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 811-4118
Fidelity Securities Fund
(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: | July 31 |
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Date of reporting period: | July 31, 2008 |
Item 1. Reports to Stockholders
Fidelity®
Blue Chip Growth
Fund -
Blue Chip Growth
Class K
Annual Report
July 31, 2008
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message | Ned Johnson's message to shareholders. | |
Performance | How the fund has done over time. | |
Management's Discussion | The managers review of fund performance, strategy and outlook. | |
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 |
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Proxy Voting Results |
| |
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 (search for "proxy voting guidelines") or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-800-544-8544 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company.
Annual Report
This report and the financial statements contained herein are submitted for the general information of the shareholders of the fund. This report is not authorized for distribution to prospective investors in the fund unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com or http://www.advisor.fidelity.com, as applicable.
NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE
Neither the fund nor Fidelity Distributors Corporation is a bank.
Annual Report
Chairman's Message
(photo_of_Edward_C_Johnson_3d)
Dear Shareholder:
Domestic and international securities markets have struggled thus far in 2008. High-grade fixed-income investments produced modestly positive results, but many stock benchmarks suffered double-digit losses through the first half of this year. Financial markets are always unpredictable, but there are a number of time-tested principles that can put the historical odds in your favor.
One of the basic tenets is to invest for the long term. Over time, riding out the markets' inevitable ups and downs has proven much more effective than selling into panic or chasing the hottest trend. Even missing only a few of the markets' best days can significantly diminish investor returns. Patience also affords the benefits of compounding - of earning interest on additional income or reinvested dividends and capital gains. There are tax advantages and cost benefits to consider as well. The more you sell, the more taxes you pay, and the more you trade, the higher the costs. While staying the course doesn't eliminate risk, it can considerably lessen the effect of short-term declines.
You can further manage your investing risk through diversification. And today, more than ever, geographic diversification should be taken into account. Studies indicate that asset allocation is the single most important determinant of a portfolio's long-term success. The right mix of stocks, bonds and cash - aligned to your particular risk tolerance and investment objective - is very important. Age-appropriate rebalancing is also an essential aspect of asset allocation. For younger investors, an emphasis on equities - which historically have been the best-performing asset class over time - is encouraged. As investors near their specific goal, such as retirement or sending a child to college, consideration may be given to replacing volatile assets (e.g. common stocks) with more-stable fixed investments (bonds or savings plans).
A third investment principle - investing regularly - can help lower the average cost of your purchases. Investing a certain amount of money each month or quarter helps ensure you won't pay for all your shares at market highs. This strategy - known as dollar cost averaging - also reduces unconstructive "emotion" from investing, helping shareholders avoid selling weak performers just prior to an upswing, or chasing a hot performer just before a correction.
We invite you to contact us via the Internet, through our Investor Centers or over the phone. It is our privilege to provide you the information you need to make the investments that are right for you.
Sincerely,
/s/Edward C. Johnson 3d
Edward C. Johnson 3d
Annual Report
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' 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 July 31, 2008 | Past 1 | Past 5 | Past 10 |
Blue Chip Growth | -6.30% | 5.00% | 1.23% |
Class K A | -6.27% | 5.00% | 1.23% |
A The initial offering of Class K shares took place on May 9, 2008. Returns prior to May 9, 2008 are those of Blue Chip Growth, the original class of the fund.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Blue Chip Growth, a class of the fund, on July 31, 1998. The chart shows how the value of your investment would have changed, and also shows how the Russell 1000® Growth Index performed over the same period.
Annual Report
Management's Discussion of Fund Performance
Comments from Jennifer Uhrig, Portfolio Manager of Fidelity® Blue Chip Growth Fund
Grim news about the U.S. economy forced most domestic equity benchmarks into negative territory for the 12 months ending July 31, 2008. Oil prices north of $140 per barrel, gasoline prices in excess of $4 per gallon and soaring food costs drove inflation and consumer prices higher. In response, consumer discretionary spending trended lower as Main Street tightened its purse strings. Wall Street, meanwhile, struggled under the weight of massive write-downs in the financials sector, an ongoing credit crisis and bleak housing data. In an effort to staunch the bleeding, the Federal Reserve Board cut interest rates on seven occasions during the past year. Nevertheless, investors fled the equity markets, and both the Dow Jones Industrial AverageSM and the Standard & Poor's 500SM Index fell to a threshold that many believe marks the official start of a "bear market." For the 12 months overall, the Dow slid 11.71%, the S&P 500® dropped 11.09% and the technology-heavy NASDAQ Composite® Index dipped 7.98%.
Blue Chip Growth performed right in line with its benchmark, its Retail Class shares posting a decline of 6.30% for the past 12 months, compared with a 6.29% drop for the Russell 1000® Growth Index. (For specific performance results of the fund's new Class K shares, please refer to the performance section of this shareholder report.) The fund benefited versus the index from favorable security selection in a variety of sectors - from the strong-performing energy and materials sectors as well as from the lagging consumer discretionary and financials groups - while a currency tail wind also helped. Among the best relative contributions came from Research In Motion, the Canada-based maker of the popular BlackBerry device; Monsanto, the producer of genetically engineered seeds; and holding no stake in index-component aircraft manufacturer Boeing. However, unfavorable sector selection in a few areas offset much of that relative gain, with the fund's overweightings in financials, consumer discretionary and information technology holding back the return. Some unfortunate stock picks in the tech sector also detracted, including software giant Microsoft and networking equipment leader Cisco Systems. Hard-hit financial stocks such as insurance conglomerate American International Group also hurt.
