character as either short-term or long-term capital losses rather than being considered all short-term as under previous law. The Fund's first fiscal year end subject to the Act will be October 31, 2012.
The tax character of distributions paid was as follows:
| October 31, 2011 | October 31, 2010 |
Ordinary Income | $ 9,148,743 | $ 975,942 |
Short-Term Trading (Redemption) Fees. Shares held by investors in the Fund less than 90 days are subject to a redemption fee equal to 1.50% of the net asset value of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Fund and accounted for as an addition to paid in capital.
New Accounting Pronouncement. In May 2011, the Financial Accounting Standards Board issued Accounting Standard Update No. 2011-04, Fair Value Measurement (Topic 820) - Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. The update changes the wording used to describe the requirements in GAAP for measuring fair value and for disclosing information about fair value measurements. The update is effective during interim and annual periods beginning after December 15, 2011. Management is currently evaluating the impact of the update's adoption on the Fund's financial statement disclosures.
Annual Report
4. Operating Policies.
Restricted Securities. The Fund may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities is included at the end of the Fund's Schedule of Investments.
5. Derivative Instruments.
Risk Exposures and the Use of Derivative Instruments. The Fund used derivative instruments (derivatives), including futures contracts, in order to meet its investment objectives. The strategy is to use derivatives to increase returns and to manage exposure to certain risks as defined below. The success of any strategy involving derivatives depends on analysis of numerous economic factors, and if the strategies for investment do not work as intended, the Fund may not achieve its objectives.
The Fund's use of derivatives increased or decreased its exposure to the following risk:
Equity Risk | Equity risk relates to the fluctuations in the value of financial instruments as a result of changes in market prices (other than those arising from interest rate risk or foreign exchange risk), whether caused by factors specific to an individual investment, its issuer, or all factors affecting all instruments traded in a market or market segment. |
The Fund is also exposed to additional risks from investing in derivatives, such as liquidity risk and counterparty credit risk. Liquidity risk is the risk that the Fund will be unable to sell the derivative in the open market in a timely manner. Counterparty credit risk is the risk that the counterparty will not be able to fulfill its obligation to the Fund. The Fund's maximum risk of loss from counterparty credit risk is generally the aggregate unrealized appreciation and unpaid counterparty payments in excess of any collateral pledged by the counterparty to the Fund. Counterparty risk related to exchange-traded futures contracts is minimal because of the protection provided by the exchange on which they trade. Derivatives involve, to varying degrees, risk of loss in excess of the amounts recognized in the Statement of Assets and Liabilities.
Futures Contracts. A futures contract is an agreement between two parties to buy or sell a specified underlying instrument for a fixed price at a specified future date. The Fund used futures contracts to manage its exposure to the stock market.
Annual Report
Notes to Financial Statements - continued
5. Derivative Instruments - continued
Futures Contracts - continued
Upon entering into a futures contract, a fund is required to deposit either cash or securities (initial margin) with a clearing broker in an amount equal to a certain percentage of the face value of the contract. Futures contracts are marked-to-market daily and subsequent payments (variation margin) are made or received by a fund depending on the daily fluctuations in the value of the futures contracts and are recorded as unrealized appreciation or (depreciation). This receivable and/or payable is included in daily variation margin on futures contracts in the Statement of Assets and Liabilities. Realized gain or (loss) is recorded upon the expiration or closing of a futures contract.
The underlying face amount at value of open futures contracts at period end, if any, 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. Securities deposited to meet initial margin requirements are identified in the Schedule of Investments.
Certain risks arise upon entering into futures contracts, including the risk that an illiquid market limits the ability to close out a futures contract prior to settlement date.
During the period the Fund recognized net realized gain (loss) of $1,242,158 and a change in net unrealized appreciation (depreciation) of $7,562 related to its investment in futures contracts. These amounts are included in the Statement of Operations.
6. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $1,431,900,114 and $1,282,079,545, respectively.
7. 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 .35% 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 Stock Selector Small Cap as compared to
Annual Report
7. Fees and Other Transactions with Affiliates - continued
Management Fee - continued
an appropriate benchmark index. For the period, the total annual management fee rate, including the performance adjustment, was .55% of the Fund's average net assets.
Distribution and Service Plan Fees. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the Fund and providing shareholder support services. For the period, the Distribution and Service Fee rates, total fees and amounts retained by FDC were as follows:
| Distribution | Service | Total Fees | Retained |
Class A | -% | .25% | $ 11,058 | $ 63 |
Class T | .25% | .25% | 6,750 | - |
Class B | .75% | .25% | 2,794 | 2,096 |
Class C | .75% | .25% | 12,446 | 3,951 |
|
|
| $ 33,048 | $ 6,110 |
Sales Load. FDC may receive a front-end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. Depending on the holding period, FDC may receive contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, 1.00% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained |
Class A | $ 2,269 |
Class T | 377 |
Class B* | 227 |
Class C* | 361 |
| $ 3,234 |
* When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
Annual Report
Notes to Financial Statements - continued
7. Fees and Other Transactions with Affiliates - continued
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the Fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, transfer agent fees for each class were as follows:
| Amount | % of |
Class A | $ 13,252 | .30 |
Class T | 4,315 | .32 |
Class B | 847 | .30 |
Class C | 3,762 | .30 |
Stock Selector Small Cap | 4,570,365 | .25 |
Institutional Class | 27,925 | .26 |
| $ 4,620,466 |
|
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 $84,786 for the period.
8. Committed Line of Credit.
The Fund participates with other funds managed by FMR or an affiliate in a $4.0 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $5,451 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, there were no borrowings on this line of credit.
Annual Report
9. Security Lending.
The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. For equity securities, a lending agent is used and may loan securities to certain qualified borrowers, including Fidelity Capital Markets (FCM), a broker-dealer affiliated with the Fund. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. The value of securities loaned to FCM at period end was $128,160. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Total security lending income during the period amounted to $896,991, including $4 from securities loaned to FCM.
10. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of the Fund provided services to the Fund in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $133,992 for the period.
11. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended October 31, | 2011 | 2010 |
From net investment income |
|
|
Class A | $ 15,209 | $ 649 |
Class T | 2,838 | - |
Stock Selector Small Cap | 9,104,153 | 974,901 |
Institutional Class | 26,543 | 392 |
Total | $ 9,148,743 | $ 975,942 |
Annual Report
Notes to Financial Statements - continued
12. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
Years ended October 31, | 2011 | 2010 | 2011 | 2010 |
Class A |
|
|
|
|
Shares sold | 141,619 | 60,233 | $ 2,551,365 | $ 878,328 |
Reinvestment of distributions | 794 | 48 | 14,554 | 635 |
Shares redeemed | (107,880) | (69,529) | (1,998,562) | (1,022,424) |
Net increase (decrease) | 34,533 | (9,248) | $ 567,357 | $ (143,461) |
Class T |
|
|
|
|
Shares sold | 81,238 | 27,634 | $ 1,558,596 | $ 398,291 |
Reinvestment of distributions | 154 | - | 2,831 | - |
Shares redeemed | (39,400) | (26,782) | (704,438) | (382,007) |
Net increase (decrease) | 41,992 | 852 | $ 856,989 | $ 16,284 |
Class B |
|
|
|
|
Shares sold | 5,592 | 2,875 | $ 102,797 | $ 40,053 |
Shares redeemed | (5,365) | (6,748) | (93,413) | (94,173) |
Net increase (decrease) | 227 | (3,873) | $ 9,384 | $ (54,120) |
Class C |
|
|
|
|
Shares sold | 52,816 | 24,030 | $ 972,098 | $ 347,201 |
Shares redeemed | (25,832) | (6,890) | (467,301) | (99,553) |
Net increase (decrease) | 26,984 | 17,140 | $ 504,797 | $ 247,648 |
Stock Selector Small Cap |
|
|
|
|
Shares sold | 42,956,006 | 14,958,012 | $ 812,040,324 | $ 219,809,002 |
Reinvestment of distributions | 490,501 | 72,340 | 8,965,215 | 962,840 |
Shares redeemed | (35,360,001) | (38,394,961) | (648,464,613) | (570,480,008) |
Net increase (decrease) | 8,086,506 | (23,364,609) | $ 172,540,926 | $ (349,708,166) |
Institutional Class |
|
|
|
|
Shares sold | 1,267,453 | 13,011 | $ 24,122,964 | $ 190,234 |
Reinvestment of distributions | 1,209 | 4 | 22,526 | 53 |
Shares redeemed | (754,664) | (4,160) | (15,119,704) | (62,596) |
Net increase (decrease) | 513,998 | 8,855 | $ 9,025,786 | $ 127,691 |
13. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
Annual Report
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Capital Trust and Shareholders of Fidelity Stock Selector Small Cap Fund:
We have audited the accompanying statement of assets and liabilities of Fidelity Stock Selector Small Cap Fund (the Fund), a fund of Fidelity Capital Trust, including the schedule of investments, as of October 31, 2011, 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 the 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, 2011, 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 Small Cap Fund as of October 31, 2011, 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 the 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 15, 2011
Annual Report
Trustees and Officers
The Trustees, Members 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, oversee management of the risks associated with such activities and contractual arrangements, and review the fund's performance. Except for James C. Curvey, each of the Trustees oversees 226 funds advised by FMR or an affiliate. Mr. Curvey oversees 429 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 75th birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board Members 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.
Experience, Skills, Attributes, and Qualifications of the Fund's Trustees. The Governance and Nominating Committee has adopted a statement of policy that describes the experience, qualifications, attributes, and skills that are necessary and desirable for potential Independent Trustee candidates (Statement of Policy). The Board believes that each Trustee satisfied at the time he or she was initially elected or appointed a Trustee, and continues to satisfy, the standards contemplated by the Statement of Policy. The Governance and Nominating Committee also engages professional search firms to help identify potential Independent Trustee candidates who have the experience, qualifications, attributes, and skills consistent with the Statement of Policy. From time to time, additional criteria based on the composition and skills of the current Independent Trustees, as well as experience or skills that may be appropriate in light of future changes to board composition, business conditions, and regulatory or other developments, have also been considered by the professional search firms and the Governance and Nominating Committee. In addition, the Board takes into account the Trustees' commitment and participation in Board and committee meetings, as well as their leadership of standing and ad hoc committees throughout their tenure.
In determining that a particular Trustee was and continues to be qualified to serve as a Trustee, the Board has considered a variety of criteria, none of which, in isolation, was controlling. The Board believes that, collectively, the Trustees have balanced and diverse experience, qualifications, attributes, and skills, which allow the Board to operate effectively in governing the fund and protecting the interests of shareholders. Information about the specific experience, skills, attributes, and qualifications of each Trustee, which in each case led to the Board's conclusion that the Trustee should serve (or continue to serve) as a trustee of the fund, is provided below.
Annual Report
Trustees and Officers - continued
Board Structure and Oversight Function. James C. Curvey is an interested person (as defined in the 1940 Act) and currently serves as Acting Chairman. The Trustees have determined that an interested Chairman is appropriate and benefits shareholders because an interested Chairman has a personal and professional stake in the quality and continuity of services provided to the fund. Independent Trustees exercise their informed business judgment to appoint an individual of their choosing to serve as Chairman, regardless of whether the Trustee happens to be independent or a member of management. The Independent Trustees have determined that they can act independently and effectively without having an Independent Trustee serve as Chairman and that a key structural component for assuring that they are in a position to do so is for the Independent Trustees to constitute a substantial majority for the Board. The Independent Trustees also regularly meet in executive session. Ned C. Lautenbach serves as Chairman of the Independent Trustees and as such (i) acts as a liaison between the Independent Trustees and management with respect to matters important to the Independent Trustees and (ii) with management prepares agendas for Board meetings.
Fidelity funds are overseen by different Boards of Trustees. The fund's Board oversees Fidelity's equity and high income funds and another Board oversees Fidelity's investment-grade bond, money market, and asset allocation funds. The asset allocation funds may invest in Fidelity funds overseen by the fund's Board. The use of separate Boards, each with its own committee structure, allows the Trustees of each group of Fidelity funds to focus on the unique issues of the funds they oversee, including common research, investment, and operational issues. On occasion, the separate Boards establish joint committees to address issues of overlapping consequences for the Fidelity funds overseen by each Board.
The Trustees operate using a system of committees to facilitate the timely and efficient consideration of all matters of importance to the Trustees, the fund, and fund shareholders and to facilitate compliance with legal and regulatory requirements and oversight of the fund's activities and associated risks. The Board, acting through its committees, has charged FMR and its affiliates with (i) identifying events or circumstances the occurrence of which could have demonstrably adverse effects on the fund's business and/or reputation; (ii) implementing processes and controls to lessen the possibility that such events or circumstances occur or to mitigate the effects of such events or circumstances if they do occur; and (iii) creating and maintaining a system designed to evaluate continuously business and market conditions in order to facilitate the identification and implementation processes described in (i) and (ii) above. Because the day-to-day operations and activities of the fund are carried out by or through FMR, its affiliates and other service providers, the fund's exposure to risks is mitigated but not eliminated by the processes overseen by the Trustees. While each of the Board's committees has responsibility for overseeing different aspects of the fund's activities, oversight is exercised primarily through the Operations, Audit, and Compliance Committees. In addition, the Independent Trustees have worked with FMR to enhance the Board's oversight of investment and financial risks, legal and regulatory risks, technology risks, and operational risks, including the development of additional risk reporting to the Board. For example, a working group comprised of Independent Trustees and FMR has worked and continues to work to review the Fidelity funds' valuation-related activities, reporting and risk management. Appropriate personnel, including but not limited to the fund's Chief Compliance Officer (CCO), FMR's internal auditor, the independent accountants, the fund's Treasurer and portfolio management personnel, make periodic reports to the Board's committees, as appropriate, including an annual review of FMR's risk management program for the Fidelity funds. The responsibilities of each standing committee, including their oversight responsibilities, are described further under "Standing Committees of the Fund's Trustees."
Annual Report
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 Occupations and Other Relevant Experience+ | |
James C. Curvey (76) | |
| Year of Election or Appointment: 2007 Mr. Curvey is Trustee and Acting Chairman of the Board of Trustees of certain Trusts. Mr. Curvey also serves as Trustee (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of Fidelity Investments Money Management, Inc. (2009-present), Director of Fidelity Research & Analysis Co. (2009-present) and Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2007-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. Previously, Mr. Curvey was the Vice Chairman (2006-2007) and Director (2000-2007) of FMR Corp. |
Ronald P. O'Hanley (54) | |
| Year of Election or Appointment: 2011 Mr. O'Hanley is Director of FMR Co., Inc. (2010-present), Director of Fidelity Investments Money Management, Inc. (2010-present), Director of Fidelity Research & Analysis Company (2010-present), President of Fidelity Asset Management and Corporate Services and a member of Fidelity's Executive Committee (2010-present). Previously, Mr. O'Hanley served as President and Chief Executive Officer of BNY Mellon Asset Management (2007-2010). Mr. O'Hanley also served as Vice Chairman of Bank New York Mellon Corp. and a member of that firm's Executive Committee. Prior to the 2007 merger of The Bank of New York and Mellon Financial Corporation, he was Vice Chairman of Mellon Financial Corporation and President and Chief Executive Officer of Mellon Asset Management. He joined Mellon in February 1997. Mr. O'Hanley currently serves as Chairman of the Boston Public Library Foundation Board of Directors and sits on the Board of Directors of Beth Israel Deaconess Medical Center, the Board of Trustees of the Marine Biological Laboratory and the Advisory Board of the Maxwell School of Citizenship and Public Administration at Syracuse University. Mr. O'Hanley also chairs the Council on Asset Management for the Financial Services Roundtable and is a member of the Board of Directors of Institutional Investor's U.S. Institute. |
* 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.
+ The information above includes each Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Trustee's qualifications to serve as a Trustee, which led to the conclusion that each Trustee should serve as a Trustee for the fund.
Annual Report
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 Occupations and Other Relevant Experience+ | |
Dennis J. Dirks (63) | |
| 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). He also served as President, Chief Operating Officer, and Board member of The Depository Trust Company (DTC) and President and Board member of the National Securities Clearing Corporation (NSCC). In addition, Mr. Dirks served as Chief Executive Officer and Board member of the Government Securities Clearing Corporation, Chief Executive Officer and Board member of the Mortgage-Backed Securities Clearing Corporation, as a Trustee and a member of the Finance Committee of Manhattan College (2005-2008), and as a Trustee and a member of the Finance Committee of AHRC of Nassau County (2006-2008). Mr. Dirks is a member of the Independent Directors Council (IDC) Governing Council (2010-Present) and Board of Directors for The Brookville Center for Children's Services, Inc. (2009-present). |
Alan J. Lacy (58) | |
| Year of Election or Appointment: 2008 Mr. Lacy serves as Senior Adviser (2007-present) of Oak Hill Capital Partners, L.P. (private equity). 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 Dave & Buster's, Inc. (restaurant and entertainment complexes, 2010-present), The Hillman Companies, Inc. (hardware wholesalers, 2010-present), and Bristol-Myers Squibb Company (global pharmaceuticals, 2007-present). Mr. Lacy is a member of the Board of Trustees of The National Parks Conservation Association (2006-Present). Previously, Mr. Lacy served as Chairman of the Board of Trustees of the National Parks Conservation Association (2008-2011) and as a member of the Board of Directors for the Western Union Company (global money transfer, 2006-2011). |
Ned C. Lautenbach (67) | |
| Year of Election or Appointment: 2000 Mr. Lautenbach is Chairman of the Independent Trustees of the Equity and High Income Funds (2006-present). Mr. Lautenbach currently serves as the Lead Director of the Eaton Corporation Board of Directors (diversified industrial, 1997-present). Mr. Lautenbach is also a member of the Board of Directors of the Philharmonic Center for the Arts in Naples, Florida (1999-present); a member of the Board of Trustees of Fairfield University (2005-present); and a member of the Council on Foreign Relations (1994-present). Previously, Mr. Lautenbach was a Partner/Advisory Partner at Clayton, Dubilier & Rice, LLC (private equity investment, 1998-2010), as well as a Director of Sony Corporation (2006-2007). |
Joseph Mauriello (67) | |
| Year of Election or Appointment: 2008 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, 1965-2005). Mr. Mauriello currently serves as a member of the Board of Directors of XL Group plc. (global insurance and re-insurance, 2006-present) and of Arcadia Resources Inc. (health care services and products, 2007-present). Previously, Mr. Mauriello served as a Director of the Hamilton Funds of the Bank of New York (2006-2007). |
Robert W. Selander (61) | |
| Year of Election or Appointment: 2011 Previously, Mr. Selander served as a Member of the Advisory Board of Fidelity's Equity and High Income Funds (2011), Executive Vice Chairman (2010), Chief Executive Officer (2009-2010), and President and Chief Executive Officer (1997-2009) of Mastercard, Inc. |
Cornelia M. Small (67) | |
| Year of Election or Appointment: 2005 Ms. Small is a member of the Board of Directors of the Teagle Foundation (2009-present). Ms. Small is also a member of the Investment Committee, and Chair (2008-present) and a member of the Board of Trustees of Smith College. In addition, Ms. Small 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. In addition, Ms. Small 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 (72) | |
| Year of Election or Appointment: 2002 Mr. Stavropoulos is Vice Chairman of the Independent Trustees of the Equity and High Income Funds (2006-present). Mr. Stavropoulos serves as President and Founder of the Michigan Baseball Foundation, the Great Lakes Loons (2007-present). 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, CEO (1995-2000; 2002-2004), Chairman of the Executive Committee (2000-2006), and as a member of the Board of Directors (1990-2006). Currently, Mr. Stavropoulos is Chairman of Univar (global distributor of commodity and specialty chemicals, 2010-present), 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, 2005-present). Mr. Stavropoulos is a special advisor to Clayton, Dubilier & Rice, LLC (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 (62) | |
| 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), and Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (61) | |
| Year of Election or Appointment: 2008 Mr. Wiley also serves as a Director of Asia Pacific Exploration Consolidated (international oil and gas exploration and production, 2008-present). Mr. Wiley serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), and a Director of Bill Barrett Corporation (exploration and production, 2005-present). In addition, Mr. Wiley also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-2010), as a Senior Energy Advisor of Katzenbach Partners, LLC (consulting, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production, 2001-2005). |
Annual Report
Trustees and Officers - continued
+ The information above includes each Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Trustee's qualifications to serve as a Trustee, which led to the conclusion that each Trustee should serve as a Trustee for the fund.
Advisory Board Members and Executive Officers:
Correspondence intended for each executive officer, Edward C. Johnson 3d, and Peter S. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Edward C. Johnson 3d (81) | |
| Year of Election or Appointment: 2011 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Mr. Johnson serves as Chief Executive Officer, Chairman, and a Director of FMR LLC, and also serves as Chairman and Director of FIL Limited. Previously, Mr. Johnson served as a Trustee and Chairman of the Board of certain Fidelity Trusts, Chairman and a Director of FMR, Chairman and a Director of FMR Co., Inc., and President of FMR LLC (2006-2007). |
Peter S. Lynch (67) | |
| Year of Election or Appointment: 2003 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Mr. Lynch is Vice Chairman and a Director of FMR and FMR Co., Inc. In addition, Mr. Lynch 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 (42) | |
| Year of Election or Appointment: 2008 President and Treasurer of Fidelity's Equity and High Income Funds. Mr. Robins also serves as President and Treasurer (2010-present) and Assistant Treasurer (2009-present) of other Fidelity funds and is an employee of Fidelity Investments (2004-present). Previously, Mr. Robins served as Deputy Treasurer of the Fidelity funds (2005-2008) and Treasurer and Chief Financial Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2006-2008). |
Brian B. Hogan (47) | |
| Year of Election or Appointment: 2009 Vice President of Equity and High Income Funds. Mr. Hogan also serves as President of FMR's Equity Division (2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager. |
Thomas C. Hense (47) | |
| Year of Election or Appointment: 2008 or 2010 Vice President of Fidelity's High Income (2008), Small Cap (2008), and Value (2010) Funds. Previously, Mr. Hense served as a portfolio manager for Fidelity's Institutional Money Management Group (Pyramis) (2003-2008). |
Scott C. Goebel (43) | |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of the Fidelity funds. Mr. Goebel also serves as Secretary of Fidelity Investments Money Management, Inc. (FIMM) (2010-present) and Fidelity Research and Analysis Company (FRAC) (2010-present); Secretary and CLO of The North Carolina Capital Management Trust: Cash and Term Portfolios (2008-present); General Counsel, Secretary, and Senior Vice President of FMR (2008-present) and FMR Co., Inc. (2008-present); employed by FMR LLC or an affiliate (2001-present); Chief Legal Officer of Fidelity Management & Research (Hong Kong) Limited (2008-present) and Assistant Secretary of Fidelity Management & Research (Japan) Inc. (2008-present), and Fidelity Management & Research (U.K.) Inc. (2008-present). Previously, Mr. Goebel served as Assistant Secretary of FIMM (2008-2010), FRAC (2008-2010), and the Funds (2007-2008) and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007). |
William C. Coffey (42) | |
| Year of Election or Appointment: 2009 Assistant Secretary of Fidelity's Equity and High Income Funds. Mr. Coffey also serves as Senior Vice President and Deputy General Counsel of FMR LLC (2010-present), and is an employee of Fidelity Investments. Previously, Mr. Coffey served as Vice President and Associate General Counsel of FMR LLC (2005-2009). |
Holly C. Laurent (57) | |
| Year of Election or Appointment: 2008 Anti-Money Laundering (AML) Officer of the Fidelity funds. Ms. Laurent also serves as AML Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2008-present) and 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), and Senior Vice President, Deputy General Counsel and Group Head for FMR LLC (2005-2006). |
Christine Reynolds (53) | |
| 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. Ms. Reynolds served as Chief Operating Officer of FPCMS (2007-2008). Previously, Ms. Reynolds served as President, Treasurer, and Anti-Money Laundering officer of the Fidelity funds (2004-2007). |
Kenneth A. Rathgeber (64) | |
| 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), Pyramis Global Advisors, LLC (2005-present), and Strategic Advisers, Inc. (2005-present). |
Jeffrey S. Christian (50) | |
| Year of Election or Appointment: 2009 Deputy Treasurer of the Fidelity funds. Mr. Christian is an employee of Fidelity Investments. Previously, Mr. Christian served as Chief Financial Officer (2008-2009) of certain Fidelity funds and Senior Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (2004-2009). |
Joseph F. Zambello (54) | |
| Year of Election or Appointment: 2011 Deputy Treasurer of the Fidelity funds. Mr. Zambello is an employee of Fidelity Investments. Previously, Mr. Zambello served as Vice President of FMR's Program Management Group (2009-2011) and Vice President of the Transfer Agent Oversight Group (2005-2009). |
Adrien E. Deberghes (44) | |
| Year of Election or Appointment: 2008 Deputy Treasurer of Fidelity's Equity and High Income Funds. Mr. Deberghes also serves as Vice President and Assistant Treasurer of Fidelity Rutland Square Trust II and Fidelity Commonwealth Trust II (2011-present), Assistant Treasurer of other Fidelity funds (2010-present), and 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). |
Stephanie J. Dorsey (42) | |
| Year of Election or Appointment: 2010 Assistant Treasurer of Fidelity's Equity and High Income Funds. Ms. Dorsey also serves as Deputy Treasurer of other Fidelity funds (2008-present) and is an employee of Fidelity Investments (2008-present). Previously, Ms. Dorsey served as Treasurer (2004-2008) of the JPMorgan Mutual Funds and Vice President (2004-2008) of JPMorgan Chase Bank. |
John R. Hebble (53) | |
| Year of Election or Appointment: 2009 Assistant Treasurer of Fidelity's Equity and High Income Funds. Mr. Hebble also serves as President (2011-present), Treasurer, and Chief Financial Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2008-present), President and Treasurer of other Fidelity funds (2008-present) and is an employee of Fidelity Investments. |
Gary W. Ryan (53) | |
| 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). |
Jonathan Davis (43) | |
| Year of Election or Appointment: 2010 Assistant Treasurer of the Fidelity funds. Mr. Davis is also Assistant Treasurer of Fidelity Rutland Square Trust II and Fidelity Commonwealth Trust II. Mr. Davis is an employee of Fidelity Investments. Previously, Mr. Davis served as Vice President and Associate General Counsel of FMR LLC (2003-2010). |
Annual Report
Distributions (Unaudited)
The fund designates 100% of dividends distributed during the fiscal year as qualifying for the dividends-received deduction for corporate shareholders.
The fund designates 100% of dividends distributed during the fiscal year as amounts which may be taken into account as a dividend for purposes of the maximum rate under section 1(h)(11) of the Internal Revenue Code.
The fund will notify shareholders in January 2012 of amounts for use in preparing 2011 income tax returns.
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees
Fidelity Stock Selector Small Cap Fund
Each year, 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 relevant to the renewal of the Advisory Contracts throughout the year.
The Board meets regularly 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. The Board has established various 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. The Board, acting directly and through its Committees, requests and receives information concerning the annual consideration of the renewal of the fund's Advisory Contracts. The Board also meets as needed to consider matters specifically related to the Board's annual consideration of the renewal of Advisory Contracts. Members of the Board may also meet with trustees of other Fidelity funds through ad hoc joint committees to discuss certain matters relevant to the Fidelity funds.
At its July 2011 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 expense ratio; (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.
In considering whether to renew the Advisory Contracts for the fund, the Board 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 is in the best interests of the fund and its shareholders and that the compensation payable under the Advisory Contracts is fair and reasonable. The Board's decision to renew the Advisory Contracts was not based on any single factor, 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 Fidelity's competitors, and that the fund's shareholders, who have 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
Board Approval of Investment Advisory Contracts and
Management Fees - continued
Nature, Extent, and Quality of Services Provided. The Board considered the 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 to act in the best interests of the fund.
Resources Dedicated to Investment Management and Support Services. The Board and the Fund Oversight and Research Committees reviewed the general qualifications and capabilities of the Investment Advisers' investment staff, including its size, education, experience, and resources, as well as the Investment Advisers' approach to recruiting, training, managing, and compensating investment personnel. The Board also noted that FMR has devoted increased resources to non-U.S. offices. The Board noted that Fidelity's analysts have extensive resources, tools and capabilities which allow them to conduct sophisticated quantitative and fundamental analysis, as well as credit analysis of issuers, counterparties and enhancers. The Board also believes that Fidelity's investment professionals have sufficient access to global information and data so as to provide competitive investment results over time, and that those professionals also have access to sophisticated tools which permit them to assess portfolio construction and risk and performance attribution characteristics continuously, as well as to transmit new information and research conclusions rapidly around the world. Additionally, in their deliberations, the Board considered the Investment Advisers' trading capabilities and resources which are an integral part of the investment management process.
Shareholder and Administrative Services. The Board considered (i) the nature, extent, quality, and cost of advisory, administrative, 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 adviser's 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 noted that the growth of fund assets over time 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 telephone representatives and over the Internet, investor education materials and asset allocation tools, and the expanded availability of Fidelity Investor Centers, with 35 new branches opening since 2010.
Annual Report
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 a large variety of mutual fund investor services. The Board noted that Fidelity had taken, or had made recommendations that resulted in the Fidelity funds taking, a number of actions over the previous year that benefited particular funds, including (i) continuing to dedicate additional resources to investment research and support of the senior management team that oversees asset management; (ii) rationalizing product lines through the mergers of six funds into other funds; (iii) continuing to migrate the Freedom Funds to dedicated lower cost underlying funds; (iv) obtaining shareholder approval to broaden the investment strategies for Fidelity Consumer Finance Portfolio, Fidelity Emerging Asia Fund, and Fidelity Environment and Alternative Energy Portfolio; (v) contractually agreeing to reduce the management fees and impose other expense limitations on Spartan 500 Index Fund and U.S. Bond Index Fund in connection with launching new institutional classes of these funds; (vi) changing the name, primary and supplemental benchmarks, and investment policies of Fidelity Global Strategies Fund to support the fund's flexible investment mandate and global orientation; and (vii) reducing the transfer agency account fee rates on certain accounts.
Investment Performance. The Board considered whether the fund has operated in accordance with its investment objective, as well as its record of compliance with its investment restrictions. It also reviewed the fund's absolute investment performance for each class, as well as the fund's relative investment performance for each class measured over multiple periods against (i) a broad-based securities market index, and (ii) a peer group of mutual funds deemed appropriate by Fidelity and reviewed by the Board. The following charts considered by the Board show, over the one-, three-, and five-year periods ended December 31, 2010, as available, the cumulative total returns of Institutional Class (Class I) and the retail class of the fund, 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 returns of Institutional Class (Class I) and the retail class show the performance of the highest performing class (based on three-year performance) and the lowest performing class (based on five-year performance), respectively. 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 numbers noted below each chart correspond to the percentile box and represent the percentage of funds in the peer group whose performance was equal to or lower than that of the class indicated.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
Fidelity Stock Selector Small Cap Fund
The Board reviewed the fund's relative investment performance against its peer group and noted that the performance of the retail class of the fund (the class with the longest performance record) was in the first quartile for the one-year period, the fourth quartile for the three-year period, and the third quartile for the five-year period. The Board also noted that the investment performance of the fund was lower than its benchmark for the three- and five-year periods, although the one-year total return of the retail class compared favorably to its benchmark. The Board considered that the variations in performance among the fund's classes reflect the variations in class expenses, which result in lower performance for higher expense classes. The Board also reviewed the fund's performance since inception as well as performance in the current year.
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 noted 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.
Based on its review, the Board concluded that the nature, extent, and quality of services provided to the fund under the Advisory Contracts should benefit the fund's shareholders.
Annual Report
Competitiveness of Management Fee and Total Expense Ratio. The Board considered the fund's management fee and total expense ratio 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 ratio comparisons by broadening the competitive group used for comparison and by reducing the number of universes to which various Fidelity funds are compared.
Management Fee. 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 6% means that 94% 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
Board Approval of Investment Advisory Contracts and
Management Fees - continued
Fidelity Stock Selector Small Cap Fund
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 2010. The Board also noted the effect of the fund's negative 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.
Based on its review, the Board concluded that the fund's management fee is fair and reasonable in light of the services that the fund receives and the other factors considered.
Total Expense Ratio. In its review of each class's total expense ratio, the Board considered the fund's management fee as well as other fund or class expenses, as applicable, such as transfer agent fees, pricing and bookkeeping fees, fund-paid 12b-1 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 the current and historical total expense ratios of each class of the fund compared to competitive fund median expenses. Each class of 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.
The Board noted that the total expense ratio of each class ranked below its competitive median for 2010. The Board considered that various factors, including 12b-1 fees, positive or negative performance adjustments, and relatively higher other expenses in the case of small fund size, can affect total expense ratios.
Annual Report
Fees Charged to Other Fidelity Clients. The Board also considered Fidelity fee structures and other information with respect to clients of FMR and its affiliates, such as other mutual funds advised or subadvised by FMR or its affiliates, pension plan clients, and other institutional clients. In March 2010, the Board created an ad hoc joint committee with the board of other Fidelity funds (the Committee) to review and compare Fidelity's institutional investment advisory business with its business of providing services to the Fidelity funds, including the differences in services provided, fees charged, and costs incurred, as well as competition in their respective marketplaces.
Based on its review of total expense ratios and fees charged to other Fidelity clients, the Board concluded that the total expense ratio of each class of the fund was reasonable in light of the services that the fund and its shareholders receive and the other factors considered, including the findings of the Committee.
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 books and records of Fidelity on which Fidelity's audited financial statements are based. 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 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 concluded that while other allocation methods may also be reasonable, Fidelity's profitability methodologies are reasonable in all material respects.
The Board also reviewed Fidelity's non-fund businesses and 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.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
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 was satisfied that the profitability was not excessive in the circumstances.
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 also noted that in 2009, it and the board of other Fidelity funds created an ad hoc committee (the Economies of Scale Committee) to analyze whether FMR attains economies of scale in respect of the management and servicing of the Fidelity funds, whether the Fidelity funds have appropriately benefited from such economies of scale, and whether there is potential for realization of any further economies of scale.
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 calculates the group fee rates based on a tiered asset "breakpoint" schedule that varies based on asset class. The Board considered that the group fee is designed to deliver the benefits of economies of scale to fund shareholders when total Fidelity 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 benefit from lower management fees as assets under FMR's management increase at the fund complex level, regardless of whether Fidelity achieves any such economies of scale.
The Board concluded, taking into account the analysis of the Economies of Scale Committee, that any potential economies of scale are being appropriately shared between fund shareholders and Fidelity.
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, actions to be taken by FMR to improve certain funds' overall performance, and Fidelity's long-term strategies for certain funds; (ii) portfolio manager changes that have occurred during the past year and length of portfolio manager tenure for different categories of funds over time; (iii) Fidelity's compensation structure for portfolio managers and other key personnel and strategies for attracting and retaining non-investment personnel; (iv) the amount of the investment that each portfolio manager has made in the Fidelity fund(s) that he or she manages; (v) historical trends in Fidelity's realization of fall-out benefits; (vi) Fidelity's group fee structures and the rationale for the individual fee rates of certain funds; (vii) fund profitability methodology and the impact of certain factors on fund profitability results; (viii) trends regarding industry use of performance fee structures and Fidelity's compliance practices with respect to performance adjustment calculations; (ix) the fee structures in place for certain other Fidelity clients; and (x) explanations regarding the relative total expense ratios of certain funds and classes, total expense competitive trends, and actions that might be taken by FMR to reduce total expense ratios for certain funds and classes.
Annual Report
Based on its evaluation of all of the conclusions noted above, and after considering all factors it believed relevant, 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
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Annual Report
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Annual Report
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SCS-UANN-1211 1.784779.108
(Fidelity Investment logo)(registered trademark)
Fidelity Advisor®
Stock Selector Small Cap
Fund - Class A, Class T, Class B
and Class C
Annual Report
October 31, 2011
Class A, Class T, Class B,
and Class C are classes of
Fidelity® Stock Selector
Small Cap Fund
Contents
Chairman's Message | The Chairman's message to shareholders. | |
Performance | How the fund has done over time. | |
Management's Discussion of Fund Performance | The Portfolio Managers' review of fundperformance and strategy. | |
Shareholder Expense Example | An example of shareholder expenses. | |
Investment Changes | A summary of major shifts in the fund's investments over the past six months. | |
Investments | A complete list of the fund's investments with their market values. | |
Financial Statements | Statements of assets and liabilities, operations, and changes in net assets, | |
Notes | Notes to the financial statements. | |
Report of Independent Registered Public Accounting Firm |
| |
Trustees and Officers |
| |
Distributions |
| |
Board Approval of Investment Advisory Contracts and Management Fees |
|
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-877-208-0098 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company.
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, http://www.advisor.fidelity.com, or http://www.401k.com, as applicable.
NOT FDIC INSURED • MAY LOSE VALUE • NO BANK GUARANTEE
Neither the fund nor Fidelity Distributors Corporation is a bank.
Annual Report
Chairman's Message
(photo_of_James_C_Curvey)
Dear Shareholder:
Global equity markets began the fourth quarter on a strong note, sharply reversing course in October amid strong corporate earnings, better-than-expected economic news and the promise of a resolution to the sovereign debt crisis in Europe. The mini rally followed a third quarter marked by a significant downturn in July and August, which heightened investor anxiety and set off a wave of volatility that hampered most major asset classes through the end of September. Financial markets are difficult to predict, of course, but you can help put the odds in your favor by following these time-tested investment principles.
One of the basic tenets is to invest according to your time horizon. For long-term investors, riding out the markets' inevitable ups and downs has proven much more effective than making decisions based on short-term developments. If your goal is approaching, you can also benefit from patience and restraint, rather than attempting to time the market. No matter your time horizon, missing only a few of the markets' best days can significantly diminish returns. Patience also affords the benefits of compounding - earning interest on additional income or reinvested dividends and capital gains. While staying the course doesn't eliminate risk, it can considerably lessen the negative impact of short-term downturns.
Asset allocation is another principle to manage risk. As you spread your portfolio among the asset classes, be sure to consider your time horizon, risk tolerance and investment objectives. Younger investors may be better served by emphasizing equities, which historically have been the best-performing asset class over time. Investors who are nearing a specific goal, such as retirement or sending a child to college, may choose to favor bonds and other investments that have tended to be more stable. Studies indicate that asset allocation is the single most important determinant of a portfolio's long-term success. After deciding on a suitable allocation strategy, make sure your portfolio is adequately diversified, with exposure to stocks of small-, mid- and large-cap companies in a range of sectors, for example. And today, more than ever, geographic diversification should be taken into account.
Lastly, investing a certain amount of money on a regular basis - a principle known as dollar-cost averaging - can help lower the average cost of your purchases, while also giving you the discipline to avoid selling weak performers just prior to an upswing, or chasing a hot performer just before a correction.
We invite you to learn more by visiting us on the Internet, dropping by one of our Investor Centers or calling us by phone. It is our privilege to provide the resources you need to choose investments that are right for you.
Sincerely,
(The acting chairman's signature appears here.)
James C. Curvey
Acting Chairman
Annual Report
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' distributions from 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, 2011 | Past 1 | Past 5 | Past 10 |
Class A (incl. sales charge)A | 4.35% | -0.72% | 4.80% |
Class T (incl. sales charge)B | 6.47% | -0.51% | 4.91% |
Class B (incl. contingent deferred sales charge) C | 4.83% | -0.54% | 5.06% |
Class C (incl. contingent deferred sales charge) D | 8.86% | -0.21% | 5.07% |
A Class A shares bear a 0.25% 12b-1 fee. The initial offering of Class A shares took place on May 2, 2007. Returns prior to May 2, 2007 are those of Fidelity® Stock Selector Small Cap Fund, the original class of the fund, which has no 12b-1 fee. Had Class A shares' 12b-1 fee been reflected, returns prior to May 2, 2007 would have been lower.
B Class T shares bear a 0.50% 12b-1 fee. The initial offering of Class T shares took place on May 2, 2007. Returns prior to May 2, 2007 are those of Fidelity Stock Selector Small Cap Fund, the original class of the fund, which has no 12b-1 fee. Had Class T shares' 12b-1 fee been reflected, returns prior to May 2, 2007 would have been lower.
C Class B shares bear a 1.00% 12b-1 fee. The initial offering of Class B shares took place on May 2, 2007. Returns prior to May 2, 2007 are those of Fidelity Stock Selector Small Cap Fund, the original class of the fund, which has no 12b-1 fee. Had Class B shares' 12b-1 fee been reflected, returns prior to May 2, 2007 would have been lower. Class B shares' contingent deferred sales charges included in the past one year, past five years, and past 10 years total return figures are 5%, 2% ,and 0%, respectively.
D Class C shares bear a 1.00% 12b-1 fee. The initial offering of Class C shares took place on May 2, 2007. Returns prior to May 2, 2007 are those of Fidelity Stock Selector Small Cap Fund, the original class of the fund, which has no 12b-1 fee. Had Class C shares' 12b-1 fee been reflected, returns prior to May 2, 2007 would have been lower. Class C shares' contingent deferred sales charges included in the past one year, past five years, and past 10 years total return figures are 1%, 0%, and 0%, respectively.
Annual Report
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Fidelity Advisor® Stock Selector Small Cap Fund - Class A on October 31, 2001, and the current 5.75% sales charge was paid. The chart shows how the value of your investment would have changed, and also shows how the Russell 2000® Index performed over the same period. The initial offering of Class A took place on May 2, 2007. See the previous page for additional information regarding the performance of Class A.
Annual Report
Management's Discussion of Fund Performance
Market Recap: U.S. stocks overcame a sharp summer drop to post a solid gain for the 12 months ending October 31, 2011. Bullishness pervaded the market during the first half of the period, only to be squelched by extreme volatility in the summer, as debate over the U.S. debt ceiling, Standard & Poor's subsequent downgrade of the country's long-term sovereign credit rating and deepening debt woes in Europe led to the worst calendar-quarter finish for the S&P 500® Index in almost three years. However, news of a possible solution to the eurozone debt crisis, along with better-than-expected U.S. economic data and strong corporate earnings, helped fuel an October rally that pushed the broad-based index up roughly 11% - its highest monthly return since December 1991. With that boost, the S&P 500® finished the year up 8.09%, while the blue-chip Dow Jones Industrial AverageSM added 10.39% and the technology-heavy Nasdaq Composite® Index gained 8.10%. Among sectors within the S&P 500®, only financials (-6%) posted a decline for the year, while energy (+19%) and utilities (+15%) fared best. Small and mid-sized stocks also rose, with the Russell 2000® and Russell Midcap® indexes adding 6.71% and 7.85%, respectively. The lengthy financial crisis in Europe continued to hamper foreign developed-markets equities, with the MSCI® EAFE® (Europe, Australasia, Far East) Index falling 3.97%.
Comments from Rayna Lesser and Morgen Peck, Co-Portfolio Managers of Fidelity Advisor® Stock Selector Small Cap Fund, along with Charles Myers, Shadman Riaz, Richard Thompson and Patrick Venanzi: For the year, the fund's Class A, Class T, Class B and Class C shares returned 10.71%, 10.34%, 9.83% and 9.86%, respectively (excluding sales charges), solidly outpacing the Russell 2000® Index. Consistent with the fund's core objective, individual stock picking accounted for most of the fund's outperformance versus the Russell index, mainly in health care, consumer discretionary and the software/services industry within information technology. Industry positioning within consumer discretionary and tech also helped. Our top individual contributors included premium bedding manufacturer Tempur-Pedic International, independent oil and gas firm SM Energy, cloud-computing services provider Terremark Worldwide - which was acquired by Verizon in April and sold from the fund in February - and beauty retailer Ulta Salon Cosmetics & Fragrance. Conversely, we had unproductive picks in financials, especially banks and real estate, and in the capital goods area of industrials. The fund's modest cash position also nicked results. Travelzoo, an online travel deals publisher, was the biggest individual detractor, while stakes in optical components manufacturer Fabrinet and Camelot Information Systems, a domestic provider of financial tech services in China, also were misses. Some stocks we mentioned were out-of-benchmark positions.
Annual Report
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, including sales charges (loads) on purchase payments or redemption proceeds, redemption fees, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (May 1, 2011 to October 31, 2011).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Annual Report
| Annualized | Beginning | Ending | Expenses Paid |
Class A | 1.23% |
|
|
|
Actual |
| $ 1,000.00 | $ 860.40 | $ 5.77 |
HypotheticalA |
| $ 1,000.00 | $ 1,019.00 | $ 6.26 |
Class T | 1.48% |
|
|
|
Actual |
| $ 1,000.00 | $ 859.10 | $ 6.94 |
HypotheticalA |
| $ 1,000.00 | $ 1,017.74 | $ 7.53 |
Class B | 1.99% |
|
|
|
Actual |
| $ 1,000.00 | $ 856.90 | $ 9.31 |
HypotheticalA |
| $ 1,000.00 | $ 1,015.17 | $ 10.11 |
Class C | 1.98% |
|
|
|
Actual |
| $ 1,000.00 | $ 857.00 | $ 9.27 |
Hypothetical A |
| $ 1,000.00 | $ 1,015.22 | $ 10.06 |
Stock Selector Small Cap | .94% |
|
|
|
Actual |
| $ 1,000.00 | $ 862.00 | $ 4.41 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.47 | $ 4.79 |
Institutional Class | .98% |
|
|
|
Actual |
| $ 1,000.00 | $ 861.30 | $ 4.60 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.27 | $ 4.99 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period).
