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, 2012 |
Item 1. Reports to Stockholders
Fidelity®
Capital Appreciation
Fund
Annual Report
October 31, 2012
(Fidelity Cover Art)
Contents
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 |
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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. © 2012 FMR LLC. All rights reserved.
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, 2012 | Past 1 | Past 5 | Past 10 |
Fidelity® Capital Appreciation Fund | 14.70% | -0.00% | 9.12% |
$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, 2002. 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
A. INST
A. INIT
Market Recap: U.S. stocks overcame bouts of volatility to post strong gains for the year ending October 31, 2012, and extend an uptrend that began in March 2009. The broad-based S&P 500® Index advanced 15.21% for the 12-month period, while the blue-chip-laden Dow Jones Industrial AverageSM and technology-heavy Nasdaq Composite® Index rose 12.56% and 12.21%, respectively. Debt problems in Europe, slower growth in China and uncertainty about a U.S. economic recovery put downward pressure on stocks early on and during a turbulent spring. However, beginning in June, stocks rose on central bank stimulus, steps to repair the eurozone and signs of life in the U.S. housing market. Equity benchmarks hit multiyear highs in September, with the Dow and the S&P® achieving their best marks since 2007, and the Nasdaq reaching a 12-year high. Stocks retreated in October, which was marked by disappointing corporate earnings reports and a two-day weather-related closure of the New York Stock Exchange. Among the 10 sectors that comprise the S&P 500®, most posted a double-digit gain, led by telecommunication services (+26%) and health care (+22%), with energy (+7%) and materials (+7%) lagging the most. Despite lingering eurozone turmoil and weaker local currencies versus the U.S. dollar, foreign developed-markets stocks rose modestly, with the MSCI® EAFE® Index adding 4.76%.
Comments from Fergus Shiel, Portfolio Manager of Fidelity® Capital Appreciation Fund: For the year, the fund's Retail Class shares returned 14.70%, modestly trailing the S&P 500®. Versus the index, my stock and sector selection added value to relative performance. However, a sizable and growing position in cash and cash equivalents dampened the fund's gain. Among sectors, information technology had the most positive impact, mainly because of favorable stock picking. At the stock level, a large overweighting in off-price clothing and home furnishings retailer TJX Companies aided performance. The company combined excellent management with a business plan well-suited to a challenging economy. Out-of-benchmark positions in apparel company PVH and US Airways Group also helped. The fund's largest holding during the period, and also its biggest contributor to absolute performance, was consumer electronics maker Apple. Conversely, stock selection in energy detracted, along with positioning in telecommunication services and consumer staples. A sizable overweighting in crude oil producer Occidental Petroleum was counterproductive. Non-benchmark stakes in specialty apparel retailer Express and air carrier United Continental Holdings also hurt results, as did unrewarding timing in owning investment bank Morgan Stanley. Express was not held 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, 2012 to October 31, 2012).
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 |
Capital Appreciation | .93% |
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|
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Actual |
| $ 1,000.00 | $ 1,008.30 | $ 4.69 |
Hypothetical A |
| $ 1,000.00 | $ 1,020.46 | $ 4.72 |
Class K | .79% |
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|
|
Actual |
| $ 1,000.00 | $ 1,009.30 | $ 3.99 |
Hypothetical A |
| $ 1,000.00 | $ 1,021.17 | $ 4.01 |
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 184/366 (to reflect the one-half year period).
Annual Report
Investment Changes (Unaudited)
Top Ten Stocks as of October 31, 2012 | ||
| % of fund's | % of fund's net assets |
Apple, Inc. | 6.0 | 5.8 |
United Continental Holdings, Inc. | 3.9 | 3.8 |
Amgen, Inc. | 3.6 | 1.6 |
Wal-Mart Stores, Inc. | 3.0 | 0.0 |
TJX Companies, Inc. | 2.9 | 3.7 |
Biogen Idec, Inc. | 2.7 | 3.0 |
eBay, Inc. | 2.7 | 0.0 |
General Electric Co. | 2.6 | 0.0 |
DSW, Inc. Class A | 2.6 | 2.5 |
PVH Corp. | 2.4 | 2.5 |
| 32.4 | |
Top Five Market Sectors as of October 31, 2012 | ||
| % of fund's | % of fund's net assets |
Consumer Discretionary | 27.5 | 33.1 |
Industrials | 11.8 | 10.3 |
Information Technology | 11.0 | 15.7 |
Health Care | 10.7 | 5.5 |
Financials | 7.3 | 9.3 |
Asset Allocation (% of fund's net assets) | |||||||
As of October 31, 2012 * | As of April 30, 2012 ** | ||||||
![]() | Stocks 84.5% |
| ![]() | Stocks 88.5% |
| ||
![]() | Short-Term |
| ![]() | Short-Term |
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* Foreign investments | 7.8% |
| ** Foreign investments | 1.5% |
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Annual Report
Investments October 31, 2012
Showing Percentage of Net Assets
Common Stocks - 84.5% | |||
Shares | Value (000s) | ||
CONSUMER DISCRETIONARY - 27.5% | |||
Automobiles - 0.8% | |||
Harley-Davidson, Inc. | 1,038,003 | $ 48,537 | |
Hotels, Restaurants & Leisure - 4.4% | |||
InterContinental Hotel Group PLC ADR | 614,939 | 15,140 | |
Las Vegas Sands Corp. | 1,513,462 | 70,285 | |
Paddy Power PLC (Ireland) | 1,359,658 | 100,347 | |
Starbucks Corp. | 773,360 | 35,497 | |
Whitbread PLC | 197,665 | 7,496 | |
William Hill PLC | 988,300 | 5,391 | |
Wyndham Worldwide Corp. | 632,723 | 31,889 | |
| 266,045 | ||
Household Durables - 2.8% | |||
M.D.C. Holdings, Inc. | 2,043,455 | 78,142 | |
PulteGroup, Inc. (a) | 5,341,584 | 92,623 | |
| 170,765 | ||
Internet & Catalog Retail - 0.6% | |||
HSN, Inc. | 316,400 | 16,459 | |
Liberty Media Corp. Interactive Series A (a) | 988,500 | 19,770 | |
| 36,229 | ||
Media - 6.1% | |||
CBS Corp. Class B | 395,371 | 12,810 | |
Charter Communications, Inc. Class A (a) | 642,678 | 49,750 | |
Comcast Corp. Class A (special) (non-vtg.) | 3,195,900 | 116,459 | |
DIRECTV (a) | 1,037,838 | 53,044 | |
Discovery Communications, Inc. (a) | 359,410 | 21,212 | |
Gannett Co., Inc. | 1,915,695 | 32,375 | |
Interpublic Group of Companies, Inc. | 8,703,145 | 87,902 | |
| 373,552 | ||
Specialty Retail - 9.7% | |||
Bed Bath & Beyond, Inc. (a) | 1,686,341 | 97,268 | |
DSW, Inc. Class A | 2,510,119 | 157,108 | |
Home Depot, Inc. | 1,681,863 | 103,233 | |
Limited Brands, Inc. | 1,138,131 | 54,505 | |
TJX Companies, Inc. | 4,304,460 | 179,195 | |
| 591,309 | ||
Common Stocks - continued | |||
Shares | Value (000s) | ||
CONSUMER DISCRETIONARY - continued | |||
Textiles, Apparel & Luxury Goods - 3.1% | |||
Oxford Industries, Inc. | 803,333 | $ 44,569 | |
PVH Corp. | 1,337,696 | 147,133 | |
| 191,702 | ||
TOTAL CONSUMER DISCRETIONARY | 1,678,139 | ||
CONSUMER STAPLES - 7.1% | |||
Food & Staples Retailing - 3.3% | |||
Carrefour SA | 741,685 | 17,919 | |
Wal-Mart Stores, Inc. | 2,429,732 | 182,278 | |
| 200,197 | ||
Food Products - 0.4% | |||
Bunge Ltd. | 306,113 | 21,743 | |
Tobacco - 3.4% | |||
Altria Group, Inc. | 1,433,622 | 45,589 | |
Lorillard, Inc. | 1,140,514 | 132,311 | |
Reynolds American, Inc. | 770,766 | 32,095 | |
| 209,995 | ||
TOTAL CONSUMER STAPLES | 431,935 | ||
ENERGY - 5.7% | |||
Energy Equipment & Services - 0.6% | |||
Cameron International Corp. (a) | 767,185 | 38,850 | |
Oil, Gas & Consumable Fuels - 5.1% | |||
Alpha Natural Resources, Inc. (a)(d) | 4,053,035 | 34,735 | |
Anadarko Petroleum Corp. | 494,841 | 34,050 | |
Concho Resources, Inc. (a) | 365,892 | 31,511 | |
Hess Corp. | 1,008,375 | 52,698 | |
Occidental Petroleum Corp. | 1,111,542 | 87,767 | |
Pioneer Natural Resources Co. | 197,700 | 20,887 | |
Rosetta Resources, Inc. (a) | 214,500 | 9,876 | |
Suncor Energy, Inc. | 1,187,700 | 39,862 | |
| 311,386 | ||
TOTAL ENERGY | 350,236 | ||
FINANCIALS - 7.3% | |||
Capital Markets - 2.8% | |||
Goldman Sachs Group, Inc. | 346,037 | 42,351 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
FINANCIALS - continued | |||
Capital Markets - continued | |||
Morgan Stanley | 3,954,753 | $ 68,734 | |
T. Rowe Price Group, Inc. | 323,935 | 21,036 | |
UBS AG | 2,471,500 | 37,081 | |
| 169,202 | ||
Commercial Banks - 1.5% | |||
Banco Bilbao Vizcaya Argentaria SA | 1,582,200 | 13,221 | |
Banco Santander SA (Spain) | 1,681,109 | 12,657 | |
BNP Paribas SA | 543,700 | 27,350 | |
Lloyds Banking Group PLC (a) | 24,715,000 | 16,275 | |
Societe Generale Series A (a) | 691,985 | 21,997 | |
| 91,500 | ||
Diversified Financial Services - 1.8% | |||
Citigroup, Inc. | 2,966,200 | 110,906 | |
Insurance - 0.3% | |||
American International Group, Inc. (a) | 444,884 | 15,540 | |
Real Estate Management & Development - 0.9% | |||
CBRE Group, Inc. (a) | 3,159,699 | 56,938 | |
TOTAL FINANCIALS | 444,086 | ||
HEALTH CARE - 10.7% | |||
Biotechnology - 9.7% | |||
Alexion Pharmaceuticals, Inc. (a) | 357,841 | 32,342 | |
Amgen, Inc. | 2,511,224 | 217,334 | |
ARIAD Pharmaceuticals, Inc. (a) | 954,052 | 20,560 | |
Biogen Idec, Inc. (a) | 1,186,719 | 164,028 | |
Gilead Sciences, Inc. (a) | 1,087,428 | 73,032 | |
Onyx Pharmaceuticals, Inc. (a) | 558,733 | 43,782 | |
PDL BioPharma, Inc. (d) | 318,375 | 2,372 | |
Regeneron Pharmaceuticals, Inc. (a) | 286,741 | 40,803 | |
| 594,253 | ||
Health Care Providers & Services - 0.4% | |||
Brookdale Senior Living, Inc. (a) | 889,702 | 20,872 | |
Pharmaceuticals - 0.6% | |||
Elan Corp. PLC sponsored ADR (a) | 3,460,802 | 37,377 | |
TOTAL HEALTH CARE | 652,502 | ||
Common Stocks - continued | |||
Shares | Value (000s) | ||
INDUSTRIALS - 11.8% | |||
Aerospace & Defense - 1.6% | |||
Textron, Inc. | 3,891,838 | $ 98,113 | |
Airlines - 6.3% | |||
Delta Air Lines, Inc. (a) | 5,369,950 | 51,713 | |
United Continental Holdings, Inc. (a)(d) | 12,267,155 | 235,652 | |
US Airways Group, Inc. (a)(d) | 8,108,223 | 98,758 | |
| 386,123 | ||
Commercial Services & Supplies - 0.1% | |||
Edenred SA | 197,694 | 5,721 | |
Electrical Equipment - 0.2% | |||
Alstom SA | 296,689 | 10,133 | |
Industrial Conglomerates - 2.9% | |||
General Electric Co. | 7,513,991 | 158,245 | |
Koninklijke Philips Electronics NV | 790,900 | 19,809 | |
| 178,054 | ||
Road & Rail - 0.7% | |||
Union Pacific Corp. | 365,930 | 45,020 | |
TOTAL INDUSTRIALS | 723,164 | ||
INFORMATION TECHNOLOGY - 11.0% | |||
Computers & Peripherals - 6.0% | |||
Apple, Inc. | 613,592 | 365,148 | |
Internet Software & Services - 3.6% | |||
eBay, Inc. (a) | 3,361,282 | 162,316 | |
VeriSign, Inc. (a) | 1,086,361 | 40,271 | |
Yahoo!, Inc. (a) | 988,500 | 16,617 | |
| 219,204 | ||
IT Services - 1.0% | |||
Visa, Inc. Class A | 445,195 | 61,775 | |
Software - 0.4% | |||
FactSet Research Systems, Inc. | 299,220 | 27,094 | |
TOTAL INFORMATION TECHNOLOGY | 673,221 | ||
MATERIALS - 2.3% | |||
Chemicals - 1.6% | |||
Monsanto Co. | 790,978 | 68,079 | |
Syngenta AG (Switzerland) | 79,100 | 30,840 | |
| 98,919 | ||
Common Stocks - continued | |||
Shares | Value (000s) | ||
MATERIALS - continued | |||
Metals & Mining - 0.7% | |||
Cliffs Natural Resources, Inc. | 691,939 | $ 25,097 | |
Walter Energy, Inc. | 543,670 | 19,007 | |
| 44,104 | ||
TOTAL MATERIALS | 143,023 | ||
TELECOMMUNICATION SERVICES - 0.6% | |||
Diversified Telecommunication Services - 0.6% | |||
Iliad SA | 138,403 | 21,321 | |
Telecom Italia SpA | 17,799,700 | 16,422 | |
| 37,743 | ||
UTILITIES - 0.5% | |||
Multi-Utilities - 0.5% | |||
Sempra Energy | 450,500 | 31,422 | |
TOTAL COMMON STOCKS (Cost $4,444,097) |
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Money Market Funds - 16.1% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.19% (b) | 922,143,795 | 922,144 | |
Fidelity Securities Lending Cash Central Fund, 0.19% (b)(c) | 63,559,575 | 63,560 | |
TOTAL MONEY MARKET FUNDS (Cost $985,704) |
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TOTAL INVESTMENT PORTFOLIO - 100.6% (Cost $5,429,801) | 6,151,175 | ||
NET OTHER ASSETS (LIABILITIES) - (0.6)% | (35,604) | ||
NET ASSETS - 100% | $ 6,115,571 |
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 | $ 686 |
Fidelity Securities Lending Cash Central Fund | 1,801 |
Total | $ 2,487 |
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, beginning of period | Purchases | Sales Proceeds | Dividend Income | Value, |
Inhibitex, Inc. | $ - | $ 117,572 | $ 128,705 | $ - | $ - |
Oxford Industries, Inc. | 40,059 | 4,471 | 15,326 | 490 | - |
Total | $ 40,059 | $ 122,043 | $ 144,031 | $ 490 | $ - |
Other Information |
The following is a summary of the inputs used, as of October 31, 2012, 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 | $ 1,678,139 | $ 1,678,139 | $ - | $ - |
Consumer Staples | 431,935 | 431,935 | - | - |
Energy | 350,236 | 350,236 | - | - |
Financials | 444,086 | 364,852 | 79,234 | - |
Health Care | 652,502 | 652,502 | - | - |
Industrials | 723,164 | 703,355 | 19,809 | - |
Information Technology | 673,221 | 673,221 | - | - |
Materials | 143,023 | 112,183 | 30,840 | - |
Telecommunication Services | 37,743 | 21,321 | 16,422 | - |
Utilities | 31,422 | 31,422 | - | - |
Money Market Funds | 985,704 | 985,704 | - | - |
Total Investments in Securities: | $ 6,151,175 | $ 6,004,870 | $ 146,305 | $ - |
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, 2012 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $62,408) - See accompanying schedule: Unaffiliated issuers (cost $4,444,097) | $ 5,165,471 |
|
Fidelity Central Funds (cost $985,704) | 985,704 |
|
Total Investments (cost $5,429,801) |
| $ 6,151,175 |
Cash |
| 2,469 |
Foreign currency held at value (cost $16) | 16 | |
Receivable for investments sold | 39,992 | |
Receivable for fund shares sold | 6,950 | |
Dividends receivable | 347 | |
Distributions receivable from Fidelity Central Funds | 101 | |
Other receivables | 508 | |
Total assets | 6,201,558 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 6,387 | |
Payable for fund shares redeemed | 11,128 | |
Accrued management fee | 3,796 | |
Other affiliated payables | 927 | |
Other payables and accrued expenses | 189 | |
Collateral on securities loaned, at value | 63,560 | |
Total liabilities | 85,987 | |
|
|
|
Net Assets | $ 6,115,571 | |
Net Assets consist of: |
| |
Paid in capital | $ 5,258,178 | |
Undistributed net investment income | 24,098 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 111,921 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 721,374 | |
Net Assets | $ 6,115,571 |
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, 2012 | |
|
|
|
Capital Appreciation: |
|
|
Net Asset Value, offering price and redemption price per share ($4,677,933 ÷ 160,133 shares) | $ 29.21 | |
|
|
|
Class K: | $ 29.28 |
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, 2012 | |
|
|
|
Investment Income |
|
|
Dividends (including $490 earned from other affiliated issuers) |
| $ 80,298 |
Income from Fidelity Central Funds |
| 2,487 |
Total income |
| 82,785 |
|
|
|
Expenses | ||
Management fee | $ 31,121 | |
Performance adjustment | 9,558 | |
Transfer agent fees | 9,496 | |
Accounting and security lending fees | 1,137 | |
Custodian fees and expenses | 130 | |
Independent trustees' compensation | 36 | |
Appreciation in deferred trustee compensation account | 1 | |
Registration fees | 158 | |
Audit | 66 | |
Legal | 21 | |
Miscellaneous | 52 | |
Total expenses before reductions | 51,776 | |
Expense reductions | (452) | 51,324 |
Net investment income (loss) | 31,461 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 246,386 | |
Other affiliated issuers | 14,843 |
|
Foreign currency transactions | 172 | |
Total net realized gain (loss) |
| 261,401 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 450,309 | |
Assets and liabilities in foreign currencies | (54) | |
Total change in net unrealized appreciation (depreciation) |
| 450,255 |
Net gain (loss) | 711,656 | |
Net increase (decrease) in net assets resulting from operations | $ 743,117 |
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) | $ 31,461 | $ 14,710 |
Net realized gain (loss) | 261,401 | 499,527 |
Change in net unrealized appreciation (depreciation) | 450,255 | (175,468) |
Net increase (decrease) in net assets resulting | 743,117 | 338,769 |
Distributions to shareholders from net investment income | (10,087) | (5,716) |
Share transactions - net increase (decrease) | 207,380 | (540,966) |
Total increase (decrease) in net assets | 940,410 | (207,913) |
|
|
|
Net Assets | ||
Beginning of period | 5,175,161 | 5,383,074 |
End of period (including undistributed net investment income of $24,098 and undistributed net investment income of $3,573, respectively) | $ 6,115,571 | $ 5,175,161 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Capital Appreciation
Years ended October 31, | 2012 | 2011 | 2010 | 2009 | 2008 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 25.51 | $ 24.03 | $ 18.71 | $ 16.68 | $ 32.13 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .15 | .06 | .04 | .04 | .16 |
Net realized and unrealized gain (loss) | 3.59 | 1.44 | 5.30 | 2.17 | (13.27) |
Total from investment operations | 3.74 | 1.50 | 5.34 | 2.21 | (13.11) |
Distributions from net investment income | (.04) | (.02) | (.02) | (.18) | (.12) |
Distributions from net realized gain | - | - | - | - | (2.22) |
Total distributions | (.04) | (.02) | (.02) | (.18) | (2.34) |
Net asset value, end of period | $ 29.21 | $ 25.51 | $ 24.03 | $ 18.71 | $ 16.68 |
Total Return A | 14.70% | 6.24% | 28.57% | 13.54% | (43.80)% |
Ratios to Average Net AssetsC,E |
|
|
|
|
|
Expenses before reductions | .96% | .91% | .88% | .79% | .82% |
Expenses net of fee waivers, if any | .96% | .91% | .88% | .79% | .82% |
Expenses net of all reductions | .95% | .90% | .86% | .78% | .82% |
Net investment income (loss) | .53% | .25% | .16% | .25% | .67% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (in millions) | $ 4,678 | $ 4,319 | $ 4,672 | $ 4,627 | $ 4,794 |
Portfolio turnover rateD | 169% | 182% | 186% | 243% | 157% |
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, | 2012 | 2011 | 2010 | 2009 | 2008 G |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 25.57 | $ 24.09 | $ 18.73 | $ 16.69 | $ 25.11 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) D | .19 | .10 | .08 | .08 | .03 |
Net realized and unrealized gain (loss) | 3.61 | 1.44 | 5.31 | 2.18 | (8.45) |
Total from investment operations | 3.80 | 1.54 | 5.39 | 2.26 | (8.42) |
Distributions from net investment income | (.09) | (.06) | (.03) | (.22) | - |
Net asset value, end of period | $ 29.28 | $ 25.57 | $ 24.09 | $ 18.73 | $ 16.69 |
Total Return B,C | 14.92% | 6.41% | 28.80% | 13.85% | (33.53)% |
Ratios to Average Net AssetsE,H |
|
|
|
|
|
Expenses before reductions | .81% | .75% | .70% | .55% | .66% A |
Expenses net of fee waivers, if any | .81% | .75% | .70% | .55% | .66% A |
Expenses net of all reductions | .80% | .74% | .68% | .54% | .65% A |
Net investment income (loss) | .68% | .41% | .34% | .49% | .41% A |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (in millions) | $ 1,438 | $ 856 | $ 712 | $ 283 | $ 93 |
Portfolio turnover rate F | 169% | 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, 2012
(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
Notes to Financial Statements - continued
(Amounts in thousands except percentages)
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. In accordance with valuation policies and procedures approved by the Board of Trustees (the Board), the Fund attempts to obtain prices from one or more third party pricing vendors or brokers to value its investments. When current market prices, quotations or rates are not readily available or reliable, securities will be fair valued in good faith by the FMR Fair Value Committee (the Committee), in accordance with procedures adopted by the Fund's Board. Factors used in determining fair value vary by security type and 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 Committee oversees the Fund's valuation policies and procedures and is responsible for approving and reporting to the Board all fair value determinations.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the Fund's own assumptions based on the best information available)
Valuation techniques used to value the Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by a third party pricing vendor on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when 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. Utilizing these techniques may result in transfers between Level 1 and Level 2.
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value (NAV) each business day and are categorized as Level 1 in the hierarchy.
Annual Report
3. Significant Accounting Policies - continued
Security Valuation - continued
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, 2012 is included at the end of the Fund's Schedule of Investments.
Foreign Currency Translation. The Fund may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rates at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. 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. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Annual Report
Notes to Financial Statements - continued
(Amounts in thousands except percentages)
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 under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for income taxes is required. As of October 31, 2012, the Fund did not have any unrecognized tax benefits in the financial statements; nor is the Fund aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. A fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are declared and recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. 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, deferred trustees compensation, capital loss carryforwards and losses deferred due to wash sales.
Annual Report
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 | $ 895,765 |
Gross unrealized depreciation | (184,361) |
Net unrealized appreciation (depreciation) on securities and other investments | $ 711,404 |
|
|
Tax Cost | $ 5,439,771 |
The tax-based components of distributable earnings as of period end were as follows:
Undistributed ordinary income | $ 24,199 |
Undistributed long-term capital gain | $ 121,892 |
Net unrealized appreciation (depreciation) | $ 711,404 |
The tax character of distributions paid was as follows:
| October 31, 2012 | October 31, 2011 |
Ordinary Income | $ 10,087 | $ 5,716 |
New Accounting Pronouncement. In December 2011, the Financial Accounting Standards Board issued Accounting Standard Update No. 2011-11, Disclosures about Offsetting Assets and Liabilities. The update creates new disclosure requirements requiring entities to disclose both gross and net information for derivatives and other financial instruments that are either offset in the Statement of Assets and Liabilities or subject to an enforceable master netting arrangement or similar agreement. The disclosure requirements are effective for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods. 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 $8,654,950 and $9,325,943, respectively.
Annual Report
Notes to Financial Statements - continued
(Amounts in thousands except percentages)
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 an annualized 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 .73% 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 | $ 8,910 | .20 |
Class K | 586 | .05 |
| $ 9,496 |
|
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 each month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $266 for the period.
Annual Report
6. Committed Line of Credit.
The Fund participates with other funds managed by FMR or an affiliate in a $4.25 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $15 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. At period end, there were no security loans outstanding with FCM. 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 $1,801, including $116 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 $452 for the period.
Annual Report
Notes to Financial Statements - continued
(Amounts in thousands except percentages)
9. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended October 31, | 2012 | 2011 |
From net investment income |
|
|
Capital Appreciation | $ 7,160 | $ 3,856 |
Class K | 2,927 | 1,860 |
Total | $ 10,087 | $ 5,716 |
10. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
Years ended October 31, | 2012 | 2011 | 2012 | 2011 |
Capital Appreciation |
|
|
|
|
Shares sold | 33,131 | 18,860 | $ 930,591 | $ 481,703 |
Reinvestment of distributions | 278 | 148 | 6,866 | 3,700 |
Shares redeemed | (42,560) | (44,166) | (1,163,912) | (1,127,770) |
Net increase (decrease) | (9,151) | (25,158) | $ (226,455) | $ (642,367) |
Class K |
|
|
|
|
Shares sold | 25,274 | 10,289 | $ 701,363 | $ 263,401 |
Reinvestment of distributions | 118 | 74 | 2,927 | 1,860 |
Shares redeemed | (9,763) | (6,424) | (270,455) | (163,860) |
Net increase (decrease) | 15,629 | 3,939 | $ 433,835 | $ 101,401 |
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, 2012, 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, 2012 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
December 11, 2012
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 236 funds advised by FMR or an affiliate. Mr. Curvey oversees 443 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 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 (77) | |
| Year of Election or Appointment: 2007 Mr. Curvey is Trustee and 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 (55) | |
| 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 (64) | |
| 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 (59) | |
| 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 Entertainment, Inc. (restaurant and entertainment complexes, 2010-present), Earth Fare, Inc. (retail grocery, 2012-present), The Hillman Companies, Inc. (hardware wholesalers, 2010-present), and Bristol-Myers Squibb Company (global pharmaceuticals, 2008-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 (68) | |
| 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 Chairman of the Board of Directors of the Philharmonic Center for the Arts in Naples, Florida (2012-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 (68) | |
| 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). Previously, Mr. Mauriello served as a Director of the Hamilton Funds of the Bank of New York (2006-2007) and of Arcadia Resources Inc. (health care services and products, 2007-2012). |
Robert W. Selander (62) | |
| 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 (68) | |
| Year of Election or Appointment: 2005 Ms. Small is a member of the Board of Directors (2009-present) and Chair of the Investment Committee (2010-present) of the Teagle Foundation. Ms. Small also serves on the Investment Committee of the Berkshire Taconic Community Foundation (2008-present). Previously, Ms. Small served as Chairperson (2002-2008) and a member of the Investment Committee and Chairperson (2008-2012) and a member of the Board of Trustees 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 (73) | |
| 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 a Director of Univar Inc. (global distributor of commodity and specialty chemicals, Chairman from 2010-May 2012 and Lead Director from May 2012-present), Teradata Corporation (data warehousing and technology solutions, 2008-present), Maersk Inc. (industrial conglomerate), and Tyco International, Ltd. (multinational manufacturing and services, 2007-present), and a member of the Advisory Board for Metalmark Capital LLC (private equity investment, 2005-present). Mr. Stavropoulos is an operating 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, a Trustee of the Rollin L. Gerstacker Foundation, and a Director of the Naples Philharmonic Center for the Arts. Previously, Mr. Stavropoulos served as a Director of Chemical Financial Corporation (bank holding company, 1993-2012). |
David M. Thomas (63) | |
| 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), and a Director of Fortune Brands, Inc. (consumer products, 2000-2011). In addition, Mr. Thomas serves as Non-Executive Chairman of the Board of Directors of Fortune Brands Home and Security (home and security products, 2011-present), and as a member of the Board of Directors of Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (62) | |
| 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). |
+ 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 David A. Rosow and Garnett A. Smith may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235. 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 (82) | |
| 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 (68) | |
| 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). |
David A. Rosow (70) | |
| Year of Election or Appointment: 2012 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Chairman and Chief Executive Officer of International Golf Group, Inc. (golf course development, 1989-present). Previously, Mr. Rosow served as Chairman and Chief Executive Officer of Rosow & Company, Inc. (private investment company, 1989-2011), a Lead Director of Hudson United Bancorp (2001-2006) and as a Director of TD Banknorth (1996-2006). In addition, Mr. Rosow is a member (2008-present) and President (2009-present) of the Town Council of Palm Beach, Florida. |
Garnett A. Smith (65) | |
| Year of Election or Appointment: 2012 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Prior to Mr. Smith's retirement, he served as Chairman and Chief Executive Officer of Inbrand Corp. (manufacturer of personal absorbent products, 1990-1997). He also served as President (1986-1990) of Inbrand Corp. Prior to his employment with Inbrand Corp., he was employed by a retail fabric chain and North Carolina National Bank. In addition, Mr. Smith is a board member of the Jackson Hole Land Trust (2009-present). |
Kenneth B. Robins (43) | |
| 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 (47) | |
| Year of Election or Appointment: 2006 Vice President of certain Equity Funds. Mr. Herring also serves as President of Fidelity Research & Analysis Company (2010-present), Chief Investment Officer and Director of Fidelity Management & Research (U.K.) Inc. (2010-present) and Group Chief Investment 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 (48) | |
| 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 (44) | |
| 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 (43) | |
| 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). |
Elizabeth Paige Baumann (44) | |
| Year of Election or Appointment: 2012 Anti-Money Laundering (AML) Officer of the Fidelity funds. Ms. Baumann also serves as AML Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2012-present), Chief AML Officer of FMR LLC (2012-present), and is an employee of Fidelity Investments. Previously, Ms. Baumann served as Vice President and Deputy Anti-Money Laundering Officer (2007-2012). |
Christine Reynolds (54) | |
| 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). |
Joseph A. Hanlon (44) | |
| Year of Election or Appointment: 2012 Chief Compliance Officer of Fidelity's Equity and High Income Funds. Mr. Hanlon serves as Compliance Officer of FMR, FMR Co., Inc., Fidelity Investments Money Management, Inc. (FIMM), Fidelity Research and Analysis Company (FRAC), Fidelity Management & Research (Japan) Inc., Fidelity Management & Research (U.K.) Inc., Fidelity Management & Research (Hong Kong), and Strategic Advisers, Inc. (2009-present), as Senior Vice President of the Fidelity Asset Management Division (2009-present), and is an employee of Fidelity Investments. |
Joseph F. Zambello (55) | |
| 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 (45) | |
| Year of Election or Appointment: 2008 Deputy Treasurer of Fidelity's Equity and High Income Funds. Mr. Deberghes also serves as Vice President (2011-present) and Assistant Treasurer (2010-present) of other Fidelity funds, 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). |
Stephen Sadoski (41) | |
| Year of Election or Appointment: 2012 Deputy Treasurer of Fidelity's Equity and High Income Funds. Mr. Sadoski also serves as Assistant Treasurer of other Fidelity funds (2012-present) and is an employee of Fidelity Investments (2012-present). Previously, Mr. Sadoski served as an assistant chief accountant in the Division of Investment Management of the Securities and Exchange Commission (SEC) (2009-2012) and as a senior manager at Deloitte & Touche (1997-2009). |
Stephanie J. Dorsey (43) | |
| 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 (54) | |
| 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 (54) | |
| 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 (44) | |
| 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 Capital Appreciation Fund voted to pay on December 10, 2012, to shareholders of record at the opening of business on December 07, 2012, a distribution of $0.590 per share derived from capital gains realized from sales of portfolio securities and a dividend of $0.147 per share from net investment income.
The fund hereby designates as a capital gain dividend with respect to the taxable year ended October 31, 2012, $122,761,195, or, if subsequently determined to be different, the net capital gain of such year.
The fund designates 100% of the dividends distributed during the fiscal year as qualifying for the dividends-received deduction for corporate shareholders.
The 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 2013 of amounts for use in preparing 2012 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, at each of its meetings, considers 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 and chaired by 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 2012 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 relative to peer funds; (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 exist and 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 also considered the fund's investment objective, strategies, and related investment philosophy. 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 continued to increase the resources devoted to non-U.S. offices, including expansion of Fidelity's global investment organization. The Board noted that Fidelity's analysts have extensive resources, tools and capabilities that allow them to conduct sophisticated quantitative and fundamental analysis, as well as credit analysis of issuers, counterparties and guarantors. 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 that 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 its deliberations, the Board considered the Investment Advisers' trading and risk management 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 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.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
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.
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) persisting in efforts to enhance Fidelity's research capabilities, in particular, international research; (iii) launching new funds and making other enhancements to meet client needs for global and income-oriented solutions; (iv) continuing to launch dedicated lower cost underlying funds to meet investment management's portfolio construction needs related to expanding underlying fund options, specifically for the Freedom Fund product lines; (v) adopting a "Stock Selector" sector neutral investment approach and employing a team of portfolio managers who are sector specialists to manage certain funds; (vi) rationalizing product lines and gaining increased efficiencies through the mergers of several funds into other funds; (vii) strengthening the Spartan Index Fund product line by adding new funds and/or new low-cost institutional share classes, restructuring fund expenses to accommodate new classes, and reducing investment minimums for certain classes of shares; (viii) modifying the eligibility criteria for Institutional Class shares to increase their appeal to government entities and charitable investors; and (ix) reducing certain transfer agent fee rates.
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, 2011, 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 (top of box) and the 75th percentile return (bottom 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
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 third quartile for the one-year period and the second quartile for the three- and five-year periods. The Board also noted that the investment performance of the retail class of the fund compared favorably to its benchmark for the three- and five-year periods, although the fund's one-year total return was lower than its benchmark. 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.
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 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 2011. 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 2011.
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. The Board noted the findings of the 2010 ad hoc joint committee (created with the board of other Fidelity funds), which reviewed and compared 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.
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 economies of scale, if any, 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) the potential to further rationalize the Fidelity fund lineup with the possibility of achieving savings for the funds and Fidelity; (iii) Fidelity's compensation structure for portfolio managers and other key 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) the realization of fall-out benefits in certain Fidelity business units; (vi) Fidelity's group fee structures, the potential impact of regulatory changes on such structures, and the rationale for the individual fee rates of certain funds; (vii) fund profitability methodology, including Fidelity's cost allocation methodology, and the impact of certain factors on fund profitability results; (viii) trends regarding industry use of performance fee structures and the possibility of implementing performance fee structures for additional funds; and (ix) the impact of net redemptions from the Fidelity funds.
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
Smithfield, RI
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
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and Account Assistance 1-800-544-6666
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www.fidelity.com
CAF-UANN-1212 1.784775.109
Fidelity®
Capital Appreciation
Fund -
Class K
Annual Report
October 31, 2012
(Fidelity Cover Art)
Contents
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. © 2012 FMR LLC. All rights reserved.
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, 2012 | Past 1 | Past 5 | Past 10 |
Class KA | 14.92% | 0.17% | 9.21% |
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, 2002. 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
A. INST
A. INIT
Market Recap: U.S. stocks overcame bouts of volatility to post strong gains for the year ending October 31, 2012, and extend an uptrend that began in March 2009. The broad-based S&P 500® Index advanced 15.21% for the 12-month period, while the blue-chip-laden Dow Jones Industrial AverageSM and technology-heavy Nasdaq Composite® Index rose 12.56% and 12.21%, respectively. Debt problems in Europe, slower growth in China and uncertainty about a U.S. economic recovery put downward pressure on stocks early on and during a turbulent spring. However, beginning in June, stocks rose on central bank stimulus, steps to repair the eurozone and signs of life in the U.S. housing market. Equity benchmarks hit multiyear highs in September, with the Dow and the S&P® achieving their best marks since 2007, and the Nasdaq reaching a 12-year high. Stocks retreated in October, which was marked by disappointing corporate earnings reports and a two-day weather-related closure of the New York Stock Exchange. Among the 10 sectors that comprise the S&P 500®, most posted a double-digit gain, led by telecommunication services (+26%) and health care (+22%), with energy (+7%) and materials (+7%) lagging the most. Despite lingering eurozone turmoil and weaker local currencies versus the U.S. dollar, foreign developed-markets stocks rose modestly, with the MSCI® EAFE® Index adding 4.76%.
Comments from Fergus Shiel, Portfolio Manager of Fidelity® Capital Appreciation Fund: For the year, the fund's Class K shares returned 14.92%, modestly trailing the S&P 500®. Versus the index, my stock and sector selection added value to relative performance. However, a sizable and growing position in cash and cash equivalents dampened the fund's gain. Among sectors, information technology had the most positive impact, mainly because of favorable stock picking. At the stock level, a large overweighting in off-price clothing and home furnishings retailer TJX Companies aided performance. The company combined excellent management with a business plan well-suited to a challenging economy. Out-of-benchmark positions in apparel company PVH and US Airways Group also helped. The fund's largest holding during the period, and also its biggest contributor to absolute performance, was consumer electronics maker Apple. Conversely, stock selection in energy detracted, along with positioning in telecommunication services and consumer staples. A sizable overweighting in crude oil producer Occidental Petroleum was counterproductive. Non-benchmark stakes in specialty apparel retailer Express and air carrier United Continental Holdings also hurt results, as did unrewarding timing in owning investment bank Morgan Stanley. Express was not held 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, 2012 to October 31, 2012).
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 |
Capital Appreciation | .93% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,008.30 | $ 4.69 |
Hypothetical A |
| $ 1,000.00 | $ 1,020.46 | $ 4.72 |
Class K | .79% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,009.30 | $ 3.99 |
Hypothetical A |
| $ 1,000.00 | $ 1,021.17 | $ 4.01 |
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 184/366 (to reflect the one-half year period).
Annual Report
Investment Changes (Unaudited)
Top Ten Stocks as of October 31, 2012 | ||
| % of fund's | % of fund's net assets |
Apple, Inc. | 6.0 | 5.8 |
United Continental Holdings, Inc. | 3.9 | 3.8 |
Amgen, Inc. | 3.6 | 1.6 |
Wal-Mart Stores, Inc. | 3.0 | 0.0 |
TJX Companies, Inc. | 2.9 | 3.7 |
Biogen Idec, Inc. | 2.7 | 3.0 |
eBay, Inc. | 2.7 | 0.0 |
General Electric Co. | 2.6 | 0.0 |
DSW, Inc. Class A | 2.6 | 2.5 |
PVH Corp. | 2.4 | 2.5 |
| 32.4 | |
Top Five Market Sectors as of October 31, 2012 | ||
| % of fund's | % of fund's net assets |
Consumer Discretionary | 27.5 | 33.1 |
Industrials | 11.8 | 10.3 |
Information Technology | 11.0 | 15.7 |
Health Care | 10.7 | 5.5 |
Financials | 7.3 | 9.3 |
Asset Allocation (% of fund's net assets) | |||||||
As of October 31, 2012 * | As of April 30, 2012 ** | ||||||
![]() | Stocks 84.5% |
| ![]() | Stocks 88.5% |
| ||
![]() | Short-Term |
| ![]() | Short-Term |
| ||
* Foreign investments | 7.8% |
| ** Foreign investments | 1.5% |
|
Annual Report
Investments October 31, 2012
Showing Percentage of Net Assets
Common Stocks - 84.5% | |||
Shares | Value (000s) | ||
CONSUMER DISCRETIONARY - 27.5% | |||
Automobiles - 0.8% | |||
Harley-Davidson, Inc. | 1,038,003 | $ 48,537 | |
Hotels, Restaurants & Leisure - 4.4% | |||
InterContinental Hotel Group PLC ADR | 614,939 | 15,140 | |
Las Vegas Sands Corp. | 1,513,462 | 70,285 | |
Paddy Power PLC (Ireland) | 1,359,658 | 100,347 | |
Starbucks Corp. | 773,360 | 35,497 | |
Whitbread PLC | 197,665 | 7,496 | |
William Hill PLC | 988,300 | 5,391 | |
Wyndham Worldwide Corp. | 632,723 | 31,889 | |
| 266,045 | ||
Household Durables - 2.8% | |||
M.D.C. Holdings, Inc. | 2,043,455 | 78,142 | |
PulteGroup, Inc. (a) | 5,341,584 | 92,623 | |
| 170,765 | ||
Internet & Catalog Retail - 0.6% | |||
HSN, Inc. | 316,400 | 16,459 | |
Liberty Media Corp. Interactive Series A (a) | 988,500 | 19,770 | |
| 36,229 | ||
Media - 6.1% | |||
CBS Corp. Class B | 395,371 | 12,810 | |
Charter Communications, Inc. Class A (a) | 642,678 | 49,750 | |
Comcast Corp. Class A (special) (non-vtg.) | 3,195,900 | 116,459 | |
DIRECTV (a) | 1,037,838 | 53,044 | |
Discovery Communications, Inc. (a) | 359,410 | 21,212 | |
Gannett Co., Inc. | 1,915,695 | 32,375 | |
Interpublic Group of Companies, Inc. | 8,703,145 | 87,902 | |
| 373,552 | ||
Specialty Retail - 9.7% | |||
Bed Bath & Beyond, Inc. (a) | 1,686,341 | 97,268 | |
DSW, Inc. Class A | 2,510,119 | 157,108 | |
Home Depot, Inc. | 1,681,863 | 103,233 | |
Limited Brands, Inc. | 1,138,131 | 54,505 | |
TJX Companies, Inc. | 4,304,460 | 179,195 | |
| 591,309 | ||
Common Stocks - continued | |||
Shares | Value (000s) | ||
CONSUMER DISCRETIONARY - continued | |||
Textiles, Apparel & Luxury Goods - 3.1% | |||
Oxford Industries, Inc. | 803,333 | $ 44,569 | |
PVH Corp. | 1,337,696 | 147,133 | |
| 191,702 | ||
TOTAL CONSUMER DISCRETIONARY | 1,678,139 | ||
CONSUMER STAPLES - 7.1% | |||
Food & Staples Retailing - 3.3% | |||
Carrefour SA | 741,685 | 17,919 | |
Wal-Mart Stores, Inc. | 2,429,732 | 182,278 | |
| 200,197 | ||
Food Products - 0.4% | |||
Bunge Ltd. | 306,113 | 21,743 | |
Tobacco - 3.4% | |||
Altria Group, Inc. | 1,433,622 | 45,589 | |
Lorillard, Inc. | 1,140,514 | 132,311 | |
Reynolds American, Inc. | 770,766 | 32,095 | |
| 209,995 | ||
TOTAL CONSUMER STAPLES | 431,935 | ||
ENERGY - 5.7% | |||
Energy Equipment & Services - 0.6% | |||
Cameron International Corp. (a) | 767,185 | 38,850 | |
Oil, Gas & Consumable Fuels - 5.1% | |||
Alpha Natural Resources, Inc. (a)(d) | 4,053,035 | 34,735 | |
Anadarko Petroleum Corp. | 494,841 | 34,050 | |
Concho Resources, Inc. (a) | 365,892 | 31,511 | |
Hess Corp. | 1,008,375 | 52,698 | |
Occidental Petroleum Corp. | 1,111,542 | 87,767 | |
Pioneer Natural Resources Co. | 197,700 | 20,887 | |
Rosetta Resources, Inc. (a) | 214,500 | 9,876 | |
Suncor Energy, Inc. | 1,187,700 | 39,862 | |
| 311,386 | ||
TOTAL ENERGY | 350,236 | ||
FINANCIALS - 7.3% | |||
Capital Markets - 2.8% | |||
Goldman Sachs Group, Inc. | 346,037 | 42,351 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
FINANCIALS - continued | |||
Capital Markets - continued | |||
Morgan Stanley | 3,954,753 | $ 68,734 | |
T. Rowe Price Group, Inc. | 323,935 | 21,036 | |
UBS AG | 2,471,500 | 37,081 | |
| 169,202 | ||
Commercial Banks - 1.5% | |||
Banco Bilbao Vizcaya Argentaria SA | 1,582,200 | 13,221 | |
Banco Santander SA (Spain) | 1,681,109 | 12,657 | |
BNP Paribas SA | 543,700 | 27,350 | |
Lloyds Banking Group PLC (a) | 24,715,000 | 16,275 | |
Societe Generale Series A (a) | 691,985 | 21,997 | |
| 91,500 | ||
Diversified Financial Services - 1.8% | |||
Citigroup, Inc. | 2,966,200 | 110,906 | |
Insurance - 0.3% | |||
American International Group, Inc. (a) | 444,884 | 15,540 | |
Real Estate Management & Development - 0.9% | |||
CBRE Group, Inc. (a) | 3,159,699 | 56,938 | |
TOTAL FINANCIALS | 444,086 | ||
HEALTH CARE - 10.7% | |||
Biotechnology - 9.7% | |||
Alexion Pharmaceuticals, Inc. (a) | 357,841 | 32,342 | |
Amgen, Inc. | 2,511,224 | 217,334 | |
ARIAD Pharmaceuticals, Inc. (a) | 954,052 | 20,560 | |
Biogen Idec, Inc. (a) | 1,186,719 | 164,028 | |
Gilead Sciences, Inc. (a) | 1,087,428 | 73,032 | |
Onyx Pharmaceuticals, Inc. (a) | 558,733 | 43,782 | |
PDL BioPharma, Inc. (d) | 318,375 | 2,372 | |
Regeneron Pharmaceuticals, Inc. (a) | 286,741 | 40,803 | |
| 594,253 | ||
Health Care Providers & Services - 0.4% | |||
Brookdale Senior Living, Inc. (a) | 889,702 | 20,872 | |
Pharmaceuticals - 0.6% | |||
Elan Corp. PLC sponsored ADR (a) | 3,460,802 | 37,377 | |
TOTAL HEALTH CARE | 652,502 | ||
Common Stocks - continued | |||
Shares | Value (000s) | ||
INDUSTRIALS - 11.8% | |||
Aerospace & Defense - 1.6% | |||
Textron, Inc. | 3,891,838 | $ 98,113 | |
Airlines - 6.3% | |||
Delta Air Lines, Inc. (a) | 5,369,950 | 51,713 | |
United Continental Holdings, Inc. (a)(d) | 12,267,155 | 235,652 | |
US Airways Group, Inc. (a)(d) | 8,108,223 | 98,758 | |
| 386,123 | ||
Commercial Services & Supplies - 0.1% | |||
Edenred SA | 197,694 | 5,721 | |
Electrical Equipment - 0.2% | |||
Alstom SA | 296,689 | 10,133 | |
Industrial Conglomerates - 2.9% | |||
General Electric Co. | 7,513,991 | 158,245 | |
Koninklijke Philips Electronics NV | 790,900 | 19,809 | |
| 178,054 | ||
Road & Rail - 0.7% | |||
Union Pacific Corp. | 365,930 | 45,020 | |
TOTAL INDUSTRIALS | 723,164 | ||
INFORMATION TECHNOLOGY - 11.0% | |||
Computers & Peripherals - 6.0% | |||
Apple, Inc. | 613,592 | 365,148 | |
Internet Software & Services - 3.6% | |||
eBay, Inc. (a) | 3,361,282 | 162,316 | |
VeriSign, Inc. (a) | 1,086,361 | 40,271 | |
Yahoo!, Inc. (a) | 988,500 | 16,617 | |
| 219,204 | ||
IT Services - 1.0% | |||
Visa, Inc. Class A | 445,195 | 61,775 | |
Software - 0.4% | |||
FactSet Research Systems, Inc. | 299,220 | 27,094 | |
TOTAL INFORMATION TECHNOLOGY | 673,221 | ||
MATERIALS - 2.3% | |||
Chemicals - 1.6% | |||
Monsanto Co. | 790,978 | 68,079 | |
Syngenta AG (Switzerland) | 79,100 | 30,840 | |
| 98,919 | ||
Common Stocks - continued | |||
Shares | Value (000s) | ||
MATERIALS - continued | |||
Metals & Mining - 0.7% | |||
Cliffs Natural Resources, Inc. | 691,939 | $ 25,097 | |
Walter Energy, Inc. | 543,670 | 19,007 | |
| 44,104 | ||
TOTAL MATERIALS | 143,023 | ||
TELECOMMUNICATION SERVICES - 0.6% | |||
Diversified Telecommunication Services - 0.6% | |||
Iliad SA | 138,403 | 21,321 | |
Telecom Italia SpA | 17,799,700 | 16,422 | |
| 37,743 | ||
UTILITIES - 0.5% | |||
Multi-Utilities - 0.5% | |||
Sempra Energy | 450,500 | 31,422 | |
TOTAL COMMON STOCKS (Cost $4,444,097) |
| ||
Money Market Funds - 16.1% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.19% (b) | 922,143,795 | 922,144 | |
Fidelity Securities Lending Cash Central Fund, 0.19% (b)(c) | 63,559,575 | 63,560 | |
TOTAL MONEY MARKET FUNDS (Cost $985,704) |
| ||
TOTAL INVESTMENT PORTFOLIO - 100.6% (Cost $5,429,801) | 6,151,175 | ||
NET OTHER ASSETS (LIABILITIES) - (0.6)% | (35,604) | ||
NET ASSETS - 100% | $ 6,115,571 |
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 | $ 686 |
Fidelity Securities Lending Cash Central Fund | 1,801 |
Total | $ 2,487 |
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, beginning of period | Purchases | Sales Proceeds | Dividend Income | Value, |
Inhibitex, Inc. | $ - | $ 117,572 | $ 128,705 | $ - | $ - |
Oxford Industries, Inc. | 40,059 | 4,471 | 15,326 | 490 | - |
Total | $ 40,059 | $ 122,043 | $ 144,031 | $ 490 | $ - |
Other Information |
The following is a summary of the inputs used, as of October 31, 2012, 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 | $ 1,678,139 | $ 1,678,139 | $ - | $ - |
Consumer Staples | 431,935 | 431,935 | - | - |
Energy | 350,236 | 350,236 | - | - |
Financials | 444,086 | 364,852 | 79,234 | - |
Health Care | 652,502 | 652,502 | - | - |
Industrials | 723,164 | 703,355 | 19,809 | - |
Information Technology | 673,221 | 673,221 | - | - |
Materials | 143,023 | 112,183 | 30,840 | - |
Telecommunication Services | 37,743 | 21,321 | 16,422 | - |
Utilities | 31,422 | 31,422 | - | - |
Money Market Funds | 985,704 | 985,704 | - | - |
Total Investments in Securities: | $ 6,151,175 | $ 6,004,870 | $ 146,305 | $ - |
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, 2012 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $62,408) - See accompanying schedule: Unaffiliated issuers (cost $4,444,097) | $ 5,165,471 |
|
Fidelity Central Funds (cost $985,704) | 985,704 |
|
Total Investments (cost $5,429,801) |
| $ 6,151,175 |
Cash |
| 2,469 |
Foreign currency held at value (cost $16) | 16 | |
Receivable for investments sold | 39,992 | |
Receivable for fund shares sold | 6,950 | |
Dividends receivable | 347 | |
Distributions receivable from Fidelity Central Funds | 101 | |
Other receivables | 508 | |
Total assets | 6,201,558 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 6,387 | |
Payable for fund shares redeemed | 11,128 | |
Accrued management fee | 3,796 | |
Other affiliated payables | 927 | |
Other payables and accrued expenses | 189 | |
Collateral on securities loaned, at value | 63,560 | |
Total liabilities | 85,987 | |
|
|
|
Net Assets | $ 6,115,571 | |
Net Assets consist of: |
| |
Paid in capital | $ 5,258,178 | |
Undistributed net investment income | 24,098 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 111,921 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 721,374 | |
Net Assets | $ 6,115,571 |
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, 2012 | |
|
|
|
Capital Appreciation: |
|
|
Net Asset Value, offering price and redemption price per share ($4,677,933 ÷ 160,133 shares) | $ 29.21 | |
|
|
|
Class K: | $ 29.28 |
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, 2012 | |
|
|
|
Investment Income |
|
|
Dividends (including $490 earned from other affiliated issuers) |
| $ 80,298 |
Income from Fidelity Central Funds |
| 2,487 |
Total income |
| 82,785 |
|
|
|
Expenses | ||
Management fee | $ 31,121 | |
Performance adjustment | 9,558 | |
Transfer agent fees | 9,496 | |
Accounting and security lending fees | 1,137 | |
Custodian fees and expenses | 130 | |
Independent trustees' compensation | 36 | |
Appreciation in deferred trustee compensation account | 1 | |
Registration fees | 158 | |
Audit | 66 | |
Legal | 21 | |
Miscellaneous | 52 | |
Total expenses before reductions | 51,776 | |
Expense reductions | (452) | 51,324 |
Net investment income (loss) | 31,461 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 246,386 | |
Other affiliated issuers | 14,843 |
|
Foreign currency transactions | 172 | |
Total net realized gain (loss) |
| 261,401 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 450,309 | |
Assets and liabilities in foreign currencies | (54) | |
Total change in net unrealized appreciation (depreciation) |
| 450,255 |
Net gain (loss) | 711,656 | |
Net increase (decrease) in net assets resulting from operations | $ 743,117 |
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) | $ 31,461 | $ 14,710 |
Net realized gain (loss) | 261,401 | 499,527 |
Change in net unrealized appreciation (depreciation) | 450,255 | (175,468) |
Net increase (decrease) in net assets resulting | 743,117 | 338,769 |
Distributions to shareholders from net investment income | (10,087) | (5,716) |
Share transactions - net increase (decrease) | 207,380 | (540,966) |
Total increase (decrease) in net assets | 940,410 | (207,913) |
|
|
|
Net Assets | ||
Beginning of period | 5,175,161 | 5,383,074 |
End of period (including undistributed net investment income of $24,098 and undistributed net investment income of $3,573, respectively) | $ 6,115,571 | $ 5,175,161 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Capital Appreciation
Years ended October 31, | 2012 | 2011 | 2010 | 2009 | 2008 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 25.51 | $ 24.03 | $ 18.71 | $ 16.68 | $ 32.13 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .15 | .06 | .04 | .04 | .16 |
Net realized and unrealized gain (loss) | 3.59 | 1.44 | 5.30 | 2.17 | (13.27) |
Total from investment operations | 3.74 | 1.50 | 5.34 | 2.21 | (13.11) |
Distributions from net investment income | (.04) | (.02) | (.02) | (.18) | (.12) |
Distributions from net realized gain | - | - | - | - | (2.22) |
Total distributions | (.04) | (.02) | (.02) | (.18) | (2.34) |
Net asset value, end of period | $ 29.21 | $ 25.51 | $ 24.03 | $ 18.71 | $ 16.68 |
Total Return A | 14.70% | 6.24% | 28.57% | 13.54% | (43.80)% |
Ratios to Average Net AssetsC,E |
|
|
|
|
|
Expenses before reductions | .96% | .91% | .88% | .79% | .82% |
Expenses net of fee waivers, if any | .96% | .91% | .88% | .79% | .82% |
Expenses net of all reductions | .95% | .90% | .86% | .78% | .82% |
Net investment income (loss) | .53% | .25% | .16% | .25% | .67% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (in millions) | $ 4,678 | $ 4,319 | $ 4,672 | $ 4,627 | $ 4,794 |
Portfolio turnover rateD | 169% | 182% | 186% | 243% | 157% |
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, | 2012 | 2011 | 2010 | 2009 | 2008 G |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 25.57 | $ 24.09 | $ 18.73 | $ 16.69 | $ 25.11 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) D | .19 | .10 | .08 | .08 | .03 |
Net realized and unrealized gain (loss) | 3.61 | 1.44 | 5.31 | 2.18 | (8.45) |
Total from investment operations | 3.80 | 1.54 | 5.39 | 2.26 | (8.42) |
Distributions from net investment income | (.09) | (.06) | (.03) | (.22) | - |
Net asset value, end of period | $ 29.28 | $ 25.57 | $ 24.09 | $ 18.73 | $ 16.69 |
Total Return B,C | 14.92% | 6.41% | 28.80% | 13.85% | (33.53)% |
Ratios to Average Net AssetsE,H |
|
|
|
|
|
Expenses before reductions | .81% | .75% | .70% | .55% | .66% A |
Expenses net of fee waivers, if any | .81% | .75% | .70% | .55% | .66% A |
Expenses net of all reductions | .80% | .74% | .68% | .54% | .65% A |
Net investment income (loss) | .68% | .41% | .34% | .49% | .41% A |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (in millions) | $ 1,438 | $ 856 | $ 712 | $ 283 | $ 93 |
Portfolio turnover rate F | 169% | 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, 2012
(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
Notes to Financial Statements - continued
(Amounts in thousands except percentages)
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. In accordance with valuation policies and procedures approved by the Board of Trustees (the Board), the Fund attempts to obtain prices from one or more third party pricing vendors or brokers to value its investments. When current market prices, quotations or rates are not readily available or reliable, securities will be fair valued in good faith by the FMR Fair Value Committee (the Committee), in accordance with procedures adopted by the Fund's Board. Factors used in determining fair value vary by security type and 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 Committee oversees the Fund's valuation policies and procedures and is responsible for approving and reporting to the Board all fair value determinations.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the Fund's own assumptions based on the best information available)
Valuation techniques used to value the Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by a third party pricing vendor on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when 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. Utilizing these techniques may result in transfers between Level 1 and Level 2.
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value (NAV) each business day and are categorized as Level 1 in the hierarchy.
Annual Report
3. Significant Accounting Policies - continued
Security Valuation - continued
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, 2012 is included at the end of the Fund's Schedule of Investments.
Foreign Currency Translation. The Fund may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rates at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. 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. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Annual Report
Notes to Financial Statements - continued
(Amounts in thousands except percentages)
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 under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for income taxes is required. As of October 31, 2012, the Fund did not have any unrecognized tax benefits in the financial statements; nor is the Fund aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. A fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are declared and recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. 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, deferred trustees compensation, capital loss carryforwards and losses deferred due to wash sales.
Annual Report
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 | $ 895,765 |
Gross unrealized depreciation | (184,361) |
Net unrealized appreciation (depreciation) on securities and other investments | $ 711,404 |
|
|
Tax Cost | $ 5,439,771 |
The tax-based components of distributable earnings as of period end were as follows:
Undistributed ordinary income | $ 24,199 |
Undistributed long-term capital gain | $ 121,892 |
Net unrealized appreciation (depreciation) | $ 711,404 |
The tax character of distributions paid was as follows:
| October 31, 2012 | October 31, 2011 |
Ordinary Income | $ 10,087 | $ 5,716 |
New Accounting Pronouncement. In December 2011, the Financial Accounting Standards Board issued Accounting Standard Update No. 2011-11, Disclosures about Offsetting Assets and Liabilities. The update creates new disclosure requirements requiring entities to disclose both gross and net information for derivatives and other financial instruments that are either offset in the Statement of Assets and Liabilities or subject to an enforceable master netting arrangement or similar agreement. The disclosure requirements are effective for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods. 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 $8,654,950 and $9,325,943, respectively.
Annual Report
Notes to Financial Statements - continued
(Amounts in thousands except percentages)
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 an annualized 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 .73% 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 | $ 8,910 | .20 |
Class K | 586 | .05 |
| $ 9,496 |
|
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 each month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $266 for the period.
Annual Report
6. Committed Line of Credit.
The Fund participates with other funds managed by FMR or an affiliate in a $4.25 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $15 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. At period end, there were no security loans outstanding with FCM. 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 $1,801, including $116 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 $452 for the period.
Annual Report
Notes to Financial Statements - continued
(Amounts in thousands except percentages)
9. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended October 31, | 2012 | 2011 |
From net investment income |
|
|
Capital Appreciation | $ 7,160 | $ 3,856 |
Class K | 2,927 | 1,860 |
Total | $ 10,087 | $ 5,716 |
10. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
Years ended October 31, | 2012 | 2011 | 2012 | 2011 |
Capital Appreciation |
|
|
|
|
Shares sold | 33,131 | 18,860 | $ 930,591 | $ 481,703 |
Reinvestment of distributions | 278 | 148 | 6,866 | 3,700 |
Shares redeemed | (42,560) | (44,166) | (1,163,912) | (1,127,770) |
Net increase (decrease) | (9,151) | (25,158) | $ (226,455) | $ (642,367) |
Class K |
|
|
|
|
Shares sold | 25,274 | 10,289 | $ 701,363 | $ 263,401 |
Reinvestment of distributions | 118 | 74 | 2,927 | 1,860 |
Shares redeemed | (9,763) | (6,424) | (270,455) | (163,860) |
Net increase (decrease) | 15,629 | 3,939 | $ 433,835 | $ 101,401 |
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, 2012, 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, 2012 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
December 11, 2012
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 236 funds advised by FMR or an affiliate. Mr. Curvey oversees 443 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 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 (77) | |
| Year of Election or Appointment: 2007 Mr. Curvey is Trustee and 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 (55) | |
| 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 (64) | |
| 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 (59) | |
| 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 Entertainment, Inc. (restaurant and entertainment complexes, 2010-present), Earth Fare, Inc. (retail grocery, 2012-present), The Hillman Companies, Inc. (hardware wholesalers, 2010-present), and Bristol-Myers Squibb Company (global pharmaceuticals, 2008-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 (68) | |
| 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 Chairman of the Board of Directors of the Philharmonic Center for the Arts in Naples, Florida (2012-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 (68) | |
| 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). Previously, Mr. Mauriello served as a Director of the Hamilton Funds of the Bank of New York (2006-2007) and of Arcadia Resources Inc. (health care services and products, 2007-2012). |
Robert W. Selander (62) | |
| 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 (68) | |
| Year of Election or Appointment: 2005 Ms. Small is a member of the Board of Directors (2009-present) and Chair of the Investment Committee (2010-present) of the Teagle Foundation. Ms. Small also serves on the Investment Committee of the Berkshire Taconic Community Foundation (2008-present). Previously, Ms. Small served as Chairperson (2002-2008) and a member of the Investment Committee and Chairperson (2008-2012) and a member of the Board of Trustees 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 (73) | |
| 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 a Director of Univar Inc. (global distributor of commodity and specialty chemicals, Chairman from 2010-May 2012 and Lead Director from May 2012-present), Teradata Corporation (data warehousing and technology solutions, 2008-present), Maersk Inc. (industrial conglomerate), and Tyco International, Ltd. (multinational manufacturing and services, 2007-present), and a member of the Advisory Board for Metalmark Capital LLC (private equity investment, 2005-present). Mr. Stavropoulos is an operating 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, a Trustee of the Rollin L. Gerstacker Foundation, and a Director of the Naples Philharmonic Center for the Arts. Previously, Mr. Stavropoulos served as a Director of Chemical Financial Corporation (bank holding company, 1993-2012). |
David M. Thomas (63) | |
| 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), and a Director of Fortune Brands, Inc. (consumer products, 2000-2011). In addition, Mr. Thomas serves as Non-Executive Chairman of the Board of Directors of Fortune Brands Home and Security (home and security products, 2011-present), and as a member of the Board of Directors of Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (62) | |
| 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). |
+ 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 David A. Rosow and Garnett A. Smith may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235. 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 (82) | |
| 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 (68) | |
| 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). |
David A. Rosow (70) | |
| Year of Election or Appointment: 2012 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Chairman and Chief Executive Officer of International Golf Group, Inc. (golf course development, 1989-present). Previously, Mr. Rosow served as Chairman and Chief Executive Officer of Rosow & Company, Inc. (private investment company, 1989-2011), a Lead Director of Hudson United Bancorp (2001-2006) and as a Director of TD Banknorth (1996-2006). In addition, Mr. Rosow is a member (2008-present) and President (2009-present) of the Town Council of Palm Beach, Florida. |
Garnett A. Smith (65) | |
| Year of Election or Appointment: 2012 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Prior to Mr. Smith's retirement, he served as Chairman and Chief Executive Officer of Inbrand Corp. (manufacturer of personal absorbent products, 1990-1997). He also served as President (1986-1990) of Inbrand Corp. Prior to his employment with Inbrand Corp., he was employed by a retail fabric chain and North Carolina National Bank. In addition, Mr. Smith is a board member of the Jackson Hole Land Trust (2009-present). |
Kenneth B. Robins (43) | |
| 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 (47) | |
| Year of Election or Appointment: 2006 Vice President of certain Equity Funds. Mr. Herring also serves as President of Fidelity Research & Analysis Company (2010-present), Chief Investment Officer and Director of Fidelity Management & Research (U.K.) Inc. (2010-present) and Group Chief Investment 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 (48) | |
| 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 (44) | |
| 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 (43) | |
| 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). |
Elizabeth Paige Baumann (44) | |
| Year of Election or Appointment: 2012 Anti-Money Laundering (AML) Officer of the Fidelity funds. Ms. Baumann also serves as AML Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2012-present), Chief AML Officer of FMR LLC (2012-present), and is an employee of Fidelity Investments. Previously, Ms. Baumann served as Vice President and Deputy Anti-Money Laundering Officer (2007-2012). |
Christine Reynolds (54) | |
| 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). |
Joseph A. Hanlon (44) | |
| Year of Election or Appointment: 2012 Chief Compliance Officer of Fidelity's Equity and High Income Funds. Mr. Hanlon serves as Compliance Officer of FMR, FMR Co., Inc., Fidelity Investments Money Management, Inc. (FIMM), Fidelity Research and Analysis Company (FRAC), Fidelity Management & Research (Japan) Inc., Fidelity Management & Research (U.K.) Inc., Fidelity Management & Research (Hong Kong), and Strategic Advisers, Inc. (2009-present), as Senior Vice President of the Fidelity Asset Management Division (2009-present), and is an employee of Fidelity Investments. |
Joseph F. Zambello (55) | |
| 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 (45) | |
| Year of Election or Appointment: 2008 Deputy Treasurer of Fidelity's Equity and High Income Funds. Mr. Deberghes also serves as Vice President (2011-present) and Assistant Treasurer (2010-present) of other Fidelity funds, 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). |
Stephen Sadoski (41) | |
| Year of Election or Appointment: 2012 Deputy Treasurer of Fidelity's Equity and High Income Funds. Mr. Sadoski also serves as Assistant Treasurer of other Fidelity funds (2012-present) and is an employee of Fidelity Investments (2012-present). Previously, Mr. Sadoski served as an assistant chief accountant in the Division of Investment Management of the Securities and Exchange Commission (SEC) (2009-2012) and as a senior manager at Deloitte & Touche (1997-2009). |
Stephanie J. Dorsey (43) | |
| 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 (54) | |
| 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 (54) | |
| 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 (44) | |
| 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 Capital Appreciation Fund voted to pay 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 | 12/10/12 | 12/07/12 | $0.19 | $0.59 |
The fund hereby designates as a capital gain dividend with respect to the taxable year ended October 31, 2012, $122,761,195, or, if subsequently determined to be different, the net capital gain of such year.