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, 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 actual expense Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (February 1, 2008 to July 31, 2008) for Blue Chip Growth and for the entire period (May 9, 2008 to July 31, 2008) for Class K. The hypothetical expense Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (February 1, 2008 to July 31, 2008).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Annual Report
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.
| Beginning | Ending | Expenses Paid |
Blue Chip Growth |
|
|
|
Actual | $ 1,000.00 | $ 974.10 | $ 2.90 B |
HypotheticalA | $ 1,000.00 | $ 1,021.93 | $ 2.97 C |
Class K |
|
|
|
Actual | $ 1,000.00 | $ 934.50 | $ .91 B |
HypotheticalA | $ 1,000.00 | $ 1,022.82 | $ 2.06 C |
A 5% return per year before expenses
B Actual expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period) for Blue Chip Growth and multiplied by 84/366 (to reflect the period May 9, 2008 to July 31, 2008) for Class K.
C Hypothetical expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
| Annualized |
Blue Chip Growth | .59% |
Class K | .41% |
Annual Report
Investment Changes (Unaudited)
Top Ten Stocks as of July 31, 2008 | ||
| % of fund's | % of fund's net assets |
Microsoft Corp. | 3.7 | 4.8 |
Cisco Systems, Inc. | 3.4 | 3.7 |
International Business Machines Corp. | 3.3 | 2.7 |
Schlumberger Ltd. (NY Shares) | 2.6 | 1.8 |
The Coca-Cola Co. | 2.5 | 2.7 |
Exxon Mobil Corp. | 2.5 | 2.9 |
Wal-Mart Stores, Inc. | 2.4 | 1.6 |
QUALCOMM, Inc. | 2.0 | 0.0 |
Oracle Corp. | 1.9 | 1.7 |
Medtronic, Inc. | 1.8 | 1.3 |
| 26.1 | |
Top Five Market Sectors as of July 31, 2008 | ||
| % of fund's | % of fund's net assets |
Information Technology | 27.4 | 30.7 |
Consumer Discretionary | 14.5 | 15.3 |
Consumer Staples | 13.5 | 12.3 |
Health Care | 13.3 | 14.6 |
Energy | 12.0 | 9.3 |
Asset Allocation (% of fund's net assets) | |||||||
As of July 31, 2008 * | As of January 31, 2008 ** | ||||||
Stocks 97.3% |
| Stocks 99.9% |
| ||||
Short-Term |
| Short-Term |
| ||||
* Foreign investments | 15.2% |
| ** Foreign investments | 15.4% |
|
Annual Report
Investments July 31, 2008
Showing Percentage of Net Assets
Common Stocks - 97.3% | |||
Shares | Value (000s) | ||
CONSUMER DISCRETIONARY - 14.5% | |||
Auto Components - 0.7% | |||
ArvinMeritor, Inc. | 682,612 | $ 9,427 | |
BorgWarner, Inc. (d) | 312,600 | 12,604 | |
Gentex Corp. | 1,281,400 | 19,810 | |
Lear Corp. (a) | 275,800 | 3,974 | |
Magna International, Inc. Class A | 608,200 | 35,844 | |
Superior Industries International, Inc. (d) | 714,000 | 12,059 | |
| 93,718 | ||
Hotels, Restaurants & Leisure - 2.8% | |||
Chipotle Mexican Grill, Inc.: | |||
Class A (a)(d) | 103,800 | 7,110 | |
Class B (a) | 406,900 | 26,050 | |
DineEquity, Inc. (d)(e) | 928,011 | 21,437 | |
McDonald's Corp. | 2,935,400 | 175,508 | |
Yum! Brands, Inc. | 3,926,900 | 140,662 | |
| 370,767 | ||
Household Durables - 2.2% | |||
Centex Corp. | 2,249,200 | 33,018 | |
D.R. Horton, Inc. | 3,261,200 | 36,265 | |
Furniture Brands International, Inc. (d)(e) | 4,633,579 | 55,001 | |
Harman International Industries, Inc. | 1,109,500 | 45,678 | |
KB Home | 1,026,300 | 18,053 | |
La-Z-Boy, Inc. (d)(e) | 4,874,100 | 35,971 | |
Lennar Corp. Class A (d) | 1,072,500 | 12,977 | |
Ryland Group, Inc. | 1,153,400 | 23,749 | |
Toll Brothers, Inc. (a) | 1,838,900 | 36,944 | |
| 297,656 | ||
Internet & Catalog Retail - 1.2% | |||
Amazon.com, Inc. (a)(d) | 2,090,500 | 159,589 | |
Leisure Equipment & Products - 0.1% | |||
Brunswick Corp. | 493,600 | 6,367 | |
Media - 2.3% | |||
E.W. Scripps Co. Class A (d) | 706,100 | 4,886 | |
Interpublic Group of Companies, Inc. (a)(d) | 8,316,900 | 73,106 | |
Lamar Advertising Co. Class A (a)(d) | 362,300 | 13,760 | |
Scripps Networks Interactive, Inc. Class A (a) | 1,624,201 | 65,845 | |
The DIRECTV Group, Inc. (a) | 2,929,300 | 79,150 | |
The Walt Disney Co. | 2,201,000 | 66,800 | |
| 303,547 | ||
Common Stocks - continued | |||
Shares | Value (000s) | ||
CONSUMER DISCRETIONARY - continued | |||
Multiline Retail - 0.6% | |||
Kohl's Corp. (a) | 1,975,500 | $ 82,793 | |
Specialty Retail - 1.9% | |||
Bed Bath & Beyond, Inc. (a) | 1,252,300 | 34,852 | |
Best Buy Co., Inc. (d) | 1,610,300 | 63,961 | |
Guess?, Inc. | 624,900 | 19,791 | |
J. Crew Group, Inc. (a)(d) | 942,129 | 27,096 | |
Lowe's Companies, Inc. | 2,949,800 | 59,940 | |
Tiffany & Co., Inc. (d) | 1,145,000 | 43,270 | |
Williams-Sonoma, Inc. | 635,000 | 11,074 | |
| 259,984 | ||
Textiles, Apparel & Luxury Goods - 2.7% | |||
Coach, Inc. (a) | 1,129,700 | 28,819 | |
NIKE, Inc. Class B (d) | 1,967,300 | 115,441 | |
Phillips-Van Heusen Corp. | 1,903,800 | 67,395 | |
Polo Ralph Lauren Corp. Class A | 1,555,400 | 92,033 | |
Under Armour, Inc. Class A (sub. vtg.) (a)(d) | 139,300 | 4,061 | |