Annual Report
Investment Changes (Unaudited)
Top Ten Stocks as of October 31, 2011 | ||
| % of fund's | % of fund's net assets |
National Penn Bancshares, Inc. | 1.3 | 1.1 |
National Retail Properties, Inc. | 1.3 | 0.6 |
Highwoods Properties, Inc. (SBI) | 1.3 | 0.8 |
Home Properties, Inc. | 1.3 | 0.7 |
Franklin Street Properties Corp. | 1.1 | 1.0 |
Teledyne Technologies, Inc. | 1.1 | 0.9 |
ProAssurance Corp. | 1.1 | 0.0 |
Quantum Corp. | 1.1 | 0.8 |
CapitalSource, Inc. | 1.1 | 0.9 |
SM Energy Co. | 1.1 | 0.8 |
| 11.8 | |
Top Five Market Sectors as of October 31, 2011 | ||
| % of fund's | % of fund's net assets |
Financials | 20.2 | 18.1 |
Information Technology | 18.8 | 18.6 |
Industrials | 14.5 | 15.0 |
Consumer Discretionary | 14.0 | 13.3 |
Health Care | 11.1 | 11.7 |
Asset Allocation (% of fund's net assets) | |||||||
As of October 31, 2011* | As of April 30, 2011** | ||||||
![]() | Stocks 96.6% |
| ![]() | Stocks and Equity |
| ||
![]() | Convertible |
| ![]() | Convertible |
| ||
![]() | Short-Term |
| ![]() | Short-Term |
| ||
* Foreign investments | 7.4% |
| ** Foreign investments | 8.3% |
|
Annual Report
Investments October 31, 2011
Showing Percentage of Net Assets
Common Stocks - 96.6% | |||
Shares | Value (000s) | ||
CONSUMER DISCRETIONARY - 14.0% | |||
Auto Components - 0.9% | |||
Tenneco, Inc. (a) | 460,414 | $ 15,065 | |
Hotels, Restaurants & Leisure - 1.5% | |||
Cracker Barrel Old Country Store, Inc. | 152,088 | 6,447 | |
Vail Resorts, Inc. (d) | 158,900 | 7,081 | |
WMS Industries, Inc. (a) | 153,500 | 3,363 | |
Wyndham Worldwide Corp. | 279,215 | 9,401 | |
| 26,292 | ||
Household Durables - 2.3% | |||
iRobot Corp. (a) | 342,370 | 11,593 | |
La-Z-Boy, Inc. (a) | 546,610 | 5,554 | |
Meritage Homes Corp. (a) | 401,300 | 7,123 | |
Tempur-Pedic International, Inc. (a) | 230,694 | 15,701 | |
| 39,971 | ||
Media - 0.4% | |||
MDC Partners, Inc. Class A (sub. vtg.) | 449,800 | 7,575 | |
Multiline Retail - 0.6% | |||
Dollarama, Inc. | 253,434 | 9,539 | |
Specialty Retail - 5.5% | |||
Ascena Retail Group, Inc. (a) | 388,080 | 11,216 | |
Body Central Corp. | 224,363 | 4,712 | |
Cabela's, Inc. Class A (a)(d) | 518,762 | 12,928 | |
DSW, Inc. Class A | 298,302 | 15,613 | |
Fourlis Holdings SA (a) | 517,430 | 2,234 | |
GameStop Corp. Class A (a) | 369,900 | 9,458 | |
Shoe Carnival, Inc. (a) | 462,347 | 12,617 | |
Signet Jewelers Ltd. | 294,300 | 12,687 | |
Ulta Salon, Cosmetics & Fragrance, Inc. (a) | 194,792 | 13,108 | |
| 94,573 | ||
Textiles, Apparel & Luxury Goods - 2.8% | |||
Deckers Outdoor Corp. (a) | 92,267 | 10,633 | |
G-III Apparel Group Ltd. (a) | 505,900 | 14,261 | |
PVH Corp. | 166,300 | 12,374 | |
Vera Bradley, Inc. (d) | 229,502 | 10,396 | |
| 47,664 | ||
TOTAL CONSUMER DISCRETIONARY | 240,679 | ||
Common Stocks - continued | |||
Shares | Value (000s) | ||
CONSUMER STAPLES - 2.6% | |||
Beverages - 0.6% | |||
Hansen Natural Corp. (a) | 83,000 | $ 7,394 | |
Primo Water Corp. (d) | 412,800 | 2,510 | |
| 9,904 | ||
Food & Staples Retailing - 0.6% | |||
Casey's General Stores, Inc. | 119,871 | 5,940 | |
Crumbs Bake Shop, Inc. (a) | 95,085 | 504 | |
United Natural Foods, Inc. (a) | 114,145 | 4,167 | |
| 10,611 | ||
Food Products - 0.8% | |||
Chiquita Brands International, Inc. (a) | 279,170 | 2,479 | |
Diamond Foods, Inc. (d) | 48,400 | 3,182 | |
Green Mountain Coffee Roasters, Inc. (a)(d) | 134,103 | 8,719 | |
| 14,380 | ||
Personal Products - 0.6% | |||
Elizabeth Arden, Inc. (a) | 271,916 | 9,321 | |
TOTAL CONSUMER STAPLES | 44,216 | ||
ENERGY - 6.7% | |||
Energy Equipment & Services - 1.4% | |||
Newpark Resources, Inc. (a) | 1,072,972 | 9,582 | |
Superior Energy Services, Inc. (a) | 336,000 | 9,448 | |
Willbros Group, Inc. (a) | 1,119,264 | 5,697 | |
| 24,727 | ||
Oil, Gas & Consumable Fuels - 5.3% | |||
Atlas Pipeline Partners, LP | 392,613 | 13,663 | |
Berry Petroleum Co. Class A | 309,700 | 10,700 | |
Cloud Peak Energy, Inc. (a) | 597,100 | 13,703 | |
Energen Corp. | 66,462 | 3,261 | |
Petroleum Development Corp. (a) | 409,250 | 10,686 | |
SM Energy Co. | 217,136 | 18,003 | |
Targa Resources Corp. | 294,000 | 9,920 | |
Whiting Petroleum Corp. (a) | 215,130 | 10,014 | |
| 89,950 | ||
TOTAL ENERGY | 114,677 | ||
Common Stocks - continued | |||
Shares | Value (000s) | ||
FINANCIALS - 20.2% | |||
Capital Markets - 2.3% | |||
Affiliated Managers Group, Inc. (a) | 63,500 | $ 5,881 | |
Duff & Phelps Corp. Class A | 1,134,646 | 14,399 | |
Knight Capital Group, Inc. Class A (a) | 984,048 | 12,291 | |
Waddell & Reed Financial, Inc. Class A | 266,459 | 7,389 | |
| 39,960 | ||
Commercial Banks - 5.3% | |||
Associated Banc-Corp. | 1,125,123 | 12,545 | |
CapitalSource, Inc. | 2,912,476 | 18,523 | |
Cathay General Bancorp | 628,346 | 8,791 | |
City National Corp. | 275,300 | 11,678 | |
Nara Bancorp, Inc. (a) | 577,300 | 4,896 | |
National Penn Bancshares, Inc. | 2,909,300 | 22,692 | |
PacWest Bancorp | 649,361 | 11,455 | |
| 90,580 | ||
Insurance - 3.7% | |||
Alterra Capital Holdings Ltd. | 718,600 | 15,579 | |
Amerisafe, Inc. (a) | 809,400 | 17,443 | |
Endurance Specialty Holdings Ltd. | 321,300 | 11,952 | |
ProAssurance Corp. | 249,520 | 19,101 | |
| 64,075 | ||
Real Estate Investment Trusts - 7.9% | |||
American Assets Trust, Inc. | 866,800 | 17,570 | |
Franklin Street Properties Corp. | 1,521,700 | 19,326 | |
Glimcher Realty Trust | 1,772,540 | 16,236 | |
Highwoods Properties, Inc. (SBI) | 710,500 | 22,011 | |
Home Properties, Inc. | 368,958 | 21,732 | |
National Retail Properties, Inc. | 814,000 | 22,182 | |
Ramco-Gershenson Properties Trust (SBI) | 1,626,250 | 15,693 | |
| 134,750 | ||
Thrifts & Mortgage Finance - 1.0% | |||
Washington Federal, Inc. | 553,706 | 7,558 | |
WSFS Financial Corp. | 222,393 | 8,840 | |
| 16,398 | ||
TOTAL FINANCIALS | 345,763 | ||
HEALTH CARE - 11.0% | |||
Biotechnology - 2.5% | |||
Achillion Pharmaceuticals, Inc. (a) | 600,884 | 3,810 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
HEALTH CARE - continued | |||
Biotechnology - continued | |||
Ardea Biosciences, Inc. (a) | 193,205 | $ 3,847 | |
ARIAD Pharmaceuticals, Inc. (a) | 571,177 | 6,643 | |
ArQule, Inc. (a) | 502,458 | 2,919 | |
BioMarin Pharmaceutical, Inc. (a) | 136,506 | 4,656 | |
Chelsea Therapeutics International Ltd. (a)(d) | 712,901 | 3,229 | |
Dynavax Technologies Corp. (a) | 1,613,741 | 4,389 | |
Infinity Pharmaceuticals, Inc. (a)(d) | 322,373 | 2,440 | |
Pharmasset, Inc. (a) | 62,788 | 4,420 | |
Targacept, Inc. (a) | 137,359 | 2,418 | |
Telik, Inc. (a) | 1,287,447 | 348 | |
Theravance, Inc. (a) | 198,281 | 4,408 | |
| 43,527 | ||
Health Care Equipment & Supplies - 1.7% | |||
Analogic Corp. | 168,299 | 9,102 | |
Cerus Corp. (a)(d) | 538,132 | 1,437 | |
Conceptus, Inc. (a) | 215,314 | 2,480 | |
Endologix, Inc. (a) | 348,980 | 3,800 | |
Sirona Dental Systems, Inc. (a) | 180,700 | 8,656 | |
Uroplasty, Inc. (a)(d) | 749,409 | 3,380 | |
| 28,855 | ||
Health Care Providers & Services - 4.8% | |||
Air Methods Corp. (a) | 119,440 | 9,653 | |
Catalyst Health Solutions, Inc. (a) | 99,091 | 5,447 | |
Centene Corp. (a) | 133,592 | 4,696 | |
Corvel Corp. (a) | 146,666 | 7,564 | |
HealthSpring, Inc. (a) | 274,925 | 14,829 | |
Humana, Inc. | 112,428 | 9,544 | |
MEDNAX, Inc. (a) | 144,675 | 9,520 | |
Omnicare, Inc. | 172,507 | 5,144 | |
PSS World Medical, Inc. (a) | 394,531 | 8,778 | |
Wellcare Health Plans, Inc. (a) | 148,625 | 7,284 | |
| 82,459 | ||
Health Care Technology - 0.8% | |||
Epocrates, Inc. (a) | 698,900 | 6,080 | |
Omnicell, Inc. (a) | 454,212 | 6,790 | |
| 12,870 | ||
Life Sciences Tools & Services - 0.3% | |||
eResearchTechnology, Inc. (a) | 876,272 | 4,478 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
HEALTH CARE - continued | |||
Pharmaceuticals - 0.9% | |||
Cardiome Pharma Corp. (a) | 433,357 | $ 1,435 | |
Columbia Laboratories, Inc. (a) | 708,568 | 1,793 | |
Endocyte, Inc. | 192,200 | 1,866 | |
Questcor Pharmaceuticals, Inc. (a) | 178,696 | 7,257 | |
XenoPort, Inc. (a) | 582,300 | 3,552 | |
| 15,903 | ||
TOTAL HEALTH CARE | 188,092 | ||
INDUSTRIALS - 14.5% | |||
Aerospace & Defense - 1.4% | |||
Alliant Techsystems, Inc. | 97,800 | 5,680 | |
Teledyne Technologies, Inc. (a) | 350,742 | 19,105 | |
| 24,785 | ||
Air Freight & Logistics - 0.4% | |||
UTI Worldwide, Inc. | 504,500 | 7,371 | |
Building Products - 1.6% | |||
A.O. Smith Corp. | 173,989 | 6,465 | |
AAON, Inc. (d) | 469,050 | 9,930 | |
Armstrong World Industries, Inc. | 250,158 | 10,654 | |
| 27,049 | ||
Commercial Services & Supplies - 1.5% | |||
Swisher Hygiene, Inc. | 986,560 | 4,301 | |
Sykes Enterprises, Inc. (a) | 544,102 | 8,668 | |
United Stationers, Inc. | 380,884 | 12,116 | |
| 25,085 | ||
Construction & Engineering - 0.9% | |||
Foster Wheeler AG (a) | 384,772 | 8,203 | |
Shaw Group, Inc. (a) | 322,287 | 7,496 | |
| 15,699 | ||
Electrical Equipment - 1.3% | |||
General Cable Corp. (a) | 463,315 | 12,991 | |
GrafTech International Ltd. (a) | 631,147 | 9,915 | |
| 22,906 | ||
Industrial Conglomerates - 0.5% | |||
Carlisle Companies, Inc. | 216,100 | 9,016 | |
Machinery - 3.1% | |||
Actuant Corp. Class A | 450,721 | 10,141 | |
Altra Holdings, Inc. (a) | 424,787 | 6,244 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
INDUSTRIALS - continued | |||
Machinery - continued | |||
CLARCOR, Inc. | 290,514 | $ 14,084 | |
Greenbrier Companies, Inc. (a) | 322,400 | 6,000 | |
TriMas Corp. (a) | 338,822 | 6,604 | |
Wabtec Corp. | 143,629 | 9,649 | |
| 52,722 | ||
Professional Services - 2.4% | |||
Advisory Board Co. (a) | 188,005 | 11,515 | |
Equifax, Inc. | 301,700 | 10,605 | |
Manpower, Inc. | 99,600 | 4,297 | |
Stantec, Inc. (a) | 350,600 | 8,620 | |
Towers Watson & Co. | 96,300 | 6,327 | |
| 41,364 | ||
Trading Companies & Distributors - 1.4% | |||
Interline Brands, Inc. (a) | 584,807 | 8,714 | |
Watsco, Inc. (d) | 240,423 | 14,824 | |
| 23,538 | ||
TOTAL INDUSTRIALS | 249,535 | ||
INFORMATION TECHNOLOGY - 18.8% | |||
Communications Equipment - 2.7% | |||
Brocade Communications Systems, Inc. (a) | 3,819,545 | 16,730 | |
DG FastChannel, Inc. (a) | 366,451 | 6,831 | |
Ixia (a) | 1,133,787 | 12,846 | |
NETGEAR, Inc. (a) | 174,732 | 6,196 | |
Oclaro, Inc. (a)(d) | 1,066,684 | 4,384 | |
| 46,987 | ||
Computers & Peripherals - 3.5% | |||
NCR Corp. (a) | 530,500 | 10,101 | |
Quantum Corp. (a) | 7,103,227 | 18,539 | |
Super Micro Computer, Inc. (a) | 969,125 | 15,506 | |
Synaptics, Inc. (a)(d) | 468,085 | 15,817 | |
| 59,963 | ||
Electronic Equipment & Components - 0.7% | |||
DDi Corp. | 125,133 | 1,150 | |
Fabrinet (a) | 834,161 | 10,344 | |
| 11,494 | ||
Internet Software & Services - 3.2% | |||
Constant Contact, Inc. (a)(d) | 297,711 | 6,026 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
INFORMATION TECHNOLOGY - continued | |||
Internet Software & Services - continued | |||
InfoSpace, Inc. (a) | 463,601 | $ 4,061 | |
Rackspace Hosting, Inc. (a) | 287,901 | 11,916 | |
Travelzoo, Inc. (a)(d) | 262,242 | 8,355 | |
VeriSign, Inc. | 365,101 | 11,716 | |
Web.com, Inc. (a)(d) | 1,320,070 | 12,752 | |
| 54,826 | ||
IT Services - 1.2% | |||
Camelot Information Systems, Inc. ADR (a)(d) | 683,497 | 2,228 | |
Cardtronics, Inc. (a) | 332,788 | 8,296 | |
Euronet Worldwide, Inc. (a) | 313,636 | 6,075 | |
HiSoft Technology International Ltd. ADR (a) | 396,576 | 4,910 | |
| 21,509 | ||
Semiconductors & Semiconductor Equipment - 2.8% | |||
Advanced Micro Devices, Inc. (a) | 559,739 | 3,263 | |
Cymer, Inc. (a) | 112,100 | 4,871 | |
Entegris, Inc. (a) | 602,870 | 5,402 | |
Marvell Technology Group Ltd. (a) | 620,344 | 8,679 | |
Micron Technology, Inc. (a) | 1,016,912 | 5,685 | |
ON Semiconductor Corp. (a) | 601,768 | 4,555 | |
RF Micro Devices, Inc. (a) | 1,392,000 | 10,217 | |
Spansion, Inc. Class A (a) | 92,067 | 947 | |
TriQuint Semiconductor, Inc. (a) | 723,194 | 3,847 | |
| 47,466 | ||
Software - 4.7% | |||
Aspen Technology, Inc. (a) | 389,431 | 6,753 | |
BroadSoft, Inc. (a) | 203,304 | 7,319 | |
JDA Software Group, Inc. (a) | 326,648 | 10,410 | |
Kenexa Corp. (a) | 301,735 | 6,901 | |
Magma Design Automation, Inc. (a) | 816,771 | 4,313 | |
Micro Focus International PLC | 1,820,293 | 9,941 | |
Nuance Communications, Inc. (a) | 205,300 | 5,436 | |
Parametric Technology Corp. (a) | 708,170 | 14,751 | |
SolarWinds, Inc. (a) | 155,735 | 4,495 | |
Synchronoss Technologies, Inc. (a) | 322,656 | 9,699 | |
| 80,018 | ||
TOTAL INFORMATION TECHNOLOGY | 322,263 | ||
Common Stocks - continued | |||
Shares | Value (000s) | ||
MATERIALS - 4.5% | |||
Chemicals - 1.2% | |||
Cabot Corp. | 301,900 | $ 9,111 | |
Rockwood Holdings, Inc. (a) | 236,900 | 10,907 | |
| 20,018 | ||
Containers & Packaging - 1.0% | |||
Aptargroup, Inc. | 146,900 | 7,047 | |
Rock-Tenn Co. Class A | 169,490 | 10,032 | |
| 17,079 | ||
Metals & Mining - 2.3% | |||
Carpenter Technology Corp. | 241,386 | 13,691 | |
Coeur d'Alene Mines Corp. (a) | 376,600 | 9,630 | |
Compass Minerals International, Inc. | 141,900 | 10,794 | |
HudBay Minerals, Inc. | 540,000 | 5,915 | |
| 40,030 | ||
TOTAL MATERIALS | 77,127 | ||
TELECOMMUNICATION SERVICES - 1.1% | |||
Diversified Telecommunication Services - 0.3% | |||
AboveNet, Inc. | 56,533 | 3,355 | |
VocalTec Communications Ltd. (a)(d) | 48,783 | 1,205 | |
| 4,560 | ||
Wireless Telecommunication Services - 0.8% | |||
Clearwire Corp. Class A (a)(d) | 6,265,795 | 12,030 | |
NII Holdings, Inc. (a) | 80,543 | 1,895 | |
| 13,925 | ||
TOTAL TELECOMMUNICATION SERVICES | 18,485 | ||
UTILITIES - 3.2% | |||
Electric Utilities - 1.7% | |||
Cleco Corp. | 272,700 | 10,054 | |
Empire District Electric Co. | 227,603 | 4,545 | |
Great Plains Energy, Inc. | 321,800 | 6,674 | |
IDACORP, Inc. | 206,807 | 8,351 | |
| 29,624 | ||
Gas Utilities - 1.1% | |||
Northwest Natural Gas Co. (d) | 207,589 | 9,699 | |
Piedmont Natural Gas Co., Inc. (d) | 275,378 | 9,002 | |
| 18,701 | ||
Common Stocks - continued | |||
Shares | Value (000s) | ||
UTILITIES - continued | |||
Multi-Utilities - 0.4% | |||
NorthWestern Energy Corp. | 206,100 | $ 7,100 | |
TOTAL UTILITIES | 55,425 | ||
TOTAL COMMON STOCKS (Cost $1,587,861) |
| ||
Convertible Preferred Stocks - 0.1% | |||
|
|
|
|
HEALTH CARE - 0.1% | |||
Pharmaceuticals - 0.1% | |||
Merrimack Pharmaceuticals, Inc. Series G (e) (Cost $2,738) | 391,134 |
|
U.S. Treasury Obligations - 0.0% | ||||
| Principal Amount (000s) |
| ||
U.S. Treasury Bills, yield at date of purchase 0% to 0.02% 11/25/11 to 12/8/11 | $ 725 |
|
Money Market Funds - 6.8% | |||
Shares |
| ||
Fidelity Cash Central Fund, 0.12% (b) | 52,024,581 | 52,025 | |
Fidelity Securities Lending Cash Central Fund, 0.11% (b)(c) | 64,021,792 | 64,022 | |
TOTAL MONEY MARKET FUNDS (Cost $116,047) |
| ||
TOTAL INVESTMENT PORTFOLIO - 103.5% (Cost $1,707,371) | 1,775,772 | ||
NET OTHER ASSETS (LIABILITIES) - (3.5)% | (60,708) | ||
NET ASSETS - 100% | $ 1,715,064 |
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
(e) Restricted securities - Investment in securities not registered under the Securities Act of 1933 (excluding 144A issues). At the end of the period, the value of restricted securities (excluding 144A issues) amounted to $2,738,000 or 0.2% of net assets. |
Additional information on each restricted holding is as follows: |
Security | Acquisition Date | Acquisition Cost (000s) |
Merrimack Pharmaceuticals, Inc. Series G | 3/31/11 | $ 2,738 |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 68 |
Fidelity Securities Lending Cash Central Fund | 897 |
Total | $ 965 |
Other Information |
The following is a summary of the inputs used, as of October 31, 2011, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the tables below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities: | ||||
Equities: | ||||
Consumer Discretionary | $ 240,679 | $ 240,679 | $ - | $ - |
Consumer Staples | 44,216 | 44,216 | - | - |
Energy | 114,677 | 114,677 | - | - |
Financials | 345,763 | 345,763 | - | - |
Health Care | 190,830 | 188,092 | - | 2,738 |
Industrials | 249,535 | 249,535 | - | - |
Information Technology | 322,263 | 322,263 | - | - |
Materials | 77,127 | 77,127 | - | - |
Telecommunication Services | 18,485 | 18,485 | - | - |
Utilities | 55,425 | 55,425 | - | - |
U.S. Government and Government Agency Obligations | 725 | - | 725 | - |
Money Market Funds | 116,047 | 116,047 | - | - |
Total Investments in Securities: | $ 1,775,772 | $ 1,772,309 | $ 725 | $ 2,738 |
The following is a reconciliation of Investments in Securities for which Level 3 inputs were used in determining value: |
(Amounts in thousands) |
|
Investments in Securities: | |
Beginning Balance | $ - |
Total Realized Gain (Loss) | - |
Total Unrealized Gain (Loss) | - |
Cost of Purchases | 2,738 |
Proceeds of Sales | - |
Amortization/Accretion | - |
Transfers in to Level 3 | - |
Transfers out of Level 3 | - |
Ending Balance | $ 2,738 |
The change in unrealized gain (loss) for the period attributable to Level 3 securities held at October 31, 2011 | $ - |
The information used in the above reconciliation represents fiscal year to date activity for any Investments in Securities identified as using Level 3 inputs at either the beginning or the end of the current fiscal period. Transfers in or out of Level 3 represent the beginning value of any Security or Instrument where a change in the pricing level occurred from the beginning to the end of the period. The cost of purchases and the proceeds of sales may include securities received or delivered through corporate actions or exchanges. Realized and unrealized gains (losses) disclosed in the reconciliation are included in Net Gain (Loss) on the Fund's Statement of Operations. |
Income Tax Information |
At October 31, 2011, the Fund had a capital loss carryforward of approximately $267,892,000 all of which will expire in fiscal 2017. Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements
Statement of Assets and Liabilities
Amounts in thousands (except per-share amounts) | October 31, 2011 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $59,747) - See accompanying schedule: Unaffiliated issuers (cost $1,591,324) | $ 1,659,725 |
|
Fidelity Central Funds (cost $116,047) | 116,047 |
|
Total Investments (cost $1,707,371) |
| $ 1,775,772 |
Receivable for investments sold | 16,202 | |
Receivable for fund shares sold | 1,793 | |
Dividends receivable | 1,163 | |
Distributions receivable from Fidelity Central Funds | 284 | |
Prepaid expenses | 8 | |
Other receivables | 80 | |
Total assets | 1,795,302 | |
|
|
|
Liabilities | ||
Payable to custodian bank | $ 2,494 | |
Payable for investments purchased | 9,552 | |
Payable for fund shares redeemed | 2,623 | |
Accrued management fee | 1,076 | |
Distribution and service plan fees payable | 3 | |
Other affiliated payables | 422 | |
Other payables and accrued expenses | 46 | |
Collateral on securities loaned, at value | 64,022 | |
Total liabilities | 80,238 | |
|
|
|
Net Assets | $ 1,715,064 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,916,521 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (269,858) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 68,401 | |
Net Assets | $ 1,715,064 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Assets and Liabilities - continued
Amounts in thousands (except per-share amounts) | October 31, 2011 | |
|
|
|
Calculation of Maximum Offering Price | $ 17.87 | |
|
|
|
Maximum offering price per share (100/94.25 of $17.87) | $ 18.96 | |
Class T: | $ 17.68 | |
|
|
|
Maximum offering price per share (100/96.50 of $17.68) | $ 18.32 | |
Class B: | $ 17.43 | |
|
|
|
Class C: | $ 17.38 | |
|
|
|
|
|
|
Stock Selector Small Cap: | $ 18.05 | |
|
|
|
Institutional Class: | $ 18.07 |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements - continued
Statement of Operations
Amounts in thousands | Year ended October 31, 2011 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 15,976 |
Special dividends |
| 3,755 |
Interest |
| 2 |
Income from Fidelity Central Funds |
| 965 |
Total income |
| 20,698 |
|
|
|
Expenses | ||
Management fee | $ 11,042 | |
Performance adjustment | (1,036) | |
Transfer agent fees | 4,620 | |
Distribution and service plan fees | 33 | |
Accounting and security lending fees | 568 | |
Custodian fees and expenses | 77 | |
Independent trustees' compensation | 10 | |
Registration fees | 144 | |
Audit | 59 | |
Legal | 8 | |
Miscellaneous | 17 | |
Total expenses before reductions | 15,542 | |
Expense reductions | (134) | 15,408 |
Net investment income (loss) | 5,290 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 248,238 | |
Foreign currency transactions | (99) | |
Futures contracts | 1,242 | |
Total net realized gain (loss) |
| 249,381 |
Change in net unrealized appreciation (depreciation) on: Investment securities | (126,111) | |
Assets and liabilities in foreign currencies | (1) | |
Futures contracts | 8 | |
Total change in net unrealized appreciation (depreciation) |
| (126,104) |
Net gain (loss) | 123,277 | |
Net increase (decrease) in net assets resulting from operations | $ 128,567 |
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 | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 5,290 | $ 3,129 |
Net realized gain (loss) | 249,381 | 280,256 |
Change in net unrealized appreciation (depreciation) | (126,104) | 94,882 |
Net increase (decrease) in net assets resulting | 128,567 | 378,267 |
Distributions to shareholders from net investment income | (9,149) | (976) |
Share transactions - net increase (decrease) | 183,503 | (349,513) |
Redemption fees | 776 | 175 |
Total increase (decrease) in net assets | 303,697 | 27,953 |
|
|
|
Net Assets | ||
Beginning of period | 1,411,367 | 1,383,414 |
End of period (including undistributed net investment income of $0 and $2,128, respectively) | $ 1,715,064 | $ 1,411,367 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended October 31, | 2011 | 2010 | 2009 | 2008 | 2007 K |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 16.20 | $ 12.53 | $ 11.24 | $ 24.79 | $ 23.20 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) E | -H, M | (.01) I | - M | (.04) | (.07) J |
Net realized and unrealized gain (loss) | 1.73 | 3.68 | 1.31 | (10.77) | 1.66 |
Total from investment operations | 1.73 | 3.67 | 1.31 | (10.81) | 1.59 |
Distributions from net investment income | (.07) | - M | (.02) | - | - |
Distributions from net realized gain | - | - | - | (2.74) | - |
Total distributions | (.07) | -M | (.02) | (2.74) | - |
Redemption fees added to paid in capital E | .01 | - M | - M | - M | -M |
Net asset value, end of period | $ 17.87 | $ 16.20 | $ 12.53 | $ 11.24 | $ 24.79 |
Total Return B, C, D | 10.71% | 29.32% | 11.69% | (48.52)% | 6.85% |
Ratios to Average Net AssetsF, L |
|
|
|
|
|
Expenses before reductions | 1.15% | 1.00% | 1.03% | 1.24% | 1.27% A |
Expenses net of fee waivers, if any | 1.15% | 1.00% | 1.03% | 1.24% | 1.27% A |
Expenses net of all reductions | 1.14% | .99% | 1.01% | 1.23% | 1.26% A |
Net investment income (loss) | -%H, N | (.07)% I | (.03)% | (.24)% | (.57)%A, J |
Supplemental Data |
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|
|
|
|
Net assets, end of period (in millions) | $ 4 | $ 3 | $ 3 | $ 2 | $ 1 |
Portfolio turnover rate G | 73% | 138% | 135% | 101% | 84% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
H Investment income per share reflects a special dividend which amounted to $.04 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.21)%.
I Investment income per share reflects a special dividend which amounted to $.01 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.16)%.
J Investment income per share reflects a special dividend which amounted to $.01 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.66)%.
K For the period May 2, 2007 (commencement of sale of shares) to October 31, 2007.
L Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
M Amount represents less than $.01 per share.
N Amount represents less than .01%.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class T
Years ended October 31, | 2011 | 2010 | 2009 | 2008 | 2007 K |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 16.07 | $ 12.45 | $ 11.19 | $ 24.74 | $ 23.20 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) E | (.05) H | (.05) I | (.03) | (.08) | (.10) J |
Net realized and unrealized gain (loss) | 1.70 | 3.67 | 1.30 | (10.76) | 1.64 |
Total from investment operations | 1.65 | 3.62 | 1.27 | (10.84) | 1.54 |
Distributions from net investment income | (.05) | - | (.01) | - | - |
Distributions from net realized gain | - | - | - | (2.71) | - |
Total distributions | (.05) | - | (.01) | (2.71) | - |
Redempti on fees added to paid in capital E | .01 | - M | - M | - M | - M |
Net asset value, end of period | $ 17.68 | $ 16.07 | $ 12.45 | $ 11.19 | $ 24.74 |
Total Return B, C, D | 10.34% | 29.08% | 11.42% | (48.70)% | 6.64% |
Ratios to Average Net AssetsF, L |
|
|
|
|
|
Expenses before reductions | 1.42% | 1.27% | 1.30% | 1.50% | 1.53% A |
Expenses net of fee waivers, if any | 1.42% | 1.27% | 1.30% | 1.50% | 1.53% A |
Expenses net of all reductions | 1.41% | 1.26% | 1.29% | 1.49% | 1.52% A |
Net investment income (loss) | (.27)% H | (.33)% I | (.31)% | (.50)% | (.83)%A, J |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 1,539 | $ 723 | $ 550 | $ 409 | $ 420 |
Portfolio turnover rate G | 73% | 138% | 135% | 101% | 84% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
H Investment income per share reflects a special dividend which amounted to $.04 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.48)%.
I Investment income per share reflects a special dividend which amounted to $.01 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.43)%.
J Investment income per share reflects a special dividend which amounted to $.01 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.92)%.
K For the period May 2, 2007 (commencement of sale of shares) to October 31, 2007.
L Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
M Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class B
Years ended October 31, | 2011 | 2010 | 2009 | 2008 | 2007 K |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 15.87 | $ 12.36 | $ 11.15 | $ 24.69 | $ 23.20 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) E | (.14) H | (.12) I | (.08) | (.17) | (.15) J |
Net realized and unrealized gain (loss) | 1.69 | 3.63 | 1.30 | (10.73) | 1.64 |
Total from investment operations | 1.55 | 3.51 | 1.22 | (10.90) | 1.49 |
Distributions from net investment income | - | - | (.01) | - | - |
Distributions from net realized gain | - | - | - | (2.64) | - |
Total distributions | - | - | (.01) | (2.64) | - |
Redemption fees added to paid in capital E | .01 | - M | - M | - M | - M |
Net asset value, end of period | $ 17.43 | $ 15.87 | $ 12.36 | $ 11.15 | $ 24.69 |
Total Return B, C, D | 9.83% | 28.40% | 10.92% | (48.94)% | 6.42% |
Ratios to Average Net AssetsF, L |
|
|
|
|
|
Expenses before reductions | 1.90% | 1.76% | 1.77% | 1.99% | 2.07% A |
Expenses net of fee waivers, if any | 1.90% | 1.76% | 1.77% | 1.99% | 2.05% A |
Expenses net of all reductions | 1.90% | 1.75% | 1.75% | 1.99% | 2.04% A |
Net investment income (loss) | (.76)% H | (.82)% I | (.78)% | (1.00)% | (1.32)% A, J |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 246 | $ 220 | $ 219 | $ 199 | $ 419 |
Portfolio turnover rate G | 73% | 138% | 135% | 101% | 84% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
D Total returns do not include the effect of the contingent deferred sales charge.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
H Investment income per share reflects a special dividend which amounted to $.04 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.96)%.
I Investment income per share reflects a special dividend which amounted to $.01 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.92)%.
J Investment income per share reflects a special dividend which amounted to $.01 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (1.41)%.
K For the period May 2, 2007 (commencement of sale of shares) to October 31, 2007.
L Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
M Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class C
Years ended October 31, | 2011 | 2010 | 2009 | 2008 | 2007 K |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 15.82 | $ 12.33 | $ 11.12 | $ 24.71 | $ 23.20 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) E | (.14) H | (.12) I | (.09) | (.17) | (.15) J |
Net realized and unrealized gain (loss) | 1.69 | 3.61 | 1.31 | (10.72) | 1.66 |
Total from investment operations | 1.55 | 3.49 | 1.22 | (10.89) | 1.51 |
Distributions from net investment income | - | - | (.01) | - | - |
Distributions from net realized gain | - | - | - | (2.70) | - |
Total distributions | - | - | (.01) | (2.70) | - |
Redemption fees added to paid in capital E | .01 | -M | -M | -M | - M |
Net asset value, end of period | $ 17.38 | $ 15.82 | $ 12.33 | $ 11.12 | $ 24.71 |
Total Return B, C, D | 9.86% | 28.30% | 10.96% | (48.95)% | 6.51% |
Ratios to Average Net AssetsF, L |
|
|
|
|
|
Expenses before reductions | 1.90% | 1.75% | 1.76% | 2.00% | 1.98% A |
Expenses net of fee waivers, if any | 1.90% | 1.75% | 1.76% | 2.00% | 1.98% A |
Expenses net of all reductions | 1.89% | 1.74% | 1.75% | 1.99% | 1.97% A |
Net investment income (loss) | (.76)% H | (.81)% I | (.77)% | (1.01)% | (1.27)% A, J |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 1,370 | $ 820 | $ 428 | $ 183 | $ 294 |
Portfolio turnover rate G | 73% | 138% | 135% | 101% | 84% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
D Total returns do not include the effect of the contingent deferred sales charge.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
H Investment income per share reflects a special dividend which amounted to $.04 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.96)%.
I Investment income per share reflects a special dividend which amounted to $.01 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.91)%.
J Investment income per share reflects a special dividend which amounted to $.01 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (1.36)%.
K For the period May 2, 2007 (commencement of sale of shares) to October 31, 2007.
L Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
M Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Stock Selector Small Cap
Years ended October 31, | 2011 | 2010 | 2009 | 2008 | 2007 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 16.35 | $ 12.61 | $ 11.28 | $ 24.81 | $ 22.23 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .05 E | .03 F | .02 | .01 | (.04) G |
Net realized and unrealized gain (loss) | 1.74 | 3.72 | 1.33 | (10.82) | 5.01 |
Total from investment operations | 1.79 | 3.75 | 1.35 | (10.81) | 4.97 |
Distributions from net investment income | (.10) | (.01) | (.02) | - | (.05) |
Distributions from net realized gain | - | - | - | (2.72) | (2.34) |
Total distributions | (.10) | (.01) | (.02) | (2.72) | (2.39) |
Redemption fees added to paid in capital B | .01 | - I | - I | - I | - I |
Net asset value, end of period | $ 18.05 | $ 16.35 | $ 12.61 | $ 11.28 | $ 24.81 |
Total Return A | 11.03% | 29.75% | 12.05% | (48.42)% | 24.42% |
Ratios to Average Net Assets C, H |
|
|
|
|
|
Expenses before reductions | .85% | .73% | .77% | .95% | 1.01% |
Expenses net of fee waivers, if any | .85% | .73% | .77% | .95% | 1.00% |
Expenses net of all reductions | .85% | .72% | .75% | .94% | .99% |
Net investment income (loss) | .29% E | .21% F | .22% | .05% | (.20)% G |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (in millions) | $ 1,698 | $ 1,406 | $ 1,379 | $ 1,292 | $ 2,602 |
Portfolio turnover rate D | 73% | 138% | 135% | 101% | 84% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
B Calculated based on average shares outstanding during the period.
C Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
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 $.04 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been .09%.
F Investment income per share reflects a special dividend which amounted to $.01 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been .12%.
G Investment income per share reflects a special dividend which amounted to $.02 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.29)%.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
I Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Institutional Class
Years ended October 31, | 2011 | 2010 | 2009 | 2008 | 2007 J |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 16.39 | $ 12.63 | $ 11.29 | $ 24.82 | $ 23.20 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) D | .05 G | .05 H | .04 | .02 | (.03) I |
Net realized and unrealized gain (loss) | 1.74 | 3.72 | 1.32 | (10.82) | 1.65 |
Total from investment operations | 1.79 | 3.77 | 1.36 | (10.80) | 1.62 |
Distributions from net investment income | (.12) | (.01) | (.02) | - | - |
Distributions from net realized gain | - | - | - | (2.73) | - |
Total distributions | (.12) | (.01) | (.02) | (2.73) | - |
Redemption fees added to paid in capital D | .01 | - L | - L | - L | - L |
Net asset value, end of period | $ 18.07 | $ 16.39 | $ 12.63 | $ 11.29 | $ 24.82 |
Total Return B, C | 10.99% | 29.89% | 12.14% | (48.36)% | 6.98% |
Ratios to Average Net Assets E, K |
|
|
|
|
|
Expenses before reductions | .86% | .63% | .63% | .84% | .94% A |
Expenses net of fee waivers, if any | .86% | .63% | .63% | .84% | .94% A |
Expenses net of all reductions | .85% | .62% | .62% | .84% | .93% A |
Net investment income (loss) | .29% G | .31% H | .36% | .15% | (.24)% A, I |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 10,038 | $ 680 | $ 413 | $ 376 | $ 162 |
Portfolio turnover rateF | 73% | 138% | 135% | 101% | 84% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
D Calculated based on average shares outstanding during the period.
E Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
G Investment income per share reflects a special dividend which amounted to $.04 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been .08%.
H Investment income per share reflects a special dividend which amounted to $.01 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been .21%.
I Investment income per share reflects a special dividend which amounted to $.01 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.33) %.
J For the period May 2, 2007 (commencement of sale of shares) to October 31, 2007.
K Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
L Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended October 31, 2011
1. Organization.
Fidelity Stock Selector Small Cap Fund (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. The Fund offers Class A, Class T, Class C, Stock Selector Small Cap and Institutional Class shares, each of which, along with Class B shares, has equal rights as to assets and voting privileges. Effective after the close of business on September 1, 2010, Class B shares were closed to new accounts and additional purchases, except for exchanges and reinvestments by existing shareholders. Each class has exclusive voting rights with respect to matters that affect that class. In order to disclose class level financial information dollar amounts presented in the notes are unrounded. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions may also differ by class.
2. Investments in Fidelity Central Funds.
The Fund invests in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC web site or upon request.
Annual Report
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Fund uses independent pricing services approved by the Board of Trustees to value its investments. When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include market or security specific events, changes in interest rates and credit quality. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The value used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the Fund's own assumptions based on the best information available)
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of October 31, 2011, as well as a roll forward of Level 3 securities, is included at the end of the Fund's Schedule of Investments. Valuation techniques used to value the Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when significant market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs),
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Security Valuation - continued
futures contracts, Exchange-traded funds (ETFs) and certain indexes as well as quoted prices for similar securities are used and are categorized as Level 2 in the hierarchy in these circumstances. Utilizing these techniques may result in transfers between Level 1 and Level 2. For restricted equity securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and are categorized as Level 3 in the hierarchy.
Debt securities, including restricted securities, are valued based on evaluated prices received from independent pricing services or from dealers who make markets in such securities. For U.S. government and government agency obligations, pricing services utilize matrix pricing which considers yield or price of bonds of comparable quality, coupon, maturity and type as well as dealer supplied prices and are generally categorized as Level 2 in the hierarchy. When independent prices are unavailable or unreliable, debt securities may be valued utilizing pricing matrices which consider similar factors that would be used by independent pricing services. These are generally categorized as Level 2 in the hierarchy but may be Level 3 depending on the circumstances.
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy.
Foreign Currency. The Fund may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on
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3. Significant Accounting Policies - continued
Investment Transactions and Income - continued
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. Large, non-recurring dividends recognized by the Fund are presented separately on the Statement of Operations as "Special Dividends" and the impact of these dividends is presented in the Financial Highlights. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company, including distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. As of October 31, 2011, the Fund did not have any unrecognized tax benefits in the financial statements. A fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are declared and recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, partnerships, deferred trustees compensation and capital loss carryforwards.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $ 246,207,121 |
Gross unrealized depreciation | (179,772,367) |
Net unrealized appreciation (depreciation) on securities and other investments | $ 66,434,754 |
|
|
Tax Cost | $ 1,709,337,694 |
The tax-based components of distributable earnings as of period end were as follows:
Capital loss carryforward | $ (267,891,888) |
Net unrealized appreciation (depreciation) | $ 66,434,485 |
Under the recently enacted Regulated Investment Company Modernization Act of 2010 (the Act), the Fund will be permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to any losses incurred in pre-enactment taxable years, which generally expire after eight years from when they are incurred. Additionally, post-enactment capital losses that are carried forward will retain their character as either short-term or long-term capital losses rather than being considered all short-term as under previous law. The Fund's first fiscal year end subject to the Act will be October 31, 2012.
The tax character of distributions paid was as follows:
| October 31, 2011 | October 31, 2010 |
Ordinary Income | $ 9,148,743 | $ 975,942 |
Short-Term Trading (Redemption) Fees. Shares held by investors in the Fund less than 90 days are subject to a redemption fee equal to 1.50% of the net asset value of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Fund and accounted for as an addition to paid in capital.
New Accounting Pronouncement. In May 2011, the Financial Accounting Standards Board issued Accounting Standard Update No. 2011-04, Fair Value Measurement (Topic 820) - Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. The update changes the wording used to describe the requirements in GAAP for measuring fair value and for disclosing information about fair value measurements. The update is effective during interim and annual periods beginning after December 15, 2011. Management is currently evaluating the impact of the update's adoption on the Fund's financial statement disclosures.
Annual Report
4. Operating Policies.
Restricted Securities. The Fund may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities is included at the end of the Fund's Schedule of Investments.
5. Derivative Instruments.
Risk Exposures and the Use of Derivative Instruments. The Fund used derivative instruments (derivatives), including futures contracts, in order to meet its investment objectives. The strategy is to use derivatives to increase returns and to manage exposure to certain risks as defined below. The success of any strategy involving derivatives depends on analysis of numerous economic factors, and if the strategies for investment do not work as intended, the Fund may not achieve its objectives.
The Fund's use of derivatives increased or decreased its exposure to the following risk:
Equity Risk | Equity risk relates to the fluctuations in the value of financial instruments as a result of changes in market prices (other than those arising from interest rate risk or foreign exchange risk), whether caused by factors specific to an individual investment, its issuer, or all factors affecting all instruments traded in a market or market segment. |
The Fund is also exposed to additional risks from investing in derivatives, such as liquidity risk and counterparty credit risk. Liquidity risk is the risk that the Fund will be unable to sell the derivative in the open market in a timely manner. Counterparty credit risk is the risk that the counterparty will not be able to fulfill its obligation to the Fund. The Fund's maximum risk of loss from counterparty credit risk is generally the aggregate unrealized appreciation and unpaid counterparty payments in excess of any collateral pledged by the counterparty to the Fund. Counterparty risk related to exchange-traded futures contracts is minimal because of the protection provided by the exchange on which they trade. Derivatives involve, to varying degrees, risk of loss in excess of the amounts recognized in the Statement of Assets and Liabilities.
Futures Contracts. A futures contract is an agreement between two parties to buy or sell a specified underlying instrument for a fixed price at a specified future date. The Fund used futures contracts to manage its exposure to the stock market.
Annual Report
Notes to Financial Statements - continued
5. Derivative Instruments - continued
Futures Contracts - continued
Upon entering into a futures contract, a fund is required to deposit either cash or securities (initial margin) with a clearing broker in an amount equal to a certain percentage of the face value of the contract. Futures contracts are marked-to-market daily and subsequent payments (variation margin) are made or received by a fund depending on the daily fluctuations in the value of the futures contracts and are recorded as unrealized appreciation or (depreciation). This receivable and/or payable is included in daily variation margin on futures contracts in the Statement of Assets and Liabilities. Realized gain or (loss) is recorded upon the expiration or closing of a futures contract.
The underlying face amount at value of open futures contracts at period end, if any, 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. Securities deposited to meet initial margin requirements are identified in the Schedule of Investments.
Certain risks arise upon entering into futures contracts, including the risk that an illiquid market limits the ability to close out a futures contract prior to settlement date.
During the period the Fund recognized net realized gain (loss) of $1,242,158 and a change in net unrealized appreciation (depreciation) of $7,562 related to its investment in futures contracts. These amounts are included in the Statement of Operations.
6. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $1,431,900,114 and $1,282,079,545, respectively.
7. 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 .35% 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 Stock Selector Small Cap as compared to
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7. Fees and Other Transactions with Affiliates - continued
Management Fee - continued
an appropriate benchmark index. For the period, the total annual management fee rate, including the performance adjustment, was .55% of the Fund's average net assets.
Distribution and Service Plan Fees. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the Fund and providing shareholder support services. For the period, the Distribution and Service Fee rates, total fees and amounts retained by FDC were as follows:
| Distribution | Service | Total Fees | Retained |
Class A | -% | .25% | $ 11,058 | $ 63 |
Class T | .25% | .25% | 6,750 | - |
Class B | .75% | .25% | 2,794 | 2,096 |
Class C | .75% | .25% | 12,446 | 3,951 |
|
|
| $ 33,048 | $ 6,110 |
Sales Load. FDC may receive a front-end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. Depending on the holding period, FDC may receive contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, 1.00% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained |
Class A | $ 2,269 |
Class T | 377 |
Class B* | 227 |
Class C* | 361 |
| $ 3,234 |
* When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
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Notes to Financial Statements - continued
7. Fees and Other Transactions with Affiliates - continued
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the Fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, transfer agent fees for each class were as follows:
| Amount | % of |
Class A | $ 13,252 | .30 |
Class T | 4,315 | .32 |
Class B | 847 | .30 |
Class C | 3,762 | .30 |
Stock Selector Small Cap | 4,570,365 | .25 |
Institutional Class | 27,925 | .26 |
| $ 4,620,466 |
|
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 $84,786 for the period.
8. Committed Line of Credit.
The Fund participates with other funds managed by FMR or an affiliate in a $4.0 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $5,451 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, there were no borrowings on this line of credit.
Annual Report
9. Security Lending.
The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. For equity securities, a lending agent is used and may loan securities to certain qualified borrowers, including Fidelity Capital Markets (FCM), a broker-dealer affiliated with the Fund. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. The value of securities loaned to FCM at period end was $128,160. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Total security lending income during the period amounted to $896,991, including $4 from securities loaned to FCM.
10. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of the Fund provided services to the Fund in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $133,992 for the period.
11. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended October 31, | 2011 | 2010 |
From net investment income |
|
|
Class A | $ 15,209 | $ 649 |
Class T | 2,838 | - |
Stock Selector Small Cap | 9,104,153 | 974,901 |
Institutional Class | 26,543 | 392 |
Total | $ 9,148,743 | $ 975,942 |
Annual Report
Notes to Financial Statements - continued
12. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
Years ended October 31, | 2011 | 2010 | 2011 | 2010 |
Class A |
|
|
|
|
Shares sold | 141,619 | 60,233 | $ 2,551,365 | $ 878,328 |
Reinvestment of distributions | 794 | 48 | 14,554 | 635 |
Shares redeemed | (107,880) | (69,529) | (1,998,562) | (1,022,424) |
Net increase (decrease) | 34,533 | (9,248) | $ 567,357 | $ (143,461) |
Class T |
|
|
|
|
Shares sold | 81,238 | 27,634 | $ 1,558,596 | $ 398,291 |
Reinvestment of distributions | 154 | - | 2,831 | - |
Shares redeemed | (39,400) | (26,782) | (704,438) | (382,007) |
Net increase (decrease) | 41,992 | 852 | $ 856,989 | $ 16,284 |
Class B |
|
|
|
|
Shares sold | 5,592 | 2,875 | $ 102,797 | $ 40,053 |
Shares redeemed | (5,365) | (6,748) | (93,413) | (94,173) |
Net increase (decrease) | 227 | (3,873) | $ 9,384 | $ (54,120) |
Class C |
|
|
|
|
Shares sold | 52,816 | 24,030 | $ 972,098 | $ 347,201 |
Shares redeemed | (25,832) | (6,890) | (467,301) | (99,553) |
Net increase (decrease) | 26,984 | 17,140 | $ 504,797 | $ 247,648 |
Stock Selector Small Cap |
|
|
|
|
Shares sold | 42,956,006 | 14,958,012 | $ 812,040,324 | $ 219,809,002 |
Reinvestment of distributions | 490,501 | 72,340 | 8,965,215 | 962,840 |
Shares redeemed | (35,360,001) | (38,394,961) | (648,464,613) | (570,480,008) |
Net increase (decrease) | 8,086,506 | (23,364,609) | $ 172,540,926 | $ (349,708,166) |
Institutional Class |
|
|
|
|
Shares sold | 1,267,453 | 13,011 | $ 24,122,964 | $ 190,234 |
Reinvestment of distributions | 1,209 | 4 | 22,526 | 53 |
Shares redeemed | (754,664) | (4,160) | (15,119,704) | (62,596) |
Net increase (decrease) | 513,998 | 8,855 | $ 9,025,786 | $ 127,691 |
13. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
Annual Report
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Capital Trust and Shareholders of Fidelity Stock Selector Small Cap Fund:
We have audited the accompanying statement of assets and liabilities of Fidelity Stock Selector Small Cap Fund (the Fund), a fund of Fidelity Capital Trust, including the schedule of investments, as of October 31, 2011, 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 the 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, 2011, 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 Small Cap Fund as of October 31, 2011, 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 the 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 15, 2011
Annual Report
Trustees and Officers
The Trustees, Members 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, oversee management of the risks associated with such activities and contractual arrangements, and review the fund's performance. Except for James C. Curvey, each of the Trustees oversees 226 funds advised by FMR or an affiliate. Mr. Curvey oversees 429 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 75th birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board Members 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.