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 2013 of amounts for use in preparing 2012 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, at each of its meetings, considers 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 and chaired by 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 2012 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 relative to peer funds; (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 exist and 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 also considered the fund's investment objective, strategies, and related investment philosophy. 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 continued to increase the resources devoted to non-U.S. offices, including expansion of Fidelity's global investment organization. The Board noted that Fidelity's analysts have extensive resources, tools and capabilities that allow them to conduct sophisticated quantitative and fundamental analysis, as well as credit analysis of issuers, counterparties and guarantors. 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 that 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 its deliberations, the Board considered the Investment Advisers' trading and risk management 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 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.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
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.
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) persisting in efforts to enhance Fidelity's research capabilities, in particular, international research; (iii) launching new funds and making other enhancements to meet client needs for global and income-oriented solutions; (iv) continuing to launch dedicated lower cost underlying funds to meet investment management's portfolio construction needs related to expanding underlying fund options, specifically for the Freedom Fund product lines; (v) adopting a "Stock Selector" sector neutral investment approach and employing a team of portfolio managers who are sector specialists to manage certain funds; (vi) rationalizing product lines and gaining increased efficiencies through the mergers of several funds into other funds; (vii) strengthening the Spartan Index Fund product line by adding new funds and/or new low-cost institutional share classes, restructuring fund expenses to accommodate new classes, and reducing investment minimums for certain classes of shares; (viii) modifying the eligibility criteria for Institutional Class shares to increase their appeal to government entities and charitable investors; and (ix) reducing certain transfer agent fee rates.
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, 2011, 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 (top of box) and the 75th percentile return (bottom 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
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 third quartile for the one-year period and the second quartile for the three- and five-year periods. The Board also noted that the investment performance of the retail class of the fund compared favorably to its benchmark for the three- and five-year periods, although the fund's one-year total return was lower than its benchmark. 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.
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 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 2011. 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 2011.
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. The Board noted the findings of the 2010 ad hoc joint committee (created with the board of other Fidelity funds), which reviewed and compared 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.
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 economies of scale, if any, 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) the potential to further rationalize the Fidelity fund lineup with the possibility of achieving savings for the funds and Fidelity; (iii) Fidelity's compensation structure for portfolio managers and other key 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) the realization of fall-out benefits in certain Fidelity business units; (vi) Fidelity's group fee structures, the potential impact of regulatory changes on such structures, and the rationale for the individual fee rates of certain funds; (vii) fund profitability methodology, including Fidelity's cost allocation methodology, and the impact of certain factors on fund profitability results; (viii) trends regarding industry use of performance fee structures and the possibility of implementing performance fee structures for additional funds; and (ix) the impact of net redemptions from the Fidelity funds.
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
Smithfield, RI
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
(Fidelity Investment logo)(registered trademark)
Corporate Headquarters
82 Devonshire St., Boston, MA 02109
www.fidelity.com
CAF-K-UANN-1212 1.863089.104
Fidelity®
Disciplined Equity
Fund
Annual Report
October 31, 2012
(Fidelity Cover Art)
Contents
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. © 2012 FMR LLC. All rights reserved.
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, 2012 | Past 1 | Past 5 | Past 10 |
Fidelity® Disciplined Equity Fund | 13.95% | -3.43% | 5.45% |
$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, 2002. 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 bouts of volatility to post strong gains for the year ending October 31, 2012, and extend an uptrend that began in March 2009. The broad-based S&P 500® Index advanced 15.21% for the 12-month period, while the blue-chip-laden Dow Jones Industrial AverageSM and technology-heavy Nasdaq Composite® Index rose 12.56% and 12.21%, respectively. Debt problems in Europe, slower growth in China and uncertainty about a U.S. economic recovery put downward pressure on stocks early on and during a turbulent spring. However, beginning in June, stocks rose on central bank stimulus, steps to repair the eurozone and signs of life in the U.S. housing market. Equity benchmarks hit multiyear highs in September, with the Dow and the S&P® achieving their best marks since 2007, and the Nasdaq reaching a 12-year high. Stocks retreated in October, which was marked by disappointing corporate earnings reports and a two-day weather-related closure of the New York Stock Exchange. Among the 10 sectors that comprise the S&P 500®, most posted a double-digit gain, led by telecommunication services (+26%) and health care (+22%), with energy (+7%) and materials (+7%) lagging the most. Despite lingering eurozone turmoil and weaker local currencies versus the U.S. dollar, foreign developed-markets stocks rose modestly, with the MSCI® EAFE® Index adding 4.76%.
Comments from Keith Quinton, Portfolio Manager of Fidelity® Disciplined Equity Fund: For the year, the fund's Retail Class shares returned 13.95%, underperforming the S&P 500® Index. Security selection detracted, as the fund's quantitative models proved ineffective for most of the period, when stocks were highly correlated. A sizable stake in troubled computer maker Hewlett-Packard was by far the fund's biggest disappointment. I remained overweighted in the stock until October, when executives lowered earnings guidance and outlined a multiyear turnaround plan. I significantly reduced the position by period end. Two other picks in the technology hardware/equipment segment also hurt, including an underweighting in consumer electronics manufacturer Apple and poor timing with network equipment provider Cisco Systems. I sold Cisco from the fund by period end. Conversely, the fund was helped by a stake in the defensive food/beverage/tobacco segment of consumer staples, particularly top relative contributor and Belgium-based out-of-index holding Anheuser-Busch InBev. Positioning in the outperforming financials sector also helped, as did picks in energy, where many companies benefited from the U.S. boom in natural gas and oil production. An overweighting in drugmaker Amgen was a plus, as its stock rose on consecutive positive earnings surprises. Improved housing markets and increased repair and remodeling activity led to gains at retailer Home Depot, another top relative contributor.
Note to shareholders: Effective January 1, 2013, Alex Devereaux will become Co-Manager of the fund.
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, 2012 to October 31, 2012).
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 |
Disciplined Equity | .48% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,019.60 | $ 2.44 |
HypotheticalA |
| $ 1,000.00 | $ 1,022.72 | $ 2.44 |
Class K | .36% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,020.40 | $ 1.83 |
HypotheticalA |
| $ 1,000.00 | $ 1,023.33 | $ 1.83 |
Class F | .30% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,020.40 | $ 1.52 |
HypotheticalA |
| $ 1,000.00 | $ 1,023.63 | $ 1.53 |
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 184/366 (to reflect the one-half year period).
Annual Report
Investment Changes (Unaudited)
Top Ten Stocks as of October 31, 2012 | ||
| % of fund's | % of fund's net assets |
JPMorgan Chase & Co. | 3.7 | 3.2 |
General Electric Co. | 3.7 | 4.2 |
Apple, Inc. | 3.5 | 2.6 |
Amgen, Inc. | 3.4 | 3.4 |
Citigroup, Inc. | 3.2 | 0.0 |
Microsoft Corp. | 3.2 | 1.8 |
Chevron Corp. | 3.1 | 4.6 |
CVS Caremark Corp. | 2.7 | 0.0 |
Oracle Corp. | 2.7 | 0.0 |
PVH Corp. | 2.5 | 1.5 |
| 31.7 | |
Top Five Market Sectors as of October 31, 2012 | ||
| % of fund's | % of fund's net assets |
Information Technology | 18.7 | 20.8 |
Financials | 14.5 | 13.2 |
Health Care | 12.0 | 11.6 |
Consumer Discretionary | 11.0 | 10.3 |
Consumer Staples | 10.7 | 9.6 |
Asset Allocation (% of fund's net assets) | |||||||
As of October 31, 2012 * | As of April 30, 2012 ** | ||||||
![]() | Stocks 96.3% |
| ![]() | Stocks and |
| ||
![]() | Short-Term |
| ![]() | Short-Term |
| ||
* Foreign investments | 13.2% |
| ** Foreign investments | 11.4% |
|
Annual Report
Investments October 31, 2012
Showing Percentage of Net Assets
Common Stocks - 95.8% | |||
Shares | Value (000s) | ||
CONSUMER DISCRETIONARY - 10.5% | |||
Auto Components - 0.3% | |||
Delphi Automotive PLC | 600,000 | $ 18,864 | |
Automobiles - 0.3% | |||
Toyota Motor Corp. sponsored ADR | 250,000 | 19,368 | |
Hotels, Restaurants & Leisure - 1.3% | |||
Brinker International, Inc. | 200,000 | 6,160 | |
Icahn Enterprises LP rights | 1,900,000 | 0 | |
Melco PBL Entertainment (Macau) Ltd. sponsored ADR (a) | 500,000 | 7,255 | |
Wyndham Worldwide Corp. | 1,500,000 | 75,600 | |
| 89,015 | ||
Household Durables - 0.4% | |||
Jarden Corp. | 184,057 | 9,166 | |
Whirlpool Corp. | 200,000 | 19,536 | |
| 28,702 | ||
Internet & Catalog Retail - 1.7% | |||
Expedia, Inc. | 2,000,000 | 118,300 | |
Media - 2.3% | |||
The Walt Disney Co. | 648,200 | 31,807 | |
Time Warner Cable, Inc. | 700,000 | 69,377 | |
Virgin Media, Inc. (d) | 1,686,600 | 55,219 | |
| 156,403 | ||
Specialty Retail - 1.3% | |||
Foot Locker, Inc. | 600,000 | 20,100 | |
Guess?, Inc. | 300,000 | 7,434 | |
Home Depot, Inc. | 1,000,000 | 61,380 | |
| 88,914 | ||
Textiles, Apparel & Luxury Goods - 2.9% | |||
G-III Apparel Group Ltd. (a) | 500,000 | 18,480 | |
Iconix Brand Group, Inc. (a) | 500,000 | 9,255 | |
PVH Corp. | 1,560,202 | 171,607 | |
| 199,342 | ||
TOTAL CONSUMER DISCRETIONARY | 718,908 | ||
CONSUMER STAPLES - 10.7% | |||
Beverages - 3.3% | |||
Anheuser-Busch InBev SA NV | 971,457 | 81,244 | |
Coca-Cola Enterprises, Inc. | 200,000 | 6,288 | |
Constellation Brands, Inc. Class A (sub. vtg.) (a) | 3,900,000 | 137,826 | |
| 225,358 | ||
Common Stocks - continued | |||
Shares | Value (000s) | ||
CONSUMER STAPLES - continued | |||
Food & Staples Retailing - 4.6% | |||
CVS Caremark Corp. | 4,000,000 | $ 185,600 | |
Kroger Co. | 2,400,000 | 60,528 | |
Wal-Mart Stores, Inc. | 948,700 | 71,171 | |
| 317,299 | ||
Food Products - 0.9% | |||
Dean Foods Co. (a) | 450,000 | 7,578 | |
The J.M. Smucker Co. | 500,000 | 42,820 | |
Tyson Foods, Inc. Class A | 450,000 | 7,565 | |
| 57,963 | ||
Tobacco - 1.9% | |||
Imperial Tobacco Group PLC | 2,600,000 | 98,181 | |
Japan Tobacco, Inc. | 1,200,000 | 33,160 | |
| 131,341 | ||
TOTAL CONSUMER STAPLES | 731,961 | ||
ENERGY - 10.3% | |||
Energy Equipment & Services - 0.8% | |||
Ensco PLC Class A | 300,000 | 17,346 | |
Exterran Holdings, Inc. (a) | 400,000 | 7,992 | |
Helix Energy Solutions Group, Inc. (a) | 400,000 | 6,916 | |
Oil States International, Inc. (a) | 100,000 | 7,310 | |
Transocean Ltd. (United States) | 400,000 | 18,276 | |
| 57,840 | ||
Oil, Gas & Consumable Fuels - 9.5% | |||
Chevron Corp. | 1,894,900 | 208,837 | |
Exxon Mobil Corp. | 1,361,500 | 124,128 | |
Marathon Petroleum Corp. | 2,485,600 | 136,534 | |
Phillips 66 | 3,400,000 | 160,344 | |
Royal Dutch Shell PLC Class A sponsored ADR | 300,000 | 20,544 | |
| 650,387 | ||
TOTAL ENERGY | 708,227 | ||
FINANCIALS - 14.5% | |||
Commercial Banks - 1.0% | |||
Wells Fargo & Co. | 2,010,300 | 67,727 | |
Consumer Finance - 2.1% | |||
Discover Financial Services | 3,500,000 | 143,500 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
FINANCIALS - continued | |||
Diversified Financial Services - 6.9% | |||
Citigroup, Inc. | 5,900,000 | $ 220,601 | |
JPMorgan Chase & Co. | 6,200,000 | 258,413 | |
| 479,014 | ||
Insurance - 4.1% | |||
Allied World Assurance Co. Holdings Ltd. | 100,000 | 8,030 | |
American International Group, Inc. (a) | 600,000 | 20,958 | |
Assured Guaranty Ltd. | 1,040,702 | 14,455 | |
Lincoln National Corp. | 900,000 | 22,311 | |
MetLife, Inc. | 4,400,000 | 156,156 | |
Montpelier Re Holdings Ltd. | 233,235 | 5,334 | |
The Travelers Companies, Inc. | 790,157 | 56,054 | |
| 283,298 | ||
Real Estate Management & Development - 0.4% | |||
Altisource Portfolio Solutions SA (a) | 225,000 | 25,538 | |
TOTAL FINANCIALS | 999,077 | ||
HEALTH CARE - 12.0% | |||
Biotechnology - 4.4% | |||
Amgen, Inc. | 2,724,000 | 235,749 | |
Gilead Sciences, Inc. (a) | 600,000 | 40,296 | |
Spectrum Pharmaceuticals, Inc. (a)(d) | 2,388,000 | 26,650 | |
Threshold Pharmaceuticals, Inc. (a) | 761,120 | 3,128 | |
| 305,823 | ||
Health Care Equipment & Supplies - 1.0% | |||
The Cooper Companies, Inc. | 400,000 | 38,392 | |
Zimmer Holdings, Inc. | 500,000 | 32,105 | |
| 70,497 | ||
Health Care Providers & Services - 1.9% | |||
Community Health Systems, Inc. (a) | 1,910,000 | 52,372 | |
UnitedHealth Group, Inc. | 1,200,000 | 67,200 | |
Universal Health Services, Inc. Class B | 200,000 | 8,278 | |
| 127,850 | ||
Life Sciences Tools & Services - 0.3% | |||
Charles River Laboratories International, Inc. (a) | 500,000 | 18,660 | |
Pharmaceuticals - 4.4% | |||
Merck & Co., Inc. | 1,200,000 | 54,756 | |
Mylan, Inc. (a) | 1,400,000 | 35,476 | |
Sanofi SA sponsored ADR | 3,400,000 | 149,090 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
HEALTH CARE - continued | |||
Pharmaceuticals - continued | |||
Warner Chilcott PLC | 1,600,224 | $ 18,531 | |
Watson Pharmaceuticals, Inc. (a) | 500,000 | 42,975 | |
| 300,828 | ||
TOTAL HEALTH CARE | 823,658 | ||
INDUSTRIALS - 9.5% | |||
Aerospace & Defense - 2.2% | |||
Textron, Inc. | 6,050,000 | 152,521 | |
Airlines - 0.1% | |||
US Airways Group, Inc. (a) | 324,231 | 3,949 | |
Building Products - 0.3% | |||
A.O. Smith Corp. | 200,000 | 12,154 | |
Owens Corning (a) | 343,651 | 11,543 | |
| 23,697 | ||
Commercial Services & Supplies - 0.5% | |||
Republic Services, Inc. | 1,300,000 | 36,855 | |
Construction & Engineering - 0.7% | |||
Fluor Corp. | 500,000 | 27,925 | |
MasTec, Inc. (a) | 850,500 | 19,187 | |
| 47,112 | ||
Industrial Conglomerates - 3.7% | |||
General Electric Co. | 12,000,000 | 252,720 | |
Machinery - 1.7% | |||
Ingersoll-Rand PLC | 800,000 | 37,624 | |
Lincoln Electric Holdings, Inc. | 200,000 | 8,674 | |
Manitowoc Co., Inc. | 1,200,000 | 17,100 | |
Oshkosh Truck Corp. (a) | 150,000 | 4,497 | |
Pentair Ltd. | 550,000 | 23,232 | |
Terex Corp. (a) | 1,250,000 | 28,188 | |
| 119,315 | ||
Trading Companies & Distributors - 0.3% | |||
AerCap Holdings NV (a) | 1,386,100 | 17,271 | |
TOTAL INDUSTRIALS | 653,440 | ||
INFORMATION TECHNOLOGY - 18.7% | |||
Communications Equipment - 1.1% | |||
Brocade Communications Systems, Inc. (a) | 14,074,600 | 74,595 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
INFORMATION TECHNOLOGY - continued | |||
Computers & Peripherals - 4.8% | |||
Apple, Inc. | 400,000 | $ 238,040 | |
Hewlett-Packard Co. | 4,096,372 | 56,735 | |
Lexmark International, Inc. Class A (d) | 1,800,000 | 38,268 | |
| 333,043 | ||
Internet Software & Services - 0.7% | |||
Demand Media, Inc. (a) | 600,000 | 5,118 | |
Facebook, Inc. Class B (a)(e) | 493,371 | 9,376 | |
Google, Inc. Class A (a) | 50,000 | 33,989 | |
| 48,483 | ||
IT Services - 4.5% | |||
Accenture PLC Class A | 800,000 | 53,928 | |
Acxiom Corp. (a) | 400,000 | 7,300 | |
Alliance Data Systems Corp. (a)(d) | 500,000 | 71,525 | |
Fidelity National Information Services, Inc. | 1,000,000 | 32,870 | |
Heartland Payment Systems, Inc. | 127,266 | 3,319 | |
IBM Corp. | 500,000 | 97,265 | |
Teradata Corp. (a) | 658,405 | 44,976 | |
| 311,183 | ||
Semiconductors & Semiconductor Equipment - 1.5% | |||
GT Advanced Technologies, Inc. (a)(d) | 4,000,000 | 17,360 | |
Samsung Electronics Co. Ltd. | 69,320 | 83,287 | |
| 100,647 | ||
Software - 6.1% | |||
BMC Software, Inc. (a) | 400,000 | 16,280 | |
Microsoft Corp. | 7,589,902 | 216,578 | |
Oracle Corp. | 5,924,580 | 183,958 | |
Parametric Technology Corp. (a) | 158,147 | 3,191 | |
| 420,007 | ||
TOTAL INFORMATION TECHNOLOGY | 1,287,958 | ||
MATERIALS - 3.2% | |||
Chemicals - 2.4% | |||
Ashland, Inc. | 100,000 | 7,115 | |
CF Industries Holdings, Inc. | 307,700 | 63,137 | |
Chemtura Corp. (a) | 400,000 | 6,372 | |
Eastman Chemical Co. | 400,000 | 23,696 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
MATERIALS - continued | |||
Chemicals - continued | |||
Huntsman Corp. | 1,000,000 | $ 15,040 | |
LyondellBasell Industries NV Class A | 900,000 | 48,051 | |
| 163,411 | ||
Containers & Packaging - 0.8% | |||
Rock-Tenn Co. Class A | 800,000 | 58,552 | |
TOTAL MATERIALS | 221,963 | ||
TELECOMMUNICATION SERVICES - 2.9% | |||
Diversified Telecommunication Services - 1.3% | |||
CenturyLink, Inc. | 1,925,485 | 73,900 | |
Nippon Telegraph & Telephone Corp. sponsored ADR | 712,500 | 16,259 | |
| 90,159 | ||
Wireless Telecommunication Services - 1.6% | |||
MetroPCS Communications, Inc. (a) | 3,200,000 | 32,672 | |
NTT DoCoMo, Inc. sponsored ADR | 300,000 | 4,320 | |
Vodafone Group PLC sponsored ADR | 2,532,300 | 68,929 | |
| 105,921 | ||
TOTAL TELECOMMUNICATION SERVICES | 196,080 | ||
UTILITIES - 3.5% | |||
Electric Utilities - 2.9% | |||
Edison International | 1,800,000 | 84,492 | |
ITC Holdings Corp. | 100,000 | 7,962 | |
Pinnacle West Capital Corp. | 600,000 | 31,782 | |
PNM Resources, Inc. | 3,577,376 | 79,275 | |
| 203,511 | ||
Independent Power Producers & Energy Traders - 0.6% | |||
Calpine Corp. (a) | 1,000,000 | 17,600 | |
The AES Corp. | 2,170,962 | 22,687 | |
| 40,287 | ||
TOTAL UTILITIES | 243,798 | ||
TOTAL COMMON STOCKS (Cost $6,328,862) |
| ||
Nonconvertible Preferred Stocks - 0.5% | |||
Shares | Value (000s) | ||
CONSUMER DISCRETIONARY - 0.5% | |||
Automobiles - 0.5% | |||
Volkswagen AG (Cost $30,771) | 160,700 | $ 33,243 | |
Money Market Funds - 2.3% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.19% (b) | 89,195,522 | 89,196 | |
Fidelity Securities Lending Cash Central Fund, 0.19% (b)(c) | 67,915,575 | 67,916 | |
TOTAL MONEY MARKET FUNDS (Cost $157,112) |
| ||
TOTAL INVESTMENT PORTFOLIO - 98.6% (Cost $6,516,745) | 6,775,425 | ||
NET OTHER ASSETS (LIABILITIES) - 1.4% | 95,943 | ||
NET ASSETS - 100% | $ 6,871,368 |
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 $9,376,000 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 | $ 204 |
Fidelity Securities Lending Cash Central Fund | 1,322 |
Total | $ 1,526 |
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, beginning of period | Purchases | Sales Proceeds | Dividend Income | Value, |
El Paso Electric Co. | $ 66,943 | $ - | $ 63,483 | $ 920 | $ - |
Spectrum Pharmaceuticals, Inc. | - | 53,316 | 18,483 | - | - |
Total | $ 66,943 | $ 53,316 | $ 81,966 | $ 920 | $ - |
Other Information |
The following is a summary of the inputs used, as of October 31, 2012, 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 | $ 752,151 | $ 752,151 | $ - | $ - |
Consumer Staples | 731,961 | 650,717 | 81,244 | - |
Energy | 708,227 | 708,227 | - | - |
Financials | 999,077 | 999,077 | - | - |
Health Care | 823,658 | 823,658 | - | - |
Industrials | 653,440 | 653,440 | - | - |
Information Technology | 1,287,958 | 1,278,582 | 9,376 | - |
Materials | 221,963 | 221,963 | - | - |
Telecommunication Services | 196,080 | 196,080 | - | - |
Utilities | 243,798 | 243,798 | - | - |
Money Market Funds | 157,112 | 157,112 | - | - |
Total Investments in Securities: | $ 6,775,425 | $ 6,684,805 | $ 90,620 | $ - |
The following is a summary of transfers between Level 1 and Level 2 for the period ended October 31, 2012. Transfers are assumed to have occurred at the beginning of the period, and are primarily attributable to the valuation techniques used for foreign equity securities, as discussed in the accompanying Notes to Financial Statements: |
Transfers | Total (000s) |
Level 1 to Level 2 | $ 0 |
Level 2 to Level 1 | $ 231,932 |
Distribution of investments by country or territory of incorporation, as a percentage of total net assets, is as follows. (Unaudited) |
United States of America | 86.8% |
United Kingdom | 2.9% |
France | 2.2% |
Ireland | 1.6% |
Korea (South) | 1.2% |
Belgium | 1.2% |
Japan | 1.1% |
Netherlands | 1.0% |
Others (Individually Less Than 1%) | 2.0% |
| 100.0% |
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, 2012 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $64,532) - See accompanying schedule: Unaffiliated issuers (cost $6,359,633) | $ 6,618,313 |
|
Fidelity Central Funds (cost $157,112) | 157,112 |
|
Total Investments (cost $6,516,745) |
| $ 6,775,425 |
Receivable for investments sold | 282,519 | |
Receivable for fund shares sold | 3,980 | |
Dividends receivable | 3,538 | |
Distributions receivable from Fidelity Central Funds | 61 | |
Other receivables | 664 | |
Total assets | 7,066,187 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 116,776 | |
Payable for fund shares redeemed | 7,438 | |
Accrued management fee | 1,548 | |
Other affiliated payables | 758 | |
Other payables and accrued expenses | 383 | |
Collateral on securities loaned, at value | 67,916 | |
Total liabilities | 194,819 | |
|
|
|
Net Assets | $ 6,871,368 | |
Net Assets consist of: |
| |
Paid in capital | $ 7,997,907 | |
Undistributed net investment income | 105,140 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (1,490,354) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 258,675 | |
Net Assets | $ 6,871,368 |
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, 2012 | |
|
|
|
Disciplined Equity: | $ 24.47 | |
|
|
|
Class K: | $ 24.49 | |
|
|
|
Class F: | $ 24.47 |
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, 2012 | |
|
|
|
Investment Income |
|
|
Dividends (including $920 earned from other affiliated issuers) |
| $ 188,814 |
Interest |
| 7 |
Income from Fidelity Central Funds |
| 1,526 |
Total income |
| 190,347 |
|
|
|
Expenses | ||
Management fee | $ 47,456 | |
Performance adjustment | (20,696) | |
Transfer agent fees | 11,021 | |
Accounting and security lending fees | 1,243 | |
Custodian fees and expenses | 210 | |
Independent trustees' compensation | 58 | |
Registration fees | 48 | |
Audit | 81 | |
Legal | 39 | |
Interest | 4 | |
Miscellaneous | 101 | |
Total expenses before reductions | 39,565 | |
Expense reductions | (1,200) | 38,365 |
Net investment income (loss) | 151,982 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 771,049 | |
Other affiliated issuers | (5,239) |
|
Foreign currency transactions | (1,444) | |
Futures contracts | 343 | |
Total net realized gain (loss) |
| 764,709 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 252,449 | |
Assets and liabilities in foreign currencies | 101 | |
Total change in net unrealized appreciation (depreciation) |
| 252,550 |
Net gain (loss) | 1,017,259 | |
Net increase (decrease) in net assets resulting from operations | $ 1,169,241 |
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) | $ 151,982 | $ 134,929 |
Net realized gain (loss) | 764,709 | 674,729 |
Change in net unrealized appreciation (depreciation) | 252,550 | (592,538) |
Net increase (decrease) in net assets resulting | 1,169,241 | 217,120 |
Distributions to shareholders from net investment income | (149,685) | (105,872) |
Share transactions - net increase (decrease) | (4,169,470) | (532,409) |
Total increase (decrease) in net assets | (3,149,914) | (421,161) |
|
|
|
Net Assets | ||
Beginning of period | 10,021,282 | 10,442,443 |
End of period (including undistributed net investment income of $105,140 and undistributed net investment income of $102,810, respectively) | $ 6,871,368 | $ 10,021,282 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Disciplined Equity
Years ended October 31, | 2012 | 2011 | 2010 | 2009 | 2008 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 21.79 | $ 21.67 | $ 19.72 | $ 18.78 | $ 33.37 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .40 | .28 | .18 | .24 | .29 |
Net realized and unrealized gain (loss) | 2.59 | .05 | 1.99 | .96 | (12.19) |
Total from investment operations | 2.99 | .33 | 2.17 | 1.20 | (11.90) |
Distributions from net investment income | (.31) | (.21) | (.22) | (.26) | (.26) |
Distributions from net realized gain | - | - | - | - | (2.43) |
Total distributions | (.31) | (.21) | (.22) | (.26) | (2.69) |
Net asset value, end of period | $ 24.47 | $ 21.79 | $ 21.67 | $ 19.72 | $ 18.78 |
Total Return A | 13.95% | 1.51% | 11.05% | 6.64% | (38.68)% |
Ratios to Average Net Assets C,E |
|
|
|
|
|
Expenses before reductions | .54% | .59% | .70% | .84% | .87% |
Expenses net of fee waivers, if any | .54% | .59% | .70% | .84% | .87% |
Expenses net of all reductions | .52% | .58% | .68% | .83% | .87% |
Net investment income (loss) | 1.72% | 1.22% | .85% | 1.37% | 1.10% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (in millions) | $ 3,948 | $ 7,233 | $ 8,943 | $ 10,530 | $ 9,804 |
Portfolio turnover rate D | 147% | 153% | 146% | 200% | 186% |
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, | 2012 | 2011 | 2010 | 2009 | 2008 G |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 21.81 | $ 21.69 | $ 19.74 | $ 18.79 | $ 27.38 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) D | .43 | .31 | .22 | .28 | .12 |
Net realized and unrealized gain (loss) | 2.60 | .06 | 1.99 | .96 | (8.71) |
Total from investment operations | 3.03 | .37 | 2.21 | 1.24 | (8.59) |
Distributions from net investment income | (.35) | (.25) | (.26) | (.29) | - |
Net asset value, end of period | $ 24.49 | $ 21.81 | $ 21.69 | $ 19.74 | $ 18.79 |
Total Return B,C | 14.14% | 1.68% | 11.25% | 6.92% | (31.37)% |
Ratios to Average Net Assets E,H |
|
|
|
|
|
Expenses before reductions | .39% | .43% | .52% | .61% | .71% A |
Expenses net of fee waivers, if any | .39% | .43% | .52% | .61% | .71% A |
Expenses net of all reductions | .37% | .42% | .51% | .60% | .71% A |
Net investment income (loss) | 1.87% | 1.38% | 1.03% | 1.59% | 1.30% A |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (in millions) | $ 131 | $ 95 | $ 141 | $ 184 | $ 49 |
Portfolio turnover rate F | 147% | 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, | 2012 | 2011 | 2010 | 2009 G |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 21.80 | $ 21.69 | $ 19.74 | $ 17.52 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss) D | .44 | .32 | .22 | .02 |
Net realized and unrealized gain (loss) | 2.60 | .05 | 2.00 | 2.20 |
Total from investment operations | 3.04 | .37 | 2.22 | 2.22 |
Distributions from net investment income | (.37) | (.26) | (.27) | - |
Net asset value, end of period | $ 24.47 | $ 21.80 | $ 21.69 | $ 19.74 |
Total Return B,C | 14.18% | 1.70% | 11.31% | 12.67% |
Ratios to Average Net Assets E,H |
|
|
|
|
Expenses before reductions | .34% | .38% | .47% | .50% A |
Expenses net of fee waivers, if any | .34% | .38% | .47% | .50% A |
Expenses net of all reductions | .32% | .37% | .45% | .49% A |
Net investment income (loss) | 1.92% | 1.43% | 1.08% | .25% A |
Supplemental Data |
|
|
|
|
Net assets, end of period (in millions) | $ 2,792 | $ 2,693 | $ 1,359 | $ 75 |
Portfolio turnover rate F | 147% | 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, 2012
(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 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.
Annual Report
Notes to Financial Statements - continued
(Amounts in thousands except percentages)
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. In accordance with valuation policies and procedures approved by the Board of Trustees (the Board), the Fund attempts to obtain prices from one or more third party pricing vendors or brokers to value its investments. When current market prices, quotations or rates are not readily available or reliable, securities will be fair valued in good faith by the FMR Fair Value Committee (the Committee), in accordance with procedures adopted by the Fund's Board. Factors used in determining fair value vary by security type and 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 Committee oversees the Fund's valuation policies and procedures and is responsible for approving and reporting to the Board all fair value determinations.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the Fund's own assumptions based on the best information available)
Valuation techniques used to value the Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by a third party pricing vendor on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as
Annual Report
3. Significant Accounting Policies - continued
Security Valuation - continued
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. 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 these securities are generally categorized as Level 3 in the hierarchy.
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value (NAV) each business day and are categorized as Level 1 in the hierarchy.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of October 31, 2012, including information on transfers between Levels 1 and 2 is included at the end of the Fund's Schedule of Investments.
Foreign Currency Translation. The Fund may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rates at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on
Annual Report
Notes to Financial Statements - continued
(Amounts in thousands except percentages)
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 under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for income taxes is required. As of October 31, 2012, the Fund did not have any unrecognized tax benefits in the financial statements; nor is the Fund aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. A fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
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 dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to futures transactions, foreign currency transactions, partnerships, 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 | $ 516,748 |
Gross unrealized depreciation | (267,000) |
Net unrealized appreciation (depreciation) on securities and other investments | $ 249,748 |
|
|
Tax Cost | $ 6,525,677 |
The tax-based components of distributable earnings as of period end were as follows:
Undistributed ordinary income | $ 105,407 |
Capital loss carryforward | $ (1,481,421) |
Net unrealized appreciation (depreciation) | $ 249,742 |
Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. Under the Regulated Investment Company Modernization Act of 2010 (the Act), the Fund is permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period and such capital losses are required to be used prior to any losses that expire. Capital loss carryforwards were as follows:
Fiscal year of expiration |
|
2017 | $ (1,481,421) |
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 character of distributions paid was as follows:
| October 31, 2012 | October 31, 2011 |
Ordinary Income | $ 149,685 | $ 105,872 |
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.
New Accounting Pronouncement. In December 2011, the Financial Accounting Standards Board issued Accounting Standard Update No. 2011-11, Disclosures about Offsetting Assets and Liabilities. The update creates new disclosure requirements requiring entities to disclose both gross and net information for derivatives and other financial instruments that are either offset in the Statement of Assets and Liabilities or subject to an enforceable master netting arrangement or similar agreement. The disclosure requirements are effective for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods. 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's investment objective allows the Fund to enter into various types of derivative contracts, including futures contracts. Derivatives are investments whose value is primarily derived from underlying assets, indices or reference rates and may be transacted on an exchange or over-the-counter (OTC). Derivatives may involve a future commitment to buy or sell a specified instrument based on specified terms, to exchange future cash flows at periodic intervals based on a notional principal amount, or for one party to make one or more payments upon the occurrence of specified events in exchange for periodic payments from the other party.
The Fund used 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.
Annual Report
4. Derivative Instruments - continued
Risk Exposures and the Use of Derivative Instruments - continued
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 close out 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. Counterparty credit risk related to exchange-traded futures contracts is minimal because of the protection provided by the exchange on which they trade.
Investing in derivatives may involve greater risks than investing in the underlying assets directly and, to varying degrees, may involve risk of loss in excess of any initial investment and collateral received and amounts recognized in the Statement of Assets and Liabilities. In addition, there may be the risk that the change in value of the derivative contract does not correspond to the change in value of the underlying instrument.
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.
Any open futures contracts at period end are shown in the Schedule of Investments under the caption "Futures Contracts." The underlying face amount at value reflects each contract's exposure to the underlying instrument at period end.
During the period the Fund recognized net realized gain (loss) of $343 related to its investment in futures contracts. This amount is included in the Statement of Operations.
Annual Report
Notes to Financial Statements - continued
(Amounts in thousands except percentages)
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $12,207,964 and $16,447,517, 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 an annualized 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 .32% 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 respective classes of the Fund, except for Class K and Class F. 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 | $ 10,958 | .20 |
Class K | 63 | .05 |
| $ 11,021 |
|
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 each month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Annual Report
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 $270 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 Loan | Weighted Average Interest Rate | Interest Expense |
Borrower | $ 27,056 | .38% | $ 4 |
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR or an affiliate in a $4.25 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $24 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
Annual Report
Notes to Financial Statements - continued
(Amounts in thousands except percentages)
8. Security Lending - continued
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 $6,127. 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 $1,322, including $11 from securities loaned to FCM.
9. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of the Fund provided services to the Fund in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $1,200 for the period.
10. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended October 31, | 2012 | 2011 |
From net investment income |
|
|
Disciplined Equity | $ 100,145 | $ 86,646 |
Class K | 1,554 | 1,698 |
Class F | 47,986 | 17,528 |
Total | $ 149,685 | $ 105,872 |
11. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
Years ended October 31, | 2012 | 2011 | 2012 | 2011 |
Disciplined Equity |
|
|
|
|
Shares sold | 11,526 | 41,487 | $ 264,379 | $ 933,066 |
Reinvestment of distributions | 4,640 | 3,881 | 99,208 | 85,889 |
Shares redeemed | (186,807) | (126,148) | (4,297,497) | (2,865,193) |
Net increase (decrease) | (170,641) | (80,780) | $ (3,933,910) | $ (1,846,238) |
Class K |
|
|
|
|
Shares sold | 3,039 | 2,553 | $ 69,662 | $ 58,670 |
Reinvestment of distributions | 73 | 77 | 1,554 | 1,698 |
Shares redeemed | (2,124) | (4,762) | (49,699) | (109,108) |
Net increase (decrease) | 988 | (2,132) | $ 21,517 | $ (48,740) |
Annual Report
11. Share Transactions - continued
| Shares | Dollars | ||
Years ended October 31, | 2012 | 2011 | 2012 | 2011 |
Class F |
|
|
|
|
Shares sold | 60,590 | 75,199 | $ 1,374,571 | $ 1,686,077 |
Reinvestment of distributions | 2,248 | 793 | 47,986 | 17,528 |
Shares redeemed | (72,255) | (15,144) | (1,679,634) | (341,036) |
Net increase (decrease) | (9,417) | 60,848 | $ (257,077) | $ 1,362,569 |
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.
At the end of the period, the Fidelity Freedom Funds and Fidelity Freedom K Funds were the owners of record, in aggregate, of approximately 81% of the total outstanding shares of the Fund.
Effective after the close of business on December 7, 2012, 182,076 shares of the Fund held by the Freedom Funds were redeemed for cash and securities, with a value of $4,434,339. The Freedom Funds' ownership in the Fund was reduced to 47%. The Fund did not recognize gain or loss for federal income tax purposes.
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, 2012, 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, 2012 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
December 14, 2012
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 236 funds advised by FMR or an affiliate. Mr. Curvey oversees 443 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 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 (77) | |
| Year of Election or Appointment: 2007 Mr. Curvey is Trustee and 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 (55) | |
| 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 (64) | |
| 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 (59) | |
| 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 Entertainment, Inc. (restaurant and entertainment complexes, 2010-present), Earth Fare, Inc. (retail grocery, 2012-present), The Hillman Companies, Inc. (hardware wholesalers, 2010-present), and Bristol-Myers Squibb Company (global pharmaceuticals, 2008-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 (68) | |
| 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 Chairman of the Board of Directors of the Philharmonic Center for the Arts in Naples, Florida (2012-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 (68) | |
| 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). Previously, Mr. Mauriello served as a Director of the Hamilton Funds of the Bank of New York (2006-2007) and of Arcadia Resources Inc. (health care services and products, 2007-2012). |
Robert W. Selander (62) | |
| 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 (68) | |
| Year of Election or Appointment: 2005 Ms. Small is a member of the Board of Directors (2009-present) and Chair of the Investment Committee (2010-present) of the Teagle Foundation. Ms. Small also serves on the Investment Committee of the Berkshire Taconic Community Foundation (2008-present). Previously, Ms. Small served as Chairperson (2002-2008) and a member of the Investment Committee and Chairperson (2008-2012) and a member of the Board of Trustees 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 (73) | |
| 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 a Director of Univar Inc. (global distributor of commodity and specialty chemicals, Chairman from 2010-May 2012 and Lead Director from May 2012-present), Teradata Corporation (data warehousing and technology solutions, 2008-present), Maersk Inc. (industrial conglomerate), and Tyco International, Ltd. (multinational manufacturing and services, 2007-present), and a member of the Advisory Board for Metalmark Capital LLC (private equity investment, 2005-present). Mr. Stavropoulos is an operating 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, a Trustee of the Rollin L. Gerstacker Foundation, and a Director of the Naples Philharmonic Center for the Arts. Previously, Mr. Stavropoulos served as a Director of Chemical Financial Corporation (bank holding company, 1993-2012). |
David M. Thomas (63) | |
| 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), and a Director of Fortune Brands, Inc. (consumer products, 2000-2011). In addition, Mr. Thomas serves as Non-Executive Chairman of the Board of Directors of Fortune Brands Home and Security (home and security products, 2011-present), and as a member of the Board of Directors of Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (62) | |
| 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). |
+ 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 David A. Rosow and Garnett A. Smith may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235. 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 (82) | |
| 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 (68) | |
| 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). |
David A. Rosow (70) | |
| Year of Election or Appointment: 2012 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Chairman and Chief Executive Officer of International Golf Group, Inc. (golf course development, 1989-present). Previously, Mr. Rosow served as Chairman and Chief Executive Officer of Rosow & Company, Inc. (private investment company, 1989-2011), a Lead Director of Hudson United Bancorp (2001-2006) and as a Director of TD Banknorth (1996-2006). In addition, Mr. Rosow is a member (2008-present) and President (2009-present) of the Town Council of Palm Beach, Florida. |
Garnett A. Smith (65) | |
| Year of Election or Appointment: 2012 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Prior to Mr. Smith's retirement, he served as Chairman and Chief Executive Officer of Inbrand Corp. (manufacturer of personal absorbent products, 1990-1997). He also served as President (1986-1990) of Inbrand Corp. Prior to his employment with Inbrand Corp., he was employed by a retail fabric chain and North Carolina National Bank. In addition, Mr. Smith is a board member of the Jackson Hole Land Trust (2009-present). |
Kenneth B. Robins (43) | |
| 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 (47) | |
| Year of Election or Appointment: 2006 Vice President of certain Equity Funds. Mr. Herring also serves as President of Fidelity Research & Analysis Company (2010-present), Chief Investment Officer and Director of Fidelity Management & Research (U.K.) Inc. (2010-present) and Group Chief Investment 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 (48) | |
| 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 (44) | |
| 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 (43) | |
| 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). |
Elizabeth Paige Baumann (44) | |
| Year of Election or Appointment: 2012 Anti-Money Laundering (AML) Officer of the Fidelity funds. Ms. Baumann also serves as AML Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2012-present), Chief AML Officer of FMR LLC (2012-present), and is an employee of Fidelity Investments. Previously, Ms. Baumann served as Vice President and Deputy Anti-Money Laundering Officer (2007-2012). |
Christine Reynolds (54) | |
| 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). |
Joseph A. Hanlon (44) | |
| Year of Election or Appointment: 2012 Chief Compliance Officer of Fidelity's Equity and High Income Funds. Mr. Hanlon serves as Compliance Officer of FMR, FMR Co., Inc., Fidelity Investments Money Management, Inc. (FIMM), Fidelity Research and Analysis Company (FRAC), Fidelity Management & Research (Japan) Inc., Fidelity Management & Research (U.K.) Inc., Fidelity Management & Research (Hong Kong), and Strategic Advisers, Inc. (2009-present), as Senior Vice President of the Fidelity Asset Management Division (2009-present), and is an employee of Fidelity Investments. |
Joseph F. Zambello (55) | |
| 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 (45) | |
| Year of Election or Appointment: 2008 Deputy Treasurer of Fidelity's Equity and High Income Funds. Mr. Deberghes also serves as Vice President (2011-present) and Assistant Treasurer (2010-present) of other Fidelity funds, 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). |
Stephen Sadoski (41) | |
| Year of Election or Appointment: 2012 Deputy Treasurer of Fidelity's Equity and High Income Funds. Mr. Sadoski also serves as Assistant Treasurer of other Fidelity funds (2012-present) and is an employee of Fidelity Investments (2012-present). Previously, Mr. Sadoski served as an assistant chief accountant in the Division of Investment Management of the Securities and Exchange Commission (SEC) (2009-2012) and as a senior manager at Deloitte & Touche (1997-2009). |
Stephanie J. Dorsey (43) | |
| 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 (54) | |
| 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 (54) | |
| 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 (44) | |
| 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 2013 of amounts for use in preparing 2012 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, at each of its meetings, considers 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 and chaired by 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 2012 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 relative to peer funds; (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 exist and 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 also considered the fund's investment objective, strategies, and related investment philosophy. 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 continued to increase the resources devoted to non-U.S. offices, including expansion of Fidelity's global investment organization. The Board noted that Fidelity's analysts have extensive resources, tools and capabilities that allow them to conduct sophisticated quantitative and fundamental analysis, as well as credit analysis of issuers, counterparties and guarantors. 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 that 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 its deliberations, the Board considered the Investment Advisers' trading and risk management 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 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.
Annual Report
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.
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) persisting in efforts to enhance Fidelity's research capabilities, in particular, international research; (iii) launching new funds and making other enhancements to meet client needs for global and income-oriented solutions; (iv) continuing to launch dedicated lower cost underlying funds to meet investment management's portfolio construction needs related to expanding underlying fund options, specifically for the Freedom Fund product lines; (v) adopting a "Stock Selector" sector neutral investment approach and employing a team of portfolio managers who are sector specialists to manage certain funds; (vi) rationalizing product lines and gaining increased efficiencies through the mergers of several funds into other funds; (vii) strengthening the Spartan Index Fund product line by adding new funds and/or new low-cost institutional share classes, restructuring fund expenses to accommodate new classes, and reducing investment minimums for certain classes of shares; (viii) modifying the eligibility criteria for Institutional Class shares to increase their appeal to government entities and charitable investors; and (ix) reducing certain transfer agent fee rates.
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, 2011, 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 returns of Class K and the retail class show the performance of the highest and lowest performing classes, respectively (based on three-year performance). The box within each chart shows the 25th percentile return (top of box) and the 75th percentile return (bottom 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 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 third 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 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 to improve the fund's disappointing performance relative to its peer group and benchmark. The Board noted that this fund had underperformed in the past 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.
Annual Report
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.
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 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 2011. 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 2011.
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. The Board noted the findings of the 2010 ad hoc joint committee (created with the board of other Fidelity funds), which reviewed and compared 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.
Annual Report
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.
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.
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.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
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 economies of scale, if any, 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) the potential to further rationalize the Fidelity fund lineup with the possibility of achieving savings for the funds and Fidelity; (iii) Fidelity's compensation structure for portfolio managers and other key 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) the realization of fall-out benefits in certain Fidelity business units; (vi) Fidelity's group fee structures, the potential impact of regulatory changes on such structures, and the rationale for the individual fee rates of certain funds; (vii) fund profitability methodology, including Fidelity's cost allocation methodology, and the impact of certain factors on fund profitability results; (viii) trends regarding industry use of performance fee structures and the possibility of implementing performance fee structures for additional funds; and (ix) the impact of net redemptions from the Fidelity funds.
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.
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(U.K.) Inc.
Fidelity Management & Research
(Japan) Inc.
Fidelity Management & Research
(Hong Kong) Limited
General Distributor
Fidelity Distributors Corporation
Smithfield, RI
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
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www.fidelity.com
FDE-UANN-1212 1.784777.109
Fidelity®
Disciplined Equity
Fund -
Class F
Annual Report
October 31, 2012
(Fidelity Cover Art)
Contents
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. © 2012 FMR LLC. All rights reserved.
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, 2012 | Past 1 | Past 5 | Past 10 |
Class F A | 14.18% | -3.29% | 5.53% |
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, 2002. 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 bouts of volatility to post strong gains for the year ending October 31, 2012, and extend an uptrend that began in March 2009. The broad-based S&P 500® Index advanced 15.21% for the 12-month period, while the blue-chip-laden Dow Jones Industrial AverageSM and technology-heavy Nasdaq Composite® Index rose 12.56% and 12.21%, respectively. Debt problems in Europe, slower growth in China and uncertainty about a U.S. economic recovery put downward pressure on stocks early on and during a turbulent spring. However, beginning in June, stocks rose on central bank stimulus, steps to repair the eurozone and signs of life in the U.S. housing market. Equity benchmarks hit multiyear highs in September, with the Dow and the S&P® achieving their best marks since 2007, and the Nasdaq reaching a 12-year high. Stocks retreated in October, which was marked by disappointing corporate earnings reports and a two-day weather-related closure of the New York Stock Exchange. Among the 10 sectors that comprise the S&P 500®, most posted a double-digit gain, led by telecommunication services (+26%) and health care (+22%), with energy (+7%) and materials (+7%) lagging the most. Despite lingering eurozone turmoil and weaker local currencies versus the U.S. dollar, foreign developed-markets stocks rose modestly, with the MSCI® EAFE® Index adding 4.76%.
Comments from Keith Quinton, Portfolio Manager of Fidelity® Disciplined Equity Fund: For the year, the fund's Class F shares returned 14.18%, underperforming the S&P 500® Index. Security selection detracted, as the fund's quantitative models proved ineffective for most of the period, when stocks were highly correlated. A sizable stake in troubled computer maker Hewlett-Packard was by far the fund's biggest disappointment. I remained overweighted in the stock until October, when executives lowered earnings guidance and outlined a multiyear turnaround plan. I significantly reduced the position by period end. Two other picks in the technology hardware/equipment segment also hurt, including an underweighting in consumer electronics manufacturer Apple and poor timing with network equipment provider Cisco Systems. I sold Cisco from the fund by period end. Conversely, the fund was helped by a stake in the defensive food/beverage/tobacco segment of consumer staples, particularly top relative contributor and Belgium-based out-of-index holding Anheuser-Busch InBev. Positioning in the outperforming financials sector also helped, as did picks in energy, where many companies benefited from the U.S. boom in natural gas and oil production. An overweighting in drugmaker Amgen was a plus, as its stock rose on consecutive positive earnings surprises. Improved housing markets and increased repair and remodeling activity led to gains at retailer Home Depot, another top relative contributor.
Note to shareholders: Effective January 1, 2013, Alex Devereaux will become Co-Manager of the fund.
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, 2012 to October 31, 2012).
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 |
Disciplined Equity | .48% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,019.60 | $ 2.44 |
HypotheticalA |
| $ 1,000.00 | $ 1,022.72 | $ 2.44 |
Class K | .36% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,020.40 | $ 1.83 |
HypotheticalA |
| $ 1,000.00 | $ 1,023.33 | $ 1.83 |
Class F | .30% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,020.40 | $ 1.52 |
HypotheticalA |
| $ 1,000.00 | $ 1,023.63 | $ 1.53 |
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 184/366 (to reflect the one-half year period).
Annual Report
Investment Changes (Unaudited)
Top Ten Stocks as of October 31, 2012 | ||
| % of fund's | % of fund's net assets |
JPMorgan Chase & Co. | 3.7 | 3.2 |
General Electric Co. | 3.7 | 4.2 |
Apple, Inc. | 3.5 | 2.6 |
Amgen, Inc. | 3.4 | 3.4 |
Citigroup, Inc. | 3.2 | 0.0 |
Microsoft Corp. | 3.2 | 1.8 |
Chevron Corp. | 3.1 | 4.6 |
CVS Caremark Corp. | 2.7 | 0.0 |
Oracle Corp. | 2.7 | 0.0 |
PVH Corp. | 2.5 | 1.5 |
| 31.7 | |
Top Five Market Sectors as of October 31, 2012 | ||
| % of fund's | % of fund's net assets |
Information Technology | 18.7 | 20.8 |
Financials | 14.5 | 13.2 |
Health Care | 12.0 | 11.6 |
Consumer Discretionary | 11.0 | 10.3 |
Consumer Staples | 10.7 | 9.6 |
Asset Allocation (% of fund's net assets) | |||||||
As of October 31, 2012 * | As of April 30, 2012 ** | ||||||
![]() | Stocks 96.3% |
| ![]() | Stocks and |
| ||
![]() | Short-Term |
| ![]() | Short-Term |
| ||
* Foreign investments | 13.2% |
| ** Foreign investments | 11.4% |
|
Annual Report
Investments October 31, 2012
Showing Percentage of Net Assets
Common Stocks - 95.8% | |||
Shares | Value (000s) | ||
CONSUMER DISCRETIONARY - 10.5% | |||
Auto Components - 0.3% | |||
Delphi Automotive PLC | 600,000 | $ 18,864 | |
Automobiles - 0.3% | |||
Toyota Motor Corp. sponsored ADR | 250,000 | 19,368 | |
Hotels, Restaurants & Leisure - 1.3% | |||
Brinker International, Inc. | 200,000 | 6,160 | |
Icahn Enterprises LP rights | 1,900,000 | 0 | |
Melco PBL Entertainment (Macau) Ltd. sponsored ADR (a) | 500,000 | 7,255 | |
Wyndham Worldwide Corp. | 1,500,000 | 75,600 | |
| 89,015 | ||
Household Durables - 0.4% | |||
Jarden Corp. | 184,057 | 9,166 | |
Whirlpool Corp. | 200,000 | 19,536 | |
| 28,702 | ||
Internet & Catalog Retail - 1.7% | |||
Expedia, Inc. | 2,000,000 | 118,300 | |
Media - 2.3% | |||
The Walt Disney Co. | 648,200 | 31,807 | |
Time Warner Cable, Inc. | 700,000 | 69,377 | |
Virgin Media, Inc. (d) | 1,686,600 | 55,219 | |
| 156,403 | ||
Specialty Retail - 1.3% | |||
Foot Locker, Inc. | 600,000 | 20,100 | |
Guess?, Inc. | 300,000 | 7,434 | |
Home Depot, Inc. | 1,000,000 | 61,380 | |
| 88,914 | ||
Textiles, Apparel & Luxury Goods - 2.9% | |||
G-III Apparel Group Ltd. (a) | 500,000 | 18,480 | |
Iconix Brand Group, Inc. (a) | 500,000 | 9,255 | |
PVH Corp. | 1,560,202 | 171,607 | |
| 199,342 | ||
TOTAL CONSUMER DISCRETIONARY | 718,908 | ||
CONSUMER STAPLES - 10.7% | |||
Beverages - 3.3% | |||
Anheuser-Busch InBev SA NV | 971,457 | 81,244 | |
Coca-Cola Enterprises, Inc. | 200,000 | 6,288 | |
Constellation Brands, Inc. Class A (sub. vtg.) (a) | 3,900,000 | 137,826 | |
| 225,358 | ||
Common Stocks - continued | |||
Shares | Value (000s) | ||
CONSUMER STAPLES - continued | |||
Food & Staples Retailing - 4.6% | |||
CVS Caremark Corp. | 4,000,000 | $ 185,600 | |
Kroger Co. | 2,400,000 | 60,528 | |
Wal-Mart Stores, Inc. | 948,700 | 71,171 | |
| 317,299 | ||
Food Products - 0.9% | |||
Dean Foods Co. (a) | 450,000 | 7,578 | |
The J.M. Smucker Co. | 500,000 | 42,820 | |
Tyson Foods, Inc. Class A | 450,000 | 7,565 | |
| 57,963 | ||
Tobacco - 1.9% | |||
Imperial Tobacco Group PLC | 2,600,000 | 98,181 | |
Japan Tobacco, Inc. | 1,200,000 | 33,160 | |
| 131,341 | ||
TOTAL CONSUMER STAPLES | 731,961 | ||
ENERGY - 10.3% | |||
Energy Equipment & Services - 0.8% | |||
Ensco PLC Class A | 300,000 | 17,346 | |
Exterran Holdings, Inc. (a) | 400,000 | 7,992 | |
Helix Energy Solutions Group, Inc. (a) | 400,000 | 6,916 | |
Oil States International, Inc. (a) | 100,000 | 7,310 | |
Transocean Ltd. (United States) | 400,000 | 18,276 | |
| 57,840 | ||
Oil, Gas & Consumable Fuels - 9.5% | |||
Chevron Corp. | 1,894,900 | 208,837 | |
Exxon Mobil Corp. | 1,361,500 | 124,128 | |
Marathon Petroleum Corp. | 2,485,600 | 136,534 | |
Phillips 66 | 3,400,000 | 160,344 | |
Royal Dutch Shell PLC Class A sponsored ADR | 300,000 | 20,544 | |
| 650,387 | ||
TOTAL ENERGY | 708,227 | ||
FINANCIALS - 14.5% | |||
Commercial Banks - 1.0% | |||
Wells Fargo & Co. | 2,010,300 | 67,727 | |
Consumer Finance - 2.1% | |||
Discover Financial Services | 3,500,000 | 143,500 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
FINANCIALS - continued | |||
Diversified Financial Services - 6.9% | |||
Citigroup, Inc. | 5,900,000 | $ 220,601 | |
JPMorgan Chase & Co. | 6,200,000 | 258,413 | |
| 479,014 | ||
Insurance - 4.1% | |||
Allied World Assurance Co. Holdings Ltd. | 100,000 | 8,030 | |
American International Group, Inc. (a) | 600,000 | 20,958 | |
Assured Guaranty Ltd. | 1,040,702 | 14,455 | |
Lincoln National Corp. | 900,000 | 22,311 | |
MetLife, Inc. | 4,400,000 | 156,156 | |
Montpelier Re Holdings Ltd. | 233,235 | 5,334 | |
The Travelers Companies, Inc. | 790,157 | 56,054 | |
| 283,298 | ||
Real Estate Management & Development - 0.4% | |||
Altisource Portfolio Solutions SA (a) | 225,000 | 25,538 | |
TOTAL FINANCIALS | 999,077 | ||
HEALTH CARE - 12.0% | |||
Biotechnology - 4.4% | |||
Amgen, Inc. | 2,724,000 | 235,749 | |
Gilead Sciences, Inc. (a) | 600,000 | 40,296 | |
Spectrum Pharmaceuticals, Inc. (a)(d) | 2,388,000 | 26,650 | |
Threshold Pharmaceuticals, Inc. (a) | 761,120 | 3,128 | |
| 305,823 | ||
Health Care Equipment & Supplies - 1.0% | |||
The Cooper Companies, Inc. | 400,000 | 38,392 | |
Zimmer Holdings, Inc. | 500,000 | 32,105 | |
| 70,497 | ||
Health Care Providers & Services - 1.9% | |||
Community Health Systems, Inc. (a) | 1,910,000 | 52,372 | |
UnitedHealth Group, Inc. | 1,200,000 | 67,200 | |
Universal Health Services, Inc. Class B | 200,000 | 8,278 | |
| 127,850 | ||
Life Sciences Tools & Services - 0.3% | |||
Charles River Laboratories International, Inc. (a) | 500,000 | 18,660 | |
Pharmaceuticals - 4.4% | |||
Merck & Co., Inc. | 1,200,000 | 54,756 | |
Mylan, Inc. (a) | 1,400,000 | 35,476 | |
Sanofi SA sponsored ADR | 3,400,000 | 149,090 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
HEALTH CARE - continued | |||
Pharmaceuticals - continued | |||
Warner Chilcott PLC | 1,600,224 | $ 18,531 | |
Watson Pharmaceuticals, Inc. (a) | 500,000 | 42,975 | |
| 300,828 | ||
TOTAL HEALTH CARE | 823,658 | ||
INDUSTRIALS - 9.5% | |||
Aerospace & Defense - 2.2% | |||
Textron, Inc. | 6,050,000 | 152,521 | |
Airlines - 0.1% | |||
US Airways Group, Inc. (a) | 324,231 | 3,949 | |
Building Products - 0.3% | |||
A.O. Smith Corp. | 200,000 | 12,154 | |
Owens Corning (a) | 343,651 | 11,543 | |
| 23,697 | ||
Commercial Services & Supplies - 0.5% | |||
Republic Services, Inc. | 1,300,000 | 36,855 | |
Construction & Engineering - 0.7% | |||
Fluor Corp. | 500,000 | 27,925 | |
MasTec, Inc. (a) | 850,500 | 19,187 | |
| 47,112 | ||
Industrial Conglomerates - 3.7% | |||
General Electric Co. | 12,000,000 | 252,720 | |
Machinery - 1.7% | |||
Ingersoll-Rand PLC | 800,000 | 37,624 | |
Lincoln Electric Holdings, Inc. | 200,000 | 8,674 | |
Manitowoc Co., Inc. | 1,200,000 | 17,100 | |
Oshkosh Truck Corp. (a) | 150,000 | 4,497 | |
Pentair Ltd. | 550,000 | 23,232 | |
Terex Corp. (a) | 1,250,000 | 28,188 | |
| 119,315 | ||
Trading Companies & Distributors - 0.3% | |||
AerCap Holdings NV (a) | 1,386,100 | 17,271 | |
TOTAL INDUSTRIALS | 653,440 | ||
INFORMATION TECHNOLOGY - 18.7% | |||
Communications Equipment - 1.1% | |||
Brocade Communications Systems, Inc. (a) | 14,074,600 | 74,595 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
INFORMATION TECHNOLOGY - continued | |||
Computers & Peripherals - 4.8% | |||
Apple, Inc. | 400,000 | $ 238,040 | |
Hewlett-Packard Co. | 4,096,372 | 56,735 | |
Lexmark International, Inc. Class A (d) | 1,800,000 | 38,268 | |
| 333,043 | ||
Internet Software & Services - 0.7% | |||
Demand Media, Inc. (a) | 600,000 | 5,118 | |
Facebook, Inc. Class B (a)(e) | 493,371 | 9,376 | |
Google, Inc. Class A (a) | 50,000 | 33,989 | |
| 48,483 | ||
IT Services - 4.5% | |||
Accenture PLC Class A | 800,000 | 53,928 | |
Acxiom Corp. (a) | 400,000 | 7,300 | |
Alliance Data Systems Corp. (a)(d) | 500,000 | 71,525 | |
Fidelity National Information Services, Inc. | 1,000,000 | 32,870 | |
Heartland Payment Systems, Inc. | 127,266 | 3,319 | |
IBM Corp. | 500,000 | 97,265 | |
Teradata Corp. (a) | 658,405 | 44,976 | |
| 311,183 | ||
Semiconductors & Semiconductor Equipment - 1.5% | |||
GT Advanced Technologies, Inc. (a)(d) | 4,000,000 | 17,360 | |
Samsung Electronics Co. Ltd. | 69,320 | 83,287 | |
| 100,647 | ||
Software - 6.1% | |||
BMC Software, Inc. (a) | 400,000 | 16,280 | |
Microsoft Corp. | 7,589,902 | 216,578 | |
Oracle Corp. | 5,924,580 | 183,958 | |
Parametric Technology Corp. (a) | 158,147 | 3,191 | |
| 420,007 | ||
TOTAL INFORMATION TECHNOLOGY | 1,287,958 | ||
MATERIALS - 3.2% | |||
Chemicals - 2.4% | |||
Ashland, Inc. | 100,000 | 7,115 | |
CF Industries Holdings, Inc. | 307,700 | 63,137 | |
Chemtura Corp. (a) | 400,000 | 6,372 | |
Eastman Chemical Co. | 400,000 | 23,696 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
MATERIALS - continued | |||
Chemicals - continued | |||
Huntsman Corp. | 1,000,000 | $ 15,040 | |
LyondellBasell Industries NV Class A | 900,000 | 48,051 | |
| 163,411 | ||
Containers & Packaging - 0.8% | |||
Rock-Tenn Co. Class A | 800,000 | 58,552 | |
TOTAL MATERIALS | 221,963 | ||
TELECOMMUNICATION SERVICES - 2.9% | |||
Diversified Telecommunication Services - 1.3% | |||
CenturyLink, Inc. | 1,925,485 | 73,900 | |
Nippon Telegraph & Telephone Corp. sponsored ADR | 712,500 | 16,259 | |
| 90,159 | ||
Wireless Telecommunication Services - 1.6% | |||
MetroPCS Communications, Inc. (a) | 3,200,000 | 32,672 | |
NTT DoCoMo, Inc. sponsored ADR | 300,000 | 4,320 | |
Vodafone Group PLC sponsored ADR | 2,532,300 | 68,929 | |
| 105,921 | ||
TOTAL TELECOMMUNICATION SERVICES | 196,080 | ||
UTILITIES - 3.5% | |||
Electric Utilities - 2.9% | |||
Edison International | 1,800,000 | 84,492 | |
ITC Holdings Corp. | 100,000 | 7,962 | |
Pinnacle West Capital Corp. | 600,000 | 31,782 | |
PNM Resources, Inc. | 3,577,376 | 79,275 | |
| 203,511 | ||
Independent Power Producers & Energy Traders - 0.6% | |||
Calpine Corp. (a) | 1,000,000 | 17,600 | |
The AES Corp. | 2,170,962 | 22,687 | |
| 40,287 | ||
TOTAL UTILITIES | 243,798 | ||
TOTAL COMMON STOCKS (Cost $6,328,862) |
| ||
Nonconvertible Preferred Stocks - 0.5% | |||
Shares | Value (000s) | ||
CONSUMER DISCRETIONARY - 0.5% | |||
Automobiles - 0.5% | |||
Volkswagen AG (Cost $30,771) | 160,700 | $ 33,243 | |
Money Market Funds - 2.3% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.19% (b) | 89,195,522 | 89,196 | |
Fidelity Securities Lending Cash Central Fund, 0.19% (b)(c) | 67,915,575 | 67,916 | |
TOTAL MONEY MARKET FUNDS (Cost $157,112) |
| ||
TOTAL INVESTMENT PORTFOLIO - 98.6% (Cost $6,516,745) | 6,775,425 | ||
NET OTHER ASSETS (LIABILITIES) - 1.4% | 95,943 | ||
NET ASSETS - 100% | $ 6,871,368 |
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 $9,376,000 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 | $ 204 |
Fidelity Securities Lending Cash Central Fund | 1,322 |
Total | $ 1,526 |
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, beginning of period | Purchases | Sales Proceeds | Dividend Income | Value, |
El Paso Electric Co. | $ 66,943 | $ - | $ 63,483 | $ 920 | $ - |
Spectrum Pharmaceuticals, Inc. | - | 53,316 | 18,483 | - | - |
Total | $ 66,943 | $ 53,316 | $ 81,966 | $ 920 | $ - |
Other Information |
The following is a summary of the inputs used, as of October 31, 2012, 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 | $ 752,151 | $ 752,151 | $ - | $ - |
Consumer Staples | 731,961 | 650,717 | 81,244 | - |
Energy | 708,227 | 708,227 | - | - |
Financials | 999,077 | 999,077 | - | - |
Health Care | 823,658 | 823,658 | - | - |
Industrials | 653,440 | 653,440 | - | - |
Information Technology | 1,287,958 | 1,278,582 | 9,376 | - |
Materials | 221,963 | 221,963 | - | - |
Telecommunication Services | 196,080 | 196,080 | - | - |
Utilities | 243,798 | 243,798 | - | - |
Money Market Funds | 157,112 | 157,112 | - | - |
Total Investments in Securities: | $ 6,775,425 | $ 6,684,805 | $ 90,620 | $ - |
The following is a summary of transfers between Level 1 and Level 2 for the period ended October 31, 2012. Transfers are assumed to have occurred at the beginning of the period, and are primarily attributable to the valuation techniques used for foreign equity securities, as discussed in the accompanying Notes to Financial Statements: |
Transfers | Total (000s) |
Level 1 to Level 2 | $ 0 |
Level 2 to Level 1 | $ 231,932 |
Distribution of investments by country or territory of incorporation, as a percentage of total net assets, is as follows. (Unaudited) |
United States of America | 86.8% |
United Kingdom | 2.9% |
France | 2.2% |
Ireland | 1.6% |
Korea (South) | 1.2% |
Belgium | 1.2% |
Japan | 1.1% |
Netherlands | 1.0% |
Others (Individually Less Than 1%) | 2.0% |
| 100.0% |
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, 2012 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $64,532) - See accompanying schedule: Unaffiliated issuers (cost $6,359,633) | $ 6,618,313 |
|
Fidelity Central Funds (cost $157,112) | 157,112 |
|
Total Investments (cost $6,516,745) |
| $ 6,775,425 |
Receivable for investments sold | 282,519 | |
Receivable for fund shares sold | 3,980 | |
Dividends receivable | 3,538 | |
Distributions receivable from Fidelity Central Funds | 61 | |
Other receivables | 664 | |
Total assets | 7,066,187 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 116,776 | |
Payable for fund shares redeemed | 7,438 | |
Accrued management fee | 1,548 | |
Other affiliated payables | 758 | |
Other payables and accrued expenses | 383 | |
Collateral on securities loaned, at value | 67,916 | |
Total liabilities | 194,819 | |
|
|
|
Net Assets | $ 6,871,368 | |
Net Assets consist of: |
| |
Paid in capital | $ 7,997,907 | |
Undistributed net investment income | 105,140 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (1,490,354) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 258,675 | |
Net Assets | $ 6,871,368 |
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, 2012 | |
|
|
|
Disciplined Equity: | $ 24.47 | |
|
|
|
Class K: | $ 24.49 | |
|
|
|
Class F: | $ 24.47 |
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, 2012 | |
|
|
|
Investment Income |
|
|
Dividends (including $920 earned from other affiliated issuers) |
| $ 188,814 |
Interest |
| 7 |
Income from Fidelity Central Funds |
| 1,526 |
Total income |
| 190,347 |
|
|
|
Expenses | ||
Management fee | $ 47,456 | |
Performance adjustment | (20,696) | |
Transfer agent fees | 11,021 | |
Accounting and security lending fees | 1,243 | |
Custodian fees and expenses | 210 | |
Independent trustees' compensation | 58 | |
Registration fees | 48 | |
Audit | 81 | |
Legal | 39 | |
Interest | 4 | |
Miscellaneous | 101 | |
Total expenses before reductions | 39,565 | |
Expense reductions | (1,200) | 38,365 |
Net investment income (loss) | 151,982 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 771,049 | |
Other affiliated issuers | (5,239) |
|
Foreign currency transactions | (1,444) | |
Futures contracts | 343 | |
Total net realized gain (loss) |
| 764,709 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 252,449 | |
Assets and liabilities in foreign currencies | 101 | |
Total change in net unrealized appreciation (depreciation) |
| 252,550 |
Net gain (loss) | 1,017,259 | |
Net increase (decrease) in net assets resulting from operations | $ 1,169,241 |
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) | $ 151,982 | $ 134,929 |
Net realized gain (loss) | 764,709 | 674,729 |
Change in net unrealized appreciation (depreciation) | 252,550 | (592,538) |
Net increase (decrease) in net assets resulting | 1,169,241 | 217,120 |
Distributions to shareholders from net investment income | (149,685) | (105,872) |
Share transactions - net increase (decrease) | (4,169,470) | (532,409) |
Total increase (decrease) in net assets | (3,149,914) | (421,161) |
|
|
|
Net Assets | ||
Beginning of period | 10,021,282 | 10,442,443 |
End of period (including undistributed net investment income of $105,140 and undistributed net investment income of $102,810, respectively) | $ 6,871,368 | $ 10,021,282 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Disciplined Equity
Years ended October 31, | 2012 | 2011 | 2010 | 2009 | 2008 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 21.79 | $ 21.67 | $ 19.72 | $ 18.78 | $ 33.37 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .40 | .28 | .18 | .24 | .29 |
Net realized and unrealized gain (loss) | 2.59 | .05 | 1.99 | .96 | (12.19) |
Total from investment operations | 2.99 | .33 | 2.17 | 1.20 | (11.90) |
Distributions from net investment income | (.31) | (.21) | (.22) | (.26) | (.26) |
Distributions from net realized gain | - | - | - | - | (2.43) |
Total distributions | (.31) | (.21) | (.22) | (.26) | (2.69) |
Net asset value, end of period | $ 24.47 | $ 21.79 | $ 21.67 | $ 19.72 | $ 18.78 |
Total Return A | 13.95% | 1.51% | 11.05% | 6.64% | (38.68)% |
Ratios to Average Net Assets C,E |
|
|
|
|
|
Expenses before reductions | .54% | .59% | .70% | .84% | .87% |
Expenses net of fee waivers, if any | .54% | .59% | .70% | .84% | .87% |
Expenses net of all reductions | .52% | .58% | .68% | .83% | .87% |
Net investment income (loss) | 1.72% | 1.22% | .85% | 1.37% | 1.10% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (in millions) | $ 3,948 | $ 7,233 | $ 8,943 | $ 10,530 | $ 9,804 |
Portfolio turnover rate D | 147% | 153% | 146% | 200% | 186% |
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, | 2012 | 2011 | 2010 | 2009 | 2008 G |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 21.81 | $ 21.69 | $ 19.74 | $ 18.79 | $ 27.38 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) D | .43 | .31 | .22 | .28 | .12 |
Net realized and unrealized gain (loss) | 2.60 | .06 | 1.99 | .96 | (8.71) |
Total from investment operations | 3.03 | .37 | 2.21 | 1.24 | (8.59) |
Distributions from net investment income | (.35) | (.25) | (.26) | (.29) | - |
Net asset value, end of period | $ 24.49 | $ 21.81 | $ 21.69 | $ 19.74 | $ 18.79 |
Total Return B,C | 14.14% | 1.68% | 11.25% | 6.92% | (31.37)% |
Ratios to Average Net Assets E,H |
|
|
|
|
|
Expenses before reductions | .39% | .43% | .52% | .61% | .71% A |
Expenses net of fee waivers, if any | .39% | .43% | .52% | .61% | .71% A |
Expenses net of all reductions | .37% | .42% | .51% | .60% | .71% A |
Net investment income (loss) | 1.87% | 1.38% | 1.03% | 1.59% | 1.30% A |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (in millions) | $ 131 | $ 95 | $ 141 | $ 184 | $ 49 |
Portfolio turnover rate F | 147% | 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, | 2012 | 2011 | 2010 | 2009 G |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 21.80 | $ 21.69 | $ 19.74 | $ 17.52 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss) D | .44 | .32 | .22 | .02 |
Net realized and unrealized gain (loss) | 2.60 | .05 | 2.00 | 2.20 |
Total from investment operations | 3.04 | .37 | 2.22 | 2.22 |
Distributions from net investment income | (.37) | (.26) | (.27) | - |
Net asset value, end of period | $ 24.47 | $ 21.80 | $ 21.69 | $ 19.74 |
Total Return B,C | 14.18% | 1.70% | 11.31% | 12.67% |
Ratios to Average Net Assets E,H |
|
|
|
|
Expenses before reductions | .34% | .38% | .47% | .50% A |
Expenses net of fee waivers, if any | .34% | .38% | .47% | .50% A |
Expenses net of all reductions | .32% | .37% | .45% | .49% A |
Net investment income (loss) | 1.92% | 1.43% | 1.08% | .25% A |
Supplemental Data |
|
|
|
|
Net assets, end of period (in millions) | $ 2,792 | $ 2,693 | $ 1,359 | $ 75 |
Portfolio turnover rate F | 147% | 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, 2012
(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 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.