VF Corp. | 680,500 | 48,710 | |
| 356,459 | ||
TOTAL CONSUMER DISCRETIONARY | 1,930,880 | ||
CONSUMER STAPLES - 13.5% | |||
Beverages - 4.0% | |||
PepsiCo, Inc. | 3,007,762 | 200,197 | |
The Coca-Cola Co. | 6,553,800 | 337,521 | |
| 537,718 | ||
Food & Staples Retailing - 4.5% | |||
Kroger Co. | 3,696,600 | 104,540 | |
Safeway, Inc. | 2,306,900 | 61,640 | |
Sysco Corp. | 3,948,400 | 111,977 | |
Wal-Mart Stores, Inc. | 5,510,455 | 323,023 | |
| 601,180 | ||
Food Products - 1.0% | |||
General Mills, Inc. | 758,900 | 48,866 | |
Kellogg Co. | 803,300 | 42,623 | |
Nestle SA sponsored ADR | 897,550 | 39,313 | |
| 130,802 | ||
Household Products - 2.6% | |||
Church & Dwight Co., Inc. | 750,800 | 41,196 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
CONSUMER STAPLES - continued | |||
Household Products - continued | |||
Procter & Gamble Co. | 3,366,630 | $ 220,447 | |
Reckitt Benckiser Group PLC | 1,473,200 | 80,321 | |
| 341,964 | ||
Personal Products - 1.4% | |||
Avon Products, Inc. | 2,588,000 | 109,731 | |
Estee Lauder Companies, Inc. Class A | 1,787,400 | 78,824 | |
| 188,555 | ||
TOTAL CONSUMER STAPLES | 1,800,219 | ||
ENERGY - 12.0% | |||
Energy Equipment & Services - 6.9% | |||
BJ Services Co. | 2,330,000 | 68,502 | |
Compagnie Generale de Geophysique SA (a) | 780,500 | 30,507 | |
Fugro NV (Certificaten Van Aandelen) unit | 622,636 | 44,175 | |
Halliburton Co. | 2,159,500 | 96,789 | |
Nabors Industries Ltd. (a) | 1,200,400 | 43,767 | |
National Oilwell Varco, Inc. (a) | 1,559,800 | 122,647 | |
Oceaneering International, Inc. (a) | 1,038,385 | 62,968 | |
Patterson-UTI Energy, Inc. | 1,900,800 | 54,021 | |
Schlumberger Ltd. (NY Shares) | 3,420,800 | 347,553 | |
Weatherford International Ltd. (a) | 1,342,600 | 50,656 | |
| 921,585 | ||
Oil, Gas & Consumable Fuels - 5.1% | |||
Chesapeake Energy Corp. | 1,357,500 | 68,079 | |
Enterprise Products Partners LP | 862,900 | 25,671 | |
Exxon Mobil Corp. | 4,098,100 | 329,610 | |
Hess Corp. | 687,000 | 69,662 | |
Peabody Energy Corp. | 822,700 | 55,656 | |
Reliance Industries Ltd. | 290,000 | 15,069 | |
Sasol Ltd. sponsored ADR | 953,100 | 50,457 | |
Southwestern Energy Co. (a) | 1,696,000 | 61,582 | |
| 675,786 | ||
TOTAL ENERGY | 1,597,371 | ||
FINANCIALS - 5.9% | |||
Capital Markets - 2.5% | |||
Charles Schwab Corp. | 3,977,200 | 91,038 | |
Janus Capital Group, Inc. | 3,268,700 | 99,172 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
FINANCIALS - continued | |||
Capital Markets - continued | |||
Merrill Lynch & Co., Inc. (d) | 530,900 | $ 14,148 | |
T. Rowe Price Group, Inc. | 2,109,481 | 126,252 | |
| 330,610 | ||
Commercial Banks - 0.8% | |||
Associated Banc-Corp. | 509,200 | 8,499 | |
ICICI Bank Ltd. sponsored ADR | 346,300 | 10,254 | |
Old National Bancorp, Indiana (d) | 381,300 | 5,788 | |
U.S. Bancorp, Delaware | 2,208,300 | 67,596 | |
Westamerica Bancorp. (d) | 257,000 | 13,364 | |
| 105,501 | ||
Consumer Finance - 0.4% | |||
Capital One Financial Corp. (d) | 1,351,300 | 56,565 | |
Diversified Financial Services - 0.3% | |||
CME Group, Inc. (d) | 107,163 | 38,593 | |
Insurance - 0.9% | |||
AFLAC, Inc. | 215,700 | 11,995 | |
American International Group, Inc. | 1,494,055 | 38,920 | |
Fidelity National Financial, Inc. Class A | 963,600 | 12,874 | |
Principal Financial Group, Inc. | 654,600 | 27,827 | |
The First American Corp. | 990,750 | 24,967 | |
| 116,583 | ||
Thrifts & Mortgage Finance - 1.0% | |||
Astoria Financial Corp. | 496,100 | 11,098 | |
Fannie Mae | 3,188,400 | 36,667 | |
Freddie Mac (d) | 5,060,300 | 41,343 | |
Hudson City Bancorp, Inc. | 762,500 | 13,923 | |
New York Community Bancorp, Inc. | 766,500 | 12,739 | |
NewAlliance Bancshares, Inc. (d) | 1,086,900 | 14,108 | |
People's United Financial, Inc. | 780,400 | 13,251 | |
| 143,129 | ||
TOTAL FINANCIALS | 790,981 | ||
HEALTH CARE - 13.3% | |||
Biotechnology - 3.7% | |||
Acorda Therapeutics, Inc. (a) | 604,900 | 19,847 | |
Celgene Corp. (a) | 1,468,000 | 110,819 | |
CSL Ltd. | 1,245,968 | 40,595 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
HEALTH CARE - continued | |||
Biotechnology - continued | |||
Genentech, Inc. (a) | 2,336,500 | $ 222,552 | |
Gilead Sciences, Inc. (a) | 1,829,100 | 98,735 | |
| 492,548 | ||
Health Care Equipment & Supplies - 5.2% | |||
Alcon, Inc. | 559,600 | 96,492 | |
Baxter International, Inc. | 1,789,800 | 122,798 | |
Becton, Dickinson & Co. | 1,322,770 | 112,316 | |
Covidien Ltd. | 1,319,200 | 64,957 | |
Medtronic, Inc. | 4,513,800 | 238,464 | |
Sonova Holding AG | 751,819 | 54,650 | |
| 689,677 | ||
Health Care Providers & Services - 0.8% | |||
Express Scripts, Inc. (a) | 665,800 | 46,966 | |
Medco Health Solutions, Inc. (a) | 1,095,700 | 54,325 | |
| 101,291 | ||
Life Sciences Tools & Services - 0.7% | |||
Charles River Laboratories International, Inc. (a) | 437,000 | 29,043 | |