Experience, Skills, Attributes, and Qualifications of the Fund's Trustees. The Governance and Nominating Committee has adopted a statement of policy that describes the experience, qualifications, attributes, and skills that are necessary and desirable for potential Independent Trustee candidates (Statement of Policy). The Board believes that each Trustee satisfied at the time he or she was initially elected or appointed a Trustee, and continues to satisfy, the standards contemplated by the Statement of Policy. The Governance and Nominating Committee also engages professional search firms to help identify potential Independent Trustee candidates who have the experience, qualifications, attributes, and skills consistent with the Statement of Policy. From time to time, additional criteria based on the composition and skills of the current Independent Trustees, as well as experience or skills that may be appropriate in light of future changes to board composition, business conditions, and regulatory or other developments, have also been considered by the professional search firms and the Governance and Nominating Committee. In addition, the Board takes into account the Trustees' commitment and participation in Board and committee meetings, as well as their leadership of standing and ad hoc committees throughout their tenure.
In determining that a particular Trustee was and continues to be qualified to serve as a Trustee, the Board has considered a variety of criteria, none of which, in isolation, was controlling. The Board believes that, collectively, the Trustees have balanced and diverse experience, qualifications, attributes, and skills, which allow the Board to operate effectively in governing the fund and protecting the interests of shareholders. Information about the specific experience, skills, attributes, and qualifications of each Trustee, which in each case led to the Board's conclusion that the Trustee should serve (or continue to serve) as a trustee of the fund, is provided below.
Annual Report
Trustees and Officers - continued
Board Structure and Oversight Function. James C. Curvey is an interested person (as defined in the 1940 Act) and currently serves as Acting Chairman. The Trustees have determined that an interested Chairman is appropriate and benefits shareholders because an interested Chairman has a personal and professional stake in the quality and continuity of services provided to the fund. Independent Trustees exercise their informed business judgment to appoint an individual of their choosing to serve as Chairman, regardless of whether the Trustee happens to be independent or a member of management. The Independent Trustees have determined that they can act independently and effectively without having an Independent Trustee serve as Chairman and that a key structural component for assuring that they are in a position to do so is for the Independent Trustees to constitute a substantial majority for the Board. The Independent Trustees also regularly meet in executive session. Ned C. Lautenbach serves as Chairman of the Independent Trustees and as such (i) acts as a liaison between the Independent Trustees and management with respect to matters important to the Independent Trustees and (ii) with management prepares agendas for Board meetings.
Fidelity funds are overseen by different Boards of Trustees. The fund's Board oversees Fidelity's equity and high income funds and another Board oversees Fidelity's investment-grade bond, money market, and asset allocation funds. The asset allocation funds may invest in Fidelity funds overseen by the fund's Board. The use of separate Boards, each with its own committee structure, allows the Trustees of each group of Fidelity funds to focus on the unique issues of the funds they oversee, including common research, investment, and operational issues. On occasion, the separate Boards establish joint committees to address issues of overlapping consequences for the Fidelity funds overseen by each Board.
The Trustees operate using a system of committees to facilitate the timely and efficient consideration of all matters of importance to the Trustees, the fund, and fund shareholders and to facilitate compliance with legal and regulatory requirements and oversight of the fund's activities and associated risks. The Board, acting through its committees, has charged FMR and its affiliates with (i) identifying events or circumstances the occurrence of which could have demonstrably adverse effects on the fund's business and/or reputation; (ii) implementing processes and controls to lessen the possibility that such events or circumstances occur or to mitigate the effects of such events or circumstances if they do occur; and (iii) creating and maintaining a system designed to evaluate continuously business and market conditions in order to facilitate the identification and implementation processes described in (i) and (ii) above. Because the day-to-day operations and activities of the fund are carried out by or through FMR, its affiliates and other service providers, the fund's exposure to risks is mitigated but not eliminated by the processes overseen by the Trustees. While each of the Board's committees has responsibility for overseeing different aspects of the fund's activities, oversight is exercised primarily through the Operations, Audit, and Compliance Committees. In addition, the Independent Trustees have worked with FMR to enhance the Board's oversight of investment and financial risks, legal and regulatory risks, technology risks, and operational risks, including the development of additional risk reporting to the Board. For example, a working group comprised of Independent Trustees and FMR has worked and continues to work to review the Fidelity funds' valuation-related activities, reporting and risk management. Appropriate personnel, including but not limited to the fund's Chief Compliance Officer (CCO), FMR's internal auditor, the independent accountants, the fund's Treasurer and portfolio management personnel, make periodic reports to the Board's committees, as appropriate, including an annual review of FMR's risk management program for the Fidelity funds. The responsibilities of each standing committee, including their oversight responsibilities, are described further under "Standing Committees of the Fund's Trustees."
Annual Report
The fund's Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-877-208-0098.
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 Occupations and Other Relevant Experience+ | |
James C. Curvey (76) | |
| Year of Election or Appointment: 2007 Mr. Curvey is Trustee and Acting Chairman of the Board of Trustees of certain Trusts. Mr. Curvey also serves as Trustee (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of Fidelity Investments Money Management, Inc. (2009-present), Director of Fidelity Research & Analysis Co. (2009-present) and Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2007-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. Previously, Mr. Curvey was the Vice Chairman (2006-2007) and Director (2000-2007) of FMR Corp. |
Ronald P. O'Hanley (54) | |
| Year of Election or Appointment: 2011 Mr. O'Hanley is Director of FMR Co., Inc. (2010-present), Director of Fidelity Investments Money Management, Inc. (2010-present), Director of Fidelity Research & Analysis Company (2010-present), President of Fidelity Asset Management and Corporate Services and a member of Fidelity's Executive Committee (2010-present). Previously, Mr. O'Hanley served as President and Chief Executive Officer of BNY Mellon Asset Management (2007-2010). Mr. O'Hanley also served as Vice Chairman of Bank New York Mellon Corp. and a member of that firm's Executive Committee. Prior to the 2007 merger of The Bank of New York and Mellon Financial Corporation, he was Vice Chairman of Mellon Financial Corporation and President and Chief Executive Officer of Mellon Asset Management. He joined Mellon in February 1997. Mr. O'Hanley currently serves as Chairman of the Boston Public Library Foundation Board of Directors and sits on the Board of Directors of Beth Israel Deaconess Medical Center, the Board of Trustees of the Marine Biological Laboratory and the Advisory Board of the Maxwell School of Citizenship and Public Administration at Syracuse University. Mr. O'Hanley also chairs the Council on Asset Management for the Financial Services Roundtable and is a member of the Board of Directors of Institutional Investor's U.S. Institute. |
* 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.
+ The information above includes each Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Trustee's qualifications to serve as a Trustee, which led to the conclusion that each Trustee should serve as a Trustee for the fund.
Annual Report
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 Occupations and Other Relevant Experience+ | |
Dennis J. Dirks (63) | |
| 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). He also served as President, Chief Operating Officer, and Board member of The Depository Trust Company (DTC) and President and Board member of the National Securities Clearing Corporation (NSCC). In addition, Mr. Dirks served as Chief Executive Officer and Board member of the Government Securities Clearing Corporation, Chief Executive Officer and Board member of the Mortgage-Backed Securities Clearing Corporation, as a Trustee and a member of the Finance Committee of Manhattan College (2005-2008), and as a Trustee and a member of the Finance Committee of AHRC of Nassau County (2006-2008). Mr. Dirks is a member of the Independent Directors Council (IDC) Governing Council (2010-Present) and Board of Directors for The Brookville Center for Children's Services, Inc. (2009-present). |
Alan J. Lacy (58) | |
| Year of Election or Appointment: 2008 Mr. Lacy serves as Senior Adviser (2007-present) of Oak Hill Capital Partners, L.P. (private equity). 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 Dave & Buster's, Inc. (restaurant and entertainment complexes, 2010-present), The Hillman Companies, Inc. (hardware wholesalers, 2010-present), and Bristol-Myers Squibb Company (global pharmaceuticals, 2007-present). Mr. Lacy is a member of the Board of Trustees of The National Parks Conservation Association (2006-Present). Previously, Mr. Lacy served as Chairman of the Board of Trustees of the National Parks Conservation Association (2008-2011) and as a member of the Board of Directors for the Western Union Company (global money transfer, 2006-2011). |
Ned C. Lautenbach (67) | |
| Year of Election or Appointment: 2000 Mr. Lautenbach is Chairman of the Independent Trustees of the Equity and High Income Funds (2006-present). Mr. Lautenbach currently serves as the Lead Director of the Eaton Corporation Board of Directors (diversified industrial, 1997-present). Mr. Lautenbach is also a member of the Board of Directors of the Philharmonic Center for the Arts in Naples, Florida (1999-present); a member of the Board of Trustees of Fairfield University (2005-present); and a member of the Council on Foreign Relations (1994-present). Previously, Mr. Lautenbach was a Partner/Advisory Partner at Clayton, Dubilier & Rice, LLC (private equity investment, 1998-2010), as well as a Director of Sony Corporation (2006-2007). |
Joseph Mauriello (67) | |
| Year of Election or Appointment: 2008 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, 1965-2005). Mr. Mauriello currently serves as a member of the Board of Directors of XL Group plc. (global insurance and re-insurance, 2006-present) and of Arcadia Resources Inc. (health care services and products, 2007-present). Previously, Mr. Mauriello served as a Director of the Hamilton Funds of the Bank of New York (2006-2007). |
Robert W. Selander (61) | |
| Year of Election or Appointment: 2011 Previously, Mr. Selander served as a Member of the Advisory Board of Fidelity's Equity and High Income Funds (2011), Executive Vice Chairman (2010), Chief Executive Officer (2009-2010), and President and Chief Executive Officer (1997-2009) of Mastercard, Inc. |
Cornelia M. Small (67) | |
| Year of Election or Appointment: 2005 Ms. Small is a member of the Board of Directors of the Teagle Foundation (2009-present). Ms. Small is also a member of the Investment Committee, and Chair (2008-present) and a member of the Board of Trustees of Smith College. In addition, Ms. Small 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. In addition, Ms. Small 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 (72) | |
| Year of Election or Appointment: 2002 Mr. Stavropoulos is Vice Chairman of the Independent Trustees of the Equity and High Income Funds (2006-present). Mr. Stavropoulos serves as President and Founder of the Michigan Baseball Foundation, the Great Lakes Loons (2007-present). 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, CEO (1995-2000; 2002-2004), Chairman of the Executive Committee (2000-2006), and as a member of the Board of Directors (1990-2006). Currently, Mr. Stavropoulos is Chairman of Univar (global distributor of commodity and specialty chemicals, 2010-present), 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, 2005-present). Mr. Stavropoulos is a special advisor to Clayton, Dubilier & Rice, LLC (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 (62) | |
| 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), and Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (61) | |
| Year of Election or Appointment: 2008 Mr. Wiley also serves as a Director of Asia Pacific Exploration Consolidated (international oil and gas exploration and production, 2008-present). Mr. Wiley serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), and a Director of Bill Barrett Corporation (exploration and production, 2005-present). In addition, Mr. Wiley also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-2010), as a Senior Energy Advisor of Katzenbach Partners, LLC (consulting, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production, 2001-2005). |
Annual Report
Trustees and Officers - continued
+ The information above includes each Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Trustee's qualifications to serve as a Trustee, which led to the conclusion that each Trustee should serve as a Trustee for the fund.
Advisory Board Members and Executive Officers:
Correspondence intended for each executive officer, Edward C. Johnson 3d, and Peter S. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Edward C. Johnson 3d (81) | |
| Year of Election or Appointment: 2011 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Mr. Johnson serves as Chief Executive Officer, Chairman, and a Director of FMR LLC, and also serves as Chairman and Director of FIL Limited. Previously, Mr. Johnson served as a Trustee and Chairman of the Board of certain Fidelity Trusts, Chairman and a Director of FMR, Chairman and a Director of FMR Co., Inc., and President of FMR LLC (2006-2007). |
Peter S. Lynch (67) | |
| Year of Election or Appointment: 2003 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Mr. Lynch is Vice Chairman and a Director of FMR and FMR Co., Inc. In addition, Mr. Lynch 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 (42) | |
| Year of Election or Appointment: 2008 President and Treasurer of Fidelity's Equity and High Income Funds. Mr. Robins also serves as President and Treasurer (2010-present) and Assistant Treasurer (2009-present) of other Fidelity funds and is an employee of Fidelity Investments (2004-present). Previously, Mr. Robins served as Deputy Treasurer of the Fidelity funds (2005-2008) and Treasurer and Chief Financial Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2006-2008). |
Brian B. Hogan (47) | |
| Year of Election or Appointment: 2009 Vice President of Equity and High Income Funds. Mr. Hogan also serves as President of FMR's Equity Division (2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager. |
Thomas C. Hense (47) | |
| Year of Election or Appointment: 2008 or 2010 Vice President of Fidelity's High Income (2008), Small Cap (2008), and Value (2010) Funds. Previously, Mr. Hense served as a portfolio manager for Fidelity's Institutional Money Management Group (Pyramis) (2003-2008). |
Scott C. Goebel (43) | |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of the Fidelity funds. Mr. Goebel also serves as Secretary of Fidelity Investments Money Management, Inc. (FIMM) (2010-present) and Fidelity Research and Analysis Company (FRAC) (2010-present); Secretary and CLO of The North Carolina Capital Management Trust: Cash and Term Portfolios (2008-present); General Counsel, Secretary, and Senior Vice President of FMR (2008-present) and FMR Co., Inc. (2008-present); employed by FMR LLC or an affiliate (2001-present); Chief Legal Officer of Fidelity Management & Research (Hong Kong) Limited (2008-present) and Assistant Secretary of Fidelity Management & Research (Japan) Inc. (2008-present), and Fidelity Management & Research (U.K.) Inc. (2008-present). Previously, Mr. Goebel served as Assistant Secretary of FIMM (2008-2010), FRAC (2008-2010), and the Funds (2007-2008) and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007). |
William C. Coffey (42) | |
| Year of Election or Appointment: 2009 Assistant Secretary of Fidelity's Equity and High Income Funds. Mr. Coffey also serves as Senior Vice President and Deputy General Counsel of FMR LLC (2010-present), and is an employee of Fidelity Investments. Previously, Mr. Coffey served as Vice President and Associate General Counsel of FMR LLC (2005-2009). |
Holly C. Laurent (57) | |
| Year of Election or Appointment: 2008 Anti-Money Laundering (AML) Officer of the Fidelity funds. Ms. Laurent also serves as AML Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2008-present) and 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), and Senior Vice President, Deputy General Counsel and Group Head for FMR LLC (2005-2006). |
Christine Reynolds (53) | |
| 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. Ms. Reynolds served as Chief Operating Officer of FPCMS (2007-2008). Previously, Ms. Reynolds served as President, Treasurer, and Anti-Money Laundering officer of the Fidelity funds (2004-2007). |
Kenneth A. Rathgeber (64) | |
| 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), Pyramis Global Advisors, LLC (2005-present), and Strategic Advisers, Inc. (2005-present). |
Jeffrey S. Christian (50) | |
| Year of Election or Appointment: 2009 Deputy Treasurer of the Fidelity funds. Mr. Christian is an employee of Fidelity Investments. Previously, Mr. Christian served as Chief Financial Officer (2008-2009) of certain Fidelity funds and Senior Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (2004-2009). |
Joseph F. Zambello (54) | |
| Year of Election or Appointment: 2011 Deputy Treasurer of the Fidelity funds. Mr. Zambello is an employee of Fidelity Investments. Previously, Mr. Zambello served as Vice President of FMR's Program Management Group (2009-2011) and Vice President of the Transfer Agent Oversight Group (2005-2009). |
Adrien E. Deberghes (44) | |
| Year of Election or Appointment: 2008 Deputy Treasurer of Fidelity's Equity and High Income Funds. Mr. Deberghes also serves as Vice President and Assistant Treasurer of Fidelity Rutland Square Trust II and Fidelity Commonwealth Trust II (2011-present), Assistant Treasurer of other Fidelity funds (2010-present), and 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). |
Stephanie J. Dorsey (42) | |
| Year of Election or Appointment: 2010 Assistant Treasurer of Fidelity's Equity and High Income Funds. Ms. Dorsey also serves as Deputy Treasurer of other Fidelity funds (2008-present) and is an employee of Fidelity Investments (2008-present). Previously, Ms. Dorsey served as Treasurer (2004-2008) of the JPMorgan Mutual Funds and Vice President (2004-2008) of JPMorgan Chase Bank. |
John R. Hebble (53) | |
| Year of Election or Appointment: 2009 Assistant Treasurer of Fidelity's Equity and High Income Funds. Mr. Hebble also serves as President (2011-present), Treasurer, and Chief Financial Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2008-present), President and Treasurer of other Fidelity funds (2008-present) and is an employee of Fidelity Investments. |
Gary W. Ryan (53) | |
| 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). |
Jonathan Davis (43) | |
| Year of Election or Appointment: 2010 Assistant Treasurer of the Fidelity funds. Mr. Davis is also Assistant Treasurer of Fidelity Rutland Square Trust II and Fidelity Commonwealth Trust II. Mr. Davis is an employee of Fidelity Investments. Previously, Mr. Davis served as Vice President and Associate General Counsel of FMR LLC (2003-2010). |
Annual Report
Distributions (Unaudited)
Class A designates 100%, Class T designates 100%, Class B designates 0%, and Class C designates 0% of the dividends distributed, respectively during the fiscal year as qualifying for the dividends-received deduction for corporate shareholders.
Class A designates 100%, Class T designates 100%, Class B designates 0%, and Class C designates 0% of the dividends distributed, respectively during the fiscal year as amounts which may be taken into account as a dividend for purposes of the maximum rate under section 1(h)(11) of the Internal Revenue Code.
The fund will notify shareholders in January 2012 of amounts for use in preparing 2011 income tax returns.
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees
Fidelity Stock Selector Small Cap Fund
Each year, 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 relevant to the renewal of the Advisory Contracts throughout the year.
The Board meets regularly 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. The Board has established various 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. The Board, acting directly and through its Committees, requests and receives information concerning the annual consideration of the renewal of the fund's Advisory Contracts. The Board also meets as needed to consider matters specifically related to the Board's annual consideration of the renewal of Advisory Contracts. Members of the Board may also meet with trustees of other Fidelity funds through ad hoc joint committees to discuss certain matters relevant to the Fidelity funds.
At its July 2011 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 expense ratio; (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.
In considering whether to renew the Advisory Contracts for the fund, the Board 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 is in the best interests of the fund and its shareholders and that the compensation payable under the Advisory Contracts is fair and reasonable. The Board's decision to renew the Advisory Contracts was not based on any single factor, 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 Fidelity's competitors, and that the fund's shareholders, who have 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
Board Approval of Investment Advisory Contracts and
Management Fees - continued
Nature, Extent, and Quality of Services Provided. The Board considered the 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 to act in the best interests of the fund.
Resources Dedicated to Investment Management and Support Services. The Board and the Fund Oversight and Research Committees reviewed the general qualifications and capabilities of the Investment Advisers' investment staff, including its size, education, experience, and resources, as well as the Investment Advisers' approach to recruiting, training, managing, and compensating investment personnel. The Board also noted that FMR has devoted increased resources to non-U.S. offices. The Board noted that Fidelity's analysts have extensive resources, tools and capabilities which allow them to conduct sophisticated quantitative and fundamental analysis, as well as credit analysis of issuers, counterparties and enhancers. The Board also believes that Fidelity's investment professionals have sufficient access to global information and data so as to provide competitive investment results over time, and that those professionals also have access to sophisticated tools which permit them to assess portfolio construction and risk and performance attribution characteristics continuously, as well as to transmit new information and research conclusions rapidly around the world. Additionally, in their deliberations, the Board considered the Investment Advisers' trading capabilities and resources which are an integral part of the investment management process.
Shareholder and Administrative Services. The Board considered (i) the nature, extent, quality, and cost of advisory, administrative, 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 adviser's 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 noted that the growth of fund assets over time 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 telephone representatives and over the Internet, investor education materials and asset allocation tools, and the expanded availability of Fidelity Investor Centers, with 35 new branches opening since 2010.
Annual Report
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 a large variety of mutual fund investor services. The Board noted that Fidelity had taken, or had made recommendations that resulted in the Fidelity funds taking, a number of actions over the previous year that benefited particular funds, including (i) continuing to dedicate additional resources to investment research and support of the senior management team that oversees asset management; (ii) rationalizing product lines through the mergers of six funds into other funds; (iii) continuing to migrate the Freedom Funds to dedicated lower cost underlying funds; (iv) obtaining shareholder approval to broaden the investment strategies for Fidelity Consumer Finance Portfolio, Fidelity Emerging Asia Fund, and Fidelity Environment and Alternative Energy Portfolio; (v) contractually agreeing to reduce the management fees and impose other expense limitations on Spartan 500 Index Fund and U.S. Bond Index Fund in connection with launching new institutional classes of these funds; (vi) changing the name, primary and supplemental benchmarks, and investment policies of Fidelity Global Strategies Fund to support the fund's flexible investment mandate and global orientation; and (vii) reducing the transfer agency account fee rates on certain accounts.
Investment Performance. The Board considered whether the fund has operated in accordance with its investment objective, as well as its record of compliance with its investment restrictions. It also reviewed the fund's absolute investment performance for each class, as well as the fund's relative investment performance for each class measured over multiple periods against (i) a broad-based securities market index, and (ii) a peer group of mutual funds deemed appropriate by Fidelity and reviewed by the Board. The following charts considered by the Board show, over the one-, three-, and five-year periods ended December 31, 2010, as available, the cumulative total returns of Institutional Class (Class I) and the retail class of the fund, 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 returns of Institutional Class (Class I) and the retail class show the performance of the highest performing class (based on three-year performance) and the lowest performing class (based on five-year performance), respectively. 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 numbers noted below each chart correspond to the percentile box and represent the percentage of funds in the peer group whose performance was equal to or lower than that of the class indicated.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
Fidelity Stock Selector Small Cap Fund
The Board reviewed the fund's relative investment performance against its peer group and noted that the performance of the retail class of the fund (the class with the longest performance record) was in the first quartile for the one-year period, the fourth quartile for the three-year period, and the third quartile for the five-year period. The Board also noted that the investment performance of the fund was lower than its benchmark for the three- and five-year periods, although the one-year total return of the retail class compared favorably to its benchmark. The Board considered that the variations in performance among the fund's classes reflect the variations in class expenses, which result in lower performance for higher expense classes. The Board also reviewed the fund's performance since inception as well as performance in the current year.
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 noted 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.
Based on its review, the Board concluded that the nature, extent, and quality of services provided to the fund under the Advisory Contracts should benefit the fund's shareholders.
Annual Report
Competitiveness of Management Fee and Total Expense Ratio. The Board considered the fund's management fee and total expense ratio 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 ratio comparisons by broadening the competitive group used for comparison and by reducing the number of universes to which various Fidelity funds are compared.
Management Fee. 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 6% means that 94% 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
Board Approval of Investment Advisory Contracts and
Management Fees - continued
Fidelity Stock Selector Small Cap Fund
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 2010. The Board also noted the effect of the fund's negative 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.
Based on its review, the Board concluded that the fund's management fee is fair and reasonable in light of the services that the fund receives and the other factors considered.
Total Expense Ratio. In its review of each class's total expense ratio, the Board considered the fund's management fee as well as other fund or class expenses, as applicable, such as transfer agent fees, pricing and bookkeeping fees, fund-paid 12b-1 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 the current and historical total expense ratios of each class of the fund compared to competitive fund median expenses. Each class of 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.
The Board noted that the total expense ratio of each class ranked below its competitive median for 2010. The Board considered that various factors, including 12b-1 fees, positive or negative performance adjustments, and relatively higher other expenses in the case of small fund size, can affect total expense ratios.
Annual Report
Fees Charged to Other Fidelity Clients. The Board also considered Fidelity fee structures and other information with respect to clients of FMR and its affiliates, such as other mutual funds advised or subadvised by FMR or its affiliates, pension plan clients, and other institutional clients. In March 2010, the Board created an ad hoc joint committee with the board of other Fidelity funds (the Committee) to review and compare Fidelity's institutional investment advisory business with its business of providing services to the Fidelity funds, including the differences in services provided, fees charged, and costs incurred, as well as competition in their respective marketplaces.
Based on its review of total expense ratios and fees charged to other Fidelity clients, the Board concluded that the total expense ratio of each class of the fund was reasonable in light of the services that the fund and its shareholders receive and the other factors considered, including the findings of the Committee.
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 books and records of Fidelity on which Fidelity's audited financial statements are based. 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 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 concluded that while other allocation methods may also be reasonable, Fidelity's profitability methodologies are reasonable in all material respects.
The Board also reviewed Fidelity's non-fund businesses and 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.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
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 was satisfied that the profitability was not excessive in the circumstances.
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 also noted that in 2009, it and the board of other Fidelity funds created an ad hoc committee (the Economies of Scale Committee) to analyze whether FMR attains economies of scale in respect of the management and servicing of the Fidelity funds, whether the Fidelity funds have appropriately benefited from such economies of scale, and whether there is potential for realization of any further economies of scale.
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 calculates the group fee rates based on a tiered asset "breakpoint" schedule that varies based on asset class. The Board considered that the group fee is designed to deliver the benefits of economies of scale to fund shareholders when total Fidelity 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 benefit from lower management fees as assets under FMR's management increase at the fund complex level, regardless of whether Fidelity achieves any such economies of scale.
The Board concluded, taking into account the analysis of the Economies of Scale Committee, that any potential economies of scale are being appropriately shared between fund shareholders and Fidelity.
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, actions to be taken by FMR to improve certain funds' overall performance, and Fidelity's long-term strategies for certain funds; (ii) portfolio manager changes that have occurred during the past year and length of portfolio manager tenure for different categories of funds over time; (iii) Fidelity's compensation structure for portfolio managers and other key personnel and strategies for attracting and retaining non-investment personnel; (iv) the amount of the investment that each portfolio manager has made in the Fidelity fund(s) that he or she manages; (v) historical trends in Fidelity's realization of fall-out benefits; (vi) Fidelity's group fee structures and the rationale for the individual fee rates of certain funds; (vii) fund profitability methodology and the impact of certain factors on fund profitability results; (viii) trends regarding industry use of performance fee structures and Fidelity's compliance practices with respect to performance adjustment calculations; (ix) the fee structures in place for certain other Fidelity clients; and (x) explanations regarding the relative total expense ratios of certain funds and classes, total expense competitive trends, and actions that might be taken by FMR to reduce total expense ratios for certain funds and classes.
Annual Report
Based on its evaluation of all of the conclusions noted above, and after considering all factors it believed relevant, 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
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Fidelity Management & Research
(U.K.) Inc.
Fidelity Management & Research
(Hong Kong) Limited
Fidelity Management & Research
(Japan) Inc.
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Service Agents
Fidelity Investments Institutional
Operations Company, Inc.
Boston, MA
Fidelity Service Company, Inc.
Boston, MA
Custodian
Brown Brothers Harriman & Co.
Boston, MA
ASCS-UANN-1211 1.843150.104
(Fidelity Investment logo)(registered trademark)
Fidelity Advisor®
Stock Selector Small Cap
Fund - Institutional Class
Annual Report
October 31, 2011
Institutional Class is a
class of Fidelity® Stock Selector Small Cap Fund
Contents
Chairman's Message | The Chairman's message to shareholders. | |
Performance | How the fund has done over time. | |
Management's Discussion of Fund Performance | The Portfolio Managers' review of fundperformance and strategy. | |
Shareholder Expense Example | An example of shareholder expenses. | |
Investment Changes | A summary of major shifts in the fund's investments over the past six months. | |
Investments | A complete list of the fund's investments with their market values. | |
Financial Statements | Statements of assets and liabilities, operations, and changes in net assets, | |
Notes | Notes to the financial statements. | |
Report of Independent Registered Public Accounting Firm |
| |
Trustees and Officers |
| |
Distributions |
| |
Board Approval of Investment Advisory Contracts and Management Fees |
|
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-877-208-0098 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company.
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, http://www.advisor.fidelity.com, or http://www.401k.com, as applicable.
NOT FDIC INSURED • MAY LOSE VALUE • NO BANK GUARANTEE
Neither the fund nor Fidelity Distributors Corporation is a bank.
Annual Report
Chairman's Message
(photo_of_James_C_Curvey)
Dear Shareholder:
Global equity markets began the fourth quarter on a strong note, sharply reversing course in October amid strong corporate earnings, better-than-expected economic news and the promise of a resolution to the sovereign debt crisis in Europe. The mini rally followed a third quarter marked by a significant downturn in July and August, which heightened investor anxiety and set off a wave of volatility that hampered most major asset classes through the end of September. Financial markets are difficult to predict, of course, but you can help put the odds in your favor by following these time-tested investment principles.
One of the basic tenets is to invest according to your time horizon. For long-term investors, riding out the markets' inevitable ups and downs has proven much more effective than making decisions based on short-term developments. If your goal is approaching, you can also benefit from patience and restraint, rather than attempting to time the market. No matter your time horizon, missing only a few of the markets' best days can significantly diminish returns. Patience also affords the benefits of compounding - earning interest on additional income or reinvested dividends and capital gains. While staying the course doesn't eliminate risk, it can considerably lessen the negative impact of short-term downturns.
Asset allocation is another principle to manage risk. As you spread your portfolio among the asset classes, be sure to consider your time horizon, risk tolerance and investment objectives. Younger investors may be better served by emphasizing equities, which historically have been the best-performing asset class over time. Investors who are nearing a specific goal, such as retirement or sending a child to college, may choose to favor bonds and other investments that have tended to be more stable. Studies indicate that asset allocation is the single most important determinant of a portfolio's long-term success. After deciding on a suitable allocation strategy, make sure your portfolio is adequately diversified, with exposure to stocks of small-, mid- and large-cap companies in a range of sectors, for example. And today, more than ever, geographic diversification should be taken into account.
Lastly, investing a certain amount of money on a regular basis - a principle known as dollar-cost averaging - can help lower the average cost of your purchases, while also giving you the discipline to avoid selling weak performers just prior to an upswing, or chasing a hot performer just before a correction.
We invite you to learn more by visiting us on the Internet, dropping by one of our Investor Centers or calling us by phone. It is our privilege to provide the resources you need to choose investments that are right for you.
Sincerely,
(The acting chairman's signature appears here.)
James C. Curvey
Acting Chairman
Annual Report
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' distributions from 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, 2011 | Past 1 | Past 5 | Past 10 |
Institutional ClassA | 10.99% | 0.77% | 5.59% |
A The initial offering of Institutional Class shares took place on May 2, 2007. Returns prior to May 2, 2007 are those of Fidelity® Stock Selector Small Cap Fund, the original class of the fund.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Fidelity Advisor® Stock Selector Small Cap Fund - Institutional Class on October 31, 2001. The chart shows how the value of your investment would have changed, and also shows how the Russell 2000® Index performed over the same period. The initial offering of Institutional Class took place on May 2, 2007. See above for additional information regarding the performance of Institutional Class.
Annual Report
Management's Discussion of Fund Performance
Market Recap: U.S. stocks overcame a sharp summer drop to post a solid gain for the 12 months ending October 31, 2011. Bullishness pervaded the market during the first half of the period, only to be squelched by extreme volatility in the summer, as debate over the U.S. debt ceiling, Standard & Poor's subsequent downgrade of the country's long-term sovereign credit rating and deepening debt woes in Europe led to the worst calendar-quarter finish for the S&P 500® Index in almost three years. However, news of a possible solution to the eurozone debt crisis, along with better-than-expected U.S. economic data and strong corporate earnings, helped fuel an October rally that pushed the broad-based index up roughly 11% - its highest monthly return since December 1991. With that boost, the S&P 500® finished the year up 8.09%, while the blue-chip Dow Jones Industrial AverageSM added 10.39% and the technology-heavy Nasdaq Composite® Index gained 8.10%. Among sectors within the S&P 500®, only financials (-6%) posted a decline for the year, while energy (+19%) and utilities (+15%) fared best. Small and mid-sized stocks also rose, with the Russell 2000® and Russell Midcap® indexes adding 6.71% and 7.85%, respectively. The lengthy financial crisis in Europe continued to hamper foreign developed-markets equities, with the MSCI® EAFE® (Europe, Australasia, Far East) Index falling 3.97%.
Comments from Rayna Lesser and Morgen Peck, Co-Portfolio Managers of Fidelity Advisor® Stock Selector Small Cap Fund, along with Charles Myers, Shadman Riaz, Richard Thompson and Patrick Venanzi: For the year, the fund's Institutional Class shares returned 10.99%, solidly outpacing the Russell 2000® Index. Consistent with the fund's core objective, individual stock picking accounted for most of the fund's outperformance versus the Russell index, mainly in health care, consumer discretionary and the software/services industry within information technology. Industry positioning within consumer discretionary and tech also helped. Our top individual contributors included premium bedding manufacturer Tempur-Pedic International, independent oil and gas firm SM Energy, cloud-computing services provider Terremark Worldwide - which was acquired by Verizon in April and sold from the fund in February - and beauty retailer Ulta Salon Cosmetics & Fragrance. Conversely, we had unproductive picks in financials, especially banks and real estate, and in the capital goods area of industrials. The fund's modest cash position also nicked results. Travelzoo, an online travel deals publisher, was the biggest individual detractor, while stakes in optical components manufacturer Fabrinet and Camelot Information Systems, a domestic provider of financial tech services in China, also were misses. Some stocks we mentioned were out-of-benchmark positions.
Annual Report
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, including sales charges (loads) on purchase payments or redemption proceeds, redemption fees, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (May 1, 2011 to October 31, 2011).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Annual Report
| Annualized | Beginning | Ending | Expenses Paid |
Class A | 1.23% |
|
|
|
Actual |
| $ 1,000.00 | $ 860.40 | $ 5.77 |
HypotheticalA |
| $ 1,000.00 | $ 1,019.00 | $ 6.26 |
Class T | 1.48% |
|
|
|
Actual |
| $ 1,000.00 | $ 859.10 | $ 6.94 |
HypotheticalA |
| $ 1,000.00 | $ 1,017.74 | $ 7.53 |
Class B | 1.99% |
|
|
|
Actual |
| $ 1,000.00 | $ 856.90 | $ 9.31 |
HypotheticalA |
| $ 1,000.00 | $ 1,015.17 | $ 10.11 |
Class C | 1.98% |
|
|
|
Actual |
| $ 1,000.00 | $ 857.00 | $ 9.27 |
Hypothetical A |
| $ 1,000.00 | $ 1,015.22 | $ 10.06 |
Stock Selector Small Cap | .94% |
|
|
|
Actual |
| $ 1,000.00 | $ 862.00 | $ 4.41 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.47 | $ 4.79 |
Institutional Class | .98% |
|
|
|
Actual |
| $ 1,000.00 | $ 861.30 | $ 4.60 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.27 | $ 4.99 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period).