Annual Report
Notes to Financial Statements - continued
(Amounts in thousands except percentages)
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. In accordance with valuation policies and procedures approved by the Board of Trustees (the Board), the Fund attempts to obtain prices from one or more third party pricing vendors or brokers to value its investments. When current market prices, quotations or rates are not readily available or reliable, securities will be fair valued in good faith by the FMR Fair Value Committee (the Committee), in accordance with procedures adopted by the Fund's Board. Factors used in determining fair value vary by security type and 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 Committee oversees the Fund's valuation policies and procedures and is responsible for approving and reporting to the Board all fair value determinations.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the Fund's own assumptions based on the best information available)
Valuation techniques used to value the Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by a third party pricing vendor on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as
Annual Report
3. Significant Accounting Policies - continued
Security Valuation - continued
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. 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 these securities are generally categorized as Level 3 in the hierarchy.
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value (NAV) each business day and are categorized as Level 1 in the hierarchy.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of October 31, 2012, including information on transfers between Levels 1 and 2 is included at the end of the Fund's Schedule of Investments.
Foreign Currency Translation. The Fund may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rates at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on
Annual Report
Notes to Financial Statements - continued
(Amounts in thousands except percentages)
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 under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for income taxes is required. As of October 31, 2012, the Fund did not have any unrecognized tax benefits in the financial statements; nor is the Fund aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. A fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
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 dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to futures transactions, foreign currency transactions, partnerships, 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 | $ 516,748 |
Gross unrealized depreciation | (267,000) |
Net unrealized appreciation (depreciation) on securities and other investments | $ 249,748 |
|
|
Tax Cost | $ 6,525,677 |
The tax-based components of distributable earnings as of period end were as follows:
Undistributed ordinary income | $ 105,407 |
Capital loss carryforward | $ (1,481,421) |
Net unrealized appreciation (depreciation) | $ 249,742 |
Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. Under the Regulated Investment Company Modernization Act of 2010 (the Act), the Fund is permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period and such capital losses are required to be used prior to any losses that expire. Capital loss carryforwards were as follows:
Fiscal year of expiration |
|
2017 | $ (1,481,421) |
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 character of distributions paid was as follows:
| October 31, 2012 | October 31, 2011 |
Ordinary Income | $ 149,685 | $ 105,872 |
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.
New Accounting Pronouncement. In December 2011, the Financial Accounting Standards Board issued Accounting Standard Update No. 2011-11, Disclosures about Offsetting Assets and Liabilities. The update creates new disclosure requirements requiring entities to disclose both gross and net information for derivatives and other financial instruments that are either offset in the Statement of Assets and Liabilities or subject to an enforceable master netting arrangement or similar agreement. The disclosure requirements are effective for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods. 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's investment objective allows the Fund to enter into various types of derivative contracts, including futures contracts. Derivatives are investments whose value is primarily derived from underlying assets, indices or reference rates and may be transacted on an exchange or over-the-counter (OTC). Derivatives may involve a future commitment to buy or sell a specified instrument based on specified terms, to exchange future cash flows at periodic intervals based on a notional principal amount, or for one party to make one or more payments upon the occurrence of specified events in exchange for periodic payments from the other party.
The Fund used 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.
Annual Report
4. Derivative Instruments - continued
Risk Exposures and the Use of Derivative Instruments - continued
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 close out 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. Counterparty credit risk related to exchange-traded futures contracts is minimal because of the protection provided by the exchange on which they trade.
Investing in derivatives may involve greater risks than investing in the underlying assets directly and, to varying degrees, may involve risk of loss in excess of any initial investment and collateral received and amounts recognized in the Statement of Assets and Liabilities. In addition, there may be the risk that the change in value of the derivative contract does not correspond to the change in value of the underlying instrument.
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.
Any open futures contracts at period end are shown in the Schedule of Investments under the caption "Futures Contracts." The underlying face amount at value reflects each contract's exposure to the underlying instrument at period end.
During the period the Fund recognized net realized gain (loss) of $343 related to its investment in futures contracts. This amount is included in the Statement of Operations.
Annual Report
Notes to Financial Statements - continued
(Amounts in thousands except percentages)
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $12,207,964 and $16,447,517, 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 an annualized 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 .32% 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 respective classes of the Fund, except for Class K and Class F. 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 | $ 10,958 | .20 |
Class K | 63 | .05 |
| $ 11,021 |
|
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 each month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Annual Report
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 $270 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 Loan | Weighted Average Interest Rate | Interest Expense |
Borrower | $ 27,056 | .38% | $ 4 |
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR or an affiliate in a $4.25 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $24 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
Annual Report
Notes to Financial Statements - continued
(Amounts in thousands except percentages)
8. Security Lending - continued
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 $6,127. 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 $1,322, including $11 from securities loaned to FCM.
9. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of the Fund provided services to the Fund in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $1,200 for the period.
10. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended October 31, | 2012 | 2011 |
From net investment income |
|
|
Disciplined Equity | $ 100,145 | $ 86,646 |
Class K | 1,554 | 1,698 |
Class F | 47,986 | 17,528 |
Total | $ 149,685 | $ 105,872 |
11. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
Years ended October 31, | 2012 | 2011 | 2012 | 2011 |
Disciplined Equity |
|
|
|
|
Shares sold | 11,526 | 41,487 | $ 264,379 | $ 933,066 |
Reinvestment of distributions | 4,640 | 3,881 | 99,208 | 85,889 |
Shares redeemed | (186,807) | (126,148) | (4,297,497) | (2,865,193) |
Net increase (decrease) | (170,641) | (80,780) | $ (3,933,910) | $ (1,846,238) |
Class K |
|
|
|
|
Shares sold | 3,039 | 2,553 | $ 69,662 | $ 58,670 |
Reinvestment of distributions | 73 | 77 | 1,554 | 1,698 |
Shares redeemed | (2,124) | (4,762) | (49,699) | (109,108) |
Net increase (decrease) | 988 | (2,132) | $ 21,517 | $ (48,740) |
Annual Report
11. Share Transactions - continued
| Shares | Dollars | ||
Years ended October 31, | 2012 | 2011 | 2012 | 2011 |
Class F |
|
|
|
|
Shares sold | 60,590 | 75,199 | $ 1,374,571 | $ 1,686,077 |
Reinvestment of distributions | 2,248 | 793 | 47,986 | 17,528 |
Shares redeemed | (72,255) | (15,144) | (1,679,634) | (341,036) |
Net increase (decrease) | (9,417) | 60,848 | $ (257,077) | $ 1,362,569 |
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.
At the end of the period, the Fidelity Freedom Funds and Fidelity Freedom K Funds were the owners of record, in aggregate, of approximately 81% of the total outstanding shares of the Fund.
Effective after the close of business on December 7, 2012, 182,076 shares of the Fund held by the Freedom Funds were redeemed for cash and securities, with a value of $4,434,339. The Freedom Funds' ownership in the Fund was reduced to 47%. The Fund did not recognize gain or loss for federal income tax purposes.
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, 2012, 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, 2012 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
December 14, 2012
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 236 funds advised by FMR or an affiliate. Mr. Curvey oversees 443 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 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 (77) | |
| Year of Election or Appointment: 2007 Mr. Curvey is Trustee and 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 (55) | |
| 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 (64) | |
| 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 (59) | |
| 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 Entertainment, Inc. (restaurant and entertainment complexes, 2010-present), Earth Fare, Inc. (retail grocery, 2012-present), The Hillman Companies, Inc. (hardware wholesalers, 2010-present), and Bristol-Myers Squibb Company (global pharmaceuticals, 2008-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 (68) | |
| 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 Chairman of the Board of Directors of the Philharmonic Center for the Arts in Naples, Florida (2012-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 (68) | |
| 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). Previously, Mr. Mauriello served as a Director of the Hamilton Funds of the Bank of New York (2006-2007) and of Arcadia Resources Inc. (health care services and products, 2007-2012). |
Robert W. Selander (62) | |
| 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 (68) | |
| Year of Election or Appointment: 2005 Ms. Small is a member of the Board of Directors (2009-present) and Chair of the Investment Committee (2010-present) of the Teagle Foundation. Ms. Small also serves on the Investment Committee of the Berkshire Taconic Community Foundation (2008-present). Previously, Ms. Small served as Chairperson (2002-2008) and a member of the Investment Committee and Chairperson (2008-2012) and a member of the Board of Trustees 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 (73) | |
| 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 a Director of Univar Inc. (global distributor of commodity and specialty chemicals, Chairman from 2010-May 2012 and Lead Director from May 2012-present), Teradata Corporation (data warehousing and technology solutions, 2008-present), Maersk Inc. (industrial conglomerate), and Tyco International, Ltd. (multinational manufacturing and services, 2007-present), and a member of the Advisory Board for Metalmark Capital LLC (private equity investment, 2005-present). Mr. Stavropoulos is an operating 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, a Trustee of the Rollin L. Gerstacker Foundation, and a Director of the Naples Philharmonic Center for the Arts. Previously, Mr. Stavropoulos served as a Director of Chemical Financial Corporation (bank holding company, 1993-2012). |
David M. Thomas (63) | |
| 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), and a Director of Fortune Brands, Inc. (consumer products, 2000-2011). In addition, Mr. Thomas serves as Non-Executive Chairman of the Board of Directors of Fortune Brands Home and Security (home and security products, 2011-present), and as a member of the Board of Directors of Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (62) | |
| 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). |
+ 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 David A. Rosow and Garnett A. Smith may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235. 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 (82) | |
| 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 (68) | |
| 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). |
David A. Rosow (70) | |
| Year of Election or Appointment: 2012 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Chairman and Chief Executive Officer of International Golf Group, Inc. (golf course development, 1989-present). Previously, Mr. Rosow served as Chairman and Chief Executive Officer of Rosow & Company, Inc. (private investment company, 1989-2011), a Lead Director of Hudson United Bancorp (2001-2006) and as a Director of TD Banknorth (1996-2006). In addition, Mr. Rosow is a member (2008-present) and President (2009-present) of the Town Council of Palm Beach, Florida. |
Garnett A. Smith (65) | |
| Year of Election or Appointment: 2012 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Prior to Mr. Smith's retirement, he served as Chairman and Chief Executive Officer of Inbrand Corp. (manufacturer of personal absorbent products, 1990-1997). He also served as President (1986-1990) of Inbrand Corp. Prior to his employment with Inbrand Corp., he was employed by a retail fabric chain and North Carolina National Bank. In addition, Mr. Smith is a board member of the Jackson Hole Land Trust (2009-present). |
Kenneth B. Robins (43) | |
| 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 (47) | |
| Year of Election or Appointment: 2006 Vice President of certain Equity Funds. Mr. Herring also serves as President of Fidelity Research & Analysis Company (2010-present), Chief Investment Officer and Director of Fidelity Management & Research (U.K.) Inc. (2010-present) and Group Chief Investment 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 (48) | |
| 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 (44) | |
| 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 (43) | |
| 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). |
Elizabeth Paige Baumann (44) | |
| Year of Election or Appointment: 2012 Anti-Money Laundering (AML) Officer of the Fidelity funds. Ms. Baumann also serves as AML Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2012-present), Chief AML Officer of FMR LLC (2012-present), and is an employee of Fidelity Investments. Previously, Ms. Baumann served as Vice President and Deputy Anti-Money Laundering Officer (2007-2012). |
Christine Reynolds (54) | |
| 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). |
Joseph A. Hanlon (44) | |
| Year of Election or Appointment: 2012 Chief Compliance Officer of Fidelity's Equity and High Income Funds. Mr. Hanlon serves as Compliance Officer of FMR, FMR Co., Inc., Fidelity Investments Money Management, Inc. (FIMM), Fidelity Research and Analysis Company (FRAC), Fidelity Management & Research (Japan) Inc., Fidelity Management & Research (U.K.) Inc., Fidelity Management & Research (Hong Kong), and Strategic Advisers, Inc. (2009-present), as Senior Vice President of the Fidelity Asset Management Division (2009-present), and is an employee of Fidelity Investments. |
Joseph F. Zambello (55) | |
| 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 (45) | |
| Year of Election or Appointment: 2008 Deputy Treasurer of Fidelity's Equity and High Income Funds. Mr. Deberghes also serves as Vice President (2011-present) and Assistant Treasurer (2010-present) of other Fidelity funds, 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). |
Stephen Sadoski (41) | |
| Year of Election or Appointment: 2012 Deputy Treasurer of Fidelity's Equity and High Income Funds. Mr. Sadoski also serves as Assistant Treasurer of other Fidelity funds (2012-present) and is an employee of Fidelity Investments (2012-present). Previously, Mr. Sadoski served as an assistant chief accountant in the Division of Investment Management of the Securities and Exchange Commission (SEC) (2009-2012) and as a senior manager at Deloitte & Touche (1997-2009). |
Stephanie J. Dorsey (43) | |
| 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 (54) | |
| 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 (54) | |
| 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 (44) | |
| 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 87% 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 2013 of amounts for use in preparing 2012 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, at each of its meetings, considers 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 and chaired by 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 2012 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 relative to peer funds; (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 exist and 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 also considered the fund's investment objective, strategies, and related investment philosophy. 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 continued to increase the resources devoted to non-U.S. offices, including expansion of Fidelity's global investment organization. The Board noted that Fidelity's analysts have extensive resources, tools and capabilities that allow them to conduct sophisticated quantitative and fundamental analysis, as well as credit analysis of issuers, counterparties and guarantors. 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 that 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 its deliberations, the Board considered the Investment Advisers' trading and risk management 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 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.
Annual Report
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.
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) persisting in efforts to enhance Fidelity's research capabilities, in particular, international research; (iii) launching new funds and making other enhancements to meet client needs for global and income-oriented solutions; (iv) continuing to launch dedicated lower cost underlying funds to meet investment management's portfolio construction needs related to expanding underlying fund options, specifically for the Freedom Fund product lines; (v) adopting a "Stock Selector" sector neutral investment approach and employing a team of portfolio managers who are sector specialists to manage certain funds; (vi) rationalizing product lines and gaining increased efficiencies through the mergers of several funds into other funds; (vii) strengthening the Spartan Index Fund product line by adding new funds and/or new low-cost institutional share classes, restructuring fund expenses to accommodate new classes, and reducing investment minimums for certain classes of shares; (viii) modifying the eligibility criteria for Institutional Class shares to increase their appeal to government entities and charitable investors; and (ix) reducing certain transfer agent fee rates.
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, 2011, 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 returns of Class K and the retail class show the performance of the highest and lowest performing classes, respectively (based on three-year performance). The box within each chart shows the 25th percentile return (top of box) and the 75th percentile return (bottom 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 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 third 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 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 to improve the fund's disappointing performance relative to its peer group and benchmark. The Board noted that this fund had underperformed in the past 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.
Annual Report
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.
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 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 2011. 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 2011.
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. The Board noted the findings of the 2010 ad hoc joint committee (created with the board of other Fidelity funds), which reviewed and compared 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.
Annual Report
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.
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.
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.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
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 economies of scale, if any, 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) the potential to further rationalize the Fidelity fund lineup with the possibility of achieving savings for the funds and Fidelity; (iii) Fidelity's compensation structure for portfolio managers and other key 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) the realization of fall-out benefits in certain Fidelity business units; (vi) Fidelity's group fee structures, the potential impact of regulatory changes on such structures, and the rationale for the individual fee rates of certain funds; (vii) fund profitability methodology, including Fidelity's cost allocation methodology, and the impact of certain factors on fund profitability results; (viii) trends regarding industry use of performance fee structures and the possibility of implementing performance fee structures for additional funds; and (ix) the impact of net redemptions from the Fidelity funds.
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
Smithfield, RI
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
(Fidelity Investment logo)(registered trademark)
Corporate Headquarters
82 Devonshire St., Boston, MA 02109
www.fidelity.com
FDE-F-ANN-1212 1.891696.103
Fidelity®
Disciplined Equity
Fund -
Class K
Annual Report
October 31, 2012
(Fidelity Cover Art)
Contents
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. © 2012 FMR LLC. All rights reserved.
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, 2012 | Past 1 | Past 5 | Past 10 |
Class KA | 14.14% | -3.27% | 5.54% |
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, 2002. 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 bouts of volatility to post strong gains for the year ending October 31, 2012, and extend an uptrend that began in March 2009. The broad-based S&P 500® Index advanced 15.21% for the 12-month period, while the blue-chip-laden Dow Jones Industrial AverageSM and technology-heavy Nasdaq Composite® Index rose 12.56% and 12.21%, respectively. Debt problems in Europe, slower growth in China and uncertainty about a U.S. economic recovery put downward pressure on stocks early on and during a turbulent spring. However, beginning in June, stocks rose on central bank stimulus, steps to repair the eurozone and signs of life in the U.S. housing market. Equity benchmarks hit multiyear highs in September, with the Dow and the S&P® achieving their best marks since 2007, and the Nasdaq reaching a 12-year high. Stocks retreated in October, which was marked by disappointing corporate earnings reports and a two-day weather-related closure of the New York Stock Exchange. Among the 10 sectors that comprise the S&P 500®, most posted a double-digit gain, led by telecommunication services (+26%) and health care (+22%), with energy (+7%) and materials (+7%) lagging the most. Despite lingering eurozone turmoil and weaker local currencies versus the U.S. dollar, foreign developed-markets stocks rose modestly, with the MSCI® EAFE® Index adding 4.76%.
Comments from Keith Quinton, Portfolio Manager of Fidelity® Disciplined Equity Fund: For the year, the fund's Class K shares returned 14.14%, underperforming the S&P 500® Index. Security selection detracted, as the fund's quantitative models proved ineffective for most of the period, when stocks were highly correlated. A sizable stake in troubled computer maker Hewlett-Packard was by far the fund's biggest disappointment. I remained overweighted in the stock until October, when executives lowered earnings guidance and outlined a multiyear turnaround plan. I significantly reduced the position by period end. Two other picks in the technology hardware/equipment segment also hurt, including an underweighting in consumer electronics manufacturer Apple and poor timing with network equipment provider Cisco Systems. I sold Cisco from the fund by period end. Conversely, the fund was helped by a stake in the defensive food/beverage/tobacco segment of consumer staples, particularly top relative contributor and Belgium-based out-of-index holding Anheuser-Busch InBev. Positioning in the outperforming financials sector also helped, as did picks in energy, where many companies benefited from the U.S. boom in natural gas and oil production. An overweighting in drugmaker Amgen was a plus, as its stock rose on consecutive positive earnings surprises. Improved housing markets and increased repair and remodeling activity led to gains at retailer Home Depot, another top relative contributor.
Note to shareholders: Effective January 1, 2013, Alex Devereaux will become Co-Manager of the fund.
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, 2012 to October 31, 2012).
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 |
Disciplined Equity | .48% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,019.60 | $ 2.44 |
HypotheticalA |
| $ 1,000.00 | $ 1,022.72 | $ 2.44 |
Class K | .36% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,020.40 | $ 1.83 |
HypotheticalA |
| $ 1,000.00 | $ 1,023.33 | $ 1.83 |
Class F | .30% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,020.40 | $ 1.52 |
HypotheticalA |
| $ 1,000.00 | $ 1,023.63 | $ 1.53 |
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 184/366 (to reflect the one-half year period).
Annual Report
Investment Changes (Unaudited)
Top Ten Stocks as of October 31, 2012 | ||
| % of fund's | % of fund's net assets |
JPMorgan Chase & Co. | 3.7 | 3.2 |
General Electric Co. | 3.7 | 4.2 |
Apple, Inc. | 3.5 | 2.6 |
Amgen, Inc. | 3.4 | 3.4 |
Citigroup, Inc. | 3.2 | 0.0 |
Microsoft Corp. | 3.2 | 1.8 |
Chevron Corp. | 3.1 | 4.6 |
CVS Caremark Corp. | 2.7 | 0.0 |
Oracle Corp. | 2.7 | 0.0 |
PVH Corp. | 2.5 | 1.5 |
| 31.7 | |
Top Five Market Sectors as of October 31, 2012 | ||
| % of fund's | % of fund's net assets |
Information Technology | 18.7 | 20.8 |
Financials | 14.5 | 13.2 |
Health Care | 12.0 | 11.6 |
Consumer Discretionary | 11.0 | 10.3 |
Consumer Staples | 10.7 | 9.6 |
Asset Allocation (% of fund's net assets) | |||||||
As of October 31, 2012 * | As of April 30, 2012 ** | ||||||
![]() | Stocks 96.3% |
| ![]() | Stocks and |
| ||
![]() | Short-Term |
| ![]() | Short-Term |
| ||
* Foreign investments | 13.2% |
| ** Foreign investments | 11.4% |
|
Annual Report
Investments October 31, 2012
Showing Percentage of Net Assets
Common Stocks - 95.8% | |||
Shares | Value (000s) | ||
CONSUMER DISCRETIONARY - 10.5% | |||
Auto Components - 0.3% | |||
Delphi Automotive PLC | 600,000 | $ 18,864 | |
Automobiles - 0.3% | |||
Toyota Motor Corp. sponsored ADR | 250,000 | 19,368 | |
Hotels, Restaurants & Leisure - 1.3% | |||
Brinker International, Inc. | 200,000 | 6,160 | |
Icahn Enterprises LP rights | 1,900,000 | 0 | |
Melco PBL Entertainment (Macau) Ltd. sponsored ADR (a) | 500,000 | 7,255 | |
Wyndham Worldwide Corp. | 1,500,000 | 75,600 | |
| 89,015 | ||
Household Durables - 0.4% | |||
Jarden Corp. | 184,057 | 9,166 | |
Whirlpool Corp. | 200,000 | 19,536 | |
| 28,702 | ||
Internet & Catalog Retail - 1.7% | |||
Expedia, Inc. | 2,000,000 | 118,300 | |
Media - 2.3% | |||
The Walt Disney Co. | 648,200 | 31,807 | |
Time Warner Cable, Inc. | 700,000 | 69,377 | |
Virgin Media, Inc. (d) | 1,686,600 | 55,219 | |
| 156,403 | ||
Specialty Retail - 1.3% | |||
Foot Locker, Inc. | 600,000 | 20,100 | |
Guess?, Inc. | 300,000 | 7,434 | |
Home Depot, Inc. | 1,000,000 | 61,380 | |
| 88,914 | ||
Textiles, Apparel & Luxury Goods - 2.9% | |||
G-III Apparel Group Ltd. (a) | 500,000 | 18,480 | |
Iconix Brand Group, Inc. (a) | 500,000 | 9,255 | |
PVH Corp. | 1,560,202 | 171,607 | |
| 199,342 | ||
TOTAL CONSUMER DISCRETIONARY | 718,908 | ||
CONSUMER STAPLES - 10.7% | |||
Beverages - 3.3% | |||
Anheuser-Busch InBev SA NV | 971,457 | 81,244 | |
Coca-Cola Enterprises, Inc. | 200,000 | 6,288 | |
Constellation Brands, Inc. Class A (sub. vtg.) (a) | 3,900,000 | 137,826 | |
| 225,358 | ||
Common Stocks - continued | |||
Shares | Value (000s) | ||
CONSUMER STAPLES - continued | |||
Food & Staples Retailing - 4.6% | |||
CVS Caremark Corp. | 4,000,000 | $ 185,600 | |
Kroger Co. | 2,400,000 | 60,528 | |
Wal-Mart Stores, Inc. | 948,700 | 71,171 | |
| 317,299 | ||
Food Products - 0.9% | |||
Dean Foods Co. (a) | 450,000 | 7,578 | |
The J.M. Smucker Co. | 500,000 | 42,820 | |
Tyson Foods, Inc. Class A | 450,000 | 7,565 | |
| 57,963 | ||
Tobacco - 1.9% | |||
Imperial Tobacco Group PLC | 2,600,000 | 98,181 | |
Japan Tobacco, Inc. | 1,200,000 | 33,160 | |
| 131,341 | ||
TOTAL CONSUMER STAPLES | 731,961 | ||
ENERGY - 10.3% | |||
Energy Equipment & Services - 0.8% | |||
Ensco PLC Class A | 300,000 | 17,346 | |
Exterran Holdings, Inc. (a) | 400,000 | 7,992 | |
Helix Energy Solutions Group, Inc. (a) | 400,000 | 6,916 | |
Oil States International, Inc. (a) | 100,000 | 7,310 | |
Transocean Ltd. (United States) | 400,000 | 18,276 | |
| 57,840 | ||
Oil, Gas & Consumable Fuels - 9.5% | |||
Chevron Corp. | 1,894,900 | 208,837 | |
Exxon Mobil Corp. | 1,361,500 | 124,128 | |
Marathon Petroleum Corp. | 2,485,600 | 136,534 | |
Phillips 66 | 3,400,000 | 160,344 | |
Royal Dutch Shell PLC Class A sponsored ADR | 300,000 | 20,544 | |
| 650,387 | ||
TOTAL ENERGY | 708,227 | ||
FINANCIALS - 14.5% | |||
Commercial Banks - 1.0% | |||
Wells Fargo & Co. | 2,010,300 | 67,727 | |
Consumer Finance - 2.1% | |||
Discover Financial Services | 3,500,000 | 143,500 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
FINANCIALS - continued | |||
Diversified Financial Services - 6.9% | |||
Citigroup, Inc. | 5,900,000 | $ 220,601 | |
JPMorgan Chase & Co. | 6,200,000 | 258,413 | |
| 479,014 | ||
Insurance - 4.1% | |||
Allied World Assurance Co. Holdings Ltd. | 100,000 | 8,030 | |
American International Group, Inc. (a) | 600,000 | 20,958 | |
Assured Guaranty Ltd. | 1,040,702 | 14,455 | |
Lincoln National Corp. | 900,000 | 22,311 | |
MetLife, Inc. | 4,400,000 | 156,156 | |
Montpelier Re Holdings Ltd. | 233,235 | 5,334 | |
The Travelers Companies, Inc. | 790,157 | 56,054 | |
| 283,298 | ||
Real Estate Management & Development - 0.4% | |||
Altisource Portfolio Solutions SA (a) | 225,000 | 25,538 | |
TOTAL FINANCIALS | 999,077 | ||
HEALTH CARE - 12.0% | |||
Biotechnology - 4.4% | |||
Amgen, Inc. | 2,724,000 | 235,749 | |
Gilead Sciences, Inc. (a) | 600,000 | 40,296 | |
Spectrum Pharmaceuticals, Inc. (a)(d) | 2,388,000 | 26,650 | |
Threshold Pharmaceuticals, Inc. (a) | 761,120 | 3,128 | |
| 305,823 | ||
Health Care Equipment & Supplies - 1.0% | |||
The Cooper Companies, Inc. | 400,000 | 38,392 | |
Zimmer Holdings, Inc. | 500,000 | 32,105 | |
| 70,497 | ||
Health Care Providers & Services - 1.9% | |||
Community Health Systems, Inc. (a) | 1,910,000 | 52,372 | |
UnitedHealth Group, Inc. | 1,200,000 | 67,200 | |
Universal Health Services, Inc. Class B | 200,000 | 8,278 | |
| 127,850 | ||
Life Sciences Tools & Services - 0.3% | |||
Charles River Laboratories International, Inc. (a) | 500,000 | 18,660 | |
Pharmaceuticals - 4.4% | |||
Merck & Co., Inc. | 1,200,000 | 54,756 | |
Mylan, Inc. (a) | 1,400,000 | 35,476 | |
Sanofi SA sponsored ADR | 3,400,000 | 149,090 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
HEALTH CARE - continued | |||
Pharmaceuticals - continued | |||
Warner Chilcott PLC | 1,600,224 | $ 18,531 | |
Watson Pharmaceuticals, Inc. (a) | 500,000 | 42,975 | |
| 300,828 | ||
TOTAL HEALTH CARE | 823,658 | ||
INDUSTRIALS - 9.5% | |||
Aerospace & Defense - 2.2% | |||
Textron, Inc. | 6,050,000 | 152,521 | |
Airlines - 0.1% | |||
US Airways Group, Inc. (a) | 324,231 | 3,949 | |
Building Products - 0.3% | |||
A.O. Smith Corp. | 200,000 | 12,154 | |
Owens Corning (a) | 343,651 | 11,543 | |
| 23,697 | ||
Commercial Services & Supplies - 0.5% | |||
Republic Services, Inc. | 1,300,000 | 36,855 | |
Construction & Engineering - 0.7% | |||
Fluor Corp. | 500,000 | 27,925 | |
MasTec, Inc. (a) | 850,500 | 19,187 | |
| 47,112 | ||
Industrial Conglomerates - 3.7% | |||
General Electric Co. | 12,000,000 | 252,720 | |
Machinery - 1.7% | |||
Ingersoll-Rand PLC | 800,000 | 37,624 | |
Lincoln Electric Holdings, Inc. | 200,000 | 8,674 | |
Manitowoc Co., Inc. | 1,200,000 | 17,100 | |
Oshkosh Truck Corp. (a) | 150,000 | 4,497 | |
Pentair Ltd. | 550,000 | 23,232 | |
Terex Corp. (a) | 1,250,000 | 28,188 | |
| 119,315 | ||
Trading Companies & Distributors - 0.3% | |||
AerCap Holdings NV (a) | 1,386,100 | 17,271 | |
TOTAL INDUSTRIALS | 653,440 | ||
INFORMATION TECHNOLOGY - 18.7% | |||
Communications Equipment - 1.1% | |||
Brocade Communications Systems, Inc. (a) | 14,074,600 | 74,595 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
INFORMATION TECHNOLOGY - continued | |||
Computers & Peripherals - 4.8% | |||
Apple, Inc. | 400,000 | $ 238,040 | |
Hewlett-Packard Co. | 4,096,372 | 56,735 | |
Lexmark International, Inc. Class A (d) | 1,800,000 | 38,268 | |
| 333,043 | ||
Internet Software & Services - 0.7% | |||
Demand Media, Inc. (a) | 600,000 | 5,118 | |
Facebook, Inc. Class B (a)(e) | 493,371 | 9,376 | |
Google, Inc. Class A (a) | 50,000 | 33,989 | |
| 48,483 | ||
IT Services - 4.5% | |||
Accenture PLC Class A | 800,000 | 53,928 | |
Acxiom Corp. (a) | 400,000 | 7,300 | |
Alliance Data Systems Corp. (a)(d) | 500,000 | 71,525 | |
Fidelity National Information Services, Inc. | 1,000,000 | 32,870 | |
Heartland Payment Systems, Inc. | 127,266 | 3,319 | |
IBM Corp. | 500,000 | 97,265 | |
Teradata Corp. (a) | 658,405 | 44,976 | |
| 311,183 | ||
Semiconductors & Semiconductor Equipment - 1.5% | |||
GT Advanced Technologies, Inc. (a)(d) | 4,000,000 | 17,360 | |
Samsung Electronics Co. Ltd. | 69,320 | 83,287 | |
| 100,647 | ||
Software - 6.1% | |||
BMC Software, Inc. (a) | 400,000 | 16,280 | |
Microsoft Corp. | 7,589,902 | 216,578 | |
Oracle Corp. | 5,924,580 | 183,958 | |
Parametric Technology Corp. (a) | 158,147 | 3,191 | |
| 420,007 | ||
TOTAL INFORMATION TECHNOLOGY | 1,287,958 | ||
MATERIALS - 3.2% | |||
Chemicals - 2.4% | |||
Ashland, Inc. | 100,000 | 7,115 | |
CF Industries Holdings, Inc. | 307,700 | 63,137 | |
Chemtura Corp. (a) | 400,000 | 6,372 | |
Eastman Chemical Co. | 400,000 | 23,696 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
MATERIALS - continued | |||
Chemicals - continued | |||
Huntsman Corp. | 1,000,000 | $ 15,040 | |
LyondellBasell Industries NV Class A | 900,000 | 48,051 | |
| 163,411 | ||
Containers & Packaging - 0.8% | |||
Rock-Tenn Co. Class A | 800,000 | 58,552 | |
TOTAL MATERIALS | 221,963 | ||
TELECOMMUNICATION SERVICES - 2.9% | |||
Diversified Telecommunication Services - 1.3% | |||
CenturyLink, Inc. | 1,925,485 | 73,900 | |
Nippon Telegraph & Telephone Corp. sponsored ADR | 712,500 | 16,259 | |
| 90,159 | ||
Wireless Telecommunication Services - 1.6% | |||
MetroPCS Communications, Inc. (a) | 3,200,000 | 32,672 | |
NTT DoCoMo, Inc. sponsored ADR | 300,000 | 4,320 | |
Vodafone Group PLC sponsored ADR | 2,532,300 | 68,929 | |
| 105,921 | ||
TOTAL TELECOMMUNICATION SERVICES | 196,080 | ||
UTILITIES - 3.5% | |||
Electric Utilities - 2.9% | |||
Edison International | 1,800,000 | 84,492 | |
ITC Holdings Corp. | 100,000 | 7,962 | |
Pinnacle West Capital Corp. | 600,000 | 31,782 | |
PNM Resources, Inc. | 3,577,376 | 79,275 | |
| 203,511 | ||
Independent Power Producers & Energy Traders - 0.6% | |||
Calpine Corp. (a) | 1,000,000 | 17,600 | |
The AES Corp. | 2,170,962 | 22,687 | |
| 40,287 | ||
TOTAL UTILITIES | 243,798 | ||
TOTAL COMMON STOCKS (Cost $6,328,862) |
| ||
Nonconvertible Preferred Stocks - 0.5% | |||
Shares | Value (000s) | ||
CONSUMER DISCRETIONARY - 0.5% | |||
Automobiles - 0.5% | |||
Volkswagen AG (Cost $30,771) | 160,700 | $ 33,243 | |
Money Market Funds - 2.3% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.19% (b) | 89,195,522 | 89,196 | |
Fidelity Securities Lending Cash Central Fund, 0.19% (b)(c) | 67,915,575 | 67,916 | |
TOTAL MONEY MARKET FUNDS (Cost $157,112) |
| ||
TOTAL INVESTMENT PORTFOLIO - 98.6% (Cost $6,516,745) | 6,775,425 | ||
NET OTHER ASSETS (LIABILITIES) - 1.4% | 95,943 | ||
NET ASSETS - 100% | $ 6,871,368 |
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 $9,376,000 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 | $ 204 |
Fidelity Securities Lending Cash Central Fund | 1,322 |
Total | $ 1,526 |
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, beginning of period | Purchases | Sales Proceeds | Dividend Income | Value, |
El Paso Electric Co. | $ 66,943 | $ - | $ 63,483 | $ 920 | $ - |
Spectrum Pharmaceuticals, Inc. | - | 53,316 | 18,483 | - | - |
Total | $ 66,943 | $ 53,316 | $ 81,966 | $ 920 | $ - |
Other Information |
The following is a summary of the inputs used, as of October 31, 2012, 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 | $ 752,151 | $ 752,151 | $ - | $ - |
Consumer Staples | 731,961 | 650,717 | 81,244 | - |
Energy | 708,227 | 708,227 | - | - |
Financials | 999,077 | 999,077 | - | - |
Health Care | 823,658 | 823,658 | - | - |
Industrials | 653,440 | 653,440 | - | - |
Information Technology | 1,287,958 | 1,278,582 | 9,376 | - |
Materials | 221,963 | 221,963 | - | - |
Telecommunication Services | 196,080 | 196,080 | - | - |
Utilities | 243,798 | 243,798 | - | - |
Money Market Funds | 157,112 | 157,112 | - | - |
Total Investments in Securities: | $ 6,775,425 | $ 6,684,805 | $ 90,620 | $ - |
The following is a summary of transfers between Level 1 and Level 2 for the period ended October 31, 2012. Transfers are assumed to have occurred at the beginning of the period, and are primarily attributable to the valuation techniques used for foreign equity securities, as discussed in the accompanying Notes to Financial Statements: |
Transfers | Total (000s) |
Level 1 to Level 2 | $ 0 |
Level 2 to Level 1 | $ 231,932 |
Distribution of investments by country or territory of incorporation, as a percentage of total net assets, is as follows. (Unaudited) |
United States of America | 86.8% |
United Kingdom | 2.9% |
France | 2.2% |
Ireland | 1.6% |
Korea (South) | 1.2% |
Belgium | 1.2% |
Japan | 1.1% |
Netherlands | 1.0% |
Others (Individually Less Than 1%) | 2.0% |
| 100.0% |
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, 2012 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $64,532) - See accompanying schedule: Unaffiliated issuers (cost $6,359,633) | $ 6,618,313 |
|
Fidelity Central Funds (cost $157,112) | 157,112 |
|
Total Investments (cost $6,516,745) |
| $ 6,775,425 |
Receivable for investments sold | 282,519 | |
Receivable for fund shares sold | 3,980 | |
Dividends receivable | 3,538 | |
Distributions receivable from Fidelity Central Funds | 61 | |
Other receivables | 664 | |
Total assets | 7,066,187 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 116,776 | |
Payable for fund shares redeemed | 7,438 | |
Accrued management fee | 1,548 | |
Other affiliated payables | 758 | |
Other payables and accrued expenses | 383 | |
Collateral on securities loaned, at value | 67,916 | |
Total liabilities | 194,819 | |
|
|
|
Net Assets | $ 6,871,368 | |
Net Assets consist of: |
| |
Paid in capital | $ 7,997,907 | |
Undistributed net investment income | 105,140 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (1,490,354) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 258,675 | |
Net Assets | $ 6,871,368 |
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, 2012 | |
|
|
|
Disciplined Equity: | $ 24.47 | |
|
|
|
Class K: | $ 24.49 | |
|
|
|
Class F: | $ 24.47 |
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, 2012 | |
|
|
|
Investment Income |
|
|
Dividends (including $920 earned from other affiliated issuers) |
| $ 188,814 |
Interest |
| 7 |
Income from Fidelity Central Funds |
| 1,526 |
Total income |
| 190,347 |
|
|
|
Expenses | ||
Management fee | $ 47,456 | |
Performance adjustment | (20,696) | |
Transfer agent fees | 11,021 | |
Accounting and security lending fees | 1,243 | |
Custodian fees and expenses | 210 | |
Independent trustees' compensation | 58 | |
Registration fees | 48 | |
Audit | 81 | |
Legal | 39 | |
Interest | 4 | |
Miscellaneous | 101 | |
Total expenses before reductions | 39,565 | |
Expense reductions | (1,200) | 38,365 |
Net investment income (loss) | 151,982 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 771,049 | |
Other affiliated issuers | (5,239) |
|
Foreign currency transactions | (1,444) | |
Futures contracts | 343 | |
Total net realized gain (loss) |
| 764,709 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 252,449 | |
Assets and liabilities in foreign currencies | 101 | |
Total change in net unrealized appreciation (depreciation) |
| 252,550 |
Net gain (loss) | 1,017,259 | |
Net increase (decrease) in net assets resulting from operations | $ 1,169,241 |
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) | $ 151,982 | $ 134,929 |
Net realized gain (loss) | 764,709 | 674,729 |
Change in net unrealized appreciation (depreciation) | 252,550 | (592,538) |
Net increase (decrease) in net assets resulting | 1,169,241 | 217,120 |
Distributions to shareholders from net investment income | (149,685) | (105,872) |
Share transactions - net increase (decrease) | (4,169,470) | (532,409) |
Total increase (decrease) in net assets | (3,149,914) | (421,161) |
|
|
|
Net Assets | ||
Beginning of period | 10,021,282 | 10,442,443 |
End of period (including undistributed net investment income of $105,140 and undistributed net investment income of $102,810, respectively) | $ 6,871,368 | $ 10,021,282 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Disciplined Equity
Years ended October 31, | 2012 | 2011 | 2010 | 2009 | 2008 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 21.79 | $ 21.67 | $ 19.72 | $ 18.78 | $ 33.37 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .40 | .28 | .18 | .24 | .29 |
Net realized and unrealized gain (loss) | 2.59 | .05 | 1.99 | .96 | (12.19) |
Total from investment operations | 2.99 | .33 | 2.17 | 1.20 | (11.90) |
Distributions from net investment income | (.31) | (.21) | (.22) | (.26) | (.26) |
Distributions from net realized gain | - | - | - | - | (2.43) |
Total distributions | (.31) | (.21) | (.22) | (.26) | (2.69) |
Net asset value, end of period | $ 24.47 | $ 21.79 | $ 21.67 | $ 19.72 | $ 18.78 |
Total Return A | 13.95% | 1.51% | 11.05% | 6.64% | (38.68)% |
Ratios to Average Net Assets C,E |
|
|
|
|
|
Expenses before reductions | .54% | .59% | .70% | .84% | .87% |
Expenses net of fee waivers, if any | .54% | .59% | .70% | .84% | .87% |
Expenses net of all reductions | .52% | .58% | .68% | .83% | .87% |
Net investment income (loss) | 1.72% | 1.22% | .85% | 1.37% | 1.10% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (in millions) | $ 3,948 | $ 7,233 | $ 8,943 | $ 10,530 | $ 9,804 |
Portfolio turnover rate D | 147% | 153% | 146% | 200% | 186% |
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, | 2012 | 2011 | 2010 | 2009 | 2008 G |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 21.81 | $ 21.69 | $ 19.74 | $ 18.79 | $ 27.38 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) D | .43 | .31 | .22 | .28 | .12 |
Net realized and unrealized gain (loss) | 2.60 | .06 | 1.99 | .96 | (8.71) |
Total from investment operations | 3.03 | .37 | 2.21 | 1.24 | (8.59) |
Distributions from net investment income | (.35) | (.25) | (.26) | (.29) | - |
Net asset value, end of period | $ 24.49 | $ 21.81 | $ 21.69 | $ 19.74 | $ 18.79 |
Total Return B,C | 14.14% | 1.68% | 11.25% | 6.92% | (31.37)% |
Ratios to Average Net Assets E,H |
|
|
|
|
|
Expenses before reductions | .39% | .43% | .52% | .61% | .71% A |
Expenses net of fee waivers, if any | .39% | .43% | .52% | .61% | .71% A |
Expenses net of all reductions | .37% | .42% | .51% | .60% | .71% A |
Net investment income (loss) | 1.87% | 1.38% | 1.03% | 1.59% | 1.30% A |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (in millions) | $ 131 | $ 95 | $ 141 | $ 184 | $ 49 |
Portfolio turnover rate F | 147% | 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, | 2012 | 2011 | 2010 | 2009 G |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 21.80 | $ 21.69 | $ 19.74 | $ 17.52 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss) D | .44 | .32 | .22 | .02 |
Net realized and unrealized gain (loss) | 2.60 | .05 | 2.00 | 2.20 |
Total from investment operations | 3.04 | .37 | 2.22 | 2.22 |
Distributions from net investment income | (.37) | (.26) | (.27) | - |
Net asset value, end of period | $ 24.47 | $ 21.80 | $ 21.69 | $ 19.74 |
Total Return B,C | 14.18% | 1.70% | 11.31% | 12.67% |
Ratios to Average Net Assets E,H |
|
|
|
|
Expenses before reductions | .34% | .38% | .47% | .50% A |
Expenses net of fee waivers, if any | .34% | .38% | .47% | .50% A |
Expenses net of all reductions | .32% | .37% | .45% | .49% A |
Net investment income (loss) | 1.92% | 1.43% | 1.08% | .25% A |
Supplemental Data |
|
|
|
|
Net assets, end of period (in millions) | $ 2,792 | $ 2,693 | $ 1,359 | $ 75 |
Portfolio turnover rate F | 147% | 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, 2012
(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 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.
Annual Report
Notes to Financial Statements - continued
(Amounts in thousands except percentages)
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. In accordance with valuation policies and procedures approved by the Board of Trustees (the Board), the Fund attempts to obtain prices from one or more third party pricing vendors or brokers to value its investments. When current market prices, quotations or rates are not readily available or reliable, securities will be fair valued in good faith by the FMR Fair Value Committee (the Committee), in accordance with procedures adopted by the Fund's Board. Factors used in determining fair value vary by security type and 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 Committee oversees the Fund's valuation policies and procedures and is responsible for approving and reporting to the Board all fair value determinations.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the Fund's own assumptions based on the best information available)
Valuation techniques used to value the Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by a third party pricing vendor on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as
Annual Report
3. Significant Accounting Policies - continued
Security Valuation - continued
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. 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 these securities are generally categorized as Level 3 in the hierarchy.
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value (NAV) each business day and are categorized as Level 1 in the hierarchy.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of October 31, 2012, including information on transfers between Levels 1 and 2 is included at the end of the Fund's Schedule of Investments.
Foreign Currency Translation. The Fund may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rates at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on
Annual Report
Notes to Financial Statements - continued
(Amounts in thousands except percentages)
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 under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for income taxes is required. As of October 31, 2012, the Fund did not have any unrecognized tax benefits in the financial statements; nor is the Fund aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. A fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
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 dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to futures transactions, foreign currency transactions, partnerships, 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 | $ 516,748 |
Gross unrealized depreciation | (267,000) |
Net unrealized appreciation (depreciation) on securities and other investments | $ 249,748 |
|
|
Tax Cost | $ 6,525,677 |
The tax-based components of distributable earnings as of period end were as follows:
Undistributed ordinary income | $ 105,407 |
Capital loss carryforward | $ (1,481,421) |
Net unrealized appreciation (depreciation) | $ 249,742 |
Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. Under the Regulated Investment Company Modernization Act of 2010 (the Act), the Fund is permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period and such capital losses are required to be used prior to any losses that expire. Capital loss carryforwards were as follows:
Fiscal year of expiration |
|
2017 | $ (1,481,421) |
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 character of distributions paid was as follows:
| October 31, 2012 | October 31, 2011 |
Ordinary Income | $ 149,685 | $ 105,872 |
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.
New Accounting Pronouncement. In December 2011, the Financial Accounting Standards Board issued Accounting Standard Update No. 2011-11, Disclosures about Offsetting Assets and Liabilities. The update creates new disclosure requirements requiring entities to disclose both gross and net information for derivatives and other financial instruments that are either offset in the Statement of Assets and Liabilities or subject to an enforceable master netting arrangement or similar agreement. The disclosure requirements are effective for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods. 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's investment objective allows the Fund to enter into various types of derivative contracts, including futures contracts. Derivatives are investments whose value is primarily derived from underlying assets, indices or reference rates and may be transacted on an exchange or over-the-counter (OTC). Derivatives may involve a future commitment to buy or sell a specified instrument based on specified terms, to exchange future cash flows at periodic intervals based on a notional principal amount, or for one party to make one or more payments upon the occurrence of specified events in exchange for periodic payments from the other party.
The Fund used 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.
Annual Report
4. Derivative Instruments - continued
Risk Exposures and the Use of Derivative Instruments - continued
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 close out 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. Counterparty credit risk related to exchange-traded futures contracts is minimal because of the protection provided by the exchange on which they trade.
Investing in derivatives may involve greater risks than investing in the underlying assets directly and, to varying degrees, may involve risk of loss in excess of any initial investment and collateral received and amounts recognized in the Statement of Assets and Liabilities. In addition, there may be the risk that the change in value of the derivative contract does not correspond to the change in value of the underlying instrument.
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.
Any open futures contracts at period end are shown in the Schedule of Investments under the caption "Futures Contracts." The underlying face amount at value reflects each contract's exposure to the underlying instrument at period end.
During the period the Fund recognized net realized gain (loss) of $343 related to its investment in futures contracts. This amount is included in the Statement of Operations.
Annual Report
Notes to Financial Statements - continued
(Amounts in thousands except percentages)
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $12,207,964 and $16,447,517, 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 an annualized 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 .32% 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 respective classes of the Fund, except for Class K and Class F. 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 | $ 10,958 | .20 |
Class K | 63 | .05 |
| $ 11,021 |
|
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 each month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Annual Report
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 $270 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 Loan | Weighted Average Interest Rate | Interest Expense |
Borrower | $ 27,056 | .38% | $ 4 |
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR or an affiliate in a $4.25 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $24 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
Annual Report
Notes to Financial Statements - continued
(Amounts in thousands except percentages)
8. Security Lending - continued
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 $6,127. 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 $1,322, including $11 from securities loaned to FCM.
9. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of the Fund provided services to the Fund in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $1,200 for the period.
10. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended October 31, | 2012 | 2011 |
From net investment income |
|
|
Disciplined Equity | $ 100,145 | $ 86,646 |
Class K | 1,554 | 1,698 |
Class F | 47,986 | 17,528 |
Total | $ 149,685 | $ 105,872 |
11. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
Years ended October 31, | 2012 | 2011 | 2012 | 2011 |
Disciplined Equity |
|
|
|
|
Shares sold | 11,526 | 41,487 | $ 264,379 | $ 933,066 |
Reinvestment of distributions | 4,640 | 3,881 | 99,208 | 85,889 |
Shares redeemed | (186,807) | (126,148) | (4,297,497) | (2,865,193) |
Net increase (decrease) | (170,641) | (80,780) | $ (3,933,910) | $ (1,846,238) |
Class K |
|
|
|
|
Shares sold | 3,039 | 2,553 | $ 69,662 | $ 58,670 |
Reinvestment of distributions | 73 | 77 | 1,554 | 1,698 |
Shares redeemed | (2,124) | (4,762) | (49,699) | (109,108) |
Net increase (decrease) | 988 | (2,132) | $ 21,517 | $ (48,740) |
Annual Report
11. Share Transactions - continued
| Shares | Dollars | ||
Years ended October 31, | 2012 | 2011 | 2012 | 2011 |
Class F |
|
|
|
|
Shares sold | 60,590 | 75,199 | $ 1,374,571 | $ 1,686,077 |
Reinvestment of distributions | 2,248 | 793 | 47,986 | 17,528 |
Shares redeemed | (72,255) | (15,144) | (1,679,634) | (341,036) |
Net increase (decrease) | (9,417) | 60,848 | $ (257,077) | $ 1,362,569 |
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.
At the end of the period, the Fidelity Freedom Funds and Fidelity Freedom K Funds were the owners of record, in aggregate, of approximately 81% of the total outstanding shares of the Fund.
Effective after the close of business on December 7, 2012, 182,076 shares of the Fund held by the Freedom Funds were redeemed for cash and securities, with a value of $4,434,339. The Freedom Funds' ownership in the Fund was reduced to 47%. The Fund did not recognize gain or loss for federal income tax purposes.
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, 2012, 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, 2012 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
December 14, 2012
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 236 funds advised by FMR or an affiliate. Mr. Curvey oversees 443 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 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 (77) | |
| Year of Election or Appointment: 2007 Mr. Curvey is Trustee and 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 (55) | |
| 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 (64) | |
| 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 (59) | |
| 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 Entertainment, Inc. (restaurant and entertainment complexes, 2010-present), Earth Fare, Inc. (retail grocery, 2012-present), The Hillman Companies, Inc. (hardware wholesalers, 2010-present), and Bristol-Myers Squibb Company (global pharmaceuticals, 2008-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 (68) | |
| 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 Chairman of the Board of Directors of the Philharmonic Center for the Arts in Naples, Florida (2012-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 (68) | |
| 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). Previously, Mr. Mauriello served as a Director of the Hamilton Funds of the Bank of New York (2006-2007) and of Arcadia Resources Inc. (health care services and products, 2007-2012). |
Robert W. Selander (62) | |
| 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 (68) | |
| Year of Election or Appointment: 2005 Ms. Small is a member of the Board of Directors (2009-present) and Chair of the Investment Committee (2010-present) of the Teagle Foundation. Ms. Small also serves on the Investment Committee of the Berkshire Taconic Community Foundation (2008-present). Previously, Ms. Small served as Chairperson (2002-2008) and a member of the Investment Committee and Chairperson (2008-2012) and a member of the Board of Trustees 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 (73) | |
| 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 a Director of Univar Inc. (global distributor of commodity and specialty chemicals, Chairman from 2010-May 2012 and Lead Director from May 2012-present), Teradata Corporation (data warehousing and technology solutions, 2008-present), Maersk Inc. (industrial conglomerate), and Tyco International, Ltd. (multinational manufacturing and services, 2007-present), and a member of the Advisory Board for Metalmark Capital LLC (private equity investment, 2005-present). Mr. Stavropoulos is an operating 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, a Trustee of the Rollin L. Gerstacker Foundation, and a Director of the Naples Philharmonic Center for the Arts. Previously, Mr. Stavropoulos served as a Director of Chemical Financial Corporation (bank holding company, 1993-2012). |
David M. Thomas (63) | |
| 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), and a Director of Fortune Brands, Inc. (consumer products, 2000-2011). In addition, Mr. Thomas serves as Non-Executive Chairman of the Board of Directors of Fortune Brands Home and Security (home and security products, 2011-present), and as a member of the Board of Directors of Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (62) | |
| 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). |
+ 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 David A. Rosow and Garnett A. Smith may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235. 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 (82) | |
| 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 (68) | |
| 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). |
David A. Rosow (70) | |
| Year of Election or Appointment: 2012 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Chairman and Chief Executive Officer of International Golf Group, Inc. (golf course development, 1989-present). Previously, Mr. Rosow served as Chairman and Chief Executive Officer of Rosow & Company, Inc. (private investment company, 1989-2011), a Lead Director of Hudson United Bancorp (2001-2006) and as a Director of TD Banknorth (1996-2006). In addition, Mr. Rosow is a member (2008-present) and President (2009-present) of the Town Council of Palm Beach, Florida. |
Garnett A. Smith (65) | |
| Year of Election or Appointment: 2012 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Prior to Mr. Smith's retirement, he served as Chairman and Chief Executive Officer of Inbrand Corp. (manufacturer of personal absorbent products, 1990-1997). He also served as President (1986-1990) of Inbrand Corp. Prior to his employment with Inbrand Corp., he was employed by a retail fabric chain and North Carolina National Bank. In addition, Mr. Smith is a board member of the Jackson Hole Land Trust (2009-present). |
Kenneth B. Robins (43) | |
| 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 (47) | |
| Year of Election or Appointment: 2006 Vice President of certain Equity Funds. Mr. Herring also serves as President of Fidelity Research & Analysis Company (2010-present), Chief Investment Officer and Director of Fidelity Management & Research (U.K.) Inc. (2010-present) and Group Chief Investment 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 (48) | |
| 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 (44) | |
| 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 (43) | |
| 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). |
Elizabeth Paige Baumann (44) | |
| Year of Election or Appointment: 2012 Anti-Money Laundering (AML) Officer of the Fidelity funds. Ms. Baumann also serves as AML Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2012-present), Chief AML Officer of FMR LLC (2012-present), and is an employee of Fidelity Investments. Previously, Ms. Baumann served as Vice President and Deputy Anti-Money Laundering Officer (2007-2012). |
Christine Reynolds (54) | |
| 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). |
Joseph A. Hanlon (44) | |
| Year of Election or Appointment: 2012 Chief Compliance Officer of Fidelity's Equity and High Income Funds. Mr. Hanlon serves as Compliance Officer of FMR, FMR Co., Inc., Fidelity Investments Money Management, Inc. (FIMM), Fidelity Research and Analysis Company (FRAC), Fidelity Management & Research (Japan) Inc., Fidelity Management & Research (U.K.) Inc., Fidelity Management & Research (Hong Kong), and Strategic Advisers, Inc. (2009-present), as Senior Vice President of the Fidelity Asset Management Division (2009-present), and is an employee of Fidelity Investments. |
Joseph F. Zambello (55) | |
| 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 (45) | |
| Year of Election or Appointment: 2008 Deputy Treasurer of Fidelity's Equity and High Income Funds. Mr. Deberghes also serves as Vice President (2011-present) and Assistant Treasurer (2010-present) of other Fidelity funds, 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). |
Stephen Sadoski (41) | |
| Year of Election or Appointment: 2012 Deputy Treasurer of Fidelity's Equity and High Income Funds. Mr. Sadoski also serves as Assistant Treasurer of other Fidelity funds (2012-present) and is an employee of Fidelity Investments (2012-present). Previously, Mr. Sadoski served as an assistant chief accountant in the Division of Investment Management of the Securities and Exchange Commission (SEC) (2009-2012) and as a senior manager at Deloitte & Touche (1997-2009). |
Stephanie J. Dorsey (43) | |
| 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 (54) | |
| 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 (54) | |
| 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 (44) | |
| 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 91% 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 2013 of amounts for use in preparing 2012 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, at each of its meetings, considers 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 and chaired by 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 2012 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 relative to peer funds; (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 exist and 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 also considered the fund's investment objective, strategies, and related investment philosophy. 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 continued to increase the resources devoted to non-U.S. offices, including expansion of Fidelity's global investment organization. The Board noted that Fidelity's analysts have extensive resources, tools and capabilities that allow them to conduct sophisticated quantitative and fundamental analysis, as well as credit analysis of issuers, counterparties and guarantors. 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 that 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 its deliberations, the Board considered the Investment Advisers' trading and risk management 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 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.
Annual Report
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.
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) persisting in efforts to enhance Fidelity's research capabilities, in particular, international research; (iii) launching new funds and making other enhancements to meet client needs for global and income-oriented solutions; (iv) continuing to launch dedicated lower cost underlying funds to meet investment management's portfolio construction needs related to expanding underlying fund options, specifically for the Freedom Fund product lines; (v) adopting a "Stock Selector" sector neutral investment approach and employing a team of portfolio managers who are sector specialists to manage certain funds; (vi) rationalizing product lines and gaining increased efficiencies through the mergers of several funds into other funds; (vii) strengthening the Spartan Index Fund product line by adding new funds and/or new low-cost institutional share classes, restructuring fund expenses to accommodate new classes, and reducing investment minimums for certain classes of shares; (viii) modifying the eligibility criteria for Institutional Class shares to increase their appeal to government entities and charitable investors; and (ix) reducing certain transfer agent fee rates.
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, 2011, 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 returns of Class K and the retail class show the performance of the highest and lowest performing classes, respectively (based on three-year performance). The box within each chart shows the 25th percentile return (top of box) and the 75th percentile return (bottom 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 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 third 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 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 to improve the fund's disappointing performance relative to its peer group and benchmark. The Board noted that this fund had underperformed in the past 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.