Covance, Inc. (a) | 352,300 | 32,341 | |
Lonza Group AG | 92,093 | 13,350 | |
Pharmaceutical Product Development, Inc. | 670,100 | 25,558 | |
| 100,292 | ||
Pharmaceuticals - 2.9% | |||
Abbott Laboratories | 974,600 | 54,909 | |
Johnson & Johnson | 1,411,600 | 96,652 | |
Merck & Co., Inc. | 1,191,600 | 39,204 | |
Novo Nordisk AS Series B | 1,022,200 | 64,813 | |
Pronova BioPharma ASA | 8,661,803 | 29,948 | |
Schering-Plough Corp. | 3,315,600 | 69,893 | |
Wyeth | 838,500 | 33,976 | |
| 389,395 | ||
TOTAL HEALTH CARE | 1,773,203 | ||
INDUSTRIALS - 7.0% | |||
Aerospace & Defense - 2.4% | |||
Honeywell International, Inc. | 1,241,400 | 63,113 | |
Lockheed Martin Corp. | 1,389,600 | 144,977 | |
Raytheon Co. | 1,929,100 | 109,824 | |
| 317,914 | ||
Common Stocks - continued | |||
Shares | Value (000s) | ||
INDUSTRIALS - continued | |||
Building Products - 0.7% | |||
Masco Corp. | 2,778,300 | $ 45,814 | |
Owens Corning (a) | 1,918,000 | 49,887 | |
| 95,701 | ||
Commercial Services & Supplies - 0.3% | |||
Manpower, Inc. (d) | 622,700 | 29,890 | |
Monster Worldwide, Inc. (a) | 351,800 | 6,241 | |
| 36,131 | ||
Construction & Engineering - 0.5% | |||
Chicago Bridge & Iron Co. NV (NY Shares) | 959,400 | 31,440 | |
KBR, Inc. | 647,200 | 18,445 | |
Shaw Group, Inc. (a) | 331,300 | 19,149 | |
| 69,034 | ||
Electrical Equipment - 1.2% | |||
Alstom SA | 642,000 | 71,862 | |
AMETEK, Inc. | 474,800 | 22,724 | |
Cooper Industries Ltd. Class A | 1,025,400 | 43,241 | |
Renewable Energy Corp. AS (a) | 887,100 | 25,690 | |
Vestas Wind Systems AS (a) | 100 | 13 | |
| 163,530 | ||
Industrial Conglomerates - 0.7% | |||
Siemens AG sponsored ADR | 721,600 | 87,588 | |
Machinery - 0.6% | |||
Danaher Corp. | 1,033,500 | 82,318 | |
Road & Rail - 0.6% | |||
Norfolk Southern Corp. | 1,127,100 | 81,061 | |
TOTAL INDUSTRIALS | 933,277 | ||
INFORMATION TECHNOLOGY - 27.4% | |||
Communications Equipment - 8.2% | |||
Cisco Systems, Inc. (a) | 20,905,500 | 459,712 | |
Corning, Inc. | 3,081,200 | 61,655 | |
Juniper Networks, Inc. (a) | 3,530,600 | 91,902 | |
Nokia Corp. sponsored ADR | 2,605,300 | 71,177 | |
QUALCOMM, Inc. | 4,781,300 | 264,597 | |
Research In Motion Ltd. (a) | 1,243,400 | 152,714 | |
| 1,101,757 | ||
Computers & Peripherals - 4.4% | |||
Apple, Inc. (a) | 846,900 | 134,615 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
INFORMATION TECHNOLOGY - continued | |||
Computers & Peripherals - continued | |||
International Business Machines Corp. | 3,382,100 | $ 432,841 | |
SanDisk Corp. (a) | 990,700 | 13,969 | |
| 581,425 | ||
Electronic Equipment & Instruments - 0.5% | |||
Hon Hai Precision Industry Co. Ltd. (Foxconn) | 5,896,680 | 28,496 | |
Tyco Electronics Ltd. | 1,281,425 | 42,466 | |
| 70,962 | ||
Internet Software & Services - 0.9% | |||
Google, Inc. Class A (sub. vtg.) (a) | 126,000 | 59,693 | |
Yahoo!, Inc. (a) | 3,138,100 | 62,417 | |
| 122,110 | ||
IT Services - 3.2% | |||
Accenture Ltd. Class A | 3,242,400 | 135,403 | |
Infosys Technologies Ltd. sponsored ADR | 514,100 | 20,250 | |
Satyam Computer Services Ltd. sponsored ADR (d) | 1,416,600 | 30,230 | |
The Western Union Co. | 6,211,200 | 171,678 | |
Visa, Inc. | 936,400 | 68,413 | |
| 425,974 | ||
Semiconductors & Semiconductor Equipment - 3.5% | |||
Applied Materials, Inc. | 10,688,800 | 185,130 | |
Lam Research Corp. (a) | 1,680,300 | 55,265 | |
Micron Technology, Inc. (a) | 6,692,800 | 32,326 | |
Samsung Electronics Co. Ltd. | 93,855 | 51,916 | |
Taiwan Semiconductor Manufacturing Co. Ltd. sponsored ADR | 13,192,759 | 125,331 | |
Teradyne, Inc. (a) | 1,298,125 | 12,163 | |
| 462,131 | ||
Software - 6.7% | |||
Activision Blizzard, Inc. (a) | 420,100 | 15,115 | |
Adobe Systems, Inc. (a) | 1,445,418 | 59,768 | |
CA, Inc. | 577,200 | 13,772 | |
Citrix Systems, Inc. (a) | 1,156,700 | 30,814 | |
Microsoft Corp. | 18,943,300 | 487,218 | |
Oracle Corp. (a) | 11,607,400 | 249,907 | |
Ubisoft Entertainment SA (a) | 165,600 | 16,298 | |
VMware, Inc. Class A | 587,500 | 21,062 | |
| 893,954 | ||
TOTAL INFORMATION TECHNOLOGY | 3,658,313 | ||
Common Stocks - continued | |||
Shares | Value (000s) | ||
MATERIALS - 3.1% | |||
Chemicals - 2.1% | |||
Monsanto Co. | 1,650,700 | $ 196,615 | |
Praxair, Inc. | 923,900 | 86,597 | |
| 283,212 | ||
Containers & Packaging - 0.2% | |||
Temple-Inland, Inc. (d) | 1,786,600 | 29,032 | |
Metals & Mining - 0.5% | |||
ArcelorMittal SA (NY Shares) Class A | 804,700 | 70,347 | |
Paper & Forest Products - 0.3% | |||
Louisiana-Pacific Corp. (d) | 4,184,000 | 35,397 | |
TOTAL MATERIALS | 417,988 | ||
UTILITIES - 0.6% | |||
Electric Utilities - 0.4% | |||
Allegheny Energy, Inc. | 261,600 | 12,661 | |
E.ON AG sponsored ADR | 550,000 | 34,722 | |
PPL Corp. | 307,100 | 14,421 | |
| 61,804 | ||
Independent Power Producers & Energy Traders - 0.2% | |||
AES Corp. (a) | 1,521,400 | 24,555 | |