Annual Report
Investment Changes (Unaudited)
Top Ten Stocks as of October 31, 2011 | ||
| % of fund's | % of fund's net assets |
National Penn Bancshares, Inc. | 1.3 | 1.1 |
National Retail Properties, Inc. | 1.3 | 0.6 |
Highwoods Properties, Inc. (SBI) | 1.3 | 0.8 |
Home Properties, Inc. | 1.3 | 0.7 |
Franklin Street Properties Corp. | 1.1 | 1.0 |
Teledyne Technologies, Inc. | 1.1 | 0.9 |
ProAssurance Corp. | 1.1 | 0.0 |
Quantum Corp. | 1.1 | 0.8 |
CapitalSource, Inc. | 1.1 | 0.9 |
SM Energy Co. | 1.1 | 0.8 |
| 11.8 | |
Top Five Market Sectors as of October 31, 2011 | ||
| % of fund's | % of fund's net assets |
Financials | 20.2 | 18.1 |
Information Technology | 18.8 | 18.6 |
Industrials | 14.5 | 15.0 |
Consumer Discretionary | 14.0 | 13.3 |
Health Care | 11.1 | 11.7 |
Asset Allocation (% of fund's net assets) | |||||||
As of October 31, 2011* | As of April 30, 2011** | ||||||
![]() | Stocks 96.6% |
| ![]() | Stocks and Equity |
| ||
![]() | Convertible |
| ![]() | Convertible |
| ||
![]() | Short-Term |
| ![]() | Short-Term |
| ||
* Foreign investments | 7.4% |
| ** Foreign investments | 8.3% |
|
Annual Report
Investments October 31, 2011
Showing Percentage of Net Assets
Common Stocks - 96.6% | |||
Shares | Value (000s) | ||
CONSUMER DISCRETIONARY - 14.0% | |||
Auto Components - 0.9% | |||
Tenneco, Inc. (a) | 460,414 | $ 15,065 | |
Hotels, Restaurants & Leisure - 1.5% | |||
Cracker Barrel Old Country Store, Inc. | 152,088 | 6,447 | |
Vail Resorts, Inc. (d) | 158,900 | 7,081 | |
WMS Industries, Inc. (a) | 153,500 | 3,363 | |
Wyndham Worldwide Corp. | 279,215 | 9,401 | |
| 26,292 | ||
Household Durables - 2.3% | |||
iRobot Corp. (a) | 342,370 | 11,593 | |
La-Z-Boy, Inc. (a) | 546,610 | 5,554 | |
Meritage Homes Corp. (a) | 401,300 | 7,123 | |
Tempur-Pedic International, Inc. (a) | 230,694 | 15,701 | |
| 39,971 | ||
Media - 0.4% | |||
MDC Partners, Inc. Class A (sub. vtg.) | 449,800 | 7,575 | |
Multiline Retail - 0.6% | |||
Dollarama, Inc. | 253,434 | 9,539 | |
Specialty Retail - 5.5% | |||
Ascena Retail Group, Inc. (a) | 388,080 | 11,216 | |
Body Central Corp. | 224,363 | 4,712 | |
Cabela's, Inc. Class A (a)(d) | 518,762 | 12,928 | |
DSW, Inc. Class A | 298,302 | 15,613 | |
Fourlis Holdings SA (a) | 517,430 | 2,234 | |
GameStop Corp. Class A (a) | 369,900 | 9,458 | |
Shoe Carnival, Inc. (a) | 462,347 | 12,617 | |
Signet Jewelers Ltd. | 294,300 | 12,687 | |
Ulta Salon, Cosmetics & Fragrance, Inc. (a) | 194,792 | 13,108 | |
| 94,573 | ||
Textiles, Apparel & Luxury Goods - 2.8% | |||
Deckers Outdoor Corp. (a) | 92,267 | 10,633 | |
G-III Apparel Group Ltd. (a) | 505,900 | 14,261 | |
PVH Corp. | 166,300 | 12,374 | |
Vera Bradley, Inc. (d) | 229,502 | 10,396 | |
| 47,664 | ||
TOTAL CONSUMER DISCRETIONARY | 240,679 | ||
Common Stocks - continued | |||
Shares | Value (000s) | ||
CONSUMER STAPLES - 2.6% | |||
Beverages - 0.6% | |||
Hansen Natural Corp. (a) | 83,000 | $ 7,394 | |
Primo Water Corp. (d) | 412,800 | 2,510 | |
| 9,904 | ||
Food & Staples Retailing - 0.6% | |||
Casey's General Stores, Inc. | 119,871 | 5,940 | |
Crumbs Bake Shop, Inc. (a) | 95,085 | 504 | |
United Natural Foods, Inc. (a) | 114,145 | 4,167 | |
| 10,611 | ||
Food Products - 0.8% | |||
Chiquita Brands International, Inc. (a) | 279,170 | 2,479 | |
Diamond Foods, Inc. (d) | 48,400 | 3,182 | |
Green Mountain Coffee Roasters, Inc. (a)(d) | 134,103 | 8,719 | |
| 14,380 | ||
Personal Products - 0.6% | |||
Elizabeth Arden, Inc. (a) | 271,916 | 9,321 | |
TOTAL CONSUMER STAPLES | 44,216 | ||
ENERGY - 6.7% | |||
Energy Equipment & Services - 1.4% | |||
Newpark Resources, Inc. (a) | 1,072,972 | 9,582 | |
Superior Energy Services, Inc. (a) | 336,000 | 9,448 | |
Willbros Group, Inc. (a) | 1,119,264 | 5,697 | |
| 24,727 | ||
Oil, Gas & Consumable Fuels - 5.3% | |||
Atlas Pipeline Partners, LP | 392,613 | 13,663 | |
Berry Petroleum Co. Class A | 309,700 | 10,700 | |
Cloud Peak Energy, Inc. (a) | 597,100 | 13,703 | |
Energen Corp. | 66,462 | 3,261 | |
Petroleum Development Corp. (a) | 409,250 | 10,686 | |
SM Energy Co. | 217,136 | 18,003 | |
Targa Resources Corp. | 294,000 | 9,920 | |
Whiting Petroleum Corp. (a) | 215,130 | 10,014 | |
| 89,950 | ||
TOTAL ENERGY | 114,677 | ||
Common Stocks - continued | |||
Shares | Value (000s) | ||
FINANCIALS - 20.2% | |||
Capital Markets - 2.3% | |||
Affiliated Managers Group, Inc. (a) | 63,500 | $ 5,881 | |
Duff & Phelps Corp. Class A | 1,134,646 | 14,399 | |
Knight Capital Group, Inc. Class A (a) | 984,048 | 12,291 | |
Waddell & Reed Financial, Inc. Class A | 266,459 | 7,389 | |
| 39,960 | ||
Commercial Banks - 5.3% | |||
Associated Banc-Corp. | 1,125,123 | 12,545 | |
CapitalSource, Inc. | 2,912,476 | 18,523 | |
Cathay General Bancorp | 628,346 | 8,791 | |
City National Corp. | 275,300 | 11,678 | |
Nara Bancorp, Inc. (a) | 577,300 | 4,896 | |
National Penn Bancshares, Inc. | 2,909,300 | 22,692 | |
PacWest Bancorp | 649,361 | 11,455 | |
| 90,580 | ||
Insurance - 3.7% | |||
Alterra Capital Holdings Ltd. | 718,600 | 15,579 | |
Amerisafe, Inc. (a) | 809,400 | 17,443 | |
Endurance Specialty Holdings Ltd. | 321,300 | 11,952 | |
ProAssurance Corp. | 249,520 | 19,101 | |
| 64,075 | ||
Real Estate Investment Trusts - 7.9% | |||
American Assets Trust, Inc. | 866,800 | 17,570 | |
Franklin Street Properties Corp. | 1,521,700 | 19,326 | |
Glimcher Realty Trust | 1,772,540 | 16,236 | |
Highwoods Properties, Inc. (SBI) | 710,500 | 22,011 | |
Home Properties, Inc. | 368,958 | 21,732 | |
National Retail Properties, Inc. | 814,000 | 22,182 | |
Ramco-Gershenson Properties Trust (SBI) | 1,626,250 | 15,693 | |
| 134,750 | ||
Thrifts & Mortgage Finance - 1.0% | |||
Washington Federal, Inc. | 553,706 | 7,558 | |
WSFS Financial Corp. | 222,393 | 8,840 | |
| 16,398 | ||
TOTAL FINANCIALS | 345,763 | ||
HEALTH CARE - 11.0% | |||
Biotechnology - 2.5% | |||
Achillion Pharmaceuticals, Inc. (a) | 600,884 | 3,810 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
HEALTH CARE - continued | |||
Biotechnology - continued | |||
Ardea Biosciences, Inc. (a) | 193,205 | $ 3,847 | |
ARIAD Pharmaceuticals, Inc. (a) | 571,177 | 6,643 | |
ArQule, Inc. (a) | 502,458 | 2,919 | |
BioMarin Pharmaceutical, Inc. (a) | 136,506 | 4,656 | |
Chelsea Therapeutics International Ltd. (a)(d) | 712,901 | 3,229 | |
Dynavax Technologies Corp. (a) | 1,613,741 | 4,389 | |
Infinity Pharmaceuticals, Inc. (a)(d) | 322,373 | 2,440 | |
Pharmasset, Inc. (a) | 62,788 | 4,420 | |
Targacept, Inc. (a) | 137,359 | 2,418 | |
Telik, Inc. (a) | 1,287,447 | 348 | |
Theravance, Inc. (a) | 198,281 | 4,408 | |
| 43,527 | ||
Health Care Equipment & Supplies - 1.7% | |||
Analogic Corp. | 168,299 | 9,102 | |
Cerus Corp. (a)(d) | 538,132 | 1,437 | |
Conceptus, Inc. (a) | 215,314 | 2,480 | |
Endologix, Inc. (a) | 348,980 | 3,800 | |
Sirona Dental Systems, Inc. (a) | 180,700 | 8,656 | |
Uroplasty, Inc. (a)(d) | 749,409 | 3,380 | |
| 28,855 | ||
Health Care Providers & Services - 4.8% | |||
Air Methods Corp. (a) | 119,440 | 9,653 | |
Catalyst Health Solutions, Inc. (a) | 99,091 | 5,447 | |
Centene Corp. (a) | 133,592 | 4,696 | |
Corvel Corp. (a) | 146,666 | 7,564 | |
HealthSpring, Inc. (a) | 274,925 | 14,829 | |
Humana, Inc. | 112,428 | 9,544 | |
MEDNAX, Inc. (a) | 144,675 | 9,520 | |
Omnicare, Inc. | 172,507 | 5,144 | |
PSS World Medical, Inc. (a) | 394,531 | 8,778 | |
Wellcare Health Plans, Inc. (a) | 148,625 | 7,284 | |
| 82,459 | ||
Health Care Technology - 0.8% | |||
Epocrates, Inc. (a) | 698,900 | 6,080 | |
Omnicell, Inc. (a) | 454,212 | 6,790 | |
| 12,870 | ||
Life Sciences Tools & Services - 0.3% | |||
eResearchTechnology, Inc. (a) | 876,272 | 4,478 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
HEALTH CARE - continued | |||
Pharmaceuticals - 0.9% | |||
Cardiome Pharma Corp. (a) | 433,357 | $ 1,435 | |
Columbia Laboratories, Inc. (a) | 708,568 | 1,793 | |
Endocyte, Inc. | 192,200 | 1,866 | |
Questcor Pharmaceuticals, Inc. (a) | 178,696 | 7,257 | |
XenoPort, Inc. (a) | 582,300 | 3,552 | |
| 15,903 | ||
TOTAL HEALTH CARE | 188,092 | ||
INDUSTRIALS - 14.5% | |||
Aerospace & Defense - 1.4% | |||
Alliant Techsystems, Inc. | 97,800 | 5,680 | |
Teledyne Technologies, Inc. (a) | 350,742 | 19,105 | |
| 24,785 | ||
Air Freight & Logistics - 0.4% | |||
UTI Worldwide, Inc. | 504,500 | 7,371 | |
Building Products - 1.6% | |||
A.O. Smith Corp. | 173,989 | 6,465 | |
AAON, Inc. (d) | 469,050 | 9,930 | |
Armstrong World Industries, Inc. | 250,158 | 10,654 | |
| 27,049 | ||
Commercial Services & Supplies - 1.5% | |||
Swisher Hygiene, Inc. | 986,560 | 4,301 | |
Sykes Enterprises, Inc. (a) | 544,102 | 8,668 | |
United Stationers, Inc. | 380,884 | 12,116 | |
| 25,085 | ||
Construction & Engineering - 0.9% | |||
Foster Wheeler AG (a) | 384,772 | 8,203 | |
Shaw Group, Inc. (a) | 322,287 | 7,496 | |
| 15,699 | ||
Electrical Equipment - 1.3% | |||
General Cable Corp. (a) | 463,315 | 12,991 | |
GrafTech International Ltd. (a) | 631,147 | 9,915 | |
| 22,906 | ||
Industrial Conglomerates - 0.5% | |||
Carlisle Companies, Inc. | 216,100 | 9,016 | |
Machinery - 3.1% | |||
Actuant Corp. Class A | 450,721 | 10,141 | |
Altra Holdings, Inc. (a) | 424,787 | 6,244 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
INDUSTRIALS - continued | |||
Machinery - continued | |||
CLARCOR, Inc. | 290,514 | $ 14,084 | |
Greenbrier Companies, Inc. (a) | 322,400 | 6,000 | |
TriMas Corp. (a) | 338,822 | 6,604 | |
Wabtec Corp. | 143,629 | 9,649 | |
| 52,722 | ||
Professional Services - 2.4% | |||
Advisory Board Co. (a) | 188,005 | 11,515 | |
Equifax, Inc. | 301,700 | 10,605 | |
Manpower, Inc. | 99,600 | 4,297 | |
Stantec, Inc. (a) | 350,600 | 8,620 | |
Towers Watson & Co. | 96,300 | 6,327 | |
| 41,364 | ||
Trading Companies & Distributors - 1.4% | |||
Interline Brands, Inc. (a) | 584,807 | 8,714 | |
Watsco, Inc. (d) | 240,423 | 14,824 | |
| 23,538 | ||
TOTAL INDUSTRIALS | 249,535 | ||
INFORMATION TECHNOLOGY - 18.8% | |||
Communications Equipment - 2.7% | |||
Brocade Communications Systems, Inc. (a) | 3,819,545 | 16,730 | |
DG FastChannel, Inc. (a) | 366,451 | 6,831 | |
Ixia (a) | 1,133,787 | 12,846 | |
NETGEAR, Inc. (a) | 174,732 | 6,196 | |
Oclaro, Inc. (a)(d) | 1,066,684 | 4,384 | |
| 46,987 | ||
Computers & Peripherals - 3.5% | |||
NCR Corp. (a) | 530,500 | 10,101 | |
Quantum Corp. (a) | 7,103,227 | 18,539 | |
Super Micro Computer, Inc. (a) | 969,125 | 15,506 | |
Synaptics, Inc. (a)(d) | 468,085 | 15,817 | |
| 59,963 | ||
Electronic Equipment & Components - 0.7% | |||
DDi Corp. | 125,133 | 1,150 | |
Fabrinet (a) | 834,161 | 10,344 | |
| 11,494 | ||
Internet Software & Services - 3.2% | |||
Constant Contact, Inc. (a)(d) | 297,711 | 6,026 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
INFORMATION TECHNOLOGY - continued | |||
Internet Software & Services - continued | |||
InfoSpace, Inc. (a) | 463,601 | $ 4,061 | |
Rackspace Hosting, Inc. (a) | 287,901 | 11,916 | |
Travelzoo, Inc. (a)(d) | 262,242 | 8,355 | |
VeriSign, Inc. | 365,101 | 11,716 | |
Web.com, Inc. (a)(d) | 1,320,070 | 12,752 | |
| 54,826 | ||
IT Services - 1.2% | |||
Camelot Information Systems, Inc. ADR (a)(d) | 683,497 | 2,228 | |
Cardtronics, Inc. (a) | 332,788 | 8,296 | |
Euronet Worldwide, Inc. (a) | 313,636 | 6,075 | |
HiSoft Technology International Ltd. ADR (a) | 396,576 | 4,910 | |
| 21,509 | ||
Semiconductors & Semiconductor Equipment - 2.8% | |||
Advanced Micro Devices, Inc. (a) | 559,739 | 3,263 | |
Cymer, Inc. (a) | 112,100 | 4,871 | |
Entegris, Inc. (a) | 602,870 | 5,402 | |
Marvell Technology Group Ltd. (a) | 620,344 | 8,679 | |
Micron Technology, Inc. (a) | 1,016,912 | 5,685 | |
ON Semiconductor Corp. (a) | 601,768 | 4,555 | |
RF Micro Devices, Inc. (a) | 1,392,000 | 10,217 | |
Spansion, Inc. Class A (a) | 92,067 | 947 | |
TriQuint Semiconductor, Inc. (a) | 723,194 | 3,847 | |
| 47,466 | ||
Software - 4.7% | |||
Aspen Technology, Inc. (a) | 389,431 | 6,753 | |
BroadSoft, Inc. (a) | 203,304 | 7,319 | |
JDA Software Group, Inc. (a) | 326,648 | 10,410 | |
Kenexa Corp. (a) | 301,735 | 6,901 | |
Magma Design Automation, Inc. (a) | 816,771 | 4,313 | |
Micro Focus International PLC | 1,820,293 | 9,941 | |
Nuance Communications, Inc. (a) | 205,300 | 5,436 | |
Parametric Technology Corp. (a) | 708,170 | 14,751 | |
SolarWinds, Inc. (a) | 155,735 | 4,495 | |
Synchronoss Technologies, Inc. (a) | 322,656 | 9,699 | |
| 80,018 | ||
TOTAL INFORMATION TECHNOLOGY | 322,263 | ||
Common Stocks - continued | |||
Shares | Value (000s) | ||
MATERIALS - 4.5% | |||
Chemicals - 1.2% | |||
Cabot Corp. | 301,900 | $ 9,111 | |
Rockwood Holdings, Inc. (a) | 236,900 | 10,907 | |
| 20,018 | ||
Containers & Packaging - 1.0% | |||
Aptargroup, Inc. | 146,900 | 7,047 | |
Rock-Tenn Co. Class A | 169,490 | 10,032 | |
| 17,079 | ||
Metals & Mining - 2.3% | |||
Carpenter Technology Corp. | 241,386 | 13,691 | |
Coeur d'Alene Mines Corp. (a) | 376,600 | 9,630 | |
Compass Minerals International, Inc. | 141,900 | 10,794 | |
HudBay Minerals, Inc. | 540,000 | 5,915 | |
| 40,030 | ||
TOTAL MATERIALS | 77,127 | ||
TELECOMMUNICATION SERVICES - 1.1% | |||
Diversified Telecommunication Services - 0.3% | |||
AboveNet, Inc. | 56,533 | 3,355 | |
VocalTec Communications Ltd. (a)(d) | 48,783 | 1,205 | |
| 4,560 | ||
Wireless Telecommunication Services - 0.8% | |||
Clearwire Corp. Class A (a)(d) | 6,265,795 | 12,030 | |
NII Holdings, Inc. (a) | 80,543 | 1,895 | |
| 13,925 | ||
TOTAL TELECOMMUNICATION SERVICES | 18,485 | ||
UTILITIES - 3.2% | |||
Electric Utilities - 1.7% | |||
Cleco Corp. | 272,700 | 10,054 | |
Empire District Electric Co. | 227,603 | 4,545 | |
Great Plains Energy, Inc. | 321,800 | 6,674 | |
IDACORP, Inc. | 206,807 | 8,351 | |
| 29,624 | ||
Gas Utilities - 1.1% | |||
Northwest Natural Gas Co. (d) | 207,589 | 9,699 | |
Piedmont Natural Gas Co., Inc. (d) | 275,378 | 9,002 | |
| 18,701 | ||
Common Stocks - continued | |||
Shares | Value (000s) | ||
UTILITIES - continued | |||
Multi-Utilities - 0.4% | |||
NorthWestern Energy Corp. | 206,100 | $ 7,100 | |
TOTAL UTILITIES | 55,425 | ||
TOTAL COMMON STOCKS (Cost $1,587,861) |
| ||
Convertible Preferred Stocks - 0.1% | |||
|
|
|
|
HEALTH CARE - 0.1% | |||
Pharmaceuticals - 0.1% | |||
Merrimack Pharmaceuticals, Inc. Series G (e) (Cost $2,738) | 391,134 |
|
U.S. Treasury Obligations - 0.0% | ||||
| Principal Amount (000s) |
| ||
U.S. Treasury Bills, yield at date of purchase 0% to 0.02% 11/25/11 to 12/8/11 | $ 725 |
|
Money Market Funds - 6.8% | |||
Shares |
| ||
Fidelity Cash Central Fund, 0.12% (b) | 52,024,581 | 52,025 | |
Fidelity Securities Lending Cash Central Fund, 0.11% (b)(c) | 64,021,792 | 64,022 | |
TOTAL MONEY MARKET FUNDS (Cost $116,047) |
| ||
TOTAL INVESTMENT PORTFOLIO - 103.5% (Cost $1,707,371) | 1,775,772 | ||
NET OTHER ASSETS (LIABILITIES) - (3.5)% | (60,708) | ||
NET ASSETS - 100% | $ 1,715,064 |
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
(e) Restricted securities - Investment in securities not registered under the Securities Act of 1933 (excluding 144A issues). At the end of the period, the value of restricted securities (excluding 144A issues) amounted to $2,738,000 or 0.2% of net assets. |
Additional information on each restricted holding is as follows: |
Security | Acquisition Date | Acquisition Cost (000s) |
Merrimack Pharmaceuticals, Inc. Series G | 3/31/11 | $ 2,738 |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 68 |
Fidelity Securities Lending Cash Central Fund | 897 |
Total | $ 965 |
Other Information |
The following is a summary of the inputs used, as of October 31, 2011, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the tables below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities: | ||||
Equities: | ||||
Consumer Discretionary | $ 240,679 | $ 240,679 | $ - | $ - |
Consumer Staples | 44,216 | 44,216 | - | - |
Energy | 114,677 | 114,677 | - | - |
Financials | 345,763 | 345,763 | - | - |
Health Care | 190,830 | 188,092 | - | 2,738 |
Industrials | 249,535 | 249,535 | - | - |
Information Technology | 322,263 | 322,263 | - | - |
Materials | 77,127 | 77,127 | - | - |
Telecommunication Services | 18,485 | 18,485 | - | - |
Utilities | 55,425 | 55,425 | - | - |
U.S. Government and Government Agency Obligations | 725 | - | 725 | - |
Money Market Funds | 116,047 | 116,047 | - | - |
Total Investments in Securities: | $ 1,775,772 | $ 1,772,309 | $ 725 | $ 2,738 |
The following is a reconciliation of Investments in Securities for which Level 3 inputs were used in determining value: |
(Amounts in thousands) |
|
Investments in Securities: | |
Beginning Balance | $ - |
Total Realized Gain (Loss) | - |
Total Unrealized Gain (Loss) | - |
Cost of Purchases | 2,738 |
Proceeds of Sales | - |
Amortization/Accretion | - |
Transfers in to Level 3 | - |
Transfers out of Level 3 | - |
Ending Balance | $ 2,738 |
The change in unrealized gain (loss) for the period attributable to Level 3 securities held at October 31, 2011 | $ - |
The information used in the above reconciliation represents fiscal year to date activity for any Investments in Securities identified as using Level 3 inputs at either the beginning or the end of the current fiscal period. Transfers in or out of Level 3 represent the beginning value of any Security or Instrument where a change in the pricing level occurred from the beginning to the end of the period. The cost of purchases and the proceeds of sales may include securities received or delivered through corporate actions or exchanges. Realized and unrealized gains (losses) disclosed in the reconciliation are included in Net Gain (Loss) on the Fund's Statement of Operations. |
Income Tax Information |
At October 31, 2011, the Fund had a capital loss carryforward of approximately $267,892,000 all of which will expire in fiscal 2017. Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements
Statement of Assets and Liabilities
Amounts in thousands (except per-share amounts) | October 31, 2011 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $59,747) - See accompanying schedule: Unaffiliated issuers (cost $1,591,324) | $ 1,659,725 |
|
Fidelity Central Funds (cost $116,047) | 116,047 |
|
Total Investments (cost $1,707,371) |
| $ 1,775,772 |
Receivable for investments sold | 16,202 | |
Receivable for fund shares sold | 1,793 | |
Dividends receivable | 1,163 | |
Distributions receivable from Fidelity Central Funds | 284 | |
Prepaid expenses | 8 | |
Other receivables | 80 | |
Total assets | 1,795,302 | |
|
|
|
Liabilities | ||
Payable to custodian bank | $ 2,494 | |
Payable for investments purchased | 9,552 | |
Payable for fund shares redeemed | 2,623 | |
Accrued management fee | 1,076 | |
Distribution and service plan fees payable | 3 | |
Other affiliated payables | 422 | |
Other payables and accrued expenses | 46 | |
Collateral on securities loaned, at value | 64,022 | |
Total liabilities | 80,238 | |
|
|
|
Net Assets | $ 1,715,064 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,916,521 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (269,858) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 68,401 | |
Net Assets | $ 1,715,064 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Assets and Liabilities - continued
Amounts in thousands (except per-share amounts) | October 31, 2011 | |
|
|
|
Calculation of Maximum Offering Price | $ 17.87 | |
|
|
|
Maximum offering price per share (100/94.25 of $17.87) | $ 18.96 | |
Class T: | $ 17.68 | |
|
|
|
Maximum offering price per share (100/96.50 of $17.68) | $ 18.32 | |
Class B: | $ 17.43 | |
|
|
|
Class C: | $ 17.38 | |
|
|
|
|
|
|
Stock Selector Small Cap: | $ 18.05 | |
|
|
|
Institutional Class: | $ 18.07 |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements - continued
Statement of Operations
Amounts in thousands | Year ended October 31, 2011 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 15,976 |
Special dividends |
| 3,755 |
Interest |
| 2 |
Income from Fidelity Central Funds |
| 965 |
Total income |
| 20,698 |
|
|
|
Expenses | ||
Management fee | $ 11,042 | |
Performance adjustment | (1,036) | |
Transfer agent fees | 4,620 | |
Distribution and service plan fees | 33 | |
Accounting and security lending fees | 568 | |
Custodian fees and expenses | 77 | |
Independent trustees' compensation | 10 | |
Registration fees | 144 | |
Audit | 59 | |
Legal | 8 | |
Miscellaneous | 17 | |
Total expenses before reductions | 15,542 | |
Expense reductions | (134) | 15,408 |
Net investment income (loss) | 5,290 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 248,238 | |
Foreign currency transactions | (99) | |
Futures contracts | 1,242 | |
Total net realized gain (loss) |
| 249,381 |
Change in net unrealized appreciation (depreciation) on: Investment securities | (126,111) | |
Assets and liabilities in foreign currencies | (1) | |
Futures contracts | 8 | |
Total change in net unrealized appreciation (depreciation) |
| (126,104) |
Net gain (loss) | 123,277 | |
Net increase (decrease) in net assets resulting from operations | $ 128,567 |
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 | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 5,290 | $ 3,129 |
Net realized gain (loss) | 249,381 | 280,256 |
Change in net unrealized appreciation (depreciation) | (126,104) | 94,882 |
Net increase (decrease) in net assets resulting | 128,567 | 378,267 |
Distributions to shareholders from net investment income | (9,149) | (976) |
Share transactions - net increase (decrease) | 183,503 | (349,513) |
Redemption fees | 776 | 175 |
Total increase (decrease) in net assets | 303,697 | 27,953 |
|
|
|
Net Assets | ||
Beginning of period | 1,411,367 | 1,383,414 |
End of period (including undistributed net investment income of $0 and $2,128, respectively) | $ 1,715,064 | $ 1,411,367 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended October 31, | 2011 | 2010 | 2009 | 2008 | 2007 K |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 16.20 | $ 12.53 | $ 11.24 | $ 24.79 | $ 23.20 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) E | -H, M | (.01) I | - M | (.04) | (.07) J |
Net realized and unrealized gain (loss) | 1.73 | 3.68 | 1.31 | (10.77) | 1.66 |
Total from investment operations | 1.73 | 3.67 | 1.31 | (10.81) | 1.59 |
Distributions from net investment income | (.07) | - M | (.02) | - | - |
Distributions from net realized gain | - | - | - | (2.74) | - |
Total distributions | (.07) | -M | (.02) | (2.74) | - |
Redemption fees added to paid in capital E | .01 | - M | - M | - M | -M |
Net asset value, end of period | $ 17.87 | $ 16.20 | $ 12.53 | $ 11.24 | $ 24.79 |
Total Return B, C, D | 10.71% | 29.32% | 11.69% | (48.52)% | 6.85% |
Ratios to Average Net AssetsF, L |
|
|
|
|
|
Expenses before reductions | 1.15% | 1.00% | 1.03% | 1.24% | 1.27% A |
Expenses net of fee waivers, if any | 1.15% | 1.00% | 1.03% | 1.24% | 1.27% A |
Expenses net of all reductions | 1.14% | .99% | 1.01% | 1.23% | 1.26% A |
Net investment income (loss) | -%H, N | (.07)% I | (.03)% | (.24)% | (.57)%A, J |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (in millions) | $ 4 | $ 3 | $ 3 | $ 2 | $ 1 |
Portfolio turnover rate G | 73% | 138% | 135% | 101% | 84% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
H Investment income per share reflects a special dividend which amounted to $.04 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.21)%.
I Investment income per share reflects a special dividend which amounted to $.01 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.16)%.
J Investment income per share reflects a special dividend which amounted to $.01 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.66)%.
K For the period May 2, 2007 (commencement of sale of shares) to October 31, 2007.
L Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
M Amount represents less than $.01 per share.
N Amount represents less than .01%.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class T
Years ended October 31, | 2011 | 2010 | 2009 | 2008 | 2007 K |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 16.07 | $ 12.45 | $ 11.19 | $ 24.74 | $ 23.20 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) E | (.05) H | (.05) I | (.03) | (.08) | (.10) J |
Net realized and unrealized gain (loss) | 1.70 | 3.67 | 1.30 | (10.76) | 1.64 |
Total from investment operations | 1.65 | 3.62 | 1.27 | (10.84) | 1.54 |
Distributions from net investment income | (.05) | - | (.01) | - | - |
Distributions from net realized gain | - | - | - | (2.71) | - |
Total distributions | (.05) | - | (.01) | (2.71) | - |
Redempti on fees added to paid in capital E | .01 | - M | - M | - M | - M |
Net asset value, end of period | $ 17.68 | $ 16.07 | $ 12.45 | $ 11.19 | $ 24.74 |
Total Return B, C, D | 10.34% | 29.08% | 11.42% | (48.70)% | 6.64% |
Ratios to Average Net AssetsF, L |
|
|
|
|
|
Expenses before reductions | 1.42% | 1.27% | 1.30% | 1.50% | 1.53% A |
Expenses net of fee waivers, if any | 1.42% | 1.27% | 1.30% | 1.50% | 1.53% A |
Expenses net of all reductions | 1.41% | 1.26% | 1.29% | 1.49% | 1.52% A |
Net investment income (loss) | (.27)% H | (.33)% I | (.31)% | (.50)% | (.83)%A, J |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 1,539 | $ 723 | $ 550 | $ 409 | $ 420 |
Portfolio turnover rate G | 73% | 138% | 135% | 101% | 84% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
H Investment income per share reflects a special dividend which amounted to $.04 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.48)%.
I Investment income per share reflects a special dividend which amounted to $.01 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.43)%.
J Investment income per share reflects a special dividend which amounted to $.01 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.92)%.
K For the period May 2, 2007 (commencement of sale of shares) to October 31, 2007.
L Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
M Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class B
Years ended October 31, | 2011 | 2010 | 2009 | 2008 | 2007 K |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 15.87 | $ 12.36 | $ 11.15 | $ 24.69 | $ 23.20 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) E | (.14) H | (.12) I | (.08) | (.17) | (.15) J |
Net realized and unrealized gain (loss) | 1.69 | 3.63 | 1.30 | (10.73) | 1.64 |
Total from investment operations | 1.55 | 3.51 | 1.22 | (10.90) | 1.49 |
Distributions from net investment income | - | - | (.01) | - | - |
Distributions from net realized gain | - | - | - | (2.64) | - |
Total distributions | - | - | (.01) | (2.64) | - |
Redemption fees added to paid in capital E | .01 | - M | - M | - M | - M |
Net asset value, end of period | $ 17.43 | $ 15.87 | $ 12.36 | $ 11.15 | $ 24.69 |
Total Return B, C, D | 9.83% | 28.40% | 10.92% | (48.94)% | 6.42% |
Ratios to Average Net AssetsF, L |
|
|
|
|
|
Expenses before reductions | 1.90% | 1.76% | 1.77% | 1.99% | 2.07% A |
Expenses net of fee waivers, if any | 1.90% | 1.76% | 1.77% | 1.99% | 2.05% A |
Expenses net of all reductions | 1.90% | 1.75% | 1.75% | 1.99% | 2.04% A |
Net investment income (loss) | (.76)% H | (.82)% I | (.78)% | (1.00)% | (1.32)% A, J |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 246 | $ 220 | $ 219 | $ 199 | $ 419 |
Portfolio turnover rate G | 73% | 138% | 135% | 101% | 84% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
D Total returns do not include the effect of the contingent deferred sales charge.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
H Investment income per share reflects a special dividend which amounted to $.04 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.96)%.
I Investment income per share reflects a special dividend which amounted to $.01 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.92)%.
J Investment income per share reflects a special dividend which amounted to $.01 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (1.41)%.
K For the period May 2, 2007 (commencement of sale of shares) to October 31, 2007.
L Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
M Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class C
Years ended October 31, | 2011 | 2010 | 2009 | 2008 | 2007 K |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 15.82 | $ 12.33 | $ 11.12 | $ 24.71 | $ 23.20 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) E | (.14) H | (.12) I | (.09) | (.17) | (.15) J |
Net realized and unrealized gain (loss) | 1.69 | 3.61 | 1.31 | (10.72) | 1.66 |
Total from investment operations | 1.55 | 3.49 | 1.22 | (10.89) | 1.51 |
Distributions from net investment income | - | - | (.01) | - | - |
Distributions from net realized gain | - | - | - | (2.70) | - |
Total distributions | - | - | (.01) | (2.70) | - |
Redemption fees added to paid in capital E | .01 | -M | -M | -M | - M |
Net asset value, end of period | $ 17.38 | $ 15.82 | $ 12.33 | $ 11.12 | $ 24.71 |
Total Return B, C, D | 9.86% | 28.30% | 10.96% | (48.95)% | 6.51% |
Ratios to Average Net AssetsF, L |
|
|
|
|
|
Expenses before reductions | 1.90% | 1.75% | 1.76% | 2.00% | 1.98% A |
Expenses net of fee waivers, if any | 1.90% | 1.75% | 1.76% | 2.00% | 1.98% A |
Expenses net of all reductions | 1.89% | 1.74% | 1.75% | 1.99% | 1.97% A |
Net investment income (loss) | (.76)% H | (.81)% I | (.77)% | (1.01)% | (1.27)% A, J |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 1,370 | $ 820 | $ 428 | $ 183 | $ 294 |
Portfolio turnover rate G | 73% | 138% | 135% | 101% | 84% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
D Total returns do not include the effect of the contingent deferred sales charge.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
H Investment income per share reflects a special dividend which amounted to $.04 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.96)%.
I Investment income per share reflects a special dividend which amounted to $.01 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.91)%.
J Investment income per share reflects a special dividend which amounted to $.01 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (1.36)%.
K For the period May 2, 2007 (commencement of sale of shares) to October 31, 2007.
L Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
M Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Stock Selector Small Cap
Years ended October 31, | 2011 | 2010 | 2009 | 2008 | 2007 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 16.35 | $ 12.61 | $ 11.28 | $ 24.81 | $ 22.23 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .05 E | .03 F | .02 | .01 | (.04) G |
Net realized and unrealized gain (loss) | 1.74 | 3.72 | 1.33 | (10.82) | 5.01 |
Total from investment operations | 1.79 | 3.75 | 1.35 | (10.81) | 4.97 |
Distributions from net investment income | (.10) | (.01) | (.02) | - | (.05) |
Distributions from net realized gain | - | - | - | (2.72) | (2.34) |
Total distributions | (.10) | (.01) | (.02) | (2.72) | (2.39) |
Redemption fees added to paid in capital B | .01 | - I | - I | - I | - I |
Net asset value, end of period | $ 18.05 | $ 16.35 | $ 12.61 | $ 11.28 | $ 24.81 |
Total Return A | 11.03% | 29.75% | 12.05% | (48.42)% | 24.42% |
Ratios to Average Net Assets C, H |
|
|
|
|
|
Expenses before reductions | .85% | .73% | .77% | .95% | 1.01% |
Expenses net of fee waivers, if any | .85% | .73% | .77% | .95% | 1.00% |
Expenses net of all reductions | .85% | .72% | .75% | .94% | .99% |
Net investment income (loss) | .29% E | .21% F | .22% | .05% | (.20)% G |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (in millions) | $ 1,698 | $ 1,406 | $ 1,379 | $ 1,292 | $ 2,602 |
Portfolio turnover rate D | 73% | 138% | 135% | 101% | 84% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
B Calculated based on average shares outstanding during the period.
C Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
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 $.04 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been .09%.
F Investment income per share reflects a special dividend which amounted to $.01 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been .12%.
G Investment income per share reflects a special dividend which amounted to $.02 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.29)%.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
I Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Institutional Class
Years ended October 31, | 2011 | 2010 | 2009 | 2008 | 2007 J |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 16.39 | $ 12.63 | $ 11.29 | $ 24.82 | $ 23.20 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) D | .05 G | .05 H | .04 | .02 | (.03) I |
Net realized and unrealized gain (loss) | 1.74 | 3.72 | 1.32 | (10.82) | 1.65 |
Total from investment operations | 1.79 | 3.77 | 1.36 | (10.80) | 1.62 |
Distributions from net investment income | (.12) | (.01) | (.02) | - | - |
Distributions from net realized gain | - | - | - | (2.73) | - |
Total distributions | (.12) | (.01) | (.02) | (2.73) | - |
Redemption fees added to paid in capital D | .01 | - L | - L | - L | - L |
Net asset value, end of period | $ 18.07 | $ 16.39 | $ 12.63 | $ 11.29 | $ 24.82 |
Total Return B, C | 10.99% | 29.89% | 12.14% | (48.36)% | 6.98% |
Ratios to Average Net Assets E, K |
|
|
|
|
|
Expenses before reductions | .86% | .63% | .63% | .84% | .94% A |
Expenses net of fee waivers, if any | .86% | .63% | .63% | .84% | .94% A |
Expenses net of all reductions | .85% | .62% | .62% | .84% | .93% A |
Net investment income (loss) | .29% G | .31% H | .36% | .15% | (.24)% A, I |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 10,038 | $ 680 | $ 413 | $ 376 | $ 162 |
Portfolio turnover rateF | 73% | 138% | 135% | 101% | 84% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
D Calculated based on average shares outstanding during the period.
E Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
G Investment income per share reflects a special dividend which amounted to $.04 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been .08%.
H Investment income per share reflects a special dividend which amounted to $.01 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been .21%.
I Investment income per share reflects a special dividend which amounted to $.01 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.33) %.
J For the period May 2, 2007 (commencement of sale of shares) to October 31, 2007.
K Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
L Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended October 31, 2011
1. Organization.
Fidelity Stock Selector Small Cap Fund (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. The Fund offers Class A, Class T, Class C, Stock Selector Small Cap and Institutional Class shares, each of which, along with Class B shares, has equal rights as to assets and voting privileges. Effective after the close of business on September 1, 2010, Class B shares were closed to new accounts and additional purchases, except for exchanges and reinvestments by existing shareholders. Each class has exclusive voting rights with respect to matters that affect that class. In order to disclose class level financial information dollar amounts presented in the notes are unrounded. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions may also differ by class.
2. Investments in Fidelity Central Funds.
The Fund invests in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC web site or upon request.
Annual Report
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Fund uses independent pricing services approved by the Board of Trustees to value its investments. When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include market or security specific events, changes in interest rates and credit quality. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The value used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the Fund's own assumptions based on the best information available)
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of October 31, 2011, as well as a roll forward of Level 3 securities, is included at the end of the Fund's Schedule of Investments. Valuation techniques used to value the Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when significant market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs),
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Security Valuation - continued
futures contracts, Exchange-traded funds (ETFs) and certain indexes as well as quoted prices for similar securities are used and are categorized as Level 2 in the hierarchy in these circumstances. Utilizing these techniques may result in transfers between Level 1 and Level 2. For restricted equity securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and are categorized as Level 3 in the hierarchy.
Debt securities, including restricted securities, are valued based on evaluated prices received from independent pricing services or from dealers who make markets in such securities. For U.S. government and government agency obligations, pricing services utilize matrix pricing which considers yield or price of bonds of comparable quality, coupon, maturity and type as well as dealer supplied prices and are generally categorized as Level 2 in the hierarchy. When independent prices are unavailable or unreliable, debt securities may be valued utilizing pricing matrices which consider similar factors that would be used by independent pricing services. These are generally categorized as Level 2 in the hierarchy but may be Level 3 depending on the circumstances.
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy.
Foreign Currency. The Fund may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on
Annual Report
3. Significant Accounting Policies - continued
Investment Transactions and Income - continued
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. Large, non-recurring dividends recognized by the Fund are presented separately on the Statement of Operations as "Special Dividends" and the impact of these dividends is presented in the Financial Highlights. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company, including distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. As of October 31, 2011, the Fund did not have any unrecognized tax benefits in the financial statements. A fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are declared and recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, partnerships, deferred trustees compensation and capital loss carryforwards.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $ 246,207,121 |
Gross unrealized depreciation | (179,772,367) |
Net unrealized appreciation (depreciation) on securities and other investments | $ 66,434,754 |
|
|
Tax Cost | $ 1,709,337,694 |
The tax-based components of distributable earnings as of period end were as follows:
Capital loss carryforward | $ (267,891,888) |
Net unrealized appreciation (depreciation) | $ 66,434,485 |
Under the recently enacted Regulated Investment Company Modernization Act of 2010 (the Act), the Fund will be permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to any losses incurred in pre-enactment taxable years, which generally expire after eight years from when they are incurred. Additionally, post-enactment capital losses that are carried forward will retain their character as either short-term or long-term capital losses rather than being considered all short-term as under previous law. The Fund's first fiscal year end subject to the Act will be October 31, 2012.
The tax character of distributions paid was as follows:
| October 31, 2011 | October 31, 2010 |
Ordinary Income | $ 9,148,743 | $ 975,942 |
Short-Term Trading (Redemption) Fees. Shares held by investors in the Fund less than 90 days are subject to a redemption fee equal to 1.50% of the net asset value of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Fund and accounted for as an addition to paid in capital.
New Accounting Pronouncement. In May 2011, the Financial Accounting Standards Board issued Accounting Standard Update No. 2011-04, Fair Value Measurement (Topic 820) - Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. The update changes the wording used to describe the requirements in GAAP for measuring fair value and for disclosing information about fair value measurements. The update is effective during interim and annual periods beginning after December 15, 2011. Management is currently evaluating the impact of the update's adoption on the Fund's financial statement disclosures.
Annual Report
4. Operating Policies.
Restricted Securities. The Fund may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities is included at the end of the Fund's Schedule of Investments.
5. Derivative Instruments.
Risk Exposures and the Use of Derivative Instruments. The Fund used derivative instruments (derivatives), including futures contracts, in order to meet its investment objectives. The strategy is to use derivatives to increase returns and to manage exposure to certain risks as defined below. The success of any strategy involving derivatives depends on analysis of numerous economic factors, and if the strategies for investment do not work as intended, the Fund may not achieve its objectives.
The Fund's use of derivatives increased or decreased its exposure to the following risk:
Equity Risk | Equity risk relates to the fluctuations in the value of financial instruments as a result of changes in market prices (other than those arising from interest rate risk or foreign exchange risk), whether caused by factors specific to an individual investment, its issuer, or all factors affecting all instruments traded in a market or market segment. |
The Fund is also exposed to additional risks from investing in derivatives, such as liquidity risk and counterparty credit risk. Liquidity risk is the risk that the Fund will be unable to sell the derivative in the open market in a timely manner. Counterparty credit risk is the risk that the counterparty will not be able to fulfill its obligation to the Fund. The Fund's maximum risk of loss from counterparty credit risk is generally the aggregate unrealized appreciation and unpaid counterparty payments in excess of any collateral pledged by the counterparty to the Fund. Counterparty risk related to exchange-traded futures contracts is minimal because of the protection provided by the exchange on which they trade. Derivatives involve, to varying degrees, risk of loss in excess of the amounts recognized in the Statement of Assets and Liabilities.
Futures Contracts. A futures contract is an agreement between two parties to buy or sell a specified underlying instrument for a fixed price at a specified future date. The Fund used futures contracts to manage its exposure to the stock market.
Annual Report
Notes to Financial Statements - continued
5. Derivative Instruments - continued
Futures Contracts - continued
Upon entering into a futures contract, a fund is required to deposit either cash or securities (initial margin) with a clearing broker in an amount equal to a certain percentage of the face value of the contract. Futures contracts are marked-to-market daily and subsequent payments (variation margin) are made or received by a fund depending on the daily fluctuations in the value of the futures contracts and are recorded as unrealized appreciation or (depreciation). This receivable and/or payable is included in daily variation margin on futures contracts in the Statement of Assets and Liabilities. Realized gain or (loss) is recorded upon the expiration or closing of a futures contract.
The underlying face amount at value of open futures contracts at period end, if any, 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. Securities deposited to meet initial margin requirements are identified in the Schedule of Investments.
Certain risks arise upon entering into futures contracts, including the risk that an illiquid market limits the ability to close out a futures contract prior to settlement date.
During the period the Fund recognized net realized gain (loss) of $1,242,158 and a change in net unrealized appreciation (depreciation) of $7,562 related to its investment in futures contracts. These amounts are included in the Statement of Operations.
6. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $1,431,900,114 and $1,282,079,545, respectively.
7. 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 .35% 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 Stock Selector Small Cap as compared to
Annual Report
7. Fees and Other Transactions with Affiliates - continued
Management Fee - continued
an appropriate benchmark index. For the period, the total annual management fee rate, including the performance adjustment, was .55% of the Fund's average net assets.
Distribution and Service Plan Fees. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the Fund and providing shareholder support services. For the period, the Distribution and Service Fee rates, total fees and amounts retained by FDC were as follows:
| Distribution | Service | Total Fees | Retained |
Class A | -% | .25% | $ 11,058 | $ 63 |
Class T | .25% | .25% | 6,750 | - |
Class B | .75% | .25% | 2,794 | 2,096 |
Class C | .75% | .25% | 12,446 | 3,951 |
|
|
| $ 33,048 | $ 6,110 |
Sales Load. FDC may receive a front-end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. Depending on the holding period, FDC may receive contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, 1.00% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained |
Class A | $ 2,269 |
Class T | 377 |
Class B* | 227 |
Class C* | 361 |
| $ 3,234 |
* When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
Annual Report
Notes to Financial Statements - continued
7. Fees and Other Transactions with Affiliates - continued
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the Fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, transfer agent fees for each class were as follows:
| Amount | % of |
Class A | $ 13,252 | .30 |
Class T | 4,315 | .32 |
Class B | 847 | .30 |
Class C | 3,762 | .30 |
Stock Selector Small Cap | 4,570,365 | .25 |
Institutional Class | 27,925 | .26 |
| $ 4,620,466 |
|
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 $84,786 for the period.
8. Committed Line of Credit.
The Fund participates with other funds managed by FMR or an affiliate in a $4.0 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $5,451 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, there were no borrowings on this line of credit.
Annual Report
9. Security Lending.
The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. For equity securities, a lending agent is used and may loan securities to certain qualified borrowers, including Fidelity Capital Markets (FCM), a broker-dealer affiliated with the Fund. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. The value of securities loaned to FCM at period end was $128,160. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Total security lending income during the period amounted to $896,991, including $4 from securities loaned to FCM.
10. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of the Fund provided services to the Fund in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $133,992 for the period.
11. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended October 31, | 2011 | 2010 |
From net investment income |
|
|
Class A | $ 15,209 | $ 649 |
Class T | 2,838 | - |
Stock Selector Small Cap | 9,104,153 | 974,901 |
Institutional Class | 26,543 | 392 |
Total | $ 9,148,743 | $ 975,942 |
Annual Report
Notes to Financial Statements - continued
12. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
Years ended October 31, | 2011 | 2010 | 2011 | 2010 |
Class A |
|
|
|
|
Shares sold | 141,619 | 60,233 | $ 2,551,365 | $ 878,328 |
Reinvestment of distributions | 794 | 48 | 14,554 | 635 |
Shares redeemed | (107,880) | (69,529) | (1,998,562) | (1,022,424) |
Net increase (decrease) | 34,533 | (9,248) | $ 567,357 | $ (143,461) |
Class T |
|
|
|
|
Shares sold | 81,238 | 27,634 | $ 1,558,596 | $ 398,291 |
Reinvestment of distributions | 154 | - | 2,831 | - |
Shares redeemed | (39,400) | (26,782) | (704,438) | (382,007) |
Net increase (decrease) | 41,992 | 852 | $ 856,989 | $ 16,284 |
Class B |
|
|
|
|
Shares sold | 5,592 | 2,875 | $ 102,797 | $ 40,053 |
Shares redeemed | (5,365) | (6,748) | (93,413) | (94,173) |
Net increase (decrease) | 227 | (3,873) | $ 9,384 | $ (54,120) |
Class C |
|
|
|
|
Shares sold | 52,816 | 24,030 | $ 972,098 | $ 347,201 |
Shares redeemed | (25,832) | (6,890) | (467,301) | (99,553) |
Net increase (decrease) | 26,984 | 17,140 | $ 504,797 | $ 247,648 |
Stock Selector Small Cap |
|
|
|
|
Shares sold | 42,956,006 | 14,958,012 | $ 812,040,324 | $ 219,809,002 |
Reinvestment of distributions | 490,501 | 72,340 | 8,965,215 | 962,840 |
Shares redeemed | (35,360,001) | (38,394,961) | (648,464,613) | (570,480,008) |
Net increase (decrease) | 8,086,506 | (23,364,609) | $ 172,540,926 | $ (349,708,166) |
Institutional Class |
|
|
|
|
Shares sold | 1,267,453 | 13,011 | $ 24,122,964 | $ 190,234 |
Reinvestment of distributions | 1,209 | 4 | 22,526 | 53 |
Shares redeemed | (754,664) | (4,160) | (15,119,704) | (62,596) |
Net increase (decrease) | 513,998 | 8,855 | $ 9,025,786 | $ 127,691 |
13. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
Annual Report
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Capital Trust and Shareholders of Fidelity Stock Selector Small Cap Fund:
We have audited the accompanying statement of assets and liabilities of Fidelity Stock Selector Small Cap Fund (the Fund), a fund of Fidelity Capital Trust, including the schedule of investments, as of October 31, 2011, 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 the 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, 2011, 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 Small Cap Fund as of October 31, 2011, 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 the 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 15, 2011
Annual Report
Trustees and Officers
The Trustees, Members 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, oversee management of the risks associated with such activities and contractual arrangements, and review the fund's performance. Except for James C. Curvey, each of the Trustees oversees 226 funds advised by FMR or an affiliate. Mr. Curvey oversees 429 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 75th birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board Members 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.
Experience, Skills, Attributes, and Qualifications of the Fund's Trustees. The Governance and Nominating Committee has adopted a statement of policy that describes the experience, qualifications, attributes, and skills that are necessary and desirable for potential Independent Trustee candidates (Statement of Policy). The Board believes that each Trustee satisfied at the time he or she was initially elected or appointed a Trustee, and continues to satisfy, the standards contemplated by the Statement of Policy. The Governance and Nominating Committee also engages professional search firms to help identify potential Independent Trustee candidates who have the experience, qualifications, attributes, and skills consistent with the Statement of Policy. From time to time, additional criteria based on the composition and skills of the current Independent Trustees, as well as experience or skills that may be appropriate in light of future changes to board composition, business conditions, and regulatory or other developments, have also been considered by the professional search firms and the Governance and Nominating Committee. In addition, the Board takes into account the Trustees' commitment and participation in Board and committee meetings, as well as their leadership of standing and ad hoc committees throughout their tenure.
In determining that a particular Trustee was and continues to be qualified to serve as a Trustee, the Board has considered a variety of criteria, none of which, in isolation, was controlling. The Board believes that, collectively, the Trustees have balanced and diverse experience, qualifications, attributes, and skills, which allow the Board to operate effectively in governing the fund and protecting the interests of shareholders. Information about the specific experience, skills, attributes, and qualifications of each Trustee, which in each case led to the Board's conclusion that the Trustee should serve (or continue to serve) as a trustee of the fund, is provided below.
Annual Report
Trustees and Officers - continued
Board Structure and Oversight Function. James C. Curvey is an interested person (as defined in the 1940 Act) and currently serves as Acting Chairman. The Trustees have determined that an interested Chairman is appropriate and benefits shareholders because an interested Chairman has a personal and professional stake in the quality and continuity of services provided to the fund. Independent Trustees exercise their informed business judgment to appoint an individual of their choosing to serve as Chairman, regardless of whether the Trustee happens to be independent or a member of management. The Independent Trustees have determined that they can act independently and effectively without having an Independent Trustee serve as Chairman and that a key structural component for assuring that they are in a position to do so is for the Independent Trustees to constitute a substantial majority for the Board. The Independent Trustees also regularly meet in executive session. Ned C. Lautenbach serves as Chairman of the Independent Trustees and as such (i) acts as a liaison between the Independent Trustees and management with respect to matters important to the Independent Trustees and (ii) with management prepares agendas for Board meetings.
Fidelity funds are overseen by different Boards of Trustees. The fund's Board oversees Fidelity's equity and high income funds and another Board oversees Fidelity's investment-grade bond, money market, and asset allocation funds. The asset allocation funds may invest in Fidelity funds overseen by the fund's Board. The use of separate Boards, each with its own committee structure, allows the Trustees of each group of Fidelity funds to focus on the unique issues of the funds they oversee, including common research, investment, and operational issues. On occasion, the separate Boards establish joint committees to address issues of overlapping consequences for the Fidelity funds overseen by each Board.
The Trustees operate using a system of committees to facilitate the timely and efficient consideration of all matters of importance to the Trustees, the fund, and fund shareholders and to facilitate compliance with legal and regulatory requirements and oversight of the fund's activities and associated risks. The Board, acting through its committees, has charged FMR and its affiliates with (i) identifying events or circumstances the occurrence of which could have demonstrably adverse effects on the fund's business and/or reputation; (ii) implementing processes and controls to lessen the possibility that such events or circumstances occur or to mitigate the effects of such events or circumstances if they do occur; and (iii) creating and maintaining a system designed to evaluate continuously business and market conditions in order to facilitate the identification and implementation processes described in (i) and (ii) above. Because the day-to-day operations and activities of the fund are carried out by or through FMR, its affiliates and other service providers, the fund's exposure to risks is mitigated but not eliminated by the processes overseen by the Trustees. While each of the Board's committees has responsibility for overseeing different aspects of the fund's activities, oversight is exercised primarily through the Operations, Audit, and Compliance Committees. In addition, the Independent Trustees have worked with FMR to enhance the Board's oversight of investment and financial risks, legal and regulatory risks, technology risks, and operational risks, including the development of additional risk reporting to the Board. For example, a working group comprised of Independent Trustees and FMR has worked and continues to work to review the Fidelity funds' valuation-related activities, reporting and risk management. Appropriate personnel, including but not limited to the fund's Chief Compliance Officer (CCO), FMR's internal auditor, the independent accountants, the fund's Treasurer and portfolio management personnel, make periodic reports to the Board's committees, as appropriate, including an annual review of FMR's risk management program for the Fidelity funds. The responsibilities of each standing committee, including their oversight responsibilities, are described further under "Standing Committees of the Fund's Trustees."
Annual Report
The fund's Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-877-208-0098.
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 Occupations and Other Relevant Experience+ | |
James C. Curvey (76) | |
| Year of Election or Appointment: 2007 Mr. Curvey is Trustee and Acting Chairman of the Board of Trustees of certain Trusts. Mr. Curvey also serves as Trustee (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of Fidelity Investments Money Management, Inc. (2009-present), Director of Fidelity Research & Analysis Co. (2009-present) and Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2007-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. Previously, Mr. Curvey was the Vice Chairman (2006-2007) and Director (2000-2007) of FMR Corp. |
Ronald P. O'Hanley (54) | |
| Year of Election or Appointment: 2011 Mr. O'Hanley is Director of FMR Co., Inc. (2010-present), Director of Fidelity Investments Money Management, Inc. (2010-present), Director of Fidelity Research & Analysis Company (2010-present), President of Fidelity Asset Management and Corporate Services and a member of Fidelity's Executive Committee (2010-present). Previously, Mr. O'Hanley served as President and Chief Executive Officer of BNY Mellon Asset Management (2007-2010). Mr. O'Hanley also served as Vice Chairman of Bank New York Mellon Corp. and a member of that firm's Executive Committee. Prior to the 2007 merger of The Bank of New York and Mellon Financial Corporation, he was Vice Chairman of Mellon Financial Corporation and President and Chief Executive Officer of Mellon Asset Management. He joined Mellon in February 1997. Mr. O'Hanley currently serves as Chairman of the Boston Public Library Foundation Board of Directors and sits on the Board of Directors of Beth Israel Deaconess Medical Center, the Board of Trustees of the Marine Biological Laboratory and the Advisory Board of the Maxwell School of Citizenship and Public Administration at Syracuse University. Mr. O'Hanley also chairs the Council on Asset Management for the Financial Services Roundtable and is a member of the Board of Directors of Institutional Investor's U.S. Institute. |
* 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.
+ The information above includes each Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Trustee's qualifications to serve as a Trustee, which led to the conclusion that each Trustee should serve as a Trustee for the fund.
Annual Report
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 Occupations and Other Relevant Experience+ | |
Dennis J. Dirks (63) | |
| 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). He also served as President, Chief Operating Officer, and Board member of The Depository Trust Company (DTC) and President and Board member of the National Securities Clearing Corporation (NSCC). In addition, Mr. Dirks served as Chief Executive Officer and Board member of the Government Securities Clearing Corporation, Chief Executive Officer and Board member of the Mortgage-Backed Securities Clearing Corporation, as a Trustee and a member of the Finance Committee of Manhattan College (2005-2008), and as a Trustee and a member of the Finance Committee of AHRC of Nassau County (2006-2008). Mr. Dirks is a member of the Independent Directors Council (IDC) Governing Council (2010-Present) and Board of Directors for The Brookville Center for Children's Services, Inc. (2009-present). |
Alan J. Lacy (58) | |
| Year of Election or Appointment: 2008 Mr. Lacy serves as Senior Adviser (2007-present) of Oak Hill Capital Partners, L.P. (private equity). 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 Dave & Buster's, Inc. (restaurant and entertainment complexes, 2010-present), The Hillman Companies, Inc. (hardware wholesalers, 2010-present), and Bristol-Myers Squibb Company (global pharmaceuticals, 2007-present). Mr. Lacy is a member of the Board of Trustees of The National Parks Conservation Association (2006-Present). Previously, Mr. Lacy served as Chairman of the Board of Trustees of the National Parks Conservation Association (2008-2011) and as a member of the Board of Directors for the Western Union Company (global money transfer, 2006-2011). |
Ned C. Lautenbach (67) | |
| Year of Election or Appointment: 2000 Mr. Lautenbach is Chairman of the Independent Trustees of the Equity and High Income Funds (2006-present). Mr. Lautenbach currently serves as the Lead Director of the Eaton Corporation Board of Directors (diversified industrial, 1997-present). Mr. Lautenbach is also a member of the Board of Directors of the Philharmonic Center for the Arts in Naples, Florida (1999-present); a member of the Board of Trustees of Fairfield University (2005-present); and a member of the Council on Foreign Relations (1994-present). Previously, Mr. Lautenbach was a Partner/Advisory Partner at Clayton, Dubilier & Rice, LLC (private equity investment, 1998-2010), as well as a Director of Sony Corporation (2006-2007). |
Joseph Mauriello (67) | |
| Year of Election or Appointment: 2008 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, 1965-2005). Mr. Mauriello currently serves as a member of the Board of Directors of XL Group plc. (global insurance and re-insurance, 2006-present) and of Arcadia Resources Inc. (health care services and products, 2007-present). Previously, Mr. Mauriello served as a Director of the Hamilton Funds of the Bank of New York (2006-2007). |
Robert W. Selander (61) | |
| Year of Election or Appointment: 2011 Previously, Mr. Selander served as a Member of the Advisory Board of Fidelity's Equity and High Income Funds (2011), Executive Vice Chairman (2010), Chief Executive Officer (2009-2010), and President and Chief Executive Officer (1997-2009) of Mastercard, Inc. |
Cornelia M. Small (67) | |
| Year of Election or Appointment: 2005 Ms. Small is a member of the Board of Directors of the Teagle Foundation (2009-present). Ms. Small is also a member of the Investment Committee, and Chair (2008-present) and a member of the Board of Trustees of Smith College. In addition, Ms. Small 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. In addition, Ms. Small 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 (72) | |
| Year of Election or Appointment: 2002 Mr. Stavropoulos is Vice Chairman of the Independent Trustees of the Equity and High Income Funds (2006-present). Mr. Stavropoulos serves as President and Founder of the Michigan Baseball Foundation, the Great Lakes Loons (2007-present). 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, CEO (1995-2000; 2002-2004), Chairman of the Executive Committee (2000-2006), and as a member of the Board of Directors (1990-2006). Currently, Mr. Stavropoulos is Chairman of Univar (global distributor of commodity and specialty chemicals, 2010-present), 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, 2005-present). Mr. Stavropoulos is a special advisor to Clayton, Dubilier & Rice, LLC (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 (62) | |
| 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), and Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (61) | |
| Year of Election or Appointment: 2008 Mr. Wiley also serves as a Director of Asia Pacific Exploration Consolidated (international oil and gas exploration and production, 2008-present). Mr. Wiley serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), and a Director of Bill Barrett Corporation (exploration and production, 2005-present). In addition, Mr. Wiley also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-2010), as a Senior Energy Advisor of Katzenbach Partners, LLC (consulting, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production, 2001-2005). |
Annual Report
Trustees and Officers - continued
+ The information above includes each Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Trustee's qualifications to serve as a Trustee, which led to the conclusion that each Trustee should serve as a Trustee for the fund.