Annual Report
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.
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 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 2011. 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 2011.
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. The Board noted the findings of the 2010 ad hoc joint committee (created with the board of other Fidelity funds), which reviewed and compared 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.
Annual Report
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.
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.
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.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
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 economies of scale, if any, 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) the potential to further rationalize the Fidelity fund lineup with the possibility of achieving savings for the funds and Fidelity; (iii) Fidelity's compensation structure for portfolio managers and other key 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) the realization of fall-out benefits in certain Fidelity business units; (vi) Fidelity's group fee structures, the potential impact of regulatory changes on such structures, and the rationale for the individual fee rates of certain funds; (vii) fund profitability methodology, including Fidelity's cost allocation methodology, and the impact of certain factors on fund profitability results; (viii) trends regarding industry use of performance fee structures and the possibility of implementing performance fee structures for additional funds; and (ix) the impact of net redemptions from the Fidelity funds.
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
Smithfield, RI
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
(Fidelity Investment logo)(registered trademark)
Corporate Headquarters
82 Devonshire St., Boston, MA 02109
www.fidelity.com
FDE-K-UANN-1212 1.863074.104
Fidelity®
Focused Stock
Fund
Annual Report
October 31, 2012
(Fidelity Cover Art)
Contents
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. © 2012 FMR LLC. All rights reserved.
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 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, 2012 | Past 1 | Past 5 | Past 10 |
Fidelity® Focused Stock Fund | 12.03% | 2.60% | 9.27% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Fidelity® Focused Stock Fund on October 31, 2002. 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 bouts of volatility to post strong gains for the year ending October 31, 2012, and extend an uptrend that began in March 2009. The broad-based S&P 500® Index advanced 15.21% for the 12-month period, while the blue-chip-laden Dow Jones Industrial AverageSM and technology-heavy Nasdaq Composite® Index rose 12.56% and 12.21%, respectively. Debt problems in Europe, slower growth in China and uncertainty about a U.S. economic recovery put downward pressure on stocks early on and during a turbulent spring. However, beginning in June, stocks rose on central bank stimulus, steps to repair the eurozone and signs of life in the U.S. housing market. Equity benchmarks hit multiyear highs in September, with the Dow and the S&P® achieving their best marks since 2007, and the Nasdaq reaching a 12-year high. Stocks retreated in October, which was marked by disappointing corporate earnings reports and a two-day weather-related closure of the New York Stock Exchange. Among the 10 sectors that comprise the S&P 500®, most posted a double-digit gain, led by telecommunication services (+26%) and health care (+22%), with energy (+7%) and materials (+7%) lagging the most. Despite lingering eurozone turmoil and weaker local currencies versus the U.S. dollar, foreign developed-markets stocks rose modestly, with the MSCI® EAFE® Index adding 4.76%.
Comments from Stephen DuFour, Portfolio Manager of Fidelity® Focused Stock Fund: For the year, the fund returned 12.03%, lagging the S&P 500®. The fund's focus on attractively priced stocks with faster earnings growth than the market hurt relative performance early in the period, when investors favored slower-growth, large-cap companies with strong balance sheets and high dividend yields. My sector allocation detracted, as did security selection within energy, industrials, financials and health care. Individual disappointments included untimely ownership of energy processing and pipeline company Keyera early in the period, when its shares were pressured by the warm winter and low natural gas prices. In industrials, the stock of Polypore International, which makes equipment used to manufacture batteries for electric vehicles, declined early on as safety issues and high costs hindered adoption rates for the batteries. Keyera and Polypore were not in the index and were not held at period end. By contrast, security selection was strong within consumer discretionary and the hardware/equipment segment of information technology. Top individual contributors included card processor MasterCard, whose shares rallied as more people worldwide paid with plastic, and homebuilder PulteGroup.
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, 2012 to October 31, 2012).
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
Shareholder Expense Example - continued
| Annualized | Beginning | Ending | Expenses Paid |
Actual | .94% | $ 1,000.00 | $ 993.60 | $ 4.71 |
Hypothetical (5% return per year before expenses) |
| $ 1,000.00 | $ 1,020.41 | $ 4.77 |
* Expenses are equal to the Fund's annualized expense ratio, multiplied by the average account value over the period, multiplied by 184/366 (to reflect the one-half year period).
Annual Report
Investment Changes (Unaudited)
Top Ten Stocks as of October 31, 2012 | ||
| % of fund's | % of fund's net assets |
MasterCard, Inc. Class A | 6.1 | 6.8 |
American Tower Corp. | 4.0 | 2.1 |
Pioneer Natural Resources Co. | 3.6 | 3.2 |
Amgen, Inc. | 3.3 | 1.4 |
Phillips 66 | 3.2 | 0.0 |
Comcast Corp. Class A | 3.1 | 0.7 |
Gilead Sciences, Inc. | 3.1 | 0.6 |
eBay, Inc. | 3.1 | 0.0 |
Discovery Communications, Inc. | 3.0 | 0.9 |
Wal-Mart Stores, Inc. | 3.0 | 0.0 |
| 35.5 | |
Top Five Market Sectors as of October 31, 2012 | ||
| % of fund's | % of fund's net assets |
Financials | 18.8 | 12.5 |
Health Care | 16.3 | 9.8 |
Information Technology | 15.4 | 31.0 |
Consumer Discretionary | 14.6 | 16.8 |
Energy | 13.4 | 8.8 |
Asset Allocation (% of fund's net assets) | |||||||
As of October 31, 2012 * | As of April 30, 2012 ** | ||||||
![]() | Stocks 95.9% |
| ![]() | Stocks 99.4% |
| ||
![]() | Short-Term Investments and Net Other Assets (Liabilities) 4.1% |
| ![]() | Short-Term Investments and Net Other Assets (Liabilities) 0.6% |
| ||
* Foreign investments | 4.7% |
| ** Foreign investments | 1.8% |
|
Annual Report
Investments October 31, 2012
Showing Percentage of Net Assets
Common Stocks - 95.9% | |||
Shares | Value | ||
CONSUMER DISCRETIONARY - 14.6% | |||
Household Durables - 1.7% | |||
PulteGroup, Inc. (a) | 529,000 | $ 9,172,860 | |
Media - 6.3% | |||
Comcast Corp. Class A | 458,800 | 17,209,588 | |
Discovery Communications, Inc. (a) | 282,000 | 16,643,640 | |
Sirius XM Radio, Inc. (a) | 337,000 | 943,600 | |
| 34,796,828 | ||
Specialty Retail - 5.8% | |||
Cabela's, Inc. Class A (a) | 260,100 | 11,655,081 | |
Home Depot, Inc. | 152,000 | 9,329,760 | |
TJX Companies, Inc. | 260,300 | 10,836,289 | |
| 31,821,130 | ||
Textiles, Apparel & Luxury Goods - 0.8% | |||
Under Armour, Inc. Class A (sub. vtg.) (a)(d) | 80,699 | 4,217,330 | |
TOTAL CONSUMER DISCRETIONARY | 80,008,148 | ||
CONSUMER STAPLES - 5.6% | |||
Beverages - 1.5% | |||
Anheuser-Busch InBev SA NV | 64,000 | 5,352,394 | |
Constellation Brands, Inc. Class A (sub. vtg.) (a) | 77,000 | 2,721,180 | |
| 8,073,574 | ||
Food & Staples Retailing - 3.0% | |||
Wal-Mart Stores, Inc. | 220,000 | 16,504,400 | |
Personal Products - 1.1% | |||
Estee Lauder Companies, Inc. Class A | 102,500 | 6,316,050 | |
TOTAL CONSUMER STAPLES | 30,894,024 | ||
ENERGY - 13.4% | |||
Oil, Gas & Consumable Fuels - 13.4% | |||
Cabot Oil & Gas Corp. | 279,000 | 13,107,420 | |
James River Coal Co. (a)(d) | 335,000 | 1,678,350 | |
Marathon Petroleum Corp. | 75,000 | 4,119,750 | |
Noble Energy, Inc. | 118,771 | 11,284,433 | |
Peabody Energy Corp. | 212,000 | 5,914,800 | |
Phillips 66 | 372,000 | 17,543,520 | |
Pioneer Natural Resources Co. | 185,900 | 19,640,335 | |
| 73,288,608 | ||
Common Stocks - continued | |||
Shares | Value | ||
FINANCIALS - 18.8% | |||
Capital Markets - 0.7% | |||
UBS AG (NY Shares) | 260,000 | $ 3,905,200 | |
Commercial Banks - 2.7% | |||
M&T Bank Corp. | 73,000 | 7,599,300 | |
Wells Fargo & Co. | 214,000 | 7,209,660 | |
| 14,808,960 | ||
Consumer Finance - 3.6% | |||
Capital One Financial Corp. | 167,000 | 10,048,390 | |
Discover Financial Services | 238,500 | 9,778,500 | |
| 19,826,890 | ||
Diversified Financial Services - 2.1% | |||
Citigroup, Inc. | 309,000 | 11,553,510 | |
Insurance - 5.1% | |||
American International Group, Inc. (a) | 344,000 | 12,015,920 | |
Berkshire Hathaway, Inc. Class B (a) | 105,000 | 9,066,750 | |
The Travelers Companies, Inc. | 97,000 | 6,881,180 | |
| 27,963,850 | ||
Real Estate Investment Trusts - 4.0% | |||
American Tower Corp. | 288,000 | 21,683,520 | |
Real Estate Management & Development - 0.6% | |||
Realogy Holdings Corp. | 100,800 | 3,582,432 | |
TOTAL FINANCIALS | 103,324,362 | ||
HEALTH CARE - 16.3% | |||
Biotechnology - 8.2% | |||
Amgen, Inc. | 212,000 | 18,347,540 | |
Gilead Sciences, Inc. (a) | 255,000 | 17,125,800 | |
Onyx Pharmaceuticals, Inc. (a) | 124,000 | 9,716,640 | |
| 45,189,980 | ||
Health Care Equipment & Supplies - 0.7% | |||
The Cooper Companies, Inc. | 39,200 | 3,762,416 | |
Health Care Providers & Services - 0.7% | |||
Catamaran Corp. (a) | 77,000 | 3,615,820 | |
Pharmaceuticals - 6.7% | |||
Abbott Laboratories | 186,000 | 12,186,720 | |
Johnson & Johnson | 121,000 | 8,569,220 | |
Common Stocks - continued | |||
Shares | Value | ||
HEALTH CARE - continued | |||
Pharmaceuticals - continued | |||
Merck & Co., Inc. | 148,000 | $ 6,753,240 | |
Pfizer, Inc. | 362,000 | 9,002,940 | |
| 36,512,120 | ||
TOTAL HEALTH CARE | 89,080,336 | ||
INDUSTRIALS - 10.0% | |||
Industrial Conglomerates - 3.0% | |||
General Electric Co. | 773,000 | 16,279,380 | |
Road & Rail - 6.1% | |||
Canadian Pacific | 107,000 | 9,843,464 | |
J.B. Hunt Transport Services, Inc. | 173,900 | 10,207,930 | |
Union Pacific Corp. | 110,000 | 13,533,300 | |
| 33,584,694 | ||
Trading Companies & Distributors - 0.9% | |||
United Rentals, Inc. (a) | 120,000 | 4,879,200 | |
TOTAL INDUSTRIALS | 54,743,274 | ||
INFORMATION TECHNOLOGY - 15.4% | |||
Computers & Peripherals - 2.9% | |||
Apple, Inc. | 26,700 | 15,889,170 | |
Internet Software & Services - 3.4% | |||
eBay, Inc. (a) | 349,600 | 16,882,184 | |
Facebook, Inc. Class A (d) | 82,000 | 1,731,430 | |
| 18,613,614 | ||
IT Services - 6.6% | |||
Accenture PLC Class A | 42,000 | 2,831,220 | |
MasterCard, Inc. Class A | 72,200 | 33,279,145 | |
| 36,110,365 | ||
Software - 2.5% | |||
salesforce.com, Inc. (a) | 90,700 | 13,240,386 | |
Workday, Inc. | 8,000 | 388,000 | |
| 13,628,386 | ||
TOTAL INFORMATION TECHNOLOGY | 84,241,535 | ||
Common Stocks - continued | |||
Shares | Value | ||
MATERIALS - 1.0% | |||
Chemicals - 0.3% | |||
Georgia Gulf Corp. (d) | 50,913 | $ 1,801,811 | |
Metals & Mining - 0.7% | |||
Freeport-McMoRan Copper & Gold, Inc. | 95,000 | 3,693,600 | |
TOTAL MATERIALS | 5,495,411 | ||
UTILITIES - 0.8% | |||
Multi-Utilities - 0.8% | |||
Sempra Energy | 63,200 | 4,408,200 | |
TOTAL COMMON STOCKS (Cost $476,147,037) |
| ||
Money Market Funds - 6.4% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.19% (b) | 27,899,793 | 27,899,793 | |
Fidelity Securities Lending Cash Central Fund, 0.19% (b)(c) | 7,205,849 | 7,205,849 | |
TOTAL MONEY MARKET FUNDS (Cost $35,105,642) |
| ||
TOTAL INVESTMENT PORTFOLIO - 102.3% (Cost $511,252,679) | 560,589,540 | ||
NET OTHER ASSETS (LIABILITIES) - (2.3)% | (12,605,598) | ||
NET ASSETS - 100% | $ 547,983,942 |
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 | $ 9,166 |
Fidelity Securities Lending Cash Central Fund | 61,400 |
Total | $ 70,566 |
Other Information |
The following is a summary of the inputs used, as of October 31, 2012, 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 | $ 80,008,148 | $ 80,008,148 | $ - | $ - |
Consumer Staples | 30,894,024 | 25,541,630 | 5,352,394 | - |
Energy | 73,288,608 | 73,288,608 | - | - |
Financials | 103,324,362 | 103,324,362 | - | - |
Health Care | 89,080,336 | 89,080,336 | - | - |
Industrials | 54,743,274 | 54,743,274 | - | - |
Information Technology | 84,241,535 | 84,241,535 | - | - |
Materials | 5,495,411 | 5,495,411 | - | - |
Utilities | 4,408,200 | 4,408,200 | - | - |
Money Market Funds | 35,105,642 | 35,105,642 | - | - |
Total Investments in Securities: | $ 560,589,540 | $ 555,237,146 | $ 5,352,394 | $ - |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements
Statement of Assets and Liabilities
| October 31, 2012 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $6,861,253) - See accompanying schedule: Unaffiliated issuers (cost $476,147,037) | $ 525,483,898 |
|
Fidelity Central Funds (cost $35,105,642) | 35,105,642 |
|
Total Investments (cost $511,252,679) |
| $ 560,589,540 |
Cash |
| 281,862 |
Receivable for investments sold | 3,892,137 | |
Receivable for fund shares sold | 1,430,925 | |
Dividends receivable | 289,169 | |
Distributions receivable from Fidelity Central Funds | 23,235 | |
Other receivables | 12,725 | |
Total assets | 566,519,593 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 10,062,729 | |
Payable for fund shares redeemed | 801,588 | |
Accrued management fee | 310,082 | |
Other affiliated payables | 115,912 | |
Other payables and accrued expenses | 39,491 | |
Collateral on securities loaned, at value | 7,205,849 | |
Total liabilities | 18,535,651 | |
|
|
|
Net Assets | $ 547,983,942 | |
Net Assets consist of: |
| |
Paid in capital | $ 470,956,044 | |
Undistributed net investment income | 624,418 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 27,066,403 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 49,337,077 | |
Net Assets, for 35,060,004 shares outstanding | $ 547,983,942 | |
Net Asset Value, offering price and redemption price per share ($547,983,942 ÷ 35,060,004 shares) | $ 15.63 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Operations
| Year ended October 31, 2012 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 6,157,485 |
Interest |
| 19 |
Income from Fidelity Central Funds |
| 70,566 |
Total income |
| 6,228,070 |
|
|
|
Expenses | ||
Management fee | $ 2,934,580 | |
Performance adjustment | 442,316 | |
Transfer agent fees | 1,181,710 | |
Accounting and security lending fees | 202,990 | |
Custodian fees and expenses | 41,452 | |
Independent trustees' compensation | 3,488 | |
Registration fees | 45,801 | |
Audit | 40,364 | |
Legal | 1,897 | |
Interest | 48 | |
Miscellaneous | 6,346 | |
Total expenses before reductions | 4,900,992 | |
Expense reductions | (44,372) | 4,856,620 |
Net investment income (loss) | 1,371,450 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 59,762,746 | |
Foreign currency transactions | 9,937 | |
Total net realized gain (loss) |
| 59,772,683 |
Change in net unrealized appreciation (depreciation) on: Investment securities | (2,335,145) | |
Assets and liabilities in foreign currencies | (75) | |
Total change in net unrealized appreciation (depreciation) |
| (2,335,220) |
Net gain (loss) | 57,437,463 | |
Net increase (decrease) in net assets resulting from operations | $ 58,808,913 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements - continued
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 1,371,450 | $ 115,924 |
Net realized gain (loss) | 59,772,683 | (21,573,716) |
Change in net unrealized appreciation (depreciation) | (2,335,220) | 27,268,453 |
Net increase (decrease) in net assets resulting | 58,808,913 | 5,810,661 |
Distributions to shareholders from net investment income | (745,356) | - |
Share transactions | 203,651,987 | 637,822,609 |
Reinvestment of distributions | 711,323 | - |
Cost of shares redeemed | (332,168,331) | (173,576,728) |
Net increase (decrease) in net assets resulting from share transactions | (127,805,021) | 464,245,881 |
Total increase (decrease) in net assets | (69,741,464) | 470,056,542 |
|
|
|
Net Assets | ||
Beginning of period | 617,725,406 | 147,668,864 |
End of period (including undistributed net investment income of $624,418 and undistributed net investment income of $0, respectively) | $ 547,983,942 | $ 617,725,406 |
Other Information Shares | ||
Sold | 13,682,045 | 44,763,038 |
Issued in reinvestment of distributions | 51,959 | - |
Redeemed | (22,905,622) | (12,450,034) |
Net increase (decrease) | (9,171,618) | 32,313,004 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights
Years ended October 31, | 2012 | 2011 | 2010 | 2009 | 2008 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 13.97 | $ 12.39 | $ 10.17 | $ 9.82 | $ 15.35 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss)B | .04 | -F | (.03) | .06 | .09 |
Net realized and unrealized gain (loss) | 1.64 | 1.58 | 2.31 | .36 | (4.27) |
Total from investment operations | 1.68 | 1.58 | 2.28 | .42 | (4.18) |
Distributions from net investment income | (.02) | - | (.06) | (.07) | (.06) |
Distributions from net realized gain | - | - | - | - | (1.29) |
Total distributions | (.02) | - | (.06) | (.07) | (1.35) |
Net asset value, end of period | $ 15.63 | $ 13.97 | $ 12.39 | $ 10.17 | $ 9.82 |
Total ReturnA | 12.03% | 12.75% | 22.44% | 4.39% | (29.58)% |
Ratios to Average Net AssetsC,E |
|
|
|
|
|
Expenses before reductions | .93% | .93% | 1.11% | 1.09% | 1.20% |
Expenses net of fee waivers, if any | .93% | .93% | 1.00% | 1.00% | 1.00% |
Expenses net of all reductions | .92% | .92% | 1.00% | .99% | .99% |
Net investment income (loss) | .26% | .03% | (.26)% | .63% | .70% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 547,984 | $ 617,725 | $ 147,669 | $ 122,780 | $ 96,870 |
Portfolio turnover rateD | 279% | 277% | 275% | 363% | 491% |
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, 2012
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. In accordance with valuation policies and procedures approved by the Board of Trustees (the Board), the Fund attempts to obtain prices from one or more third party pricing vendors or brokers to value its investments. When current market prices, quotations or rates are not readily available or reliable, securities
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Security Valuation - continued
will be fair valued in good faith by the FMR Fair Value Committee (the Committee), in accordance with procedures adopted by the Fund's Board. Factors used in determining fair value vary by security type and 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 Committee oversees the Fund's valuation policies and procedures and is responsible for approving and reporting to the Board all fair value determinations.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the Fund's own assumptions based on the best information available)
Valuation techniques used to value the Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by a third party pricing vendor on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when 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. Utilizing these techniques may result in transfers between Level 1 and Level 2.
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value (NAV) each business day and are categorized as Level 1 in the hierarchy.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of October 31, 2012, is included at the end of the Fund's Schedule of Investments.
Annual Report
3. Significant Accounting Policies - continued
Foreign Currency Translation. The Fund may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rates at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. 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.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for income taxes is required. As of October 31, 2012, the Fund did not have any unrecognized tax benefits in the financial statements; nor is the Fund aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. A fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are declared and recorded on the ex-dividend date. Income 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 | $ 54,551,847 |
Gross unrealized depreciation | (8,103,479) |
Net unrealized appreciation (depreciation) on securities and other investments |
$ 46,448,368 |
|
|
Tax Cost | $ 514,141,172 |
The tax-based components of distributable earnings as of period end were as follows:
Undistributed ordinary income | $ 3,014,711 |
Undistributed long-term capital gain | $ 27,564,603 |
Net unrealized appreciation (depreciation) | $ 46,448,584 |
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, 2012 | October 31, 2011 |
Ordinary Income | $ 745,356 | $ - |
New Accounting Pronouncement. In December 2011, the Financial Accounting Standards Board issued Accounting Standard Update No. 2011-11, Disclosures about Offsetting Assets and Liabilities. The update creates new disclosure requirements requiring entities to disclose both gross and net information for derivatives and other financial instruments that are either offset in the Statement of Assets and Liabilities or subject to an enforceable master netting arrangement or similar agreement. The disclosure requirements are effective for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods. 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 $1,466,969,724 and $1,616,051,761, 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 an annualized 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 .64% 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
Annual Report
Notes to Financial Statements - continued
5. Fees and Other Transactions with Affiliates - continued
Transfer Agent Fees - continued
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 .22% 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 each month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $50,629 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 Loan | Weighted Average Interest Rate | Interest |
Borrower | $ 5,240,000 | .33% | $ 48 |
6. Committed Line of Credit.
The Fund participates with other funds managed by FMR or an affiliate in a $4.25 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $1,467 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
Annual Report
7. Security Lending - continued
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. At period end, there were no security loans outstanding with FCM. 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 $61,400, including $1,552 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 $44,360 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 $12.
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 14% 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, 2012, 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, 2012 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
December 11, 2012
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 236 funds advised by FMR or an affiliate. Mr. Curvey oversees 443 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 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 (77) | |
| Year of Election or Appointment: 2007 Mr. Curvey is Trustee and 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 (55) | |
| 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 (64) | |
| 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 (59) | |
| 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 Entertainment, Inc. (restaurant and entertainment complexes, 2010-present), Earth Fare, Inc. (retail grocery, 2012-present), The Hillman Companies, Inc. (hardware wholesalers, 2010-present), and Bristol-Myers Squibb Company (global pharmaceuticals, 2008-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 (68) | |
| 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 Chairman of the Board of Directors of the Philharmonic Center for the Arts in Naples, Florida (2012-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 (68) | |
| 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). Previously, Mr. Mauriello served as a Director of the Hamilton Funds of the Bank of New York (2006-2007) and of Arcadia Resources Inc. (health care services and products, 2007-2012). |
Robert W. Selander (62) | |
| 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 (68) | |
| Year of Election or Appointment: 2005 Ms. Small is a member of the Board of Directors (2009-present) and Chair of the Investment Committee (2010-present) of the Teagle Foundation. Ms. Small also serves on the Investment Committee of the Berkshire Taconic Community Foundation (2008-present). Previously, Ms. Small served as Chairperson (2002-2008) and a member of the Investment Committee and Chairperson (2008-2012) and a member of the Board of Trustees 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 (73) | |
| 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 a Director of Univar Inc. (global distributor of commodity and specialty chemicals, Chairman from 2010-May 2012 and Lead Director from May 2012-present), Teradata Corporation (data warehousing and technology solutions, 2008-present), Maersk Inc. (industrial conglomerate), and Tyco International, Ltd. (multinational manufacturing and services, 2007-present), and a member of the Advisory Board for Metalmark Capital LLC (private equity investment, 2005-present). Mr. Stavropoulos is an operating 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, a Trustee of the Rollin L. Gerstacker Foundation, and a Director of the Naples Philharmonic Center for the Arts. Previously, Mr. Stavropoulos served as a Director of Chemical Financial Corporation (bank holding company, 1993-2012). |
David M. Thomas (63) | |
| 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), and a Director of Fortune Brands, Inc. (consumer products, 2000-2011). In addition, Mr. Thomas serves as Non-Executive Chairman of the Board of Directors of Fortune Brands Home and Security (home and security products, 2011-present), and as a member of the Board of Directors of Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (62) | |
| 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). |
+ 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 David A. Rosow and Garnett A. Smith may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235. 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 (82) | |
| 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 (68) | |
| 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). |
David A. Rosow (70) | |
| Year of Election or Appointment: 2012 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Chairman and Chief Executive Officer of International Golf Group, Inc. (golf course development, 1989-present). Previously, Mr. Rosow served as Chairman and Chief Executive Officer of Rosow & Company, Inc. (private investment company, 1989-2011), a Lead Director of Hudson United Bancorp (2001-2006) and as a Director of TD Banknorth (1996-2006). In addition, Mr. Rosow is a member (2008-present) and President (2009-present) of the Town Council of Palm Beach, Florida. |
Garnett A. Smith (65) | |
| Year of Election or Appointment: 2012 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Prior to Mr. Smith's retirement, he served as Chairman and Chief Executive Officer of Inbrand Corp. (manufacturer of personal absorbent products, 1990-1997). He also served as President (1986-1990) of Inbrand Corp. Prior to his employment with Inbrand Corp., he was employed by a retail fabric chain and North Carolina National Bank. In addition, Mr. Smith is a board member of the Jackson Hole Land Trust (2009-present). |
Kenneth B. Robins (43) | |
| 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 (47) | |
| Year of Election or Appointment: 2006 Vice President of certain Equity Funds. Mr. Herring also serves as President of Fidelity Research & Analysis Company (2010-present), Chief Investment Officer and Director of Fidelity Management & Research (U.K.) Inc. (2010-present) and Group Chief Investment 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 (48) | |
| 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 (44) | |
| 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 (43) | |
| 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). |
Elizabeth Paige Baumann (44) | |
| Year of Election or Appointment: 2012 Anti-Money Laundering (AML) Officer of the Fidelity funds. Ms. Baumann also serves as AML Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2012-present), Chief AML Officer of FMR LLC (2012-present), and is an employee of Fidelity Investments. Previously, Ms. Baumann served as Vice President and Deputy Anti-Money Laundering Officer (2007-2012). |
Christine Reynolds (54) | |
| 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). |
Joseph A. Hanlon (44) | |
| Year of Election or Appointment: 2012 Chief Compliance Officer of Fidelity's Equity and High Income Funds. Mr. Hanlon serves as Compliance Officer of FMR, FMR Co., Inc., Fidelity Investments Money Management, Inc. (FIMM), Fidelity Research and Analysis Company (FRAC), Fidelity Management & Research (Japan) Inc., Fidelity Management & Research (U.K.) Inc., Fidelity Management & Research (Hong Kong), and Strategic Advisers, Inc. (2009-present), as Senior Vice President of the Fidelity Asset Management Division (2009-present), and is an employee of Fidelity Investments. |
Joseph F. Zambello (55) | |
| 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 (45) | |
| Year of Election or Appointment: 2008 Deputy Treasurer of Fidelity's Equity and High Income Funds. Mr. Deberghes also serves as Vice President (2011-present) and Assistant Treasurer (2010-present) of other Fidelity funds, 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). |
Stephen Sadoski (41) | |
| Year of Election or Appointment: 2012 Deputy Treasurer of Fidelity's Equity and High Income Funds. Mr. Sadoski also serves as Assistant Treasurer of other Fidelity funds (2012-present) and is an employee of Fidelity Investments (2012-present). Previously, Mr. Sadoski served as an assistant chief accountant in the Division of Investment Management of the Securities and Exchange Commission (SEC) (2009-2012) and as a senior manager at Deloitte & Touche (1997-2009). |
Stephanie J. Dorsey (43) | |
| 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 (54) | |
| 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 (54) | |
| 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 (44) | |
| 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 Focused Stock Fund voted to pay on December 10, 2012, to shareholders of record at the opening of business on December 07, 2012, a distribution of $.790 per share derived from capital gains realized from sales of portfolio securities and a dividend of $.029 per share from net investment income.
The fund hereby designates as a capital gain dividend with respect to the taxable year ended October 31, 2012, $27,564,603, or, if subsequently determined to be different, the net capital gain of such year.
The fund designates 100% of the dividend distributed during the fiscal year as qualifying for the dividends-received deduction for corporate shareholders.
The fund designates 100% of the dividends distributed in December during the fiscal year as amounts which may be taken into account as a dividend for the purposes of the maximum rate under section 1(h)(11) of the Internal Revenue Code.
The fund will notify shareholders in January 2013 of amounts for use in preparing 2012 income tax returns.
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, at each of its meetings, considers 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 and chaired by 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 2012 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 relative to peer funds; (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 exist and 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 also considered the fund's investment objective, strategies, and related investment philosophy. 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 continued to increase the resources devoted to non-U.S. offices, including expansion of Fidelity's global investment organization. The Board noted that Fidelity's analysts have extensive resources, tools and capabilities that allow them to conduct sophisticated quantitative and fundamental analysis, as well as credit analysis of issuers, counterparties and guarantors. 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 that 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 its deliberations, the Board considered the Investment Advisers' trading and risk management 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 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.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
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.
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) persisting in efforts to enhance Fidelity's research capabilities, in particular, international research; (iii) launching new funds and making other enhancements to meet client needs for global and income-oriented solutions; (iv) continuing to launch dedicated lower cost underlying funds to meet investment management's portfolio construction needs related to expanding underlying fund options, specifically for the Freedom Fund product lines; (v) adopting a "Stock Selector" sector neutral investment approach and employing a team of portfolio managers who are sector specialists to manage certain funds; (vi) rationalizing product lines and gaining increased efficiencies through the mergers of several funds into other funds; (vii) strengthening the Spartan Index Fund product line by adding new funds and/or new low-cost institutional share classes, restructuring fund expenses to accommodate new classes, and reducing investment minimums for certain classes of shares; (viii) modifying the eligibility criteria for Institutional Class shares to increase their appeal to government entities and charitable investors; and (ix) reducing certain transfer agent fee rates.
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, 2011, 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 (top of box) and the 75th percentile return (bottom 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
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 second quartile for the one- and three-year periods and the first quartile for the five-year period. The Board also noted that the investment performance of the fund compared favorably to its benchmark for the three- and five-year periods, although the fund's one-year total return was lower than its benchmark. 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.
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 Focused Stock 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 2011. 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 2011.
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. The Board noted the findings of the 2010 ad hoc joint committee (created with the board of other Fidelity funds), which reviewed and compared 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.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
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.
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.
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.
Annual Report
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 economies of scale, if any, 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) the potential to further rationalize the Fidelity fund lineup with the possibility of achieving savings for the funds and Fidelity; (iii) Fidelity's compensation structure for portfolio managers and other key 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) the realization of fall-out benefits in certain Fidelity business units; (vi) Fidelity's group fee structures, the potential impact of regulatory changes on such structures, and the rationale for the individual fee rates of certain funds; (vii) fund profitability methodology, including Fidelity's cost allocation methodology, and the impact of certain factors on fund profitability results; (viii) trends regarding industry use of performance fee structures and the possibility of implementing performance fee structures for additional funds; and (ix) the impact of net redemptions from the Fidelity funds.
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
Smithfield, RI
Transfer and Service Agents
Fidelity Investments Institutional
Operations Company, Inc.
Boston, MA
Fidelity Service Company, Inc.
Boston, MA
Custodian
JPMorgan Chase Bank
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
(Fidelity Investment logo)(registered trademark)
Corporate Headquarters
82 Devonshire St., Boston, MA 02109
www.fidelity.com
TQG-UANN-1212 1.784778.109
Fidelity®
Stock Selector Small Cap
Fund
Annual Report
October 31, 2012
(Fidelity Cover Art)
Contents
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. © 2012 FMR LLC. All rights reserved.
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, 2012 | Past 1 | Past 5 | Past 10 |
Fidelity® Stock Selector Small Cap Fund | 8.86% | -1.95% | 7.53% |
$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, 2002. 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 bouts of volatility to post strong gains for the year ending October 31, 2012, and extend an uptrend that began in March 2009. The broad-based S&P 500® Index advanced 15.21% for the 12-month period, while the blue-chip-laden Dow Jones Industrial AverageSM and technology-heavy Nasdaq Composite® Index rose 12.56% and 12.21%, respectively. Debt problems in Europe, slower growth in China and uncertainty about a U.S. economic recovery put downward pressure on stocks early on and during a turbulent spring. However, beginning in June, stocks rose on central bank stimulus, steps to repair the eurozone and signs of life in the U.S. housing market. Equity benchmarks hit multiyear highs in September, with the Dow achieving its best mark since 2007, the S&P® rising to its highest level since 2008, and the Nasdaq reaching a 12-year high. Stocks retreated in October, which was marked by disappointing corporate earnings reports and a two-day weather-related closure of the New York Stock Exchange. Among the 10 sectors that comprise the S&P 500®, most posted a double-digit gain, led by telecommunication services (+26%) and health care (+22%), with energy (+7%) and materials (+7%) lagging the most. Despite lingering eurozone turmoil and weaker local currencies versus the U.S. dollar, foreign developed-markets stocks rose modestly, with the MSCI® EAFE® Index adding 4.76%.
Comments from Morgen Peck, Co-Portfolio Manager of Fidelity® Stock Selector Small Cap Fund, and Eirene Kontopoulos, who became a Co-Portfolio Manager of the fund, overseeing its health care sleeve, on April 2, 2012: For the year, the fund's Retail Class shares gained 8.86%, versus 12.08% for the Russell 2000® Index. On a sector basis, stock selection in consumer discretionary and financials hurt the most. In terms of individual stocks, two technology names - Quantum, a provider of data storage solutions, and Super Micro Computer, a maker of specialized servers - delivered the biggest blow. Trading firm Knight Capital Group and premium mattress maker Tempur-Pedic International also notably detracted. Conversely, we had some strong picks in the lagging energy sector and also benefited from our choices in health care. Software/services firm Web.com Group was the top contributor, while biotechnology firm Infinity Pharmaceuticals and Canadian discount store operator Dollarama also helped. Some stocks mentioned were not in the index and/or were sold from the fund by period end.
_________________________________________________
Note to shareholders: On February 1, 2012, Anmol Mehra became a Co-Portfolio Manager of the fund, responsible for the consumer discretionary and consumer staples sleeves.
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, 2012 to October 31, 2012).
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 Expense Ratio | Beginning | Ending | Expenses Paid |
Class A | 1.32% |
|
|
|
Actual |
| $ 1,000.00 | $ 985.30 | $ 6.59 |
HypotheticalA |
| $ 1,000.00 | $ 1,018.50 | $ 6.70 |
Class T | 1.57% |
|
|
|
Actual |
| $ 1,000.00 | $ 984.10 | $ 7.83 |
HypotheticalA |
| $ 1,000.00 | $ 1,017.24 | $ 7.96 |
Class B | 2.07% |
|
|
|
Actual |
| $ 1,000.00 | $ 982.20 | $ 10.31 |
HypotheticalA |
| $ 1,000.00 | $ 1,014.73 | $ 10.48 |
Class C | 2.08% |
|
|
|
Actual |
| $ 1,000.00 | $ 981.70 | $ 10.36 |
Hypothetical A |
| $ 1,000.00 | $ 1,014.68 | $ 10.53 |
Stock Selector Small Cap | 1.01% |
|
|
|
Actual |
| $ 1,000.00 | $ 986.90 | $ 5.04 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.06 | $ 5.13 |
Institutional Class | 1.03% |
|
|
|
Actual |
| $ 1,000.00 | $ 987.00 | $ 5.14 |
HypotheticalA |
| $ 1,000.00 | $ 1,019.96 | $ 5.23 |
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 184/366 (to reflect the one-half year period).
Annual Report
Investment Changes (Unaudited)
Top Ten Stocks as of October 31, 2012 | ||
| % of fund's | % of fund's net assets |
National Retail Properties, Inc. | 1.1 | 1.2 |
Glimcher Realty Trust | 1.1 | 1.1 |
Colonial Properties Trust (SBI) | 1.1 | 1.1 |
Ramco-Gershenson Properties Trust (SBI) | 1.0 | 1.0 |
National Penn Bancshares, Inc. | 1.0 | 0.9 |
Teledyne Technologies, Inc. | 1.0 | 1.0 |
American Assets Trust, Inc. | 1.0 | 1.0 |
Home Properties, Inc. | 1.0 | 1.2 |
UMB Financial Corp. | 0.9 | 0.0 |
Waddell & Reed Financial, Inc. Class A | 0.9 | 0.9 |
| 10.1 | |
Top Five Market Sectors as of October 31, 2012 | ||
| % of fund's | % of fund's net assets |
Financials | 21.4 | 22.0 |
Information Technology | 16.9 | 16.8 |
Industrials | 15.0 | 15.2 |
Consumer Discretionary | 14.1 | 13.1 |
Health Care | 11.6 | 11.2 |
Asset Allocation (% of fund's net assets) | |||||||
As of October 31, 2012* | As of April 30, 2012** | ||||||
![]() | Stocks 97.6% |
| ![]() | Stocks and |
| ||
![]() | Convertible |
| ![]() | Convertible |
| ||
![]() | Short-Term |
| ![]() | Short-Term |
| ||
* Foreign investments | 7.5% |
| ** Foreign investments | 8.6% |
|
Annual Report
Investments October 31, 2012
Showing Percentage of Net Assets
Common Stocks - 97.6% | |||
Shares | Value (000s) | ||
CONSUMER DISCRETIONARY - 14.1% | |||
Auto Components - 1.2% | |||
Gentex Corp. | 381,850 | $ 6,575 | |
Tenneco, Inc. (a) | 322,984 | 9,867 | |
| 16,442 | ||
Hotels, Restaurants & Leisure - 1.6% | |||
BJ's Restaurants, Inc. (a) | 184,300 | 6,091 | |
Life Time Fitness, Inc. (a) | 225,501 | 10,123 | |
Wyndham Worldwide Corp. | 117,415 | 5,918 | |
| 22,132 | ||
Household Durables - 1.2% | |||
Ethan Allen Interiors, Inc. | 358,810 | 10,553 | |
Skullcandy, Inc. (a)(d) | 486,754 | 5,895 | |
| 16,448 | ||
Internet & Catalog Retail - 0.5% | |||
HSN, Inc. | 141,093 | 7,340 | |
Media - 1.5% | |||
Cinemark Holdings, Inc. | 356,867 | 8,811 | |
John Wiley & Sons, Inc. Class A | 176,903 | 7,674 | |
MDC Partners, Inc. Class A (sub. vtg.) | 367,900 | 4,161 | |
| 20,646 | ||
Multiline Retail - 0.9% | |||
Dollarama, Inc. | 183,634 | 11,600 | |
Specialty Retail - 5.0% | |||
Ascena Retail Group, Inc. (a) | 558,460 | 11,058 | |
Conn's, Inc. (a) | 346,427 | 8,775 | |
DSW, Inc. Class A | 164,502 | 10,296 | |
Express, Inc. (a) | 406,517 | 4,525 | |
GameStop Corp. Class A (d) | 339,800 | 7,758 | |
Jos. A. Bank Clothiers, Inc. (a) | 191,325 | 8,952 | |
Shoe Carnival, Inc. | 252,822 | 5,911 | |
Signet Jewelers Ltd. | 197,810 | 10,239 | |
| 67,514 | ||
Textiles, Apparel & Luxury Goods - 2.2% | |||
Hanesbrands, Inc. (a) | 245,935 | 8,231 | |
PVH Corp. | 99,300 | 10,922 | |
Steven Madden Ltd. (a) | 244,338 | 10,487 | |
| 29,640 | ||
TOTAL CONSUMER DISCRETIONARY | 191,762 | ||
Common Stocks - continued | |||
Shares | Value (000s) | ||
CONSUMER STAPLES - 3.7% | |||
Food & Staples Retailing - 1.6% | |||
Casey's General Stores, Inc. | 48,417 | $ 2,496 | |
Fresh Market, Inc. (a) | 100,414 | 5,694 | |
Susser Holdings Corp. (a) | 156,820 | 5,636 | |
United Natural Foods, Inc. (a) | 139,645 | 7,435 | |
| 21,261 | ||
Food Products - 1.3% | |||
Calavo Growers, Inc. | 160,073 | 3,779 | |
Fresh Del Monte Produce, Inc. | 199,593 | 5,024 | |
Green Mountain Coffee Roasters, Inc. (a)(d) | 125,203 | 3,025 | |
Post Holdings, Inc. (a) | 184,052 | 5,807 | |
| 17,635 | ||
Household Products - 0.3% | |||
Spectrum Brands Holdings, Inc. | 79,753 | 3,628 | |
Personal Products - 0.5% | |||
Elizabeth Arden, Inc. (a) | 149,416 | 7,049 | |
TOTAL CONSUMER STAPLES | 49,573 | ||
ENERGY - 6.2% | |||
Energy Equipment & Services - 1.1% | |||
Atwood Oceanics, Inc. (a) | 159,600 | 7,629 | |
Total Energy Services, Inc. | 429,700 | 6,518 | |
| 14,147 | ||
Oil, Gas & Consumable Fuels - 5.1% | |||
Atlas Pipeline Partners, LP | 264,304 | 9,351 | |
Berry Petroleum Co. Class A | 241,400 | 9,296 | |
Cloud Peak Energy, Inc. (a) | 446,500 | 9,421 | |
Energen Corp. | 46,062 | 2,149 | |
PDC Energy, Inc. (a) | 352,201 | 10,661 | |
Stone Energy Corp. (a) | 363,900 | 8,584 | |
Targa Resources Corp. | 225,500 | 11,485 | |
Western Refining, Inc. | 347,340 | 8,638 | |
| 69,585 | ||
TOTAL ENERGY | 83,732 | ||
FINANCIALS - 21.4% | |||
Capital Markets - 2.1% | |||
Affiliated Managers Group, Inc. (a) | 57,800 | 7,312 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
FINANCIALS - continued | |||
Capital Markets - continued | |||
Duff & Phelps Corp. Class A | 676,711 | $ 8,412 | |
Waddell & Reed Financial, Inc. Class A | 381,159 | 12,704 | |
| 28,428 | ||
Commercial Banks - 7.2% | |||
Associated Banc-Corp. | 826,123 | 10,649 | |
BancFirst Corp. | 156,700 | 6,889 | |
Bank of the Ozarks, Inc. | 346,400 | 11,341 | |
BBCN Bancorp, Inc. | 836,786 | 9,983 | |
Bridge Capital Holdings (a) | 335,523 | 5,016 | |
Cathay General Bancorp | 367,236 | 6,496 | |
City National Corp. | 216,413 | 11,059 | |
National Penn Bancshares, Inc. | 1,500,298 | 13,398 | |
PacWest Bancorp | 416,975 | 9,382 | |
UMB Financial Corp. | 288,200 | 12,834 | |
| 97,047 | ||
Insurance - 3.3% | |||
Allied World Assurance Co. Holdings Ltd. | 156,400 | 12,559 | |
Alterra Capital Holdings Ltd. | 433,215 | 10,583 | |
Amerisafe, Inc. (a) | 417,800 | 10,967 | |
ProAssurance Corp. | 121,792 | 10,888 | |
| 44,997 | ||
Real Estate Investment Trusts - 8.0% | |||
American Assets Trust, Inc. | 486,000 | 13,205 | |
Colonial Properties Trust (SBI) | 670,753 | 14,508 | |
DCT Industrial Trust, Inc. | 1,941,500 | 12,523 | |
Glimcher Realty Trust | 1,370,840 | 14,627 | |
Highwoods Properties, Inc. (SBI) | 368,100 | 11,871 | |
Home Properties, Inc. | 212,392 | 12,911 | |
National Retail Properties, Inc. | 467,200 | 14,798 | |
Ramco-Gershenson Properties Trust (SBI) | 1,077,250 | 13,961 | |
| 108,404 | ||
Thrifts & Mortgage Finance - 0.8% | |||
Washington Federal, Inc. | 663,030 | 11,126 | |
TOTAL FINANCIALS | 290,002 | ||
HEALTH CARE - 11.5% | |||
Biotechnology - 5.2% | |||
Achillion Pharmaceuticals, Inc. (a) | 517,654 | 4,887 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
HEALTH CARE - continued | |||
Biotechnology - continued | |||
ARIAD Pharmaceuticals, Inc. (a) | 169,704 | $ 3,657 | |
BioMarin Pharmaceutical, Inc. (a) | 80,856 | 2,995 | |
Discovery Laboratories, Inc. (a) | 1,024,176 | 2,468 | |
Dynavax Technologies Corp. (a) | 1,211,510 | 5,016 | |
Infinity Pharmaceuticals, Inc. (a)(d) | 199,867 | 4,475 | |
Insmed, Inc. (a) | 485,871 | 3,105 | |
Isis Pharmaceuticals, Inc. (a) | 431,728 | 3,734 | |
Medivation, Inc. (a) | 74,586 | 3,813 | |
Merrimack Pharmaceuticals, Inc. (d) | 497,634 | 3,075 | |
Novavax, Inc. (a) | 2,011,387 | 4,224 | |
OncoGenex Pharmaceuticals, Inc. (a) | 223,329 | 2,769 | |
Pharmacyclics, Inc. (a) | 62,252 | 3,802 | |
Rigel Pharmaceuticals, Inc. (a) | 323,900 | 2,886 | |
Synageva BioPharma Corp. (a) | 93,784 | 3,965 | |
Targacept, Inc. (a) | 628,317 | 2,564 | |
Theravance, Inc. (a) | 233,569 | 5,258 | |
Threshold Pharmaceuticals, Inc. (a) | 527,069 | 2,166 | |
Tranzyme, Inc. (a) | 492,471 | 2,088 | |
XOMA Corp. (a)(d) | 1,265,859 | 3,468 | |
| 70,415 | ||
Health Care Equipment & Supplies - 2.3% | |||
Align Technology, Inc. (a) | 296,222 | 7,874 | |
Analogic Corp. | 35,251 | 2,597 | |
Cerus Corp. (a)(d) | 1,295,355 | 4,029 | |
Conceptus, Inc. (a) | 245,736 | 4,630 | |
ICU Medical, Inc. (a) | 115,989 | 6,882 | |
Natus Medical, Inc. (a) | 239,290 | 2,704 | |
Sirona Dental Systems, Inc. (a) | 56,233 | 3,220 | |
| 31,936 | ||
Health Care Providers & Services - 1.6% | |||
BioScrip, Inc. (a) | 431,655 | 3,976 | |
Corvel Corp. (a) | 68,370 | 2,908 | |
Humana, Inc. | 55,228 | 4,102 | |
Magellan Health Services, Inc. (a) | 53,413 | 2,679 | |
MEDNAX, Inc. (a) | 62,355 | 4,301 | |
Team Health Holdings, Inc. (a) | 162,798 | 4,332 | |
| 22,298 | ||
Health Care Technology - 1.1% | |||
Epocrates, Inc. (a) | 512,834 | 5,016 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
HEALTH CARE - continued | |||
Health Care Technology - continued | |||
MedAssets, Inc. (a) | 182,300 | $ 3,232 | |
Medidata Solutions, Inc. (a) | 156,365 | 6,570 | |
| 14,818 | ||
Life Sciences Tools & Services - 0.3% | |||
Luminex Corp. (a) | 223,003 | 3,586 | |
Pharmaceuticals - 1.0% | |||
Biodelivery Sciences International, Inc. (a)(d) | 713,623 | 3,647 | |
ViroPharma, Inc. (a) | 233,122 | 5,886 | |
XenoPort, Inc. (a) | 443,900 | 3,653 | |
| 13,186 | ||
TOTAL HEALTH CARE | 156,239 | ||
INDUSTRIALS - 15.0% | |||
Aerospace & Defense - 1.3% | |||
Alliant Techsystems, Inc. | 80,193 | 4,594 | |
Teledyne Technologies, Inc. (a) | 208,342 | 13,340 | |
| 17,934 | ||
Air Freight & Logistics - 0.9% | |||
Hub Group, Inc. Class A (a) | 271,374 | 8,415 | |
UTI Worldwide, Inc. | 313,700 | 4,357 | |
| 12,772 | ||
Building Products - 1.2% | |||
AAON, Inc. | 320,950 | 6,734 | |
Armstrong World Industries, Inc. | 170,958 | 8,856 | |
| 15,590 | ||
Commercial Services & Supplies - 1.4% | |||
Swisher Hygiene, Inc. (a) | 986,560 | 1,314 | |
Tetra Tech, Inc. (a) | 351,081 | 9,107 | |
United Stationers, Inc. | 303,984 | 8,822 | |
| 19,243 | ||
Construction & Engineering - 1.2% | |||
Foster Wheeler AG (a) | 338,572 | 7,540 | |
MasTec, Inc. (a) | 355,590 | 8,022 | |
| 15,562 | ||
Electrical Equipment - 1.2% | |||
General Cable Corp. (a) | 354,490 | 10,114 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
INDUSTRIALS - continued | |||
Electrical Equipment - continued | |||
GrafTech International Ltd. (a) | 391,447 | $ 4,114 | |
II-VI, Inc. (a) | 155,975 | 2,575 | |
| 16,803 | ||
Industrial Conglomerates - 0.6% | |||
Carlisle Companies, Inc. | 147,900 | 8,216 | |
Machinery - 2.4% | |||
Actuant Corp. Class A | 328,821 | 9,286 | |
Altra Holdings, Inc. | 192,506 | 3,469 | |
CLARCOR, Inc. | 151,710 | 6,863 | |
TriMas Corp. (a) | 279,233 | 7,003 | |
Wabtec Corp. | 70,429 | 5,768 | |
| 32,389 | ||
Marine - 0.3% | |||
DryShips, Inc. (a)(d) | 1,597,097 | 3,546 | |
Professional Services - 2.7% | |||
Advisory Board Co. (a) | 68,036 | 3,232 | |
Equifax, Inc. | 158,100 | 7,911 | |
Manpower, Inc. | 226,096 | 8,578 | |
Stantec, Inc. | 305,300 | 10,515 | |
Towers Watson & Co. | 115,500 | 6,204 | |
| 36,440 | ||
Road & Rail - 0.4% | |||
Ryder System, Inc. | 119,041 | 5,371 | |
Trading Companies & Distributors - 1.4% | |||
Kaman Corp. | 231,400 | 8,608 | |
Watsco, Inc. | 152,923 | 10,452 | |
| 19,060 | ||
TOTAL INDUSTRIALS | 202,926 | ||
INFORMATION TECHNOLOGY - 16.9% | |||
Communications Equipment - 3.5% | |||
Acme Packet, Inc. (a) | 256,683 | 4,246 | |
Brocade Communications Systems, Inc. (a) | 1,533,577 | 8,128 | |
Finisar Corp. (a)(d) | 756,189 | 8,711 | |
Ixia (a) | 252,448 | 3,537 | |
NETGEAR, Inc. (a) | 173,714 | 6,169 | |
Plantronics, Inc. | 189,196 | 6,138 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
INFORMATION TECHNOLOGY - continued | |||
Communications Equipment - continued | |||
Polycom, Inc. (a) | 678,974 | $ 6,803 | |
Riverbed Technology, Inc. (a) | 205,749 | 3,800 | |
| 47,532 | ||
Computers & Peripherals - 2.2% | |||
NCR Corp. (a) | 342,400 | 7,286 | |
Quantum Corp. (a) | 5,270,941 | 5,534 | |
SanDisk Corp. (a) | 125,240 | 5,230 | |
Super Micro Computer, Inc. (a) | 726,815 | 5,749 | |
Synaptics, Inc. (a) | 297,657 | 6,894 | |
| 30,693 | ||
Electronic Equipment & Components - 1.3% | |||
Arrow Electronics, Inc. (a) | 138,613 | 4,883 | |
Fabrinet (a) | 646,861 | 6,229 | |
InvenSense, Inc. | 229,419 | 2,569 | |
Vishay Intertechnology, Inc. (a) | 429,400 | 3,555 | |
| 17,236 | ||
Internet Software & Services - 1.9% | |||
Bankrate, Inc. (a) | 752,450 | 8,074 | |
Blucora, Inc. (a) | 298,022 | 5,230 | |
EarthLink, Inc. | 218,280 | 1,384 | |
QuinStreet, Inc. (a) | 238,867 | 1,462 | |
Stamps.com, Inc. (a) | 187,409 | 5,157 | |
Web.com Group, Inc. (a) | 314,270 | 4,959 | |
| 26,266 | ||
IT Services - 2.4% | |||
Euronet Worldwide, Inc. (a) | 450,784 | 9,146 | |
ExlService Holdings, Inc. (a) | 338,648 | 10,038 | |
HiSoft Technology International Ltd. ADR (a) | 272,776 | 2,834 | |
Sapient Corp. (a) | 1,027,461 | 10,562 | |
| 32,580 | ||
Semiconductors & Semiconductor Equipment - 1.7% | |||
Cirrus Logic, Inc. (a) | 102,100 | 4,162 | |
Entegris, Inc. (a) | 737,577 | 6,056 | |
Integrated Device Technology, Inc. (a) | 702,562 | 3,822 | |
RF Micro Devices, Inc. (a) | 1,814,550 | 8,002 | |
Spansion, Inc. Class A | 50,765 | 563 | |
| 22,605 | ||
Common Stocks - continued | |||
Shares | Value (000s) | ||
INFORMATION TECHNOLOGY - continued | |||
Software - 3.9% | |||
BroadSoft, Inc. (a) | 105,543 | $ 4,034 | |
Mentor Graphics Corp. (a) | 272,268 | 4,226 | |
Nuance Communications, Inc. (a) | 545,455 | 12,142 | |
Parametric Technology Corp. (a) | 482,303 | 9,733 | |
QLIK Technologies, Inc. (a) | 217,200 | 3,999 | |
Solera Holdings, Inc. | 152,282 | 7,128 | |
Synchronoss Technologies, Inc. (a) | 217,756 | 4,462 | |
Verint Systems, Inc. (a) | 249,237 | 6,797 | |
| 52,521 | ||
TOTAL INFORMATION TECHNOLOGY | 229,433 | ||
MATERIALS - 4.7% | |||
Chemicals - 1.2% | |||
Cabot Corp. | 233,203 | 8,339 | |
Kraton Performance Polymers, Inc. (a) | 255,051 | 5,565 | |
LyondellBasell Industries NV Class A | 273 | 15 | |
Zoltek Companies, Inc. (a)(d) | 418,565 | 2,867 | |
| 16,786 | ||
Containers & Packaging - 1.1% | |||
Aptargroup, Inc. | 125,250 | 6,423 | |
Rock-Tenn Co. Class A | 117,190 | 8,577 | |
| 15,000 | ||
Metals & Mining - 2.4% | |||
Carpenter Technology Corp. | 170,232 | 8,275 | |
Coeur d'Alene Mines Corp. (a) | 310,000 | 9,582 | |
Compass Minerals International, Inc. | 130,500 | 10,290 | |
HudBay Minerals, Inc. | 480,700 | 4,462 | |
| 32,609 | ||
TOTAL MATERIALS | 64,395 | ||
TELECOMMUNICATION SERVICES - 0.8% | |||
Diversified Telecommunication Services - 0.2% | |||
Towerstream Corp. (a)(d) | 549,375 | 1,934 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
TELECOMMUNICATION SERVICES - continued | |||
Wireless Telecommunication Services - 0.6% | |||
Clearwire Corp. Class A (a)(d) | 3,876,731 | $ 7,753 | |
NII Holdings, Inc. (a) | 115,024 | 917 | |
| 8,670 | ||
TOTAL TELECOMMUNICATION SERVICES | 10,604 | ||
UTILITIES - 3.3% | |||
Electric Utilities - 2.3% | |||
Cleco Corp. | 198,700 | 8,574 | |
Empire District Electric Co. | 247,877 | 5,381 | |
IDACORP, Inc. | 150,807 | 6,744 | |
PNM Resources, Inc. | 256,249 | 5,678 | |
UNS Energy Corp. | 129,300 | 5,513 | |
| 31,890 | ||
Gas Utilities - 1.0% | |||
Atmos Energy Corp. | 171,863 | 6,182 | |
Northwest Natural Gas Co. | 156,789 | 7,295 | |
| 13,477 | ||
TOTAL UTILITIES | 45,367 | ||
TOTAL COMMON STOCKS (Cost $1,304,684) |
| ||
Convertible Preferred Stocks - 0.1% | |||
|
|
|
|
HEALTH CARE - 0.1% | |||
Pharmaceuticals - 0.1% | |||
Agios Pharmaceuticals, Inc. Series C (e) (Cost $1,617) | 329,266 |
|
U.S. Treasury Obligations - 0.2% | ||||
| Principal Amount (000s) |
| ||
U.S. Treasury Bills, yield at date of purchase 0.09% to 0.1% 11/23/12 to 12/20/12 | $ 2,020 |
|
Money Market Funds - 4.4% | |||
Shares | Value (000s) | ||
Fidelity Cash Central Fund, 0.19% (b) | 30,663,237 | $ 30,663 | |
Fidelity Securities Lending Cash Central Fund, 0.19% (b)(c) | 29,432,277 | 29,432 | |
TOTAL MONEY MARKET FUNDS (Cost $60,095) |
| ||
TOTAL INVESTMENT PORTFOLIO - 102.3% (Cost $1,368,416) | 1,387,765 | ||
NET OTHER ASSETS (LIABILITIES) - (2.3)% | (30,616) | ||
NET ASSETS - 100% | $ 1,357,149 |
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 $1,617,000 or 0.1% of net assets. |
Additional information on each restricted holding is as follows: |
Security | Acquisition Date | Acquisition Cost (000s) |
Agios Pharmaceuticals, Inc. Series C | 11/16/11 | $ 1,617 |
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 | $ 75 |
Fidelity Securities Lending Cash Central Fund | 1,741 |
Total | $ 1,816 |
Other Information |
The following is a summary of the inputs used, as of October 31, 2012, 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 | $ 191,762 | $ 191,762 | $ - | $ - |
Consumer Staples | 49,573 | 49,573 | - | - |
Energy | 83,732 | 83,732 | - | - |
Financials | 290,002 | 290,002 | - | - |
Health Care | 157,856 | 156,239 | - | 1,617 |
Industrials | 202,926 | 201,612 | 1,314 | - |
Information Technology | 229,433 | 229,433 | - | - |
Materials | 64,395 | 64,395 | - | - |
Telecommunication Services | 10,604 | 10,604 | - | - |
Utilities | 45,367 | 45,367 | - | - |
U.S. Government and Government Agency Obligations | 2,020 | - | 2,020 | - |
Money Market Funds | 60,095 | 60,095 | - | - |
Total Investments in Securities: | $ 1,387,765 | $ 1,382,814 | $ 3,334 | $ 1,617 |
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, 2012 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $28,400) - See accompanying schedule: Unaffiliated issuers (cost $1,308,321) | $ 1,327,670 |
|
Fidelity Central Funds (cost $60,095) | 60,095 |
|
Total Investments (cost $1,368,416) |
| $ 1,387,765 |
Receivable for investments sold | 974 | |
Receivable for fund shares sold | 1,111 | |
Dividends receivable | 766 | |
Distributions receivable from Fidelity Central Funds | 303 | |
Other receivables | 34 | |
Total assets | 1,390,953 | |
|
|
|
Liabilities | ||
Payable to custodian bank | $ 146 | |
Payable for investments purchased | 868 | |
Payable for fund shares redeemed | 2,113 | |
Accrued management fee | 854 | |
Distribution and service plan fees payable | 3 | |
Other affiliated payables | 335 | |
Other payables and accrued expenses | 53 | |
Collateral on securities loaned, at value | 29,432 | |
Total liabilities | 33,804 | |
|
|
|
Net Assets | $ 1,357,149 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,413,359 | |
Undistributed net investment income | 2,357 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (77,916) | |
Net unrealized appreciation (depreciation) on investments | 19,349 | |
Net Assets | $ 1,357,149 |
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, 2012 | |
|
|
|
Calculation of Maximum Offering Price | $ 19.40 | |
|
|
|
Maximum offering price per share (100/94.25 of $19.40) | $ 20.58 | |
Class T: | $ 19.15 | |
|
|
|
Maximum offering price per share (100/96.50 of $19.15) | $ 19.84 | |
Class B: | $ 18.79 | |
|
|
|
Class C: | $ 18.73 | |
|
|
|
|
|
|
Stock Selector Small Cap: | $ 19.65 | |
|
|
|
Institutional Class: | $ 19.72 |
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
Statement of Operations
Amounts in thousands | Year ended October 31, 2012 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 17,656 |
Interest |
| 5 |
Income from Fidelity Central Funds (including $1,741 from security lending) |
| 1,816 |
Total income |
| 19,477 |
|
|
|
Expenses | ||
Management fee | $ 9,397 | |
Performance adjustment | 2,351 | |
Transfer agent fees | 3,981 | |
Distribution and service plan fees | 35 | |
Accounting and security lending fees | 492 | |
Custodian fees and expenses | 96 | |
Independent trustees' compensation | 10 | |
Registration fees | 94 | |
Audit | 61 | |
Legal | 7 | |
Miscellaneous | 22 | |
Total expenses before reductions | 16,546 | |
Expense reductions | (119) | 16,427 |
Net investment income (loss) | 3,050 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 188,743 | |
Foreign currency transactions | 2 | |
Futures contracts | 1,724 | |
Total net realized gain (loss) |
| 190,469 |
Change in net unrealized appreciation (depreciation) on: Investment securities | (49,052) | |
Net gain (loss) | 141,417 | |
Net increase (decrease) in net assets resulting from operations | $ 144,467 |
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) | $ 3,050 | $ 5,290 |
Net realized gain (loss) | 190,469 | 249,381 |
Change in net unrealized appreciation (depreciation) | (49,052) | (126,104) |
Net increase (decrease) in net assets resulting | 144,467 | 128,567 |
Distributions to shareholders from net investment income | - | (9,149) |
Share transactions - net increase (decrease) | (502,681) | 183,503 |
Redemption fees | 299 | 776 |
Total increase (decrease) in net assets | (357,915) | 303,697 |
|
|
|
Net Assets | ||
Beginning of period | 1,715,064 | 1,411,367 |
End of period (including undistributed net investment income of $2,357 and undistributed net investment income of $0, respectively) | $ 1,357,149 | $ 1,715,064 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended October 31, | 2012 | 2011 | 2010 | 2009 | 2008 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 17.87 | $ 16.20 | $ 12.53 | $ 11.24 | $ 24.79 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.02) | - G, J | (.01) H | - J | (.04) |
Net realized and unrealized gain (loss) | 1.55 | 1.73 | 3.68 | 1.31 | (10.77) |
Total from investment operations | 1.53 | 1.73 | 3.67 | 1.31 | (10.81) |
Distributions from net investment income | - | (.07) | - J | (.02) | - |
Distributions from net realized gain | - | - | - | - | (2.74) |
Total distributions | - | (.07) | - J | (.02) | (2.74) |
Redemption fees added to paid in capital C | - J | .01 | - J | - J | - J |
Net asset value, end of period | $ 19.40 | $ 17.87 | $ 16.20 | $ 12.53 | $ 11.24 |
Total Return A, B | 8.56% | 10.71% | 29.32% | 11.69% | (48.52)% |
Ratios to Average Net Assets D, I |
|
|
|
|
|
Expenses before reductions | 1.37% | 1.15% | 1.00% | 1.03% | 1.24% |
Expenses net of fee waivers, if any | 1.37% | 1.15% | 1.00% | 1.03% | 1.24% |
Expenses net of all reductions | 1.36% | 1.14% | .99% | 1.01% | 1.23% |
Net investment income (loss) | (.10)% | -% F, G | (.07)% H | (.03)% | (.24)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (in millions) | $ 4 | $ 4 | $ 3 | $ 3 | $ 2 |
Portfolio turnover rate E | 61% | 73% | 138% | 135% | 101% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
B Total returns do not include the effect of the sales charges.
C Calculated based on average shares outstanding during the period.
D 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.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Amount represents less than .01%.
G Investment income per share reflects a large, non-recurring dividend which amounted to $.04 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been (.21) %.
H Investment income per share reflects a large, non-recurring dividend which amounted to $.01 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been (.16) %.
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. 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.
J Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class T
Years ended October 31, | 2012 | 2011 | 2010 | 2009 | 2008 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 17.68 | $ 16.07 | $ 12.45 | $ 11.19 | $ 24.74 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss)C | (.07) | (.05) F | (.05) G | (.03) | (.08) |
Net realized and unrealized gain (loss) | 1.54 | 1.70 | 3.67 | 1.30 | (10.76) |
Total from investment operations | 1.47 | 1.65 | 3.62 | 1.27 | (10.84) |
Distributions from net investment income | - | (.05) | - | (.01) | - |
Distributions from net realized gain | - | - | - | - | (2.71) |
Total distributions | - | (.05) | - | (.01) | (2.71) |
Redemption fees added to paid in capital C | - I | .01 | - I | - I | - I |
Net asset value, end of period | $ 19.15 | $ 17.68 | $ 16.07 | $ 12.45 | $ 11.19 |
Total Return A, B | 8.31% | 10.34% | 29.08% | 11.42% | (48.70)% |
Ratios to Average Net Assets D, H |
|
|
|
|
|
Expenses before reductions | 1.64% | 1.42% | 1.27% | 1.30% | 1.50% |
Expenses net of fee waivers, if any | 1.64% | 1.42% | 1.27% | 1.30% | 1.50% |
Expenses net of all reductions | 1.63% | 1.41% | 1.26% | 1.29% | 1.49% |
Net investment income (loss) | (.37)% | (.27)% F | (.33)% G | (.31)% | (.50)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 1,073 | $ 1,539 | $ 723 | $ 550 | $ 409 |
Portfolio turnover rate E | 61% | 73% | 138% | 135% | 101% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
B Total returns do not include the effect of the sales charges.
C Calculated based on average shares outstanding during the period.