TOTAL UTILITIES | 86,359 | ||
TOTAL COMMON STOCKS (Cost $11,775,417) | 12,988,591 | ||
Money Market Funds - 4.6% | |||
|
| ||
Fidelity Cash Central Fund, 2.35% (b) | 356,014,702 | 356,015 | |
Fidelity Securities Lending Cash Central Fund, 2.37% (b)(c) | 256,267,458 | 256,267 | |
TOTAL MONEY MARKET FUNDS (Cost $612,282) | 612,282 | ||
TOTAL INVESTMENT PORTFOLIO - 101.9% (Cost $12,387,699) | 13,600,873 | ||
NET OTHER ASSETS - (1.9)% | (252,220) | ||
NET ASSETS - 100% | $ 13,348,653 |
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
(e) Affiliated company |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 3,564 |
Fidelity Securities Lending Cash Central Fund | 5,304 |
Total | $ 8,868 |
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, |
AMN Healthcare Services, Inc. | $ 69,129 | $ - | $ 57,131 | $ - | $ - |
Cross Country Healthcare, Inc. | 50,352 | - | 44,669 | - | - |
DineEquity, Inc. | - | 35,430 | - | 232 | 21,437 |
Furniture Brands International, Inc. | 19,283 | 26,249 | 610 | 925 | 55,001 |
IHOP Corp. | 24,601 | 938 | 629 | 700 | - |
La-Z-Boy, Inc. | 45,787 | 2,154 | - | 1,524 | 35,971 |
Nastech Pharmaceutical | 26,132 | - | 7,684 | - | - |
Total | $ 235,284 | $ 64,771 | $ 110,723 | $ 3,381 | $ 112,409 |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 84.8% |
Netherlands Antilles | 2.6% |
Bermuda | 2.1% |
Switzerland | 1.5% |
Canada | 1.4% |
Taiwan | 1.1% |
Others (individually less than 1%) | 6.5% |
| 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) | July 31, 2008 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $246,567) - See accompanying schedule: Unaffiliated issuers (cost $11,600,173) | $ 12,876,182 |
|
Fidelity Central Funds (cost $612,282) | 612,282 |
|
Other affiliated issuers (cost $175,244) | 112,409 |
|
Total Investments (cost $12,387,699) |
| $ 13,600,873 |
Cash | 10 | |
Receivable for fund shares sold | 14,295 | |
Dividends receivable | 14,189 | |
Distributions receivable from Fidelity Central Funds | 931 | |
Prepaid expenses | 21 | |
Other receivables | 499 | |
Total assets | 13,630,818 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 3 | |
Payable for fund shares redeemed | 18,794 | |
Accrued management fee | 3,444 | |
Other affiliated payables | 2,936 | |
Other payables and accrued expenses | 721 | |
Collateral on securities loaned, at value | 256,267 | |
Total liabilities | 282,165 | |
|
|
|
Net Assets | $ 13,348,653 | |
Net Assets consist of: |
| |
Paid in capital | $ 11,788,755 | |
Undistributed net investment income | 71,533 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 275,329 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 1,213,036 | |
Net Assets | $ 13,348,653 |
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) | July 31, 2008 | |
|
|
|
Blue Chip Growth: | $ 39.06 | |
|
|
|
Class K: | $ 39.07 |
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 July 31, 2008 | |
|
|
|
Investment Income |
|
|
Dividends (including $3,381 earned from other affiliated issuers) |
| $ 209,383 |
Interest |
| 233 |
Income from Fidelity Central Funds |
| 8,868 |
Total income |
| 218,484 |
|
|
|
Expenses | ||
Management fee | $ 87,786 | |
Performance adjustment | (36,458) | |
Transfer agent fees | 36,617 | |
Accounting and security lending fees | 1,593 | |
Custodian fees and expenses | 318 | |
Independent trustees' compensation | 68 | |
Registration fees | 85 | |
Audit | 107 | |
Legal | 279 | |
Interest | 232 | |
Miscellaneous | 1,063 | |
Total expenses before reductions | 91,690 | |
Expense reductions | (1,210) | 90,480 |
Net investment income (loss) | 128,004 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 814,276 | |
Other affiliated issuers | (77,688) |
|
Foreign currency transactions | (379) | |
Total net realized gain (loss) |
| 736,209 |
Change in net unrealized appreciation (depreciation) on: Investment securities (net of increase in deferred foreign taxes of $155) | (1,621,656) | |
Assets and liabilities in foreign currencies | 16 | |
Total change in net unrealized appreciation (depreciation) |
| (1,621,640) |
Net gain (loss) | (885,431) | |
Net increase (decrease) in net assets resulting from operations | $ (757,427) |
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) | $ 128,004 | $ 145,297 |
Net realized gain (loss) | 736,209 | 1,625,665 |
Change in net unrealized appreciation (depreciation) | (1,621,640) | 1,230,855 |
Net increase (decrease) in net assets resulting | (757,427) | 3,001,817 |
Distributions to shareholders from net investment income | (124,380) | (110,618) |
Distributions to shareholders from net realized gain | (1,882,106) | (430,992) |
Total distributions | (2,006,486) | (541,610) |
Share transactions - net increase (decrease) | (2,503,707) | (3,414,792) |
Total increase (decrease) in net assets | (5,267,620) | (954,585) |
|
|
|
Net Assets | ||