Advisory Board Members and Executive Officers:
Correspondence intended for each executive officer, Edward C. Johnson 3d, and Peter S. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Edward C. Johnson 3d (81) | |
| Year of Election or Appointment: 2011 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Mr. Johnson serves as Chief Executive Officer, Chairman, and a Director of FMR LLC, and also serves as Chairman and Director of FIL Limited. Previously, Mr. Johnson served as a Trustee and Chairman of the Board of certain Fidelity Trusts, Chairman and a Director of FMR, Chairman and a Director of FMR Co., Inc., and President of FMR LLC (2006-2007). |
Peter S. Lynch (67) | |
| Year of Election or Appointment: 2003 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Mr. Lynch is Vice Chairman and a Director of FMR and FMR Co., Inc. In addition, Mr. Lynch 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 (42) | |
| Year of Election or Appointment: 2008 President and Treasurer of Fidelity's Equity and High Income Funds. Mr. Robins also serves as President and Treasurer (2010-present) and Assistant Treasurer (2009-present) of other Fidelity funds and is an employee of Fidelity Investments (2004-present). Previously, Mr. Robins served as Deputy Treasurer of the Fidelity funds (2005-2008) and Treasurer and Chief Financial Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2006-2008). |
Brian B. Hogan (47) | |
| Year of Election or Appointment: 2009 Vice President of Equity and High Income Funds. Mr. Hogan also serves as President of FMR's Equity Division (2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager. |
Thomas C. Hense (47) | |
| Year of Election or Appointment: 2008 or 2010 Vice President of Fidelity's High Income (2008), Small Cap (2008), and Value (2010) Funds. Previously, Mr. Hense served as a portfolio manager for Fidelity's Institutional Money Management Group (Pyramis) (2003-2008). |
Scott C. Goebel (43) | |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of the Fidelity funds. Mr. Goebel also serves as Secretary of Fidelity Investments Money Management, Inc. (FIMM) (2010-present) and Fidelity Research and Analysis Company (FRAC) (2010-present); Secretary and CLO of The North Carolina Capital Management Trust: Cash and Term Portfolios (2008-present); General Counsel, Secretary, and Senior Vice President of FMR (2008-present) and FMR Co., Inc. (2008-present); employed by FMR LLC or an affiliate (2001-present); Chief Legal Officer of Fidelity Management & Research (Hong Kong) Limited (2008-present) and Assistant Secretary of Fidelity Management & Research (Japan) Inc. (2008-present), and Fidelity Management & Research (U.K.) Inc. (2008-present). Previously, Mr. Goebel served as Assistant Secretary of FIMM (2008-2010), FRAC (2008-2010), and the Funds (2007-2008) and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007). |
William C. Coffey (42) | |
| Year of Election or Appointment: 2009 Assistant Secretary of Fidelity's Equity and High Income Funds. Mr. Coffey also serves as Senior Vice President and Deputy General Counsel of FMR LLC (2010-present), and is an employee of Fidelity Investments. Previously, Mr. Coffey served as Vice President and Associate General Counsel of FMR LLC (2005-2009). |
Holly C. Laurent (57) | |
| Year of Election or Appointment: 2008 Anti-Money Laundering (AML) Officer of the Fidelity funds. Ms. Laurent also serves as AML Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2008-present) and 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), and Senior Vice President, Deputy General Counsel and Group Head for FMR LLC (2005-2006). |
Christine Reynolds (53) | |
| 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. Ms. Reynolds served as Chief Operating Officer of FPCMS (2007-2008). Previously, Ms. Reynolds served as President, Treasurer, and Anti-Money Laundering officer of the Fidelity funds (2004-2007). |
Kenneth A. Rathgeber (64) | |
| 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), Pyramis Global Advisors, LLC (2005-present), and Strategic Advisers, Inc. (2005-present). |
Jeffrey S. Christian (50) | |
| Year of Election or Appointment: 2009 Deputy Treasurer of the Fidelity funds. Mr. Christian is an employee of Fidelity Investments. Previously, Mr. Christian served as Chief Financial Officer (2008-2009) of certain Fidelity funds and Senior Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (2004-2009). |
Joseph F. Zambello (54) | |
| Year of Election or Appointment: 2011 Deputy Treasurer of the Fidelity funds. Mr. Zambello is an employee of Fidelity Investments. Previously, Mr. Zambello served as Vice President of FMR's Program Management Group (2009-2011) and Vice President of the Transfer Agent Oversight Group (2005-2009). |
Adrien E. Deberghes (44) | |
| Year of Election or Appointment: 2008 Deputy Treasurer of Fidelity's Equity and High Income Funds. Mr. Deberghes also serves as Vice President and Assistant Treasurer of Fidelity Rutland Square Trust II and Fidelity Commonwealth Trust II (2011-present), Assistant Treasurer of other Fidelity funds (2010-present), and 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). |
Stephanie J. Dorsey (42) | |
| Year of Election or Appointment: 2010 Assistant Treasurer of Fidelity's Equity and High Income Funds. Ms. Dorsey also serves as Deputy Treasurer of other Fidelity funds (2008-present) and is an employee of Fidelity Investments (2008-present). Previously, Ms. Dorsey served as Treasurer (2004-2008) of the JPMorgan Mutual Funds and Vice President (2004-2008) of JPMorgan Chase Bank. |
John R. Hebble (53) | |
| Year of Election or Appointment: 2009 Assistant Treasurer of Fidelity's Equity and High Income Funds. Mr. Hebble also serves as President (2011-present), Treasurer, and Chief Financial Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2008-present), President and Treasurer of other Fidelity funds (2008-present) and is an employee of Fidelity Investments. |
Gary W. Ryan (53) | |
| 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). |
Jonathan Davis (43) | |
| Year of Election or Appointment: 2010 Assistant Treasurer of the Fidelity funds. Mr. Davis is also Assistant Treasurer of Fidelity Rutland Square Trust II and Fidelity Commonwealth Trust II. Mr. Davis is an employee of Fidelity Investments. Previously, Mr. Davis served as Vice President and Associate General Counsel of FMR LLC (2003-2010). |
Annual Report
Distributions (Unaudited)
Institutional Class designates 100% of dividends distributed during the fiscal year as qualifying for the dividends-received deduction for corporate shareholders.
Institutional Class designates 100% of dividends distributed during the fiscal year as amounts which may be taken into account as a dividend for purposes of the maximum rate under section 1(h)(11) of the Internal Revenue Code.
The fund will notify shareholders in January 2012 of amounts for use in preparing 2011 income tax returns.
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees
Fidelity Stock Selector Small Cap Fund
Each year, 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 relevant to the renewal of the Advisory Contracts throughout the year.
The Board meets regularly 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. The Board has established various 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. The Board, acting directly and through its Committees, requests and receives information concerning the annual consideration of the renewal of the fund's Advisory Contracts. The Board also meets as needed to consider matters specifically related to the Board's annual consideration of the renewal of Advisory Contracts. Members of the Board may also meet with trustees of other Fidelity funds through ad hoc joint committees to discuss certain matters relevant to the Fidelity funds.
At its July 2011 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 expense ratio; (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.
In considering whether to renew the Advisory Contracts for the fund, the Board 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 is in the best interests of the fund and its shareholders and that the compensation payable under the Advisory Contracts is fair and reasonable. The Board's decision to renew the Advisory Contracts was not based on any single factor, 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 Fidelity's competitors, and that the fund's shareholders, who have 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
Board Approval of Investment Advisory Contracts and
Management Fees - continued
Nature, Extent, and Quality of Services Provided. The Board considered the 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 to act in the best interests of the fund.
Resources Dedicated to Investment Management and Support Services. The Board and the Fund Oversight and Research Committees reviewed the general qualifications and capabilities of the Investment Advisers' investment staff, including its size, education, experience, and resources, as well as the Investment Advisers' approach to recruiting, training, managing, and compensating investment personnel. The Board also noted that FMR has devoted increased resources to non-U.S. offices. The Board noted that Fidelity's analysts have extensive resources, tools and capabilities which allow them to conduct sophisticated quantitative and fundamental analysis, as well as credit analysis of issuers, counterparties and enhancers. The Board also believes that Fidelity's investment professionals have sufficient access to global information and data so as to provide competitive investment results over time, and that those professionals also have access to sophisticated tools which permit them to assess portfolio construction and risk and performance attribution characteristics continuously, as well as to transmit new information and research conclusions rapidly around the world. Additionally, in their deliberations, the Board considered the Investment Advisers' trading capabilities and resources which are an integral part of the investment management process.
Shareholder and Administrative Services. The Board considered (i) the nature, extent, quality, and cost of advisory, administrative, 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 adviser's 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 noted that the growth of fund assets over time 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 telephone representatives and over the Internet, investor education materials and asset allocation tools, and the expanded availability of Fidelity Investor Centers, with 35 new branches opening since 2010.
Annual Report
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 a large variety of mutual fund investor services. The Board noted that Fidelity had taken, or had made recommendations that resulted in the Fidelity funds taking, a number of actions over the previous year that benefited particular funds, including (i) continuing to dedicate additional resources to investment research and support of the senior management team that oversees asset management; (ii) rationalizing product lines through the mergers of six funds into other funds; (iii) continuing to migrate the Freedom Funds to dedicated lower cost underlying funds; (iv) obtaining shareholder approval to broaden the investment strategies for Fidelity Consumer Finance Portfolio, Fidelity Emerging Asia Fund, and Fidelity Environment and Alternative Energy Portfolio; (v) contractually agreeing to reduce the management fees and impose other expense limitations on Spartan 500 Index Fund and U.S. Bond Index Fund in connection with launching new institutional classes of these funds; (vi) changing the name, primary and supplemental benchmarks, and investment policies of Fidelity Global Strategies Fund to support the fund's flexible investment mandate and global orientation; and (vii) reducing the transfer agency account fee rates on certain accounts.
Investment Performance. The Board considered whether the fund has operated in accordance with its investment objective, as well as its record of compliance with its investment restrictions. It also reviewed the fund's absolute investment performance for each class, as well as the fund's relative investment performance for each class measured over multiple periods against (i) a broad-based securities market index, and (ii) a peer group of mutual funds deemed appropriate by Fidelity and reviewed by the Board. The following charts considered by the Board show, over the one-, three-, and five-year periods ended December 31, 2010, as available, the cumulative total returns of Institutional Class (Class I) and the retail class of the fund, 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 returns of Institutional Class (Class I) and the retail class show the performance of the highest performing class (based on three-year performance) and the lowest performing class (based on five-year performance), respectively. 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 numbers noted below each chart correspond to the percentile box and represent the percentage of funds in the peer group whose performance was equal to or lower than that of the class indicated.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
Fidelity Stock Selector Small Cap Fund
The Board reviewed the fund's relative investment performance against its peer group and noted that the performance of the retail class of the fund (the class with the longest performance record) was in the first quartile for the one-year period, the fourth quartile for the three-year period, and the third quartile for the five-year period. The Board also noted that the investment performance of the fund was lower than its benchmark for the three- and five-year periods, although the one-year total return of the retail class compared favorably to its benchmark. The Board considered that the variations in performance among the fund's classes reflect the variations in class expenses, which result in lower performance for higher expense classes. The Board also reviewed the fund's performance since inception as well as performance in the current year.
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 noted 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.
Based on its review, the Board concluded that the nature, extent, and quality of services provided to the fund under the Advisory Contracts should benefit the fund's shareholders.
Annual Report
Competitiveness of Management Fee and Total Expense Ratio. The Board considered the fund's management fee and total expense ratio 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 ratio comparisons by broadening the competitive group used for comparison and by reducing the number of universes to which various Fidelity funds are compared.
Management Fee. 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 6% means that 94% 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
Board Approval of Investment Advisory Contracts and
Management Fees - continued
Fidelity Stock Selector Small Cap Fund
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 2010. The Board also noted the effect of the fund's negative 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.
Based on its review, the Board concluded that the fund's management fee is fair and reasonable in light of the services that the fund receives and the other factors considered.
Total Expense Ratio. In its review of each class's total expense ratio, the Board considered the fund's management fee as well as other fund or class expenses, as applicable, such as transfer agent fees, pricing and bookkeeping fees, fund-paid 12b-1 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 the current and historical total expense ratios of each class of the fund compared to competitive fund median expenses. Each class of 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.
The Board noted that the total expense ratio of each class ranked below its competitive median for 2010. The Board considered that various factors, including 12b-1 fees, positive or negative performance adjustments, and relatively higher other expenses in the case of small fund size, can affect total expense ratios.
Annual Report
Fees Charged to Other Fidelity Clients. The Board also considered Fidelity fee structures and other information with respect to clients of FMR and its affiliates, such as other mutual funds advised or subadvised by FMR or its affiliates, pension plan clients, and other institutional clients. In March 2010, the Board created an ad hoc joint committee with the board of other Fidelity funds (the Committee) to review and compare Fidelity's institutional investment advisory business with its business of providing services to the Fidelity funds, including the differences in services provided, fees charged, and costs incurred, as well as competition in their respective marketplaces.
Based on its review of total expense ratios and fees charged to other Fidelity clients, the Board concluded that the total expense ratio of each class of the fund was reasonable in light of the services that the fund and its shareholders receive and the other factors considered, including the findings of the Committee.
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 books and records of Fidelity on which Fidelity's audited financial statements are based. 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 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 concluded that while other allocation methods may also be reasonable, Fidelity's profitability methodologies are reasonable in all material respects.
The Board also reviewed Fidelity's non-fund businesses and 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.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
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 was satisfied that the profitability was not excessive in the circumstances.
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 also noted that in 2009, it and the board of other Fidelity funds created an ad hoc committee (the Economies of Scale Committee) to analyze whether FMR attains economies of scale in respect of the management and servicing of the Fidelity funds, whether the Fidelity funds have appropriately benefited from such economies of scale, and whether there is potential for realization of any further economies of scale.
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 calculates the group fee rates based on a tiered asset "breakpoint" schedule that varies based on asset class. The Board considered that the group fee is designed to deliver the benefits of economies of scale to fund shareholders when total Fidelity 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 benefit from lower management fees as assets under FMR's management increase at the fund complex level, regardless of whether Fidelity achieves any such economies of scale.
The Board concluded, taking into account the analysis of the Economies of Scale Committee, that any potential economies of scale are being appropriately shared between fund shareholders and Fidelity.
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, actions to be taken by FMR to improve certain funds' overall performance, and Fidelity's long-term strategies for certain funds; (ii) portfolio manager changes that have occurred during the past year and length of portfolio manager tenure for different categories of funds over time; (iii) Fidelity's compensation structure for portfolio managers and other key personnel and strategies for attracting and retaining non-investment personnel; (iv) the amount of the investment that each portfolio manager has made in the Fidelity fund(s) that he or she manages; (v) historical trends in Fidelity's realization of fall-out benefits; (vi) Fidelity's group fee structures and the rationale for the individual fee rates of certain funds; (vii) fund profitability methodology and the impact of certain factors on fund profitability results; (viii) trends regarding industry use of performance fee structures and Fidelity's compliance practices with respect to performance adjustment calculations; (ix) the fee structures in place for certain other Fidelity clients; and (x) explanations regarding the relative total expense ratios of certain funds and classes, total expense competitive trends, and actions that might be taken by FMR to reduce total expense ratios for certain funds and classes.
Annual Report
Based on its evaluation of all of the conclusions noted above, and after considering all factors it believed relevant, 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
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Fidelity Management & Research
(U.K.) Inc.
Fidelity Management & Research
(Hong Kong) Limited
Fidelity Management & Research
(Japan) Inc.
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Service Agents
Fidelity Investments Institutional
Operations Company, Inc.
Boston, MA
Fidelity Service Company, Inc.
Boston, MA
Custodian
Brown Brothers Harriman & Co.
Boston, MA
ASCSI-UANN-1211 1.843142.104
Fidelity®
Value
Fund
Annual Report
October 31, 2011
Contents
Chairman's Message | The Chairman's message to shareholders. | |
Performance | How the fund has done over time. | |
Management's Discussion of Fund Performance | The Portfolio Manager's review of fund performance and strategy. | |
Shareholder Expense Example | An example of shareholder expenses. | |
Investment Changes | A summary of major shifts in the fund's investments over the past six months. | |
Investments | A complete list of the fund's investments with their market values. | |
Financial Statements | Statements of assets and liabilities, operations, and changes in net assets, as well as financial highlights. | |
Notes | Notes to the financial statements. | |
Report of Independent Registered Public Accounting Firm |
| |
Trustees and Officers |
| |
Distributions |
| |
Board Approval of Investment Advisory Contracts and Management Fees |
|
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-800-544-8544 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company.
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, http://www.advisor.fidelity.com, or http://www.401k.com, as applicable.
NOT FDIC INSURED • MAY LOSE VALUE • NO BANK GUARANTEE
Neither the fund nor Fidelity Distributors Corporation is a bank.
Annual Report
Chairman's Message
(photo_of_James_C_Curvey)
Dear Shareholder:
Global equity markets began the fourth quarter on a strong note, sharply reversing course in October amid strong corporate earnings, better-than-expected economic news and the promise of a resolution to the sovereign debt crisis in Europe. The mini rally followed a third quarter marked by a significant downturn in July and August, which heightened investor anxiety and set off a wave of volatility that hampered most major asset classes through the end of September. Financial markets are difficult to predict, of course, but you can help put the odds in your favor by following these time-tested investment principles.
One of the basic tenets is to invest according to your time horizon. For long-term investors, riding out the markets' inevitable ups and downs has proven much more effective than making decisions based on short-term developments. If your goal is approaching, you can also benefit from patience and restraint, rather than attempting to time the market. No matter your time horizon, missing only a few of the markets' best days can significantly diminish returns. Patience also affords the benefits of compounding - earning interest on additional income or reinvested dividends and capital gains. While staying the course doesn't eliminate risk, it can considerably lessen the negative impact of short-term downturns.
Asset allocation is another principle to manage risk. As you spread your portfolio among the asset classes, be sure to consider your time horizon, risk tolerance and investment objectives. Younger investors may be better served by emphasizing equities, which historically have been the best-performing asset class over time. Investors who are nearing a specific goal, such as retirement or sending a child to college, may choose to favor bonds and other investments that have tended to be more stable. Studies indicate that asset allocation is the single most important determinant of a portfolio's long-term success. After deciding on a suitable allocation strategy, make sure your portfolio is adequately diversified, with exposure to stocks of small-, mid- and large-cap companies in a range of sectors, for example. And today, more than ever, geographic diversification should be taken into account.
Lastly, investing a certain amount of money on a regular basis - a principle known as dollar-cost averaging - can help lower the average cost of your purchases, while also giving you the discipline to avoid selling weak performers just prior to an upswing, or chasing a hot performer just before a correction.
We invite you to learn more by visiting us on the Internet, dropping by one of our Investor Centers or calling us by phone. It is our privilege to provide the resources you need to choose investments that are right for you.
Sincerely,
(The acting chairman's signature appears here.)
James C. Curvey
Acting Chairman
Annual Report
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' distributions from 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, 2011 | Past 1 | Past 5 | Past 10 |
Fidelity® Value Fund | 2.05% | -1.18% | 6.97% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Fidelity® Value Fund, a class of the fund, on October 31, 2001. The chart shows how the value of your investment would have changed, and also shows how the Russell Midcap® Value Index performed over the same period.
Annual Report
Management's Discussion of Fund Performance
Market Recap: U.S. stocks overcame a sharp summer drop to post a solid gain for the 12 months ending October 31, 2011. Bullishness pervaded the market during the first half of the period, only to be squelched by extreme volatility in the summer, as debate over the U.S. debt ceiling, Standard & Poor's subsequent downgrade of the country's long-term sovereign credit rating and deepening debt woes in Europe led to the worst calendar-quarter finish for the S&P 500® Index in almost three years. However, news of a possible solution to the eurozone debt crisis, along with better-than-expected U.S. economic data and strong corporate earnings, helped fuel an October rally that pushed the broad-based index up roughly 11% - its highest monthly return since December 1991. With that boost, the S&P 500® finished the year up 8.09%, while the blue-chip Dow Jones Industrial AverageSM added 10.39% and the technology-heavy Nasdaq Composite® Index gained 8.10%. Among sectors within the S&P 500®, only financials (-6%) posted a decline for the year, while energy (+19%) and utilities (+15%) fared best. Small and mid-sized stocks also rose, with the Russell 2000® and Russell Midcap® indexes adding 6.71% and 7.85%, respectively. The lengthy financial crisis in Europe continued to hamper foreign developed-markets equities, with the MSCI® EAFE® (Europe, Australasia, Far East) Index falling 3.97%.
Comments from Matthew Friedman, Co-Portfolio Manager of Fidelity® Value Fund: For the year, the fund's Retail Class shares returned 2.05%, compared with 5.83% for the Russell Midcap® Value Index. The fund's relative underperformance was primarily due to weak stock selection in the consumer discretionary and utilities sectors. Within consumer discretionary, the most disappointing results came from picks in the retailing industry, mainly a non-index stake in office supply retailer OfficeMax. We missed by not owning diversified apparel manufacturer VF and broadcasting giant CBS, both index components that outperformed. In utilities, a holding in California electricity generator PG&E was costly. Conversely, information technology stocks provided a relative boost, including a stake in National Semiconductor and an underweighting in Xerox. Our choices in energy helped, despite the sector's overall drag on performance, with oil services firm Baker Hughes emerging as the fund's top individual contributor. Elsewhere, my picks in banks were beneficial. Some of the stocks I've mentioned were not in the index, and some were sold from the fund by period end.
Note to shareholders: Katherine Buck became Co-Portfolio Manager of the fund - responsible for the consumer discretionary and consumer staples subportfolios - on January 3, 2011.
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 Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (May 1, 2011 to October 31, 2011).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.
Annual Report
| Annualized | Beginning | Ending | Expenses Paid |
Value | .62% |
|
|
|
Actual |
| $ 1,000.00 | $ 850.50 | $ 2.89 |
Hypothetical A |
| $ 1,000.00 | $ 1,022.08 | $ 3.16 |
Class K | .47% |
|
|
|
Actual |
| $ 1,000.00 | $ 851.20 | $ 2.19 |
Hypothetical A |
| $ 1,000.00 | $ 1,022.84 | $ 2.40 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period).
Annual Report
Investment Changes (Unaudited)
Top Ten Stocks as of October 31, 2011 | ||
| % of fund's | % of fund's net assets |
Sempra Energy | 2.5 | 1.6 |
Edison International | 1.9 | 0.0 |
U.S. Bancorp | 1.8 | 1.6 |
Berkshire Hathaway, Inc. Class B | 1.6 | 1.1 |
Wells Fargo & Co. | 1.5 | 1.2 |
National Grid PLC | 1.4 | 1.1 |
The AES Corp. | 1.1 | 1.1 |
State Street Corp. | 1.0 | 0.9 |
Republic Services, Inc. | 1.0 | 0.8 |
MetLife, Inc. | 1.0 | 1.1 |
| 14.8 | |
Top Five Market Sectors as of October 31, 2011 | ||
| % of fund's | % of fund's net assets |
Financials | 28.8 | 25.9 |
Utilities | 11.9 | 9.4 |
Industrials | 11.9 | 11.9 |
Consumer Discretionary | 10.2 | 11.3 |
Information Technology | 9.6 | 8.0 |
Asset Allocation (% of fund's net assets) | |||||||
As of October 31, 2011* | As of April 30, 2011** | ||||||
![]() | Stocks and Equity |
| ![]() | Stocks and Equity |
| ||
![]() | Short-Term |
| ![]() | Short-Term |
| ||
* Foreign investments | 16.6% |
| ** Foreign investments | 16.3% |
|
Annual Report
Investments October 31, 2011
Showing Percentage of Net Assets
Common Stocks - 97.2% | |||
Shares | Value (000s) | ||
CONSUMER DISCRETIONARY - 10.1% | |||
Auto Components - 0.7% | |||
Autoliv, Inc. | 697,791 | $ 40,311 | |
Tenneco, Inc. (a) | 208,717 | 6,829 | |
| 47,140 | ||
Diversified Consumer Services - 0.3% | |||
Anhanguera Educacional Participacoes SA | 426,500 | 6,271 | |
DeVry, Inc. | 302,131 | 11,384 | |
| 17,655 | ||
Hotels, Restaurants & Leisure - 1.8% | |||
Accor SA | 309,355 | 10,170 | |
Brinker International, Inc. | 589,991 | 13,511 | |
Carnival Corp. unit | 345,000 | 12,147 | |
Penn National Gaming, Inc. (a) | 633,935 | 22,822 | |
Sonic Corp. (a) | 2,445,158 | 18,119 | |
Wyndham Worldwide Corp. | 1,227,032 | 41,314 | |
| 118,083 | ||
Household Durables - 1.2% | |||
Ethan Allen Interiors, Inc. (d) | 314,839 | 6,234 | |
Garmin Ltd. (d) | 441,700 | 15,190 | |
Jarden Corp. | 1,824,372 | 58,435 | |
| 79,859 | ||
Leisure Equipment & Products - 0.8% | |||
Brunswick Corp. | 1,857,707 | 32,807 | |
Eastman Kodak Co. (a)(d) | 3,558,838 | 3,950 | |
Hasbro, Inc. | 401,541 | 15,283 | |
| 52,040 | ||
Media - 1.1% | |||
Aegis Group PLC | 8,493,021 | 18,739 | |
Interpublic Group of Companies, Inc. | 1,111,500 | 10,537 | |
Kabel Deutschland Holding AG (a) | 138,700 | 7,920 | |
The Walt Disney Co. | 169,900 | 5,926 | |
Valassis Communications, Inc. (a)(d) | 677,286 | 13,227 | |
Virgin Media, Inc. | 689,300 | 16,805 | |
| 73,154 | ||
Multiline Retail - 0.6% | |||
Macy's, Inc. | 1,045,100 | 31,907 | |
PPR SA | 62,400 | 9,750 | |
| 41,657 | ||
Common Stocks - continued | |||
Shares | Value (000s) | ||
CONSUMER DISCRETIONARY - continued | |||
Specialty Retail - 3.3% | |||
Advance Auto Parts, Inc. | 175,789 | $ 11,439 | |
Ascena Retail Group, Inc. (a) | 457,900 | 13,233 | |
Best Buy Co., Inc. | 1,807,402 | 47,408 | |
Chico's FAS, Inc. | 2,526,963 | 31,233 | |
Collective Brands, Inc. (a)(d) | 1,997,129 | 29,178 | |
Lowe's Companies, Inc. | 1,624,965 | 34,157 | |
OfficeMax, Inc. (a) | 2,577,404 | 13,196 | |
Sally Beauty Holdings, Inc. (a) | 464,338 | 8,911 | |
Signet Jewelers Ltd. | 288,500 | 12,437 | |
Staples, Inc. | 1,310,215 | 19,601 | |
| 220,793 | ||
Textiles, Apparel & Luxury Goods - 0.3% | |||
adidas AG | 119,800 | 8,482 | |
Warnaco Group, Inc. (a) | 267,664 | 13,142 | |
| 21,624 | ||
TOTAL CONSUMER DISCRETIONARY | 672,005 | ||
CONSUMER STAPLES - 5.9% | |||
Beverages - 1.9% | |||
Coca-Cola Enterprises, Inc. | 623,606 | 16,725 | |
Dr Pepper Snapple Group, Inc. | 825,952 | 30,932 | |
Heckmann Corp. (a) | 1,337,900 | 8,014 | |
Molson Coors Brewing Co. Class B | 510,910 | 21,632 | |
PepsiCo, Inc. | 610,283 | 38,417 | |
Treasury Wine Estates Ltd. | 1,898,291 | 7,413 | |
| 123,133 | ||
Food & Staples Retailing - 1.1% | |||
Casey's General Stores, Inc. | 211,876 | 10,498 | |
CVS Caremark Corp. | 1,007,720 | 36,580 | |
Kroger Co. | 572,064 | 13,260 | |
Walgreen Co. | 311,814 | 10,352 | |
| 70,690 | ||
Food Products - 2.2% | |||
Archer Daniels Midland Co. | 410,344 | 11,875 | |
Bunge Ltd. | 458,399 | 28,315 | |
ConAgra Foods, Inc. | 816,960 | 20,694 | |
Danone | 232,200 | 16,163 | |
Dean Foods Co. (a) | 1,885,062 | 18,323 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
CONSUMER STAPLES - continued | |||
Food Products - continued | |||
Sara Lee Corp. | 1,379,303 | $ 24,552 | |
The J.M. Smucker Co. | 364,331 | 28,061 | |
| 147,983 | ||
Household Products - 0.1% | |||
Spectrum Brands Holdings, Inc. (a) | 391,431 | 9,935 | |
Tobacco - 0.6% | |||
Lorillard, Inc. | 351,791 | 38,929 | |
TOTAL CONSUMER STAPLES | 390,670 | ||
ENERGY - 6.7% | |||
Energy Equipment & Services - 2.3% | |||
Baker Hughes, Inc. | 752,226 | 43,622 | |
BW Offshore Ltd. | 4,490,125 | 8,428 | |
Exterran Holdings, Inc. (a)(d) | 1,202,801 | 11,427 | |
Halliburton Co. | 597,400 | 22,319 | |
Patterson-UTI Energy, Inc. | 1,033,000 | 20,991 | |
Rowan Companies, Inc. (a) | 781,312 | 26,947 | |
Transocean Ltd. (United States) | 343,414 | 19,626 | |
| 153,360 | ||
Oil, Gas & Consumable Fuels - 4.4% | |||
Anadarko Petroleum Corp. | 231,300 | 18,157 | |
Apache Corp. | 241,000 | 24,011 | |
Atlas Pipeline Partners, LP | 504,700 | 17,564 | |
Cimarex Energy Co. | 263,600 | 16,870 | |
Cloud Peak Energy, Inc. (a) | 1,131,314 | 25,964 | |
El Paso Corp. | 646,000 | 16,156 | |
HollyFrontier Corp. | 1,010,116 | 31,000 | |
Nexen, Inc. | 1,329,500 | 22,580 | |
Noble Energy, Inc. | 203,100 | 18,145 | |
Talisman Energy, Inc. | 1,260,850 | 17,885 | |
Whiting Petroleum Corp. (a) | 776,646 | 36,153 | |
Williams Companies, Inc. | 974,430 | 29,340 | |
World Fuel Services Corp. (d) | 462,440 | 18,428 | |
| 292,253 | ||
TOTAL ENERGY | 445,613 | ||
Common Stocks - continued | |||
Shares | Value (000s) | ||
FINANCIALS - 28.8% | |||
Capital Markets - 3.4% | |||
Ashmore Group PLC | 1,468,000 | $ 8,145 | |
Bank of New York Mellon Corp. | 682,204 | 14,517 | |
Goldman Sachs Group, Inc. | 177,632 | 19,460 | |
Invesco Ltd. | 2,094,350 | 42,034 | |
Knight Capital Group, Inc. Class A (a) | 1,434,723 | 17,920 | |
Morgan Stanley | 1,999,147 | 35,265 | |
State Street Corp. | 1,698,240 | 68,592 | |
TD Ameritrade Holding Corp. | 882,608 | 14,810 | |
The Blackstone Group LP | 543,825 | 8,000 | |
| 228,743 | ||
Commercial Banks - 6.2% | |||
Bank of Ireland | 140,863,526 | 20,274 | |
CIT Group, Inc. (a) | 1,659,903 | 57,848 | |
Comerica, Inc. | 926,796 | 23,680 | |
Heritage Financial Corp., Washington | 133,801 | 1,687 | |
Itau Unibanco Banco Multiplo SA sponsored ADR | 2,919,600 | 55,823 | |
PNC Financial Services Group, Inc. | 443,055 | 23,796 | |
Regions Financial Corp. | 693,027 | 2,724 | |
TCF Financial Corp. | 227,037 | 2,416 | |
U.S. Bancorp | 4,779,266 | 122,301 | |
Wells Fargo & Co. | 3,897,041 | 100,972 | |
| 411,521 | ||
Consumer Finance - 1.0% | |||
Capital One Financial Corp. | 392,800 | 17,935 | |
SLM Corp. | 3,608,500 | 49,328 | |
| 67,263 | ||
Diversified Financial Services - 1.2% | |||
CME Group, Inc. | 80,700 | 22,238 | |
JPMorgan Chase & Co. | 1,683,321 | 58,512 | |
| 80,750 | ||
Insurance - 9.6% | |||
AEGON NV (a) | 3,338,631 | 15,924 | |
AFLAC, Inc. | 1,315,176 | 59,301 | |
Aon Corp. | 178,023 | 8,299 | |
Assurant, Inc. | 670,703 | 25,849 | |
Berkshire Hathaway, Inc. Class B (a) | 1,393,034 | 108,462 | |
Brasil Insurance Participacoes e Administracao SA | 673,600 | 6,472 | |
Everest Re Group Ltd. | 214,449 | 19,283 | |
Fairfax Financial Holdings Ltd. (sub. vtg.) | 125,250 | 52,353 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
FINANCIALS - continued | |||
Insurance - continued | |||
First American Financial Corp. | 1,307,832 | $ 15,694 | |
Hartford Financial Services Group, Inc. | 1,091,400 | 21,009 | |
Hilltop Holdings, Inc. (a) | 354,619 | 2,794 | |
Jardine Lloyd Thompson Group PLC | 1,938,629 | 22,463 | |
MetLife, Inc. | 1,893,664 | 66,581 | |
National Financial Partners Corp. (a) | 1,151,983 | 15,748 | |
Progressive Corp. | 454,800 | 8,646 | |
Prudential Financial, Inc. | 637,222 | 34,537 | |
Reinsurance Group of America, Inc. | 516,218 | 26,962 | |
StanCorp Financial Group, Inc. | 696,775 | 23,649 | |
Torchmark Corp. | 795,401 | 32,556 | |
Unum Group | 1,257,404 | 29,977 | |
Validus Holdings Ltd. | 555,010 | 15,185 | |
XL Group PLC Class A | 1,312,170 | 28,527 | |
| 640,271 | ||
Real Estate Investment Trusts - 4.3% | |||
American Capital Agency Corp. | 473,400 | 13,023 | |
Douglas Emmett, Inc. | 1,300,517 | 25,360 | |
Post Properties, Inc. | 573,492 | 23,559 | |
Prologis, Inc. | 1,229,353 | 36,586 | |
Public Storage | 239,877 | 30,956 | |
SL Green Realty Corp. | 748,228 | 51,620 | |
The Macerich Co. | 40,772 | 2,029 | |
Ventas, Inc. | 822,492 | 45,739 | |
Vornado Realty Trust | 88,691 | 7,345 | |
Weyerhaeuser Co. | 2,608,621 | 46,903 | |
| 283,120 | ||
Real Estate Management & Development - 2.7% | |||
BR Malls Participacoes SA | 1,564,800 | 16,904 | |
Brookfield Asset Management, Inc. Class A | 181,200 | 5,242 | |
CBRE Group, Inc. (a) | 741,553 | 13,185 | |
Forest City Enterprises, Inc. Class A (a)(d) | 3,562,201 | 48,731 | |
Forestar Group, Inc. (a) | 1,718,303 | 22,338 | |
Kennedy-Wilson Holdings, Inc. (d) | 4,497,450 | 55,858 | |
Wharf Holdings Ltd. | 2,693,000 | 14,325 | |
| 176,583 | ||
Common Stocks - continued | |||
Shares | Value (000s) | ||
FINANCIALS - continued | |||
Thrifts & Mortgage Finance - 0.4% | |||
People's United Financial, Inc. | 2,037,335 | $ 25,976 | |
TOTAL FINANCIALS | 1,914,227 | ||
HEALTH CARE - 6.2% | |||
Biotechnology - 0.4% | |||
Amgen, Inc. | 418,200 | 23,950 | |
Health Care Equipment & Supplies - 1.5% | |||
Alere, Inc. (a) | 188,800 | 4,920 | |
Boston Scientific Corp. (a) | 1,910,761 | 11,254 | |
CareFusion Corp. (a) | 549,600 | 14,070 | |
Covidien PLC | 308,700 | 14,521 | |
DENTSPLY International, Inc. | 178,600 | 6,601 | |
Hologic, Inc. (a) | 1,409,404 | 22,720 | |
The Cooper Companies, Inc. | 34,724 | 2,406 | |
Zimmer Holdings, Inc. (a) | 483,167 | 25,429 | |
| 101,921 | ||
Health Care Providers & Services - 3.5% | |||
Brookdale Senior Living, Inc. (a) | 269,933 | 4,475 | |
Cardinal Health, Inc. | 165,500 | 7,327 | |
CIGNA Corp. | 792,300 | 35,131 | |
Community Health Systems, Inc. (a) | 1,081,200 | 18,899 | |
DaVita, Inc. (a) | 201,470 | 14,103 | |
Emeritus Corp. (a) | 1,262,374 | 22,357 | |
HCA Holdings, Inc. | 271,000 | 6,355 | |
Health Net, Inc. (a) | 351,100 | 9,757 | |
HealthSouth Corp. (a) | 741,800 | 13,100 | |
Humana, Inc. | 56,326 | 4,782 | |
Lincare Holdings, Inc. | 545,665 | 12,850 | |
McKesson Corp. | 208,604 | 17,012 | |
Medco Health Solutions, Inc. (a) | 193,700 | 10,626 | |
MEDNAX, Inc. (a) | 249,560 | 16,421 | |
Omnicare, Inc. | 295,800 | 8,821 | |
Quest Diagnostics, Inc. | 395,301 | 22,058 | |
Universal American Spin Corp. (a) | 397,062 | 4,566 | |
Universal Health Services, Inc. Class B | 117,651 | 4,703 | |
| 233,343 | ||
Life Sciences Tools & Services - 0.1% | |||
PerkinElmer, Inc. | 497,600 | 10,285 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
HEALTH CARE - continued | |||
Pharmaceuticals - 0.7% | |||
AVANIR Pharmaceuticals Class A (a)(d) | 3,310,358 | $ 9,898 | |
Cadence Pharmaceuticals, Inc. (a)(d) | 1,310,067 | 7,638 | |
Forest Laboratories, Inc. (a) | 191,100 | 5,981 | |
Impax Laboratories, Inc. (a) | 380,293 | 7,191 | |
Valeant Pharmaceuticals International, Inc. (Canada) | 103,000 | 4,067 | |
XenoPort, Inc. (a) | 1,464,400 | 8,933 | |
| 43,708 | ||
TOTAL HEALTH CARE | 413,207 | ||
INDUSTRIALS - 11.9% | |||
Aerospace & Defense - 2.1% | |||
AerCap Holdings NV (a) | 1,165,068 | 13,818 | |
DigitalGlobe, Inc. (a) | 1,061,398 | 21,653 | |
Esterline Technologies Corp. (a) | 201,142 | 11,244 | |
Lockheed Martin Corp. | 275,985 | 20,947 | |
Meggitt PLC | 4,309,715 | 26,656 | |
Raytheon Co. | 303,511 | 13,412 | |
Textron, Inc. | 1,001,145 | 19,442 | |
Ultra Electronics Holdings PLC | 396,300 | 10,146 | |
| 137,318 | ||
Airlines - 0.2% | |||
Pinnacle Airlines Corp. (a)(e) | 1,925,465 | 4,948 | |
SkyWest, Inc. | 786,160 | 10,542 | |
| 15,490 | ||
Building Products - 1.5% | |||
A.O. Smith Corp. | 193,213 | 7,180 | |
Armstrong World Industries, Inc. | 369,298 | 15,728 | |
Lennox International, Inc. | 500,805 | 16,121 | |
Owens Corning (a) | 2,206,612 | 62,624 | |
| 101,653 | ||
Commercial Services & Supplies - 1.9% | |||
Interface, Inc. Class A | 616,518 | 8,039 | |
Intrum Justitia AB | 828,729 | 13,633 | |
Quad/Graphics, Inc. | 443,796 | 8,752 | |
Republic Services, Inc. | 2,394,268 | 68,141 | |
Sykes Enterprises, Inc. (a) | 828,360 | 13,196 | |
The Geo Group, Inc. (a) | 728,935 | 13,288 | |
| 125,049 | ||
Common Stocks - continued | |||
Shares | Value (000s) | ||
INDUSTRIALS - continued | |||
Construction & Engineering - 0.9% | |||
Foster Wheeler AG (a) | 1,180,874 | $ 25,176 | |
Jacobs Engineering Group, Inc. (a) | 902,700 | 35,025 | |
| 60,201 | ||
Electrical Equipment - 0.9% | |||
Alstom SA | 256,011 | 9,601 | |
GrafTech International Ltd. (a) | 1,227,217 | 19,280 | |
Prysmian SpA | 2,176,503 | 32,982 | |
| 61,863 | ||
Industrial Conglomerates - 0.5% | |||
Carlisle Companies, Inc. | 262,800 | 10,964 | |
Koninklijke Philips Electronics NV | 552,100 | 11,495 | |
Orkla ASA (A Shares) (d) | 975,200 | 8,495 | |
| 30,954 | ||
Machinery - 2.0% | |||
Fiat Industrial SpA (a) | 879,894 | 7,678 | |
Ingersoll-Rand Co. Ltd. | 1,171,485 | 36,468 | |
Navistar International Corp. (a) | 436,806 | 18,376 | |
Snap-On, Inc. | 179,618 | 9,640 | |
Stanley Black & Decker, Inc. | 722,526 | 46,133 | |
Vallourec SA | 187,289 | 11,399 | |
| 129,694 | ||
Marine - 0.0% | |||
Ultrapetrol (Bahamas) Ltd. (a) | 1,082,677 | 3,216 | |
Professional Services - 0.6% | |||
FTI Consulting, Inc. (a) | 198,700 | 7,831 | |
Towers Watson & Co. | 491,750 | 32,308 | |
| 40,139 | ||
Road & Rail - 1.3% | |||
Con-way, Inc. | 489,097 | 14,414 | |
Contrans Group, Inc. Class A | 1,855,400 | 13,215 | |
Quality Distribution, Inc. (a)(e) | 1,424,708 | 16,056 | |
Union Pacific Corp. | 320,247 | 31,887 | |
Vitran Corp., Inc. (a)(e) | 1,632,988 | 7,920 | |
| 83,492 | ||
TOTAL INDUSTRIALS | 789,069 | ||
Common Stocks - continued | |||
Shares | Value (000s) | ||
INFORMATION TECHNOLOGY - 9.6% | |||
Communications Equipment - 1.6% | |||
Cisco Systems, Inc. | 2,029,454 | $ 37,606 | |
Comverse Technology, Inc. (a) | 2,645,860 | 18,230 | |
Juniper Networks, Inc. (a) | 622,995 | 15,245 | |
Motorola Solutions, Inc. | 395,640 | 18,559 | |
ViaSat, Inc. (a) | 357,401 | 15,222 | |
| 104,862 | ||
Computers & Peripherals - 0.8% | |||
Gemalto NV | 145,762 | 6,651 | |
Hewlett-Packard Co. | 1,595,952 | 42,468 | |
Western Digital Corp. (a) | 245,600 | 6,543 | |
| 55,662 | ||
Electronic Equipment & Components - 2.3% | |||
Arrow Electronics, Inc. (a) | 641,120 | 23,112 | |
Avnet, Inc. (a) | 743,143 | 22,525 | |
Corning, Inc. | 1,365,236 | 19,509 | |
Flextronics International Ltd. (a) | 3,266,555 | 21,445 | |
Ingram Micro, Inc. Class A (a) | 740,402 | 13,238 | |
Jabil Circuit, Inc. | 1,715,784 | 35,277 | |
TE Connectivity Ltd. | 537,461 | 19,107 | |
| 154,213 | ||
Internet Software & Services - 0.4% | |||
eBay, Inc. (a) | 168,500 | 5,363 | |
Google, Inc. Class A (a) | 30,200 | 17,898 | |
| 23,261 | ||
IT Services - 1.3% | |||
Amdocs Ltd. (a) | 478,741 | 14,372 | |
Atos Origin SA | 249,448 | 12,089 | |
Fiserv, Inc. (a) | 465,703 | 27,416 | |
Global Payments, Inc. | 102,200 | 4,693 | |
MasterCard, Inc. Class A | 84,900 | 29,481 | |
| 88,051 | ||
Semiconductors & Semiconductor Equipment - 2.8% | |||
Advanced Micro Devices, Inc. (a)(d) | 1,531,836 | 8,931 | |
Analog Devices, Inc. | 309,500 | 11,318 | |
ASML Holding NV | 364,225 | 15,272 | |
Freescale Semiconductor Holdings I Ltd. | 1,507,800 | 19,888 | |
Intersil Corp. Class A | 2,311,248 | 27,666 | |
Marvell Technology Group Ltd. (a) | 4,066,976 | 56,897 | |
Micron Technology, Inc. (a) | 3,505,672 | 19,597 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
INFORMATION TECHNOLOGY - continued | |||
Semiconductors & Semiconductor Equipment - continued | |||
NXP Semiconductors NV (a) | 517,000 | $ 9,290 | |
ON Semiconductor Corp. (a) | 1,293,494 | 9,792 | |
PMC-Sierra, Inc. (a) | 1,615,266 | 10,241 | |
| 188,892 | ||
Software - 0.4% | |||
BMC Software, Inc. (a) | 309,550 | 10,760 | |
CA, Inc. | 583,746 | 12,644 | |
| 23,404 | ||
TOTAL INFORMATION TECHNOLOGY | 638,345 | ||
MATERIALS - 4.9% | |||
Chemicals - 3.0% | |||
Air Products & Chemicals, Inc. | 312,967 | 26,959 | |
Ashland, Inc. | 873,855 | 46,279 | |
Celanese Corp. Class A | 334,686 | 14,576 | |
Cytec Industries, Inc. | 373,800 | 16,698 | |
Innophos Holdings, Inc. | 257,785 | 11,340 | |
Lanxess AG | 133,472 | 7,867 | |
LyondellBasell Industries NV Class A | 370,250 | 12,166 | |
Olin Corp. | 690,124 | 13,016 | |
Rockwood Holdings, Inc. (a) | 73,100 | 3,366 | |
Solutia, Inc. (a) | 1,575,720 | 25,605 | |
W.R. Grace & Co. (a) | 513,819 | 21,472 | |
| 199,344 | ||
Construction Materials - 0.2% | |||
Eagle Materials, Inc. | 155,172 | 3,193 | |
HeidelbergCement AG | 172,683 | 7,881 | |
| 11,074 | ||
Containers & Packaging - 0.8% | |||
Ball Corp. | 511,282 | 17,675 | |
Owens-Illinois, Inc. (a) | 564,827 | 11,342 | |
Rock-Tenn Co. Class A | 141,256 | 8,361 | |
Sonoco Products Co. | 478,778 | 15,029 | |
| 52,407 | ||
Metals & Mining - 0.9% | |||
Compass Minerals International, Inc. | 275,296 | 20,942 | |
IAMGOLD Corp. | 407,200 | 8,754 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
MATERIALS - continued | |||
Metals & Mining - continued | |||
Reliance Steel & Aluminum Co. | 468,593 | $ 20,707 | |
Walter Energy, Inc. | 157,671 | 11,928 | |
| 62,331 | ||
TOTAL MATERIALS | 325,156 | ||
TELECOMMUNICATION SERVICES - 1.2% | |||
Diversified Telecommunication Services - 0.2% | |||
CenturyLink, Inc. | 154,391 | 5,444 | |
Frontier Communications Corp. (d) | 800,600 | 5,012 | |
| 10,456 | ||
Wireless Telecommunication Services - 1.0% | |||
American Tower Corp. Class A (a) | 743,100 | 40,945 | |
NII Holdings, Inc. (a) | 886,032 | 20,848 | |
Sprint Nextel Corp. (a) | 1,860,744 | 4,782 | |
| 66,575 | ||
TOTAL TELECOMMUNICATION SERVICES | 77,031 | ||
UTILITIES - 11.9% | |||
Electric Utilities - 3.8% | |||
Edison International | 3,030,070 | 123,021 | |
El Paso Electric Co. | 617,503 | 19,779 | |
FirstEnergy Corp. | 609,400 | 27,399 | |
NextEra Energy, Inc. | 578,893 | 32,650 | |
Osterreichische Elektrizitatswirtschafts AG | 56,038 | 1,631 | |
PPL Corp. | 1,633,139 | 47,965 | |
| 252,445 | ||
Gas Utilities - 0.7% | |||
China Gas Holdings Ltd. | 40,448,000 | 11,608 | |
ONEOK, Inc. | 513,734 | 39,069 | |
| 50,677 | ||
Independent Power Producers & Energy Traders - 1.8% | |||
Calpine Corp. (a) | 3,153,320 | 47,836 | |
The AES Corp. (a) | 6,297,830 | 70,662 | |
| 118,498 | ||
Multi-Utilities - 5.6% | |||
CMS Energy Corp. | 1,973,546 | 41,089 | |
National Grid PLC | 9,392,724 | 93,400 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
UTILITIES - continued | |||
Multi-Utilities - continued | |||
NiSource, Inc. | 1,752,226 | $ 38,707 | |
OGE Energy Corp. | 576,151 | 29,810 | |
Sempra Energy | 3,147,017 | 169,085 | |
| 372,091 | ||
TOTAL UTILITIES | 793,711 | ||
TOTAL COMMON STOCKS (Cost $7,117,750) |
| ||
Nonconvertible Preferred Stocks - 0.1% | |||
|
|
|
|
CONSUMER DISCRETIONARY - 0.1% | |||
Automobiles - 0.1% | |||
Volkswagen AG (Cost $9,199) | 47,200 |
|
U.S. Treasury Obligations - 0.1% | ||||
| Principal Amount (000s) |
| ||
U.S. Treasury Bills, yield at date of purchase 0% to 0.02% 11/10/11 to 12/15/11 (f) | $ 4,600 |
|
Money Market Funds - 2.8% | |||
Shares | Value (000s) | ||
Fidelity Cash Central Fund, 0.12% (b) | 107,419,692 | $ 107,420 | |
Fidelity Securities Lending Cash Central Fund, 0.11% (b)(c) | 80,151,592 | 80,152 | |
TOTAL MONEY MARKET FUNDS (Cost $187,572) |
| ||
TOTAL INVESTMENT PORTFOLIO - 100.2% (Cost $7,319,121) | 6,659,489 | ||
NET OTHER ASSETS (LIABILITIES) - (0.2)% | (14,508) | ||
NET ASSETS - 100% | $ 6,644,981 |
Futures Contracts | |||||
Expiration Date | Underlying Face Amount at Value | Unrealized Appreciation/ | |||
Purchased | |||||
Equity Index Contracts | |||||
486 CME E-mini S&P Midcap 400 Index Contracts | Dec. 2011 | $ 43,064 | $ (1,091) |
|
The face value of futures purchased as a percentage of net assets is 0.6% |
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
(e) Affiliated company |
(f) 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 $4,250,000. |
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 |
Fidelity Cash Central Fund | $ 242 |
Fidelity Securities Lending Cash Central Fund | 2,003 |
Total | $ 2,245 |
Other Affiliated Issuers |
An affiliated company is a company in which the Fund has ownership of at least 5% of the voting securities. Fiscal year to date transactions with companies which are or were affiliates are as follows: |
Affiliates | Value, beginning of period | Purchases | Sales Proceeds | Dividend Income | Value, |
Ethan Allen Interiors, Inc. | $ 40,015 | $ 230 | $ 50,791 | $ 292 | $ - |
Forestar Group, Inc. | 33,849 | 6,207 | 13,149 | - | - |
OfficeMax, Inc. | 80,319 | 8,819 | 20,194 | - | - |
Pinnacle Airlines Corp. | 11,091 | - | - | - | 4,948 |
Quality Distribution, Inc. | 12,378 | 4,149 | 9,832 | - | 16,056 |
Vitran Corp., Inc. | 15,100 | 3,568 | 2,809 | - | 7,920 |
Total | $ 192,752 | $ 22,973 | $ 96,775 | $ 292 | $ 28,924 |
Other Information |
The following is a summary of the inputs used, as of October 31, 2011, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities: | ||||
Equities: | ||||
Consumer Discretionary | $ 680,288 | $ 680,288 | $ - | $ - |
Consumer Staples | 390,670 | 383,257 | 7,413 | - |
Energy | 445,613 | 445,613 | - | - |
Financials | 1,914,227 | 1,883,978 | 30,249 | - |
Health Care | 413,207 | 413,207 | - | - |
Industrials | 789,069 | 777,574 | 11,495 | - |
Information Technology | 638,345 | 638,345 | - | - |
Materials | 325,156 | 325,156 | - | - |
Telecommunication Services | 77,031 | 77,031 | - | - |
Utilities | 793,711 | 688,703 | 105,008 | - |
U.S. Government and Government Agency Obligations | 4,600 | - | 4,600 | - |
Money Market Funds | 187,572 | 187,572 | - | - |
Total Investments in Securities: | $ 6,659,489 | $ 6,500,724 | $ 158,765 | $ - |
Derivative Instruments: | ||||
Liabilities | ||||
Futures Contracts | $ (1,091) | $ (1,091) | $ - | $ - |
Value of Derivative Instruments |
The following table is a summary of the Fund's value of derivative instruments by risk exposure as of October 31, 2011. For additional information on derivative instruments, please refer to the Derivative Instruments section in the accompanying Notes to Financial Statements. |
Risk Exposure / | Value | |
| Asset | Liability |
Equity Risk | ||
Futures Contracts (a) | $ - | $ (1,091) |
Total Value of Derivatives | $ - | $ (1,091) |
(a) Reflects cumulative appreciation/(depreciation) on futures contracts as disclosed on the Schedule of Investments. Only the period end variation margin is separately disclosed on the Statement of Assets and Liabilities. |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 83.4% |
Bermuda | 3.1% |
United Kingdom | 2.7% |
Canada | 2.0% |
Ireland | 1.5% |
Brazil | 1.3% |
Netherlands | 1.3% |
Switzerland | 1.2% |
France | 1.0% |
Others (Individually Less Than 1%) | 2.5% |
| 100.0% |
Income Tax Information |
At October 31, 2011, the Fund had a capital loss carryforward of approximately $2,395,748,000 of which $2,067,432,000 and $328,316,000 will expire in fiscal 2017 and 2018, respectively. Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements
Statement of Assets and Liabilities
Amounts in thousands (except per-share amounts) | October 31, 2011 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $74,173) - See accompanying schedule: Unaffiliated issuers (cost $7,098,256) | $ 6,442,993 |
|
Fidelity Central Funds (cost $187,572) | 187,572 |
|
Other affiliated issuers (cost $33,293) | 28,924 |
|
Total Investments (cost $7,319,121) |
| $ 6,659,489 |
Foreign currency held at value (cost $76) | 76 | |
Receivable for investments sold | 117,098 | |
Receivable for fund shares sold | 3,478 | |
Dividends receivable | 5,249 | |
Distributions receivable from Fidelity Central Funds | 233 | |
Prepaid expenses | 26 | |
Other receivables | 457 | |
Total assets | 6,786,106 | |
|
|
|
Liabilities | ||
Payable to custodian bank | $ 2,683 | |
Payable for investments purchased | 40,701 | |
Payable for fund shares redeemed | 12,209 | |
Accrued management fee | 2,646 | |
Payable for daily variation margin on futures contracts | 1,217 | |
Other affiliated payables | 1,153 | |
Other payables and accrued expenses | 364 | |
Collateral on securities loaned, at value | 80,152 | |
Total liabilities | 141,125 | |
|
|
|
Net Assets | $ 6,644,981 | |
Net Assets consist of: |
| |
Paid in capital | $ 9,723,235 | |
Undistributed net investment income | 38,674 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (2,456,227) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (660,701) | |
Net Assets | $ 6,644,981 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Assets and Liabilities - continued
Amounts in thousands (except per-share amounts) | October 31, 2011 | |
|
|
|
Value: | $ 64.53 | |
|
|
|
Class K: | $ 64.66 |
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, 2011 | |
|
|
|
Investment Income |
|
|
Dividends (including $292 earned from other affiliated issuers) |
| $ 114,631 |
Interest |
| 6 |
Income from Fidelity Central Funds |
| 2,245 |
Total income |
| 116,882 |
|
|
|
Expenses | ||
Management fee | $ 44,912 | |
Performance adjustment | (15,244) | |
Transfer agent fees | 15,010 | |
Accounting and security lending fees | 1,230 | |
Custodian fees and expenses | 323 | |
Independent trustees' compensation | 45 | |
Registration fees | 96 | |
Audit | 86 | |
Legal | 41 | |
Interest | 2 | |
Miscellaneous | 93 | |
Total expenses before reductions | 46,594 | |
Expense reductions | (755) | 45,839 |
Net investment income (loss) | 71,043 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 898,226 | |
Other affiliated issuers | (50,528) |
|
Foreign currency transactions | (1,499) | |
Futures contracts | 5,892 | |
Total net realized gain (loss) |
| 852,091 |
Change in net unrealized appreciation (depreciation) on: Investment securities | (641,171) | |
Assets and liabilities in foreign currencies | 25 | |
Futures contracts | (1,538) | |
Total change in net unrealized appreciation (depreciation) |
| (642,684) |
Net gain (loss) | 209,407 | |
Net increase (decrease) in net assets resulting from operations | $ 280,450 |
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 | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 71,043 | $ 92,872 |
Net realized gain (loss) | 852,091 | (403,665) |
Change in net unrealized appreciation (depreciation) | (642,684) | 2,075,224 |
Net increase (decrease) in net assets resulting | 280,450 | 1,764,431 |
Distributions to shareholders from net investment income | (112,001) | (70,609) |
Distributions to shareholders from net realized gain | (2,508) | - |
Total distributions | (114,509) | (70,609) |
Share transactions - net increase (decrease) | (1,667,982) | (1,308,650) |
Total increase (decrease) in net assets | (1,502,041) | 385,172 |
|
|
|
Net Assets | ||
Beginning of period | 8,147,022 | 7,761,850 |
End of period (including undistributed net investment income of $38,674 and undistributed net investment income of $88,210, respectively) | $ 6,644,981 | $ 8,147,022 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Value
Years ended October 31, | 2011 | 2010 | 2009 | 2008 | 2007 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 64.09 | $ 51.82 | $ 43.78 | $ 89.60 | $ 83.82 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .59 | .66 E | .59 | .75 | .64 |
Net realized and unrealized gain (loss) | .75 | 12.09 | 7.69 | (38.92) | 11.79 |
Total from investment operations | 1.34 | 12.75 | 8.28 | (38.17) | 12.43 |
Distributions from net investment income | (.88) | (.48) | (.24) | (.56) | (.56) |
Distributions from net realized gain | (.02) | - | - | (7.09) | (6.09) |
Total distributions | (.90) | (.48) | (.24) | (7.65) | (6.65) |
Net asset value, end of period | $ 64.53 | $ 64.09 | $ 51.82 | $ 43.78 | $ 89.60 |
Total Return A | 2.05% | 24.74% | 19.12% | (46.34)% | 15.82% |
Ratios to Average Net Assets C,F |
|
|
|
|
|
Expenses before reductions | .60% | .64% | .64% | .76% | .70% |
Expenses net of fee waivers, if any | .60% | .64% | .64% | .76% | .70% |
Expenses net of all reductions | .59% | .63% | .64% | .76% | .69% |
Net investment income (loss) | .87% | 1.12% E | 1.41% | 1.10% | .74% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (in millions) | $ 6,006 | $ 7,276 | $ 7,278 | $ 11,066 | $ 22,558 |
Portfolio turnover rate D | 95% | 148% | 51% | 50% | 44% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
B Calculated based on average shares outstanding during the period.
C Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
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 $.23 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been .73%.
F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class K
Years ended October 31, | 2011 | 2010 | 2009 | 2008 H |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 64.24 | $ 51.96 | $ 43.82 | $ 72.61 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss) D | .70 | .76 G | .72 | .25 |
Net realized and unrealized gain (loss) | .74 | 12.12 | 7.67 | (29.04) |
Total from investment operations | 1.44 | 12.88 | 8.39 | (28.79) |
Distributions from net investment income | (1.00) | (.60) | (.25) | - |
Distributions from net realized gain | (.02) | - | - | - |
Total distributions | (1.02) | (.60) | (.25) | - |
Net asset value, end of period | $ 64.66 | $ 64.24 | $ 51.96 | $ 43.82 |
Total Return B,C | 2.20% | 24.96% | 19.39% | (39.65)% |
Ratios to Average Net Assets E,I |
|
|
|
|
Expenses before reductions | .44% | .47% | .40% | .60% A |
Expenses net of fee waivers, if any | .44% | .47% | .40% | .60% A |
Expenses net of all reductions | .44% | .46% | .40% | .60% A |
Net investment income (loss) | 1.02% | 1.29% G | 1.64% | 1.17% A |
Supplemental Data |
|
|
|
|
Net assets, end of period (in millions) | $ 639 | $ 872 | $ 484 | $ 177 |
Portfolio turnover rate F | 95% | 148% | 51% | 50% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
D Calculated based on average shares outstanding during the period.
E Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
G Investment income per share reflects a special dividend which amounted to $.23 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been .90%.
H For the period May 9, 2008 (commencement of sale of shares) to October 31, 2008.
I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended October 31, 2011
(Amounts in thousands except percentages)
1. Organization.
Fidelity Value Fund (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. The Fund offers Value and Class K shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent fees incurred. Certain expense reductions may also differ by class.
2. Investments in Fidelity Central Funds.
The Fund invests in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm are available on the SEC web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the
Annual Report
3. Significant Accounting Policies - continued
date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Fund uses independent pricing services approved by the Board of Trustees to value its investments. When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include market or security specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The value used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the Fund's own assumptions based on the best information available)
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of October 31, 2011, is included at the end of the Fund's Schedule of Investments. Valuation techniques used to value the Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when significant market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-traded funds (ETFs) and certain indexes as well as quoted prices for similar securities are used and are categorized as Level 2 in the hierarchy in these circumstances. Utilizing these techniques may result in transfers between Level 1 and Level 2. For restricted equity securities and private placements where
Annual Report
Notes to Financial Statements - continued
(Amounts in thousands except percentages)
3. Significant Accounting Policies - continued
Security Valuation - continued
observable inputs are limited, assumptions about market activity and risk are used and are categorized as Level 3 in the hierarchy.
Debt securities, including restricted securities, are valued based on evaluated prices received from independent pricing services or from dealers who make markets in such securities. For U.S. government and government agency obligations, pricing services utilize matrix pricing which considers yield or price of bonds of comparable quality, coupon, maturity and type as well as dealer supplied prices and are generally categorized as Level 2 in the hierarchy. When independent prices are unavailable or unreliable, debt securities may be valued utilizing pricing matrices which consider similar factors that would be used by independent pricing services. These are generally categorized as Level 2 in the hierarchy but may be Level 3 depending on the circumstances.
Futures contracts are valued at the settlement price established each day by the board of trade or exchange on which they are traded and are categorized as Level 1 in the hierarchy. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy.
Foreign Currency. The Fund may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on
Annual Report
3. Significant Accounting Policies - continued
Investment Transactions and Income - continued
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. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Deferred Trustee Compensation. Under a Deferred Compensation Plan (the Plan), independent Trustees may elect to defer receipt of a portion of their annual compensation. Deferred amounts are invested in a cross-section of Fidelity funds, are marked-to-market and remain in the Fund until distributed in accordance with the Plan. The investment of deferred amounts and the offsetting payable to the Trustees are included in the accompanying Statement of Assets and Liabilities.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company, including distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. As of October 31, 2011, the Fund did not have any unrecognized tax benefits in the financial statements. A fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are declared and recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP.
Annual Report
Notes to Financial Statements - continued
(Amounts in thousands except percentages)
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, passive foreign investment companies (PFIC), partnerships, market discount, deferred trustees compensation, capital loss carryforwards, and losses deferred due to wash sales.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $ 318,883 |
Gross unrealized depreciation | (1,042,838) |
Net unrealized appreciation (depreciation) on securities and other investments | $ (723,955) |
|
|
Tax Cost | $ 7,383,444 |
The tax-based components of distributable earnings as of period end were as follows:
Undistributed ordinary income | $ 41,704 |
Capital loss carryforward | $ (2,395,748) |
Net unrealized appreciation (depreciation) | $ (723,955) |
Under the recently enacted Regulated Investment Company Modernization Act of 2010 (the Act), the Fund will be permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to any losses incurred in pre-enactment taxable years, which generally expire after eight years from when they are incurred. Additionally, post-enactment capital losses that are carried forward will retain their character as either short-term or long-term capital losses rather than being considered all short-term as under previous law. The Fund's first fiscal year end subject to the Act will be October 31, 2012.
Annual Report
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The tax character of distributions paid was as follows:
| October 31, 2011 | October 31, 2010 |
Ordinary Income | $ 114,509 | $ 70,609 |
New Accounting Pronouncement. In May 2011, the Financial Accounting Standards Board issued Accounting Standard Update No. 2011-04, Fair Value Measurement (Topic 820) - Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. The update changes the wording used to describe the requirements in GAAP for measuring fair value and for disclosing information about fair value measurements. The update is effective during interim and annual periods beginning after December 15, 2011. Management is currently evaluating the impact of the update's adoption on the Fund's financial statement disclosures.
4. Derivative Instruments.
Risk Exposures and the Use of Derivative Instruments. The Fund used derivative instruments (derivatives), including futures contracts, in order to meet its investment objectives. The strategy is to use derivatives to increase returns and to manage exposure to certain risks as defined below. The success of any strategy involving derivatives depends on analysis of numerous economic factors, and if the strategies for investment do not work as intended, the Fund may not achieve its objectives.
The Fund's use of derivatives increased or decreased its exposure to the following risk:
Equity Risk | Equity risk relates to the fluctuations in the value of financial instruments as a result of changes in market prices (other than those arising from interest rate risk or foreign exchange risk), whether caused by factors specific to an individual investment, its issuer, or all factors affecting all instruments traded in a market or market segment. |
The Fund is also exposed to additional risks from investing in derivatives, such as liquidity risk and counterparty credit risk. Liquidity risk is the risk that the Fund will be unable to sell the derivative in the open market in a timely manner. Counterparty credit risk is the risk that the counterparty will not be able to fulfill its obligation to the Fund. The Fund's maximum risk of loss from counterparty credit risk is generally the aggregate unrealized appreciation and unpaid counterparty payments in excess of any collateral pledged by the counterparty to the Fund. Counterparty risk related to exchange-traded futures contracts is minimal because of the protection provided by the exchange on which they trade. Derivatives involve, to varying degrees, risk of loss in excess of the amounts recognized in the Statement of Assets and Liabilities.
Annual Report
Notes to Financial Statements - continued
(Amounts in thousands except percentages)
4. Derivative Instruments - continued
Futures Contracts. A futures contract is an agreement between two parties to buy or sell a specified underlying instrument for a fixed price at a specified future date. The Fund used futures contracts to manage its exposure to the stock market.
Upon entering into a futures contract, a fund is required to deposit either cash or securities (initial margin) with a clearing broker in an amount equal to a certain percentage of the face value of the contract. Futures contracts are marked-to-market daily and subsequent payments (variation margin) are made or received by a fund depending on the daily fluctuations in the value of the futures contracts and are recorded as unrealized appreciation or (depreciation). This receivable and/or payable is included in daily variation margin on futures contracts in the Statement of Assets and Liabilities. Realized gain or (loss) is recorded upon the expiration or closing of a futures contract.
The underlying face amount at value of 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 and is representative of activity for the period. Securities deposited to meet initial margin requirements are identified in the Schedule of Investments.
Certain risks arise upon entering into futures contracts, including the risk that an illiquid market limits the ability to close out a futures contract prior to settlement date.
During the period the Fund recognized net realized gain (loss) of $5,892 and a change in net unrealized appreciation (depreciation) of $(1,538) related to its investment in futures contracts. These amounts are included in the Statement of Operations.
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $7,505,261 and $9,184,607, respectively.
6. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and a group fee rate that averaged .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
Annual Report
6. Fees and Other Transactions with Affiliates - continued
Management Fee - continued
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 Value, as compared to an appropriate benchmark index. For the period, the total annual management fee rate, including the performance adjustment, was .37% of the Fund's average net assets.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of Value. FIIOC receives an asset-based fee of Class K's average net assets. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, transfer agent fees for each class were as follows:
| Amount | % of |
Value | $ 14,549 | .20 |
Class K | 461 | .05 |
| $ 15,010 |
|
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 $216 for the period.
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding.
Annual Report
Notes to Financial Statements - continued
(Amounts in thousands except percentages)
6. Fees and Other Transactions with Affiliates - continued
Interfund Lending Program - continued
The Fund's activity in this program during the period for which loans were outstanding was as follows:
Borrower or Lender | Average Daily | Weighted Average Interest Rate | Interest |
Borrower | $ 137,494 | .32% | $ 2 |
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR or an affiliate in a $4.0 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $25 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, there were no borrowings on this line of credit.
8. Security Lending.
The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. For equity securities, a lending agent is used and may loan securities to certain qualified borrowers, including Fidelity Capital Markets (FCM), a broker-dealer affiliated with the Fund. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. The value of securities loaned to FCM at period end was $299. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Total security lending income during the period amounted to $2,003, including $12 from securities loaned to FCM.
Annual Report
9. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of the Fund provided services to the Fund in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $755 for the period.
10. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended October 31, | 2011 | 2010 |
From net investment income |
|
|
Value | $ 98,394 | $ 65,010 |
Class K | 13,607 | 5,599 |
Total | $ 112,001 | $ 70,609 |
From net realized gain |
|
|
Value | $ 2,236 | $ - |
Class K | 272 | - |
Total | $ 2,508 | $ - |
11. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
Years ended October 31, | 2011 | 2010 | 2011 | 2010 |
Value |
|
|
|
|
Shares sold | 9,763 | 15,905 | $ 677,671 | $ 953,857 |
Reinvestment of distributions | 1,446 | 1,127 | 96,363 | 62,576 |
Shares redeemed | (31,637) | (43,950) | (2,177,863) | (2,561,113) |
Net increase (decrease) | (20,428) | (26,918) | $ (1,403,829) | $ (1,544,680) |
Class K |
|
|
|
|
Shares sold | 4,738 | 9,653 | $ 327,041 | $ 558,763 |
Reinvestment of distributions | 208 | 101 | 13,878 | 5,599 |
Shares redeemed | (8,636) | (5,506) | (605,072) | (328,332) |
Net increase (decrease) | (3,690) | 4,248 | $ (264,153) | $ 236,030 |
12. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
Annual Report
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Capital Trust and the Shareholders of Fidelity Value Fund:
In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Fidelity Value Fund (a fund of Fidelity Capital Trust) at October 31, 2011, 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 the financial highlights for each of the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fidelity Value Fund's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the 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 are free of material misstatement. An audit 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, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at October 31, 2011 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
December 12, 2011
Annual Report
Trustees and Officers
The Trustees, Members 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, oversee management of the risks associated with such activities and contractual arrangements, and review the fund's performance. Except for James C. Curvey, each of the Trustees oversees 226 funds advised by FMR or an affiliate. Mr. Curvey oversees 429 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 75th birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board Members 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.
Experience, Skills, Attributes, and Qualifications of the Fund's Trustees. The Governance and Nominating Committee has adopted a statement of policy that describes the experience, qualifications, attributes, and skills that are necessary and desirable for potential Independent Trustee candidates (Statement of Policy). The Board believes that each Trustee satisfied at the time he or she was initially elected or appointed a Trustee, and continues to satisfy, the standards contemplated by the Statement of Policy. The Governance and Nominating Committee also engages professional search firms to help identify potential Independent Trustee candidates who have the experience, qualifications, attributes, and skills consistent with the Statement of Policy. From time to time, additional criteria based on the composition and skills of the current Independent Trustees, as well as experience or skills that may be appropriate in light of future changes to board composition, business conditions, and regulatory or other developments, have also been considered by the professional search firms and the Governance and Nominating Committee. In addition, the Board takes into account the Trustees' commitment and participation in Board and committee meetings, as well as their leadership of standing and ad hoc committees throughout their tenure.
In determining that a particular Trustee was and continues to be qualified to serve as a Trustee, the Board has considered a variety of criteria, none of which, in isolation, was controlling. The Board believes that, collectively, the Trustees have balanced and diverse experience, qualifications, attributes, and skills, which allow the Board to operate effectively in governing the fund and protecting the interests of shareholders. Information about the specific experience, skills, attributes, and qualifications of each Trustee, which in each case led to the Board's conclusion that the Trustee should serve (or continue to serve) as a trustee of the fund, is provided below.
Annual Report
Trustees and Officers - continued
Board Structure and Oversight Function. James C. Curvey is an interested person (as defined in the 1940 Act) and currently serves as Acting Chairman. The Trustees have determined that an interested Chairman is appropriate and benefits shareholders because an interested Chairman has a personal and professional stake in the quality and continuity of services provided to the fund. Independent Trustees exercise their informed business judgment to appoint an individual of their choosing to serve as Chairman, regardless of whether the Trustee happens to be independent or a member of management. The Independent Trustees have determined that they can act independently and effectively without having an Independent Trustee serve as Chairman and that a key structural component for assuring that they are in a position to do so is for the Independent Trustees to constitute a substantial majority for the Board. The Independent Trustees also regularly meet in executive session. Ned C. Lautenbach serves as Chairman of the Independent Trustees and as such (i) acts as a liaison between the Independent Trustees and management with respect to matters important to the Independent Trustees and (ii) with management prepares agendas for Board meetings.
Fidelity funds are overseen by different Boards of Trustees. The fund's Board oversees Fidelity's equity and high income funds and another Board oversees Fidelity's investment-grade bond, money market, and asset allocation funds. The asset allocation funds may invest in Fidelity funds overseen by the fund's Board. The use of separate Boards, each with its own committee structure, allows the Trustees of each group of Fidelity funds to focus on the unique issues of the funds they oversee, including common research, investment, and operational issues. On occasion, the separate Boards establish joint committees to address issues of overlapping consequences for the Fidelity funds overseen by each Board.
The Trustees operate using a system of committees to facilitate the timely and efficient consideration of all matters of importance to the Trustees, the fund, and fund shareholders and to facilitate compliance with legal and regulatory requirements and oversight of the fund's activities and associated risks. The Board, acting through its committees, has charged FMR and its affiliates with (i) identifying events or circumstances the occurrence of which could have demonstrably adverse effects on the fund's business and/or reputation; (ii) implementing processes and controls to lessen the possibility that such events or circumstances occur or to mitigate the effects of such events or circumstances if they do occur; and (iii) creating and maintaining a system designed to evaluate continuously business and market conditions in order to facilitate the identification and implementation processes described in (i) and (ii) above. Because the day-to-day operations and activities of the fund are carried out by or through FMR, its affiliates and other service providers, the fund's exposure to risks is mitigated but not eliminated by the processes overseen by the Trustees. While each of the Board's committees has responsibility for overseeing different aspects of the fund's activities, oversight is exercised primarily through the Operations, Audit, and Compliance Committees. In addition, the Independent Trustees have worked with FMR to enhance the Board's oversight of investment and financial risks, legal and regulatory risks, technology risks, and operational risks, including the development of additional risk reporting to the Board. For example, a working group comprised of Independent Trustees and FMR has worked and continues to work to review the Fidelity funds' valuation-related activities, reporting and risk management. Appropriate personnel, including but not limited to the fund's Chief Compliance Officer (CCO), FMR's internal auditor, the independent accountants, the fund's Treasurer and portfolio management personnel, make periodic reports to the Board's committees, as appropriate, including an annual review of FMR's risk management program for the Fidelity funds. The responsibilities of each standing committee, including their oversight responsibilities, are described further under "Standing Committees of the Fund's Trustees."
Annual Report
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 Occupations and Other Relevant Experience+ | |
James C. Curvey (76) | |
| Year of Election or Appointment: 2007 Mr. Curvey is Trustee and Acting Chairman of the Board of Trustees of certain Trusts. Mr. Curvey also serves as Trustee (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of Fidelity Investments Money Management, Inc. (2009-present), Director of Fidelity Research & Analysis Co. (2009-present) and Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2007-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. Previously, Mr. Curvey was the Vice Chairman (2006-2007) and Director (2000-2007) of FMR Corp. |
Ronald P. O'Hanley (54) | |
| Year of Election or Appointment: 2011 Mr. O'Hanley is Director of FMR Co., Inc. (2010-present), Director of Fidelity Investments Money Management, Inc. (2010-present), Director of Fidelity Research & Analysis Company (2010-present), President of Fidelity Asset Management and Corporate Services and a member of Fidelity's Executive Committee (2010-present). Previously, Mr. O'Hanley served as President and Chief Executive Officer of BNY Mellon Asset Management (2007-2010). Mr. O'Hanley also served as Vice Chairman of Bank New York Mellon Corp. and a member of that firm's Executive Committee. Prior to the 2007 merger of The Bank of New York and Mellon Financial Corporation, he was Vice Chairman of Mellon Financial Corporation and President and Chief Executive Officer of Mellon Asset Management. He joined Mellon in February 1997. Mr. O'Hanley currently serves as Chairman of the Boston Public Library Foundation Board of Directors and sits on the Board of Directors of Beth Israel Deaconess Medical Center, the Board of Trustees of the Marine Biological Laboratory and the Advisory Board of the Maxwell School of Citizenship and Public Administration at Syracuse University. Mr. O'Hanley also chairs the Council on Asset Management for the Financial Services Roundtable and is a member of the Board of Directors of Institutional Investor's U.S. Institute. |
* 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.
+ The information above includes each Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Trustee's qualifications to serve as a Trustee, which led to the conclusion that each Trustee should serve as a Trustee for the fund.
Annual Report
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 Occupations and Other Relevant Experience+ | |
Dennis J. Dirks (63) | |
| 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). He also served as President, Chief Operating Officer, and Board member of The Depository Trust Company (DTC) and President and Board member of the National Securities Clearing Corporation (NSCC). In addition, Mr. Dirks served as Chief Executive Officer and Board member of the Government Securities Clearing Corporation, Chief Executive Officer and Board member of the Mortgage-Backed Securities Clearing Corporation, as a Trustee and a member of the Finance Committee of Manhattan College (2005-2008), and as a Trustee and a member of the Finance Committee of AHRC of Nassau County (2006-2008). Mr. Dirks is a member of the Independent Directors Council (IDC) Governing Council (2010-Present) and Board of Directors for The Brookville Center for Children's Services, Inc. (2009-present). |
Alan J. Lacy (58) | |
| Year of Election or Appointment: 2008 Mr. Lacy serves as Senior Adviser (2007-present) of Oak Hill Capital Partners, L.P. (private equity). 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 Dave & Buster's, Inc. (restaurant and entertainment complexes, 2010-present), The Hillman Companies, Inc. (hardware wholesalers, 2010-present), and Bristol-Myers Squibb Company (global pharmaceuticals, 2007-present). Mr. Lacy is a member of the Board of Trustees of The National Parks Conservation Association (2006-Present). Previously, Mr. Lacy served as Chairman of the Board of Trustees of the National Parks Conservation Association (2008-2011) and as a member of the Board of Directors for the Western Union Company (global money transfer, 2006-2011). |
Ned C. Lautenbach (67) | |
| Year of Election or Appointment: 2000 Mr. Lautenbach is Chairman of the Independent Trustees of the Equity and High Income Funds (2006-present). Mr. Lautenbach currently serves as the Lead Director of the Eaton Corporation Board of Directors (diversified industrial, 1997-present). Mr. Lautenbach is also a member of the Board of Directors of the Philharmonic Center for the Arts in Naples, Florida (1999-present); a member of the Board of Trustees of Fairfield University (2005-present); and a member of the Council on Foreign Relations (1994-present). Previously, Mr. Lautenbach was a Partner/Advisory Partner at Clayton, Dubilier & Rice, LLC (private equity investment, 1998-2010), as well as a Director of Sony Corporation (2006-2007). |
Joseph Mauriello (67) | |
| Year of Election or Appointment: 2008 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, 1965-2005). Mr. Mauriello currently serves as a member of the Board of Directors of XL Group plc. (global insurance and re-insurance, 2006-present) and of Arcadia Resources Inc. (health care services and products, 2007-present). Previously, Mr. Mauriello served as a Director of the Hamilton Funds of the Bank of New York (2006-2007). |
Robert W. Selander (61) | |
| Year of Election or Appointment: 2011 Previously, Mr. Selander served as a Member of the Advisory Board of Fidelity's Equity and High Income Funds (2011), Executive Vice Chairman (2010), Chief Executive Officer (2009-2010), and President and Chief Executive Officer (1997-2009) of Mastercard, Inc. |
Cornelia M. Small (67) | |
| Year of Election or Appointment: 2005 Ms. Small is a member of the Board of Directors of the Teagle Foundation (2009-present). Ms. Small is also a member of the Investment Committee, and Chair (2008-present) and a member of the Board of Trustees of Smith College. In addition, Ms. Small 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. In addition, Ms. Small 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 (72) | |
| Year of Election or Appointment: 2002 Mr. Stavropoulos is Vice Chairman of the Independent Trustees of the Equity and High Income Funds (2006-present). Mr. Stavropoulos serves as President and Founder of the Michigan Baseball Foundation, the Great Lakes Loons (2007-present). 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, CEO (1995-2000; 2002-2004), Chairman of the Executive Committee (2000-2006), and as a member of the Board of Directors (1990-2006). Currently, Mr. Stavropoulos is Chairman of Univar (global distributor of commodity and specialty chemicals, 2010-present), 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, 2005-present). Mr. Stavropoulos is a special advisor to Clayton, Dubilier & Rice, LLC (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 (62) | |
| 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), and Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (61) | |
| Year of Election or Appointment: 2008 Mr. Wiley also serves as a Director of Asia Pacific Exploration Consolidated (international oil and gas exploration and production, 2008-present). Mr. Wiley serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), and a Director of Bill Barrett Corporation (exploration and production, 2005-present). In addition, Mr. Wiley also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-2010), as a Senior Energy Advisor of Katzenbach Partners, LLC (consulting, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production, 2001-2005). |
Annual Report
Trustees and Officers - continued
+ The information above includes each Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Trustee's qualifications to serve as a Trustee, which led to the conclusion that each Trustee should serve as a Trustee for the fund.
Advisory Board Members and Executive Officers:
Correspondence intended for each executive officer, Edward C. Johnson 3d, and Peter S. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Edward C. Johnson 3d (81) | |
| Year of Election or Appointment: 2011 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Mr. Johnson serves as Chief Executive Officer, Chairman, and a Director of FMR LLC, and also serves as Chairman and Director of FIL Limited. Previously, Mr. Johnson served as a Trustee and Chairman of the Board of certain Fidelity Trusts, Chairman and a Director of FMR, Chairman and a Director of FMR Co., Inc., and President of FMR LLC (2006-2007). |
Peter S. Lynch (67) | |
| Year of Election or Appointment: 2003 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Mr. Lynch is Vice Chairman and a Director of FMR and FMR Co., Inc. In addition, Mr. Lynch 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 (42) | |
| Year of Election or Appointment: 2008 President and Treasurer of Fidelity's Equity and High Income Funds. Mr. Robins also serves as President and Treasurer (2010-present) and Assistant Treasurer (2009-present) of other Fidelity funds and is an employee of Fidelity Investments (2004-present). Previously, Mr. Robins served as Deputy Treasurer of the Fidelity funds (2005-2008) and Treasurer and Chief Financial Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2006-2008). |
Brian B. Hogan (47) | |
| Year of Election or Appointment: 2009 Vice President of Equity and High Income Funds. Mr. Hogan also serves as President of FMR's Equity Division (2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager. |
Thomas C. Hense (47) | |
| Year of Election or Appointment: 2008 or 2010 Vice President of Fidelity's High Income (2008), Small Cap (2008), and Value (2010) Funds. Previously, Mr. Hense served as a portfolio manager for Fidelity's Institutional Money Management Group (Pyramis) (2003-2008). |
Scott C. Goebel (43) | |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of the Fidelity funds. Mr. Goebel also serves as Secretary of Fidelity Investments Money Management, Inc. (FIMM) (2010-present) and Fidelity Research and Analysis Company (FRAC) (2010-present); Secretary and CLO of The North Carolina Capital Management Trust: Cash and Term Portfolios (2008-present); General Counsel, Secretary, and Senior Vice President of FMR (2008-present) and FMR Co., Inc. (2008-present); employed by FMR LLC or an affiliate (2001-present); Chief Legal Officer of Fidelity Management & Research (Hong Kong) Limited (2008-present) and Assistant Secretary of Fidelity Management & Research (Japan) Inc. (2008-present), and Fidelity Management & Research (U.K.) Inc. (2008-present). Previously, Mr. Goebel served as Assistant Secretary of FIMM (2008-2010), FRAC (2008-2010), and the Funds (2007-2008) and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007). |
William C. Coffey (42) | |
| Year of Election or Appointment: 2009 Assistant Secretary of Fidelity's Equity and High Income Funds. Mr. Coffey also serves as Senior Vice President and Deputy General Counsel of FMR LLC (2010-present), and is an employee of Fidelity Investments. Previously, Mr. Coffey served as Vice President and Associate General Counsel of FMR LLC (2005-2009). |
Holly C. Laurent (57) | |
| Year of Election or Appointment: 2008 Anti-Money Laundering (AML) Officer of the Fidelity funds. Ms. Laurent also serves as AML Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2008-present) and 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), and Senior Vice President, Deputy General Counsel and Group Head for FMR LLC (2005-2006). |
Christine Reynolds (53) | |
| 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. Ms. Reynolds served as Chief Operating Officer of FPCMS (2007-2008). Previously, Ms. Reynolds served as President, Treasurer, and Anti-Money Laundering officer of the Fidelity funds (2004-2007). |
Kenneth A. Rathgeber (64) | |
| 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), Pyramis Global Advisors, LLC (2005-present), and Strategic Advisers, Inc. (2005-present). |
Jeffrey S. Christian (50) | |
| Year of Election or Appointment: 2009 Deputy Treasurer of the Fidelity funds. Mr. Christian is an employee of Fidelity Investments. Previously, Mr. Christian served as Chief Financial Officer (2008-2009) of certain Fidelity funds and Senior Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (2004-2009). |
Joseph F. Zambello (54) | |
| Year of Election or Appointment: 2011 Deputy Treasurer of the Fidelity funds. Mr. Zambello is an employee of Fidelity Investments. Previously, Mr. Zambello served as Vice President of FMR's Program Management Group (2009-2011) and Vice President of the Transfer Agent Oversight Group (2005-2009). |
Adrien E. Deberghes (44) | |
| Year of Election or Appointment: 2008 Deputy Treasurer of Fidelity's Equity and High Income Funds. Mr. Deberghes also serves as Vice President and Assistant Treasurer of Fidelity Rutland Square Trust II and Fidelity Commonwealth Trust II (2011-present), Assistant Treasurer of other Fidelity funds (2010-present), and 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). |
Stephanie J. Dorsey (42) | |
| Year of Election or Appointment: 2010 Assistant Treasurer of Fidelity's Equity and High Income Funds. Ms. Dorsey also serves as Deputy Treasurer of other Fidelity funds (2008-present) and is an employee of Fidelity Investments (2008-present). Previously, Ms. Dorsey served as Treasurer (2004-2008) of the JPMorgan Mutual Funds and Vice President (2004-2008) of JPMorgan Chase Bank. |
John R. Hebble (53) | |
| Year of Election or Appointment: 2009 Assistant Treasurer of Fidelity's Equity and High Income Funds. Mr. Hebble also serves as President (2011-present), Treasurer, and Chief Financial Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2008-present), President and Treasurer of other Fidelity funds (2008-present) and is an employee of Fidelity Investments. |
Gary W. Ryan (53) | |
| 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). |
Jonathan Davis (43) | |
| Year of Election or Appointment: 2010 Assistant Treasurer of the Fidelity funds. Mr. Davis is also Assistant Treasurer of Fidelity Rutland Square Trust II and Fidelity Commonwealth Trust II. Mr. Davis is an employee of Fidelity Investments. Previously, Mr. Davis served as Vice President and Associate General Counsel of FMR LLC (2003-2010). |
Annual Report
Distributions (Unaudited)
The Board of Trustees of Fidelity Value Fund voted to pay on December 5, 2011, to shareholders of record at the opening of business on December 2, 2011, a distribution of $0.029 per share derived from capital gains realized from sales of portfolio securities and a dividend of $0.576 per share from net investment income.
Fidelity Value Fund designates 98% of the dividends distributed during the fiscal year as qualifying for the dividends-received deduction for corporate shareholders.
Fidelity Value Fund designates 100% of the dividends distributed in 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 2012 of amounts for use in preparing 2011 income tax returns.
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees
Fidelity Value Fund
Each year, 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 relevant to the renewal of the Advisory Contracts throughout the year.
The Board meets regularly 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. The Board has established various 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. The Board, acting directly and through its Committees, requests and receives information concerning the annual consideration of the renewal of the fund's Advisory Contracts. The Board also meets as needed to consider matters specifically related to the Board's annual consideration of the renewal of Advisory Contracts. Members of the Board may also meet with trustees of other Fidelity funds through ad hoc joint committees to discuss certain matters relevant to the Fidelity funds.
At its July 2011 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 expense ratio; (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.
In considering whether to renew the Advisory Contracts for the fund, the Board 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 is in the best interests of the fund and its shareholders and that the compensation payable under the Advisory Contracts is fair and reasonable. The Board's decision to renew the Advisory Contracts was not based on any single factor, 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 Fidelity's competitors, and that the fund's shareholders, who have 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
Board Approval of Investment Advisory Contracts and
Management Fees - continued
Nature, Extent, and Quality of Services Provided. The Board considered the 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 to act in the best interests of the fund.
Resources Dedicated to Investment Management and Support Services. The Board and the Fund Oversight and Research Committees reviewed the general qualifications and capabilities of the Investment Advisers' investment staff, including its size, education, experience, and resources, as well as the Investment Advisers' approach to recruiting, training, managing, and compensating investment personnel. The Board also noted that FMR has devoted increased resources to non-U.S. offices. The Board noted that Fidelity's analysts have extensive resources, tools and capabilities which allow them to conduct sophisticated quantitative and fundamental analysis, as well as credit analysis of issuers, counterparties and enhancers. The Board also believes that Fidelity's investment professionals have sufficient access to global information and data so as to provide competitive investment results over time, and that those professionals also have access to sophisticated tools which permit them to assess portfolio construction and risk and performance attribution characteristics continuously, as well as to transmit new information and research conclusions rapidly around the world. Additionally, in their deliberations, the Board considered the Investment Advisers' trading capabilities and resources which are an integral part of the investment management process.
Shareholder and Administrative Services. The Board considered (i) the nature, extent, quality, and cost of advisory, administrative, 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 adviser's 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 noted that the growth of fund assets over time 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 telephone representatives and over the Internet, investor education materials and asset allocation tools, and the expanded availability of Fidelity Investor Centers, with 35 new branches opening since 2010.
Annual Report
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 a large variety of mutual fund investor services. The Board noted that Fidelity had taken, or had made recommendations that resulted in the Fidelity funds taking, a number of actions over the previous year that benefited particular funds, including (i) continuing to dedicate additional resources to investment research and support of the senior management team that oversees asset management; (ii) rationalizing product lines through the mergers of six funds into other funds; (iii) continuing to migrate the Freedom Funds to dedicated lower cost underlying funds; (iv) obtaining shareholder approval to broaden the investment strategies for Fidelity Consumer Finance Portfolio, Fidelity Emerging Asia Fund, and Fidelity Environment and Alternative Energy Portfolio; (v) contractually agreeing to reduce the management fees and impose other expense limitations on Spartan 500 Index Fund and U.S. Bond Index Fund in connection with launching new institutional classes of these funds; (vi) changing the name, primary and supplemental benchmarks, and investment policies of Fidelity Global Strategies Fund to support the fund's flexible investment mandate and global orientation; and (vii) reducing the transfer agency account fee rates on certain accounts.
Investment Performance. The Board considered whether the fund has operated in accordance with its investment objective, as well as its record of compliance with its investment restrictions. It also reviewed the fund's absolute investment performance for each class, as well as the fund's relative investment performance for each class measured over multiple periods against (i) a broad-based securities market index, and (ii) a peer group of mutual funds deemed appropriate by Fidelity and reviewed by the Board. The following charts considered by the Board show, over the one-, three-, and five-year periods ended December 31, 2010, as available, the cumulative total returns of Class K and the retail class of the fund, 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 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 numbers noted below each chart correspond to the percentile box and represent the percentage of funds in the peer group whose performance was equal to or lower than that of the class indicated.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
Fidelity Value Fund
The Board reviewed the fund's relative investment performance against its peer group and noted that the performance of the retail class of the fund (the class with the longer performance record) was in the second quartile for the one-year period and the fourth quartile for the three- and five-year periods. The Board also noted that the investment performance of the fund was lower than its benchmark for all the periods shown. The Board considered that the variations in performance between the fund's classes reflect the variations in class expenses, which result in lower performance for the higher expense class. The Board also reviewed the fund's performance since inception as well as performance in the current year.
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 noted 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.
Based on its review, the Board concluded that the nature, extent, and quality of services provided to the fund under the Advisory Contracts should benefit the fund's shareholders.
Competitiveness of Management Fee and Total Expense Ratio. The Board considered the fund's management fee and total expense ratio 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 ratio comparisons by broadening the competitive group used for comparison and by reducing the number of universes to which various Fidelity funds are compared.
Annual Report
Management Fee. 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 10% means that 90% 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.
Fidelity Value Fund
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
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 2010. The Board also noted the effect of the fund's negative 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.
Based on its review, the Board concluded that the fund's management fee is fair and reasonable in light of the services that the fund receives and the other factors considered.
Total Expense Ratio. In its review of each class's total expense ratio, the Board considered the fund's management fee as well as other fund or class expenses, as applicable, 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 the current and historical total expense ratios of each class of the fund compared to competitive fund median expenses. Each class of 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.
The Board noted that the total expense ratio of each class ranked below its competitive median for 2010. The Board considered that various factors, including 12b-1 fees, positive or negative performance adjustments, and relatively higher other expenses in the case of small fund size, can affect total expense ratios.
Fees Charged to Other Fidelity Clients. The Board also considered Fidelity fee structures and other information with respect to clients of FMR and its affiliates, such as other mutual funds advised or subadvised by FMR or its affiliates, pension plan clients, and other institutional clients. In March 2010, the Board created an ad hoc joint committee with the board of other Fidelity funds (the Committee) to review and compare Fidelity's institutional investment advisory business with its business of providing services to the Fidelity funds, including the differences in services provided, fees charged, and costs incurred, as well as competition in their respective marketplaces.
Based on its review of total expense ratios and fees charged to other Fidelity clients, the Board concluded that the total expense ratio of each class of the fund was reasonable in light of the services that the fund and its shareholders receive and the other factors considered, including the findings of the Committee.
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.
Annual Report
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 books and records of Fidelity on which Fidelity's audited financial statements are based. 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 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 concluded that while other allocation methods may also be reasonable, Fidelity's profitability methodologies are reasonable in all material respects.
The Board also reviewed Fidelity's non-fund businesses and 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 was satisfied that the profitability was not excessive in the circumstances.
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 also noted that in 2009, it and the board of other Fidelity funds created an ad hoc committee (the Economies of Scale Committee) to analyze whether FMR attains economies of scale in respect of the management and servicing of the Fidelity funds, whether the Fidelity funds have appropriately benefited from such economies of scale, and whether there is potential for realization of any further economies of scale.
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 calculates the group fee rates based on a tiered asset "breakpoint" schedule that varies based on asset class. The Board considered that the group fee is designed to deliver the benefits of economies of scale to fund shareholders when total Fidelity 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 benefit from lower management fees as assets under FMR's management increase at the fund complex level, regardless of whether Fidelity achieves any such economies of scale.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
The Board concluded, taking into account the analysis of the Economies of Scale Committee, that any potential economies of scale are being appropriately shared between fund shareholders and Fidelity.