D 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.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Investment income per share reflects a large, non-recurring dividend which amounted to $.04 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been (.48) %.
G Investment income per share reflects a large, non-recurring dividend which amounted to $.01 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been (.43) %.
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 - Class B
Years ended October 31, | 2012 | 2011 | 2010 | 2009 | 2008 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 17.43 | $ 15.87 | $ 12.36 | $ 11.15 | $ 24.69 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.16) | (.14)F | (.12)G | (.08) | (.17) |
Net realized and unrealized gain (loss) | 1.52 | 1.69 | 3.63 | 1.30 | (10.73) |
Total from investment operations | 1.36 | 1.55 | 3.51 | 1.22 | (10.90) |
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 C | - I | .01 | - I | - I | - I |
Net asset value, end of period | $ 18.79 | $ 17.43 | $ 15.87 | $ 12.36 | $ 11.15 |
Total Return A, B | 7.80% | 9.83% | 28.40% | 10.92% | (48.94)% |
Ratios to Average Net Assets D, H |
|
|
|
|
|
Expenses before reductions | 2.12% | 1.90% | 1.76% | 1.77% | 1.99% |
Expenses net of fee waivers, if any | 2.12% | 1.90% | 1.76% | 1.77% | 1.99% |
Expenses net of all reductions | 2.11% | 1.90% | 1.75% | 1.75% | 1.99% |
Net investment income (loss) | (.85)% | (.76)% F | (.82)% G | (.78)% | (1.00)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 225 | $ 246 | $ 220 | $ 219 | $ 199 |
Portfolio turnover rate E | 61% | 73% | 138% | 135% | 101% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
B Total returns do not include the effect of the contingent deferred sales charge.
C Calculated based on average shares outstanding during the period.
D 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.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Investment income per share reflects a large, non-recurring dividend which amounted to $.04 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been (.96) %.
G Investment income per share reflects a large, non-recurring dividend which amounted to $.01 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been (.92) %.
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 - Class C
Years ended October 31, | 2012 | 2011 | 2010 | 2009 | 2008 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 17.38 | $ 15.82 | $ 12.33 | $ 11.12 | $ 24.71 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss)C | (.16) | (.14)F | (.12)G | (.09) | (.17) |
Net realized and unrealized gain (loss) | 1.51 | 1.69 | 3.61 | 1.31 | (10.72) |
Total from investment operations | 1.35 | 1.55 | 3.49 | 1.22 | (10.89) |
Distributions from net investment income | - | - | - | (.01) | - |
Distributions from net realized gain | - | - | - | - | (2.70) |
Total distributions | - | - | - | (.01) | (2.70) |
Redemption fees added to paid in capitalC | - I | .01 | - I | - I | - I |
Net asset value, end of period | $ 18.73 | $ 17.38 | $ 15.82 | $ 12.33 | $ 11.12 |
Total Return A, B | 7.77% | 9.86% | 28.30% | 10.96% | (48.95)% |
Ratios to Average Net Assets D, H |
|
|
|
|
|
Expenses before reductions | 2.12% | 1.90% | 1.75% | 1.76% | 2.00% |
Expenses net of fee waivers, if any | 2.12% | 1.90% | 1.75% | 1.76% | 2.00% |
Expenses net of all reductions | 2.11% | 1.89% | 1.74% | 1.75% | 1.99% |
Net investment income (loss) | (.85)% | (.76)% F | (.81)%G | (.77)% | (1.01)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 1,504 | $ 1,370 | $ 820 | $ 428 | $ 183 |
Portfolio turnover rate E | 61% | 73% | 138% | 135% | 101% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
B Total returns do not include the effect of the contingent deferred sales charge.
C Calculated based on average shares outstanding during the period.
D 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.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Investment income per share reflects a large, non-recurring dividend which amounted to $.04 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been (.96) %.
G Investment income per share reflects a large, non-recurring dividend which amounted to $.01 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been (.91) %.
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 - Stock Selector Small Cap
Years ended October 31, | 2012 | 2011 | 2010 | 2009 | 2008 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 18.05 | $ 16.35 | $ 12.61 | $ 11.28 | $ 24.81 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .04 | .05 E | .03 F | .02 | .01 |
Net realized and unrealized gain (loss) | 1.56 | 1.74 | 3.72 | 1.33 | (10.82) |
Total from investment operations | 1.60 | 1.79 | 3.75 | 1.35 | (10.81) |
Distributions from net investment income | - | (.10) | (.01) | (.02) | - |
Distributions from net realized gain | - | - | - | - | (2.72) |
Total distributions | - | (.10) | (.01) | (.02) | (2.72) |
Redemption fees added to paid in capital B | - H | .01 | -H | -H | -H |
Net asset value, end of period | $ 19.65 | $ 18.05 | $ 16.35 | $ 12.61 | $ 11.28 |
Total Return A | 8.86% | 11.03% | 29.75% | 12.05% | (48.42)% |
Ratios to Average Net Assets C, G |
|
|
|
|
|
Expenses before reductions | 1.07% | .85% | .73% | .77% | .95% |
Expenses net of fee waivers, if any | 1.07% | .85% | .73% | .77% | .95% |
Expenses net of all reductions | 1.06% | .85% | .72% | .75% | .94% |
Net investment income (loss) | .20% | .29% E | .21% F | .22% | .05% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (in millions) | $ 1,311 | $ 1,698 | $ 1,406 | $ 1,379 | $ 1,292 |
Portfolio turnover rate D | 61% | 73% | 138% | 135% | 101% |
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 large, non-recurring dividend which amounted to $.04 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .09%.
F Investment income per share reflects a large, non-recurring dividend which amounted to $.01 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .12%.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
H 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, | 2012 | 2011 | 2010 | 2009 | 2008 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 18.07 | $ 16.39 | $ 12.63 | $ 11.29 | $ 24.82 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss)B | .04 | .05 E | .05 F | .04 | .02 |
Net realized and unrealized gain (loss) | 1.61 | 1.74 | 3.72 | 1.32 | (10.82) |
Total from investment operations | 1.65 | 1.79 | 3.77 | 1.36 | (10.80) |
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 capitalB | - H | .01 | - H | - H | - H |
Net asset value, end of period | $ 19.72 | $ 18.07 | $ 16.39 | $ 12.63 | $ 11.29 |
Total ReturnA | 9.13% | 10.99% | 29.89% | 12.14% | (48.36)% |
Ratios to Average Net AssetsC, G |
|
|
|
|
|
Expenses before reductions | 1.06% | .86% | .63% | .63% | .84% |
Expenses net of fee waivers, if any | 1.06% | .86% | .63% | .63% | .84% |
Expenses net of all reductions | 1.05% | .85% | .62% | .62% | .84% |
Net investment income (loss) | .21% | .29% E | .31% F | .36% | .15% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 39,592 | $ 10,038 | $ 680 | $ 413 | $ 376 |
Portfolio turnover rate D | 61% | 73% | 138% | 135% | 101% |
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 large, non-recurring dividend which amounted to $.04 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .08%.
F Investment income per share reflects a large, non-recurring dividend which amounted to $.01 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .21%.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
H 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, 2012
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. 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.
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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. In accordance with valuation policies and procedures approved by the Board of Trustees (the Board), the Fund attempts to obtain prices from one or more third party pricing vendors or brokers to value its investments. When current market prices, quotations or rates are not readily available or reliable, securities will be fair valued in good faith by the FMR Fair Value Committee (the Committee), in accordance with procedures adopted by the Fund's Board. Factors used in determining fair value vary by security type and 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 Committee oversees the Fund's valuation policies and procedures and is responsible for approving and reporting to the Board all fair value determinations.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the Fund's own assumptions based on the best information available)
Valuation techniques used to value the Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by a third party pricing vendor on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when significant market or security specific events arise, comparisons to the valuation of American Depositary Receipts
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Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Security Valuation - continued
(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. 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 these securities are categorized as Level 3 in the hierarchy.
Debt securities, including restricted securities, are valued based on evaluated prices received from third party pricing vendors or from brokers who make markets in such securities. For U.S. government and government agency obligations, pricing vendors utilize matrix pricing which considers yield or price of bonds of comparable quality, coupon, maturity and type as well as broker-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 methodologies which consider similar factors that would be used by third party pricing vendors. 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 (NAV) each business day and are categorized as Level 1 in the hierarchy.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of October 31, 2012, is included at the end of the Fund's Schedule of Investments.
Foreign Currency Translation. The Fund may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rates at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
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3. Significant Accounting Policies - continued
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 under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for income taxes is required. As of October 31, 2012, the Fund did not have any unrecognized tax benefits in the financial statements; nor is the Fund aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. A fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
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Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
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, 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 | $ 154,058,681 |
Gross unrealized depreciation | (136,833,244) |
Net unrealized appreciation (depreciation) on securities and other investments | $ 17,225,437 |
|
|
Tax Cost | $ 1,370,539,922 |
The tax-based components of distributable earnings as of period end were as follows:
Undistributed ordinary income | $ 3,697,958 |
Capital loss carryforward | $ (76,149,147) |
Net unrealized appreciation (depreciation) | $ 17,225,437 |
Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. Under the Regulated Investment Company Modernization Act of 2010 (the Act), the Fund is permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period and such capital losses are required to be used prior to any losses that expire. Capital loss carryforwards were as follows:
Fiscal year of expiration |
|
2017 | $ (76,149,147) |
The tax character of distributions paid was as follows:
| October 31, 2012 | October 31, 2011 |
Ordinary Income | $ - | $ 9,148,743 |
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3. Significant Accounting Policies - continued
Short-Term Trading (Redemption) Fees. During the period, shares held by investors in the Fund less than 90 days were 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.
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.
New Accounting Pronouncement. In December 2011, the Financial Accounting Standards Board issued Accounting Standard Update No. 2011-11, Disclosures about Offsetting Assets and Liabilities. The update creates new disclosure requirements requiring entities to disclose both gross and net information for derivatives and other financial instruments that are either offset in the Statement of Assets and Liabilities or subject to an enforceable master netting arrangement or similar agreement. The disclosure requirements are effective for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods. 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's investment objective allows the Fund to enter into various types of derivative contracts, including futures contracts. Derivatives are investments whose value is primarily derived from underlying assets, indices or reference rates and may be transacted on an exchange or over-the-counter (OTC). Derivatives may involve a future commitment to buy or sell a specified instrument based on specified terms, to exchange future cash flows at periodic intervals based on a notional principal amount, or for one party to make one or more payments upon the occurrence of specified events in exchange for periodic payments from the other party.
The Fund used 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.
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Notes to Financial Statements - continued
4. Derivative Instruments - continued
Risk Exposures and the Use of Derivative Instruments - continued
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 close out 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. Counterparty credit risk related to exchange-traded futures contracts is minimal because of the protection provided by the exchange on which they trade.
Investing in derivatives may involve greater risks than investing in the underlying assets directly and, to varying degrees, may involve risk of loss in excess of any initial investment and collateral received and amounts recognized in the Statement of Assets and Liabilities. In addition, there may be the risk that the change in value of the derivative contract does not correspond to the change in value of the underlying instrument.
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.
Any open futures contracts at period end are shown in the Schedule of Investments under the caption "Futures Contracts." The underlying face amount at value reflects each contract's exposure to the underlying instrument at period end.
During the period the Fund recognized net realized gain (loss) of $1,723,827 related to its investment in futures contracts. This amount is included in the Statement of Operations.
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5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $903,468,768 and $1,372,717,175, 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 .35% of the Fund's average net assets and an annualized 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 an appropriate benchmark index. For the period, the total annual management fee rate, including the performance adjustment, was .76% 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% | $ 11,017 | $ 245 |
Class T | .25% | .25% | 6,128 | 85 |
Class B | .75% | .25% | 2,378 | 1,788 |
Class C | .75% | .25% | 15,565 | 4,522 |
|
|
| $ 35,088 | $ 6,640 |
Sales Load. FDC may receive a front-end sales charge of up to 5.75% for selling Class A shares and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. Depending on the holding period, FDC may receive contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. The deferred sales charges range from 5.00% to 1.00% for Class B shares, 1.00% for Class C shares, 1.00% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
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Notes to Financial Statements - continued
6. Fees and Other Transactions with Affiliates - continued
Sales Load - continued
For the period, sales charge amounts retained by FDC were as follows:
| Retained |
Class A | $ 2,402 |
Class T | 533 |
Class B* | 1,000 |
Class C* | 391 |
| $ 4,326 |
* When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales
are made.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of 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 | $ 13,391 | .30 |
Class T | 3,934 | .32 |
Class B | 724 | .30 |
Class C | 4,734 | .30 |
Stock Selector Small Cap | 3,907,429 | .26 |
Institutional Class | 51,268 | .25 |
| $ 3,981,480 |
|
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 each month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $65,259 for the period.
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6. Fees and Other Transactions with Affiliates - continued
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. The Fund's activity in this program during the period for which loans were outstanding was as follows:
Borrower or Lender | Average Loan | Weighted Average Interest Rate | Interest |
Borrower | $ 9,767,000 | .38% | $ 103 |
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR or an affiliate in a $4.25 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $4,349 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 $72,600. 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, and includes $38,761 from securities loaned to FCM.
Annual Report
Notes to Financial Statements - continued
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 $118,757 for the period.
10. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended October 31, | 2012 | 2011 |
From net investment income |
|
|
Class A | $ - | $ 15,209 |
Class T | - | 2,838 |
Stock Selector Small Cap | - | 9,104,153 |
Institutional Class | - | 26,543 |
Total | $ - | $ 9,148,743 |
11. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
Years ended October 31, | 2012 | 2011 | 2012 | 2011 |
Class A |
|
|
|
|
Shares sold | 67,380 | 141,619 | $ 1,259,708 | $ 2,551,365 |
Reinvestment of distributions | - | 794 | - | 14,554 |
Shares redeemed | (98,140) | (107,880) | (1,883,409) | (1,998,562) |
Net increase (decrease) | (30,760) | 34,533 | $ (623,701) | $ 567,357 |
Class T |
|
|
|
|
Shares sold | 21,703 | 81,238 | $ 403,605 | $ 1,558,596 |
Reinvestment of distributions | - | 154 | - | 2,831 |
Shares redeemed | (52,662) | (39,400) | (988,816) | (704,438) |
Net increase (decrease) | (30,959) | 41,992 | $ (585,211) | $ 856,989 |
Class B |
|
|
|
|
Shares sold | 475 | 5,592 | $ 8,561 | $ 102,797 |
Shares redeemed | (2,588) | (5,365) | (48,635) | (93,413) |
Net increase (decrease) | (2,113) | 227 | $ (40,074) | $ 9,384 |
Class C |
|
|
|
|
Shares sold | 22,125 | 52,816 | $ 401,995 | $ 972,098 |
Shares redeemed | (20,647) | (25,832) | (381,653) | (467,301) |
Net increase (decrease) | 1,478 | 26,984 | $ 20,342 | $ 504,797 |
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11. Share Transactions - continued
| Shares | Dollars | ||
Years ended October 31, | 2012 | 2011 | 2012 | 2011 |
Stock Selector Small Cap |
|
|
|
|
Shares sold | 9,673,161 | 42,956,006 | $ 183,426,126 | $ 812,040,324 |
Reinvestment of distributions | - | 490,501 | - | 8,965,215 |
Shares redeemed | (37,048,256) | (35,360,001) | (710,455,997) | (648,464,613) |
Net increase (decrease) | (27,375,095) | 8,086,506 | $ (527,029,871) | $ 172,540,926 |
Institutional Class |
|
|
|
|
Shares sold | 2,802,215 | 1,267,453 | $ 52,718,967 | $ 24,122,964 |
Reinvestment of distributions | - | 1,209 | - | 22,526 |
Shares redeemed | (1,350,009) | (754,664) | (27,142,424) | (15,119,704) |
Net increase (decrease) | 1,452,206 | 513,998 | $ 25,576,543 | $ 9,025,786 |
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 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, 2012, 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, 2012, 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, 2012, 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.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
December 17, 2012
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 236 funds advised by FMR or an affiliate. Mr. Curvey oversees 443 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 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 (77) | |
| Year of Election or Appointment: 2007 Mr. Curvey is Trustee and 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 (55) | |
| 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 (64) | |
| 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 (59) | |
| 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 Entertainment, Inc. (restaurant and entertainment complexes, 2010-present), Earth Fare, Inc. (retail grocery, 2012-present), The Hillman Companies, Inc. (hardware wholesalers, 2010-present), and Bristol-Myers Squibb Company (global pharmaceuticals, 2008-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 (68) | |
| 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 Chairman of the Board of Directors of the Philharmonic Center for the Arts in Naples, Florida (2012-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 (68) | |
| 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). Previously, Mr. Mauriello served as a Director of the Hamilton Funds of the Bank of New York (2006-2007) and of Arcadia Resources Inc. (health care services and products, 2007-2012). |
Robert W. Selander (62) | |
| 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 (68) | |
| Year of Election or Appointment: 2005 Ms. Small is a member of the Board of Directors (2009-present) and Chair of the Investment Committee (2010-present) of the Teagle Foundation. Ms. Small also serves on the Investment Committee of the Berkshire Taconic Community Foundation (2008-present). Previously, Ms. Small served as Chairperson (2002-2008) and a member of the Investment Committee and Chairperson (2008-2012) and a member of the Board of Trustees 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 (73) | |
| 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 a Director of Univar Inc. (global distributor of commodity and specialty chemicals, Chairman from 2010-May 2012 and Lead Director from May 2012-present), Teradata Corporation (data warehousing and technology solutions, 2008-present), Maersk Inc. (industrial conglomerate), and Tyco International, Ltd. (multinational manufacturing and services, 2007-present), and a member of the Advisory Board for Metalmark Capital LLC (private equity investment, 2005-present). Mr. Stavropoulos is an operating 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, a Trustee of the Rollin L. Gerstacker Foundation, and a Director of the Naples Philharmonic Center for the Arts. Previously, Mr. Stavropoulos served as a Director of Chemical Financial Corporation (bank holding company, 1993-2012). |
David M. Thomas (63) | |
| 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), and a Director of Fortune Brands, Inc. (consumer products, 2000-2011). In addition, Mr. Thomas serves as Non-Executive Chairman of the Board of Directors of Fortune Brands Home and Security (home and security products, 2011-present), and as a member of the Board of Directors of Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (62) | |
| 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). |
+ 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 David A. Rosow and Garnett A. Smith may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235. 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 (82) | |
| 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 (68) | |
| 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). |
David A. Rosow (70) | |
| Year of Election or Appointment: 2012 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Chairman and Chief Executive Officer of International Golf Group, Inc. (golf course development, 1989-present). Previously, Mr. Rosow served as Chairman and Chief Executive Officer of Rosow & Company, Inc. (private investment company, 1989-2011), a Lead Director of Hudson United Bancorp (2001-2006) and as a Director of TD Banknorth (1996-2006). In addition, Mr. Rosow is a member (2008-present) and President (2009-present) of the Town Council of Palm Beach, Florida. |
Garnett A. Smith (65) | |
| Year of Election or Appointment: 2012 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Prior to Mr. Smith's retirement, he served as Chairman and Chief Executive Officer of Inbrand Corp. (manufacturer of personal absorbent products, 1990-1997). He also served as President (1986-1990) of Inbrand Corp. Prior to his employment with Inbrand Corp., he was employed by a retail fabric chain and North Carolina National Bank. In addition, Mr. Smith is a board member of the Jackson Hole Land Trust (2009-present). |
Kenneth B. Robins (43) | |
| 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 (48) | |
| 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 (48) | |
| 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 (44) | |
| 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 (43) | |
| 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). |
Elizabeth Paige Baumann (44) | |
| Year of Election or Appointment: 2012 Anti-Money Laundering (AML) Officer of the Fidelity funds. Ms. Baumann also serves as AML Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2012-present), Chief AML Officer of FMR LLC (2012-present), and is an employee of Fidelity Investments. Previously, Ms. Baumann served as Vice President and Deputy Anti-Money Laundering Officer (2007-2012). |
Christine Reynolds (54) | |
| 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). |
Joseph A. Hanlon (44) | |
| Year of Election or Appointment: 2012 Chief Compliance Officer of Fidelity's Equity and High Income Funds. Mr. Hanlon serves as Compliance Officer of FMR, FMR Co., Inc., Fidelity Investments Money Management, Inc. (FIMM), Fidelity Research and Analysis Company (FRAC), Fidelity Management & Research (Japan) Inc., Fidelity Management & Research (U.K.) Inc., Fidelity Management & Research (Hong Kong), and Strategic Advisers, Inc. (2009-present), as Senior Vice President of the Fidelity Asset Management Division (2009-present), and is an employee of Fidelity Investments. |
Joseph F. Zambello (55) | |
| 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 (45) | |
| Year of Election or Appointment: 2008 Deputy Treasurer of Fidelity's Equity and High Income Funds. Mr. Deberghes also serves as Vice President (2011-present) and Assistant Treasurer (2010-present) of other Fidelity funds, 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). |
Stephen Sadoski (41) | |
| Year of Election or Appointment: 2012 Deputy Treasurer of Fidelity's Equity and High Income Funds. Mr. Sadoski also serves as Assistant Treasurer of other Fidelity funds (2012-present) and is an employee of Fidelity Investments (2012-present). Previously, Mr. Sadoski served as an assistant chief accountant in the Division of Investment Management of the Securities and Exchange Commission (SEC) (2009-2012) and as a senior manager at Deloitte & Touche (1997-2009). |
Stephanie J. Dorsey (43) | |
| 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 (54) | |
| 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 (54) | |
| 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 (44) | |
| 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 Stock Selector Small Cap Fund voted to pay on December 10, 2012, to shareholders of record at the opening of business on December 07, 2012, a distribution of $0.007 per share derived from capital gains realized from sales of portfolio securities and a dividend of $0.09 per share from net investment income.
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, at each of its meetings, considers 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 and chaired by 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 2012 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 relative to peer funds; (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 exist and 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 also considered the fund's investment objective, strategies, and related investment philosophy. 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 continued to increase the resources devoted to non-U.S. offices, including expansion of Fidelity's global investment organization. The Board noted that Fidelity's analysts have extensive resources, tools and capabilities that allow them to conduct sophisticated quantitative and fundamental analysis, as well as credit analysis of issuers, counterparties and guarantors. 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 that 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 its deliberations, the Board considered the Investment Advisers' trading and risk management 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 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.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
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.
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) persisting in efforts to enhance Fidelity's research capabilities, in particular, international research; (iii) launching new funds and making other enhancements to meet client needs for global and income-oriented solutions; (iv) continuing to launch dedicated lower cost underlying funds to meet investment management's portfolio construction needs related to expanding underlying fund options, specifically for the Freedom Fund product lines; (v) adopting a "Stock Selector" sector neutral investment approach and employing a team of portfolio managers who are sector specialists to manage certain funds; (vi) rationalizing product lines and gaining increased efficiencies through the mergers of several funds into other funds; (vii) strengthening the Spartan Index Fund product line by adding new funds and/or new low-cost institutional share classes, restructuring fund expenses to accommodate new classes, and reducing investment minimums for certain classes of shares; (viii) modifying the eligibility criteria for Institutional Class shares to increase their appeal to government entities and charitable investors; and (ix) reducing certain transfer agent fee rates.
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, 2011, as available, the cumulative total returns of the retail class and Class B 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 the retail class and Class B show the performance of the highest performing class (based on five-year performance) and the lowest performing class (based on three-year performance), respectively. The box within each chart shows the 25th percentile return (top of box) and the 75th percentile return (bottom 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 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 was in the second quartile for the one-year period, the first 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 retail class of the fund compared favorably to its benchmark for the one- and three-year periods, although the fund's five-year cumulative total return was lower than 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 noted that there were changes in the fund's portfolio management in April 2012, February 2012, and December 2011. 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.
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 5% means that 95% of the funds in the Total Mapped Group had higher management fees than the fund. The "Asset-Size Peer Group" (ASPG) comparison focuses on a fund's standing relative to non-Fidelity funds similar in size to the fund within the Total Mapped Group. The ASPG represents at least 15% of the funds in the Total Mapped Group with comparable asset size and management fee characteristics, subject to a minimum of 50 funds (or all funds in the Total Mapped Group if fewer than 50). Additional information, such as the ASPG quartile in which the fund's management fee ranked and the impact of the fund's performance adjustment, is also included in the chart and considered by the Board.
Annual Report
Fidelity Stock Selector 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 2011. The Board also noted the effect of the fund's 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 of Class A, Class B, Class C, Institutional Class, and the retail class ranked below its competitive median for 2011 and the total expense ratio of Class T ranked above its competitive median for 2011. 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. The Board noted that the total expense ratio of Class T was above the competitive median primarily because of higher 12b-1 fees on Class T. Class T has a higher 12b-1 fee, but a lower front-end sales charge, than traditionally priced front-end sales charge classes. The Board considered that Class T is primarily sold load-waived in the retirement plan market where its 0.50% 12b-1 fee is comparable to competing no-load, higher 12b-1 fee classes designed specifically for retirement plans. The Board noted that the fund offers multiple classes, each of which has a different sales load and 12b-1 fee structure, and that the multiple structures are intended to offer a range of pricing options for the intermediary market. The Board also noted that the total expense ratios of the classes vary primarily by the level of their 12b-1 fees, although differences in transfer agent fees may also cause expenses to vary from class to class.
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. The Board noted the findings of the 2010 ad hoc joint committee (created with the board of other Fidelity funds), which reviewed and compared 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, although Class T was above the median of the universe presented for comparison, in light of the services that the fund and its shareholders receive and the other factors considered.
Costs of the Services and Profitability. The Board considered the revenues earned and the expenses incurred by Fidelity in conducting the business of developing, marketing, distributing, managing, administering and servicing the fund and its shareholders. The Board also considered the level of Fidelity's profits in respect of all the Fidelity funds.
On an annual basis, FMR presents to the Board Fidelity's profitability for the fund. Fidelity calculates the profitability for each fund, as well as aggregate profitability for groups of Fidelity funds and all Fidelity funds, using a series of detailed revenue and cost allocation methodologies which originate with the 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.
Annual Report
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 economies of scale, if any, 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) the potential to further rationalize the Fidelity fund lineup with the possibility of achieving savings for the funds and Fidelity; (iii) Fidelity's compensation structure for portfolio managers and other key 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) the realization of fall-out benefits in certain Fidelity business units; (vi) Fidelity's group fee structures, the potential impact of regulatory changes on such structures, and the rationale for the individual fee rates of certain funds; (vii) fund profitability methodology, including Fidelity's cost allocation methodology, and the impact of certain factors on fund profitability results; (viii) trends regarding industry use of performance fee structures and the possibility of implementing performance fee structures for additional funds; and (ix) the impact of net redemptions from the Fidelity funds.
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
Smithfield, RI
Transfer and Service Agents
Fidelity Investments Institutional
Operations Company, Inc.
Boston, MA
Fidelity Service Company, Inc.
Boston, MA
Custodian
Brown Brothers Harriman & Co.
Boston, MA
The Fidelity Telephone Connection
Mutual Fund 24-Hour Service
Exchanges/Redemptions
and Account Assistance 1-800-544-6666
Product Information 1-800-544-6666
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(8 a.m. - 9 p.m.)
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for the deaf and hearing impaired
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Automated line for quickest service
(Fidelity Investment logo)(registered trademark)
Corporate Headquarters
82 Devonshire St., Boston, MA 02109
www.fidelity.com
SCS-UANN-1212 1.784779.109
(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, 2012
(Fidelity Cover Art)
Class A, Class T, Class B,
and Class C are classes of
Fidelity® Stock Selector
Small Cap Fund
Contents
Performance | How the fund has done over time. | |
Management's Discussion of Fund Performance | The Portfolio Managers' 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, | |
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. © 2012 FMR LLC. All rights reserved.
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, 2012 | Past 1 | Past 5 | Past 10 |
Class A (incl. sales charge)A | 2.32% | -3.37% | 6.74% |
Class T (incl. sales charge)B | 4.52% | -3.18% | 6.82% |
Class B (incl. contingent deferred sales charge) C | 2.80% | -3.29% | 6.93% |
Class C (incl. contingent deferred sales charge) D | 6.77% | -2.96% | 6.93% |
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, 2002, 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 bouts of volatility to post strong gains for the year ending October 31, 2012, and extend an uptrend that began in March 2009. The broad-based S&P 500® Index advanced 15.21% for the 12-month period, while the blue-chip-laden Dow Jones Industrial AverageSM and technology-heavy Nasdaq Composite® Index rose 12.56% and 12.21%, respectively. Debt problems in Europe, slower growth in China and uncertainty about a U.S. economic recovery put downward pressure on stocks early on and during a turbulent spring. However, beginning in June, stocks rose on central bank stimulus, steps to repair the eurozone and signs of life in the U.S. housing market. Equity benchmarks hit multiyear highs in September, with the Dow achieving its best mark since 2007, the S&P® rising to its highest level since 2008, and the Nasdaq reaching a 12-year high. Stocks retreated in October, which was marked by disappointing corporate earnings reports and a two-day weather-related closure of the New York Stock Exchange. Among the 10 sectors that comprise the S&P 500®, most posted a double-digit gain, led by telecommunication services (+26%) and health care (+22%), with energy (+7%) and materials (+7%) lagging the most. Despite lingering eurozone turmoil and weaker local currencies versus the U.S. dollar, foreign developed-markets stocks rose modestly, with the MSCI® EAFE® Index adding 4.76%.
Comments from Morgen Peck, Co-Portfolio Manager of Fidelity Advisor® Stock Selector Small Cap Fund, and Eirene Kontopoulos, who became a Co-Portfolio Manager of the fund, overseeing its health care sleeve, on April 2, 2012: For the year, the fund's Class A, Class T, Class B and Class C shares gained 8.56%, 8.31%, 7.80% and 7.77%, respectively (excluding sales charges), versus 12.08% for the Russell 2000® Index. On a sector basis, stock selection in consumer discretionary and financials hurt the most. In terms of individual stocks, two technology names - Quantum, a provider of data storage solutions, and Super Micro Computer, a maker of specialized servers - delivered the biggest blow. Trading firm Knight Capital Group and premium mattress maker Tempur-Pedic International also notably detracted. Conversely, we had some strong picks in the lagging energy sector and also benefited from our choices in health care. Software/services firm Web.com Group was the top contributor, while biotechnology firm Infinity Pharmaceuticals and Canadian discount store operator Dollarama also helped. Some stocks mentioned were not in the index and/or were sold from the fund by period end.
Annual Report
______________________________________
Note to shareholders: On February 1, 2012, Anmol Mehra became a Co-Portfolio Manager of the fund, responsible for the consumer discretionary and consumer staples sleeves.
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, 2012 to October 31, 2012).
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 Expense Ratio | Beginning | Ending | Expenses Paid |
Class A | 1.32% |
|
|
|
Actual |
| $ 1,000.00 | $ 985.30 | $ 6.59 |
HypotheticalA |
| $ 1,000.00 | $ 1,018.50 | $ 6.70 |
Class T | 1.57% |
|
|
|
Actual |
| $ 1,000.00 | $ 984.10 | $ 7.83 |
HypotheticalA |
| $ 1,000.00 | $ 1,017.24 | $ 7.96 |
Class B | 2.07% |
|
|
|
Actual |
| $ 1,000.00 | $ 982.20 | $ 10.31 |
HypotheticalA |
| $ 1,000.00 | $ 1,014.73 | $ 10.48 |
Class C | 2.08% |
|
|
|
Actual |
| $ 1,000.00 | $ 981.70 | $ 10.36 |
Hypothetical A |
| $ 1,000.00 | $ 1,014.68 | $ 10.53 |
Stock Selector Small Cap | 1.01% |
|
|
|
Actual |
| $ 1,000.00 | $ 986.90 | $ 5.04 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.06 | $ 5.13 |
Institutional Class | 1.03% |
|
|
|
Actual |
| $ 1,000.00 | $ 987.00 | $ 5.14 |
HypotheticalA |
| $ 1,000.00 | $ 1,019.96 | $ 5.23 |
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 184/366 (to reflect the one-half year period).
Annual Report
Investment Changes (Unaudited)
Top Ten Stocks as of October 31, 2012 | ||
| % of fund's | % of fund's net assets |
National Retail Properties, Inc. | 1.1 | 1.2 |
Glimcher Realty Trust | 1.1 | 1.1 |
Colonial Properties Trust (SBI) | 1.1 | 1.1 |
Ramco-Gershenson Properties Trust (SBI) | 1.0 | 1.0 |
National Penn Bancshares, Inc. | 1.0 | 0.9 |
Teledyne Technologies, Inc. | 1.0 | 1.0 |
American Assets Trust, Inc. | 1.0 | 1.0 |
Home Properties, Inc. | 1.0 | 1.2 |
UMB Financial Corp. | 0.9 | 0.0 |
Waddell & Reed Financial, Inc. Class A | 0.9 | 0.9 |
| 10.1 | |
Top Five Market Sectors as of October 31, 2012 | ||
| % of fund's | % of fund's net assets |
Financials | 21.4 | 22.0 |
Information Technology | 16.9 | 16.8 |
Industrials | 15.0 | 15.2 |
Consumer Discretionary | 14.1 | 13.1 |
Health Care | 11.6 | 11.2 |
Asset Allocation (% of fund's net assets) | |||||||
As of October 31, 2012* | As of April 30, 2012** | ||||||
![]() | Stocks 97.6% |
| ![]() | Stocks and |
| ||
![]() | Convertible |
| ![]() | Convertible |
| ||
![]() | Short-Term |
| ![]() | Short-Term |
| ||
* Foreign investments | 7.5% |
| ** Foreign investments | 8.6% |
|
Annual Report
Investments October 31, 2012
Showing Percentage of Net Assets
Common Stocks - 97.6% | |||
Shares | Value (000s) | ||
CONSUMER DISCRETIONARY - 14.1% | |||
Auto Components - 1.2% | |||
Gentex Corp. | 381,850 | $ 6,575 | |
Tenneco, Inc. (a) | 322,984 | 9,867 | |
| 16,442 | ||
Hotels, Restaurants & Leisure - 1.6% | |||
BJ's Restaurants, Inc. (a) | 184,300 | 6,091 | |
Life Time Fitness, Inc. (a) | 225,501 | 10,123 | |
Wyndham Worldwide Corp. | 117,415 | 5,918 | |
| 22,132 | ||
Household Durables - 1.2% | |||
Ethan Allen Interiors, Inc. | 358,810 | 10,553 | |
Skullcandy, Inc. (a)(d) | 486,754 | 5,895 | |
| 16,448 | ||
Internet & Catalog Retail - 0.5% | |||
HSN, Inc. | 141,093 | 7,340 | |
Media - 1.5% | |||
Cinemark Holdings, Inc. | 356,867 | 8,811 | |
John Wiley & Sons, Inc. Class A | 176,903 | 7,674 | |
MDC Partners, Inc. Class A (sub. vtg.) | 367,900 | 4,161 | |
| 20,646 | ||
Multiline Retail - 0.9% | |||
Dollarama, Inc. | 183,634 | 11,600 | |
Specialty Retail - 5.0% | |||
Ascena Retail Group, Inc. (a) | 558,460 | 11,058 | |
Conn's, Inc. (a) | 346,427 | 8,775 | |
DSW, Inc. Class A | 164,502 | 10,296 | |
Express, Inc. (a) | 406,517 | 4,525 | |
GameStop Corp. Class A (d) | 339,800 | 7,758 | |
Jos. A. Bank Clothiers, Inc. (a) | 191,325 | 8,952 | |
Shoe Carnival, Inc. | 252,822 | 5,911 | |
Signet Jewelers Ltd. | 197,810 | 10,239 | |
| 67,514 | ||
Textiles, Apparel & Luxury Goods - 2.2% | |||
Hanesbrands, Inc. (a) | 245,935 | 8,231 | |
PVH Corp. | 99,300 | 10,922 | |
Steven Madden Ltd. (a) | 244,338 | 10,487 | |
| 29,640 | ||
TOTAL CONSUMER DISCRETIONARY | 191,762 | ||
Common Stocks - continued | |||
Shares | Value (000s) | ||
CONSUMER STAPLES - 3.7% | |||
Food & Staples Retailing - 1.6% | |||
Casey's General Stores, Inc. | 48,417 | $ 2,496 | |
Fresh Market, Inc. (a) | 100,414 | 5,694 | |
Susser Holdings Corp. (a) | 156,820 | 5,636 | |
United Natural Foods, Inc. (a) | 139,645 | 7,435 | |
| 21,261 | ||
Food Products - 1.3% | |||
Calavo Growers, Inc. | 160,073 | 3,779 | |
Fresh Del Monte Produce, Inc. | 199,593 | 5,024 | |
Green Mountain Coffee Roasters, Inc. (a)(d) | 125,203 | 3,025 | |
Post Holdings, Inc. (a) | 184,052 | 5,807 | |
| 17,635 | ||
Household Products - 0.3% | |||
Spectrum Brands Holdings, Inc. | 79,753 | 3,628 | |
Personal Products - 0.5% | |||
Elizabeth Arden, Inc. (a) | 149,416 | 7,049 | |
TOTAL CONSUMER STAPLES | 49,573 | ||
ENERGY - 6.2% | |||
Energy Equipment & Services - 1.1% | |||
Atwood Oceanics, Inc. (a) | 159,600 | 7,629 | |
Total Energy Services, Inc. | 429,700 | 6,518 | |
| 14,147 | ||
Oil, Gas & Consumable Fuels - 5.1% | |||
Atlas Pipeline Partners, LP | 264,304 | 9,351 | |
Berry Petroleum Co. Class A | 241,400 | 9,296 | |
Cloud Peak Energy, Inc. (a) | 446,500 | 9,421 | |
Energen Corp. | 46,062 | 2,149 | |
PDC Energy, Inc. (a) | 352,201 | 10,661 | |
Stone Energy Corp. (a) | 363,900 | 8,584 | |
Targa Resources Corp. | 225,500 | 11,485 | |
Western Refining, Inc. | 347,340 | 8,638 | |
| 69,585 | ||
TOTAL ENERGY | 83,732 | ||
FINANCIALS - 21.4% | |||
Capital Markets - 2.1% | |||
Affiliated Managers Group, Inc. (a) | 57,800 | 7,312 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
FINANCIALS - continued | |||
Capital Markets - continued | |||
Duff & Phelps Corp. Class A | 676,711 | $ 8,412 | |
Waddell & Reed Financial, Inc. Class A | 381,159 | 12,704 | |
| 28,428 | ||
Commercial Banks - 7.2% | |||
Associated Banc-Corp. | 826,123 | 10,649 | |
BancFirst Corp. | 156,700 | 6,889 | |
Bank of the Ozarks, Inc. | 346,400 | 11,341 | |
BBCN Bancorp, Inc. | 836,786 | 9,983 | |
Bridge Capital Holdings (a) | 335,523 | 5,016 | |
Cathay General Bancorp | 367,236 | 6,496 | |
City National Corp. | 216,413 | 11,059 | |
National Penn Bancshares, Inc. | 1,500,298 | 13,398 | |
PacWest Bancorp | 416,975 | 9,382 | |
UMB Financial Corp. | 288,200 | 12,834 | |
| 97,047 | ||
Insurance - 3.3% | |||
Allied World Assurance Co. Holdings Ltd. | 156,400 | 12,559 | |
Alterra Capital Holdings Ltd. | 433,215 | 10,583 | |
Amerisafe, Inc. (a) | 417,800 | 10,967 | |
ProAssurance Corp. | 121,792 | 10,888 | |
| 44,997 | ||
Real Estate Investment Trusts - 8.0% | |||
American Assets Trust, Inc. | 486,000 | 13,205 | |
Colonial Properties Trust (SBI) | 670,753 | 14,508 | |
DCT Industrial Trust, Inc. | 1,941,500 | 12,523 | |
Glimcher Realty Trust | 1,370,840 | 14,627 | |
Highwoods Properties, Inc. (SBI) | 368,100 | 11,871 | |
Home Properties, Inc. | 212,392 | 12,911 | |
National Retail Properties, Inc. | 467,200 | 14,798 | |
Ramco-Gershenson Properties Trust (SBI) | 1,077,250 | 13,961 | |
| 108,404 | ||
Thrifts & Mortgage Finance - 0.8% | |||
Washington Federal, Inc. | 663,030 | 11,126 | |
TOTAL FINANCIALS | 290,002 | ||
HEALTH CARE - 11.5% | |||
Biotechnology - 5.2% | |||
Achillion Pharmaceuticals, Inc. (a) | 517,654 | 4,887 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
HEALTH CARE - continued | |||
Biotechnology - continued | |||
ARIAD Pharmaceuticals, Inc. (a) | 169,704 | $ 3,657 | |
BioMarin Pharmaceutical, Inc. (a) | 80,856 | 2,995 | |
Discovery Laboratories, Inc. (a) | 1,024,176 | 2,468 | |
Dynavax Technologies Corp. (a) | 1,211,510 | 5,016 | |
Infinity Pharmaceuticals, Inc. (a)(d) | 199,867 | 4,475 | |
Insmed, Inc. (a) | 485,871 | 3,105 | |
Isis Pharmaceuticals, Inc. (a) | 431,728 | 3,734 | |
Medivation, Inc. (a) | 74,586 | 3,813 | |
Merrimack Pharmaceuticals, Inc. (d) | 497,634 | 3,075 | |
Novavax, Inc. (a) | 2,011,387 | 4,224 | |
OncoGenex Pharmaceuticals, Inc. (a) | 223,329 | 2,769 | |
Pharmacyclics, Inc. (a) | 62,252 | 3,802 | |
Rigel Pharmaceuticals, Inc. (a) | 323,900 | 2,886 | |
Synageva BioPharma Corp. (a) | 93,784 | 3,965 | |
Targacept, Inc. (a) | 628,317 | 2,564 | |
Theravance, Inc. (a) | 233,569 | 5,258 | |
Threshold Pharmaceuticals, Inc. (a) | 527,069 | 2,166 | |
Tranzyme, Inc. (a) | 492,471 | 2,088 | |
XOMA Corp. (a)(d) | 1,265,859 | 3,468 | |
| 70,415 | ||
Health Care Equipment & Supplies - 2.3% | |||
Align Technology, Inc. (a) | 296,222 | 7,874 | |
Analogic Corp. | 35,251 | 2,597 | |
Cerus Corp. (a)(d) | 1,295,355 | 4,029 | |
Conceptus, Inc. (a) | 245,736 | 4,630 | |
ICU Medical, Inc. (a) | 115,989 | 6,882 | |
Natus Medical, Inc. (a) | 239,290 | 2,704 | |
Sirona Dental Systems, Inc. (a) | 56,233 | 3,220 | |
| 31,936 | ||
Health Care Providers & Services - 1.6% | |||
BioScrip, Inc. (a) | 431,655 | 3,976 | |
Corvel Corp. (a) | 68,370 | 2,908 | |
Humana, Inc. | 55,228 | 4,102 | |
Magellan Health Services, Inc. (a) | 53,413 | 2,679 | |
MEDNAX, Inc. (a) | 62,355 | 4,301 | |
Team Health Holdings, Inc. (a) | 162,798 | 4,332 | |
| 22,298 | ||
Health Care Technology - 1.1% | |||
Epocrates, Inc. (a) | 512,834 | 5,016 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
HEALTH CARE - continued | |||
Health Care Technology - continued | |||
MedAssets, Inc. (a) | 182,300 | $ 3,232 | |
Medidata Solutions, Inc. (a) | 156,365 | 6,570 | |
| 14,818 | ||
Life Sciences Tools & Services - 0.3% | |||
Luminex Corp. (a) | 223,003 | 3,586 | |
Pharmaceuticals - 1.0% | |||
Biodelivery Sciences International, Inc. (a)(d) | 713,623 | 3,647 | |
ViroPharma, Inc. (a) | 233,122 | 5,886 | |
XenoPort, Inc. (a) | 443,900 | 3,653 | |
| 13,186 | ||
TOTAL HEALTH CARE | 156,239 | ||
INDUSTRIALS - 15.0% | |||
Aerospace & Defense - 1.3% | |||
Alliant Techsystems, Inc. | 80,193 | 4,594 | |
Teledyne Technologies, Inc. (a) | 208,342 | 13,340 | |
| 17,934 | ||
Air Freight & Logistics - 0.9% | |||
Hub Group, Inc. Class A (a) | 271,374 | 8,415 | |
UTI Worldwide, Inc. | 313,700 | 4,357 | |
| 12,772 | ||
Building Products - 1.2% | |||
AAON, Inc. | 320,950 | 6,734 | |
Armstrong World Industries, Inc. | 170,958 | 8,856 | |
| 15,590 | ||
Commercial Services & Supplies - 1.4% | |||
Swisher Hygiene, Inc. (a) | 986,560 | 1,314 | |
Tetra Tech, Inc. (a) | 351,081 | 9,107 | |
United Stationers, Inc. | 303,984 | 8,822 | |
| 19,243 | ||
Construction & Engineering - 1.2% | |||
Foster Wheeler AG (a) | 338,572 | 7,540 | |
MasTec, Inc. (a) | 355,590 | 8,022 | |
| 15,562 | ||
Electrical Equipment - 1.2% | |||
General Cable Corp. (a) | 354,490 | 10,114 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
INDUSTRIALS - continued | |||
Electrical Equipment - continued | |||
GrafTech International Ltd. (a) | 391,447 | $ 4,114 | |
II-VI, Inc. (a) | 155,975 | 2,575 | |
| 16,803 | ||
Industrial Conglomerates - 0.6% | |||
Carlisle Companies, Inc. | 147,900 | 8,216 | |
Machinery - 2.4% | |||
Actuant Corp. Class A | 328,821 | 9,286 | |
Altra Holdings, Inc. | 192,506 | 3,469 | |
CLARCOR, Inc. | 151,710 | 6,863 | |
TriMas Corp. (a) | 279,233 | 7,003 | |
Wabtec Corp. | 70,429 | 5,768 | |
| 32,389 | ||
Marine - 0.3% | |||
DryShips, Inc. (a)(d) | 1,597,097 | 3,546 | |
Professional Services - 2.7% | |||
Advisory Board Co. (a) | 68,036 | 3,232 | |
Equifax, Inc. | 158,100 | 7,911 | |
Manpower, Inc. | 226,096 | 8,578 | |
Stantec, Inc. | 305,300 | 10,515 | |
Towers Watson & Co. | 115,500 | 6,204 | |
| 36,440 | ||
Road & Rail - 0.4% | |||
Ryder System, Inc. | 119,041 | 5,371 | |
Trading Companies & Distributors - 1.4% | |||
Kaman Corp. | 231,400 | 8,608 | |
Watsco, Inc. | 152,923 | 10,452 | |
| 19,060 | ||
TOTAL INDUSTRIALS | 202,926 | ||
INFORMATION TECHNOLOGY - 16.9% | |||
Communications Equipment - 3.5% | |||
Acme Packet, Inc. (a) | 256,683 | 4,246 | |
Brocade Communications Systems, Inc. (a) | 1,533,577 | 8,128 | |
Finisar Corp. (a)(d) | 756,189 | 8,711 | |
Ixia (a) | 252,448 | 3,537 | |
NETGEAR, Inc. (a) | 173,714 | 6,169 | |
Plantronics, Inc. | 189,196 | 6,138 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
INFORMATION TECHNOLOGY - continued | |||
Communications Equipment - continued | |||
Polycom, Inc. (a) | 678,974 | $ 6,803 | |
Riverbed Technology, Inc. (a) | 205,749 | 3,800 | |
| 47,532 | ||
Computers & Peripherals - 2.2% | |||
NCR Corp. (a) | 342,400 | 7,286 | |
Quantum Corp. (a) | 5,270,941 | 5,534 | |
SanDisk Corp. (a) | 125,240 | 5,230 | |
Super Micro Computer, Inc. (a) | 726,815 | 5,749 | |
Synaptics, Inc. (a) | 297,657 | 6,894 | |
| 30,693 | ||
Electronic Equipment & Components - 1.3% | |||
Arrow Electronics, Inc. (a) | 138,613 | 4,883 | |
Fabrinet (a) | 646,861 | 6,229 | |
InvenSense, Inc. | 229,419 | 2,569 | |
Vishay Intertechnology, Inc. (a) | 429,400 | 3,555 | |
| 17,236 | ||
Internet Software & Services - 1.9% | |||
Bankrate, Inc. (a) | 752,450 | 8,074 | |
Blucora, Inc. (a) | 298,022 | 5,230 | |
EarthLink, Inc. | 218,280 | 1,384 | |
QuinStreet, Inc. (a) | 238,867 | 1,462 | |
Stamps.com, Inc. (a) | 187,409 | 5,157 | |
Web.com Group, Inc.��(a) | 314,270 | 4,959 | |
| 26,266 | ||
IT Services - 2.4% | |||
Euronet Worldwide, Inc. (a) | 450,784 | 9,146 | |
ExlService Holdings, Inc. (a) | 338,648 | 10,038 | |
HiSoft Technology International Ltd. ADR (a) | 272,776 | 2,834 | |
Sapient Corp. (a) | 1,027,461 | 10,562 | |
| 32,580 | ||
Semiconductors & Semiconductor Equipment - 1.7% | |||
Cirrus Logic, Inc. (a) | 102,100 | 4,162 | |
Entegris, Inc. (a) | 737,577 | 6,056 | |
Integrated Device Technology, Inc. (a) | 702,562 | 3,822 | |
RF Micro Devices, Inc. (a) | 1,814,550 | 8,002 | |
Spansion, Inc. Class A | 50,765 | 563 | |
| 22,605 | ||
Common Stocks - continued | |||
Shares | Value (000s) | ||
INFORMATION TECHNOLOGY - continued | |||
Software - 3.9% | |||
BroadSoft, Inc. (a) | 105,543 | $ 4,034 | |
Mentor Graphics Corp. (a) | 272,268 | 4,226 | |
Nuance Communications, Inc. (a) | 545,455 | 12,142 | |
Parametric Technology Corp. (a) | 482,303 | 9,733 | |
QLIK Technologies, Inc. (a) | 217,200 | 3,999 | |
Solera Holdings, Inc. | 152,282 | 7,128 | |
Synchronoss Technologies, Inc. (a) | 217,756 | 4,462 | |
Verint Systems, Inc. (a) | 249,237 | 6,797 | |
| 52,521 | ||
TOTAL INFORMATION TECHNOLOGY | 229,433 | ||
MATERIALS - 4.7% | |||
Chemicals - 1.2% | |||
Cabot Corp. | 233,203 | 8,339 | |
Kraton Performance Polymers, Inc. (a) | 255,051 | 5,565 | |
LyondellBasell Industries NV Class A | 273 | 15 | |
Zoltek Companies, Inc. (a)(d) | 418,565 | 2,867 | |
| 16,786 | ||
Containers & Packaging - 1.1% | |||
Aptargroup, Inc. | 125,250 | 6,423 | |
Rock-Tenn Co. Class A | 117,190 | 8,577 | |
| 15,000 | ||
Metals & Mining - 2.4% | |||
Carpenter Technology Corp. | 170,232 | 8,275 | |
Coeur d'Alene Mines Corp. (a) | 310,000 | 9,582 | |
Compass Minerals International, Inc. | 130,500 | 10,290 | |
HudBay Minerals, Inc. | 480,700 | 4,462 | |
| 32,609 | ||
TOTAL MATERIALS | 64,395 | ||
TELECOMMUNICATION SERVICES - 0.8% | |||
Diversified Telecommunication Services - 0.2% | |||
Towerstream Corp. (a)(d) | 549,375 | 1,934 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
TELECOMMUNICATION SERVICES - continued | |||
Wireless Telecommunication Services - 0.6% | |||
Clearwire Corp. Class A (a)(d) | 3,876,731 | $ 7,753 | |
NII Holdings, Inc. (a) | 115,024 | 917 | |
| 8,670 | ||
TOTAL TELECOMMUNICATION SERVICES | 10,604 | ||
UTILITIES - 3.3% | |||
Electric Utilities - 2.3% | |||
Cleco Corp. | 198,700 | 8,574 | |
Empire District Electric Co. | 247,877 | 5,381 | |
IDACORP, Inc. | 150,807 | 6,744 | |
PNM Resources, Inc. | 256,249 | 5,678 | |
UNS Energy Corp. | 129,300 | 5,513 | |
| 31,890 | ||
Gas Utilities - 1.0% | |||
Atmos Energy Corp. | 171,863 | 6,182 | |
Northwest Natural Gas Co. | 156,789 | 7,295 | |
| 13,477 | ||
TOTAL UTILITIES | 45,367 | ||
TOTAL COMMON STOCKS (Cost $1,304,684) |
| ||
Convertible Preferred Stocks - 0.1% | |||
|
|
|
|
HEALTH CARE - 0.1% | |||
Pharmaceuticals - 0.1% | |||
Agios Pharmaceuticals, Inc. Series C (e) (Cost $1,617) | 329,266 |
|
U.S. Treasury Obligations - 0.2% | ||||
| Principal Amount (000s) |
| ||
U.S. Treasury Bills, yield at date of purchase 0.09% to 0.1% 11/23/12 to 12/20/12 | $ 2,020 |
|
Money Market Funds - 4.4% | |||
Shares | Value (000s) | ||
Fidelity Cash Central Fund, 0.19% (b) | 30,663,237 | $ 30,663 | |
Fidelity Securities Lending Cash Central Fund, 0.19% (b)(c) | 29,432,277 | 29,432 | |
TOTAL MONEY MARKET FUNDS (Cost $60,095) |
| ||
TOTAL INVESTMENT PORTFOLIO - 102.3% (Cost $1,368,416) | 1,387,765 | ||
NET OTHER ASSETS (LIABILITIES) - (2.3)% | (30,616) | ||
NET ASSETS - 100% | $ 1,357,149 |
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 $1,617,000 or 0.1% of net assets. |
Additional information on each restricted holding is as follows: |
Security | Acquisition Date | Acquisition Cost (000s) |
Agios Pharmaceuticals, Inc. Series C | 11/16/11 | $ 1,617 |
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 | $ 75 |
Fidelity Securities Lending Cash Central Fund | 1,741 |
Total | $ 1,816 |
Other Information |
The following is a summary of the inputs used, as of October 31, 2012, 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 | $ 191,762 | $ 191,762 | $ - | $ - |
Consumer Staples | 49,573 | 49,573 | - | - |
Energy | 83,732 | 83,732 | - | - |
Financials | 290,002 | 290,002 | - | - |
Health Care | 157,856 | 156,239 | - | 1,617 |
Industrials | 202,926 | 201,612 | 1,314 | - |
Information Technology | 229,433 | 229,433 | - | - |
Materials | 64,395 | 64,395 | - | - |
Telecommunication Services | 10,604 | 10,604 | - | - |
Utilities | 45,367 | 45,367 | - | - |
U.S. Government and Government Agency Obligations | 2,020 | - | 2,020 | - |
Money Market Funds | 60,095 | 60,095 | - | - |
Total Investments in Securities: | $ 1,387,765 | $ 1,382,814 | $ 3,334 | $ 1,617 |
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, 2012 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $28,400) - See accompanying schedule: Unaffiliated issuers (cost $1,308,321) | $ 1,327,670 |
|
Fidelity Central Funds (cost $60,095) | 60,095 |
|
Total Investments (cost $1,368,416) |
| $ 1,387,765 |
Receivable for investments sold | 974 | |
Receivable for fund shares sold | 1,111 | |
Dividends receivable | 766 | |
Distributions receivable from Fidelity Central Funds | 303 | |
Other receivables | 34 | |
Total assets | 1,390,953 | |
|
|
|
Liabilities | ||
Payable to custodian bank | $ 146 | |
Payable for investments purchased | 868 | |
Payable for fund shares redeemed | 2,113 | |
Accrued management fee | 854 | |
Distribution and service plan fees payable | 3 | |
Other affiliated payables | 335 | |
Other payables and accrued expenses | 53 | |
Collateral on securities loaned, at value | 29,432 | |
Total liabilities | 33,804 | |
|
|
|
Net Assets | $ 1,357,149 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,413,359 | |
Undistributed net investment income | 2,357 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (77,916) | |
Net unrealized appreciation (depreciation) on investments | 19,349 | |
Net Assets | $ 1,357,149 |
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, 2012 | |
|
|
|
Calculation of Maximum Offering Price | $ 19.40 | |
|
|
|
Maximum offering price per share (100/94.25 of $19.40) | $ 20.58 | |
Class T: | $ 19.15 | |
|
|
|
Maximum offering price per share (100/96.50 of $19.15) | $ 19.84 | |
Class B: | $ 18.79 | |
|
|
|
Class C: | $ 18.73 | |
|
|
|
|
|
|
Stock Selector Small Cap: | $ 19.65 | |
|
|
|
Institutional Class: | $ 19.72 |
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
Statement of Operations
Amounts in thousands | Year ended October 31, 2012 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 17,656 |
Interest |
| 5 |
Income from Fidelity Central Funds (including $1,741 from security lending) |
| 1,816 |
Total income |
| 19,477 |
|
|
|
Expenses | ||
Management fee | $ 9,397 | |
Performance adjustment | 2,351 | |
Transfer agent fees | 3,981 | |
Distribution and service plan fees | 35 | |
Accounting and security lending fees | 492 | |
Custodian fees and expenses | 96 | |
Independent trustees' compensation | 10 | |
Registration fees | 94 | |
Audit | 61 | |
Legal | 7 | |
Miscellaneous | 22 | |
Total expenses before reductions | 16,546 | |
Expense reductions | (119) | 16,427 |
Net investment income (loss) | 3,050 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 188,743 | |
Foreign currency transactions | 2 | |
Futures contracts | 1,724 | |
Total net realized gain (loss) |
| 190,469 |
Change in net unrealized appreciation (depreciation) on: Investment securities | (49,052) | |
Net gain (loss) | 141,417 | |
Net increase (decrease) in net assets resulting from operations | $ 144,467 |
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) | $ 3,050 | $ 5,290 |
Net realized gain (loss) | 190,469 | 249,381 |
Change in net unrealized appreciation (depreciation) | (49,052) | (126,104) |
Net increase (decrease) in net assets resulting | 144,467 | 128,567 |
Distributions to shareholders from net investment income | - | (9,149) |
Share transactions - net increase (decrease) | (502,681) | 183,503 |
Redemption fees | 299 | 776 |
Total increase (decrease) in net assets | (357,915) | 303,697 |
|
|
|
Net Assets | ||
Beginning of period | 1,715,064 | 1,411,367 |
End of period (including undistributed net investment income of $2,357 and undistributed net investment income of $0, respectively) | $ 1,357,149 | $ 1,715,064 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended October 31, | 2012 | 2011 | 2010 | 2009 | 2008 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 17.87 | $ 16.20 | $ 12.53 | $ 11.24 | $ 24.79 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.02) | - G, J | (.01) H | - J | (.04) |
Net realized and unrealized gain (loss) | 1.55 | 1.73 | 3.68 | 1.31 | (10.77) |
Total from investment operations | 1.53 | 1.73 | 3.67 | 1.31 | (10.81) |
Distributions from net investment income | - | (.07) | - J | (.02) | - |
Distributions from net realized gain | - | - | - | - | (2.74) |
Total distributions | - | (.07) | - J | (.02) | (2.74) |
Redemption fees added to paid in capital C | - J | .01 | - J | - J | - J |
Net asset value, end of period | $ 19.40 | $ 17.87 | $ 16.20 | $ 12.53 | $ 11.24 |
Total Return A, B | 8.56% | 10.71% | 29.32% | 11.69% | (48.52)% |
Ratios to Average Net Assets D, I |
|
|
|
|
|
Expenses before reductions | 1.37% | 1.15% | 1.00% | 1.03% | 1.24% |
Expenses net of fee waivers, if any | 1.37% | 1.15% | 1.00% | 1.03% | 1.24% |
Expenses net of all reductions | 1.36% | 1.14% | .99% | 1.01% | 1.23% |
Net investment income (loss) | (.10)% | -% F, G | (.07)% H | (.03)% | (.24)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (in millions) | $ 4 | $ 4 | $ 3 | $ 3 | $ 2 |
Portfolio turnover rate E | 61% | 73% | 138% | 135% | 101% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
B Total returns do not include the effect of the sales charges.
C Calculated based on average shares outstanding during the period.
D 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.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Amount represents less than .01%.
G Investment income per share reflects a large, non-recurring dividend which amounted to $.04 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been (.21) %.
H Investment income per share reflects a large, non-recurring dividend which amounted to $.01 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been (.16) %.
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. 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.
J Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class T
Years ended October 31, | 2012 | 2011 | 2010 | 2009 | 2008 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 17.68 | $ 16.07 | $ 12.45 | $ 11.19 | $ 24.74 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss)C | (.07) | (.05) F | (.05) G | (.03) | (.08) |
Net realized and unrealized gain (loss) | 1.54 | 1.70 | 3.67 | 1.30 | (10.76) |
Total from investment operations | 1.47 | 1.65 | 3.62 | 1.27 | (10.84) |
Distributions from net investment income | - | (.05) | - | (.01) | - |
Distributions from net realized gain | - | - | - | - | (2.71) |
Total distributions | - | (.05) | - | (.01) | (2.71) |
Redemption fees added to paid in capital C | - I | .01 | - I | - I | - I |
Net asset value, end of period | $ 19.15 | $ 17.68 | $ 16.07 | $ 12.45 | $ 11.19 |
Total Return A, B | 8.31% | 10.34% | 29.08% | 11.42% | (48.70)% |
Ratios to Average Net Assets D, H |
|
|
|
|
|
Expenses before reductions | 1.64% | 1.42% | 1.27% | 1.30% | 1.50% |
Expenses net of fee waivers, if any | 1.64% | 1.42% | 1.27% | 1.30% | 1.50% |
Expenses net of all reductions | 1.63% | 1.41% | 1.26% | 1.29% | 1.49% |
Net investment income (loss) | (.37)% | (.27)% F | (.33)% G | (.31)% | (.50)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 1,073 | $ 1,539 | $ 723 | $ 550 | $ 409 |
Portfolio turnover rate E | 61% | 73% | 138% | 135% | 101% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
B Total returns do not include the effect of the sales charges.
C Calculated based on average shares outstanding during the period.
D 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.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Investment income per share reflects a large, non-recurring dividend which amounted to $.04 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been (.48) %.
G Investment income per share reflects a large, non-recurring dividend which amounted to $.01 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been (.43) %.
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 - Class B
Years ended October 31, | 2012 | 2011 | 2010 | 2009 | 2008 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 17.43 | $ 15.87 | $ 12.36 | $ 11.15 | $ 24.69 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.16) | (.14)F | (.12)G | (.08) | (.17) |
Net realized and unrealized gain (loss) | 1.52 | 1.69 | 3.63 | 1.30 | (10.73) |
Total from investment operations | 1.36 | 1.55 | 3.51 | 1.22 | (10.90) |
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 C | - I | .01 | - I | - I | - I |
Net asset value, end of period | $ 18.79 | $ 17.43 | $ 15.87 | $ 12.36 | $ 11.15 |
Total Return A, B | 7.80% | 9.83% | 28.40% | 10.92% | (48.94)% |
Ratios to Average Net Assets D, H |
|
|
|
|
|
Expenses before reductions | 2.12% | 1.90% | 1.76% | 1.77% | 1.99% |
Expenses net of fee waivers, if any | 2.12% | 1.90% | 1.76% | 1.77% | 1.99% |
Expenses net of all reductions | 2.11% | 1.90% | 1.75% | 1.75% | 1.99% |
Net investment income (loss) | (.85)% | (.76)% F | (.82)% G | (.78)% | (1.00)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 225 | $ 246 | $ 220 | $ 219 | $ 199 |
Portfolio turnover rate E | 61% | 73% | 138% | 135% | 101% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
B Total returns do not include the effect of the contingent deferred sales charge.
C Calculated based on average shares outstanding during the period.
D 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.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Investment income per share reflects a large, non-recurring dividend which amounted to $.04 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been (.96) %.
G Investment income per share reflects a large, non-recurring dividend which amounted to $.01 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been (.92) %.
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 - Class C
Years ended October 31, | 2012 | 2011 | 2010 | 2009 | 2008 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 17.38 | $ 15.82 | $ 12.33 | $ 11.12 | $ 24.71 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss)C | (.16) | (.14)F | (.12)G | (.09) | (.17) |
Net realized and unrealized gain (loss) | 1.51 | 1.69 | 3.61 | 1.31 | (10.72) |
Total from investment operations | 1.35 | 1.55 | 3.49 | 1.22 | (10.89) |
Distributions from net investment income | - | - | - | (.01) | - |
Distributions from net realized gain | - | - | - | - | (2.70) |
Total distributions | - | - | - | (.01) | (2.70) |
Redemption fees added to paid in capitalC | - I | .01 | - I | - I | - I |
Net asset value, end of period | $ 18.73 | $ 17.38 | $ 15.82 | $ 12.33 | $ 11.12 |
Total Return A, B | 7.77% | 9.86% | 28.30% | 10.96% | (48.95)% |
Ratios to Average Net Assets D, H |
|
|
|
|
|
Expenses before reductions | 2.12% | 1.90% | 1.75% | 1.76% | 2.00% |
Expenses net of fee waivers, if any | 2.12% | 1.90% | 1.75% | 1.76% | 2.00% |
Expenses net of all reductions | 2.11% | 1.89% | 1.74% | 1.75% | 1.99% |
Net investment income (loss) | (.85)% | (.76)% F | (.81)%G | (.77)% | (1.01)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 1,504 | $ 1,370 | $ 820 | $ 428 | $ 183 |
Portfolio turnover rate E | 61% | 73% | 138% | 135% | 101% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
B Total returns do not include the effect of the contingent deferred sales charge.
C Calculated based on average shares outstanding during the period.
D 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.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Investment income per share reflects a large, non-recurring dividend which amounted to $.04 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been (.96) %.
G Investment income per share reflects a large, non-recurring dividend which amounted to $.01 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been (.91) %.