Beginning of period | 18,616,273 | 19,570,858 |
End of period (including undistributed net investment income of $71,533 and undistributed net investment income of $82,288, respectively) | $ 13,348,653 | $ 18,616,273 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Blue Chip Growth
Years ended July 31, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, | $ 46.88 | $ 41.54 | $ 42.60 | $ 38.72 | $ 36.13 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .35 | .32 | .23 | .42 E | .19 |
Net realized and unrealized gain (loss) | (2.89) | 6.19 | (1.06) | 3.85 | 2.62 |
Total from investment operations | (2.54) | 6.51 | (.83) | 4.27 | 2.81 |
Distributions from net investment income | (.33) | (.24) | (.23) | (.39) | (.22) |
Distributions from net realized gain | (4.95) | (.93) | - | - | - |
Total distributions | (5.28) | (1.17) | (.23) | (.39) | (.22) |
Net asset value, end of period | $ 39.06 | $ 46.88 | $ 41.54 | $ 42.60 | $ 38.72 |
Total Return A | (6.30)% | 16.02% | (1.97)% | 11.08% | 7.79% |
Ratios to Average Net Assets C, F |
|
|
|
| |
Expenses before reductions | .58% | .60% | .63% | .66% | .68% |
Expenses net of fee waivers, | .58% | .60% | .63% | .66% | .68% |
Expenses net of all reductions | .57% | .59% | .61% | .64% | .67% |
Net investment income (loss) | .81% | .72% | .54% | 1.05% | .48% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period | $ 13,349 | $ 18,616 | $ 19,571 | $ 22,881 | $ 22,102 |
Portfolio turnover rate D | 82% | 87% | 48% | 29% | 23% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Calculated based on average shares outstanding during the period.
C Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
D Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
E Investment income per share reflects a special dividend which amounted to $.20 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been .56%.
F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class K
Period ended July 31, | 2008G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 41.81 |
Income from Investment Operations |
|
Net investment income (loss)D | .10 |
Net realized and unrealized gain (loss) | (2.84) |
Total from investment operations | (2.74) |
Net asset value, end of period | $ 39.07 |
Total ReturnB,C | (6.55)% |
Ratios to Average Net AssetsE,H |
|
Expenses before reductions | .41% A |
Expenses net of fee waivers, if any | .41% A |
Expenses net of all reductions | .41% A |
Net investment income (loss) | 1.09% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 93 |
Portfolio turnover rateF | 82% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
G For the period May 9, 2008 (commencement of sale of shares) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended July 31, 2008
1. Organization.
Fidelity Blue Chip Growth Fund (the Fund) is a fund of Fidelity Securities Fund (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. On January 17, 2008, the Board of Trustees approved the creation of an additional class of shares. The Fund commenced sale of Class K shares and the existing class was designated Blue Chip Growth on May 9, 2008. The Fund offers Blue Chip Growth 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. In order to disclose class level financial information dollar amounts presented in the notes are unrounded. 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.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the SEC's web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. Wherever possible, the Fund uses independent pricing services approved by the Board of Trustees to value its investments.
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
As permitted by compliance with certain conditions under Rule 2a-7 of the 1940 Act, securities owned by the Money Market Funds are valued at amortized cost which approximates market value.
When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
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. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Deferred Trustee Compensation. Under a Deferred Compensation Plan (the Plan), independent Trustees must defer receipt of a portion of, and may elect to defer receipt of an additional 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 by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The implementation of FIN 48 did not result in any unrecognized tax benefits in the accompanying financial statements. Each of the Fund's federal tax
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. In addition, the Fund will claim a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. Certain adjustments have been made to the accounts relating to prior periods. Collectively, these adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, partnerships, deferred trustees compensation and losses deferred due to wash sales.