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, actions to be taken by FMR to improve certain funds' overall performance, and Fidelity's long-term strategies for certain funds; (ii) portfolio manager changes that have occurred during the past year and length of portfolio manager tenure for different categories of funds over time; (iii) Fidelity's compensation structure for portfolio managers and other key personnel and strategies for attracting and retaining non-investment personnel; (iv) the amount of the investment that each portfolio manager has made in the Fidelity fund(s) that he or she manages; (v) historical trends in Fidelity's realization of fall-out benefits; (vi) Fidelity's group fee structures and the rationale for the individual fee rates of certain funds; (vii) fund profitability methodology and the impact of certain factors on fund profitability results; (viii) trends regarding industry use of performance fee structures and Fidelity's compliance practices with respect to performance adjustment calculations; (ix) the fee structures in place for certain other Fidelity clients; and (x) explanations regarding the relative total expense ratios of certain funds and classes, total expense competitive trends, and actions that might be taken by FMR to reduce total expense ratios for certain funds and classes.
Based on its evaluation of all of the conclusions noted above, and after considering all factors it believed relevant, 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.
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.
Fidelity's Web Site
www.fidelity.com
* When you call the quotes line, please remember that a fund's yield and return will vary and, except for money market funds, share price will also vary. This means that you may have a gain or loss when you sell your shares. There is no assurance that money market funds will be able to maintain a stable $1 share price; an investment in a money market fund is not insured or guaranteed by the U.S. government. Total returns are historical and include changes in share price, reinvestment of dividends and capital gains distributions, and the effects of any sales charges.
Annual Report
To Visit Fidelity
For directions and hours,
please call 1-800-544-9797.
Arizona
7001 West Ray Road
Chandler, AZ
15445 N. Scottsdale Road
Scottsdale, AZ
17550 North 75th Avenue
Glendale, AZ
5330 E. Broadway Blvd
Tucson, AZ
California
815 East Birch Street
Brea, CA
1411 Chapin Avenue
Burlingame, CA
851 East Hamilton Avenue
Campbell, CA
601 Larkspur Landing Circle
Larkspur, CA
2000 Avenue of the Stars
Los Angeles, CA
27101 Puerta Real
Mission Viejo, CA
73575 El Paseo
Palm Desert, CA
251 University Avenue
Palo Alto, CA
123 South Lake Avenue
Pasadena, CA
16656 Bernardo Ctr. Drive
Rancho Bernardo, CA
1220 Roseville Parkway
Roseville, CA
1740 Arden Way
Sacramento, CA
7676 Hazard Center Drive
San Diego, CA
11943 El Camino Real
San Diego, CA
8 Montgomery Street
San Francisco, CA
3793 State Street
Santa Barbara, CA
1200 Wilshire Boulevard
Santa Monica, CA
398 West El Camino Real
Sunnyvale, CA
111 South Westlake Blvd
Thousand Oaks, CA
21701 Hawthorne Boulevard
Torrance, CA
2001 North Main Street
Walnut Creek, CA
6326 Canoga Avenue
Woodland Hills, CA
2211 Michelson Drive
Irvine, CA
Colorado
281 East Flatiron Circle
Broomfield, CO
1625 Broadway
Denver, CO
9185 Westview Road
Lone Tree, CO
Connecticut
48 West Putnam Avenue
Greenwich, CT
265 Church Street
New Haven, CT
300 Atlantic Street
Stamford, CT
29 South Main Street
West Hartford, CT
1261 Post Road
Fairfield, CT
Delaware
400 Delaware Avenue
Wilmington, DE
Florida
175 East Altamonte Drive
Altamonte Springs, FL
1400 Glades Road
Boca Raton, FL
121 Alhambra Plaza
Coral Gables, FL
2948 N. Federal Highway
Ft. Lauderdale, FL
4671 Town Center Parkway
Jacksonville, FL
8880 Tamiami Trail, North
Naples, FL
230 Royal Palm Way
Palm Beach, FL
3501 PGA Boulevard
Palm Beach Gardens, FL
3550 Tamiami Trail, South
Sarasota, FL
1502 N. Westshore Blvd.
Tampa, FL
2465 State Road 7
Wellington, FL
Georgia
3242 Peachtree Road
Atlanta, GA
1000 Abernathy Road
Atlanta, GA
Illinois
One North LaSalle Street
Chicago, IL
401 North Michigan Avenue
Chicago, IL
One Skokie Valley Road
Highland Park, IL
1415 West 22nd Street
Oak Brook, IL
15105 S LaGrange Road
Orland Park, IL
1572 East Golf Road
Schaumburg, IL
1823 Freedom Drive
Naperville, IL
Indiana
8480 Keystone Crossing
Indianapolis, IN
Kansas
5400 College Boulevard
Overland Park, KS
Maine
Three Canal Plaza
Portland, ME
Maryland
7315 Wisconsin Avenue
Bethesda, MD
610 York Road
Towson, MD
Massachusetts
801 Boylston Street
Boston, MA
155 Congress Street
Boston, MA
300 Granite Street
Braintree, MA
44 Mall Road
Burlington, MA
238 Main Street
Cambridge, MA
200 Endicott Street
Danvers, MA
Annual Report
405 Cochituate Road
Framingham, MA
551 Boston Turnpike
Shrewsbury, MA
Michigan
500 E. Eisenhower Pkwy.
Ann Arbor, MI
280 N. Old Woodward Ave.
Birmingham, MI
30200 Northwestern Hwy.
Farmington Hills, MI
43420 Grand River Avenue
Novi, MI
3480 28th Street
Grand Rapids, MI
2425 S. Linden Road STE E
Flint, MI
Minnesota
7740 France Avenue South
Edina, MN
8342 3rd Street North
Oakdale, MN
Missouri
1524 South Lindbergh Blvd.
St. Louis, MO
Nevada
2225 Village Walk Drive
Henderson, NV
New Jersey
501 Route 73 South
Marlton, NJ
150 Essex Street
Millburn, NJ
35 Morris Street
Morristown, NJ
396 Route 17, North
Paramus, NJ
3518 Route 1 North
Princeton, NJ
530 Broad Street
Shrewsbury, NJ
New Mexico
2261 Q Street NE
Albuquerque, NM
New York
1130 Franklin Avenue
Garden City, NY
37 West Jericho Turnpike
Huntington Station, NY
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Annual Report
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Annual Report
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VAL-UANN-1211 1.784783.108
Fidelity®
Value
Fund -
Class K
Annual Report
October 31, 2011
Contents
Chairman's Message | The Chairman's message to shareholders. | |
Performance | How the fund has done over time. | |
Management's Discussion of Fund Performance | The Portfolio Manager's review of fund performance and strategy. | |
Shareholder Expense Example | An example of shareholder expenses. | |
Investment Changes | A summary of major shifts in the fund's investments over the past six months. | |
Investments | A complete list of the fund's investments with their market values. | |
Financial Statements | Statements of assets and liabilities, operations, and changes in net assets, as well as financial highlights. | |
Notes | Notes to the financial statements. | |
Report of Independent Registered Public Accounting Firm |
| |
Trustees and Officers |
| |
Distributions |
| |
Board Approval of Investment Advisory Contracts and Management Fees |
|
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-800-835-5092 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company.
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, http://www.advisor.fidelity.com, or http://www.401k.com, as applicable.
NOT FDIC INSURED • MAY LOSE VALUE • NO BANK GUARANTEE
Neither the fund nor Fidelity Distributors Corporation is a bank.
Annual Report
Chairman's Message
(photo_of_James_C_Curvey)
Dear Shareholder:
Global equity markets began the fourth quarter on a strong note, sharply reversing course in October amid strong corporate earnings, better-than-expected economic news and the promise of a resolution to the sovereign debt crisis in Europe. The mini rally followed a third quarter marked by a significant downturn in July and August, which heightened investor anxiety and set off a wave of volatility that hampered most major asset classes through the end of September. Financial markets are difficult to predict, of course, but you can help put the odds in your favor by following these time-tested investment principles.
One of the basic tenets is to invest according to your time horizon. For long-term investors, riding out the markets' inevitable ups and downs has proven much more effective than making decisions based on short-term developments. If your goal is approaching, you can also benefit from patience and restraint, rather than attempting to time the market. No matter your time horizon, missing only a few of the markets' best days can significantly diminish returns. Patience also affords the benefits of compounding - earning interest on additional income or reinvested dividends and capital gains. While staying the course doesn't eliminate risk, it can considerably lessen the negative impact of short-term downturns.
Asset allocation is another principle to manage risk. As you spread your portfolio among the asset classes, be sure to consider your time horizon, risk tolerance and investment objectives. Younger investors may be better served by emphasizing equities, which historically have been the best-performing asset class over time. Investors who are nearing a specific goal, such as retirement or sending a child to college, may choose to favor bonds and other investments that have tended to be more stable. Studies indicate that asset allocation is the single most important determinant of a portfolio's long-term success. After deciding on a suitable allocation strategy, make sure your portfolio is adequately diversified, with exposure to stocks of small-, mid- and large-cap companies in a range of sectors, for example. And today, more than ever, geographic diversification should be taken into account.
Lastly, investing a certain amount of money on a regular basis - a principle known as dollar-cost averaging - can help lower the average cost of your purchases, while also giving you the discipline to avoid selling weak performers just prior to an upswing, or chasing a hot performer just before a correction.
We invite you to learn more by visiting us on the Internet, dropping by one of our Investor Centers or calling us by phone. It is our privilege to provide the resources you need to choose investments that are right for you.
Sincerely,
(The acting chairman's signature appears here.)
James C. Curvey
Acting Chairman
Annual Report
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' distributions from 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, 2011 | Past 1 | Past 5 | Past 10 |
Class K A | 2.20% | -1.05% | 7.04% |
A The initial offering of Class K shares took place on May 9, 2008. Returns prior to May 9, 2008 are those of Fidelity® Value Fund, the original class of the fund.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Fidelity® Value Fund - Class K on October 31, 2001. The chart shows how the value of your investment would have changed, and also shows how the Russell Midcap® Value Index 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
Management's Discussion of Fund Performance
Market Recap: U.S. stocks overcame a sharp summer drop to post a solid gain for the 12 months ending October 31, 2011. Bullishness pervaded the market during the first half of the period, only to be squelched by extreme volatility in the summer, as debate over the U.S. debt ceiling, Standard & Poor's subsequent downgrade of the country's long-term sovereign credit rating and deepening debt woes in Europe led to the worst calendar-quarter finish for the S&P 500® Index in almost three years. However, news of a possible solution to the eurozone debt crisis, along with better-than-expected U.S. economic data and strong corporate earnings, helped fuel an October rally that pushed the broad-based index up roughly 11% - its highest monthly return since December 1991. With that boost, the S&P 500® finished the year up 8.09%, while the blue-chip Dow Jones Industrial AverageSM added 10.39% and the technology-heavy Nasdaq Composite® Index gained 8.10%. Among sectors within the S&P 500®, only financials (-6%) posted a decline for the year, while energy (+19%) and utilities (+15%) fared best. Small and mid-sized stocks also rose, with the Russell 2000® and Russell Midcap® indexes adding 6.71% and 7.85%, respectively. The lengthy financial crisis in Europe continued to hamper foreign developed-markets equities, with the MSCI® EAFE® (Europe, Australasia, Far East) Index falling 3.97%.
Comments from Matthew Friedman, Co-Portfolio Manager of Fidelity® Value Fund: For the year, the fund's Class K shares returned 2.20%, compared with 5.83% for the Russell Midcap® Value Index. The fund's relative underperformance was primarily due to weak stock selection in the consumer discretionary and utilities sectors. Within consumer discretionary, the most disappointing results came from picks in the retailing industry, mainly a non-index stake in office supply retailer OfficeMax. We missed by not owning diversified apparel manufacturer VF and broadcasting giant CBS, both index components that outperformed. In utilities, a holding in California electricity generator PG&E was costly. Conversely, information technology stocks provided a relative boost, including a stake in National Semiconductor and an underweighting in Xerox. Our choices in energy helped, despite the sector's overall drag on performance, with oil services firm Baker Hughes emerging as the fund's top individual contributor. Elsewhere, my picks in banks were beneficial. Some of the stocks I've mentioned were not in the index, and some were sold from the fund by period end.
Note to shareholders: Katherine Buck became Co-Portfolio Manager of the fund - responsible for the consumer discretionary and consumer staples subportfolios - on January 3, 2011.
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 Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (May 1, 2011 to October 31, 2011).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.
Annual Report
| Annualized | Beginning | Ending | Expenses Paid |
Value | .62% |
|
|
|
Actual |
| $ 1,000.00 | $ 850.50 | $ 2.89 |
Hypothetical A |
| $ 1,000.00 | $ 1,022.08 | $ 3.16 |
Class K | .47% |
|
|
|
Actual |
| $ 1,000.00 | $ 851.20 | $ 2.19 |
Hypothetical A |
| $ 1,000.00 | $ 1,022.84 | $ 2.40 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period).
Annual Report
Investment Changes (Unaudited)
Top Ten Stocks as of October 31, 2011 | ||
| % of fund's | % of fund's net assets |
Sempra Energy | 2.5 | 1.6 |
Edison International | 1.9 | 0.0 |
U.S. Bancorp | 1.8 | 1.6 |
Berkshire Hathaway, Inc. Class B | 1.6 | 1.1 |
Wells Fargo & Co. | 1.5 | 1.2 |
National Grid PLC | 1.4 | 1.1 |
The AES Corp. | 1.1 | 1.1 |
State Street Corp. | 1.0 | 0.9 |
Republic Services, Inc. | 1.0 | 0.8 |
MetLife, Inc. | 1.0 | 1.1 |
| 14.8 | |
Top Five Market Sectors as of October 31, 2011 | ||
| % of fund's | % of fund's net assets |
Financials | 28.8 | 25.9 |
Utilities | 11.9 | 9.4 |
Industrials | 11.9 | 11.9 |
Consumer Discretionary | 10.2 | 11.3 |
Information Technology | 9.6 | 8.0 |
Asset Allocation (% of fund's net assets) | |||||||
As of October 31, 2011* | As of April 30, 2011** | ||||||
![]() | Stocks and Equity |
| ![]() | Stocks and Equity |
| ||
![]() | Short-Term |
| ![]() | Short-Term |
| ||
* Foreign investments | 16.6% |
| ** Foreign investments | 16.3% |
|
Annual Report
Investments October 31, 2011
Showing Percentage of Net Assets
Common Stocks - 97.2% | |||
Shares | Value (000s) | ||
CONSUMER DISCRETIONARY - 10.1% | |||
Auto Components - 0.7% | |||
Autoliv, Inc. | 697,791 | $ 40,311 | |
Tenneco, Inc. (a) | 208,717 | 6,829 | |
| 47,140 | ||
Diversified Consumer Services - 0.3% | |||
Anhanguera Educacional Participacoes SA | 426,500 | 6,271 | |
DeVry, Inc. | 302,131 | 11,384 | |
| 17,655 | ||
Hotels, Restaurants & Leisure - 1.8% | |||
Accor SA | 309,355 | 10,170 | |
Brinker International, Inc. | 589,991 | 13,511 | |
Carnival Corp. unit | 345,000 | 12,147 | |
Penn National Gaming, Inc. (a) | 633,935 | 22,822 | |
Sonic Corp. (a) | 2,445,158 | 18,119 | |
Wyndham Worldwide Corp. | 1,227,032 | 41,314 | |
| 118,083 | ||
Household Durables - 1.2% | |||
Ethan Allen Interiors, Inc. (d) | 314,839 | 6,234 | |
Garmin Ltd. (d) | 441,700 | 15,190 | |
Jarden Corp. | 1,824,372 | 58,435 | |
| 79,859 | ||
Leisure Equipment & Products - 0.8% | |||
Brunswick Corp. | 1,857,707 | 32,807 | |
Eastman Kodak Co. (a)(d) | 3,558,838 | 3,950 | |
Hasbro, Inc. | 401,541 | 15,283 | |
| 52,040 | ||
Media - 1.1% | |||
Aegis Group PLC | 8,493,021 | 18,739 | |
Interpublic Group of Companies, Inc. | 1,111,500 | 10,537 | |
Kabel Deutschland Holding AG (a) | 138,700 | 7,920 | |
The Walt Disney Co. | 169,900 | 5,926 | |
Valassis Communications, Inc. (a)(d) | 677,286 | 13,227 | |
Virgin Media, Inc. | 689,300 | 16,805 | |
| 73,154 | ||
Multiline Retail - 0.6% | |||
Macy's, Inc. | 1,045,100 | 31,907 | |
PPR SA | 62,400 | 9,750 | |
| 41,657 | ||
Common Stocks - continued | |||
Shares | Value (000s) | ||
CONSUMER DISCRETIONARY - continued | |||
Specialty Retail - 3.3% | |||
Advance Auto Parts, Inc. | 175,789 | $ 11,439 | |
Ascena Retail Group, Inc. (a) | 457,900 | 13,233 | |
Best Buy Co., Inc. | 1,807,402 | 47,408 | |
Chico's FAS, Inc. | 2,526,963 | 31,233 | |
Collective Brands, Inc. (a)(d) | 1,997,129 | 29,178 | |
Lowe's Companies, Inc. | 1,624,965 | 34,157 | |
OfficeMax, Inc. (a) | 2,577,404 | 13,196 | |
Sally Beauty Holdings, Inc. (a) | 464,338 | 8,911 | |
Signet Jewelers Ltd. | 288,500 | 12,437 | |
Staples, Inc. | 1,310,215 | 19,601 | |
| 220,793 | ||
Textiles, Apparel & Luxury Goods - 0.3% | |||
adidas AG | 119,800 | 8,482 | |
Warnaco Group, Inc. (a) | 267,664 | 13,142 | |
| 21,624 | ||
TOTAL CONSUMER DISCRETIONARY | 672,005 | ||
CONSUMER STAPLES - 5.9% | |||
Beverages - 1.9% | |||
Coca-Cola Enterprises, Inc. | 623,606 | 16,725 | |
Dr Pepper Snapple Group, Inc. | 825,952 | 30,932 | |
Heckmann Corp. (a) | 1,337,900 | 8,014 | |
Molson Coors Brewing Co. Class B | 510,910 | 21,632 | |
PepsiCo, Inc. | 610,283 | 38,417 | |
Treasury Wine Estates Ltd. | 1,898,291 | 7,413 | |
| 123,133 | ||
Food & Staples Retailing - 1.1% | |||
Casey's General Stores, Inc. | 211,876 | 10,498 | |
CVS Caremark Corp. | 1,007,720 | 36,580 | |
Kroger Co. | 572,064 | 13,260 | |
Walgreen Co. | 311,814 | 10,352 | |
| 70,690 | ||
Food Products - 2.2% | |||
Archer Daniels Midland Co. | 410,344 | 11,875 | |
Bunge Ltd. | 458,399 | 28,315 | |
ConAgra Foods, Inc. | 816,960 | 20,694 | |
Danone | 232,200 | 16,163 | |
Dean Foods Co. (a) | 1,885,062 | 18,323 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
CONSUMER STAPLES - continued | |||
Food Products - continued | |||
Sara Lee Corp. | 1,379,303 | $ 24,552 | |
The J.M. Smucker Co. | 364,331 | 28,061 | |
| 147,983 | ||
Household Products - 0.1% | |||
Spectrum Brands Holdings, Inc. (a) | 391,431 | 9,935 | |
Tobacco - 0.6% | |||
Lorillard, Inc. | 351,791 | 38,929 | |
TOTAL CONSUMER STAPLES | 390,670 | ||
ENERGY - 6.7% | |||
Energy Equipment & Services - 2.3% | |||
Baker Hughes, Inc. | 752,226 | 43,622 | |
BW Offshore Ltd. | 4,490,125 | 8,428 | |
Exterran Holdings, Inc. (a)(d) | 1,202,801 | 11,427 | |
Halliburton Co. | 597,400 | 22,319 | |
Patterson-UTI Energy, Inc. | 1,033,000 | 20,991 | |
Rowan Companies, Inc. (a) | 781,312 | 26,947 | |
Transocean Ltd. (United States) | 343,414 | 19,626 | |
| 153,360 | ||
Oil, Gas & Consumable Fuels - 4.4% | |||
Anadarko Petroleum Corp. | 231,300 | 18,157 | |
Apache Corp. | 241,000 | 24,011 | |
Atlas Pipeline Partners, LP | 504,700 | 17,564 | |
Cimarex Energy Co. | 263,600 | 16,870 | |
Cloud Peak Energy, Inc. (a) | 1,131,314 | 25,964 | |
El Paso Corp. | 646,000 | 16,156 | |
HollyFrontier Corp. | 1,010,116 | 31,000 | |
Nexen, Inc. | 1,329,500 | 22,580 | |
Noble Energy, Inc. | 203,100 | 18,145 | |
Talisman Energy, Inc. | 1,260,850 | 17,885 | |
Whiting Petroleum Corp. (a) | 776,646 | 36,153 | |
Williams Companies, Inc. | 974,430 | 29,340 | |
World Fuel Services Corp. (d) | 462,440 | 18,428 | |
| 292,253 | ||
TOTAL ENERGY | 445,613 | ||
Common Stocks - continued | |||
Shares | Value (000s) | ||
FINANCIALS - 28.8% | |||
Capital Markets - 3.4% | |||
Ashmore Group PLC | 1,468,000 | $ 8,145 | |
Bank of New York Mellon Corp. | 682,204 | 14,517 | |
Goldman Sachs Group, Inc. | 177,632 | 19,460 | |
Invesco Ltd. | 2,094,350 | 42,034 | |
Knight Capital Group, Inc. Class A (a) | 1,434,723 | 17,920 | |
Morgan Stanley | 1,999,147 | 35,265 | |
State Street Corp. | 1,698,240 | 68,592 | |
TD Ameritrade Holding Corp. | 882,608 | 14,810 | |
The Blackstone Group LP | 543,825 | 8,000 | |
| 228,743 | ||
Commercial Banks - 6.2% | |||
Bank of Ireland | 140,863,526 | 20,274 | |
CIT Group, Inc. (a) | 1,659,903 | 57,848 | |
Comerica, Inc. | 926,796 | 23,680 | |
Heritage Financial Corp., Washington | 133,801 | 1,687 | |
Itau Unibanco Banco Multiplo SA sponsored ADR | 2,919,600 | 55,823 | |
PNC Financial Services Group, Inc. | 443,055 | 23,796 | |
Regions Financial Corp. | 693,027 | 2,724 | |
TCF Financial Corp. | 227,037 | 2,416 | |
U.S. Bancorp | 4,779,266 | 122,301 | |
Wells Fargo & Co. | 3,897,041 | 100,972 | |
| 411,521 | ||
Consumer Finance - 1.0% | |||
Capital One Financial Corp. | 392,800 | 17,935 | |
SLM Corp. | 3,608,500 | 49,328 | |
| 67,263 | ||
Diversified Financial Services - 1.2% | |||
CME Group, Inc. | 80,700 | 22,238 | |
JPMorgan Chase & Co. | 1,683,321 | 58,512 | |
| 80,750 | ||
Insurance - 9.6% | |||
AEGON NV (a) | 3,338,631 | 15,924 | |
AFLAC, Inc. | 1,315,176 | 59,301 | |
Aon Corp. | 178,023 | 8,299 | |
Assurant, Inc. | 670,703 | 25,849 | |
Berkshire Hathaway, Inc. Class B (a) | 1,393,034 | 108,462 | |
Brasil Insurance Participacoes e Administracao SA | 673,600 | 6,472 | |
Everest Re Group Ltd. | 214,449 | 19,283 | |
Fairfax Financial Holdings Ltd. (sub. vtg.) | 125,250 | 52,353 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
FINANCIALS - continued | |||
Insurance - continued | |||
First American Financial Corp. | 1,307,832 | $ 15,694 | |
Hartford Financial Services Group, Inc. | 1,091,400 | 21,009 | |
Hilltop Holdings, Inc. (a) | 354,619 | 2,794 | |
Jardine Lloyd Thompson Group PLC | 1,938,629 | 22,463 | |
MetLife, Inc. | 1,893,664 | 66,581 | |
National Financial Partners Corp. (a) | 1,151,983 | 15,748 | |
Progressive Corp. | 454,800 | 8,646 | |
Prudential Financial, Inc. | 637,222 | 34,537 | |
Reinsurance Group of America, Inc. | 516,218 | 26,962 | |
StanCorp Financial Group, Inc. | 696,775 | 23,649 | |
Torchmark Corp. | 795,401 | 32,556 | |
Unum Group | 1,257,404 | 29,977 | |
Validus Holdings Ltd. | 555,010 | 15,185 | |
XL Group PLC Class A | 1,312,170 | 28,527 | |
| 640,271 | ||
Real Estate Investment Trusts - 4.3% | |||
American Capital Agency Corp. | 473,400 | 13,023 | |
Douglas Emmett, Inc. | 1,300,517 | 25,360 | |
Post Properties, Inc. | 573,492 | 23,559 | |
Prologis, Inc. | 1,229,353 | 36,586 | |
Public Storage | 239,877 | 30,956 | |
SL Green Realty Corp. | 748,228 | 51,620 | |
The Macerich Co. | 40,772 | 2,029 | |
Ventas, Inc. | 822,492 | 45,739 | |
Vornado Realty Trust | 88,691 | 7,345 | |
Weyerhaeuser Co. | 2,608,621 | 46,903 | |
| 283,120 | ||
Real Estate Management & Development - 2.7% | |||
BR Malls Participacoes SA | 1,564,800 | 16,904 | |
Brookfield Asset Management, Inc. Class A | 181,200 | 5,242 | |
CBRE Group, Inc. (a) | 741,553 | 13,185 | |
Forest City Enterprises, Inc. Class A (a)(d) | 3,562,201 | 48,731 | |
Forestar Group, Inc. (a) | 1,718,303 | 22,338 | |
Kennedy-Wilson Holdings, Inc. (d) | 4,497,450 | 55,858 | |
Wharf Holdings Ltd. | 2,693,000 | 14,325 | |
| 176,583 | ||
Common Stocks - continued | |||
Shares | Value (000s) | ||
FINANCIALS - continued | |||
Thrifts & Mortgage Finance - 0.4% | |||
People's United Financial, Inc. | 2,037,335 | $ 25,976 | |
TOTAL FINANCIALS | 1,914,227 | ||
HEALTH CARE - 6.2% | |||
Biotechnology - 0.4% | |||
Amgen, Inc. | 418,200 | 23,950 | |
Health Care Equipment & Supplies - 1.5% | |||
Alere, Inc. (a) | 188,800 | 4,920 | |
Boston Scientific Corp. (a) | 1,910,761 | 11,254 | |
CareFusion Corp. (a) | 549,600 | 14,070 | |
Covidien PLC | 308,700 | 14,521 | |
DENTSPLY International, Inc. | 178,600 | 6,601 | |
Hologic, Inc. (a) | 1,409,404 | 22,720 | |
The Cooper Companies, Inc. | 34,724 | 2,406 | |
Zimmer Holdings, Inc. (a) | 483,167 | 25,429 | |
| 101,921 | ||
Health Care Providers & Services - 3.5% | |||
Brookdale Senior Living, Inc. (a) | 269,933 | 4,475 | |
Cardinal Health, Inc. | 165,500 | 7,327 | |
CIGNA Corp. | 792,300 | 35,131 | |
Community Health Systems, Inc. (a) | 1,081,200 | 18,899 | |
DaVita, Inc. (a) | 201,470 | 14,103 | |
Emeritus Corp. (a) | 1,262,374 | 22,357 | |
HCA Holdings, Inc. | 271,000 | 6,355 | |
Health Net, Inc. (a) | 351,100 | 9,757 | |
HealthSouth Corp. (a) | 741,800 | 13,100 | |
Humana, Inc. | 56,326 | 4,782 | |
Lincare Holdings, Inc. | 545,665 | 12,850 | |
McKesson Corp. | 208,604 | 17,012 | |
Medco Health Solutions, Inc. (a) | 193,700 | 10,626 | |
MEDNAX, Inc. (a) | 249,560 | 16,421 | |
Omnicare, Inc. | 295,800 | 8,821 | |
Quest Diagnostics, Inc. | 395,301 | 22,058 | |
Universal American Spin Corp. (a) | 397,062 | 4,566 | |
Universal Health Services, Inc. Class B | 117,651 | 4,703 | |
| 233,343 | ||
Life Sciences Tools & Services - 0.1% | |||
PerkinElmer, Inc. | 497,600 | 10,285 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
HEALTH CARE - continued | |||
Pharmaceuticals - 0.7% | |||
AVANIR Pharmaceuticals Class A (a)(d) | 3,310,358 | $ 9,898 | |
Cadence Pharmaceuticals, Inc. (a)(d) | 1,310,067 | 7,638 | |
Forest Laboratories, Inc. (a) | 191,100 | 5,981 | |
Impax Laboratories, Inc. (a) | 380,293 | 7,191 | |
Valeant Pharmaceuticals International, Inc. (Canada) | 103,000 | 4,067 | |
XenoPort, Inc. (a) | 1,464,400 | 8,933 | |
| 43,708 | ||
TOTAL HEALTH CARE | 413,207 | ||
INDUSTRIALS - 11.9% | |||
Aerospace & Defense - 2.1% | |||
AerCap Holdings NV (a) | 1,165,068 | 13,818 | |
DigitalGlobe, Inc. (a) | 1,061,398 | 21,653 | |
Esterline Technologies Corp. (a) | 201,142 | 11,244 | |
Lockheed Martin Corp. | 275,985 | 20,947 | |
Meggitt PLC | 4,309,715 | 26,656 | |
Raytheon Co. | 303,511 | 13,412 | |
Textron, Inc. | 1,001,145 | 19,442 | |
Ultra Electronics Holdings PLC | 396,300 | 10,146 | |
| 137,318 | ||
Airlines - 0.2% | |||
Pinnacle Airlines Corp. (a)(e) | 1,925,465 | 4,948 | |
SkyWest, Inc. | 786,160 | 10,542 | |
| 15,490 | ||
Building Products - 1.5% | |||
A.O. Smith Corp. | 193,213 | 7,180 | |
Armstrong World Industries, Inc. | 369,298 | 15,728 | |
Lennox International, Inc. | 500,805 | 16,121 | |
Owens Corning (a) | 2,206,612 | 62,624 | |
| 101,653 | ||
Commercial Services & Supplies - 1.9% | |||
Interface, Inc. Class A | 616,518 | 8,039 | |
Intrum Justitia AB | 828,729 | 13,633 | |
Quad/Graphics, Inc. | 443,796 | 8,752 | |
Republic Services, Inc. | 2,394,268 | 68,141 | |
Sykes Enterprises, Inc. (a) | 828,360 | 13,196 | |
The Geo Group, Inc. (a) | 728,935 | 13,288 | |
| 125,049 | ||
Common Stocks - continued | |||
Shares | Value (000s) | ||
INDUSTRIALS - continued | |||
Construction & Engineering - 0.9% | |||
Foster Wheeler AG (a) | 1,180,874 | $ 25,176 | |
Jacobs Engineering Group, Inc. (a) | 902,700 | 35,025 | |
| 60,201 | ||
Electrical Equipment - 0.9% | |||
Alstom SA | 256,011 | 9,601 | |
GrafTech International Ltd. (a) | 1,227,217 | 19,280 | |
Prysmian SpA | 2,176,503 | 32,982 | |
| 61,863 | ||
Industrial Conglomerates - 0.5% | |||
Carlisle Companies, Inc. | 262,800 | 10,964 | |
Koninklijke Philips Electronics NV | 552,100 | 11,495 | |
Orkla ASA (A Shares) (d) | 975,200 | 8,495 | |
| 30,954 | ||
Machinery - 2.0% | |||
Fiat Industrial SpA (a) | 879,894 | 7,678 | |
Ingersoll-Rand Co. Ltd. | 1,171,485 | 36,468 | |
Navistar International Corp. (a) | 436,806 | 18,376 | |
Snap-On, Inc. | 179,618 | 9,640 | |
Stanley Black & Decker, Inc. | 722,526 | 46,133 | |
Vallourec SA | 187,289 | 11,399 | |
| 129,694 | ||
Marine - 0.0% | |||
Ultrapetrol (Bahamas) Ltd. (a) | 1,082,677 | 3,216 | |
Professional Services - 0.6% | |||
FTI Consulting, Inc. (a) | 198,700 | 7,831 | |
Towers Watson & Co. | 491,750 | 32,308 | |
| 40,139 | ||
Road & Rail - 1.3% | |||
Con-way, Inc. | 489,097 | 14,414 | |
Contrans Group, Inc. Class A | 1,855,400 | 13,215 | |
Quality Distribution, Inc. (a)(e) | 1,424,708 | 16,056 | |
Union Pacific Corp. | 320,247 | 31,887 | |
Vitran Corp., Inc. (a)(e) | 1,632,988 | 7,920 | |
| 83,492 | ||
TOTAL INDUSTRIALS | 789,069 | ||
Common Stocks - continued | |||
Shares | Value (000s) | ||
INFORMATION TECHNOLOGY - 9.6% | |||
Communications Equipment - 1.6% | |||
Cisco Systems, Inc. | 2,029,454 | $ 37,606 | |
Comverse Technology, Inc. (a) | 2,645,860 | 18,230 | |
Juniper Networks, Inc. (a) | 622,995 | 15,245 | |
Motorola Solutions, Inc. | 395,640 | 18,559 | |
ViaSat, Inc. (a) | 357,401 | 15,222 | |
| 104,862 | ||
Computers & Peripherals - 0.8% | |||
Gemalto NV | 145,762 | 6,651 | |
Hewlett-Packard Co. | 1,595,952 | 42,468 | |
Western Digital Corp. (a) | 245,600 | 6,543 | |
| 55,662 | ||
Electronic Equipment & Components - 2.3% | |||
Arrow Electronics, Inc. (a) | 641,120 | 23,112 | |
Avnet, Inc. (a) | 743,143 | 22,525 | |
Corning, Inc. | 1,365,236 | 19,509 | |
Flextronics International Ltd. (a) | 3,266,555 | 21,445 | |
Ingram Micro, Inc. Class A (a) | 740,402 | 13,238 | |
Jabil Circuit, Inc. | 1,715,784 | 35,277 | |
TE Connectivity Ltd. | 537,461 | 19,107 | |
| 154,213 | ||
Internet Software & Services - 0.4% | |||
eBay, Inc. (a) | 168,500 | 5,363 | |
Google, Inc. Class A (a) | 30,200 | 17,898 | |
| 23,261 | ||
IT Services - 1.3% | |||
Amdocs Ltd. (a) | 478,741 | 14,372 | |
Atos Origin SA | 249,448 | 12,089 | |
Fiserv, Inc. (a) | 465,703 | 27,416 | |
Global Payments, Inc. | 102,200 | 4,693 | |
MasterCard, Inc. Class A | 84,900 | 29,481 | |
| 88,051 | ||
Semiconductors & Semiconductor Equipment - 2.8% | |||
Advanced Micro Devices, Inc. (a)(d) | 1,531,836 | 8,931 | |
Analog Devices, Inc. | 309,500 | 11,318 | |
ASML Holding NV | 364,225 | 15,272 | |
Freescale Semiconductor Holdings I Ltd. | 1,507,800 | 19,888 | |
Intersil Corp. Class A | 2,311,248 | 27,666 | |
Marvell Technology Group Ltd. (a) | 4,066,976 | 56,897 | |
Micron Technology, Inc. (a) | 3,505,672 | 19,597 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
INFORMATION TECHNOLOGY - continued | |||
Semiconductors & Semiconductor Equipment - continued | |||
NXP Semiconductors NV (a) | 517,000 | $ 9,290 | |
ON Semiconductor Corp. (a) | 1,293,494 | 9,792 | |
PMC-Sierra, Inc. (a) | 1,615,266 | 10,241 | |
| 188,892 | ||
Software - 0.4% | |||
BMC Software, Inc. (a) | 309,550 | 10,760 | |
CA, Inc. | 583,746 | 12,644 | |
| 23,404 | ||
TOTAL INFORMATION TECHNOLOGY | 638,345 | ||
MATERIALS - 4.9% | |||
Chemicals - 3.0% | |||
Air Products & Chemicals, Inc. | 312,967 | 26,959 | |
Ashland, Inc. | 873,855 | 46,279 | |
Celanese Corp. Class A | 334,686 | 14,576 | |
Cytec Industries, Inc. | 373,800 | 16,698 | |
Innophos Holdings, Inc. | 257,785 | 11,340 | |
Lanxess AG | 133,472 | 7,867 | |
LyondellBasell Industries NV Class A | 370,250 | 12,166 | |
Olin Corp. | 690,124 | 13,016 | |
Rockwood Holdings, Inc. (a) | 73,100 | 3,366 | |
Solutia, Inc. (a) | 1,575,720 | 25,605 | |
W.R. Grace & Co. (a) | 513,819 | 21,472 | |
| 199,344 | ||
Construction Materials - 0.2% | |||
Eagle Materials, Inc. | 155,172 | 3,193 | |
HeidelbergCement AG | 172,683 | 7,881 | |
| 11,074 | ||
Containers & Packaging - 0.8% | |||
Ball Corp. | 511,282 | 17,675 | |
Owens-Illinois, Inc. (a) | 564,827 | 11,342 | |
Rock-Tenn Co. Class A | 141,256 | 8,361 | |
Sonoco Products Co. | 478,778 | 15,029 | |
| 52,407 | ||
Metals & Mining - 0.9% | |||
Compass Minerals International, Inc. | 275,296 | 20,942 | |
IAMGOLD Corp. | 407,200 | 8,754 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
MATERIALS - continued | |||
Metals & Mining - continued | |||
Reliance Steel & Aluminum Co. | 468,593 | $ 20,707 | |
Walter Energy, Inc. | 157,671 | 11,928 | |
| 62,331 | ||
TOTAL MATERIALS | 325,156 | ||
TELECOMMUNICATION SERVICES - 1.2% | |||
Diversified Telecommunication Services - 0.2% | |||
CenturyLink, Inc. | 154,391 | 5,444 | |
Frontier Communications Corp. (d) | 800,600 | 5,012 | |
| 10,456 | ||
Wireless Telecommunication Services - 1.0% | |||
American Tower Corp. Class A (a) | 743,100 | 40,945 | |
NII Holdings, Inc. (a) | 886,032 | 20,848 | |
Sprint Nextel Corp. (a) | 1,860,744 | 4,782 | |
| 66,575 | ||
TOTAL TELECOMMUNICATION SERVICES | 77,031 | ||
UTILITIES - 11.9% | |||
Electric Utilities - 3.8% | |||
Edison International | 3,030,070 | 123,021 | |
El Paso Electric Co. | 617,503 | 19,779 | |
FirstEnergy Corp. | 609,400 | 27,399 | |
NextEra Energy, Inc. | 578,893 | 32,650 | |
Osterreichische Elektrizitatswirtschafts AG | 56,038 | 1,631 | |
PPL Corp. | 1,633,139 | 47,965 | |
| 252,445 | ||
Gas Utilities - 0.7% | |||
China Gas Holdings Ltd. | 40,448,000 | 11,608 | |
ONEOK, Inc. | 513,734 | 39,069 | |
| 50,677 | ||
Independent Power Producers & Energy Traders - 1.8% | |||
Calpine Corp. (a) | 3,153,320 | 47,836 | |
The AES Corp. (a) | 6,297,830 | 70,662 | |
| 118,498 | ||
Multi-Utilities - 5.6% | |||
CMS Energy Corp. | 1,973,546 | 41,089 | |
National Grid PLC | 9,392,724 | 93,400 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
UTILITIES - continued | |||
Multi-Utilities - continued | |||
NiSource, Inc. | 1,752,226 | $ 38,707 | |
OGE Energy Corp. | 576,151 | 29,810 | |
Sempra Energy | 3,147,017 | 169,085 | |
| 372,091 | ||
TOTAL UTILITIES | 793,711 | ||
TOTAL COMMON STOCKS (Cost $7,117,750) |
| ||
Nonconvertible Preferred Stocks - 0.1% | |||
|
|
|
|
CONSUMER DISCRETIONARY - 0.1% | |||
Automobiles - 0.1% | |||
Volkswagen AG (Cost $9,199) | 47,200 |
|
U.S. Treasury Obligations - 0.1% | ||||
| Principal Amount (000s) |
| ||
U.S. Treasury Bills, yield at date of purchase 0% to 0.02% 11/10/11 to 12/15/11 (f) | $ 4,600 |
|
Money Market Funds - 2.8% | |||
Shares | Value (000s) | ||
Fidelity Cash Central Fund, 0.12% (b) | 107,419,692 | $ 107,420 | |
Fidelity Securities Lending Cash Central Fund, 0.11% (b)(c) | 80,151,592 | 80,152 | |
TOTAL MONEY MARKET FUNDS (Cost $187,572) |
| ||
TOTAL INVESTMENT PORTFOLIO - 100.2% (Cost $7,319,121) | 6,659,489 | ||
NET OTHER ASSETS (LIABILITIES) - (0.2)% | (14,508) | ||
NET ASSETS - 100% | $ 6,644,981 |
Futures Contracts | |||||
Expiration Date | Underlying Face Amount at Value | Unrealized Appreciation/ | |||
Purchased | |||||
Equity Index Contracts | |||||
486 CME E-mini S&P Midcap 400 Index Contracts | Dec. 2011 | $ 43,064 | $ (1,091) |
|
The face value of futures purchased as a percentage of net assets is 0.6% |
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
(e) Affiliated company |
(f) 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 $4,250,000. |
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 |
Fidelity Cash Central Fund | $ 242 |
Fidelity Securities Lending Cash Central Fund | 2,003 |
Total | $ 2,245 |
Other Affiliated Issuers |
An affiliated company is a company in which the Fund has ownership of at least 5% of the voting securities. Fiscal year to date transactions with companies which are or were affiliates are as follows: |
Affiliates | Value, beginning of period | Purchases | Sales Proceeds | Dividend Income | Value, |
Ethan Allen Interiors, Inc. | $ 40,015 | $ 230 | $ 50,791 | $ 292 | $ - |
Forestar Group, Inc. | 33,849 | 6,207 | 13,149 | - | - |
OfficeMax, Inc. | 80,319 | 8,819 | 20,194 | - | - |
Pinnacle Airlines Corp. | 11,091 | - | - | - | 4,948 |
Quality Distribution, Inc. | 12,378 | 4,149 | 9,832 | - | 16,056 |
Vitran Corp., Inc. | 15,100 | 3,568 | 2,809 | - | 7,920 |
Total | $ 192,752 | $ 22,973 | $ 96,775 | $ 292 | $ 28,924 |
Other Information |
The following is a summary of the inputs used, as of October 31, 2011, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities: | ||||
Equities: | ||||
Consumer Discretionary | $ 680,288 | $ 680,288 | $ - | $ - |
Consumer Staples | 390,670 | 383,257 | 7,413 | - |
Energy | 445,613 | 445,613 | - | - |
Financials | 1,914,227 | 1,883,978 | 30,249 | - |
Health Care | 413,207 | 413,207 | - | - |
Industrials | 789,069 | 777,574 | 11,495 | - |
Information Technology | 638,345 | 638,345 | - | - |
Materials | 325,156 | 325,156 | - | - |
Telecommunication Services | 77,031 | 77,031 | - | - |
Utilities | 793,711 | 688,703 | 105,008 | - |
U.S. Government and Government Agency Obligations | 4,600 | - | 4,600 | - |
Money Market Funds | 187,572 | 187,572 | - | - |
Total Investments in Securities: | $ 6,659,489 | $ 6,500,724 | $ 158,765 | $ - |
Derivative Instruments: | ||||
Liabilities | ||||
Futures Contracts | $ (1,091) | $ (1,091) | $ - | $ - |
Value of Derivative Instruments |
The following table is a summary of the Fund's value of derivative instruments by risk exposure as of October 31, 2011. For additional information on derivative instruments, please refer to the Derivative Instruments section in the accompanying Notes to Financial Statements. |
Risk Exposure / | Value | |
| Asset | Liability |
Equity Risk | ||
Futures Contracts (a) | $ - | $ (1,091) |
Total Value of Derivatives | $ - | $ (1,091) |
(a) Reflects cumulative appreciation/(depreciation) on futures contracts as disclosed on the Schedule of Investments. Only the period end variation margin is separately disclosed on the Statement of Assets and Liabilities. |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 83.4% |
Bermuda | 3.1% |
United Kingdom | 2.7% |
Canada | 2.0% |
Ireland | 1.5% |
Brazil | 1.3% |
Netherlands | 1.3% |
Switzerland | 1.2% |
France | 1.0% |
Others (Individually Less Than 1%) | 2.5% |
| 100.0% |
Income Tax Information |
At October 31, 2011, the Fund had a capital loss carryforward of approximately $2,395,748,000 of which $2,067,432,000 and $328,316,000 will expire in fiscal 2017 and 2018, respectively. Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements
Statement of Assets and Liabilities
Amounts in thousands (except per-share amounts) | October 31, 2011 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $74,173) - See accompanying schedule: Unaffiliated issuers (cost $7,098,256) | $ 6,442,993 |
|
Fidelity Central Funds (cost $187,572) | 187,572 |
|
Other affiliated issuers (cost $33,293) | 28,924 |
|
Total Investments (cost $7,319,121) |
| $ 6,659,489 |
Foreign currency held at value (cost $76) | 76 | |
Receivable for investments sold | 117,098 | |
Receivable for fund shares sold | 3,478 | |
Dividends receivable | 5,249 | |
Distributions receivable from Fidelity Central Funds | 233 | |
Prepaid expenses | 26 | |
Other receivables | 457 | |
Total assets | 6,786,106 | |
|
|
|
Liabilities | ||
Payable to custodian bank | $ 2,683 | |
Payable for investments purchased | 40,701 | |
Payable for fund shares redeemed | 12,209 | |
Accrued management fee | 2,646 | |
Payable for daily variation margin on futures contracts | 1,217 | |
Other affiliated payables | 1,153 | |
Other payables and accrued expenses | 364 | |
Collateral on securities loaned, at value | 80,152 | |
Total liabilities | 141,125 | |
|
|
|
Net Assets | $ 6,644,981 | |
Net Assets consist of: |
| |
Paid in capital | $ 9,723,235 | |
Undistributed net investment income | 38,674 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (2,456,227) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (660,701) | |
Net Assets | $ 6,644,981 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Assets and Liabilities - continued
Amounts in thousands (except per-share amounts) | October 31, 2011 | |
|
|
|
Value: | $ 64.53 | |
|
|
|
Class K: | $ 64.66 |
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, 2011 | |
|
|
|
Investment Income |
|
|
Dividends (including $292 earned from other affiliated issuers) |
| $ 114,631 |
Interest |
| 6 |
Income from Fidelity Central Funds |
| 2,245 |
Total income |
| 116,882 |
|
|
|
Expenses | ||
Management fee | $ 44,912 | |
Performance adjustment | (15,244) | |
Transfer agent fees | 15,010 | |
Accounting and security lending fees | 1,230 | |
Custodian fees and expenses | 323 | |
Independent trustees' compensation | 45 | |
Registration fees | 96 | |
Audit | 86 | |
Legal | 41 | |
Interest | 2 | |
Miscellaneous | 93 | |
Total expenses before reductions | 46,594 | |
Expense reductions | (755) | 45,839 |
Net investment income (loss) | 71,043 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 898,226 | |
Other affiliated issuers | (50,528) |
|
Foreign currency transactions | (1,499) | |
Futures contracts | 5,892 | |
Total net realized gain (loss) |
| 852,091 |
Change in net unrealized appreciation (depreciation) on: Investment securities | (641,171) | |
Assets and liabilities in foreign currencies | 25 | |
Futures contracts | (1,538) | |
Total change in net unrealized appreciation (depreciation) |
| (642,684) |
Net gain (loss) | 209,407 | |
Net increase (decrease) in net assets resulting from operations | $ 280,450 |
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 | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 71,043 | $ 92,872 |
Net realized gain (loss) | 852,091 | (403,665) |
Change in net unrealized appreciation (depreciation) | (642,684) | 2,075,224 |
Net increase (decrease) in net assets resulting | 280,450 | 1,764,431 |
Distributions to shareholders from net investment income | (112,001) | (70,609) |
Distributions to shareholders from net realized gain | (2,508) | - |
Total distributions | (114,509) | (70,609) |
Share transactions - net increase (decrease) | (1,667,982) | (1,308,650) |
Total increase (decrease) in net assets | (1,502,041) | 385,172 |
|
|
|
Net Assets | ||
Beginning of period | 8,147,022 | 7,761,850 |
End of period (including undistributed net investment income of $38,674 and undistributed net investment income of $88,210, respectively) | $ 6,644,981 | $ 8,147,022 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Value
Years ended October 31, | 2011 | 2010 | 2009 | 2008 | 2007 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 64.09 | $ 51.82 | $ 43.78 | $ 89.60 | $ 83.82 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .59 | .66 E | .59 | .75 | .64 |
Net realized and unrealized gain (loss) | .75 | 12.09 | 7.69 | (38.92) | 11.79 |
Total from investment operations | 1.34 | 12.75 | 8.28 | (38.17) | 12.43 |
Distributions from net investment income | (.88) | (.48) | (.24) | (.56) | (.56) |
Distributions from net realized gain | (.02) | - | - | (7.09) | (6.09) |
Total distributions | (.90) | (.48) | (.24) | (7.65) | (6.65) |
Net asset value, end of period | $ 64.53 | $ 64.09 | $ 51.82 | $ 43.78 | $ 89.60 |
Total Return A | 2.05% | 24.74% | 19.12% | (46.34)% | 15.82% |
Ratios to Average Net Assets C,F |
|
|
|
|
|
Expenses before reductions | .60% | .64% | .64% | .76% | .70% |
Expenses net of fee waivers, if any | .60% | .64% | .64% | .76% | .70% |
Expenses net of all reductions | .59% | .63% | .64% | .76% | .69% |
Net investment income (loss) | .87% | 1.12% E | 1.41% | 1.10% | .74% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (in millions) | $ 6,006 | $ 7,276 | $ 7,278 | $ 11,066 | $ 22,558 |
Portfolio turnover rate D | 95% | 148% | 51% | 50% | 44% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
B Calculated based on average shares outstanding during the period.
C Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
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 $.23 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been .73%.
F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class K
Years ended October 31, | 2011 | 2010 | 2009 | 2008 H |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 64.24 | $ 51.96 | $ 43.82 | $ 72.61 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss) D | .70 | .76 G | .72 | .25 |
Net realized and unrealized gain (loss) | .74 | 12.12 | 7.67 | (29.04) |
Total from investment operations | 1.44 | 12.88 | 8.39 | (28.79) |
Distributions from net investment income | (1.00) | (.60) | (.25) | - |
Distributions from net realized gain | (.02) | - | - | - |
Total distributions | (1.02) | (.60) | (.25) | - |
Net asset value, end of period | $ 64.66 | $ 64.24 | $ 51.96 | $ 43.82 |
Total Return B,C | 2.20% | 24.96% | 19.39% | (39.65)% |
Ratios to Average Net Assets E,I |
|
|
|
|
Expenses before reductions | .44% | .47% | .40% | .60% A |
Expenses net of fee waivers, if any | .44% | .47% | .40% | .60% A |
Expenses net of all reductions | .44% | .46% | .40% | .60% A |
Net investment income (loss) | 1.02% | 1.29% G | 1.64% | 1.17% A |
Supplemental Data |
|
|
|
|
Net assets, end of period (in millions) | $ 639 | $ 872 | $ 484 | $ 177 |
Portfolio turnover rate F | 95% | 148% | 51% | 50% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
D Calculated based on average shares outstanding during the period.
E Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
G Investment income per share reflects a special dividend which amounted to $.23 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been .90%.
H For the period May 9, 2008 (commencement of sale of shares) to October 31, 2008.
I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended October 31, 2011
(Amounts in thousands except percentages)
1. Organization.
Fidelity Value Fund (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. The Fund offers Value and Class K shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent fees incurred. Certain expense reductions may also differ by class.
2. Investments in Fidelity Central Funds.
The Fund invests in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm are available on the SEC web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the
Annual Report
3. Significant Accounting Policies - continued
date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Fund uses independent pricing services approved by the Board of Trustees to value its investments. When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include market or security specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The value used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the Fund's own assumptions based on the best information available)
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of October 31, 2011, is included at the end of the Fund's Schedule of Investments. Valuation techniques used to value the Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when significant market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-traded funds (ETFs) and certain indexes as well as quoted prices for similar securities are used and are categorized as Level 2 in the hierarchy in these circumstances. Utilizing these techniques may result in transfers between Level 1 and Level 2. For restricted equity securities and private placements where
Annual Report
Notes to Financial Statements - continued
(Amounts in thousands except percentages)
3. Significant Accounting Policies - continued
Security Valuation - continued
observable inputs are limited, assumptions about market activity and risk are used and are categorized as Level 3 in the hierarchy.
Debt securities, including restricted securities, are valued based on evaluated prices received from independent pricing services or from dealers who make markets in such securities. For U.S. government and government agency obligations, pricing services utilize matrix pricing which considers yield or price of bonds of comparable quality, coupon, maturity and type as well as dealer supplied prices and are generally categorized as Level 2 in the hierarchy. When independent prices are unavailable or unreliable, debt securities may be valued utilizing pricing matrices which consider similar factors that would be used by independent pricing services. These are generally categorized as Level 2 in the hierarchy but may be Level 3 depending on the circumstances.
Futures contracts are valued at the settlement price established each day by the board of trade or exchange on which they are traded and are categorized as Level 1 in the hierarchy. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy.
Foreign Currency. The Fund may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on
Annual Report
3. Significant Accounting Policies - continued
Investment Transactions and Income - continued
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. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Deferred Trustee Compensation. Under a Deferred Compensation Plan (the Plan), independent Trustees may elect to defer receipt of a portion of their annual compensation. Deferred amounts are invested in a cross-section of Fidelity funds, are marked-to-market and remain in the Fund until distributed in accordance with the Plan. The investment of deferred amounts and the offsetting payable to the Trustees are included in the accompanying Statement of Assets and Liabilities.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company, including distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. As of October 31, 2011, the Fund did not have any unrecognized tax benefits in the financial statements. A fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are declared and recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP.
Annual Report
Notes to Financial Statements - continued
(Amounts in thousands except percentages)
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, passive foreign investment companies (PFIC), partnerships, market discount, deferred trustees compensation, capital loss carryforwards, and losses deferred due to wash sales.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $ 318,883 |
Gross unrealized depreciation | (1,042,838) |
Net unrealized appreciation (depreciation) on securities and other investments | $ (723,955) |
|
|
Tax Cost | $ 7,383,444 |
The tax-based components of distributable earnings as of period end were as follows:
Undistributed ordinary income | $ 41,704 |
Capital loss carryforward | $ (2,395,748) |
Net unrealized appreciation (depreciation) | $ (723,955) |
Under the recently enacted Regulated Investment Company Modernization Act of 2010 (the Act), the Fund will be permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to any losses incurred in pre-enactment taxable years, which generally expire after eight years from when they are incurred. Additionally, post-enactment capital losses that are carried forward will retain their character as either short-term or long-term capital losses rather than being considered all short-term as under previous law. The Fund's first fiscal year end subject to the Act will be October 31, 2012.
Annual Report
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The tax character of distributions paid was as follows:
| October 31, 2011 | October 31, 2010 |
Ordinary Income | $ 114,509 | $ 70,609 |
New Accounting Pronouncement. In May 2011, the Financial Accounting Standards Board issued Accounting Standard Update No. 2011-04, Fair Value Measurement (Topic 820) - Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. The update changes the wording used to describe the requirements in GAAP for measuring fair value and for disclosing information about fair value measurements. The update is effective during interim and annual periods beginning after December 15, 2011. Management is currently evaluating the impact of the update's adoption on the Fund's financial statement disclosures.
4. Derivative Instruments.
Risk Exposures and the Use of Derivative Instruments. The Fund used derivative instruments (derivatives), including futures contracts, in order to meet its investment objectives. The strategy is to use derivatives to increase returns and to manage exposure to certain risks as defined below. The success of any strategy involving derivatives depends on analysis of numerous economic factors, and if the strategies for investment do not work as intended, the Fund may not achieve its objectives.
The Fund's use of derivatives increased or decreased its exposure to the following risk:
Equity Risk | Equity risk relates to the fluctuations in the value of financial instruments as a result of changes in market prices (other than those arising from interest rate risk or foreign exchange risk), whether caused by factors specific to an individual investment, its issuer, or all factors affecting all instruments traded in a market or market segment. |
The Fund is also exposed to additional risks from investing in derivatives, such as liquidity risk and counterparty credit risk. Liquidity risk is the risk that the Fund will be unable to sell the derivative in the open market in a timely manner. Counterparty credit risk is the risk that the counterparty will not be able to fulfill its obligation to the Fund. The Fund's maximum risk of loss from counterparty credit risk is generally the aggregate unrealized appreciation and unpaid counterparty payments in excess of any collateral pledged by the counterparty to the Fund. Counterparty risk related to exchange-traded futures contracts is minimal because of the protection provided by the exchange on which they trade. Derivatives involve, to varying degrees, risk of loss in excess of the amounts recognized in the Statement of Assets and Liabilities.
Annual Report
Notes to Financial Statements - continued
(Amounts in thousands except percentages)
4. Derivative Instruments - continued
Futures Contracts. A futures contract is an agreement between two parties to buy or sell a specified underlying instrument for a fixed price at a specified future date. The Fund used futures contracts to manage its exposure to the stock market.
Upon entering into a futures contract, a fund is required to deposit either cash or securities (initial margin) with a clearing broker in an amount equal to a certain percentage of the face value of the contract. Futures contracts are marked-to-market daily and subsequent payments (variation margin) are made or received by a fund depending on the daily fluctuations in the value of the futures contracts and are recorded as unrealized appreciation or (depreciation). This receivable and/or payable is included in daily variation margin on futures contracts in the Statement of Assets and Liabilities. Realized gain or (loss) is recorded upon the expiration or closing of a futures contract.
The underlying face amount at value of 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 and is representative of activity for the period. Securities deposited to meet initial margin requirements are identified in the Schedule of Investments.
Certain risks arise upon entering into futures contracts, including the risk that an illiquid market limits the ability to close out a futures contract prior to settlement date.
During the period the Fund recognized net realized gain (loss) of $5,892 and a change in net unrealized appreciation (depreciation) of $(1,538) related to its investment in futures contracts. These amounts are included in the Statement of Operations.
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $7,505,261 and $9,184,607, respectively.
6. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and a group fee rate that averaged .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
Annual Report
6. Fees and Other Transactions with Affiliates - continued
Management Fee - continued
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 Value, as compared to an appropriate benchmark index. For the period, the total annual management fee rate, including the performance adjustment, was .37% of the Fund's average net assets.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of Value. FIIOC receives an asset-based fee of Class K's average net assets. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, transfer agent fees for each class were as follows:
| Amount | % of |
Value | $ 14,549 | .20 |
Class K | 461 | .05 |
| $ 15,010 |
|
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 $216 for the period.
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding.
Annual Report
Notes to Financial Statements - continued
(Amounts in thousands except percentages)
6. Fees and Other Transactions with Affiliates - continued
Interfund Lending Program - continued
The Fund's activity in this program during the period for which loans were outstanding was as follows:
Borrower or Lender | Average Daily | Weighted Average Interest Rate | Interest |
Borrower | $ 137,494 | .32% | $ 2 |
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR or an affiliate in a $4.0 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $25 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, there were no borrowings on this line of credit.
8. Security Lending.
The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. For equity securities, a lending agent is used and may loan securities to certain qualified borrowers, including Fidelity Capital Markets (FCM), a broker-dealer affiliated with the Fund. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. The value of securities loaned to FCM at period end was $299. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Total security lending income during the period amounted to $2,003, including $12 from securities loaned to FCM.
Annual Report
9. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of the Fund provided services to the Fund in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $755 for the period.
10. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended October 31, | 2011 | 2010 |
From net investment income |
|
|
Value | $ 98,394 | $ 65,010 |
Class K | 13,607 | 5,599 |
Total | $ 112,001 | $ 70,609 |
From net realized gain |
|
|
Value | $ 2,236 | $ - |
Class K | 272 | - |
Total | $ 2,508 | $ - |
11. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
Years ended October 31, | 2011 | 2010 | 2011 | 2010 |
Value |
|
|
|
|
Shares sold | 9,763 | 15,905 | $ 677,671 | $ 953,857 |
Reinvestment of distributions | 1,446 | 1,127 | 96,363 | 62,576 |
Shares redeemed | (31,637) | (43,950) | (2,177,863) | (2,561,113) |
Net increase (decrease) | (20,428) | (26,918) | $ (1,403,829) | $ (1,544,680) |
Class K |
|
|
|
|
Shares sold | 4,738 | 9,653 | $ 327,041 | $ 558,763 |
Reinvestment of distributions | 208 | 101 | 13,878 | 5,599 |
Shares redeemed | (8,636) | (5,506) | (605,072) | (328,332) |
Net increase (decrease) | (3,690) | 4,248 | $ (264,153) | $ 236,030 |
12. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
Annual Report
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Capital Trust and the Shareholders of Fidelity Value Fund:
In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Fidelity Value Fund (a fund of Fidelity Capital Trust) at October 31, 2011, 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 the financial highlights for each of the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fidelity Value Fund's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the 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 are free of material misstatement. An audit 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, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at October 31, 2011 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
December 12, 2011
Annual Report
Trustees and Officers
The Trustees, Members 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, oversee management of the risks associated with such activities and contractual arrangements, and review the fund's performance. Except for James C. Curvey, each of the Trustees oversees 226 funds advised by FMR or an affiliate. Mr. Curvey oversees 429 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 75th birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board Members 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.
Experience, Skills, Attributes, and Qualifications of the Fund's Trustees. The Governance and Nominating Committee has adopted a statement of policy that describes the experience, qualifications, attributes, and skills that are necessary and desirable for potential Independent Trustee candidates (Statement of Policy). The Board believes that each Trustee satisfied at the time he or she was initially elected or appointed a Trustee, and continues to satisfy, the standards contemplated by the Statement of Policy. The Governance and Nominating Committee also engages professional search firms to help identify potential Independent Trustee candidates who have the experience, qualifications, attributes, and skills consistent with the Statement of Policy. From time to time, additional criteria based on the composition and skills of the current Independent Trustees, as well as experience or skills that may be appropriate in light of future changes to board composition, business conditions, and regulatory or other developments, have also been considered by the professional search firms and the Governance and Nominating Committee. In addition, the Board takes into account the Trustees' commitment and participation in Board and committee meetings, as well as their leadership of standing and ad hoc committees throughout their tenure.
In determining that a particular Trustee was and continues to be qualified to serve as a Trustee, the Board has considered a variety of criteria, none of which, in isolation, was controlling. The Board believes that, collectively, the Trustees have balanced and diverse experience, qualifications, attributes, and skills, which allow the Board to operate effectively in governing the fund and protecting the interests of shareholders. Information about the specific experience, skills, attributes, and qualifications of each Trustee, which in each case led to the Board's conclusion that the Trustee should serve (or continue to serve) as a trustee of the fund, is provided below.
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Trustees and Officers - continued
Board Structure and Oversight Function. James C. Curvey is an interested person (as defined in the 1940 Act) and currently serves as Acting Chairman. The Trustees have determined that an interested Chairman is appropriate and benefits shareholders because an interested Chairman has a personal and professional stake in the quality and continuity of services provided to the fund. Independent Trustees exercise their informed business judgment to appoint an individual of their choosing to serve as Chairman, regardless of whether the Trustee happens to be independent or a member of management. The Independent Trustees have determined that they can act independently and effectively without having an Independent Trustee serve as Chairman and that a key structural component for assuring that they are in a position to do so is for the Independent Trustees to constitute a substantial majority for the Board. The Independent Trustees also regularly meet in executive session. Ned C. Lautenbach serves as Chairman of the Independent Trustees and as such (i) acts as a liaison between the Independent Trustees and management with respect to matters important to the Independent Trustees and (ii) with management prepares agendas for Board meetings.
Fidelity funds are overseen by different Boards of Trustees. The fund's Board oversees Fidelity's equity and high income funds and another Board oversees Fidelity's investment-grade bond, money market, and asset allocation funds. The asset allocation funds may invest in Fidelity funds overseen by the fund's Board. The use of separate Boards, each with its own committee structure, allows the Trustees of each group of Fidelity funds to focus on the unique issues of the funds they oversee, including common research, investment, and operational issues. On occasion, the separate Boards establish joint committees to address issues of overlapping consequences for the Fidelity funds overseen by each Board.
The Trustees operate using a system of committees to facilitate the timely and efficient consideration of all matters of importance to the Trustees, the fund, and fund shareholders and to facilitate compliance with legal and regulatory requirements and oversight of the fund's activities and associated risks. The Board, acting through its committees, has charged FMR and its affiliates with (i) identifying events or circumstances the occurrence of which could have demonstrably adverse effects on the fund's business and/or reputation; (ii) implementing processes and controls to lessen the possibility that such events or circumstances occur or to mitigate the effects of such events or circumstances if they do occur; and (iii) creating and maintaining a system designed to evaluate continuously business and market conditions in order to facilitate the identification and implementation processes described in (i) and (ii) above. Because the day-to-day operations and activities of the fund are carried out by or through FMR, its affiliates and other service providers, the fund's exposure to risks is mitigated but not eliminated by the processes overseen by the Trustees. While each of the Board's committees has responsibility for overseeing different aspects of the fund's activities, oversight is exercised primarily through the Operations, Audit, and Compliance Committees. In addition, the Independent Trustees have worked with FMR to enhance the Board's oversight of investment and financial risks, legal and regulatory risks, technology risks, and operational risks, including the development of additional risk reporting to the Board. For example, a working group comprised of Independent Trustees and FMR has worked and continues to work to review the Fidelity funds' valuation-related activities, reporting and risk management. Appropriate personnel, including but not limited to the fund's Chief Compliance Officer (CCO), FMR's internal auditor, the independent accountants, the fund's Treasurer and portfolio management personnel, make periodic reports to the Board's committees, as appropriate, including an annual review of FMR's risk management program for the Fidelity funds. The responsibilities of each standing committee, including their oversight responsibilities, are described further under "Standing Committees of the Fund's Trustees."
Annual Report
The fund's Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-800-835-5092.
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 Occupations and Other Relevant Experience+ | |
James C. Curvey (76) | |
| Year of Election or Appointment: 2007 Mr. Curvey is Trustee and Acting Chairman of the Board of Trustees of certain Trusts. Mr. Curvey also serves as Trustee (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of Fidelity Investments Money Management, Inc. (2009-present), Director of Fidelity Research & Analysis Co. (2009-present) and Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2007-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. Previously, Mr. Curvey was the Vice Chairman (2006-2007) and Director (2000-2007) of FMR Corp. |
Ronald P. O'Hanley (54) | |
| Year of Election or Appointment: 2011 Mr. O'Hanley is Director of FMR Co., Inc. (2010-present), Director of Fidelity Investments Money Management, Inc. (2010-present), Director of Fidelity Research & Analysis Company (2010-present), President of Fidelity Asset Management and Corporate Services and a member of Fidelity's Executive Committee (2010-present). Previously, Mr. O'Hanley served as President and Chief Executive Officer of BNY Mellon Asset Management (2007-2010). Mr. O'Hanley also served as Vice Chairman of Bank New York Mellon Corp. and a member of that firm's Executive Committee. Prior to the 2007 merger of The Bank of New York and Mellon Financial Corporation, he was Vice Chairman of Mellon Financial Corporation and President and Chief Executive Officer of Mellon Asset Management. He joined Mellon in February 1997. Mr. O'Hanley currently serves as Chairman of the Boston Public Library Foundation Board of Directors and sits on the Board of Directors of Beth Israel Deaconess Medical Center, the Board of Trustees of the Marine Biological Laboratory and the Advisory Board of the Maxwell School of Citizenship and Public Administration at Syracuse University. Mr. O'Hanley also chairs the Council on Asset Management for the Financial Services Roundtable and is a member of the Board of Directors of Institutional Investor's U.S. Institute. |
* 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.
+ The information above includes each Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Trustee's qualifications to serve as a Trustee, which led to the conclusion that each Trustee should serve as a Trustee for the fund.
Annual Report
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 Occupations and Other Relevant Experience+ | |
Dennis J. Dirks (63) | |
| 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). He also served as President, Chief Operating Officer, and Board member of The Depository Trust Company (DTC) and President and Board member of the National Securities Clearing Corporation (NSCC). In addition, Mr. Dirks served as Chief Executive Officer and Board member of the Government Securities Clearing Corporation, Chief Executive Officer and Board member of the Mortgage-Backed Securities Clearing Corporation, as a Trustee and a member of the Finance Committee of Manhattan College (2005-2008), and as a Trustee and a member of the Finance Committee of AHRC of Nassau County (2006-2008). Mr. Dirks is a member of the Independent Directors Council (IDC) Governing Council (2010-Present) and Board of Directors for The Brookville Center for Children's Services, Inc. (2009-present). |
Alan J. Lacy (58) | |
| Year of Election or Appointment: 2008 Mr. Lacy serves as Senior Adviser (2007-present) of Oak Hill Capital Partners, L.P. (private equity). 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 Dave & Buster's, Inc. (restaurant and entertainment complexes, 2010-present), The Hillman Companies, Inc. (hardware wholesalers, 2010-present), and Bristol-Myers Squibb Company (global pharmaceuticals, 2007-present). Mr. Lacy is a member of the Board of Trustees of The National Parks Conservation Association (2006-Present). Previously, Mr. Lacy served as Chairman of the Board of Trustees of the National Parks Conservation Association (2008-2011) and as a member of the Board of Directors for the Western Union Company (global money transfer, 2006-2011). |
Ned C. Lautenbach (67) | |
| Year of Election or Appointment: 2000 Mr. Lautenbach is Chairman of the Independent Trustees of the Equity and High Income Funds (2006-present). Mr. Lautenbach currently serves as the Lead Director of the Eaton Corporation Board of Directors (diversified industrial, 1997-present). Mr. Lautenbach is also a member of the Board of Directors of the Philharmonic Center for the Arts in Naples, Florida (1999-present); a member of the Board of Trustees of Fairfield University (2005-present); and a member of the Council on Foreign Relations (1994-present). Previously, Mr. Lautenbach was a Partner/Advisory Partner at Clayton, Dubilier & Rice, LLC (private equity investment, 1998-2010), as well as a Director of Sony Corporation (2006-2007). |
Joseph Mauriello (67) | |
| Year of Election or Appointment: 2008 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, 1965-2005). Mr. Mauriello currently serves as a member of the Board of Directors of XL Group plc. (global insurance and re-insurance, 2006-present) and of Arcadia Resources Inc. (health care services and products, 2007-present). Previously, Mr. Mauriello served as a Director of the Hamilton Funds of the Bank of New York (2006-2007). |
Robert W. Selander (61) | |
| Year of Election or Appointment: 2011 Previously, Mr. Selander served as a Member of the Advisory Board of Fidelity's Equity and High Income Funds (2011), Executive Vice Chairman (2010), Chief Executive Officer (2009-2010), and President and Chief Executive Officer (1997-2009) of Mastercard, Inc. |
Cornelia M. Small (67) | |
| Year of Election or Appointment: 2005 Ms. Small is a member of the Board of Directors of the Teagle Foundation (2009-present). Ms. Small is also a member of the Investment Committee, and Chair (2008-present) and a member of the Board of Trustees of Smith College. In addition, Ms. Small 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. In addition, Ms. Small 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 (72) | |
| Year of Election or Appointment: 2002 Mr. Stavropoulos is Vice Chairman of the Independent Trustees of the Equity and High Income Funds (2006-present). Mr. Stavropoulos serves as President and Founder of the Michigan Baseball Foundation, the Great Lakes Loons (2007-present). 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, CEO (1995-2000; 2002-2004), Chairman of the Executive Committee (2000-2006), and as a member of the Board of Directors (1990-2006). Currently, Mr. Stavropoulos is Chairman of Univar (global distributor of commodity and specialty chemicals, 2010-present), 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, 2005-present). Mr. Stavropoulos is a special advisor to Clayton, Dubilier & Rice, LLC (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 (62) | |
| 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), and Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (61) | |
| Year of Election or Appointment: 2008 Mr. Wiley also serves as a Director of Asia Pacific Exploration Consolidated (international oil and gas exploration and production, 2008-present). Mr. Wiley serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), and a Director of Bill Barrett Corporation (exploration and production, 2005-present). In addition, Mr. Wiley also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-2010), as a Senior Energy Advisor of Katzenbach Partners, LLC (consulting, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production, 2001-2005). |
Annual Report
Trustees and Officers - continued
+ The information above includes each Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Trustee's qualifications to serve as a Trustee, which led to the conclusion that each Trustee should serve as a Trustee for the fund.
Advisory Board Members and Executive Officers:
Correspondence intended for each executive officer, Edward C. Johnson 3d, and Peter S. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Edward C. Johnson 3d (81) | |
| Year of Election or Appointment: 2011 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Mr. Johnson serves as Chief Executive Officer, Chairman, and a Director of FMR LLC, and also serves as Chairman and Director of FIL Limited. Previously, Mr. Johnson served as a Trustee and Chairman of the Board of certain Fidelity Trusts, Chairman and a Director of FMR, Chairman and a Director of FMR Co., Inc., and President of FMR LLC (2006-2007). |
Peter S. Lynch (67) | |
| Year of Election or Appointment: 2003 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Mr. Lynch is Vice Chairman and a Director of FMR and FMR Co., Inc. In addition, Mr. Lynch 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 (42) | |
| Year of Election or Appointment: 2008 President and Treasurer of Fidelity's Equity and High Income Funds. Mr. Robins also serves as President and Treasurer (2010-present) and Assistant Treasurer (2009-present) of other Fidelity funds and is an employee of Fidelity Investments (2004-present). Previously, Mr. Robins served as Deputy Treasurer of the Fidelity funds (2005-2008) and Treasurer and Chief Financial Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2006-2008). |
Brian B. Hogan (47) | |
| Year of Election or Appointment: 2009 Vice President of Equity and High Income Funds. Mr. Hogan also serves as President of FMR's Equity Division (2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager. |
Thomas C. Hense (47) | |
| Year of Election or Appointment: 2008 or 2010 Vice President of Fidelity's High Income (2008), Small Cap (2008), and Value (2010) Funds. Previously, Mr. Hense served as a portfolio manager for Fidelity's Institutional Money Management Group (Pyramis) (2003-2008). |
Scott C. Goebel (43) | |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of the Fidelity funds. Mr. Goebel also serves as Secretary of Fidelity Investments Money Management, Inc. (FIMM) (2010-present) and Fidelity Research and Analysis Company (FRAC) (2010-present); Secretary and CLO of The North Carolina Capital Management Trust: Cash and Term Portfolios (2008-present); General Counsel, Secretary, and Senior Vice President of FMR (2008-present) and FMR Co., Inc. (2008-present); employed by FMR LLC or an affiliate (2001-present); Chief Legal Officer of Fidelity Management & Research (Hong Kong) Limited (2008-present) and Assistant Secretary of Fidelity Management & Research (Japan) Inc. (2008-present), and Fidelity Management & Research (U.K.) Inc. (2008-present). Previously, Mr. Goebel served as Assistant Secretary of FIMM (2008-2010), FRAC (2008-2010), and the Funds (2007-2008) and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007). |
William C. Coffey (42) | |
| Year of Election or Appointment: 2009 Assistant Secretary of Fidelity's Equity and High Income Funds. Mr. Coffey also serves as Senior Vice President and Deputy General Counsel of FMR LLC (2010-present), and is an employee of Fidelity Investments. Previously, Mr. Coffey served as Vice President and Associate General Counsel of FMR LLC (2005-2009). |
Holly C. Laurent (57) | |
| Year of Election or Appointment: 2008 Anti-Money Laundering (AML) Officer of the Fidelity funds. Ms. Laurent also serves as AML Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2008-present) and 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), and Senior Vice President, Deputy General Counsel and Group Head for FMR LLC (2005-2006). |
Christine Reynolds (53) | |
| 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. Ms. Reynolds served as Chief Operating Officer of FPCMS (2007-2008). Previously, Ms. Reynolds served as President, Treasurer, and Anti-Money Laundering officer of the Fidelity funds (2004-2007). |
Kenneth A. Rathgeber (64) | |
| 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), Pyramis Global Advisors, LLC (2005-present), and Strategic Advisers, Inc. (2005-present). |
Jeffrey S. Christian (50) | |
| Year of Election or Appointment: 2009 Deputy Treasurer of the Fidelity funds. Mr. Christian is an employee of Fidelity Investments. Previously, Mr. Christian served as Chief Financial Officer (2008-2009) of certain Fidelity funds and Senior Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (2004-2009). |
Joseph F. Zambello (54) | |
| Year of Election or Appointment: 2011 Deputy Treasurer of the Fidelity funds. Mr. Zambello is an employee of Fidelity Investments. Previously, Mr. Zambello served as Vice President of FMR's Program Management Group (2009-2011) and Vice President of the Transfer Agent Oversight Group (2005-2009). |
Adrien E. Deberghes (44) | |
| Year of Election or Appointment: 2008 Deputy Treasurer of Fidelity's Equity and High Income Funds. Mr. Deberghes also serves as Vice President and Assistant Treasurer of Fidelity Rutland Square Trust II and Fidelity Commonwealth Trust II (2011-present), Assistant Treasurer of other Fidelity funds (2010-present), and 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). |
Stephanie J. Dorsey (42) | |
| Year of Election or Appointment: 2010 Assistant Treasurer of Fidelity's Equity and High Income Funds. Ms. Dorsey also serves as Deputy Treasurer of other Fidelity funds (2008-present) and is an employee of Fidelity Investments (2008-present). Previously, Ms. Dorsey served as Treasurer (2004-2008) of the JPMorgan Mutual Funds and Vice President (2004-2008) of JPMorgan Chase Bank. |
John R. Hebble (53) | |
| Year of Election or Appointment: 2009 Assistant Treasurer of Fidelity's Equity and High Income Funds. Mr. Hebble also serves as President (2011-present), Treasurer, and Chief Financial Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2008-present), President and Treasurer of other Fidelity funds (2008-present) and is an employee of Fidelity Investments. |
Gary W. Ryan (53) | |
| 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). |
Jonathan Davis (43) | |
| Year of Election or Appointment: 2010 Assistant Treasurer of the Fidelity funds. Mr. Davis is also Assistant Treasurer of Fidelity Rutland Square Trust II and Fidelity Commonwealth Trust II. Mr. Davis is an employee of Fidelity Investments. Previously, Mr. Davis served as Vice President and Associate General Counsel of FMR LLC (2003-2010). |
Annual Report
Distributions (Unaudited)
The Board of Trustees of Fidelity Value Fund voted to pay to shareholders of record at the opening of business on record date, the following distributions per share derived from capital gains realized from sales of portfolio securities, and dividends derived from net investment income:
| Pay Date | Record Date | Dividends | Capital Gains |
Class K | 12/05/11 | 12/02/11 | $0.684 | $0.029 |
Class K designates 86% of the dividend distributed during the fiscal year as qualifying for the dividends-received deduction for corporate shareholders.
Class K designates 100% of the dividends distributed 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 2012 of amounts for use in preparing 2011 income tax returns.
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees
Fidelity Value Fund
Each year, 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 relevant to the renewal of the Advisory Contracts throughout the year.
The Board meets regularly 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. The Board has established various 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. The Board, acting directly and through its Committees, requests and receives information concerning the annual consideration of the renewal of the fund's Advisory Contracts. The Board also meets as needed to consider matters specifically related to the Board's annual consideration of the renewal of Advisory Contracts. Members of the Board may also meet with trustees of other Fidelity funds through ad hoc joint committees to discuss certain matters relevant to the Fidelity funds.
At its July 2011 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 expense ratio; (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.
In considering whether to renew the Advisory Contracts for the fund, the Board 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 is in the best interests of the fund and its shareholders and that the compensation payable under the Advisory Contracts is fair and reasonable. The Board's decision to renew the Advisory Contracts was not based on any single factor, 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 Fidelity's competitors, and that the fund's shareholders, who have 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
Board Approval of Investment Advisory Contracts and
Management Fees - continued
Nature, Extent, and Quality of Services Provided. The Board considered the 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 to act in the best interests of the fund.
Resources Dedicated to Investment Management and Support Services. The Board and the Fund Oversight and Research Committees reviewed the general qualifications and capabilities of the Investment Advisers' investment staff, including its size, education, experience, and resources, as well as the Investment Advisers' approach to recruiting, training, managing, and compensating investment personnel. The Board also noted that FMR has devoted increased resources to non-U.S. offices. The Board noted that Fidelity's analysts have extensive resources, tools and capabilities which allow them to conduct sophisticated quantitative and fundamental analysis, as well as credit analysis of issuers, counterparties and enhancers. The Board also believes that Fidelity's investment professionals have sufficient access to global information and data so as to provide competitive investment results over time, and that those professionals also have access to sophisticated tools which permit them to assess portfolio construction and risk and performance attribution characteristics continuously, as well as to transmit new information and research conclusions rapidly around the world. Additionally, in their deliberations, the Board considered the Investment Advisers' trading capabilities and resources which are an integral part of the investment management process.
Shareholder and Administrative Services. The Board considered (i) the nature, extent, quality, and cost of advisory, administrative, 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 adviser's 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 noted that the growth of fund assets over time 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 telephone representatives and over the Internet, investor education materials and asset allocation tools, and the expanded availability of Fidelity Investor Centers, with 35 new branches opening since 2010.
Annual Report
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 a large variety of mutual fund investor services. The Board noted that Fidelity had taken, or had made recommendations that resulted in the Fidelity funds taking, a number of actions over the previous year that benefited particular funds, including (i) continuing to dedicate additional resources to investment research and support of the senior management team that oversees asset management; (ii) rationalizing product lines through the mergers of six funds into other funds; (iii) continuing to migrate the Freedom Funds to dedicated lower cost underlying funds; (iv) obtaining shareholder approval to broaden the investment strategies for Fidelity Consumer Finance Portfolio, Fidelity Emerging Asia Fund, and Fidelity Environment and Alternative Energy Portfolio; (v) contractually agreeing to reduce the management fees and impose other expense limitations on Spartan 500 Index Fund and U.S. Bond Index Fund in connection with launching new institutional classes of these funds; (vi) changing the name, primary and supplemental benchmarks, and investment policies of Fidelity Global Strategies Fund to support the fund's flexible investment mandate and global orientation; and (vii) reducing the transfer agency account fee rates on certain accounts.
Investment Performance. The Board considered whether the fund has operated in accordance with its investment objective, as well as its record of compliance with its investment restrictions. It also reviewed the fund's absolute investment performance for each class, as well as the fund's relative investment performance for each class measured over multiple periods against (i) a broad-based securities market index, and (ii) a peer group of mutual funds deemed appropriate by Fidelity and reviewed by the Board. The following charts considered by the Board show, over the one-, three-, and five-year periods ended December 31, 2010, as available, the cumulative total returns of Class K and the retail class of the fund, 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 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 numbers noted below each chart correspond to the percentile box and represent the percentage of funds in the peer group whose performance was equal to or lower than that of the class indicated.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
Fidelity Value Fund
The Board reviewed the fund's relative investment performance against its peer group and noted that the performance of the retail class of the fund (the class with the longer performance record) was in the second quartile for the one-year period and the fourth quartile for the three- and five-year periods. The Board also noted that the investment performance of the fund was lower than its benchmark for all the periods shown. The Board considered that the variations in performance between the fund's classes reflect the variations in class expenses, which result in lower performance for the higher expense class. The Board also reviewed the fund's performance since inception as well as performance in the current year.
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 noted 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.
Based on its review, the Board concluded that the nature, extent, and quality of services provided to the fund under the Advisory Contracts should benefit the fund's shareholders.
Competitiveness of Management Fee and Total Expense Ratio. The Board considered the fund's management fee and total expense ratio 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 ratio comparisons by broadening the competitive group used for comparison and by reducing the number of universes to which various Fidelity funds are compared.
Annual Report
Management Fee. 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 10% means that 90% 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.
Fidelity Value Fund
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
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 2010. The Board also noted the effect of the fund's negative 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.
Based on its review, the Board concluded that the fund's management fee is fair and reasonable in light of the services that the fund receives and the other factors considered.
Total Expense Ratio. In its review of each class's total expense ratio, the Board considered the fund's management fee as well as other fund or class expenses, as applicable, 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 the current and historical total expense ratios of each class of the fund compared to competitive fund median expenses. Each class of 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.
The Board noted that the total expense ratio of each class ranked below its competitive median for 2010. The Board considered that various factors, including 12b-1 fees, positive or negative performance adjustments, and relatively higher other expenses in the case of small fund size, can affect total expense ratios.
Fees Charged to Other Fidelity Clients. The Board also considered Fidelity fee structures and other information with respect to clients of FMR and its affiliates, such as other mutual funds advised or subadvised by FMR or its affiliates, pension plan clients, and other institutional clients. In March 2010, the Board created an ad hoc joint committee with the board of other Fidelity funds (the Committee) to review and compare Fidelity's institutional investment advisory business with its business of providing services to the Fidelity funds, including the differences in services provided, fees charged, and costs incurred, as well as competition in their respective marketplaces.
Based on its review of total expense ratios and fees charged to other Fidelity clients, the Board concluded that the total expense ratio of each class of the fund was reasonable in light of the services that the fund and its shareholders receive and the other factors considered, including the findings of the Committee.
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.
Annual Report
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 books and records of Fidelity on which Fidelity's audited financial statements are based. 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 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 concluded that while other allocation methods may also be reasonable, Fidelity's profitability methodologies are reasonable in all material respects.
The Board also reviewed Fidelity's non-fund businesses and 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 was satisfied that the profitability was not excessive in the circumstances.
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 also noted that in 2009, it and the board of other Fidelity funds created an ad hoc committee (the Economies of Scale Committee) to analyze whether FMR attains economies of scale in respect of the management and servicing of the Fidelity funds, whether the Fidelity funds have appropriately benefited from such economies of scale, and whether there is potential for realization of any further economies of scale.
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 calculates the group fee rates based on a tiered asset "breakpoint" schedule that varies based on asset class. The Board considered that the group fee is designed to deliver the benefits of economies of scale to fund shareholders when total Fidelity 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 benefit from lower management fees as assets under FMR's management increase at the fund complex level, regardless of whether Fidelity achieves any such economies of scale.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
The Board concluded, taking into account the analysis of the Economies of Scale Committee, that any potential economies of scale are being appropriately shared between fund shareholders and Fidelity.
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, actions to be taken by FMR to improve certain funds' overall performance, and Fidelity's long-term strategies for certain funds; (ii) portfolio manager changes that have occurred during the past year and length of portfolio manager tenure for different categories of funds over time; (iii) Fidelity's compensation structure for portfolio managers and other key personnel and strategies for attracting and retaining non-investment personnel; (iv) the amount of the investment that each portfolio manager has made in the Fidelity fund(s) that he or she manages; (v) historical trends in Fidelity's realization of fall-out benefits; (vi) Fidelity's group fee structures and the rationale for the individual fee rates of certain funds; (vii) fund profitability methodology and the impact of certain factors on fund profitability results; (viii) trends regarding industry use of performance fee structures and Fidelity's compliance practices with respect to performance adjustment calculations; (ix) the fee structures in place for certain other Fidelity clients; and (x) explanations regarding the relative total expense ratios of certain funds and classes, total expense competitive trends, and actions that might be taken by FMR to reduce total expense ratios for certain funds and classes.
Based on its evaluation of all of the conclusions noted above, and after considering all factors it believed relevant, 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 workplace benefits (including your workplace savings plan, investments, and additional services) via your telephone or PC. You can access your plan and account information and research your investments 24 hours a day.
By Phone
Fidelity provides a single toll-free number to access plan information, account balances, positions, and quotes*. It's easy to navigate the service, and on your first call, the system will help you create a personal identification number (PIN) for security.
Fidelity Workplace
Investing
1-800-835-5092
By PC
Fidelity's web site on the Internet provides a wide range of information, including plan information, daily financial news, fund performance, interactive planning tools, and news about Fidelity products and services.
Fidelity's Web Site
www.401k.com
* When you call the quotes line, please remember that a fund's yield and return will vary and, except for money market funds, share price will also vary. This means that you may have a gain or loss when you sell your shares. There is no assurance that money market funds will be able to maintain a stable $1 share price; an investment in a money market fund is not insured or guaranteed by the U.S. government. Total returns are historical and include changes in share price, reinvestment of dividends and capital gains distributions, and the effects of any sales charges.
Annual Report
To Write Fidelity
We'll give your correspondence immediate attention and send you written confirmation upon completion of your request.
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
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 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
State Street Bank and Trust Company
Quincy, MA
VAL-K-UANN-1211 1.863246.103
Item 2. Code of Ethics
As of the end of the period, October 31, 2011, Fidelity Capital Trust (the trust) has adopted a code of ethics, as defined in Item 2 of Form N-CSR, that applies to its President and Treasurer and its Chief Financial Officer. A copy of the code of ethics is filed as an exhibit to this Form N-CSR.
Item 3. Audit Committee Financial Expert
The Board of Trustees of the trust has determined that Joseph Mauriello is an audit committee financial expert, as defined in Item 3 of Form N-CSR. Mr. Mauriello is independent for purposes of Item 3 of Form N-CSR.
Item 4. Principal Accountant Fees and Services
Fees and Services
The following table presents fees billed by Deloitte & Touche LLP, the member firms of Deloitte Touche Tohmatsu, and their respective affiliates (collectively, "Deloitte Entities") in each of the last two fiscal years for services rendered to Fidelity Stock Selector Small Cap Fund (the "Fund"):
Services Billed by Deloitte Entities
October 31, 2011 FeesA
| Audit Fees | Audit-Related Fees | Tax Fees | All Other Fees |
Fidelity Stock Selector Small Cap Fund | $42,000 | $- | $4,600 | $400 |
October 31, 2010 FeesA
| Audit Fees | Audit-Related Fees | Tax Fees | All Other Fees |
Fidelity Stock Selector Small Cap Fund | $41,000 | $- | $4,800 | $- |
A Amounts may reflect rounding.
The following table presents fees billed by PricewaterhouseCoopers LLP ("PwC") in each of the last two fiscal years for services rendered to Fidelity Capital Appreciation Fund, Fidelity Disciplined Equity Fund, Fidelity Focused Stock Fund, and Fidelity Value Fund (the "Funds"):
Services Billed by PwC
October 31, 2011 FeesA
| Audit Fees | Audit-Related Fees | Tax Fees | All Other Fees |
Fidelity Capital Appreciation Fund | $58,000 | $- | $3,300 | $4,200 |
Fidelity Disciplined Equity Fund | $70,000 | $- | $3,300 | $6,600 |
Fidelity Focused Stock Fund | $34,000 | $- | $3,300 | $1,800 |
Fidelity Value Fund | $68,000 | $- | $4,300 | $5,500 |
October 31, 2010 FeesA
| Audit Fees | Audit-Related Fees | Tax Fees | All Other Fees |
Fidelity Capital Appreciation Fund | $58,000 | $- | $3,200 | $4,200 |
Fidelity Disciplined Equity Fund | $73,000 | $- | $3,200 | $6,800 |
Fidelity Focused Stock Fund | $35,000 | $- | $3,200 | $1,700 |
Fidelity Value Fund | $70,000 | $- | $4,100 | $5,600 |
A Amounts may reflect rounding.
The following table presents fees billed by PwC and Deloitte Entities that were required to be approved by the Audit Committee for services that relate directly to the operations and financial reporting of the Funds and that are rendered on behalf of Fidelity Management & Research Company ("FMR") and entities controlling, controlled by, or under common control with FMR (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser) that provide ongoing services to the Funds ("Fund Service Providers"):
Services Billed by Deloitte Entities
| October 31, 2011A | October 31, 2010A |
Audit-Related Fees | $440,000 | $720,000 |
Tax Fees | $- | $- |
All Other Fees | $430,000 | $790,000 |
A Amounts may reflect rounding.
Services Billed by PwC
| October 31, 2011A | October 31, 2010A |
Audit-Related Fees | $3,835,000 | $2,150,000 |
Tax Fees | $- | $- |
All Other Fees | $- | $510,000 |
A Amounts may reflect rounding.
"Audit-Related Fees" represent fees billed for assurance and related services that are reasonably related to the performance of the fund audit or the review of the fund's financial statements and that are not reported under Audit Fees.
"Tax Fees" represent fees billed for tax compliance, tax advice or tax planning that relate directly to the operations and financial reporting of the fund.
"All Other Fees" represent fees billed for services provided to the fund or Fund Service Provider, a significant portion of which are assurance related, that relate directly to the operations and financial reporting of the fund, excluding those services that are reported under Audit Fees, Audit-Related Fees or Tax Fees.
Assurance services must be performed by an independent public accountant.
* * *
The aggregate non-audit fees billed by PwC and Deloitte Entities for services rendered to the Funds, FMR (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any Fund Service Provider for each of the last two fiscal years of the Funds are as follows:
Billed By | October 31, 2011 A | October 31, 2010 A |
PwC | $5,865,000 | $5,230,000 |
Deloitte Entities | $965,000 | $1,605,000 |
A Amounts may reflect rounding.
The trust's Audit Committee has considered non-audit services that were not pre-approved that were provided by PwC and Deloitte Entities to Fund Service Providers to be compatible with maintaining the independence of PwC and Deloitte Entities in their audits of the Funds, taking into account representations from PwC and Deloitte Entities, in accordance with Public Company Accounting Oversight Board rules, regarding their independence from the Funds and their related entities and FMR's review of the appropriateness and permissibility under applicable law of such non-audit services prior to their provision to the Fund Service Providers.
Audit Committee Pre-Approval Policies and Procedures
The trust's Audit Committee must pre-approve all audit and non-audit services provided by a fund's independent registered public accounting firm relating to the operations or financial reporting of the fund. Prior to the commencement of any audit or non-audit services to a fund, the Audit Committee reviews the services to determine whether they are appropriate and permissible under applicable law.
The Audit Committee has adopted policies and procedures to, among other purposes, provide a framework for the Committee's consideration of non-audit services by the audit firms that audit the Fidelity funds. The policies and procedures require that any non-audit service provided by a fund audit firm to a Fidelity fund and any non-audit service provided by a fund auditor to a Fund Service Provider that relates directly to the operations and financial reporting of a Fidelity fund ("Covered Service") are subject to approval by the Audit Committee before such service is provided.
All Covered Services must be approved in advance of provision of the service either: (i) by formal resolution of the Audit Committee, or (ii) by oral or written approval of the service by the Chair of the Audit Committee (or if the Chair is unavailable, such other member of the Audit Committee as may be designated by the Chair to act in the Chair's absence). The approval contemplated by (ii) above is permitted where the Treasurer determines that action on such an engagement is necessary before the next meeting of the Audit Committee.
Non-audit services provided by a fund audit firm to a Fund Service Provider that do not relate directly to the operations and financial reporting of a Fidelity fund are reported to the Audit Committee on a periodic basis.
Non-Audit Services Approved Pursuant to Rule 2-01(c)(7)(i)(C) and (ii) of Regulation S-X ("De Minimis Exception")
There were no non-audit services approved or required to be approved by the Audit Committee pursuant to the De Minimis Exception during the Funds' last two fiscal years relating to services provided to (i) the Funds or (ii) any Fund Service Provider that relate directly to the operations and financial reporting of the Funds.
Item 5. Audit Committee of Listed Registrants
Not applicable.
Item 6. Investments
(a) Not applicable.
(b) Not applicable
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies
Not applicable.
Item 9. Purchase of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders
There were no material changes to the procedures by which shareholders may recommend nominees to the trust's Board of Trustees.
Item 11. Controls and Procedures
(a)(i) The President and Treasurer and the Chief Financial Officer have concluded that the trust's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act) provide reasonable assurances that material information relating to the trust is made known to them by the appropriate persons, based on their evaluation of these controls and procedures as of a date within 90 days of the filing date of this report.
(a)(ii) There was no change in the trust's internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act) that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the trust's internal control over financial reporting.
Item 12. Exhibits
(a) | (1) | Code of Ethics pursuant to Item 2 of Form N-CSR is filed and attached hereto as EX-99.CODE ETH. |
(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: | December 28, 2011 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By: | /s/Kenneth B. Robins |
| Kenneth B. Robins |
| President and Treasurer |
|
|
Date: | December 28, 2011 |
By: | /s/Christine Reynolds |
| Christine Reynolds |
| Chief Financial Officer |
|
|
Date: | December 28, 2011 |