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 - Stock Selector Small Cap
Years ended October 31, | 2012 | 2011 | 2010 | 2009 | 2008 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 18.05 | $ 16.35 | $ 12.61 | $ 11.28 | $ 24.81 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .04 | .05 E | .03 F | .02 | .01 |
Net realized and unrealized gain (loss) | 1.56 | 1.74 | 3.72 | 1.33 | (10.82) |
Total from investment operations | 1.60 | 1.79 | 3.75 | 1.35 | (10.81) |
Distributions from net investment income | - | (.10) | (.01) | (.02) | - |
Distributions from net realized gain | - | - | - | - | (2.72) |
Total distributions | - | (.10) | (.01) | (.02) | (2.72) |
Redemption fees added to paid in capital B | - H | .01 | -H | -H | -H |
Net asset value, end of period | $ 19.65 | $ 18.05 | $ 16.35 | $ 12.61 | $ 11.28 |
Total Return A | 8.86% | 11.03% | 29.75% | 12.05% | (48.42)% |
Ratios to Average Net Assets C, G |
|
|
|
|
|
Expenses before reductions | 1.07% | .85% | .73% | .77% | .95% |
Expenses net of fee waivers, if any | 1.07% | .85% | .73% | .77% | .95% |
Expenses net of all reductions | 1.06% | .85% | .72% | .75% | .94% |
Net investment income (loss) | .20% | .29% E | .21% F | .22% | .05% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (in millions) | $ 1,311 | $ 1,698 | $ 1,406 | $ 1,379 | $ 1,292 |
Portfolio turnover rate D | 61% | 73% | 138% | 135% | 101% |
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 large, non-recurring dividend which amounted to $.04 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .09%.
F Investment income per share reflects a large, non-recurring dividend which amounted to $.01 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .12%.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
H 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, | 2012 | 2011 | 2010 | 2009 | 2008 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 18.07 | $ 16.39 | $ 12.63 | $ 11.29 | $ 24.82 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss)B | .04 | .05 E | .05 F | .04 | .02 |
Net realized and unrealized gain (loss) | 1.61 | 1.74 | 3.72 | 1.32 | (10.82) |
Total from investment operations | 1.65 | 1.79 | 3.77 | 1.36 | (10.80) |
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 capitalB | - H | .01 | - H | - H | - H |
Net asset value, end of period | $ 19.72 | $ 18.07 | $ 16.39 | $ 12.63 | $ 11.29 |
Total ReturnA | 9.13% | 10.99% | 29.89% | 12.14% | (48.36)% |
Ratios to Average Net AssetsC, G |
|
|
|
|
|
Expenses before reductions | 1.06% | .86% | .63% | .63% | .84% |
Expenses net of fee waivers, if any | 1.06% | .86% | .63% | .63% | .84% |
Expenses net of all reductions | 1.05% | .85% | .62% | .62% | .84% |
Net investment income (loss) | .21% | .29% E | .31% F | .36% | .15% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 39,592 | $ 10,038 | $ 680 | $ 413 | $ 376 |
Portfolio turnover rate D | 61% | 73% | 138% | 135% | 101% |
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 large, non-recurring dividend which amounted to $.04 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .08%.
F Investment income per share reflects a large, non-recurring dividend which amounted to $.01 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .21%.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
H 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, 2012
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. 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. In accordance with valuation policies and procedures approved by the Board of Trustees (the Board), the Fund attempts to obtain prices from one or more third party pricing vendors or brokers to value its investments. When current market prices, quotations or rates are not readily available or reliable, securities will be fair valued in good faith by the FMR Fair Value Committee (the Committee), in accordance with procedures adopted by the Fund's Board. Factors used in determining fair value vary by security type and 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 Committee oversees the Fund's valuation policies and procedures and is responsible for approving and reporting to the Board all fair value determinations.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the Fund's own assumptions based on the best information available)
Valuation techniques used to value the Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by a third party pricing vendor on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when significant market or security specific events arise, comparisons to the valuation of American Depositary Receipts
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Security Valuation - continued
(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. 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 these securities are categorized as Level 3 in the hierarchy.
Debt securities, including restricted securities, are valued based on evaluated prices received from third party pricing vendors or from brokers who make markets in such securities. For U.S. government and government agency obligations, pricing vendors utilize matrix pricing which considers yield or price of bonds of comparable quality, coupon, maturity and type as well as broker-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 methodologies which consider similar factors that would be used by third party pricing vendors. 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 (NAV) each business day and are categorized as Level 1 in the hierarchy.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of October 31, 2012, is included at the end of the Fund's Schedule of Investments.
Foreign Currency Translation. The Fund may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rates at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Annual Report
3. Significant Accounting Policies - continued
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 under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for income taxes is required. As of October 31, 2012, the Fund did not have any unrecognized tax benefits in the financial statements; nor is the Fund aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. A fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
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, 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 | $ 154,058,681 |
Gross unrealized depreciation | (136,833,244) |
Net unrealized appreciation (depreciation) on securities and other investments | $ 17,225,437 |
|
|
Tax Cost | $ 1,370,539,922 |
The tax-based components of distributable earnings as of period end were as follows:
Undistributed ordinary income | $ 3,697,958 |
Capital loss carryforward | $ (76,149,147) |
Net unrealized appreciation (depreciation) | $ 17,225,437 |
Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. Under the Regulated Investment Company Modernization Act of 2010 (the Act), the Fund is permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period and such capital losses are required to be used prior to any losses that expire. Capital loss carryforwards were as follows:
Fiscal year of expiration |
|
2017 | $ (76,149,147) |
The tax character of distributions paid was as follows:
| October 31, 2012 | October 31, 2011 |
Ordinary Income | $ - | $ 9,148,743 |
Annual Report
3. Significant Accounting Policies - continued
Short-Term Trading (Redemption) Fees. During the period, shares held by investors in the Fund less than 90 days were 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.
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.
New Accounting Pronouncement. In December 2011, the Financial Accounting Standards Board issued Accounting Standard Update No. 2011-11, Disclosures about Offsetting Assets and Liabilities. The update creates new disclosure requirements requiring entities to disclose both gross and net information for derivatives and other financial instruments that are either offset in the Statement of Assets and Liabilities or subject to an enforceable master netting arrangement or similar agreement. The disclosure requirements are effective for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods. 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's investment objective allows the Fund to enter into various types of derivative contracts, including futures contracts. Derivatives are investments whose value is primarily derived from underlying assets, indices or reference rates and may be transacted on an exchange or over-the-counter (OTC). Derivatives may involve a future commitment to buy or sell a specified instrument based on specified terms, to exchange future cash flows at periodic intervals based on a notional principal amount, or for one party to make one or more payments upon the occurrence of specified events in exchange for periodic payments from the other party.
The Fund used 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.
Annual Report
Notes to Financial Statements - continued
4. Derivative Instruments - continued
Risk Exposures and the Use of Derivative Instruments - continued
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 close out 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. Counterparty credit risk related to exchange-traded futures contracts is minimal because of the protection provided by the exchange on which they trade.
Investing in derivatives may involve greater risks than investing in the underlying assets directly and, to varying degrees, may involve risk of loss in excess of any initial investment and collateral received and amounts recognized in the Statement of Assets and Liabilities. In addition, there may be the risk that the change in value of the derivative contract does not correspond to the change in value of the underlying instrument.
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.
Any open futures contracts at period end are shown in the Schedule of Investments under the caption "Futures Contracts." The underlying face amount at value reflects each contract's exposure to the underlying instrument at period end.
During the period the Fund recognized net realized gain (loss) of $1,723,827 related to its investment in futures contracts. This amount is included in the Statement of Operations.
Annual Report
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $903,468,768 and $1,372,717,175, 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 .35% of the Fund's average net assets and an annualized 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 an appropriate benchmark index. For the period, the total annual management fee rate, including the performance adjustment, was .76% 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% | $ 11,017 | $ 245 |
Class T | .25% | .25% | 6,128 | 85 |
Class B | .75% | .25% | 2,378 | 1,788 |
Class C | .75% | .25% | 15,565 | 4,522 |
|
|
| $ 35,088 | $ 6,640 |
Sales Load. FDC may receive a front-end sales charge of up to 5.75% for selling Class A shares and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. Depending on the holding period, FDC may receive contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. The deferred sales charges range from 5.00% to 1.00% for Class B shares, 1.00% for Class C shares, 1.00% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
Annual Report
Notes to Financial Statements - continued
6. Fees and Other Transactions with Affiliates - continued
Sales Load - continued
For the period, sales charge amounts retained by FDC were as follows:
| Retained |
Class A | $ 2,402 |
Class T | 533 |
Class B* | 1,000 |
Class C* | 391 |
| $ 4,326 |
* When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales
are made.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of 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 | $ 13,391 | .30 |
Class T | 3,934 | .32 |
Class B | 724 | .30 |
Class C | 4,734 | .30 |
Stock Selector Small Cap | 3,907,429 | .26 |
Institutional Class | 51,268 | .25 |
| $ 3,981,480 |
|
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 each month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $65,259 for the period.
Annual Report
6. Fees and Other Transactions with Affiliates - continued
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. The Fund's activity in this program during the period for which loans were outstanding was as follows:
Borrower or Lender | Average Loan | Weighted Average Interest Rate | Interest |
Borrower | $ 9,767,000 | .38% | $ 103 |
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR or an affiliate in a $4.25 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $4,349 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 $72,600. 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, and includes $38,761 from securities loaned to FCM.
Annual Report
Notes to Financial Statements - continued
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 $118,757 for the period.
10. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended October 31, | 2012 | 2011 |
From net investment income |
|
|
Class A | $ - | $ 15,209 |
Class T | - | 2,838 |
Stock Selector Small Cap | - | 9,104,153 |
Institutional Class | - | 26,543 |
Total | $ - | $ 9,148,743 |
11. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
Years ended October 31, | 2012 | 2011 | 2012 | 2011 |
Class A |
|
|
|
|
Shares sold | 67,380 | 141,619 | $ 1,259,708 | $ 2,551,365 |
Reinvestment of distributions | - | 794 | - | 14,554 |
Shares redeemed | (98,140) | (107,880) | (1,883,409) | (1,998,562) |
Net increase (decrease) | (30,760) | 34,533 | $ (623,701) | $ 567,357 |
Class T |
|
|
|
|
Shares sold | 21,703 | 81,238 | $ 403,605 | $ 1,558,596 |
Reinvestment of distributions | - | 154 | - | 2,831 |
Shares redeemed | (52,662) | (39,400) | (988,816) | (704,438) |
Net increase (decrease) | (30,959) | 41,992 | $ (585,211) | $ 856,989 |
Class B |
|
|
|
|
Shares sold | 475 | 5,592 | $ 8,561 | $ 102,797 |
Shares redeemed | (2,588) | (5,365) | (48,635) | (93,413) |
Net increase (decrease) | (2,113) | 227 | $ (40,074) | $ 9,384 |
Class C |
|
|
|
|
Shares sold | 22,125 | 52,816 | $ 401,995 | $ 972,098 |
Shares redeemed | (20,647) | (25,832) | (381,653) | (467,301) |
Net increase (decrease) | 1,478 | 26,984 | $ 20,342 | $ 504,797 |
Annual Report
11. Share Transactions - continued
| Shares | Dollars | ||
Years ended October 31, | 2012 | 2011 | 2012 | 2011 |
Stock Selector Small Cap |
|
|
|
|
Shares sold | 9,673,161 | 42,956,006 | $ 183,426,126 | $ 812,040,324 |
Reinvestment of distributions | - | 490,501 | - | 8,965,215 |
Shares redeemed | (37,048,256) | (35,360,001) | (710,455,997) | (648,464,613) |
Net increase (decrease) | (27,375,095) | 8,086,506 | $ (527,029,871) | $ 172,540,926 |
Institutional Class |
|
|
|
|
Shares sold | 2,802,215 | 1,267,453 | $ 52,718,967 | $ 24,122,964 |
Reinvestment of distributions | - | 1,209 | - | 22,526 |
Shares redeemed | (1,350,009) | (754,664) | (27,142,424) | (15,119,704) |
Net increase (decrease) | 1,452,206 | 513,998 | $ 25,576,543 | $ 9,025,786 |
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 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, 2012, 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, 2012, 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, 2012, 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.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
December 17, 2012
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 236 funds advised by FMR or an affiliate. Mr. Curvey oversees 443 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 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 (77) | |
| Year of Election or Appointment: 2007 Mr. Curvey is Trustee and 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 (55) | |
| 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 (64) | |
| 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 (59) | |
| 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 Entertainment, Inc. (restaurant and entertainment complexes, 2010-present), Earth Fare, Inc. (retail grocery, 2012-present), The Hillman Companies, Inc. (hardware wholesalers, 2010-present), and Bristol-Myers Squibb Company (global pharmaceuticals, 2008-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 (68) | |
| 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 Chairman of the Board of Directors of the Philharmonic Center for the Arts in Naples, Florida (2012-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 (68) | |
| 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). Previously, Mr. Mauriello served as a Director of the Hamilton Funds of the Bank of New York (2006-2007) and of Arcadia Resources Inc. (health care services and products, 2007-2012). |
Robert W. Selander (62) | |
| 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 (68) | |
| Year of Election or Appointment: 2005 Ms. Small is a member of the Board of Directors (2009-present) and Chair of the Investment Committee (2010-present) of the Teagle Foundation. Ms. Small also serves on the Investment Committee of the Berkshire Taconic Community Foundation (2008-present). Previously, Ms. Small served as Chairperson (2002-2008) and a member of the Investment Committee and Chairperson (2008-2012) and a member of the Board of Trustees 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 (73) | |
| 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 a Director of Univar Inc. (global distributor of commodity and specialty chemicals, Chairman from 2010-May 2012 and Lead Director from May 2012-present), Teradata Corporation (data warehousing and technology solutions, 2008-present), Maersk Inc. (industrial conglomerate), and Tyco International, Ltd. (multinational manufacturing and services, 2007-present), and a member of the Advisory Board for Metalmark Capital LLC (private equity investment, 2005-present). Mr. Stavropoulos is an operating 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, a Trustee of the Rollin L. Gerstacker Foundation, and a Director of the Naples Philharmonic Center for the Arts. Previously, Mr. Stavropoulos served as a Director of Chemical Financial Corporation (bank holding company, 1993-2012). |
David M. Thomas (63) | |
| 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), and a Director of Fortune Brands, Inc. (consumer products, 2000-2011). In addition, Mr. Thomas serves as Non-Executive Chairman of the Board of Directors of Fortune Brands Home and Security (home and security products, 2011-present), and as a member of the Board of Directors of Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (62) | |
| 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). |
+ 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 David A. Rosow and Garnett A. Smith may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235. 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 (82) | |
| 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 (68) | |
| 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). |
David A. Rosow (70) | |
| Year of Election or Appointment: 2012 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Chairman and Chief Executive Officer of International Golf Group, Inc. (golf course development, 1989-present). Previously, Mr. Rosow served as Chairman and Chief Executive Officer of Rosow & Company, Inc. (private investment company, 1989-2011), a Lead Director of Hudson United Bancorp (2001-2006) and as a Director of TD Banknorth (1996-2006). In addition, Mr. Rosow is a member (2008-present) and President (2009-present) of the Town Council of Palm Beach, Florida. |
Garnett A. Smith (65) | |
| Year of Election or Appointment: 2012 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Prior to Mr. Smith's retirement, he served as Chairman and Chief Executive Officer of Inbrand Corp. (manufacturer of personal absorbent products, 1990-1997). He also served as President (1986-1990) of Inbrand Corp. Prior to his employment with Inbrand Corp., he was employed by a retail fabric chain and North Carolina National Bank. In addition, Mr. Smith is a board member of the Jackson Hole Land Trust (2009-present). |
Kenneth B. Robins (43) | |
| 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 (48) | |
| 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 (48) | |
| 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 (44) | |
| 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 (43) | |
| 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). |
Elizabeth Paige Baumann (44) | |
| Year of Election or Appointment: 2012 Anti-Money Laundering (AML) Officer of the Fidelity funds. Ms. Baumann also serves as AML Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2012-present), Chief AML Officer of FMR LLC (2012-present), and is an employee of Fidelity Investments. Previously, Ms. Baumann served as Vice President and Deputy Anti-Money Laundering Officer (2007-2012). |
Christine Reynolds (54) | |
| 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). |
Joseph A. Hanlon (44) | |
| Year of Election or Appointment: 2012 Chief Compliance Officer of Fidelity's Equity and High Income Funds. Mr. Hanlon serves as Compliance Officer of FMR, FMR Co., Inc., Fidelity Investments Money Management, Inc. (FIMM), Fidelity Research and Analysis Company (FRAC), Fidelity Management & Research (Japan) Inc., Fidelity Management & Research (U.K.) Inc., Fidelity Management & Research (Hong Kong), and Strategic Advisers, Inc. (2009-present), as Senior Vice President of the Fidelity Asset Management Division (2009-present), and is an employee of Fidelity Investments. |
Joseph F. Zambello (55) | |
| 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 (45) | |
| Year of Election or Appointment: 2008 Deputy Treasurer of Fidelity's Equity and High Income Funds. Mr. Deberghes also serves as Vice President (2011-present) and Assistant Treasurer (2010-present) of other Fidelity funds, 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). |
Stephen Sadoski (41) | |
| Year of Election or Appointment: 2012 Deputy Treasurer of Fidelity's Equity and High Income Funds. Mr. Sadoski also serves as Assistant Treasurer of other Fidelity funds (2012-present) and is an employee of Fidelity Investments (2012-present). Previously, Mr. Sadoski served as an assistant chief accountant in the Division of Investment Management of the Securities and Exchange Commission (SEC) (2009-2012) and as a senior manager at Deloitte & Touche (1997-2009). |
Stephanie J. Dorsey (43) | |
| 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 (54) | |
| 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 (54) | |
| 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 (44) | |
| 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 Stock Selector Small Cap 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 A | 12/10/12 | 12/07/12 | $0.027 | $0.007 |
Class T | 12/10/12 | 12/07/12 | $0.000 | $0.000 |
Class B | 12/10/12 | 12/07/12 | $0.000 | $0.000 |
Class C | 12/10/12 | 12/07/12 | $0.000 | $0.000 |
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, at each of its meetings, considers 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 and chaired by 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 2012 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 relative to peer funds; (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 exist and 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 also considered the fund's investment objective, strategies, and related investment philosophy. 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 continued to increase the resources devoted to non-U.S. offices, including expansion of Fidelity's global investment organization. The Board noted that Fidelity's analysts have extensive resources, tools and capabilities that allow them to conduct sophisticated quantitative and fundamental analysis, as well as credit analysis of issuers, counterparties and guarantors. 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 that 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 its deliberations, the Board considered the Investment Advisers' trading and risk management 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 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.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
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.
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) persisting in efforts to enhance Fidelity's research capabilities, in particular, international research; (iii) launching new funds and making other enhancements to meet client needs for global and income-oriented solutions; (iv) continuing to launch dedicated lower cost underlying funds to meet investment management's portfolio construction needs related to expanding underlying fund options, specifically for the Freedom Fund product lines; (v) adopting a "Stock Selector" sector neutral investment approach and employing a team of portfolio managers who are sector specialists to manage certain funds; (vi) rationalizing product lines and gaining increased efficiencies through the mergers of several funds into other funds; (vii) strengthening the Spartan Index Fund product line by adding new funds and/or new low-cost institutional share classes, restructuring fund expenses to accommodate new classes, and reducing investment minimums for certain classes of shares; (viii) modifying the eligibility criteria for Institutional Class shares to increase their appeal to government entities and charitable investors; and (ix) reducing certain transfer agent fee rates.
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, 2011, as available, the cumulative total returns of the retail class and Class B 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 the retail class and Class B show the performance of the highest performing class (based on five-year performance) and the lowest performing class (based on three-year performance), respectively. The box within each chart shows the 25th percentile return (top of box) and the 75th percentile return (bottom 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 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 was in the second quartile for the one-year period, the first 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 retail class of the fund compared favorably to its benchmark for the one- and three-year periods, although the fund's five-year cumulative total return was lower than 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 noted that there were changes in the fund's portfolio management in April 2012, February 2012, and December 2011. 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.
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 5% means that 95% of the funds in the Total Mapped Group had higher management fees than the fund. The "Asset-Size Peer Group" (ASPG) comparison focuses on a fund's standing relative to non-Fidelity funds similar in size to the fund within the Total Mapped Group. The ASPG represents at least 15% of the funds in the Total Mapped Group with comparable asset size and management fee characteristics, subject to a minimum of 50 funds (or all funds in the Total Mapped Group if fewer than 50). Additional information, such as the ASPG quartile in which the fund's management fee ranked and the impact of the fund's performance adjustment, is also included in the chart and considered by the Board.
Annual Report
Fidelity Stock Selector 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 2011. The Board also noted the effect of the fund's 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 of Class A, Class B, Class C, Institutional Class, and the retail class ranked below its competitive median for 2011 and the total expense ratio of Class T ranked above its competitive median for 2011. 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. The Board noted that the total expense ratio of Class T was above the competitive median primarily because of higher 12b-1 fees on Class T. Class T has a higher 12b-1 fee, but a lower front-end sales charge, than traditionally priced front-end sales charge classes. The Board considered that Class T is primarily sold load-waived in the retirement plan market where its 0.50% 12b-1 fee is comparable to competing no-load, higher 12b-1 fee classes designed specifically for retirement plans. The Board noted that the fund offers multiple classes, each of which has a different sales load and 12b-1 fee structure, and that the multiple structures are intended to offer a range of pricing options for the intermediary market. The Board also noted that the total expense ratios of the classes vary primarily by the level of their 12b-1 fees, although differences in transfer agent fees may also cause expenses to vary from class to class.
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. The Board noted the findings of the 2010 ad hoc joint committee (created with the board of other Fidelity funds), which reviewed and compared 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, although Class T was above the median of the universe presented for comparison, in light of the services that the fund and its shareholders receive and the other factors considered.
Costs of the Services and Profitability. The Board considered the revenues earned and the expenses incurred by Fidelity in conducting the business of developing, marketing, distributing, managing, administering and servicing the fund and its shareholders. The Board also considered the level of Fidelity's profits in respect of all the Fidelity funds.
On an annual basis, FMR presents to the Board Fidelity's profitability for the fund. Fidelity calculates the profitability for each fund, as well as aggregate profitability for groups of Fidelity funds and all Fidelity funds, using a series of detailed revenue and cost allocation methodologies which originate with the 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.
Annual Report
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 economies of scale, if any, 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) the potential to further rationalize the Fidelity fund lineup with the possibility of achieving savings for the funds and Fidelity; (iii) Fidelity's compensation structure for portfolio managers and other key 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) the realization of fall-out benefits in certain Fidelity business units; (vi) Fidelity's group fee structures, the potential impact of regulatory changes on such structures, and the rationale for the individual fee rates of certain funds; (vii) fund profitability methodology, including Fidelity's cost allocation methodology, and the impact of certain factors on fund profitability results; (viii) trends regarding industry use of performance fee structures and the possibility of implementing performance fee structures for additional funds; and (ix) the impact of net redemptions from the Fidelity funds.
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
Smithfield, RI
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
(Fidelity Investment logo)(registered trademark)
Corporate Headquarters
82 Devonshire St., Boston, MA 02109
www.fidelity.com
ASCS-UANN-1212 1.843150.105
(Fidelity Investment logo)(registered trademark)
Fidelity Advisor®
Stock Selector Small Cap
Fund - Institutional Class
Annual Report
October 31, 2012
(Fidelity Cover Art)
Institutional Class
is a class of Fidelity®
Stock Selector Small Cap Fund
Contents
Performance | How the fund has done over time. | |
Management's Discussion of Fund Performance | The Portfolio Managers' 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, | |
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. © 2012 FMR LLC. All rights reserved.
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, 2012 | Past 1 | Past 5 | Past 10 |
Institutional ClassA | 9.13% | -1.85% | 7.59% |
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, 2002. 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 bouts of volatility to post strong gains for the year ending October 31, 2012, and extend an uptrend that began in March 2009. The broad-based S&P 500® Index advanced 15.21% for the 12-month period, while the blue-chip-laden Dow Jones Industrial AverageSM and technology-heavy Nasdaq Composite® Index rose 12.56% and 12.21%, respectively. Debt problems in Europe, slower growth in China and uncertainty about a U.S. economic recovery put downward pressure on stocks early on and during a turbulent spring. However, beginning in June, stocks rose on central bank stimulus, steps to repair the eurozone and signs of life in the U.S. housing market. Equity benchmarks hit multiyear highs in September, with the Dow achieving its best mark since 2007, the S&P® rising to its highest level since 2008, and the Nasdaq reaching a 12-year high. Stocks retreated in October, which was marked by disappointing corporate earnings reports and a two-day weather-related closure of the New York Stock Exchange. Among the 10 sectors that comprise the S&P 500®, most posted a double-digit gain, led by telecommunication services (+26%) and health care (+22%), with energy (+7%) and materials (+7%) lagging the most. Despite lingering eurozone turmoil and weaker local currencies versus the U.S. dollar, foreign developed-markets stocks rose modestly, with the MSCI® EAFE® Index adding 4.76%.
Comments from Morgen Peck, Co-Portfolio Manager of Fidelity Advisor® Stock Selector Small Cap Fund, and Eirene Kontopoulos, who became a Co-Portfolio Manager of the fund, overseeing its health care sleeve, on April 2, 2012: For the year, the fund's Institutional Class shares gained 9.13%, versus 12.08% for the Russell 2000® Index. On a sector basis, stock selection in consumer discretionary and financials hurt the most. In terms of individual stocks, two technology names - Quantum, a provider of data storage solutions, and Super Micro Computer, a maker of specialized servers - delivered the biggest blow. Trading firm Knight Capital Group and premium mattress maker Tempur-Pedic International also notably detracted. Conversely, we had some strong picks in the lagging energy sector and also benefited from our choices in health care. Software/services firm Web.com Group was the top contributor, while biotechnology firm Infinity Pharmaceuticals and Canadian discount store operator Dollarama also helped. Some stocks mentioned were not in the index and/or were sold from the fund by period end.
Annual Report
______________________________________
Note to shareholders: On February 1, 2012, Anmol Mehra became a Co-Portfolio Manager of the fund, responsible for the consumer discretionary and consumer staples sleeves.
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, 2012 to October 31, 2012).
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 Expense Ratio | Beginning | Ending | Expenses Paid |
Class A | 1.32% |
|
|
|
Actual |
| $ 1,000.00 | $ 985.30 | $ 6.59 |
HypotheticalA |
| $ 1,000.00 | $ 1,018.50 | $ 6.70 |
Class T | 1.57% |
|
|
|
Actual |
| $ 1,000.00 | $ 984.10 | $ 7.83 |
HypotheticalA |
| $ 1,000.00 | $ 1,017.24 | $ 7.96 |
Class B | 2.07% |
|
|
|
Actual |
| $ 1,000.00 | $ 982.20 | $ 10.31 |
HypotheticalA |
| $ 1,000.00 | $ 1,014.73 | $ 10.48 |
Class C | 2.08% |
|
|
|
Actual |
| $ 1,000.00 | $ 981.70 | $ 10.36 |
Hypothetical A |
| $ 1,000.00 | $ 1,014.68 | $ 10.53 |
Stock Selector Small Cap | 1.01% |
|
|
|
Actual |
| $ 1,000.00 | $ 986.90 | $ 5.04 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.06 | $ 5.13 |
Institutional Class | 1.03% |
|
|
|
Actual |
| $ 1,000.00 | $ 987.00 | $ 5.14 |
HypotheticalA |
| $ 1,000.00 | $ 1,019.96 | $ 5.23 |
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 184/366 (to reflect the one-half year period).
Annual Report
Investment Changes (Unaudited)
Top Ten Stocks as of October 31, 2012 | ||
| % of fund's | % of fund's net assets |
National Retail Properties, Inc. | 1.1 | 1.2 |
Glimcher Realty Trust | 1.1 | 1.1 |
Colonial Properties Trust (SBI) | 1.1 | 1.1 |
Ramco-Gershenson Properties Trust (SBI) | 1.0 | 1.0 |
National Penn Bancshares, Inc. | 1.0 | 0.9 |
Teledyne Technologies, Inc. | 1.0 | 1.0 |
American Assets Trust, Inc. | 1.0 | 1.0 |
Home Properties, Inc. | 1.0 | 1.2 |
UMB Financial Corp. | 0.9 | 0.0 |
Waddell & Reed Financial, Inc. Class A | 0.9 | 0.9 |
| 10.1 | |
Top Five Market Sectors as of October 31, 2012 | ||
| % of fund's | % of fund's net assets |
Financials | 21.4 | 22.0 |
Information Technology | 16.9 | 16.8 |
Industrials | 15.0 | 15.2 |
Consumer Discretionary | 14.1 | 13.1 |
Health Care | 11.6 | 11.2 |
Asset Allocation (% of fund's net assets) | |||||||
As of October 31, 2012* | As of April 30, 2012** | ||||||
![]() | Stocks 97.6% |
| ![]() | Stocks and |
| ||
![]() | Convertible |
| ![]() | Convertible |
| ||
![]() | Short-Term |
| ![]() | Short-Term |
| ||
* Foreign investments | 7.5% |
| ** Foreign investments | 8.6% |
|
Annual Report
Investments October 31, 2012
Showing Percentage of Net Assets
Common Stocks - 97.6% | |||
Shares | Value (000s) | ||
CONSUMER DISCRETIONARY - 14.1% | |||
Auto Components - 1.2% | |||
Gentex Corp. | 381,850 | $ 6,575 | |
Tenneco, Inc. (a) | 322,984 | 9,867 | |
| 16,442 | ||
Hotels, Restaurants & Leisure - 1.6% | |||
BJ's Restaurants, Inc. (a) | 184,300 | 6,091 | |
Life Time Fitness, Inc. (a) | 225,501 | 10,123 | |
Wyndham Worldwide Corp. | 117,415 | 5,918 | |
| 22,132 | ||
Household Durables - 1.2% | |||
Ethan Allen Interiors, Inc. | 358,810 | 10,553 | |
Skullcandy, Inc. (a)(d) | 486,754 | 5,895 | |
| 16,448 | ||
Internet & Catalog Retail - 0.5% | |||
HSN, Inc. | 141,093 | 7,340 | |
Media - 1.5% | |||
Cinemark Holdings, Inc. | 356,867 | 8,811 | |
John Wiley & Sons, Inc. Class A | 176,903 | 7,674 | |
MDC Partners, Inc. Class A (sub. vtg.) | 367,900 | 4,161 | |
| 20,646 | ||
Multiline Retail - 0.9% | |||
Dollarama, Inc. | 183,634 | 11,600 | |
Specialty Retail - 5.0% | |||
Ascena Retail Group, Inc. (a) | 558,460 | 11,058 | |
Conn's, Inc. (a) | 346,427 | 8,775 | |
DSW, Inc. Class A | 164,502 | 10,296 | |
Express, Inc. (a) | 406,517 | 4,525 | |
GameStop Corp. Class A (d) | 339,800 | 7,758 | |
Jos. A. Bank Clothiers, Inc. (a) | 191,325 | 8,952 | |
Shoe Carnival, Inc. | 252,822 | 5,911 | |
Signet Jewelers Ltd. | 197,810 | 10,239 | |
| 67,514 | ||
Textiles, Apparel & Luxury Goods - 2.2% | |||
Hanesbrands, Inc. (a) | 245,935 | 8,231 | |
PVH Corp. | 99,300 | 10,922 | |
Steven Madden Ltd. (a) | 244,338 | 10,487 | |
| 29,640 | ||
TOTAL CONSUMER DISCRETIONARY | 191,762 | ||
Common Stocks - continued | |||
Shares | Value (000s) | ||
CONSUMER STAPLES - 3.7% | |||
Food & Staples Retailing - 1.6% | |||
Casey's General Stores, Inc. | 48,417 | $ 2,496 | |
Fresh Market, Inc. (a) | 100,414 | 5,694 | |
Susser Holdings Corp. (a) | 156,820 | 5,636 | |
United Natural Foods, Inc. (a) | 139,645 | 7,435 | |
| 21,261 | ||
Food Products - 1.3% | |||
Calavo Growers, Inc. | 160,073 | 3,779 | |
Fresh Del Monte Produce, Inc. | 199,593 | 5,024 | |
Green Mountain Coffee Roasters, Inc. (a)(d) | 125,203 | 3,025 | |
Post Holdings, Inc. (a) | 184,052 | 5,807 | |
| 17,635 | ||
Household Products - 0.3% | |||
Spectrum Brands Holdings, Inc. | 79,753 | 3,628 | |
Personal Products - 0.5% | |||
Elizabeth Arden, Inc. (a) | 149,416 | 7,049 | |
TOTAL CONSUMER STAPLES | 49,573 | ||
ENERGY - 6.2% | |||
Energy Equipment & Services - 1.1% | |||
Atwood Oceanics, Inc. (a) | 159,600 | 7,629 | |
Total Energy Services, Inc. | 429,700 | 6,518 | |
| 14,147 | ||
Oil, Gas & Consumable Fuels - 5.1% | |||
Atlas Pipeline Partners, LP | 264,304 | 9,351 | |
Berry Petroleum Co. Class A | 241,400 | 9,296 | |
Cloud Peak Energy, Inc. (a) | 446,500 | 9,421 | |
Energen Corp. | 46,062 | 2,149 | |
PDC Energy, Inc. (a) | 352,201 | 10,661 | |
Stone Energy Corp. (a) | 363,900 | 8,584 | |
Targa Resources Corp. | 225,500 | 11,485 | |
Western Refining, Inc. | 347,340 | 8,638 | |
| 69,585 | ||
TOTAL ENERGY | 83,732 | ||
FINANCIALS - 21.4% | |||
Capital Markets - 2.1% | |||
Affiliated Managers Group, Inc. (a) | 57,800 | 7,312 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
FINANCIALS - continued | |||
Capital Markets - continued | |||
Duff & Phelps Corp. Class A | 676,711 | $ 8,412 | |
Waddell & Reed Financial, Inc. Class A | 381,159 | 12,704 | |
| 28,428 | ||
Commercial Banks - 7.2% | |||
Associated Banc-Corp. | 826,123 | 10,649 | |
BancFirst Corp. | 156,700 | 6,889 | |
Bank of the Ozarks, Inc. | 346,400 | 11,341 | |
BBCN Bancorp, Inc. | 836,786 | 9,983 | |
Bridge Capital Holdings (a) | 335,523 | 5,016 | |
Cathay General Bancorp | 367,236 | 6,496 | |
City National Corp. | 216,413 | 11,059 | |
National Penn Bancshares, Inc. | 1,500,298 | 13,398 | |
PacWest Bancorp | 416,975 | 9,382 | |
UMB Financial Corp. | 288,200 | 12,834 | |
| 97,047 | ||
Insurance - 3.3% | |||
Allied World Assurance Co. Holdings Ltd. | 156,400 | 12,559 | |
Alterra Capital Holdings Ltd. | 433,215 | 10,583 | |
Amerisafe, Inc. (a) | 417,800 | 10,967 | |
ProAssurance Corp. | 121,792 | 10,888 | |
| 44,997 | ||
Real Estate Investment Trusts - 8.0% | |||
American Assets Trust, Inc. | 486,000 | 13,205 | |
Colonial Properties Trust (SBI) | 670,753 | 14,508 | |
DCT Industrial Trust, Inc. | 1,941,500 | 12,523 | |
Glimcher Realty Trust | 1,370,840 | 14,627 | |
Highwoods Properties, Inc. (SBI) | 368,100 | 11,871 | |
Home Properties, Inc. | 212,392 | 12,911 | |
National Retail Properties, Inc. | 467,200 | 14,798 | |
Ramco-Gershenson Properties Trust (SBI) | 1,077,250 | 13,961 | |
| 108,404 | ||
Thrifts & Mortgage Finance - 0.8% | |||
Washington Federal, Inc. | 663,030 | 11,126 | |
TOTAL FINANCIALS | 290,002 | ||
HEALTH CARE - 11.5% | |||
Biotechnology - 5.2% | |||
Achillion Pharmaceuticals, Inc. (a) | 517,654 | 4,887 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
HEALTH CARE - continued | |||
Biotechnology - continued | |||
ARIAD Pharmaceuticals, Inc. (a) | 169,704 | $ 3,657 | |
BioMarin Pharmaceutical, Inc. (a) | 80,856 | 2,995 | |
Discovery Laboratories, Inc. (a) | 1,024,176 | 2,468 | |
Dynavax Technologies Corp. (a) | 1,211,510 | 5,016 | |
Infinity Pharmaceuticals, Inc. (a)(d) | 199,867 | 4,475 | |
Insmed, Inc. (a) | 485,871 | 3,105 | |
Isis Pharmaceuticals, Inc. (a) | 431,728 | 3,734 | |
Medivation, Inc. (a) | 74,586 | 3,813 | |
Merrimack Pharmaceuticals, Inc. (d) | 497,634 | 3,075 | |
Novavax, Inc. (a) | 2,011,387 | 4,224 | |
OncoGenex Pharmaceuticals, Inc. (a) | 223,329 | 2,769 | |
Pharmacyclics, Inc. (a) | 62,252 | 3,802 | |
Rigel Pharmaceuticals, Inc. (a) | 323,900 | 2,886 | |
Synageva BioPharma Corp. (a) | 93,784 | 3,965 | |
Targacept, Inc. (a) | 628,317 | 2,564 | |
Theravance, Inc. (a) | 233,569 | 5,258 | |
Threshold Pharmaceuticals, Inc. (a) | 527,069 | 2,166 | |
Tranzyme, Inc. (a) | 492,471 | 2,088 | |
XOMA Corp. (a)(d) | 1,265,859 | 3,468 | |
| 70,415 | ||
Health Care Equipment & Supplies - 2.3% | |||
Align Technology, Inc. (a) | 296,222 | 7,874 | |
Analogic Corp. | 35,251 | 2,597 | |
Cerus Corp. (a)(d) | 1,295,355 | 4,029 | |
Conceptus, Inc. (a) | 245,736 | 4,630 | |
ICU Medical, Inc. (a) | 115,989 | 6,882 | |
Natus Medical, Inc. (a) | 239,290 | 2,704 | |
Sirona Dental Systems, Inc. (a) | 56,233 | 3,220 | |
| 31,936 | ||
Health Care Providers & Services - 1.6% | |||
BioScrip, Inc. (a) | 431,655 | 3,976 | |
Corvel Corp. (a) | 68,370 | 2,908 | |
Humana, Inc. | 55,228 | 4,102 | |
Magellan Health Services, Inc. (a) | 53,413 | 2,679 | |
MEDNAX, Inc. (a) | 62,355 | 4,301 | |
Team Health Holdings, Inc. (a) | 162,798 | 4,332 | |
| 22,298 | ||
Health Care Technology - 1.1% | |||
Epocrates, Inc. (a) | 512,834 | 5,016 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
HEALTH CARE - continued | |||
Health Care Technology - continued | |||
MedAssets, Inc. (a) | 182,300 | $ 3,232 | |
Medidata Solutions, Inc. (a) | 156,365 | 6,570 | |
| 14,818 | ||
Life Sciences Tools & Services - 0.3% | |||
Luminex Corp. (a) | 223,003 | 3,586 | |
Pharmaceuticals - 1.0% | |||
Biodelivery Sciences International, Inc. (a)(d) | 713,623 | 3,647 | |
ViroPharma, Inc. (a) | 233,122 | 5,886 | |
XenoPort, Inc. (a) | 443,900 | 3,653 | |
| 13,186 | ||
TOTAL HEALTH CARE | 156,239 | ||
INDUSTRIALS - 15.0% | |||
Aerospace & Defense - 1.3% | |||
Alliant Techsystems, Inc. | 80,193 | 4,594 | |
Teledyne Technologies, Inc. (a) | 208,342 | 13,340 | |
| 17,934 | ||
Air Freight & Logistics - 0.9% | |||
Hub Group, Inc. Class A (a) | 271,374 | 8,415 | |
UTI Worldwide, Inc. | 313,700 | 4,357 | |
| 12,772 | ||
Building Products - 1.2% | |||
AAON, Inc. | 320,950 | 6,734 | |
Armstrong World Industries, Inc. | 170,958 | 8,856 | |
| 15,590 | ||
Commercial Services & Supplies - 1.4% | |||
Swisher Hygiene, Inc. (a) | 986,560 | 1,314 | |
Tetra Tech, Inc. (a) | 351,081 | 9,107 | |
United Stationers, Inc. | 303,984 | 8,822 | |
| 19,243 | ||
Construction & Engineering - 1.2% | |||
Foster Wheeler AG (a) | 338,572 | 7,540 | |
MasTec, Inc. (a) | 355,590 | 8,022 | |
| 15,562 | ||
Electrical Equipment - 1.2% | |||
General Cable Corp. (a) | 354,490 | 10,114 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
INDUSTRIALS - continued | |||
Electrical Equipment - continued | |||
GrafTech International Ltd. (a) | 391,447 | $ 4,114 | |
II-VI, Inc. (a) | 155,975 | 2,575 | |
| 16,803 | ||
Industrial Conglomerates - 0.6% | |||
Carlisle Companies, Inc. | 147,900 | 8,216 | |
Machinery - 2.4% | |||
Actuant Corp. Class A | 328,821 | 9,286 | |
Altra Holdings, Inc. | 192,506 | 3,469 | |
CLARCOR, Inc. | 151,710 | 6,863 | |
TriMas Corp. (a) | 279,233 | 7,003 | |
Wabtec Corp. | 70,429 | 5,768 | |
| 32,389 | ||
Marine - 0.3% | |||
DryShips, Inc. (a)(d) | 1,597,097 | 3,546 | |
Professional Services - 2.7% | |||
Advisory Board Co. (a) | 68,036 | 3,232 | |
Equifax, Inc. | 158,100 | 7,911 | |
Manpower, Inc. | 226,096 | 8,578 | |
Stantec, Inc. | 305,300 | 10,515 | |
Towers Watson & Co. | 115,500 | 6,204 | |
| 36,440 | ||
Road & Rail - 0.4% | |||
Ryder System, Inc. | 119,041 | 5,371 | |
Trading Companies & Distributors - 1.4% | |||
Kaman Corp. | 231,400 | 8,608 | |
Watsco, Inc. | 152,923 | 10,452 | |
| 19,060 | ||
TOTAL INDUSTRIALS | 202,926 | ||
INFORMATION TECHNOLOGY - 16.9% | |||
Communications Equipment - 3.5% | |||
Acme Packet, Inc. (a) | 256,683 | 4,246 | |
Brocade Communications Systems, Inc. (a) | 1,533,577 | 8,128 | |
Finisar Corp. (a)(d) | 756,189 | 8,711 | |
Ixia (a) | 252,448 | 3,537 | |
NETGEAR, Inc. (a) | 173,714 | 6,169 | |
Plantronics, Inc. | 189,196 | 6,138 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
INFORMATION TECHNOLOGY - continued | |||
Communications Equipment - continued | |||
Polycom, Inc. (a) | 678,974 | $ 6,803 | |
Riverbed Technology, Inc. (a) | 205,749 | 3,800 | |
| 47,532 | ||
Computers & Peripherals - 2.2% | |||
NCR Corp. (a) | 342,400 | 7,286 | |
Quantum Corp. (a) | 5,270,941 | 5,534 | |
SanDisk Corp. (a) | 125,240 | 5,230 | |
Super Micro Computer, Inc. (a) | 726,815 | 5,749 | |
Synaptics, Inc. (a) | 297,657 | 6,894 | |
| 30,693 | ||
Electronic Equipment & Components - 1.3% | |||
Arrow Electronics, Inc. (a) | 138,613 | 4,883 | |
Fabrinet (a) | 646,861 | 6,229 | |
InvenSense, Inc. | 229,419 | 2,569 | |
Vishay Intertechnology, Inc. (a) | 429,400 | 3,555 | |
| 17,236 | ||
Internet Software & Services - 1.9% | |||
Bankrate, Inc. (a) | 752,450 | 8,074 | |
Blucora, Inc. (a) | 298,022 | 5,230 | |
EarthLink, Inc. | 218,280 | 1,384 | |
QuinStreet, Inc. (a) | 238,867 | 1,462 | |
Stamps.com, Inc. (a) | 187,409 | 5,157 | |
Web.com Group, Inc. (a) | 314,270 | 4,959 | |
| 26,266 | ||
IT Services - 2.4% | |||
Euronet Worldwide, Inc. (a) | 450,784 | 9,146 | |
ExlService Holdings, Inc. (a) | 338,648 | 10,038 | |
HiSoft Technology International Ltd. ADR (a) | 272,776 | 2,834 | |
Sapient Corp. (a) | 1,027,461 | 10,562 | |
| 32,580 | ||
Semiconductors & Semiconductor Equipment - 1.7% | |||
Cirrus Logic, Inc. (a) | 102,100 | 4,162 | |
Entegris, Inc. (a) | 737,577 | 6,056 | |
Integrated Device Technology, Inc. (a) | 702,562 | 3,822 | |
RF Micro Devices, Inc. (a) | 1,814,550 | 8,002 | |
Spansion, Inc. Class A | 50,765 | 563 | |
| 22,605 | ||
Common Stocks - continued | |||
Shares | Value (000s) | ||
INFORMATION TECHNOLOGY - continued | |||
Software - 3.9% | |||
BroadSoft, Inc. (a) | 105,543 | $ 4,034 | |
Mentor Graphics Corp. (a) | 272,268 | 4,226 | |
Nuance Communications, Inc. (a) | 545,455 | 12,142 | |
Parametric Technology Corp. (a) | 482,303 | 9,733 | |
QLIK Technologies, Inc. (a) | 217,200 | 3,999 | |
Solera Holdings, Inc. | 152,282 | 7,128 | |
Synchronoss Technologies, Inc. (a) | 217,756 | 4,462 | |
Verint Systems, Inc. (a) | 249,237 | 6,797 | |
| 52,521 | ||
TOTAL INFORMATION TECHNOLOGY | 229,433 | ||
MATERIALS - 4.7% | |||
Chemicals - 1.2% | |||
Cabot Corp. | 233,203 | 8,339 | |
Kraton Performance Polymers, Inc. (a) | 255,051 | 5,565 | |
LyondellBasell Industries NV Class A | 273 | 15 | |
Zoltek Companies, Inc. (a)(d) | 418,565 | 2,867 | |
| 16,786 | ||
Containers & Packaging - 1.1% | |||
Aptargroup, Inc. | 125,250 | 6,423 | |
Rock-Tenn Co. Class A | 117,190 | 8,577 | |
| 15,000 | ||
Metals & Mining - 2.4% | |||
Carpenter Technology Corp. | 170,232 | 8,275 | |
Coeur d'Alene Mines Corp. (a) | 310,000 | 9,582 | |
Compass Minerals International, Inc. | 130,500 | 10,290 | |
HudBay Minerals, Inc. | 480,700 | 4,462 | |
| 32,609 | ||
TOTAL MATERIALS | 64,395 | ||
TELECOMMUNICATION SERVICES - 0.8% | |||
Diversified Telecommunication Services - 0.2% | |||
Towerstream Corp. (a)(d) | 549,375 | 1,934 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
TELECOMMUNICATION SERVICES - continued | |||
Wireless Telecommunication Services - 0.6% | |||
Clearwire Corp. Class A (a)(d) | 3,876,731 | $ 7,753 | |
NII Holdings, Inc. (a) | 115,024 | 917 | |
| 8,670 | ||
TOTAL TELECOMMUNICATION SERVICES | 10,604 | ||
UTILITIES - 3.3% | |||
Electric Utilities - 2.3% | |||
Cleco Corp. | 198,700 | 8,574 | |
Empire District Electric Co. | 247,877 | 5,381 | |
IDACORP, Inc. | 150,807 | 6,744 | |
PNM Resources, Inc. | 256,249 | 5,678 | |
UNS Energy Corp. | 129,300 | 5,513 | |
| 31,890 | ||
Gas Utilities - 1.0% | |||
Atmos Energy Corp. | 171,863 | 6,182 | |
Northwest Natural Gas Co. | 156,789 | 7,295 | |
| 13,477 | ||
TOTAL UTILITIES | 45,367 | ||
TOTAL COMMON STOCKS (Cost $1,304,684) |
| ||
Convertible Preferred Stocks - 0.1% | |||
|
|
|
|
HEALTH CARE - 0.1% | |||
Pharmaceuticals - 0.1% | |||
Agios Pharmaceuticals, Inc. Series C (e) (Cost $1,617) | 329,266 |
|
U.S. Treasury Obligations - 0.2% | ||||
| Principal Amount (000s) |
| ||
U.S. Treasury Bills, yield at date of purchase 0.09% to 0.1% 11/23/12 to 12/20/12 | $ 2,020 |
|
Money Market Funds - 4.4% | |||
Shares | Value (000s) | ||
Fidelity Cash Central Fund, 0.19% (b) | 30,663,237 | $ 30,663 | |
Fidelity Securities Lending Cash Central Fund, 0.19% (b)(c) | 29,432,277 | 29,432 | |
TOTAL MONEY MARKET FUNDS (Cost $60,095) |
| ||
TOTAL INVESTMENT PORTFOLIO - 102.3% (Cost $1,368,416) | 1,387,765 | ||
NET OTHER ASSETS (LIABILITIES) - (2.3)% | (30,616) | ||
NET ASSETS - 100% | $ 1,357,149 |
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 $1,617,000 or 0.1% of net assets. |
Additional information on each restricted holding is as follows: |
Security | Acquisition Date | Acquisition Cost (000s) |
Agios Pharmaceuticals, Inc. Series C | 11/16/11 | $ 1,617 |
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 | $ 75 |
Fidelity Securities Lending Cash Central Fund | 1,741 |
Total | $ 1,816 |
Other Information |
The following is a summary of the inputs used, as of October 31, 2012, 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 | $ 191,762 | $ 191,762 | $ - | $ - |
Consumer Staples | 49,573 | 49,573 | - | - |
Energy | 83,732 | 83,732 | - | - |
Financials | 290,002 | 290,002 | - | - |
Health Care | 157,856 | 156,239 | - | 1,617 |
Industrials | 202,926 | 201,612 | 1,314 | - |
Information Technology | 229,433 | 229,433 | - | - |
Materials | 64,395 | 64,395 | - | - |
Telecommunication Services | 10,604 | 10,604 | - | - |
Utilities | 45,367 | 45,367 | - | - |
U.S. Government and Government Agency Obligations | 2,020 | - | 2,020 | - |
Money Market Funds | 60,095 | 60,095 | - | - |
Total Investments in Securities: | $ 1,387,765 | $ 1,382,814 | $ 3,334 | $ 1,617 |
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, 2012 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $28,400) - See accompanying schedule: Unaffiliated issuers (cost $1,308,321) | $ 1,327,670 |
|
Fidelity Central Funds (cost $60,095) | 60,095 |
|
Total Investments (cost $1,368,416) |
| $ 1,387,765 |
Receivable for investments sold | 974 | |
Receivable for fund shares sold | 1,111 | |
Dividends receivable | 766 | |
Distributions receivable from Fidelity Central Funds | 303 | |
Other receivables | 34 | |
Total assets | 1,390,953 | |
|
|
|
Liabilities | ||
Payable to custodian bank | $ 146 | |
Payable for investments purchased | 868 | |
Payable for fund shares redeemed | 2,113 | |
Accrued management fee | 854 | |
Distribution and service plan fees payable | 3 | |
Other affiliated payables | 335 | |
Other payables and accrued expenses | 53 | |
Collateral on securities loaned, at value | 29,432 | |
Total liabilities | 33,804 | |
|
|
|
Net Assets | $ 1,357,149 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,413,359 | |
Undistributed net investment income | 2,357 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (77,916) | |
Net unrealized appreciation (depreciation) on investments | 19,349 | |
Net Assets | $ 1,357,149 |
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, 2012 | |
|
|
|
Calculation of Maximum Offering Price | $ 19.40 | |
|
|
|
Maximum offering price per share (100/94.25 of $19.40) | $ 20.58 | |
Class T: | $ 19.15 | |
|
|
|
Maximum offering price per share (100/96.50 of $19.15) | $ 19.84 | |
Class B: | $ 18.79 | |
|
|
|
Class C: | $ 18.73 | |
|
|
|
|
|
|
Stock Selector Small Cap: | $ 19.65 | |
|
|
|
Institutional Class: | $ 19.72 |
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
Statement of Operations
Amounts in thousands | Year ended October 31, 2012 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 17,656 |
Interest |
| 5 |
Income from Fidelity Central Funds (including $1,741 from security lending) |
| 1,816 |
Total income |
| 19,477 |
|
|
|
Expenses | ||
Management fee | $ 9,397 | |
Performance adjustment | 2,351 | |
Transfer agent fees | 3,981 | |
Distribution and service plan fees | 35 | |
Accounting and security lending fees | 492 | |
Custodian fees and expenses | 96 | |
Independent trustees' compensation | 10 | |
Registration fees | 94 | |
Audit | 61 | |
Legal | 7 | |
Miscellaneous | 22 | |
Total expenses before reductions | 16,546 | |
Expense reductions | (119) | 16,427 |
Net investment income (loss) | 3,050 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 188,743 | |
Foreign currency transactions | 2 | |
Futures contracts | 1,724 | |
Total net realized gain (loss) |
| 190,469 |
Change in net unrealized appreciation (depreciation) on: Investment securities | (49,052) | |
Net gain (loss) | 141,417 | |
Net increase (decrease) in net assets resulting from operations | $ 144,467 |
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) | $ 3,050 | $ 5,290 |
Net realized gain (loss) | 190,469 | 249,381 |
Change in net unrealized appreciation (depreciation) | (49,052) | (126,104) |
Net increase (decrease) in net assets resulting | 144,467 | 128,567 |
Distributions to shareholders from net investment income | - | (9,149) |
Share transactions - net increase (decrease) | (502,681) | 183,503 |
Redemption fees | 299 | 776 |
Total increase (decrease) in net assets | (357,915) | 303,697 |
|
|
|
Net Assets | ||
Beginning of period | 1,715,064 | 1,411,367 |
End of period (including undistributed net investment income of $2,357 and undistributed net investment income of $0, respectively) | $ 1,357,149 | $ 1,715,064 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended October 31, | 2012 | 2011 | 2010 | 2009 | 2008 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 17.87 | $ 16.20 | $ 12.53 | $ 11.24 | $ 24.79 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.02) | - G, J | (.01) H | - J | (.04) |
Net realized and unrealized gain (loss) | 1.55 | 1.73 | 3.68 | 1.31 | (10.77) |
Total from investment operations | 1.53 | 1.73 | 3.67 | 1.31 | (10.81) |
Distributions from net investment income | - | (.07) | - J | (.02) | - |
Distributions from net realized gain | - | - | - | - | (2.74) |
Total distributions | - | (.07) | - J | (.02) | (2.74) |
Redemption fees added to paid in capital C | - J | .01 | - J | - J | - J |
Net asset value, end of period | $ 19.40 | $ 17.87 | $ 16.20 | $ 12.53 | $ 11.24 |
Total Return A, B | 8.56% | 10.71% | 29.32% | 11.69% | (48.52)% |
Ratios to Average Net Assets D, I |
|
|
|
|
|
Expenses before reductions | 1.37% | 1.15% | 1.00% | 1.03% | 1.24% |
Expenses net of fee waivers, if any | 1.37% | 1.15% | 1.00% | 1.03% | 1.24% |
Expenses net of all reductions | 1.36% | 1.14% | .99% | 1.01% | 1.23% |
Net investment income (loss) | (.10)% | -% F, G | (.07)% H | (.03)% | (.24)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (in millions) | $ 4 | $ 4 | $ 3 | $ 3 | $ 2 |
Portfolio turnover rate E | 61% | 73% | 138% | 135% | 101% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
B Total returns do not include the effect of the sales charges.
C Calculated based on average shares outstanding during the period.
D 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.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Amount represents less than .01%.
G Investment income per share reflects a large, non-recurring dividend which amounted to $.04 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been (.21) %.
H Investment income per share reflects a large, non-recurring dividend which amounted to $.01 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been (.16) %.
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. 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.
J Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class T
Years ended October 31, | 2012 | 2011 | 2010 | 2009 | 2008 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 17.68 | $ 16.07 | $ 12.45 | $ 11.19 | $ 24.74 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss)C | (.07) | (.05) F | (.05) G | (.03) | (.08) |
Net realized and unrealized gain (loss) | 1.54 | 1.70 | 3.67 | 1.30 | (10.76) |
Total from investment operations | 1.47 | 1.65 | 3.62 | 1.27 | (10.84) |
Distributions from net investment income | - | (.05) | - | (.01) | - |
Distributions from net realized gain | - | - | - | - | (2.71) |
Total distributions | - | (.05) | - | (.01) | (2.71) |
Redemption fees added to paid in capital C | - I | .01 | - I | - I | - I |
Net asset value, end of period | $ 19.15 | $ 17.68 | $ 16.07 | $ 12.45 | $ 11.19 |
Total Return A, B | 8.31% | 10.34% | 29.08% | 11.42% | (48.70)% |
Ratios to Average Net Assets D, H |
|
|
|
|
|
Expenses before reductions | 1.64% | 1.42% | 1.27% | 1.30% | 1.50% |
Expenses net of fee waivers, if any | 1.64% | 1.42% | 1.27% | 1.30% | 1.50% |
Expenses net of all reductions | 1.63% | 1.41% | 1.26% | 1.29% | 1.49% |
Net investment income (loss) | (.37)% | (.27)% F | (.33)% G | (.31)% | (.50)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 1,073 | $ 1,539 | $ 723 | $ 550 | $ 409 |
Portfolio turnover rate E | 61% | 73% | 138% | 135% | 101% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
B Total returns do not include the effect of the sales charges.
C Calculated based on average shares outstanding during the period.
D 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.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Investment income per share reflects a large, non-recurring dividend which amounted to $.04 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been (.48) %.
G Investment income per share reflects a large, non-recurring dividend which amounted to $.01 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been (.43) %.
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 - Class B
Years ended October 31, | 2012 | 2011 | 2010 | 2009 | 2008 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 17.43 | $ 15.87 | $ 12.36 | $ 11.15 | $ 24.69 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.16) | (.14)F | (.12)G | (.08) | (.17) |
Net realized and unrealized gain (loss) | 1.52 | 1.69 | 3.63 | 1.30 | (10.73) |
Total from investment operations | 1.36 | 1.55 | 3.51 | 1.22 | (10.90) |
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 C | - I | .01 | - I | - I | - I |
Net asset value, end of period | $ 18.79 | $ 17.43 | $ 15.87 | $ 12.36 | $ 11.15 |
Total Return A, B | 7.80% | 9.83% | 28.40% | 10.92% | (48.94)% |
Ratios to Average Net Assets D, H |
|
|
|
|
|
Expenses before reductions | 2.12% | 1.90% | 1.76% | 1.77% | 1.99% |
Expenses net of fee waivers, if any | 2.12% | 1.90% | 1.76% | 1.77% | 1.99% |
Expenses net of all reductions | 2.11% | 1.90% | 1.75% | 1.75% | 1.99% |
Net investment income (loss) | (.85)% | (.76)% F | (.82)% G | (.78)% | (1.00)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 225 | $ 246 | $ 220 | $ 219 | $ 199 |
Portfolio turnover rate E | 61% | 73% | 138% | 135% | 101% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
B Total returns do not include the effect of the contingent deferred sales charge.
C Calculated based on average shares outstanding during the period.
D 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.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Investment income per share reflects a large, non-recurring dividend which amounted to $.04 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been (.96) %.
G Investment income per share reflects a large, non-recurring dividend which amounted to $.01 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been (.92) %.
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 - Class C
Years ended October 31, | 2012 | 2011 | 2010 | 2009 | 2008 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 17.38 | $ 15.82 | $ 12.33 | $ 11.12 | $ 24.71 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss)C | (.16) | (.14)F | (.12)G | (.09) | (.17) |
Net realized and unrealized gain (loss) | 1.51 | 1.69 | 3.61 | 1.31 | (10.72) |
Total from investment operations | 1.35 | 1.55 | 3.49 | 1.22 | (10.89) |
Distributions from net investment income | - | - | - | (.01) | - |
Distributions from net realized gain | - | - | - | - | (2.70) |
Total distributions | - | - | - | (.01) | (2.70) |
Redemption fees added to paid in capitalC | - I | .01 | - I | - I | - I |
Net asset value, end of period | $ 18.73 | $ 17.38 | $ 15.82 | $ 12.33 | $ 11.12 |
Total Return A, B | 7.77% | 9.86% | 28.30% | 10.96% | (48.95)% |
Ratios to Average Net Assets D, H |
|
|
|
|
|
Expenses before reductions | 2.12% | 1.90% | 1.75% | 1.76% | 2.00% |
Expenses net of fee waivers, if any | 2.12% | 1.90% | 1.75% | 1.76% | 2.00% |
Expenses net of all reductions | 2.11% | 1.89% | 1.74% | 1.75% | 1.99% |
Net investment income (loss) | (.85)% | (.76)% F | (.81)%G | (.77)% | (1.01)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 1,504 | $ 1,370 | $ 820 | $ 428 | $ 183 |
Portfolio turnover rate E | 61% | 73% | 138% | 135% | 101% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
B Total returns do not include the effect of the contingent deferred sales charge.
C Calculated based on average shares outstanding during the period.
D 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.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Investment income per share reflects a large, non-recurring dividend which amounted to $.04 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been (.96) %.
G Investment income per share reflects a large, non-recurring dividend which amounted to $.01 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been (.91) %.
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 - Stock Selector Small Cap
Years ended October 31, | 2012 | 2011 | 2010 | 2009 | 2008 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 18.05 | $ 16.35 | $ 12.61 | $ 11.28 | $ 24.81 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .04 | .05 E | .03 F | .02 | .01 |
Net realized and unrealized gain (loss) | 1.56 | 1.74 | 3.72 | 1.33 | (10.82) |
Total from investment operations | 1.60 | 1.79 | 3.75 | 1.35 | (10.81) |
Distributions from net investment income | - | (.10) | (.01) | (.02) | - |
Distributions from net realized gain | - | - | - | - | (2.72) |
Total distributions | - | (.10) | (.01) | (.02) | (2.72) |
Redemption fees added to paid in capital B | - H | .01 | -H | -H | -H |
Net asset value, end of period | $ 19.65 | $ 18.05 | $ 16.35 | $ 12.61 | $ 11.28 |
Total Return A | 8.86% | 11.03% | 29.75% | 12.05% | (48.42)% |
Ratios to Average Net Assets C, G |
|
|
|
|
|
Expenses before reductions | 1.07% | .85% | .73% | .77% | .95% |
Expenses net of fee waivers, if any | 1.07% | .85% | .73% | .77% | .95% |
Expenses net of all reductions | 1.06% | .85% | .72% | .75% | .94% |
Net investment income (loss) | .20% | .29% E | .21% F | .22% | .05% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (in millions) | $ 1,311 | $ 1,698 | $ 1,406 | $ 1,379 | $ 1,292 |
Portfolio turnover rate D | 61% | 73% | 138% | 135% | 101% |
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 large, non-recurring dividend which amounted to $.04 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .09%.
F Investment income per share reflects a large, non-recurring dividend which amounted to $.01 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .12%.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
H 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, | 2012 | 2011 | 2010 | 2009 | 2008 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 18.07 | $ 16.39 | $ 12.63 | $ 11.29 | $ 24.82 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss)B | .04 | .05 E | .05 F | .04 | .02 |
Net realized and unrealized gain (loss) | 1.61 | 1.74 | 3.72 | 1.32 | (10.82) |
Total from investment operations | 1.65 | 1.79 | 3.77 | 1.36 | (10.80) |
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 capitalB | - H | .01 | - H | - H | - H |
Net asset value, end of period | $ 19.72 | $ 18.07 | $ 16.39 | $ 12.63 | $ 11.29 |
Total ReturnA | 9.13% | 10.99% | 29.89% | 12.14% | (48.36)% |
Ratios to Average Net AssetsC, G |
|
|
|
|
|
Expenses before reductions | 1.06% | .86% | .63% | .63% | .84% |
Expenses net of fee waivers, if any | 1.06% | .86% | .63% | .63% | .84% |
Expenses net of all reductions | 1.05% | .85% | .62% | .62% | .84% |
Net investment income (loss) | .21% | .29% E | .31% F | .36% | .15% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 39,592 | $ 10,038 | $ 680 | $ 413 | $ 376 |
Portfolio turnover rate D | 61% | 73% | 138% | 135% | 101% |
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 large, non-recurring dividend which amounted to $.04 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .08%.
F Investment income per share reflects a large, non-recurring dividend which amounted to $.01 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .21%.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
H 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, 2012
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. 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. In accordance with valuation policies and procedures approved by the Board of Trustees (the Board), the Fund attempts to obtain prices from one or more third party pricing vendors or brokers to value its investments. When current market prices, quotations or rates are not readily available or reliable, securities will be fair valued in good faith by the FMR Fair Value Committee (the Committee), in accordance with procedures adopted by the Fund's Board. Factors used in determining fair value vary by security type and 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 Committee oversees the Fund's valuation policies and procedures and is responsible for approving and reporting to the Board all fair value determinations.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the Fund's own assumptions based on the best information available)
Valuation techniques used to value the Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by a third party pricing vendor on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when significant market or security specific events arise, comparisons to the valuation of American Depositary Receipts
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Security Valuation - continued
(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. 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 these securities are categorized as Level 3 in the hierarchy.
Debt securities, including restricted securities, are valued based on evaluated prices received from third party pricing vendors or from brokers who make markets in such securities. For U.S. government and government agency obligations, pricing vendors utilize matrix pricing which considers yield or price of bonds of comparable quality, coupon, maturity and type as well as broker-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 methodologies which consider similar factors that would be used by third party pricing vendors. 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 (NAV) each business day and are categorized as Level 1 in the hierarchy.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of October 31, 2012, is included at the end of the Fund's Schedule of Investments.