The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows:
Unrealized appreciation | $ 2,048,011,423 |
Unrealized depreciation | (870,710,241) |
Net unrealized appreciation (depreciation) | 1,177,301,182 |
Undistributed ordinary income | 57,295,277 |
Undistributed long-term capital gain | 240,437,512 |
|
|
Cost for federal income tax purposes | $ 12,423,571,383 |
The tax character of distributions paid was as follows:
| July 31, 2008 | July 31, 2007 |
Ordinary Income | $ 124,380,053 | $ 110,618,117 |
Long-term Capital Gains | 1,882,106,068 | 430,991,875 |
Total | $ 2,006,486,121 | $ 541,609,992 |
New Accounting Pronouncements. In September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and results in expanded disclosures about fair value measurements.
Annual Report
4. Operating Policies.
Repurchase Agreements. Fidelity Management & Research Company (FMR) has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits the Fund and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts which are then invested in repurchase agreements. The Fund may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. The Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
5. Purchases and Sales of Investments.
Purchases and sales of securities other than short-term securities, aggregated $12,918,824,580 and $17,497,427,037, respectively.
6. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. In addition, the management fee is subject to a performance adjustment (up to a maximum of .20% of the Fund's average net assets over a 36 month performance period). The upward or downward adjustment to the management fee is based on the relative investment performance of the retail class of the Fund, Blue Chip Growth as compared to an appropriate benchmark index. For the period, the total annual management fee rate, including the performance adjustment, was .33% of the Fund's average net assets.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to account size and type of account of the shareholders of Blue Chip Growth and asset-based fees of .05% of average net assets for Class K. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. Prior to January 1, 2008, Fidelity Service Company (FSC), also an Affiliate of FMR, was the
Annual Report
Notes to Financial Statements - continued
6. Fees and Other Transactions with Affiliates - continued
Transfer Agent Fees - continued
transfer agent for Blue Chip Growth. Prior to January 1, 2008, Fidelity Service Company (FSC), also an affiliate of FMR, was the transfer agent for Blue Chip Growth. For the period, the transfer agent fees for Blue Chip Growth were equivalent to an annualized rate of .23% of average net assets.
For the period, the total transfer agent fees paid by each class were as follows:
| Amount |
Blue Chip Growth | $ 36,617,118 |
Blue Chip Growth Class K | 12 |
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $183,503 for the period.
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. The Fund's activity in this program during the period for which loans were outstanding was as follows:
Borrower or Lender | Average Daily Loan Balance | Weighted Average Interest Rate | Interest Expense |
Borrower | $ 40,124,489 | 4.43% | $ 231,866 |
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $4.2 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro rata portion of the line of credit, which amounted to $39,476 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
Annual Report
8. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Net income from lending portfolio securities during the period amounted to $5,303,995.
9. Expense Reductions.
FMR voluntarily agreed to reimburse a portion of Blue Chip Growth's operating expenses. During the period, this reimbursement reduced the class' expenses by $12,755.
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 $371,223 for the period. In addition, through arrangements with the Fund's custodian and transfer agent, credits realized as a result of uninvested cash balances were used to reduce the Fund's expenses. During the period, these credits reduced the Fund's custody expenses by $7,881. During the period, credits reduced each class' transfer agent expense as noted in the table below.
| Transfer Agent |
Blue Chip Growth | $ 818,182 |
10. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future
Annual Report
Notes to Financial Statements - continued
10. Other - continued
claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
In December 2006, the Independent Trustees, with the assistance of independent counsel, completed an investigation regarding gifts, gratuities and business entertainment provided by certain brokers to certain individuals who were employed on FMR's domestic equity trading desk during the period 2002 to 2004. The Independent Trustees and FMR agreed that, despite the absence of proof that the Fidelity mutual funds experienced diminished execution quality as a result of the improper receipt of gifts and business entertainment, the conduct at issue was serious and was worthy of redress. Accordingly, the Independent Trustees requested, and FMR agreed to make, a payment of $42 million plus accrued interest, which equaled approximately $7.3 million, to certain Fidelity mutual funds.
In March 2008, the Trustees approved a method for allocating this payment among the funds and, in total, FMR paid the fund $1,190,588, which is recorded in the accompanying Statement of Operations.
In a related administrative order dated March 5, 2008, the U.S. Securities and Exchange Commission ("SEC") announced a settlement with FMR and FMR Co., Inc. (an affiliate of FMR) involving the SEC's regulatory rules for investment advisers and the improper receipt of gifts, gratuities and business entertainment. Without admitting or denying the SEC's findings, FMR agreed to pay an $8 million civil penalty to the United States Treasury.
11. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended July 31, | 2008 | 2007 |
From net investment income |
|
|
Blue Chip Growth | $ 124,380,053 | $ 110,618,117 |
From net realized gain |
|
|
Blue Chip Growth | $ 1,882,106,068 | $ 430,991,875 |
Annual Report
12. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
Years ended July 31, | 2008 A | 2007 | 2008 A | 2007 |
Blue Chip Growth |
|
|
|
|
Shares sold | 41,834,063 | 59,925,030 | $ 1,768,681,051 | $ 2,670,980,693 |
Reinvestment of distributions | 45,780,294 | 12,779,077 | 1,982,162,208 | 535,074,118 |
Shares redeemed | (142,989,488) | (146,659,008) | (6,254,650,166) | (6,620,849,144) |
Net increase (decrease) | (55,375,131) | (73,954,901) | $ (2,503,806,907) | $ (3,414,792,333) |
Class K |
|
|
|
|
Shares sold | 2,392 | - | $ 100,000 | $ - |
Net increase (decrease) | 2,392 | - | $ 100,000 | $ - |
A Share transactions for Class K are for the period May 9, 2008 to July 31, 2008.
Annual Report
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Securities Fund and Shareholders of Fidelity Blue Chip Growth Fund:
We have audited the accompanying statement of assets and liabilities of Fidelity Blue Chip Growth Fund (the Fund), a fund of Fidelity Securities Fund, including the schedule of investments, as of July 31, 2008, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of July 31, 2008, by correspondence with the custodians and brokers; where replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Fidelity Blue Chip Growth Fund as of July 31, 2008, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and its financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Boston, Massachusetts
September 22, 2008
Annual Report
Trustees and Officers
The Trustees, Member of the Advisory Board, and executive officers of the trust and fund, as applicable, are listed below. The Board of Trustees governs the fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee the fund's activities, review contractual arrangements with companies that provide services to the fund, and review the fund's performance. Except for Edward C. Johnson 3d and James C. Curvey, each of the Trustees oversees 218 funds advised by FMR or an affiliate. Messrs. Johnson and Curvey oversee 377 funds advised by FMR or an affiliate.