Foreign Currency Translation. The Fund may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rates at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Annual Report
3. Significant Accounting Policies - continued
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 under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for income taxes is required. As of October 31, 2012, the Fund did not have any unrecognized tax benefits in the financial statements; nor is the Fund aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. A fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
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, 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 | $ 154,058,681 |
Gross unrealized depreciation | (136,833,244) |
Net unrealized appreciation (depreciation) on securities and other investments | $ 17,225,437 |
|
|
Tax Cost | $ 1,370,539,922 |
The tax-based components of distributable earnings as of period end were as follows:
Undistributed ordinary income | $ 3,697,958 |
Capital loss carryforward | $ (76,149,147) |
Net unrealized appreciation (depreciation) | $ 17,225,437 |
Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. Under the Regulated Investment Company Modernization Act of 2010 (the Act), the Fund is permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period and such capital losses are required to be used prior to any losses that expire. Capital loss carryforwards were as follows:
Fiscal year of expiration |
|
2017 | $ (76,149,147) |
The tax character of distributions paid was as follows:
| October 31, 2012 | October 31, 2011 |
Ordinary Income | $ - | $ 9,148,743 |
Annual Report
3. Significant Accounting Policies - continued
Short-Term Trading (Redemption) Fees. During the period, shares held by investors in the Fund less than 90 days were 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.
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.
New Accounting Pronouncement. In December 2011, the Financial Accounting Standards Board issued Accounting Standard Update No. 2011-11, Disclosures about Offsetting Assets and Liabilities. The update creates new disclosure requirements requiring entities to disclose both gross and net information for derivatives and other financial instruments that are either offset in the Statement of Assets and Liabilities or subject to an enforceable master netting arrangement or similar agreement. The disclosure requirements are effective for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods. 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's investment objective allows the Fund to enter into various types of derivative contracts, including futures contracts. Derivatives are investments whose value is primarily derived from underlying assets, indices or reference rates and may be transacted on an exchange or over-the-counter (OTC). Derivatives may involve a future commitment to buy or sell a specified instrument based on specified terms, to exchange future cash flows at periodic intervals based on a notional principal amount, or for one party to make one or more payments upon the occurrence of specified events in exchange for periodic payments from the other party.
The Fund used 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.
Annual Report
Notes to Financial Statements - continued
4. Derivative Instruments - continued
Risk Exposures and the Use of Derivative Instruments - continued
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 close out 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. Counterparty credit risk related to exchange-traded futures contracts is minimal because of the protection provided by the exchange on which they trade.
Investing in derivatives may involve greater risks than investing in the underlying assets directly and, to varying degrees, may involve risk of loss in excess of any initial investment and collateral received and amounts recognized in the Statement of Assets and Liabilities. In addition, there may be the risk that the change in value of the derivative contract does not correspond to the change in value of the underlying instrument.
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.
Any open futures contracts at period end are shown in the Schedule of Investments under the caption "Futures Contracts." The underlying face amount at value reflects each contract's exposure to the underlying instrument at period end.
During the period the Fund recognized net realized gain (loss) of $1,723,827 related to its investment in futures contracts. This amount is included in the Statement of Operations.
Annual Report
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $903,468,768 and $1,372,717,175, 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 .35% of the Fund's average net assets and an annualized 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 an appropriate benchmark index. For the period, the total annual management fee rate, including the performance adjustment, was .76% 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% | $ 11,017 | $ 245 |
Class T | .25% | .25% | 6,128 | 85 |
Class B | .75% | .25% | 2,378 | 1,788 |
Class C | .75% | .25% | 15,565 | 4,522 |
|
|
| $ 35,088 | $ 6,640 |
Sales Load. FDC may receive a front-end sales charge of up to 5.75% for selling Class A shares and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. Depending on the holding period, FDC may receive contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. The deferred sales charges range from 5.00% to 1.00% for Class B shares, 1.00% for Class C shares, 1.00% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
Annual Report
Notes to Financial Statements - continued
6. Fees and Other Transactions with Affiliates - continued
Sales Load - continued
For the period, sales charge amounts retained by FDC were as follows:
| Retained |
Class A | $ 2,402 |
Class T | 533 |
Class B* | 1,000 |
Class C* | 391 |
| $ 4,326 |
* When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales
are made.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of 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 | $ 13,391 | .30 |
Class T | 3,934 | .32 |
Class B | 724 | .30 |
Class C | 4,734 | .30 |
Stock Selector Small Cap | 3,907,429 | .26 |
Institutional Class | 51,268 | .25 |
| $ 3,981,480 |
|
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 each month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $65,259 for the period.
Annual Report
6. Fees and Other Transactions with Affiliates - continued
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. The Fund's activity in this program during the period for which loans were outstanding was as follows:
Borrower or Lender | Average Loan | Weighted Average Interest Rate | Interest |
Borrower | $ 9,767,000 | .38% | $ 103 |
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR or an affiliate in a $4.25 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $4,349 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 $72,600. 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, and includes $38,761 from securities loaned to FCM.
Annual Report
Notes to Financial Statements - continued
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 $118,757 for the period.
10. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended October 31, | 2012 | 2011 |
From net investment income |
|
|
Class A | $ - | $ 15,209 |
Class T | - | 2,838 |
Stock Selector Small Cap | - | 9,104,153 |
Institutional Class | - | 26,543 |
Total | $ - | $ 9,148,743 |
11. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
Years ended October 31, | 2012 | 2011 | 2012 | 2011 |
Class A |
|
|
|
|
Shares sold | 67,380 | 141,619 | $ 1,259,708 | $ 2,551,365 |
Reinvestment of distributions | - | 794 | - | 14,554 |
Shares redeemed | (98,140) | (107,880) | (1,883,409) | (1,998,562) |
Net increase (decrease) | (30,760) | 34,533 | $ (623,701) | $ 567,357 |
Class T |
|
|
|
|
Shares sold | 21,703 | 81,238 | $ 403,605 | $ 1,558,596 |
Reinvestment of distributions | - | 154 | - | 2,831 |
Shares redeemed | (52,662) | (39,400) | (988,816) | (704,438) |
Net increase (decrease) | (30,959) | 41,992 | $ (585,211) | $ 856,989 |
Class B |
|
|
|
|
Shares sold | 475 | 5,592 | $ 8,561 | $ 102,797 |
Shares redeemed | (2,588) | (5,365) | (48,635) | (93,413) |
Net increase (decrease) | (2,113) | 227 | $ (40,074) | $ 9,384 |
Class C |
|
|
|
|
Shares sold | 22,125 | 52,816 | $ 401,995 | $ 972,098 |
Shares redeemed | (20,647) | (25,832) | (381,653) | (467,301) |
Net increase (decrease) | 1,478 | 26,984 | $ 20,342 | $ 504,797 |
Annual Report
11. Share Transactions - continued
| Shares | Dollars | ||
Years ended October 31, | 2012 | 2011 | 2012 | 2011 |
Stock Selector Small Cap |
|
|
|
|
Shares sold | 9,673,161 | 42,956,006 | $ 183,426,126 | $ 812,040,324 |
Reinvestment of distributions | - | 490,501 | - | 8,965,215 |
Shares redeemed | (37,048,256) | (35,360,001) | (710,455,997) | (648,464,613) |
Net increase (decrease) | (27,375,095) | 8,086,506 | $ (527,029,871) | $ 172,540,926 |
Institutional Class |
|
|
|
|
Shares sold | 2,802,215 | 1,267,453 | $ 52,718,967 | $ 24,122,964 |
Reinvestment of distributions | - | 1,209 | - | 22,526 |
Shares redeemed | (1,350,009) | (754,664) | (27,142,424) | (15,119,704) |
Net increase (decrease) | 1,452,206 | 513,998 | $ 25,576,543 | $ 9,025,786 |
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 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, 2012, 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, 2012, 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, 2012, 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.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
December 17, 2012
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 236 funds advised by FMR or an affiliate. Mr. Curvey oversees 443 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 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 (77) | |
| Year of Election or Appointment: 2007 Mr. Curvey is Trustee and 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 (55) | |
| 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 (64) | |
| 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 (59) | |
| 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 Entertainment, Inc. (restaurant and entertainment complexes, 2010-present), Earth Fare, Inc. (retail grocery, 2012-present), The Hillman Companies, Inc. (hardware wholesalers, 2010-present), and Bristol-Myers Squibb Company (global pharmaceuticals, 2008-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 (68) | |
| 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 Chairman of the Board of Directors of the Philharmonic Center for the Arts in Naples, Florida (2012-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 (68) | |
| 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). Previously, Mr. Mauriello served as a Director of the Hamilton Funds of the Bank of New York (2006-2007) and of Arcadia Resources Inc. (health care services and products, 2007-2012). |
Robert W. Selander (62) | |
| 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 (68) | |
| Year of Election or Appointment: 2005 Ms. Small is a member of the Board of Directors (2009-present) and Chair of the Investment Committee (2010-present) of the Teagle Foundation. Ms. Small also serves on the Investment Committee of the Berkshire Taconic Community Foundation (2008-present). Previously, Ms. Small served as Chairperson (2002-2008) and a member of the Investment Committee and Chairperson (2008-2012) and a member of the Board of Trustees 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 (73) | |
| 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 a Director of Univar Inc. (global distributor of commodity and specialty chemicals, Chairman from 2010-May 2012 and Lead Director from May 2012-present), Teradata Corporation (data warehousing and technology solutions, 2008-present), Maersk Inc. (industrial conglomerate), and Tyco International, Ltd. (multinational manufacturing and services, 2007-present), and a member of the Advisory Board for Metalmark Capital LLC (private equity investment, 2005-present). Mr. Stavropoulos is an operating 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, a Trustee of the Rollin L. Gerstacker Foundation, and a Director of the Naples Philharmonic Center for the Arts. Previously, Mr. Stavropoulos served as a Director of Chemical Financial Corporation (bank holding company, 1993-2012). |
David M. Thomas (63) | |
| 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), and a Director of Fortune Brands, Inc. (consumer products, 2000-2011). In addition, Mr. Thomas serves as Non-Executive Chairman of the Board of Directors of Fortune Brands Home and Security (home and security products, 2011-present), and as a member of the Board of Directors of Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (62) | |
| 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). |
+ 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 David A. Rosow and Garnett A. Smith may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235. 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 (82) | |
| 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 (68) | |
| 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). |
David A. Rosow (70) | |
| Year of Election or Appointment: 2012 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Chairman and Chief Executive Officer of International Golf Group, Inc. (golf course development, 1989-present). Previously, Mr. Rosow served as Chairman and Chief Executive Officer of Rosow & Company, Inc. (private investment company, 1989-2011), a Lead Director of Hudson United Bancorp (2001-2006) and as a Director of TD Banknorth (1996-2006). In addition, Mr. Rosow is a member (2008-present) and President (2009-present) of the Town Council of Palm Beach, Florida. |
Garnett A. Smith (65) | |
| Year of Election or Appointment: 2012 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Prior to Mr. Smith's retirement, he served as Chairman and Chief Executive Officer of Inbrand Corp. (manufacturer of personal absorbent products, 1990-1997). He also served as President (1986-1990) of Inbrand Corp. Prior to his employment with Inbrand Corp., he was employed by a retail fabric chain and North Carolina National Bank. In addition, Mr. Smith is a board member of the Jackson Hole Land Trust (2009-present). |
Kenneth B. Robins (43) | |
| 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 (48) | |
| 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 (48) | |
| 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 (44) | |
| 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 (43) | |
| 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). |
Elizabeth Paige Baumann (44) | |
| Year of Election or Appointment: 2012 Anti-Money Laundering (AML) Officer of the Fidelity funds. Ms. Baumann also serves as AML Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2012-present), Chief AML Officer of FMR LLC (2012-present), and is an employee of Fidelity Investments. Previously, Ms. Baumann served as Vice President and Deputy Anti-Money Laundering Officer (2007-2012). |
Christine Reynolds (54) | |
| 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). |
Joseph A. Hanlon (44) | |
| Year of Election or Appointment: 2012 Chief Compliance Officer of Fidelity's Equity and High Income Funds. Mr. Hanlon serves as Compliance Officer of FMR, FMR Co., Inc., Fidelity Investments Money Management, Inc. (FIMM), Fidelity Research and Analysis Company (FRAC), Fidelity Management & Research (Japan) Inc., Fidelity Management & Research (U.K.) Inc., Fidelity Management & Research (Hong Kong), and Strategic Advisers, Inc. (2009-present), as Senior Vice President of the Fidelity Asset Management Division (2009-present), and is an employee of Fidelity Investments. |
Joseph F. Zambello (55) | |
| 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 (45) | |
| Year of Election or Appointment: 2008 Deputy Treasurer of Fidelity's Equity and High Income Funds. Mr. Deberghes also serves as Vice President (2011-present) and Assistant Treasurer (2010-present) of other Fidelity funds, 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). |
Stephen Sadoski (41) | |
| Year of Election or Appointment: 2012 Deputy Treasurer of Fidelity's Equity and High Income Funds. Mr. Sadoski also serves as Assistant Treasurer of other Fidelity funds (2012-present) and is an employee of Fidelity Investments (2012-present). Previously, Mr. Sadoski served as an assistant chief accountant in the Division of Investment Management of the Securities and Exchange Commission (SEC) (2009-2012) and as a senior manager at Deloitte & Touche (1997-2009). |
Stephanie J. Dorsey (43) | |
| 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 (54) | |
| 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 (54) | |
| 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 (44) | |
| 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 Stock Selector Small Cap 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 |
Institutional Class | 12/10/12 | 12/07/12 | $0.126 | $0.007 |
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, at each of its meetings, considers 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 and chaired by 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 2012 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 relative to peer funds; (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 exist and 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 also considered the fund's investment objective, strategies, and related investment philosophy. 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 continued to increase the resources devoted to non-U.S. offices, including expansion of Fidelity's global investment organization. The Board noted that Fidelity's analysts have extensive resources, tools and capabilities that allow them to conduct sophisticated quantitative and fundamental analysis, as well as credit analysis of issuers, counterparties and guarantors. 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 that 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 its deliberations, the Board considered the Investment Advisers' trading and risk management 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 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.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
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.
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) persisting in efforts to enhance Fidelity's research capabilities, in particular, international research; (iii) launching new funds and making other enhancements to meet client needs for global and income-oriented solutions; (iv) continuing to launch dedicated lower cost underlying funds to meet investment management's portfolio construction needs related to expanding underlying fund options, specifically for the Freedom Fund product lines; (v) adopting a "Stock Selector" sector neutral investment approach and employing a team of portfolio managers who are sector specialists to manage certain funds; (vi) rationalizing product lines and gaining increased efficiencies through the mergers of several funds into other funds; (vii) strengthening the Spartan Index Fund product line by adding new funds and/or new low-cost institutional share classes, restructuring fund expenses to accommodate new classes, and reducing investment minimums for certain classes of shares; (viii) modifying the eligibility criteria for Institutional Class shares to increase their appeal to government entities and charitable investors; and (ix) reducing certain transfer agent fee rates.
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, 2011, as available, the cumulative total returns of the retail class and Class B 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 the retail class and Class B show the performance of the highest performing class (based on five-year performance) and the lowest performing class (based on three-year performance), respectively. The box within each chart shows the 25th percentile return (top of box) and the 75th percentile return (bottom 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 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 was in the second quartile for the one-year period, the first 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 retail class of the fund compared favorably to its benchmark for the one- and three-year periods, although the fund's five-year cumulative total return was lower than 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 noted that there were changes in the fund's portfolio management in April 2012, February 2012, and December 2011. 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.
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 5% means that 95% of the funds in the Total Mapped Group had higher management fees than the fund. The "Asset-Size Peer Group" (ASPG) comparison focuses on a fund's standing relative to non-Fidelity funds similar in size to the fund within the Total Mapped Group. The ASPG represents at least 15% of the funds in the Total Mapped Group with comparable asset size and management fee characteristics, subject to a minimum of 50 funds (or all funds in the Total Mapped Group if fewer than 50). Additional information, such as the ASPG quartile in which the fund's management fee ranked and the impact of the fund's performance adjustment, is also included in the chart and considered by the Board.
Annual Report
Fidelity Stock Selector 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 2011. The Board also noted the effect of the fund's 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 of Class A, Class B, Class C, Institutional Class, and the retail class ranked below its competitive median for 2011 and the total expense ratio of Class T ranked above its competitive median for 2011. 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. The Board noted that the total expense ratio of Class T was above the competitive median primarily because of higher 12b-1 fees on Class T. Class T has a higher 12b-1 fee, but a lower front-end sales charge, than traditionally priced front-end sales charge classes. The Board considered that Class T is primarily sold load-waived in the retirement plan market where its 0.50% 12b-1 fee is comparable to competing no-load, higher 12b-1 fee classes designed specifically for retirement plans. The Board noted that the fund offers multiple classes, each of which has a different sales load and 12b-1 fee structure, and that the multiple structures are intended to offer a range of pricing options for the intermediary market. The Board also noted that the total expense ratios of the classes vary primarily by the level of their 12b-1 fees, although differences in transfer agent fees may also cause expenses to vary from class to class.
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. The Board noted the findings of the 2010 ad hoc joint committee (created with the board of other Fidelity funds), which reviewed and compared 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, although Class T was above the median of the universe presented for comparison, in light of the services that the fund and its shareholders receive and the other factors considered.
Costs of the Services and Profitability. The Board considered the revenues earned and the expenses incurred by Fidelity in conducting the business of developing, marketing, distributing, managing, administering and servicing the fund and its shareholders. The Board also considered the level of Fidelity's profits in respect of all the Fidelity funds.
On an annual basis, FMR presents to the Board Fidelity's profitability for the fund. Fidelity calculates the profitability for each fund, as well as aggregate profitability for groups of Fidelity funds and all Fidelity funds, using a series of detailed revenue and cost allocation methodologies which originate with the 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.
Annual Report
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 economies of scale, if any, 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) the potential to further rationalize the Fidelity fund lineup with the possibility of achieving savings for the funds and Fidelity; (iii) Fidelity's compensation structure for portfolio managers and other key 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) the realization of fall-out benefits in certain Fidelity business units; (vi) Fidelity's group fee structures, the potential impact of regulatory changes on such structures, and the rationale for the individual fee rates of certain funds; (vii) fund profitability methodology, including Fidelity's cost allocation methodology, and the impact of certain factors on fund profitability results; (viii) trends regarding industry use of performance fee structures and the possibility of implementing performance fee structures for additional funds; and (ix) the impact of net redemptions from the Fidelity funds.
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
Smithfield, RI
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
(Fidelity Investment logo)(registered trademark)
Corporate Headquarters
82 Devonshire St., Boston, MA 02109
www.fidelity.com
ASCSI-UANN-1212 1.843142.105
Fidelity®
Value
Fund
Annual Report
October 31, 2012
(Fidelity Cover Art)
Contents
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, 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. © 2012 FMR LLC. All rights reserved.
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, 2012 | Past 1 | Past 5 | Past 10 |
Fidelity® Value Fund | 15.99% | -1.15% | 8.92% |
$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, 2002. 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 bouts of volatility to post strong gains for the year ending October 31, 2012, and extend an uptrend that began in March 2009. The broad-based S&P 500® Index advanced 15.21% for the 12-month period, while the blue-chip-laden Dow Jones Industrial AverageSM and technology-heavy Nasdaq Composite® Index rose 12.56% and 12.21%, respectively. Debt problems in Europe, slower growth in China and uncertainty about a U.S. economic recovery put downward pressure on stocks early on and during a turbulent spring. However, beginning in June, stocks rose on central bank stimulus, steps to repair the eurozone and signs of life in the U.S. housing market. Equity benchmarks hit multiyear highs in September, with the Dow and the S&P® achieving their best marks since 2007, and the Nasdaq reaching a 12-year high. Stocks retreated in October, which was marked by disappointing corporate earnings reports and a two-day weather-related closure of the New York Stock Exchange. Among the 10 sectors that comprise the S&P 500®, most posted a double-digit gain, led by telecommunication services (+26%) and health care (+22%), with energy (+7%) and materials (+7%) lagging the most. Despite lingering eurozone turmoil and weaker local currencies versus the U.S. dollar, foreign developed-markets stocks rose modestly, with the MSCI® EAFE® Index adding 4.76%.
Comments from Matthew Friedman, Lead Portfolio Manager of Fidelity® Value Fund: For the year, the fund's Retail Class shares returned 15.99%, compared with 14.99% for the Russell Midcap® Value Index. The fund's relative performance was largely driven by favorable stock picking in the materials and consumer discretionary sectors. Sempra Energy in utilities was the fund's top individual contributor, while regional banking firms Wells Fargo and U.S. Bancorp further boosted returns, despite financials' overall drag on results. Canadian oil and gas entity Nexen and specialty chemicals manufacturer Solutia were among several beneficiaries of buyout activity. Weak stock picking in the financials sector was the biggest detractor, including stakes in Brazil's Itau Unibanco Holdings and Knight Capital Group, along with missing out on strong-performing index component Discover Financial Services. Results from the telecommunication services and information technology sectors also were disappointing, including the biggest individual detractor, Latin American wireless provider NII Holdings, and personal computer/printer manufacturer Hewlett-Packard. A number of these stocks were not in the index, and I sold some prior to 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, 2012 to October 31, 2012).
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 | .55% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,032.60 | $ 2.81 |
HypotheticalA |
| $ 1,000.00 | $ 1,022.37 | $ 2.80 |
Class K | .42% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,033.40 | $ 2.15 |
HypotheticalA |
| $ 1,000.00 | $ 1,023.03 | $ 2.14 |
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 184/366 (to reflect the one-half year period).
Annual Report
Investment Changes (Unaudited)
Top Ten Stocks as of October 31, 2012 | ||
| % of fund's | % of fund's net assets |
Sempra Energy | 1.8 | 2.5 |
Berkshire Hathaway, Inc. Class B | 1.6 | 1.6 |
Edison International | 1.4 | 1.8 |
Northeast Utilities | 1.4 | 1.1 |
U.S. Bancorp | 1.1 | 1.3 |
ITC Holdings Corp. | 1.1 | 0.0 |
Wells Fargo & Co. | 1.0 | 1.7 |
Ventas, Inc. | 0.9 | 0.7 |
CIT Group, Inc. | 0.9 | 0.9 |
AECOM Technology Corp. | 0.9 | 0.1 |
| 12.1 | |
Top Five Market Sectors as of October 31, 2012 | ||
| % of fund's | % of fund's net assets |
Financials | 27.0 | 28.6 |
Industrials | 12.3 | 11.6 |
Information Technology | 10.6 | 9.2 |
Consumer Discretionary | 10.6 | 11.1 |
Utilities | 8.9 | 11.3 |
Asset Allocation (% of fund's net assets) | |||||||
As of October 31, 2012 * | As of April 30, 2012 ** | ||||||
![]() | Stocks and |
| ![]() | Stocks and |
| ||
![]() | Short-Term |
| ![]() | Short-Term |
| ||
* Foreign investments | 16.1% |
| ** Foreign investments | 16.8% |
|
Annual Report
Investments October 31, 2012
Showing Percentage of Net Assets
Common Stocks - 97.1% | |||
Shares | Value (000s) | ||
CONSUMER DISCRETIONARY - 10.6% | |||
Auto Components - 1.0% | |||
Delphi Automotive PLC | 1,312,555 | $ 41,267 | |
Tenneco, Inc. (a) | 637,563 | 19,478 | |
| 60,745 | ||
Automobiles - 0.3% | |||
Harley-Davidson, Inc. | 392,496 | 18,353 | |
Diversified Consumer Services - 0.8% | |||
Anhanguera Educacional Participacoes SA | 1,005,500 | 17,624 | |
DeVry, Inc. | 567,998 | 14,916 | |
H&R Block, Inc. | 1,056,338 | 18,697 | |
| 51,237 | ||
Hotels, Restaurants & Leisure - 0.8% | |||
Carnival Corp. unit | 375,574 | 14,227 | |
Penn National Gaming, Inc. (a) | 497,237 | 20,103 | |
Sonic Corp. (a) | 1,536,421 | 15,318 | |
| 49,648 | ||
Household Durables - 0.9% | |||
Harman International Industries, Inc. | 258,731 | 10,849 | |
Jarden Corp. | 586,729 | 29,219 | |
Whirlpool Corp. | 186,395 | 18,207 | |
| 58,275 | ||
Internet & Catalog Retail - 0.6% | |||
Liberty Media Corp. Interactive Series A (a) | 1,870,503 | 37,410 | |
Leisure Equipment & Products - 0.2% | |||
Brunswick Corp. | 546,055 | 12,881 | |
Media - 1.3% | |||
Cablevision Systems Corp. - NY Group Class A | 843,988 | 14,702 | |
DreamWorks Animation SKG, Inc. Class A (a)(d) | 718,007 | 14,626 | |
Kabel Deutschland Holding AG | 106,600 | 7,681 | |
Liberty Media Corp. Series A (a) | 149,899 | 8,531 | |
McGraw-Hill Companies, Inc. | 216,537 | 11,970 | |
Time Warner, Inc. | 317,400 | 13,791 | |
Valassis Communications, Inc. (a)(d) | 471,351 | 12,265 | |
| 83,566 | ||
Multiline Retail - 0.1% | |||
PPR SA | 47,400 | 8,334 | |
Specialty Retail - 4.3% | |||
Abercrombie & Fitch Co. Class A | 351,983 | 10,764 | |
Advance Auto Parts, Inc. | 241,917 | 17,162 | |
Ascena Retail Group, Inc. (a) | 2,244,907 | 44,449 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
CONSUMER DISCRETIONARY - continued | |||
Specialty Retail - continued | |||
Bed Bath & Beyond, Inc. (a) | 83,400 | $ 4,811 | |
Best Buy Co., Inc. | 1,711,778 | 26,036 | |
Chico's FAS, Inc. | 924,880 | 17,203 | |
Express, Inc. (a) | 1,019,872 | 11,351 | |
Guess?, Inc. | 893,647 | 22,145 | |
Jos. A. Bank Clothiers, Inc. (a) | 303,858 | 14,218 | |
Lowe's Companies, Inc. | 1,122,100 | 36,334 | |
OfficeMax, Inc. | 1,484,804 | 10,913 | |
Signet Jewelers Ltd. | 281,867 | 14,589 | |
Staples, Inc. | 2,260,456 | 26,029 | |
WH Smith PLC (d) | 1,488,188 | 14,914 | |
| 270,918 | ||
Textiles, Apparel & Luxury Goods - 0.3% | |||
Gildan Activewear, Inc. | 504,600 | 17,183 | |
TOTAL CONSUMER DISCRETIONARY | 668,550 | ||
CONSUMER STAPLES - 5.2% | |||
Beverages - 1.5% | |||
Britvic PLC | 1,746,258 | 10,122 | |
Cott Corp. | 1,134,000 | 8,663 | |
Dr Pepper Snapple Group, Inc. | 649,252 | 27,820 | |
Molson Coors Brewing Co. Class B | 864,875 | 37,311 | |
Treasury Wine Estates Ltd. | 2,289,505 | 11,741 | |
| 95,657 | ||
Food & Staples Retailing - 0.7% | |||
CVS Caremark Corp. | 525,420 | 24,379 | |
Kroger Co. | 430,804 | 10,865 | |
Walgreen Co. | 285,914 | 10,073 | |
| 45,317 | ||
Food Products - 2.1% | |||
Bunge Ltd. | 307,846 | 21,866 | |
ConAgra Foods, Inc. | 940,460 | 26,182 | |
Danone SA | 270,000 | 16,597 | |
Dean Foods Co. (a) | 501,594 | 8,447 | |
Ingredion, Inc. | 229,123 | 14,082 | |
The J.M. Smucker Co. | 513,953 | 44,015 | |
| 131,189 | ||
Common Stocks - continued | |||
Shares | Value (000s) | ||
CONSUMER STAPLES - continued | |||
Household Products - 0.5% | |||
Reckitt Benckiser Group PLC | 544,727 | $ 32,964 | |
Tobacco - 0.4% | |||
Lorillard, Inc. | 225,733 | 26,187 | |
TOTAL CONSUMER STAPLES | 331,314 | ||
ENERGY - 8.6% | |||
Energy Equipment & Services - 2.9% | |||
Cameron International Corp. (a) | 921,480 | 46,664 | |
Dresser-Rand Group, Inc. (a) | 203,400 | 10,481 | |
Fugro NV (Certificaten Van Aandelen) unit | 271,300 | 18,342 | |
Halliburton Co. | 533,715 | 17,234 | |
National Oilwell Varco, Inc. | 342,731 | 25,259 | |
Oil States International, Inc. (a) | 134,627 | 9,841 | |
Patterson-UTI Energy, Inc. | 1,192,190 | 19,290 | |
Rowan Companies PLC (a) | 1,168,275 | 37,046 | |
| 184,157 | ||
Oil, Gas & Consumable Fuels - 5.7% | |||
Anadarko Petroleum Corp. | 525,590 | 36,166 | |
BPZ Energy, Inc. (a) | 2,283,600 | 6,577 | |
Chesapeake Energy Corp. (d) | 904,810 | 18,331 | |
Cloud Peak Energy, Inc. (a) | 786,874 | 16,603 | |
Energen Corp. | 961,744 | 44,865 | |
EQT Corp. | 487,340 | 29,547 | |
Exxon Mobil Corp. | 142,300 | 12,973 | |
HollyFrontier Corp. | 1,081,869 | 41,793 | |
Marathon Petroleum Corp. | 416,900 | 22,900 | |
Noble Energy, Inc. | 232,400 | 22,080 | |
Northern Oil & Gas, Inc. (a) | 424,800 | 6,440 | |
Phillips 66 | 525,427 | 24,779 | |
The Williams Companies, Inc. | 1,222,308 | 42,769 | |
World Fuel Services Corp. | 439,620 | 15,255 | |
WPX Energy, Inc. | 1,326,360 | 22,469 | |
| 363,547 | ||
TOTAL ENERGY | 547,704 | ||
FINANCIALS - 27.0% | |||
Capital Markets - 3.4% | |||
Ameriprise Financial, Inc. | 357,570 | 20,871 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
FINANCIALS - continued | |||
Capital Markets - continued | |||
Ashmore Group PLC | 1,830,400 | $ 10,743 | |
Bank of New York Mellon Corp. | 308,504 | 7,623 | |
Fortress Investment Group LLC | 2,538,300 | 10,965 | |
Goldman Sachs Group, Inc. | 124,747 | 15,268 | |
Invesco Ltd. | 1,882,421 | 45,780 | |
Morgan Stanley | 1,501,747 | 26,100 | |
State Street Corp. | 1,152,995 | 51,389 | |
TD Ameritrade Holding Corp. | 397,764 | 6,241 | |
The Blackstone Group LP | 1,268,496 | 19,484 | |
| 214,464 | ||
Commercial Banks - 4.8% | |||
Bank of Ireland (a) | 140,863,526 | 16,806 | |
CIT Group, Inc. (a) | 1,488,503 | 55,402 | |
Comerica, Inc. | 68,899 | 2,054 | |
DnB NOR ASA | 1,327,495 | 16,578 | |
First Citizen Bancshares, Inc. | 82,945 | 13,997 | |
Heritage Financial Corp., Washington | 74,295 | 1,027 | |
Itau Unibanco Holdings SA sponsored ADR | 2,732,075 | 39,834 | |
PNC Financial Services Group, Inc. | 459,155 | 26,718 | |
U.S. Bancorp | 2,158,512 | 71,684 | |
Wells Fargo & Co. | 1,822,328 | 61,394 | |
| 305,494 | ||
Consumer Finance - 1.1% | |||
Capital One Financial Corp. | 359,700 | 21,643 | |
SLM Corp. | 2,646,276 | 46,522 | |
| 68,165 | ||
Diversified Financial Services - 1.6% | |||
Deutsche Boerse AG | 269,500 | 14,587 | |
JPMorgan Chase & Co. | 1,083,721 | 45,169 | |
Moody's Corp. | 411,797 | 19,832 | |
The NASDAQ Stock Market, Inc. | 897,115 | 21,360 | |
| 100,948 | ||
Insurance - 8.6% | |||
AFLAC, Inc. | 978,872 | 48,728 | |
Aon PLC | 625,428 | 33,742 | |
Berkshire Hathaway, Inc. Class B (a) | 1,199,334 | 103,562 | |
Brasil Insurance Participacoes e Administracao SA | 1,158,100 | 10,229 | |
Fairfax Financial Holdings Ltd. (sub. vtg.) | 148,061 | 54,927 | |
First American Financial Corp. | 194,886 | 4,434 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
FINANCIALS - continued | |||
Insurance - continued | |||
Greenlight Capital Re, Ltd. (a) | 396,456 | $ 10,129 | |
Hanover Insurance Group, Inc. | 9,900 | 357 | |
Hartford Financial Services Group, Inc. | 1,071,642 | 23,265 | |
Jardine Lloyd Thompson Group PLC | 743,607 | 8,922 | |
MetLife, Inc. | 924,164 | 32,799 | |
Montpelier Re Holdings Ltd. | 183,300 | 4,192 | |
Old Republic International Corp. | 4,056,721 | 40,080 | |
Progressive Corp. | 307,400 | 6,855 | |
Prudential Financial, Inc. | 395,522 | 22,565 | |
Reinsurance Group of America, Inc. | 444,618 | 23,529 | |
StanCorp Financial Group, Inc. | 602,975 | 20,712 | |
The Chubb Corp. | 9,900 | 762 | |
The Travelers Companies, Inc. | 9,900 | 702 | |
Torchmark Corp. | 673,101 | 34,052 | |
Unum Group | 1,040,504 | 21,101 | |
Validus Holdings Ltd. | 1,088,538 | 38,970 | |
| 544,614 | ||
Real Estate Investment Trusts - 4.4% | |||
American Campus Communities, Inc. | 49,600 | 2,247 | |
American Realty Capital Trust, Inc. | 475,765 | 5,362 | |
American Tower Corp. | 534,391 | 40,234 | |
Boston Properties, Inc. | 177,252 | 18,842 | |
Corporate Office Properties Trust (SBI) | 249,000 | 6,213 | |
Douglas Emmett, Inc. | 902,617 | 21,166 | |
Equity Lifestyle Properties, Inc. | 265,919 | 17,904 | |
HCP, Inc. | 94,127 | 4,170 | |
Health Care REIT, Inc. | 69,389 | 4,124 | |
MFA Financial, Inc. | 1,565,592 | 12,791 | |
Prologis, Inc. | 956,578 | 32,801 | |
Public Storage | 49,274 | 6,831 | |
SL Green Realty Corp. | 314,473 | 23,680 | |
Ventas, Inc. | 930,455 | 58,870 | |
Weyerhaeuser Co. | 908,804 | 25,165 | |
| 280,400 | ||
Real Estate Management & Development - 2.8% | |||
Brookfield Asset Management, Inc. Class A (d) | 130,400 | 4,489 | |
CBRE Group, Inc. (a) | 1,745,341 | 31,451 | |
Forest City Enterprises, Inc. Class A (a) | 2,520,873 | 40,460 | |
Forestar Group, Inc. (a) | 1,410,019 | 22,574 | |
Jones Lang LaSalle, Inc. | 39,599 | 3,078 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
FINANCIALS - continued | |||
Real Estate Management & Development - continued | |||
Kennedy-Wilson Holdings, Inc. | 5,048,749 | $ 71,692 | |
| 173,744 | ||
Thrifts & Mortgage Finance - 0.3% | |||
People's United Financial, Inc. | 1,774,435 | 21,346 | |
TOTAL FINANCIALS | 1,709,175 | ||
HEALTH CARE - 6.9% | |||
Health Care Equipment & Supplies - 2.2% | |||
Alere, Inc. (a) | 127,415 | 2,446 | |
Boston Scientific Corp. (a) | 4,783,984 | 24,590 | |
CareFusion Corp. (a) | 1,030,596 | 27,373 | |
Hologic, Inc. (a) | 554,955 | 11,443 | |
St. Jude Medical, Inc. | 88,900 | 3,401 | |
Stryker Corp. | 349,541 | 18,386 | |
Teleflex, Inc. | 87,758 | 5,963 | |
The Cooper Companies, Inc. | 65,224 | 6,260 | |
Zimmer Holdings, Inc. | 630,122 | 40,460 | |
| 140,322 | ||
Health Care Providers & Services - 2.9% | |||
Brookdale Senior Living, Inc. (a) | 148,600 | 3,486 | |
CIGNA Corp. | 578,225 | 29,489 | |
Emeritus Corp. (a) | 1,387,733 | 31,155 | |
Health Net, Inc. (a) | 214,796 | 4,622 | |
Humana, Inc. | 276,476 | 20,534 | |
McKesson Corp. | 239,504 | 22,348 | |
MEDNAX, Inc. (a) | 299,157 | 20,636 | |
Quest Diagnostics, Inc. | 148,300 | 8,560 | |
UnitedHealth Group, Inc. | 270,898 | 15,170 | |
Universal Health Services, Inc. Class B | 677,790 | 28,054 | |
| 184,054 | ||
Health Care Technology - 0.0% | |||
Allscripts Healthcare Solutions, Inc. (a) | 102,000 | 1,318 | |
Life Sciences Tools & Services - 0.5% | |||
Life Technologies Corp. (a) | 501,232 | 24,515 | |
PerkinElmer, Inc. | 148,700 | 4,599 | |
| 29,114 | ||
Common Stocks - continued | |||
Shares | Value (000s) | ||
HEALTH CARE - continued | |||
Pharmaceuticals - 1.3% | |||
AVANIR Pharmaceuticals Class A (a)(d) | 2,129,558 | $ 6,091 | |
Elan Corp. PLC sponsored ADR (a) | 1,327,500 | 14,337 | |
Endo Pharmaceuticals Holdings, Inc. (a) | 527,240 | 15,111 | |
Forest Laboratories, Inc. (a) | 325,700 | 10,979 | |
Hospira, Inc. (a) | 146,100 | 4,484 | |
Impax Laboratories, Inc. (a) | 508,194 | 10,799 | |
ViroPharma, Inc. (a) | 87,236 | 2,203 | |
Warner Chilcott PLC | 643,690 | 7,454 | |
Watson Pharmaceuticals, Inc. (a) | 135,600 | 11,655 | |
| 83,113 | ||
TOTAL HEALTH CARE | 437,921 | ||
INDUSTRIALS - 12.3% | |||
Aerospace & Defense - 1.5% | |||
DigitalGlobe, Inc. (a)(d) | 635,073 | 16,474 | |
Esterline Technologies Corp. (a) | 224,477 | 12,973 | |
General Dynamics Corp. | 268,420 | 18,274 | |
Meggitt PLC | 2,073,434 | 12,916 | |
Rockwell Collins, Inc. | 174,809 | 9,366 | |
Textron, Inc. | 907,345 | 22,874 | |
| 92,877 | ||
Building Products - 0.8% | |||
Owens Corning (a) | 1,461,648 | 49,097 | |
Commercial Services & Supplies - 2.1% | |||
Corrections Corp. of America | 563,119 | 18,949 | |
Interface, Inc. | 951,164 | 13,611 | |
Intrum Justitia AB | 871,887 | 12,619 | |
Quad/Graphics, Inc. | 698,972 | 12,812 | |
Republic Services, Inc. | 595,834 | 16,892 | |
Sykes Enterprises, Inc. (a) | 808,954 | 11,018 | |
The Geo Group, Inc. | 1,627,548 | 45,116 | |
| 131,017 | ||
Construction & Engineering - 1.6% | |||
AECOM Technology Corp. (a) | 2,577,968 | 55,349 | |
Foster Wheeler AG (a) | 1,452,830 | 32,355 | |
MasTec, Inc. (a) | 507,002 | 11,438 | |
| 99,142 | ||
Common Stocks - continued | |||
Shares | Value (000s) | ||
INDUSTRIALS - continued | |||
Electrical Equipment - 0.4% | |||
Hubbell, Inc. Class B | 149,350 | $ 12,504 | |
Prysmian SpA | 683,300 | 13,143 | |
| 25,647 | ||
Industrial Conglomerates - 0.6% | |||
Carlisle Companies, Inc. | 397,810 | 22,098 | |
Koninklijke Philips Electronics NV | 426,534 | 10,683 | |
Orkla ASA (A Shares) | 1,021,800 | 8,083 | |
| 40,864 | ||
Machinery - 3.2% | |||
Cummins, Inc. | 192,600 | 18,024 | |
Fiat Industrial SpA | 1,082,794 | 11,726 | |
GEA Group AG | 313,234 | 9,780 | |
Harsco Corp. | 826,620 | 16,524 | |
Ingersoll-Rand PLC | 400,092 | 18,816 | |
ITT Corp. | 581,425 | 12,094 | |
Oshkosh Truck Corp. (a) | 860,552 | 25,799 | |
PACCAR, Inc. | 239,567 | 10,383 | |
Parker Hannifin Corp. | 127,404 | 10,022 | |
Snap-On, Inc. | 187,714 | 14,516 | |
Stanley Black & Decker, Inc. | 790,502 | 54,782 | |
| 202,466 | ||
Marine - 0.1% | |||
Ultrapetrol (Bahamas) Ltd. (a)(d)(e) | 3,001,747 | 4,563 | |
Professional Services - 1.1% | |||
FTI Consulting, Inc. (a) | 320,852 | 8,329 | |
Manpower, Inc. | 580,185 | 22,012 | |
Towers Watson & Co. | 784,764 | 42,150 | |
| 72,491 | ||
Road & Rail - 0.5% | |||
Con-way, Inc. | 402,475 | 11,716 | |
Quality Distribution, Inc. (a)(e) | 1,634,287 | 14,055 | |
Vitran Corp., Inc. (a)(e) | 1,639,888 | 8,577 | |
| 34,348 | ||
Common Stocks - continued | |||
Shares | Value (000s) | ||
INDUSTRIALS - continued | |||
Trading Companies & Distributors - 0.4% | |||
AerCap Holdings NV (a) | 909,268 | $ 11,329 | |
WESCO International, Inc. (a) | 238,832 | 15,495 | |
| 26,824 | ||
TOTAL INDUSTRIALS | 779,336 | ||
INFORMATION TECHNOLOGY - 10.6% | |||
Communications Equipment - 0.9% | |||
Cisco Systems, Inc. | 763,461 | 13,086 | |
Motorola Solutions, Inc. | 263,240 | 13,604 | |
Polycom, Inc. (a) | 1,596,891 | 16,001 | |
ViaSat, Inc. (a) | 350,321 | 13,606 | |
| 56,297 | ||
Computers & Peripherals - 0.6% | |||
Electronics for Imaging, Inc. (a) | 607,448 | 10,545 | |
Hewlett-Packard Co. | 1,442,742 | 19,982 | |
Lexmark International, Inc. Class A | 394,800 | 8,393 | |
| 38,920 | ||
Electronic Equipment & Components - 2.7% | |||
Aeroflex Holding Corp. (a) | 1,197,731 | 7,618 | |
Arrow Electronics, Inc. (a) | 635,225 | 22,379 | |
Benchmark Electronics, Inc. (a) | 497,930 | 7,379 | |
Corning, Inc. | 942,420 | 11,073 | |
Flextronics International Ltd. (a) | 7,686,041 | 44,348 | |
Jabil Circuit, Inc. | 2,439,789 | 42,306 | |
TE Connectivity Ltd. | 576,584 | 18,554 | |
TTM Technologies, Inc. (a) | 1,753,400 | 15,781 | |
| 169,438 | ||
Internet Software & Services - 0.2% | |||
Yahoo!, Inc. (a) | 616,500 | 10,363 | |
IT Services - 1.5% | |||
Amdocs Ltd. | 658,463 | 21,775 | |
Fidelity National Information Services, Inc. | 488,595 | 16,060 | |
Fiserv, Inc. (a) | 255,903 | 19,177 | |
Global Payments, Inc. | 337,368 | 14,422 | |
Sapient Corp. (a) | 915,914 | 9,416 | |
Unisys Corp. (a) | 696,922 | 11,883 | |
| 92,733 | ||
Common Stocks - continued | |||
Shares | Value (000s) | ||
INFORMATION TECHNOLOGY - continued | |||
Office Electronics - 0.3% | |||
Xerox Corp. | 3,439,789 | $ 22,152 | |
Semiconductors & Semiconductor Equipment - 2.4% | |||
ASML Holding NV | 288,725 | 15,871 | |
Broadcom Corp. Class A | 533,662 | 16,829 | |
Entegris, Inc. (a) | 1,383,824 | 11,361 | |
Freescale Semiconductor Holdings I Ltd. (a)(d) | 2,887,502 | 25,814 | |
Intersil Corp. Class A | 3,250,292 | 22,915 | |
Marvell Technology Group Ltd. | 2,450,132 | 19,332 | |
NXP Semiconductors NV (a) | 637,900 | 15,475 | |
ON Semiconductor Corp. (a) | 3,317,582 | 20,403 | |
PMC-Sierra, Inc. (a) | 1,655,360 | 7,747 | |
| 155,747 | ||
Software - 2.0% | |||
Autodesk, Inc. (a) | 228,239 | 7,267 | |
BMC Software, Inc. (a) | 221,737 | 9,025 | |
Check Point Software Technologies Ltd. (a) | 249,500 | 11,110 | |
Comverse Technology, Inc. (a) | 2,327,195 | 15,336 | |
Constellation Software, Inc. | 69,400 | 7,960 | |
Electronic Arts, Inc. (a) | 1,210,892 | 14,955 | |
JDA Software Group, Inc. (a) | 674,285 | 25,717 | |
Oracle Corp. | 570,503 | 17,714 | |
Symantec Corp. (a) | 825,866 | 15,023 | |
| 124,107 | ||
TOTAL INFORMATION TECHNOLOGY | 669,757 | ||
MATERIALS - 6.2% | |||
Chemicals - 3.2% | |||
Air Products & Chemicals, Inc. | 280,867 | 21,776 | |
Albemarle Corp. | 311,486 | 17,166 | |
Ashland, Inc. | 649,855 | 46,237 | |
Cytec Industries, Inc. | 293,800 | 20,219 | |
Eastman Chemical Co. | 559,695 | 33,156 | |
LyondellBasell Industries NV Class A | 335,020 | 17,887 | |
Methanex Corp. | 392,108 | 11,754 | |
Mexichem SAB de CV | 1,678,900 | 8,320 | |
W.R. Grace & Co. (a) | 110,219 | 7,072 | |
Westlake Chemical Corp. | 240,564 | 18,297 | |
| 201,884 | ||
Common Stocks - continued | |||
Shares | Value (000s) | ||
MATERIALS - continued | |||
Containers & Packaging - 1.5% | |||
Ball Corp. | 611,682 | $ 26,198 | |
Rock-Tenn Co. Class A | 705,834 | 51,660 | |
Sonoco Products Co. | 458,178 | 14,263 | |
| 92,121 | ||
Metals & Mining - 1.5% | |||
Coeur d'Alene Mines Corp. (a) | 288,200 | 8,908 | |
First Quantum Minerals Ltd. | 937,100 | 21,064 | |
Gem Diamonds Ltd. (a) | 2,582,367 | 7,032 | |
Reliance Steel & Aluminum Co. | 904,270 | 49,138 | |
SunCoke Energy, Inc. (a) | 741,477 | 11,916 | |
| 98,058 | ||
TOTAL MATERIALS | 392,063 | ||
TELECOMMUNICATION SERVICES - 0.8% | |||
Diversified Telecommunication Services - 0.2% | |||
CenturyLink, Inc. | 57,491 | 2,207 | |
Frontier Communications Corp. (d) | 2,166,104 | 10,224 | |
| 12,431 | ||
Wireless Telecommunication Services - 0.6% | |||
NII Holdings, Inc. (a)(d) | 3,022,115 | 24,086 | |
Sprint Nextel Corp. (a) | 2,652,304 | 14,694 | |
| 38,780 | ||
TOTAL TELECOMMUNICATION SERVICES | 51,211 | ||
UTILITIES - 8.9% | |||
Electric Utilities - 5.5% | |||
Edison International | 1,934,770 | 90,818 | |
ITC Holdings Corp. | 895,512 | 71,301 | |
NextEra Energy, Inc. | 307,893 | 21,571 | |
Northeast Utilities | 2,270,479 | 89,230 | |
OGE Energy Corp. | 543,651 | 31,303 | |
Pinnacle West Capital Corp. | 451,913 | 23,938 | |
PNM Resources, Inc. | 943,392 | 20,906 | |
| 349,067 | ||
Gas Utilities - 0.3% | |||
ONEOK, Inc. | 364,574 | 17,244 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
UTILITIES - continued | |||
Independent Power Producers & Energy Traders - 1.0% | |||
Calpine Corp. (a) | 920,860 | $ 16,207 | |
The AES Corp. | 4,559,203 | 47,644 | |
| 63,851 | ||
Multi-Utilities - 2.1% | |||
PG&E Corp. | 448,769 | 19,082 | |
Sempra Energy | 1,623,397 | 113,238 | |
| 132,320 | ||
TOTAL UTILITIES | 562,482 | ||
TOTAL COMMON STOCKS (Cost $6,187,814) |
|
U.S. Treasury Obligations - 0.0% | ||||
| Principal |
| ||
U.S. Treasury Bills, yield at date of purchase 0.08% to 0.11% 11/23/12 to 1/24/13 (f) | $ 3,080 |
|
Money Market Funds - 3.9% | |||
Shares |
| ||
Fidelity Cash Central Fund, 0.19% (b) | 189,262,510 | 189,263 | |
Fidelity Securities Lending Cash Central Fund, 0.19% (b)(c) | 59,630,645 | 59,631 | |
TOTAL MONEY MARKET FUNDS (Cost $248,894) |
| ||
TOTAL INVESTMENT PORTFOLIO - 101.0% (Cost $6,439,788) | 6,401,487 | ||
NET OTHER ASSETS (LIABILITIES) - (1.0)% | (65,883) | ||
NET ASSETS - 100% | $ 6,335,604 |
Futures Contracts | |||||
Expiration | Underlying Face | Unrealized | |||
Purchased | |||||
Equity Index Contracts | |||||
640 CME E-mini S&P MidCap 400 Index Contracts | Dec. 2012 | $ 62,598 | $ (209) |
|
The face value of futures purchased as a percentage of net assets is 1% |
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 $3,065,000. |
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 | $ 240 |
Fidelity Securities Lending Cash Central Fund | 1,130 |
Total | $ 1,370 |
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 | Dividend | Value, |
Pinnacle Airlines Corp. | $ 4,948 | $ - | $ 302 | $ - | $ - |
Quality Distribution, Inc. | 16,056 | 3,500 | 1,627 | - | 14,055 |
Ultrapetrol (Bahamas) Ltd. | 3,216 | 3,646 | - | - | 4,563 |
Vitran Corp., Inc. | 7,920 | 33 | - | - | 8,577 |
Total | $ 32,140 | $ 7,179 | $ 1,929 | $ - | $ 27,195 |
Other Information |
The following is a summary of the inputs used, as of October 31, 2012, 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 | $ 668,550 | $ 668,550 | $ - | $ - |
Consumer Staples | 331,314 | 331,314 | - | - |
Energy | 547,704 | 547,704 | - | - |
Financials | 1,709,175 | 1,692,369 | 16,806 | - |
Health Care | 437,921 | 437,921 | - | - |
Industrials | 779,336 | 768,653 | 10,683 | - |
Information Technology | 669,757 | 669,757 | - | - |
Materials | 392,063 | 392,063 | - | - |
Telecommunication Services | 51,211 | 51,211 | - | - |
Utilities | 562,482 | 562,482 | - | - |
U.S. Government and Government Agency Obligations | 3,080 | - | 3,080 | - |
Money Market Funds | 248,894 | 248,894 | - | - |
Total Investments in Securities: | $ 6,401,487 | $ 6,370,918 | $ 30,569 | $ - |
Derivative Instruments: | ||||
Liabilities | ||||
Futures Contracts | $ (209) | $ (209) | $ - | $ - |
Value of Derivative Instruments |
The following table is a summary of the Fund's value of derivative instruments by primary risk exposure as of October 31, 2012. For additional information on derivative instruments, please refer to the Derivative Instruments section in the accompanying Notes to Financial Statements. |
Primary Risk Exposure / | Value | |
| Asset | Liability |
Equity Risk | ||
Futures Contracts (a) | $ - | $ (209) |
Total Value of Derivatives | $ - | $ (209) |
(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 or territory of incorporation, as a percentage of total net assets, is as follows. (Unaudited) |
United States of America | 83.9% |
Bermuda | 2.7% |
United Kingdom | 2.5% |
Canada | 2.1% |
Netherlands | 1.4% |
Brazil | 1.1% |
Others (Individually Less Than 1%) | 6.3% |
| 100.0% |
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, 2012 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $57,528) - See accompanying schedule: Unaffiliated issuers (cost $6,155,423) | $ 6,125,398 |
|
Fidelity Central Funds (cost $248,894) | 248,894 |
|
Other affiliated issuers (cost $35,471) | 27,195 |
|
Total Investments (cost $6,439,788) |
| $ 6,401,487 |
Cash |
| 3 |
Receivable for investments sold | 52,088 | |
Receivable for fund shares sold | 2,776 | |
Dividends receivable | 2,731 | |
Distributions receivable from Fidelity Central Funds | 93 | |
Receivable for daily variation margin on futures contracts | 339 | |
Other receivables | 475 | |
Total assets | 6,459,992 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 44,340 | |
Payable for fund shares redeemed | 16,927 | |
Accrued management fee | 1,996 | |
Other affiliated payables | 1,025 | |
Other payables and accrued expenses | 469 | |
Collateral on securities loaned, at value | 59,631 | |
Total liabilities | 124,388 | |
|
|
|
Net Assets | $ 6,335,604 | |
Net Assets consist of: |
| |
Paid in capital | $ 8,519,381 | |
Undistributed net investment income | 44,796 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (2,190,066) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (38,507) | |
Net Assets | $ 6,335,604 |
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, 2012 | |
|
|
|
Value: | $ 74.14 | |
|
|
|
Class K: | $ 74.27 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Operations
Amounts in thousands | Year ended October 31, 2012 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 111,107 |
Interest |
| 4 |
Income from Fidelity Central Funds |
| 1,370 |
Total income |
| 112,481 |
|
|
|
Expenses | ||
Management fee | $ 35,859 | |
Performance adjustment | (6,434) | |
Transfer agent fees | 11,668 | |
Accounting and security lending fees | 1,153 | |
Custodian fees and expenses | 250 | |
Independent trustees' compensation | 43 | |
Appreciation in deferred trustee compensation account | 1 | |
Registration fees | 97 | |
Audit | 86 | |
Legal | 27 | |
Miscellaneous | 70 | |
Total expenses before reductions | 42,820 | |
Expense reductions | (310) | 42,510 |
Net investment income (loss) | 69,971 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 273,852 | |
Other affiliated issuers | (9,159) |
|
Investments not meeting investment restrictions | 34 | |
Payment from investment advisor for loss on investment not meeting investment restrictions | 24 | |
Foreign currency transactions | (459) | |
Futures contracts | 226 | |
Total net realized gain (loss) |
| 264,518 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 621,331 | |
Assets and liabilities in foreign currencies | (19) | |
Futures contracts | 882 | |
Total change in net unrealized appreciation (depreciation) |
| 622,194 |
Net gain (loss) | 886,712 | |
Net increase (decrease) in net assets resulting from operations | $ 956,683 |
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) | $ 69,971 | $ 71,043 |
Net realized gain (loss) | 264,518 | 852,091 |
Change in net unrealized appreciation (depreciation) | 622,194 | (642,684) |
Net increase (decrease) in net assets resulting | 956,683 | 280,450 |
Distributions to shareholders from net investment income | (59,276) | (112,001) |
Distributions to shareholders from net realized gain | (2,930) | (2,508) |
Total distributions | (62,206) | (114,509) |
Share transactions - net increase (decrease) | (1,203,854) | (1,667,982) |
Total increase (decrease) in net assets | (309,377) | (1,502,041) |
|
|
|
Net Assets | ||
Beginning of period | 6,644,981 | 8,147,022 |
End of period (including undistributed net investment income of $44,796 and undistributed net investment income of $38,674, respectively) | $ 6,335,604 | $ 6,644,981 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Value
Years ended October 31, | 2012 | 2011 | 2010 | 2009 | 2008 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 64.53 | $ 64.09 | $ 51.82 | $ 43.78 | $ 89.60 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .74 | .59 | .66 E | .59 | .75 |
Net realized and unrealized gain (loss) | 9.48 | .75 | 12.09 | 7.69 | (38.92) |
Total from investment operations | 10.22 | 1.34 | 12.75 | 8.28 | (38.17) |
Distributions from net investment income | (.58) | (.88) | (.48) | (.24) | (.56) |
Distributions from net realized gain | (.03) | (.02) | - | - | (7.09) |
Total distributions | (.61) | (.90) | (.48) | (.24) | (7.65) |
Net asset value, end of period | $ 74.14 | $ 64.53 | $ 64.09 | $ 51.82 | $ 43.78 |
Total Return A | 15.99% | 2.05% | 24.74% | 19.12% | (46.34)% |
Ratios to Average Net Assets C, F |
|
|
|
|
|
Expenses before reductions | .68% | .60% | .64% | .64% | .76% |
Expenses net of fee waivers, if any | .68% | .60% | .64% | .64% | .76% |
Expenses net of all reductions | .68% | .59% | .63% | .64% | .76% |
Net investment income (loss) | 1.07% | .87% | 1.12% E | 1.41% | 1.10% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (in millions) | $ 5,571 | $ 6,006 | $ 7,276 | $ 7,278 | $ 11,066 |
Portfolio turnover rate D | 77% | 95% | 148% | 51% | 50% |
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 large, non-recurring dividend which amounted to $.23 per share. Excluding this non-recurring 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, | 2012 | 2011 | 2010 | 2009 | 2008 H |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 64.66 | $ 64.24 | $ 51.96 | $ 43.82 | $ 72.61 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) D | .85 | .70 | .76 G | .72 | .25 |
Net realized and unrealized gain (loss) | 9.47 | .74 | 12.12 | 7.67 | (29.04) |
Total from investment operations | 10.32 | 1.44 | 12.88 | 8.39 | (28.79) |
Distributions from net investment income | (.68) | (1.00) | (.60) | (.25) | - |
Distributions from net realized gain | (.03) | (.02) | - | - | - |
Total distributions | (.71) | (1.02) | (.60) | (.25) | - |
Net asset value, end of period | $ 74.27 | $ 64.66 | $ 64.24 | $ 51.96 | $ 43.82 |
Total Return B, C | 16.16% | 2.20% | 24.96% | 19.39% | (39.65)% |
Ratios to Average Net Assets E, I |
|
|
|
|
|
Expenses before reductions | .54% | .44% | .47% | .40% | .60% A |
Expenses net of fee waivers, if any | .54% | .44% | .47% | .40% | .60% A |
Expenses net of all reductions | .53% | .44% | .46% | .40% | .60% A |
Net investment income (loss) | 1.22% | 1.02% | 1.29% G | 1.64% | 1.17% A |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (in millions) | $ 765 | $ 639 | $ 872 | $ 484 | $ 177 |
Portfolio turnover rate F | 77% | 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 large, non-recurring dividend which amounted to $.23 per share. Excluding this non-recurring 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, 2012
(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 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
Notes to Financial Statements - continued
(Amounts in thousands except percentages)
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. In accordance with valuation policies and procedures approved by the Board of Trustees (the Board), the Fund attempts to obtain prices from one or more third party pricing vendors or brokers to value its investments. When current market prices, quotations or rates are not readily available or reliable, securities will be fair valued in good faith by the FMR Fair Value Committee (the Committee), in accordance with procedures adopted by the Fund's Board. Factors used in determining fair value vary by security type and 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 Committee oversees the Fund's valuation policies and procedures and is responsible for approving and reporting to the Board all fair value determinations.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the Fund's own assumptions based on the best information available)
Valuation techniques used to value the Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by a third party pricing vendor on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when 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. Utilizing these techniques may result in transfers between Level 1 and Level 2.
Debt securities, including restricted securities, are valued based on evaluated prices received from third party pricing vendors or from brokers who make markets in such securities. For U.S. government and government agency obligations, pricing vendors utilize matrix pricing which considers yield or price of bonds of comparable quality,
Annual Report
3. Significant Accounting Policies - continued
Security Valuation - continued
coupon, maturity and type as well as broker-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 methodologies which consider similar factors that would be used by third party pricing vendors. 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 (NAV) each business day and are categorized as Level 1 in the hierarchy.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of October 31, 2012, is included at the end of the Fund's Schedule of Investments.
Foreign Currency Translation. The Fund may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rates at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on
Annual Report
Notes to Financial Statements - continued
(Amounts in thousands except percentages)
3. Significant Accounting Policies - continued
Investment Transactions and Income - continued
securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Deferred Trustee Compensation. Under a Deferred Compensation Plan (the Plan), independent Trustees may elect to defer receipt of a portion of their annual compensation. Deferred amounts are invested in a cross-section of Fidelity funds, are marked-to-market and remain in the Fund until distributed in accordance with the Plan. The investment of deferred amounts and the offsetting payable to the Trustees are included in the accompanying Statement of Assets and Liabilities.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for income taxes is required. As of October 31, 2012, the Fund did not have any unrecognized tax benefits in the financial statements; nor is the Fund aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. A fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are declared and recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP.
Annual Report
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to futures transactions, foreign currency transactions, 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 | $ 546,190 |
Gross unrealized depreciation | (636,556) |
Net unrealized appreciation (depreciation) on securities and other investments | $ (90,366) |
|
|
Tax Cost | $ 6,491,853 |
The tax-based components of distributable earnings as of period end were as follows:
Undistributed ordinary income | $ 45,145 |
Capital loss carryforward | $ (2,138,210) |
Net unrealized appreciation (depreciation) | $ (90,363) |
Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. Under the Regulated Investment Company Modernization Act of 2010 (the Act), the Fund is permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period and such capital losses are required to be used prior to any losses that expire. Capital loss carryforwards were as follows:
Fiscal year of expiration |
|
2017 | $ (1,809,894) |
2018 | (328,316) |
Total capital loss carryforward | $ (2,138,210) |
The tax character of distributions paid was as follows:
| October 31, 2012 | October 31, 2011 |
Ordinary Income | $ 62,206 | $ 114,509 |
Annual Report
Notes to Financial Statements - continued
(Amounts in thousands except percentages)
3. Significant Accounting Policies - continued
New Accounting Pronouncement. In December 2011, the Financial Accounting Standards Board issued Accounting Standard Update No. 2011-11, Disclosures about Offsetting Assets and Liabilities. The update creates new disclosure requirements requiring entities to disclose both gross and net information for derivatives and other financial instruments that are either offset in the Statement of Assets and Liabilities or subject to an enforceable master netting arrangement or similar agreement. The disclosure requirements are effective for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods. 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's investment objective allows the Fund to enter into various types of derivative contracts, including futures contracts. Derivatives are investments whose value is primarily derived from underlying assets, indices or reference rates and may be transacted on an exchange or over-the-counter (OTC). Derivatives may involve a future commitment to buy or sell a specified instrument based on specified terms, to exchange future cash flows at periodic intervals based on a notional principal amount, or for one party to make one or more payments upon the occurrence of specified events in exchange for periodic payments from the other party.
The Fund used 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 close out 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. Counterparty credit risk related to exchange-traded futures contracts is minimal because of the protection provided by the exchange on which they trade.
Annual Report
4. Derivative Instruments - continued
Risk Exposures and the Use of Derivative Instruments - continued
Investing in derivatives may involve greater risks than investing in the underlying assets directly and, to varying degrees, may involve risk of loss in excess of any initial investment and collateral received and amounts recognized in the Statement of Assets and Liabilities. In addition, there may be the risk that the change in value of the derivative contract does not correspond to the change in value of the underlying instrument.
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.
Any open futures contracts at period end are shown in the Schedule of Investments under the caption "Futures Contracts." The underlying face amount at value 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.
During the period the Fund recognized net realized gain (loss) of $226 and a change in net unrealized appreciation (depreciation) of $882 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 $4,819,773 and $6,014,900, respectively.
The Fund realized a gain and loss of $58 and $24 respectively, on sales of investments which did not meet the investment restrictions of the Fund. The loss of $24 was fully reimbursed by the Fund's investment advisor.
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
Annual Report
Notes to Financial Statements - continued
(Amounts in thousands except percentages)
6. Fees and Other Transactions with Affiliates - continued
Management Fee - continued
of .30% of the Fund's average net assets and an annualized 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 Value, as compared to an appropriate benchmark index. For the period, the total annual management fee rate, including the performance adjustment, was .46% of the Fund's average net assets.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of 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 | $ 11,305 | .20 |
Class K | 363 | .05 |
| $ 11,668 |
|
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 each month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $150 for the period.
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR or an affiliate in a $4.25 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which
Annual Report
7. Committed Line of Credit - continued
amounted to $18 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 $2,628. 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 $1,130, including $35 from securities loaned to FCM.
9. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of the Fund provided services to the Fund in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $310 for the period.
10. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended October 31, | 2012 | 2011 |
From net investment income |
|
|
Value | $ 52,420 | $ 98,394 |
Class K | 6,856 | 13,607 |
Total | $ 59,276 | $ 112,001 |
Annual Report
Notes to Financial Statements - continued
(Amounts in thousands except percentages)
10. Distributions to Shareholders - continued
Years ended October 31, | 2012 | 2011 |
From net realized gain |
|
|
Value | $ 2,639 | $ 2,236 |
Class K | 291 | 272 |
Total | $ 2,930 | $ 2,508 |
11. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
Years ended October 31, | 2012 | 2011 | 2012 | 2011 |
Value |
|
|
|
|
Shares sold | 4,490 | 9,763 | $ 310,256 | $ 677,671 |
Reinvestment of distributions | 833 | 1,446 | 52,550 | 96,363 |
Shares redeemed | (23,268) | (31,637) | (1,594,790) | (2,177,863) |
Net increase (decrease) | (17,945) | (20,428) | $ (1,231,984) | $ (1,403,829) |
Class K |
|
|
|
|
Shares sold | 4,935 | 4,738 | $ 339,901 | $ 327,041 |
Reinvestment of distributions | 113 | 208 | 7,146 | 13,878 |
Shares redeemed | (4,630) | (8,636) | (318,917) | (605,072) |
Net increase (decrease) | 418 | (3,690) | $ 28,130 | $ (264,153) |
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, 2012, 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, 2012 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
December 12, 2012
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 236 funds advised by FMR or an affiliate. Mr. Curvey oversees 443 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 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 (77) | |
| Year of Election or Appointment: 2007 Mr. Curvey is Trustee and 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 (55) | |
| 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 (64) | |
| 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 (59) | |
| 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 Entertainment, Inc. (restaurant and entertainment complexes, 2010-present), Earth Fare, Inc. (retail grocery, 2012-present), The Hillman Companies, Inc. (hardware wholesalers, 2010-present), and Bristol-Myers Squibb Company (global pharmaceuticals, 2008-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 (68) | |
| 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 Chairman of the Board of Directors of the Philharmonic Center for the Arts in Naples, Florida (2012-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 (68) | |
| 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). Previously, Mr. Mauriello served as a Director of the Hamilton Funds of the Bank of New York (2006-2007) and of Arcadia Resources Inc. (health care services and products, 2007-2012). |
Robert W. Selander (62) | |
| 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 (68) | |
| Year of Election or Appointment: 2005 Ms. Small is a member of the Board of Directors (2009-present) and Chair of the Investment Committee (2010-present) of the Teagle Foundation. Ms. Small also serves on the Investment Committee of the Berkshire Taconic Community Foundation (2008-present). Previously, Ms. Small served as Chairperson (2002-2008) and a member of the Investment Committee and Chairperson (2008-2012) and a member of the Board of Trustees 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 (73) | |
| 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 a Director of Univar Inc. (global distributor of commodity and specialty chemicals, Chairman from 2010-May 2012 and Lead Director from May 2012-present), Teradata Corporation (data warehousing and technology solutions, 2008-present), Maersk Inc. (industrial conglomerate), and Tyco International, Ltd. (multinational manufacturing and services, 2007-present), and a member of the Advisory Board for Metalmark Capital LLC (private equity investment, 2005-present). Mr. Stavropoulos is an operating 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, a Trustee of the Rollin L. Gerstacker Foundation, and a Director of the Naples Philharmonic Center for the Arts. Previously, Mr. Stavropoulos served as a Director of Chemical Financial Corporation (bank holding company, 1993-2012). |
David M. Thomas (63) | |
| 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), and a Director of Fortune Brands, Inc. (consumer products, 2000-2011). In addition, Mr. Thomas serves as Non-Executive Chairman of the Board of Directors of Fortune Brands Home and Security (home and security products, 2011-present), and as a member of the Board of Directors of Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (62) | |
| 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). |
+ 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 David A. Rosow and Garnett A. Smith may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235. 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 (82) | |
| 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 (68) | |
| 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). |
David A. Rosow (70) | |
| Year of Election or Appointment: 2012 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Chairman and Chief Executive Officer of International Golf Group, Inc. (golf course development, 1989-present). Previously, Mr. Rosow served as Chairman and Chief Executive Officer of Rosow & Company, Inc. (private investment company, 1989-2011), a Lead Director of Hudson United Bancorp (2001-2006) and as a Director of TD Banknorth (1996-2006). In addition, Mr. Rosow is a member (2008-present) and President (2009-present) of the Town Council of Palm Beach, Florida. |
Garnett A. Smith (65) | |
| Year of Election or Appointment: 2012 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Prior to Mr. Smith's retirement, he served as Chairman and Chief Executive Officer of Inbrand Corp. (manufacturer of personal absorbent products, 1990-1997). He also served as President (1986-1990) of Inbrand Corp. Prior to his employment with Inbrand Corp., he was employed by a retail fabric chain and North Carolina National Bank. In addition, Mr. Smith is a board member of the Jackson Hole Land Trust (2009-present). |
Kenneth B. Robins (43) | |
| 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 (48) | |
| 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 (48) | |
| 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 (44) | |
| 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 (43) | |
| 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). |
Elizabeth Paige Baumann (44) | |
| Year of Election or Appointment: 2012 Anti-Money Laundering (AML) Officer of the Fidelity funds. Ms. Baumann also serves as AML Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2012-present), Chief AML Officer of FMR LLC (2012-present), and is an employee of Fidelity Investments. Previously, Ms. Baumann served as Vice President and Deputy Anti-Money Laundering Officer (2007-2012). |
Christine Reynolds (54) | |
| 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). |
Joseph A. Hanlon (44) | |
| Year of Election or Appointment: 2012 Chief Compliance Officer of Fidelity's Equity and High Income Funds. Mr. Hanlon serves as Compliance Officer of FMR, FMR Co., Inc., Fidelity Investments Money Management, Inc. (FIMM), Fidelity Research and Analysis Company (FRAC), Fidelity Management & Research (Japan) Inc., Fidelity Management & Research (U.K.) Inc., Fidelity Management & Research (Hong Kong), and Strategic Advisers, Inc. (2009-present), as Senior Vice President of the Fidelity Asset Management Division (2009-present), and is an employee of Fidelity Investments. |
Joseph F. Zambello (55) | |
| 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 (45) | |
| Year of Election or Appointment: 2008 Deputy Treasurer of Fidelity's Equity and High Income Funds. Mr. Deberghes also serves as Vice President (2011-present) and Assistant Treasurer (2010-present) of other Fidelity funds, 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). |
Stephen Sadoski (41) | |
| Year of Election or Appointment: 2012 Deputy Treasurer of Fidelity's Equity and High Income Funds. Mr. Sadoski also serves as Assistant Treasurer of other Fidelity funds (2012-present) and is an employee of Fidelity Investments (2012-present). Previously, Mr. Sadoski served as an assistant chief accountant in the Division of Investment Management of the Securities and Exchange Commission (SEC) (2009-2012) and as a senior manager at Deloitte & Touche (1997-2009). |
Stephanie J. Dorsey (43) | |
| 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 (54) | |
| 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 (54) | |
| 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 (44) | |
| 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 the dividends distributed during the fiscal year as qualifying for the dividends-received deduction for corporate shareholders.
The 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 2013 of amounts for use in preparing 2012 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, at each of its meetings, considers 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 and chaired by 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 2012 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 relative to peer funds; (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 exist and 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 also considered the fund's investment objective, strategies, and related investment philosophy. 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 continued to increase the resources devoted to non-U.S. offices, including expansion of Fidelity's global investment organization. The Board noted that Fidelity's analysts have extensive resources, tools and capabilities that allow them to conduct sophisticated quantitative and fundamental analysis, as well as credit analysis of issuers, counterparties and guarantors. 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 that 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 its deliberations, the Board considered the Investment Advisers' trading and risk management 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 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.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
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.
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) persisting in efforts to enhance Fidelity's research capabilities, in particular, international research; (iii) launching new funds and making other enhancements to meet client needs for global and income-oriented solutions; (iv) continuing to launch dedicated lower cost underlying funds to meet investment management's portfolio construction needs related to expanding underlying fund options, specifically for the Freedom Fund product lines; (v) adopting a "Stock Selector" sector neutral investment approach and employing a team of portfolio managers who are sector specialists to manage certain funds; (vi) rationalizing product lines and gaining increased efficiencies through the mergers of several funds into other funds; (vii) strengthening the Spartan Index Fund product line by adding new funds and/or new low-cost institutional share classes, restructuring fund expenses to accommodate new classes, and reducing investment minimums for certain classes of shares; (viii) modifying the eligibility criteria for Institutional Class shares to increase their appeal to government entities and charitable investors; and (ix) reducing certain transfer agent fee rates.
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, 2011, 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 (top of box) and the 75th percentile return (bottom 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 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 fourth quartile for the one- and five-year periods and the second quartile for the three-year period. The Board also noted that the investment performance of the fund was lower than its benchmark for the one- and five-year periods, although the three-year cumulative total return of the retail class compared favorably to its benchmark. 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 will closely monitor the performance of the fund in the coming 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.
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 Value 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 2011. 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 2011.
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. The Board noted the findings of the 2010 ad hoc joint committee (created with the board of other Fidelity funds), which reviewed and compared 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.
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 economies of scale, if any, 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) the potential to further rationalize the Fidelity fund lineup with the possibility of achieving savings for the funds and Fidelity; (iii) Fidelity's compensation structure for portfolio managers and other key 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) the realization of fall-out benefits in certain Fidelity business units; (vi) Fidelity's group fee structures, the potential impact of regulatory changes on such structures, and the rationale for the individual fee rates of certain funds; (vii) fund profitability methodology, including Fidelity's cost allocation methodology, and the impact of certain factors on fund profitability results; (viii) trends regarding industry use of performance fee structures and the possibility of implementing performance fee structures for additional funds; and (ix) the impact of net redemptions from the Fidelity funds.
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
Smithfield, RI
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
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
(Fidelity Investment logo)(registered trademark)
Corporate Headquarters
82 Devonshire St., Boston, MA 02109
www.fidelity.com
VAL-UANN-1212 1.784783.109
Fidelity®
Value
Fund -
Class K
Annual Report
October 31, 2012
(Fidelity Cover Art)
Contents
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, 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. © 2012 FMR LLC. All rights reserved.
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, 2012 | Past 1 | Past 5 | Past 10 |
Class K A | 16.16% | -0.99% | 9.01% |
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, 2002. 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 bouts of volatility to post strong gains for the year ending October 31, 2012, and extend an uptrend that began in March 2009. The broad-based S&P 500® Index advanced 15.21% for the 12-month period, while the blue-chip-laden Dow Jones Industrial AverageSM and technology-heavy Nasdaq Composite® Index rose 12.56% and 12.21%, respectively. Debt problems in Europe, slower growth in China and uncertainty about a U.S. economic recovery put downward pressure on stocks early on and during a turbulent spring. However, beginning in June, stocks rose on central bank stimulus, steps to repair the eurozone and signs of life in the U.S. housing market. Equity benchmarks hit multiyear highs in September, with the Dow and the S&P® achieving their best marks since 2007, and the Nasdaq reaching a 12-year high. Stocks retreated in October, which was marked by disappointing corporate earnings reports and a two-day weather-related closure of the New York Stock Exchange. Among the 10 sectors that comprise the S&P 500®, most posted a double-digit gain, led by telecommunication services (+26%) and health care (+22%), with energy (+7%) and materials (+7%) lagging the most. Despite lingering eurozone turmoil and weaker local currencies versus the U.S. dollar, foreign developed-markets stocks rose modestly, with the MSCI® EAFE® Index adding 4.76%.
Comments from Matthew Friedman, Lead Portfolio Manager of Fidelity® Value Fund: For the year, the fund's Class K shares returned 16.16%, compared with 14.99% for the Russell Midcap® Value Index. The fund's relative performance was largely driven by favorable stock picking in the materials and consumer discretionary sectors. Sempra Energy in utilities was the fund's top individual contributor, while regional banking firms Wells Fargo and U.S. Bancorp further boosted returns, despite financials' overall drag on results. Canadian oil and gas entity Nexen and specialty chemicals manufacturer Solutia were among several beneficiaries of buyout activity. Weak stock picking in the financials sector was the biggest detractor, including stakes in Brazil's Itau Unibanco Holdings and Knight Capital Group, along with missing out on strong-performing index component Discover Financial Services. Results from the telecommunication services and information technology sectors also were disappointing, including the biggest individual detractor, Latin American wireless provider NII Holdings, and personal computer/printer manufacturer Hewlett-Packard. A number of these stocks were not in the index, and I sold some prior to 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, 2012 to October 31, 2012).
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 | .55% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,032.60 | $ 2.81 |
HypotheticalA |
| $ 1,000.00 | $ 1,022.37 | $ 2.80 |
Class K | .42% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,033.40 | $ 2.15 |
HypotheticalA |
| $ 1,000.00 | $ 1,023.03 | $ 2.14 |
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 184/366 (to reflect the one-half year period).
Annual Report
Investment Changes (Unaudited)
Top Ten Stocks as of October 31, 2012 | ||
| % of fund's | % of fund's net assets |
Sempra Energy | 1.8 | 2.5 |
Berkshire Hathaway, Inc. Class B | 1.6 | 1.6 |
Edison International | 1.4 | 1.8 |
Northeast Utilities | 1.4 | 1.1 |
U.S. Bancorp | 1.1 | 1.3 |
ITC Holdings Corp. | 1.1 | 0.0 |
Wells Fargo & Co. | 1.0 | 1.7 |
Ventas, Inc. | 0.9 | 0.7 |
CIT Group, Inc. | 0.9 | 0.9 |
AECOM Technology Corp. | 0.9 | 0.1 |
| 12.1 | |
Top Five Market Sectors as of October 31, 2012 | ||
| % of fund's | % of fund's net assets |
Financials | 27.0 | 28.6 |
Industrials | 12.3 | 11.6 |
Information Technology | 10.6 | 9.2 |
Consumer Discretionary | 10.6 | 11.1 |
Utilities | 8.9 | 11.3 |
Asset Allocation (% of fund's net assets) | |||||||
As of October 31, 2012 * | As of April 30, 2012 ** | ||||||
![]() | Stocks and |
| ![]() | Stocks and |
| ||
![]() | Short-Term |
| ![]() | Short-Term |
| ||
* Foreign investments | 16.1% |
| ** Foreign investments | 16.8% |
|
Annual Report
Investments October 31, 2012
Showing Percentage of Net Assets
Common Stocks - 97.1% | |||
Shares | Value (000s) | ||
CONSUMER DISCRETIONARY - 10.6% | |||
Auto Components - 1.0% | |||
Delphi Automotive PLC | 1,312,555 | $ 41,267 | |
Tenneco, Inc. (a) | 637,563 | 19,478 | |
| 60,745 | ||
Automobiles - 0.3% | |||
Harley-Davidson, Inc. | 392,496 | 18,353 | |
Diversified Consumer Services - 0.8% | |||
Anhanguera Educacional Participacoes SA | 1,005,500 | 17,624 | |
DeVry, Inc. | 567,998 | 14,916 | |
H&R Block, Inc. | 1,056,338 | 18,697 | |
| 51,237 | ||
Hotels, Restaurants & Leisure - 0.8% | |||
Carnival Corp. unit | 375,574 | 14,227 | |
Penn National Gaming, Inc. (a) | 497,237 | 20,103 | |
Sonic Corp. (a) | 1,536,421 | 15,318 | |
| 49,648 | ||
Household Durables - 0.9% | |||
Harman International Industries, Inc. | 258,731 | 10,849 | |
Jarden Corp. | 586,729 | 29,219 | |
Whirlpool Corp. | 186,395 | 18,207 | |
| 58,275 | ||
Internet & Catalog Retail - 0.6% | |||
Liberty Media Corp. Interactive Series A (a) | 1,870,503 | 37,410 | |
Leisure Equipment & Products - 0.2% | |||
Brunswick Corp. | 546,055 | 12,881 | |
Media - 1.3% | |||
Cablevision Systems Corp. - NY Group Class A | 843,988 | 14,702 | |
DreamWorks Animation SKG, Inc. Class A (a)(d) | 718,007 | 14,626 | |
Kabel Deutschland Holding AG | 106,600 | 7,681 | |
Liberty Media Corp. Series A (a) | 149,899 | 8,531 | |
McGraw-Hill Companies, Inc. | 216,537 | 11,970 | |
Time Warner, Inc. | 317,400 | 13,791 | |
Valassis Communications, Inc. (a)(d) | 471,351 | 12,265 | |
| 83,566 | ||
Multiline Retail - 0.1% | |||
PPR SA | 47,400 | 8,334 | |
Specialty Retail - 4.3% | |||
Abercrombie & Fitch Co. Class A | 351,983 | 10,764 | |
Advance Auto Parts, Inc. | 241,917 | 17,162 | |
Ascena Retail Group, Inc. (a) | 2,244,907 | 44,449 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
CONSUMER DISCRETIONARY - continued | |||
Specialty Retail - continued | |||
Bed Bath & Beyond, Inc. (a) | 83,400 | $ 4,811 | |
Best Buy Co., Inc. | 1,711,778 | 26,036 | |
Chico's FAS, Inc. | 924,880 | 17,203 | |
Express, Inc. (a) | 1,019,872 | 11,351 | |
Guess?, Inc. | 893,647 | 22,145 | |
Jos. A. Bank Clothiers, Inc. (a) | 303,858 | 14,218 | |
Lowe's Companies, Inc. | 1,122,100 | 36,334 | |
OfficeMax, Inc. | 1,484,804 | 10,913 | |
Signet Jewelers Ltd. | 281,867 | 14,589 | |
Staples, Inc. | 2,260,456 | 26,029 | |
WH Smith PLC (d) | 1,488,188 | 14,914 | |
| 270,918 | ||
Textiles, Apparel & Luxury Goods - 0.3% | |||
Gildan Activewear, Inc. | 504,600 | 17,183 | |
TOTAL CONSUMER DISCRETIONARY | 668,550 | ||
CONSUMER STAPLES - 5.2% | |||
Beverages - 1.5% | |||
Britvic PLC | 1,746,258 | 10,122 | |
Cott Corp. | 1,134,000 | 8,663 | |
Dr Pepper Snapple Group, Inc. | 649,252 | 27,820 | |
Molson Coors Brewing Co. Class B | 864,875 | 37,311 | |
Treasury Wine Estates Ltd. | 2,289,505 | 11,741 | |
| 95,657 | ||
Food & Staples Retailing - 0.7% | |||
CVS Caremark Corp. | 525,420 | 24,379 | |
Kroger Co. | 430,804 | 10,865 | |
Walgreen Co. | 285,914 | 10,073 | |
| 45,317 | ||
Food Products - 2.1% | |||
Bunge Ltd. | 307,846 | 21,866 | |
ConAgra Foods, Inc. | 940,460 | 26,182 | |
Danone SA | 270,000 | 16,597 | |
Dean Foods Co. (a) | 501,594 | 8,447 | |
Ingredion, Inc. | 229,123 | 14,082 | |
The J.M. Smucker Co. | 513,953 | 44,015 | |
| 131,189 | ||
Common Stocks - continued | |||
Shares | Value (000s) | ||
CONSUMER STAPLES - continued | |||
Household Products - 0.5% | |||
Reckitt Benckiser Group PLC | 544,727 | $ 32,964 | |
Tobacco - 0.4% | |||
Lorillard, Inc. | 225,733 | 26,187 | |
TOTAL CONSUMER STAPLES | 331,314 | ||
ENERGY - 8.6% | |||
Energy Equipment & Services - 2.9% | |||
Cameron International Corp. (a) | 921,480 | 46,664 | |
Dresser-Rand Group, Inc. (a) | 203,400 | 10,481 | |
Fugro NV (Certificaten Van Aandelen) unit | 271,300 | 18,342 | |
Halliburton Co. | 533,715 | 17,234 | |
National Oilwell Varco, Inc. | 342,731 | 25,259 | |
Oil States International, Inc. (a) | 134,627 | 9,841 | |
Patterson-UTI Energy, Inc. | 1,192,190 | 19,290 | |
Rowan Companies PLC (a) | 1,168,275 | 37,046 | |
| 184,157 | ||
Oil, Gas & Consumable Fuels - 5.7% | |||
Anadarko Petroleum Corp. | 525,590 | 36,166 | |
BPZ Energy, Inc. (a) | 2,283,600 | 6,577 | |
Chesapeake Energy Corp. (d) | 904,810 | 18,331 | |
Cloud Peak Energy, Inc. (a) | 786,874 | 16,603 | |
Energen Corp. | 961,744 | 44,865 | |
EQT Corp. | 487,340 | 29,547 | |
Exxon Mobil Corp. | 142,300 | 12,973 | |
HollyFrontier Corp. | 1,081,869 | 41,793 | |
Marathon Petroleum Corp. | 416,900 | 22,900 | |
Noble Energy, Inc. | 232,400 | 22,080 | |
Northern Oil & Gas, Inc. (a) | 424,800 | 6,440 | |
Phillips 66 | 525,427 | 24,779 | |
The Williams Companies, Inc. | 1,222,308 | 42,769 | |
World Fuel Services Corp. | 439,620 | 15,255 | |
WPX Energy, Inc. | 1,326,360 | 22,469 | |
| 363,547 | ||
TOTAL ENERGY | 547,704 | ||
FINANCIALS - 27.0% | |||
Capital Markets - 3.4% | |||
Ameriprise Financial, Inc. | 357,570 | 20,871 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
FINANCIALS - continued | |||
Capital Markets - continued | |||
Ashmore Group PLC | 1,830,400 | $ 10,743 | |
Bank of New York Mellon Corp. | 308,504 | 7,623 | |
Fortress Investment Group LLC | 2,538,300 | 10,965 | |
Goldman Sachs Group, Inc. | 124,747 | 15,268 | |
Invesco Ltd. | 1,882,421 | 45,780 | |
Morgan Stanley | 1,501,747 | 26,100 | |
State Street Corp. | 1,152,995 | 51,389 | |
TD Ameritrade Holding Corp. | 397,764 | 6,241 | |
The Blackstone Group LP | 1,268,496 | 19,484 | |
| 214,464 | ||
Commercial Banks - 4.8% | |||
Bank of Ireland (a) | 140,863,526 | 16,806 | |
CIT Group, Inc. (a) | 1,488,503 | 55,402 | |
Comerica, Inc. | 68,899 | 2,054 | |
DnB NOR ASA | 1,327,495 | 16,578 | |
First Citizen Bancshares, Inc. | 82,945 | 13,997 | |
Heritage Financial Corp., Washington | 74,295 | 1,027 | |
Itau Unibanco Holdings SA sponsored ADR | 2,732,075 | 39,834 | |
PNC Financial Services Group, Inc. | 459,155 | 26,718 | |
U.S. Bancorp | 2,158,512 | 71,684 | |
Wells Fargo & Co. | 1,822,328 | 61,394 | |
| 305,494 | ||
Consumer Finance - 1.1% | |||
Capital One Financial Corp. | 359,700 | 21,643 | |
SLM Corp. | 2,646,276 | 46,522 | |
| 68,165 | ||
Diversified Financial Services - 1.6% | |||
Deutsche Boerse AG | 269,500 | 14,587 | |
JPMorgan Chase & Co. | 1,083,721 | 45,169 | |
Moody's Corp. | 411,797 | 19,832 | |
The NASDAQ Stock Market, Inc. | 897,115 | 21,360 | |
| 100,948 | ||
Insurance - 8.6% | |||
AFLAC, Inc. | 978,872 | 48,728 | |
Aon PLC | 625,428 | 33,742 | |
Berkshire Hathaway, Inc. Class B (a) | 1,199,334 | 103,562 | |
Brasil Insurance Participacoes e Administracao SA | 1,158,100 | 10,229 | |
Fairfax Financial Holdings Ltd. (sub. vtg.) | 148,061 | 54,927 | |
First American Financial Corp. | 194,886 | 4,434 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
FINANCIALS - continued | |||
Insurance - continued | |||
Greenlight Capital Re, Ltd. (a) | 396,456 | $ 10,129 | |
Hanover Insurance Group, Inc. | 9,900 | 357 | |
Hartford Financial Services Group, Inc. | 1,071,642 | 23,265 | |
Jardine Lloyd Thompson Group PLC | 743,607 | 8,922 | |
MetLife, Inc. | 924,164 | 32,799 | |
Montpelier Re Holdings Ltd. | 183,300 | 4,192 | |
Old Republic International Corp. | 4,056,721 | 40,080 | |
Progressive Corp. | 307,400 | 6,855 | |
Prudential Financial, Inc. | 395,522 | 22,565 | |
Reinsurance Group of America, Inc. | 444,618 | 23,529 | |
StanCorp Financial Group, Inc. | 602,975 | 20,712 | |
The Chubb Corp. | 9,900 | 762 | |
The Travelers Companies, Inc. | 9,900 | 702 | |
Torchmark Corp. | 673,101 | 34,052 | |
Unum Group | 1,040,504 | 21,101 | |
Validus Holdings Ltd. | 1,088,538 | 38,970 | |
| 544,614 | ||
Real Estate Investment Trusts - 4.4% | |||
American Campus Communities, Inc. | 49,600 | 2,247 | |
American Realty Capital Trust, Inc. | 475,765 | 5,362 | |
American Tower Corp. | 534,391 | 40,234 | |
Boston Properties, Inc. | 177,252 | 18,842 | |
Corporate Office Properties Trust (SBI) | 249,000 | 6,213 | |
Douglas Emmett, Inc. | 902,617 | 21,166 | |
Equity Lifestyle Properties, Inc. | 265,919 | 17,904 | |
HCP, Inc. | 94,127 | 4,170 | |
Health Care REIT, Inc. | 69,389 | 4,124 | |
MFA Financial, Inc. | 1,565,592 | 12,791 | |
Prologis, Inc. | 956,578 | 32,801 | |
Public Storage | 49,274 | 6,831 | |
SL Green Realty Corp. | 314,473 | 23,680 | |
Ventas, Inc. | 930,455 | 58,870 | |
Weyerhaeuser Co. | 908,804 | 25,165 | |
| 280,400 | ||
Real Estate Management & Development - 2.8% | |||
Brookfield Asset Management, Inc. Class A (d) | 130,400 | 4,489 | |
CBRE Group, Inc. (a) | 1,745,341 | 31,451 | |
Forest City Enterprises, Inc. Class A (a) | 2,520,873 | 40,460 | |
Forestar Group, Inc. (a) | 1,410,019 | 22,574 | |
Jones Lang LaSalle, Inc. | 39,599 | 3,078 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
FINANCIALS - continued | |||
Real Estate Management & Development - continued | |||
Kennedy-Wilson Holdings, Inc. | 5,048,749 | $ 71,692 | |
| 173,744 | ||
Thrifts & Mortgage Finance - 0.3% | |||
People's United Financial, Inc. | 1,774,435 | 21,346 | |
TOTAL FINANCIALS | 1,709,175 | ||
HEALTH CARE - 6.9% | |||
Health Care Equipment & Supplies - 2.2% | |||
Alere, Inc. (a) | 127,415 | 2,446 | |
Boston Scientific Corp. (a) | 4,783,984 | 24,590 | |
CareFusion Corp. (a) | 1,030,596 | 27,373 | |
Hologic, Inc. (a) | 554,955 | 11,443 | |
St. Jude Medical, Inc. | 88,900 | 3,401 | |
Stryker Corp. | 349,541 | 18,386 | |
Teleflex, Inc. | 87,758 | 5,963 | |
The Cooper Companies, Inc. | 65,224 | 6,260 | |
Zimmer Holdings, Inc. | 630,122 | 40,460 | |
| 140,322 | ||
Health Care Providers & Services - 2.9% | |||
Brookdale Senior Living, Inc. (a) | 148,600 | 3,486 | |
CIGNA Corp. | 578,225 | 29,489 | |
Emeritus Corp. (a) | 1,387,733 | 31,155 | |
Health Net, Inc. (a) | 214,796 | 4,622 | |
Humana, Inc. | 276,476 | 20,534 | |
McKesson Corp. | 239,504 | 22,348 | |
MEDNAX, Inc. (a) | 299,157 | 20,636 | |
Quest Diagnostics, Inc. | 148,300 | 8,560 | |
UnitedHealth Group, Inc. | 270,898 | 15,170 | |
Universal Health Services, Inc. Class B | 677,790 | 28,054 | |
| 184,054 | ||
Health Care Technology - 0.0% | |||
Allscripts Healthcare Solutions, Inc. (a) | 102,000 | 1,318 | |
Life Sciences Tools & Services - 0.5% | |||
Life Technologies Corp. (a) | 501,232 | 24,515 | |
PerkinElmer, Inc. | 148,700 | 4,599 | |
| 29,114 | ||
Common Stocks - continued | |||
Shares | Value (000s) | ||
HEALTH CARE - continued | |||
Pharmaceuticals - 1.3% | |||
AVANIR Pharmaceuticals Class A (a)(d) | 2,129,558 | $ 6,091 | |
Elan Corp. PLC sponsored ADR (a) | 1,327,500 | 14,337 | |
Endo Pharmaceuticals Holdings, Inc. (a) | 527,240 | 15,111 | |
Forest Laboratories, Inc. (a) | 325,700 | 10,979 | |
Hospira, Inc. (a) | 146,100 | 4,484 | |
Impax Laboratories, Inc. (a) | 508,194 | 10,799 | |
ViroPharma, Inc. (a) | 87,236 | 2,203 | |
Warner Chilcott PLC | 643,690 | 7,454 | |
Watson Pharmaceuticals, Inc. (a) | 135,600 | 11,655 | |
| 83,113 | ||
TOTAL HEALTH CARE | 437,921 | ||
INDUSTRIALS - 12.3% | |||
Aerospace & Defense - 1.5% | |||
DigitalGlobe, Inc. (a)(d) | 635,073 | 16,474 | |
Esterline Technologies Corp. (a) | 224,477 | 12,973 | |
General Dynamics Corp. | 268,420 | 18,274 | |
Meggitt PLC | 2,073,434 | 12,916 | |
Rockwell Collins, Inc. | 174,809 | 9,366 | |
Textron, Inc. | 907,345 | 22,874 | |
| 92,877 | ||
Building Products - 0.8% | |||
Owens Corning (a) | 1,461,648 | 49,097 | |
Commercial Services & Supplies - 2.1% | |||
Corrections Corp. of America | 563,119 | 18,949 | |
Interface, Inc. | 951,164 | 13,611 | |
Intrum Justitia AB | 871,887 | 12,619 | |
Quad/Graphics, Inc. | 698,972 | 12,812 | |
Republic Services, Inc. | 595,834 | 16,892 | |
Sykes Enterprises, Inc. (a) | 808,954 | 11,018 | |
The Geo Group, Inc. | 1,627,548 | 45,116 | |
| 131,017 | ||
Construction & Engineering - 1.6% | |||
AECOM Technology Corp. (a) | 2,577,968 | 55,349 | |
Foster Wheeler AG (a) | 1,452,830 | 32,355 | |
MasTec, Inc. (a) | 507,002 | 11,438 | |
| 99,142 | ||
Common Stocks - continued | |||
Shares | Value (000s) | ||
INDUSTRIALS - continued | |||
Electrical Equipment - 0.4% | |||
Hubbell, Inc. Class B | 149,350 | $ 12,504 | |
Prysmian SpA | 683,300 | 13,143 | |
| 25,647 | ||
Industrial Conglomerates - 0.6% | |||
Carlisle Companies, Inc. | 397,810 | 22,098 | |
Koninklijke Philips Electronics NV | 426,534 | 10,683 | |
Orkla ASA (A Shares) | 1,021,800 | 8,083 | |
| 40,864 | ||
Machinery - 3.2% | |||
Cummins, Inc. | 192,600 | 18,024 | |
Fiat Industrial SpA | 1,082,794 | 11,726 | |
GEA Group AG | 313,234 | 9,780 | |
Harsco Corp. | 826,620 | 16,524 | |
Ingersoll-Rand PLC | 400,092 | 18,816 | |
ITT Corp. | 581,425 | 12,094 | |
Oshkosh Truck Corp. (a) | 860,552 | 25,799 | |
PACCAR, Inc. | 239,567 | 10,383 | |
Parker Hannifin Corp. | 127,404 | 10,022 | |
Snap-On, Inc. | 187,714 | 14,516 | |
Stanley Black & Decker, Inc. | 790,502 | 54,782 | |
| 202,466 | ||
Marine - 0.1% | |||
Ultrapetrol (Bahamas) Ltd. (a)(d)(e) | 3,001,747 | 4,563 | |
Professional Services - 1.1% | |||
FTI Consulting, Inc. (a) | 320,852 | 8,329 | |
Manpower, Inc. | 580,185 | 22,012 | |
Towers Watson & Co. | 784,764 | 42,150 | |
| 72,491 | ||
Road & Rail - 0.5% | |||
Con-way, Inc. | 402,475 | 11,716 | |
Quality Distribution, Inc. (a)(e) | 1,634,287 | 14,055 | |
Vitran Corp., Inc. (a)(e) | 1,639,888 | 8,577 | |
| 34,348 | ||
Common Stocks - continued | |||
Shares | Value (000s) | ||
INDUSTRIALS - continued | |||
Trading Companies & Distributors - 0.4% | |||
AerCap Holdings NV (a) | 909,268 | $ 11,329 | |
WESCO International, Inc. (a) | 238,832 | 15,495 | |
| 26,824 | ||
TOTAL INDUSTRIALS | 779,336 | ||
INFORMATION TECHNOLOGY - 10.6% | |||
Communications Equipment - 0.9% | |||
Cisco Systems, Inc. | 763,461 | 13,086 | |
Motorola Solutions, Inc. | 263,240 | 13,604 | |
Polycom, Inc. (a) | 1,596,891 | 16,001 | |
ViaSat, Inc. (a) | 350,321 | 13,606 | |
| 56,297 | ||
Computers & Peripherals - 0.6% | |||
Electronics for Imaging, Inc. (a) | 607,448 | 10,545 | |
Hewlett-Packard Co. | 1,442,742 | 19,982 | |
Lexmark International, Inc. Class A | 394,800 | 8,393 | |
| 38,920 | ||
Electronic Equipment & Components - 2.7% | |||
Aeroflex Holding Corp. (a) | 1,197,731 | 7,618 | |
Arrow Electronics, Inc. (a) | 635,225 | 22,379 | |
Benchmark Electronics, Inc. (a) | 497,930 | 7,379 | |
Corning, Inc. | 942,420 | 11,073 | |
Flextronics International Ltd. (a) | 7,686,041 | 44,348 | |
Jabil Circuit, Inc. | 2,439,789 | 42,306 | |
TE Connectivity Ltd. | 576,584 | 18,554 | |
TTM Technologies, Inc. (a) | 1,753,400 | 15,781 | |
| 169,438 | ||
Internet Software & Services - 0.2% | |||
Yahoo!, Inc. (a) | 616,500 | 10,363 | |
IT Services - 1.5% | |||
Amdocs Ltd. | 658,463 | 21,775 | |
Fidelity National Information Services, Inc. | 488,595 | 16,060 | |
Fiserv, Inc. (a) | 255,903 | 19,177 | |
Global Payments, Inc. | 337,368 | 14,422 | |
Sapient Corp. (a) | 915,914 | 9,416 | |
Unisys Corp. (a) | 696,922 | 11,883 | |
| 92,733 | ||
Common Stocks - continued | |||
Shares | Value (000s) | ||
INFORMATION TECHNOLOGY - continued | |||
Office Electronics - 0.3% | |||
Xerox Corp. | 3,439,789 | $ 22,152 | |
Semiconductors & Semiconductor Equipment - 2.4% | |||
ASML Holding NV | 288,725 | 15,871 | |
Broadcom Corp. Class A | 533,662 | 16,829 | |
Entegris, Inc. (a) | 1,383,824 | 11,361 | |
Freescale Semiconductor Holdings I Ltd. (a)(d) | 2,887,502 | 25,814 | |
Intersil Corp. Class A | 3,250,292 | 22,915 | |
Marvell Technology Group Ltd. | 2,450,132 | 19,332 | |
NXP Semiconductors NV (a) | 637,900 | 15,475 | |
ON Semiconductor Corp. (a) | 3,317,582 | 20,403 | |
PMC-Sierra, Inc. (a) | 1,655,360 | 7,747 | |
| 155,747 | ||
Software - 2.0% | |||
Autodesk, Inc. (a) | 228,239 | 7,267 | |
BMC Software, Inc. (a) | 221,737 | 9,025 | |
Check Point Software Technologies Ltd. (a) | 249,500 | 11,110 | |
Comverse Technology, Inc. (a) | 2,327,195 | 15,336 | |
Constellation Software, Inc. | 69,400 | 7,960 | |
Electronic Arts, Inc. (a) | 1,210,892 | 14,955 | |
JDA Software Group, Inc. (a) | 674,285 | 25,717 | |
Oracle Corp. | 570,503 | 17,714 | |
Symantec Corp. (a) | 825,866 | 15,023 | |
| 124,107 | ||
TOTAL INFORMATION TECHNOLOGY | 669,757 | ||
MATERIALS - 6.2% | |||
Chemicals - 3.2% | |||
Air Products & Chemicals, Inc. | 280,867 | 21,776 | |
Albemarle Corp. | 311,486 | 17,166 | |
Ashland, Inc. | 649,855 | 46,237 | |
Cytec Industries, Inc. | 293,800 | 20,219 | |
Eastman Chemical Co. | 559,695 | 33,156 | |
LyondellBasell Industries NV Class A | 335,020 | 17,887 | |
Methanex Corp. | 392,108 | 11,754 | |
Mexichem SAB de CV | 1,678,900 | 8,320 | |
W.R. Grace & Co. (a) | 110,219 | 7,072 | |
Westlake Chemical Corp. | 240,564 | 18,297 | |
| 201,884 | ||
Common Stocks - continued | |||
Shares | Value (000s) | ||
MATERIALS - continued | |||
Containers & Packaging - 1.5% | |||
Ball Corp. | 611,682 | $ 26,198 | |
Rock-Tenn Co. Class A | 705,834 | 51,660 | |
Sonoco Products Co. | 458,178 | 14,263 | |
| 92,121 | ||
Metals & Mining - 1.5% | |||
Coeur d'Alene Mines Corp. (a) | 288,200 | 8,908 | |
First Quantum Minerals Ltd. | 937,100 | 21,064 | |
Gem Diamonds Ltd. (a) | 2,582,367 | 7,032 | |
Reliance Steel & Aluminum Co. | 904,270 | 49,138 | |
SunCoke Energy, Inc. (a) | 741,477 | 11,916 | |
| 98,058 | ||
TOTAL MATERIALS | 392,063 | ||
TELECOMMUNICATION SERVICES - 0.8% | |||
Diversified Telecommunication Services - 0.2% | |||
CenturyLink, Inc. | 57,491 | 2,207 | |
Frontier Communications Corp. (d) | 2,166,104 | 10,224 | |
| 12,431 | ||
Wireless Telecommunication Services - 0.6% | |||
NII Holdings, Inc. (a)(d) | 3,022,115 | 24,086 | |
Sprint Nextel Corp. (a) | 2,652,304 | 14,694 | |
| 38,780 | ||
TOTAL TELECOMMUNICATION SERVICES | 51,211 | ||
UTILITIES - 8.9% | |||
Electric Utilities - 5.5% | |||
Edison International | 1,934,770 | 90,818 | |
ITC Holdings Corp. | 895,512 | 71,301 | |
NextEra Energy, Inc. | 307,893 | 21,571 | |
Northeast Utilities | 2,270,479 | 89,230 | |
OGE Energy Corp. | 543,651 | 31,303 | |
Pinnacle West Capital Corp. | 451,913 | 23,938 | |
PNM Resources, Inc. | 943,392 | 20,906 | |
| 349,067 | ||
Gas Utilities - 0.3% | |||
ONEOK, Inc. | 364,574 | 17,244 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
UTILITIES - continued | |||
Independent Power Producers & Energy Traders - 1.0% | |||
Calpine Corp. (a) | 920,860 | $ 16,207 | |
The AES Corp. | 4,559,203 | 47,644 | |
| 63,851 | ||
Multi-Utilities - 2.1% | |||
PG&E Corp. | 448,769 | 19,082 | |
Sempra Energy | 1,623,397 | 113,238 | |
| 132,320 | ||
TOTAL UTILITIES | 562,482 | ||
TOTAL COMMON STOCKS (Cost $6,187,814) |
|
U.S. Treasury Obligations - 0.0% | ||||
| Principal |
| ||
U.S. Treasury Bills, yield at date of purchase 0.08% to 0.11% 11/23/12 to 1/24/13 (f) | $ 3,080 |
|
Money Market Funds - 3.9% | |||
Shares |
| ||
Fidelity Cash Central Fund, 0.19% (b) | 189,262,510 | 189,263 | |
Fidelity Securities Lending Cash Central Fund, 0.19% (b)(c) | 59,630,645 | 59,631 | |
TOTAL MONEY MARKET FUNDS (Cost $248,894) |
| ||
TOTAL INVESTMENT PORTFOLIO - 101.0% (Cost $6,439,788) | 6,401,487 | ||
NET OTHER ASSETS (LIABILITIES) - (1.0)% | (65,883) | ||
NET ASSETS - 100% | $ 6,335,604 |
Futures Contracts | |||||
Expiration | Underlying Face | Unrealized | |||
Purchased | |||||
Equity Index Contracts | |||||
640 CME E-mini S&P MidCap 400 Index Contracts | Dec. 2012 | $ 62,598 | $ (209) |
|
The face value of futures purchased as a percentage of net assets is 1% |
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 $3,065,000. |
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 | $ 240 |
Fidelity Securities Lending Cash Central Fund | 1,130 |
Total | $ 1,370 |
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 | Dividend | Value, |
Pinnacle Airlines Corp. | $ 4,948 | $ - | $ 302 | $ - | $ - |
Quality Distribution, Inc. | 16,056 | 3,500 | 1,627 | - | 14,055 |
Ultrapetrol (Bahamas) Ltd. | 3,216 | 3,646 | - | - | 4,563 |
Vitran Corp., Inc. | 7,920 | 33 | - | - | 8,577 |
Total | $ 32,140 | $ 7,179 | $ 1,929 | $ - | $ 27,195 |
Other Information |
The following is a summary of the inputs used, as of October 31, 2012, 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 | $ 668,550 | $ 668,550 | $ - | $ - |
Consumer Staples | 331,314 | 331,314 | - | - |
Energy | 547,704 | 547,704 | - | - |
Financials | 1,709,175 | 1,692,369 | 16,806 | - |
Health Care | 437,921 | 437,921 | - | - |
Industrials | 779,336 | 768,653 | 10,683 | - |
Information Technology | 669,757 | 669,757 | - | - |
Materials | 392,063 | 392,063 | - | - |
Telecommunication Services | 51,211 | 51,211 | - | - |
Utilities | 562,482 | 562,482 | - | - |
U.S. Government and Government Agency Obligations | 3,080 | - | 3,080 | - |
Money Market Funds | 248,894 | 248,894 | - | - |
Total Investments in Securities: | $ 6,401,487 | $ 6,370,918 | $ 30,569 | $ - |
Derivative Instruments: | ||||
Liabilities | ||||
Futures Contracts | $ (209) | $ (209) | $ - | $ - |
Value of Derivative Instruments |
The following table is a summary of the Fund's value of derivative instruments by primary risk exposure as of October 31, 2012. For additional information on derivative instruments, please refer to the Derivative Instruments section in the accompanying Notes to Financial Statements. |
Primary Risk Exposure / | Value | |
| Asset | Liability |
Equity Risk | ||
Futures Contracts (a) | $ - | $ (209) |
Total Value of Derivatives | $ - | $ (209) |
(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 or territory of incorporation, as a percentage of total net assets, is as follows. (Unaudited) |
United States of America | 83.9% |
Bermuda | 2.7% |
United Kingdom | 2.5% |
Canada | 2.1% |
Netherlands | 1.4% |
Brazil | 1.1% |
Others (Individually Less Than 1%) | 6.3% |
| 100.0% |
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, 2012 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $57,528) - See accompanying schedule: Unaffiliated issuers (cost $6,155,423) | $ 6,125,398 |
|
Fidelity Central Funds (cost $248,894) | 248,894 |
|
Other affiliated issuers (cost $35,471) | 27,195 |
|
Total Investments (cost $6,439,788) |
| $ 6,401,487 |
Cash |
| 3 |
Receivable for investments sold | 52,088 | |
Receivable for fund shares sold | 2,776 | |
Dividends receivable | 2,731 | |
Distributions receivable from Fidelity Central Funds | 93 | |
Receivable for daily variation margin on futures contracts | 339 | |
Other receivables | 475 | |
Total assets | 6,459,992 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 44,340 | |
Payable for fund shares redeemed | 16,927 | |
Accrued management fee | 1,996 | |
Other affiliated payables | 1,025 | |
Other payables and accrued expenses | 469 | |
Collateral on securities loaned, at value | 59,631 | |
Total liabilities | 124,388 | |
|
|
|
Net Assets | $ 6,335,604 | |
Net Assets consist of: |
| |
Paid in capital | $ 8,519,381 | |
Undistributed net investment income | 44,796 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (2,190,066) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (38,507) | |
Net Assets | $ 6,335,604 |
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, 2012 | |
|
|
|
Value: | $ 74.14 | |
|
|
|
Class K: | $ 74.27 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Operations
Amounts in thousands | Year ended October 31, 2012 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 111,107 |
Interest |
| 4 |
Income from Fidelity Central Funds |
| 1,370 |
Total income |
| 112,481 |
|
|
|
Expenses | ||
Management fee | $ 35,859 | |
Performance adjustment | (6,434) | |
Transfer agent fees | 11,668 | |
Accounting and security lending fees | 1,153 | |
Custodian fees and expenses | 250 | |
Independent trustees' compensation | 43 | |
Appreciation in deferred trustee compensation account | 1 | |
Registration fees | 97 | |
Audit | 86 | |
Legal | 27 | |
Miscellaneous | 70 | |
Total expenses before reductions | 42,820 | |
Expense reductions | (310) | 42,510 |
Net investment income (loss) | 69,971 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 273,852 | |
Other affiliated issuers | (9,159) |
|
Investments not meeting investment restrictions | 34 | |
Payment from investment advisor for loss on investment not meeting investment restrictions | 24 | |
Foreign currency transactions | (459) | |
Futures contracts | 226 | |
Total net realized gain (loss) |
| 264,518 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 621,331 | |
Assets and liabilities in foreign currencies | (19) | |
Futures contracts | 882 | |
Total change in net unrealized appreciation (depreciation) |
| 622,194 |
Net gain (loss) | 886,712 | |
Net increase (decrease) in net assets resulting from operations | $ 956,683 |
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) | $ 69,971 | $ 71,043 |
Net realized gain (loss) | 264,518 | 852,091 |
Change in net unrealized appreciation (depreciation) | 622,194 | (642,684) |
Net increase (decrease) in net assets resulting | 956,683 | 280,450 |
Distributions to shareholders from net investment income | (59,276) | (112,001) |
Distributions to shareholders from net realized gain | (2,930) | (2,508) |
Total distributions | (62,206) | (114,509) |
Share transactions - net increase (decrease) | (1,203,854) | (1,667,982) |
Total increase (decrease) in net assets | (309,377) | (1,502,041) |
|
|
|
Net Assets | ||
Beginning of period | 6,644,981 | 8,147,022 |
End of period (including undistributed net investment income of $44,796 and undistributed net investment income of $38,674, respectively) | $ 6,335,604 | $ 6,644,981 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Value
Years ended October 31, | 2012 | 2011 | 2010 | 2009 | 2008 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 64.53 | $ 64.09 | $ 51.82 | $ 43.78 | $ 89.60 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .74 | .59 | .66 E | .59 | .75 |
Net realized and unrealized gain (loss) | 9.48 | .75 | 12.09 | 7.69 | (38.92) |
Total from investment operations | 10.22 | 1.34 | 12.75 | 8.28 | (38.17) |
Distributions from net investment income | (.58) | (.88) | (.48) | (.24) | (.56) |
Distributions from net realized gain | (.03) | (.02) | - | - | (7.09) |
Total distributions | (.61) | (.90) | (.48) | (.24) | (7.65) |
Net asset value, end of period | $ 74.14 | $ 64.53 | $ 64.09 | $ 51.82 | $ 43.78 |
Total Return A | 15.99% | 2.05% | 24.74% | 19.12% | (46.34)% |
Ratios to Average Net Assets C, F |
|
|
|
|
|
Expenses before reductions | .68% | .60% | .64% | .64% | .76% |
Expenses net of fee waivers, if any | .68% | .60% | .64% | .64% | .76% |
Expenses net of all reductions | .68% | .59% | .63% | .64% | .76% |
Net investment income (loss) | 1.07% | .87% | 1.12% E | 1.41% | 1.10% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (in millions) | $ 5,571 | $ 6,006 | $ 7,276 | $ 7,278 | $ 11,066 |
Portfolio turnover rate D | 77% | 95% | 148% | 51% | 50% |
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 large, non-recurring dividend which amounted to $.23 per share. Excluding this non-recurring 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, | 2012 | 2011 | 2010 | 2009 | 2008 H |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 64.66 | $ 64.24 | $ 51.96 | $ 43.82 | $ 72.61 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) D | .85 | .70 | .76 G | .72 | .25 |
Net realized and unrealized gain (loss) | 9.47 | .74 | 12.12 | 7.67 | (29.04) |
Total from investment operations | 10.32 | 1.44 | 12.88 | 8.39 | (28.79) |
Distributions from net investment income | (.68) | (1.00) | (.60) | (.25) | - |
Distributions from net realized gain | (.03) | (.02) | - | - | - |
Total distributions | (.71) | (1.02) | (.60) | (.25) | - |
Net asset value, end of period | $ 74.27 | $ 64.66 | $ 64.24 | $ 51.96 | $ 43.82 |
Total Return B, C | 16.16% | 2.20% | 24.96% | 19.39% | (39.65)% |
Ratios to Average Net Assets E, I |
|
|
|
|
|
Expenses before reductions | .54% | .44% | .47% | .40% | .60% A |
Expenses net of fee waivers, if any | .54% | .44% | .47% | .40% | .60% A |
Expenses net of all reductions | .53% | .44% | .46% | .40% | .60% A |
Net investment income (loss) | 1.22% | 1.02% | 1.29% G | 1.64% | 1.17% A |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (in millions) | $ 765 | $ 639 | $ 872 | $ 484 | $ 177 |
Portfolio turnover rate F | 77% | 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 large, non-recurring dividend which amounted to $.23 per share. Excluding this non-recurring 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, 2012
(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 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
Notes to Financial Statements - continued
(Amounts in thousands except percentages)
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. In accordance with valuation policies and procedures approved by the Board of Trustees (the Board), the Fund attempts to obtain prices from one or more third party pricing vendors or brokers to value its investments. When current market prices, quotations or rates are not readily available or reliable, securities will be fair valued in good faith by the FMR Fair Value Committee (the Committee), in accordance with procedures adopted by the Fund's Board. Factors used in determining fair value vary by security type and 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 Committee oversees the Fund's valuation policies and procedures and is responsible for approving and reporting to the Board all fair value determinations.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the Fund's own assumptions based on the best information available)
Valuation techniques used to value the Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by a third party pricing vendor on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when 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. Utilizing these techniques may result in transfers between Level 1 and Level 2.
Debt securities, including restricted securities, are valued based on evaluated prices received from third party pricing vendors or from brokers who make markets in such securities. For U.S. government and government agency obligations, pricing vendors utilize matrix pricing which considers yield or price of bonds of comparable quality,
Annual Report
3. Significant Accounting Policies - continued
Security Valuation - continued
coupon, maturity and type as well as broker-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 methodologies which consider similar factors that would be used by third party pricing vendors. 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 (NAV) each business day and are categorized as Level 1 in the hierarchy.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of October 31, 2012, is included at the end of the Fund's Schedule of Investments.
Foreign Currency Translation. The Fund may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rates at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on
Annual Report
Notes to Financial Statements - continued
(Amounts in thousands except percentages)
3. Significant Accounting Policies - continued
Investment Transactions and Income - continued
securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Deferred Trustee Compensation. Under a Deferred Compensation Plan (the Plan), independent Trustees may elect to defer receipt of a portion of their annual compensation. Deferred amounts are invested in a cross-section of Fidelity funds, are marked-to-market and remain in the Fund until distributed in accordance with the Plan. The investment of deferred amounts and the offsetting payable to the Trustees are included in the accompanying Statement of Assets and Liabilities.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for income taxes is required. As of October 31, 2012, the Fund did not have any unrecognized tax benefits in the financial statements; nor is the Fund aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. A fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are declared and recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP.
Annual Report
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to futures transactions, foreign currency transactions, 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 | $ 546,190 |
Gross unrealized depreciation | (636,556) |
Net unrealized appreciation (depreciation) on securities and other investments | $ (90,366) |
|
|
Tax Cost | $ 6,491,853 |
The tax-based components of distributable earnings as of period end were as follows:
Undistributed ordinary income | $ 45,145 |
Capital loss carryforward | $ (2,138,210) |
Net unrealized appreciation (depreciation) | $ (90,363) |
Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. Under the Regulated Investment Company Modernization Act of 2010 (the Act), the Fund is permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period and such capital losses are required to be used prior to any losses that expire. Capital loss carryforwards were as follows:
Fiscal year of expiration |
|
2017 | $ (1,809,894) |
2018 | (328,316) |
Total capital loss carryforward | $ (2,138,210) |
The tax character of distributions paid was as follows:
| October 31, 2012 | October 31, 2011 |
Ordinary Income | $ 62,206 | $ 114,509 |
Annual Report
Notes to Financial Statements - continued
(Amounts in thousands except percentages)
3. Significant Accounting Policies - continued
New Accounting Pronouncement. In December 2011, the Financial Accounting Standards Board issued Accounting Standard Update No. 2011-11, Disclosures about Offsetting Assets and Liabilities. The update creates new disclosure requirements requiring entities to disclose both gross and net information for derivatives and other financial instruments that are either offset in the Statement of Assets and Liabilities or subject to an enforceable master netting arrangement or similar agreement. The disclosure requirements are effective for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods. 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's investment objective allows the Fund to enter into various types of derivative contracts, including futures contracts. Derivatives are investments whose value is primarily derived from underlying assets, indices or reference rates and may be transacted on an exchange or over-the-counter (OTC). Derivatives may involve a future commitment to buy or sell a specified instrument based on specified terms, to exchange future cash flows at periodic intervals based on a notional principal amount, or for one party to make one or more payments upon the occurrence of specified events in exchange for periodic payments from the other party.
The Fund used 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 close out 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. Counterparty credit risk related to exchange-traded futures contracts is minimal because of the protection provided by the exchange on which they trade.
Annual Report
4. Derivative Instruments - continued
Risk Exposures and the Use of Derivative Instruments - continued
Investing in derivatives may involve greater risks than investing in the underlying assets directly and, to varying degrees, may involve risk of loss in excess of any initial investment and collateral received and amounts recognized in the Statement of Assets and Liabilities. In addition, there may be the risk that the change in value of the derivative contract does not correspond to the change in value of the underlying instrument.
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.
Any open futures contracts at period end are shown in the Schedule of Investments under the caption "Futures Contracts." The underlying face amount at value 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.
During the period the Fund recognized net realized gain (loss) of $226 and a change in net unrealized appreciation (depreciation) of $882 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 $4,819,773 and $6,014,900, respectively.
The Fund realized a gain and loss of $58 and $24 respectively, on sales of investments which did not meet the investment restrictions of the Fund. The loss of $24 was fully reimbursed by the Fund's investment advisor.
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
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Notes to Financial Statements - continued
(Amounts in thousands except percentages)
6. Fees and Other Transactions with Affiliates - continued
Management Fee - continued
of .30% of the Fund's average net assets and an annualized 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 Value, as compared to an appropriate benchmark index. For the period, the total annual management fee rate, including the performance adjustment, was .46% of the Fund's average net assets.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of 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 | $ 11,305 | .20 |
Class K | 363 | .05 |
| $ 11,668 |
|
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 each month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $150 for the period.
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR or an affiliate in a $4.25 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which
Annual Report
7. Committed Line of Credit - continued
amounted to $18 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 $2,628. 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 $1,130, including $35 from securities loaned to FCM.
9. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of the Fund provided services to the Fund in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $310 for the period.
10. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended October 31, | 2012 | 2011 |
From net investment income |
|
|
Value | $ 52,420 | $ 98,394 |
Class K | 6,856 | 13,607 |
Total | $ 59,276 | $ 112,001 |
Annual Report
Notes to Financial Statements - continued
(Amounts in thousands except percentages)
10. Distributions to Shareholders - continued
Years ended October 31, | 2012 | 2011 |
From net realized gain |
|
|
Value | $ 2,639 | $ 2,236 |
Class K | 291 | 272 |
Total | $ 2,930 | $ 2,508 |
11. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
Years ended October 31, | 2012 | 2011 | 2012 | 2011 |
Value |
|
|
|
|
Shares sold | 4,490 | 9,763 | $ 310,256 | $ 677,671 |
Reinvestment of distributions | 833 | 1,446 | 52,550 | 96,363 |
Shares redeemed | (23,268) | (31,637) | (1,594,790) | (2,177,863) |
Net increase (decrease) | (17,945) | (20,428) | $ (1,231,984) | $ (1,403,829) |
Class K |
|
|
|
|
Shares sold | 4,935 | 4,738 | $ 339,901 | $ 327,041 |
Reinvestment of distributions | 113 | 208 | 7,146 | 13,878 |
Shares redeemed | (4,630) | (8,636) | (318,917) | (605,072) |
Net increase (decrease) | 418 | (3,690) | $ 28,130 | $ (264,153) |
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, 2012, 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, 2012 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
December 12, 2012
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 236 funds advised by FMR or an affiliate. Mr. Curvey oversees 443 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 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 (77) | |
| Year of Election or Appointment: 2007 Mr. Curvey is Trustee and 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 (55) | |
| 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 (64) | |
| 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 (59) | |
| 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 Entertainment, Inc. (restaurant and entertainment complexes, 2010-present), Earth Fare, Inc. (retail grocery, 2012-present), The Hillman Companies, Inc. (hardware wholesalers, 2010-present), and Bristol-Myers Squibb Company (global pharmaceuticals, 2008-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 (68) | |
| 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 Chairman of the Board of Directors of the Philharmonic Center for the Arts in Naples, Florida (2012-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 (68) | |
| 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). Previously, Mr. Mauriello served as a Director of the Hamilton Funds of the Bank of New York (2006-2007) and of Arcadia Resources Inc. (health care services and products, 2007-2012). |
Robert W. Selander (62) | |
| 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 (68) | |
| Year of Election or Appointment: 2005 Ms. Small is a member of the Board of Directors (2009-present) and Chair of the Investment Committee (2010-present) of the Teagle Foundation. Ms. Small also serves on the Investment Committee of the Berkshire Taconic Community Foundation (2008-present). Previously, Ms. Small served as Chairperson (2002-2008) and a member of the Investment Committee and Chairperson (2008-2012) and a member of the Board of Trustees 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 (73) | |
| 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 a Director of Univar Inc. (global distributor of commodity and specialty chemicals, Chairman from 2010-May 2012 and Lead Director from May 2012-present), Teradata Corporation (data warehousing and technology solutions, 2008-present), Maersk Inc. (industrial conglomerate), and Tyco International, Ltd. (multinational manufacturing and services, 2007-present), and a member of the Advisory Board for Metalmark Capital LLC (private equity investment, 2005-present). Mr. Stavropoulos is an operating 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, a Trustee of the Rollin L. Gerstacker Foundation, and a Director of the Naples Philharmonic Center for the Arts. Previously, Mr. Stavropoulos served as a Director of Chemical Financial Corporation (bank holding company, 1993-2012). |
David M. Thomas (63) | |
| 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), and a Director of Fortune Brands, Inc. (consumer products, 2000-2011). In addition, Mr. Thomas serves as Non-Executive Chairman of the Board of Directors of Fortune Brands Home and Security (home and security products, 2011-present), and as a member of the Board of Directors of Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (62) | |
| 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). |
+ 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 David A. Rosow and Garnett A. Smith may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235. 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 (82) | |
| 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 (68) | |
| 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). |
David A. Rosow (70) | |
| Year of Election or Appointment: 2012 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Chairman and Chief Executive Officer of International Golf Group, Inc. (golf course development, 1989-present). Previously, Mr. Rosow served as Chairman and Chief Executive Officer of Rosow & Company, Inc. (private investment company, 1989-2011), a Lead Director of Hudson United Bancorp (2001-2006) and as a Director of TD Banknorth (1996-2006). In addition, Mr. Rosow is a member (2008-present) and President (2009-present) of the Town Council of Palm Beach, Florida. |
Garnett A. Smith (65) | |
| Year of Election or Appointment: 2012 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Prior to Mr. Smith's retirement, he served as Chairman and Chief Executive Officer of Inbrand Corp. (manufacturer of personal absorbent products, 1990-1997). He also served as President (1986-1990) of Inbrand Corp. Prior to his employment with Inbrand Corp., he was employed by a retail fabric chain and North Carolina National Bank. In addition, Mr. Smith is a board member of the Jackson Hole Land Trust (2009-present). |
Kenneth B. Robins (43) | |
| 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 (48) | |
| 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 (48) | |
| 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 (44) | |
| 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 (43) | |
| 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). |
Elizabeth Paige Baumann (44) | |
| Year of Election or Appointment: 2012 Anti-Money Laundering (AML) Officer of the Fidelity funds. Ms. Baumann also serves as AML Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2012-present), Chief AML Officer of FMR LLC (2012-present), and is an employee of Fidelity Investments. Previously, Ms. Baumann served as Vice President and Deputy Anti-Money Laundering Officer (2007-2012). |
Christine Reynolds (54) | |
| 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). |
Joseph A. Hanlon (44) | |
| Year of Election or Appointment: 2012 Chief Compliance Officer of Fidelity's Equity and High Income Funds. Mr. Hanlon serves as Compliance Officer of FMR, FMR Co., Inc., Fidelity Investments Money Management, Inc. (FIMM), Fidelity Research and Analysis Company (FRAC), Fidelity Management & Research (Japan) Inc., Fidelity Management & Research (U.K.) Inc., Fidelity Management & Research (Hong Kong), and Strategic Advisers, Inc. (2009-present), as Senior Vice President of the Fidelity Asset Management Division (2009-present), and is an employee of Fidelity Investments. |
Joseph F. Zambello (55) | |
| 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 (45) | |
| Year of Election or Appointment: 2008 Deputy Treasurer of Fidelity's Equity and High Income Funds. Mr. Deberghes also serves as Vice President (2011-present) and Assistant Treasurer (2010-present) of other Fidelity funds, 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). |
Stephen Sadoski (41) | |
| Year of Election or Appointment: 2012 Deputy Treasurer of Fidelity's Equity and High Income Funds. Mr. Sadoski also serves as Assistant Treasurer of other Fidelity funds (2012-present) and is an employee of Fidelity Investments (2012-present). Previously, Mr. Sadoski served as an assistant chief accountant in the Division of Investment Management of the Securities and Exchange Commission (SEC) (2009-2012) and as a senior manager at Deloitte & Touche (1997-2009). |
Stephanie J. Dorsey (43) | |
| 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 (54) | |
| 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 (54) | |
| 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 (44) | |
| 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)
K Class designates 85% of the dividend distributed during the fiscal year as qualifying for the dividends-received deduction for corporate shareholders.
K Class 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 2013 of amounts for use in preparing 2012 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, at each of its meetings, considers 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 and chaired by 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 2012 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 relative to peer funds; (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 exist and 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 also considered the fund's investment objective, strategies, and related investment philosophy. 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 continued to increase the resources devoted to non-U.S. offices, including expansion of Fidelity's global investment organization. The Board noted that Fidelity's analysts have extensive resources, tools and capabilities that allow them to conduct sophisticated quantitative and fundamental analysis, as well as credit analysis of issuers, counterparties and guarantors. 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 that 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 its deliberations, the Board considered the Investment Advisers' trading and risk management 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 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.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
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.
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) persisting in efforts to enhance Fidelity's research capabilities, in particular, international research; (iii) launching new funds and making other enhancements to meet client needs for global and income-oriented solutions; (iv) continuing to launch dedicated lower cost underlying funds to meet investment management's portfolio construction needs related to expanding underlying fund options, specifically for the Freedom Fund product lines; (v) adopting a "Stock Selector" sector neutral investment approach and employing a team of portfolio managers who are sector specialists to manage certain funds; (vi) rationalizing product lines and gaining increased efficiencies through the mergers of several funds into other funds; (vii) strengthening the Spartan Index Fund product line by adding new funds and/or new low-cost institutional share classes, restructuring fund expenses to accommodate new classes, and reducing investment minimums for certain classes of shares; (viii) modifying the eligibility criteria for Institutional Class shares to increase their appeal to government entities and charitable investors; and (ix) reducing certain transfer agent fee rates.
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, 2011, 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 (top of box) and the 75th percentile return (bottom 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 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 fourth quartile for the one- and five-year periods and the second quartile for the three-year period. The Board also noted that the investment performance of the fund was lower than its benchmark for the one- and five-year periods, although the three-year cumulative total return of the retail class compared favorably to its benchmark. 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 will closely monitor the performance of the fund in the coming 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.
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 Value 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 2011. 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 2011.
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. The Board noted the findings of the 2010 ad hoc joint committee (created with the board of other Fidelity funds), which reviewed and compared 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.
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 economies of scale, if any, 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) the potential to further rationalize the Fidelity fund lineup with the possibility of achieving savings for the funds and Fidelity; (iii) Fidelity's compensation structure for portfolio managers and other key 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) the realization of fall-out benefits in certain Fidelity business units; (vi) Fidelity's group fee structures, the potential impact of regulatory changes on such structures, and the rationale for the individual fee rates of certain funds; (vii) fund profitability methodology, including Fidelity's cost allocation methodology, and the impact of certain factors on fund profitability results; (viii) trends regarding industry use of performance fee structures and the possibility of implementing performance fee structures for additional funds; and (ix) the impact of net redemptions from the Fidelity funds.
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
Smithfield, RI
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
(Fidelity Investment logo)(registered trademark)
Corporate Headquarters
82 Devonshire St., Boston, MA 02109
www.fidelity.com
VAL-K-UANN-1212 1.863246.104
Item 2. Code of Ethics
As of the end of the period, October 31, 2012, 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, 2012 FeesA
| Audit Fees | Audit-Related Fees | Tax Fees | All Other Fees |
Fidelity Stock Selector Small Cap Fund | $42,000 | $- | $4,600 | $600 |
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 |
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, 2012 FeesA
| Audit Fees | Audit-Related Fees | Tax Fees | All Other Fees |
Fidelity Capital Appreciation Fund | $57,000 | $- | $3,300 | $3,800 |
Fidelity Disciplined Equity Fund | $67,000 | $- | $3,500 | $5,200 |
Fidelity Focused Stock Fund | $35,000 | $- | $3,300 | $1,700 |
Fidelity Value Fund | $65,000 | $- | $5,300 | $4,200 |
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 |
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, 2012A | October 31, 2011A |
Audit-Related Fees | $720,000 | $440,000 |
Tax Fees | $- | $- |
All Other Fees | $1,305,000 | $430,000 |
A Amounts may reflect rounding.
Services Billed by PwC
| October 31, 2012A | October 31, 2011A |
Audit-Related Fees | $3,640,000 | $3,835,000 |
Tax Fees | $- | $- |
All Other Fees | $- | $- |
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, 2012 A | October 31, 2011 A |
PwC | $4,200,000 | $5,865,000 |
Deloitte Entities | $2,070,000 | $965,000 |
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 26, 2012 |
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 26, 2012 |
By: | /s/Christine Reynolds |
| Christine Reynolds |
| Chief Financial Officer |
|
|
Date: | December 26, 2012 |