The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust. Each Trustee who is not an interested person (as defined in the 1940 Act) (Independent Trustee), shall retire not later than the last day of the calendar year in which his or her 72nd birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board Member hold office without limit in time, except that any officer and Advisory Board Member may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years.
The fund's Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-800-544-8544.
Interested Trustees*:
Correspondence intended for each Trustee who is an interested person may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Edward C. Johnson 3d (78) | |
| Year of Election or Appointment: 1984 Mr. Johnson is Chairman of the Board of Trustees. Mr. Johnson serves as Chief Executive Officer, Chairman, and a Director of FMR LLC; Chairman and a Director of FMR; Chairman and a Director of Fidelity Research & Analysis Company (FRAC); Chairman and a Director of Fidelity Investments Money Management, Inc.; and Chairman and a Director of FMR Co., Inc. In addition, Mr. Johnson serves as Chairman and Director of FIL Limited. Previously, Mr. Johnson served as President of FMR LLC (2006-2007). |
James C. Curvey (73) | |
| Year of Election or Appointment: 2007 Mr. Curvey also serves as Trustee (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2006- |
* Trustees have been determined to be "Interested Trustees" by virtue of, among other things, their affiliation with the trust or various entities under common control with FMR. FMR Corp. merged with and into FMR LLC on October 1, 2007. Any references to FMR LLC for prior periods are deemed to be references to the prior entity.
Independent Trustees:
Correspondence intended for each Independent Trustee (that is, the Trustees other than the Interested Trustees) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.
Name, Age; Principal Occupation | |
Dennis J. Dirks (60) | |
| Year of Election or Appointment: 2005 Prior to his retirement in May 2003, Mr. Dirks was Chief Operating Officer and a member of the Board of The Depository Trust & Clearing Corporation (DTCC) (1999-2003). He also served as President, Chief Operating Officer, and Board member of The Depository Trust Company (DTC) (1999-2003) and President and Board member of the National Securities Clearing Corporation (NSCC) (1999-2003). In addition, Mr. Dirks served as a Trustee and a member of the Finance Committee of Manhattan College (2005-2008), and as Chief Executive Officer and Board member of the Government Securities Clearing Corporation (2001-2003) and Chief Executive Officer and Board member of the Mortgage-Backed Securities Clearing Corporation (2001-2003). Mr. Dirks also serves as a Trustee and a member of the Finance Committee of AHRC of Nassau County (2006-present). |
Alan J. Lacy (54) | |
| Year of Election or Appointment: 2008 Mr. Lacy serves as Senior Adviser (2007-present) of Oak Hill Capital Partners, L.P. (a private equity firm). Mr. Lacy also served as Chief Executive Officer (2000-2005) and Vice Chairman (2005-2006) of Sears Holdings Corporation and Sears, Roebuck and Co. (retail). In addition, Mr. Lacy serves as a member of the Board of Directors of The Western Union Company (global money transfer, 2006-present) and Bristol-Myers Squibb (global pharmaceuticals, 2007-present). Mr. Lacy is a Trustee of the National Parks Conservation Association and The Field Museum of Natural History. |
Ned C. Lautenbach (64) | |
| Year of Election or Appointment: 2000 Mr. Lautenbach is Chairman of the Independent Trustees (2006-present). Mr. Lautenbach is an Advisory Partner of Clayton, Dubilier & Rice, Inc. (private equity investment firm). Previously, Mr. Lautenbach was with the International Business Machines Corporation (IBM) from 1968 until his retirement in 1998. Mr. Lautenbach serves as a Director of Eaton Corporation (diversified industrial) as well as the Philharmonic Center for the Arts in Naples, Florida. He also is a member of the Board of Trustees of Fairfield University (2005-present), as well as a member of the Council on Foreign Relations. Previously, Mr. Lautenbach served as a Director of Sony Corporation (2006-2007). |
Joseph Mauriello (63) | |
| 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 |
Cornelia M. Small (64) | |
| Year of Election or Appointment: 2005 Ms. Small is a member of the Investment Committee, and Chair (2008-present) and a member of the Board of Trustees of Smith College. Ms. Small also serves on the Investment Committee of the Berkshire Taconic Community Foundation (2008-present). Previously, Ms. Small served as Chairperson of the Investment Committee (2002-2008) of Smith College and as Co-Chair (2000-2003) of the Annual Fund for the Fletcher School of Law and Diplomacy. In addition, she served as Chief Investment Officer, Director of Global Equity Investments, and a member of the Board of Directors of Scudder, Stevens & Clark and Scudder Kemper Investments. |
William S. Stavropoulos (69) | |
| Year of Election or Appointment: 2002 Mr. Stavropoulos is Chairman Emeritus of the Board of Directors of The Dow Chemical Company, where he previously served in numerous senior management positions, including President (1993-2000; 2002- |
David M. Thomas (59) | |
| Year of Election or Appointment: 2008 Previously, Mr. Thomas served as Executive Chairman (2005-2006) and Chairman and Chief Executive Officer (2000-2005) of IMS Health, Inc. (pharmaceutical and healthcare information solutions). In addition, Mr. Thomas serves as a member of the Board of Directors of Fortune Brands, Inc. (consumer products holding company), and Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (57) | |
| Year of Election or Appointment: 2008 Mr. Wiley also serves as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-present). He serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005- |
Advisory Board Member and Executive Officers**:
Correspondence intended for each executive officer and Mr. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Peter S. Lynch (64) | |
| Year of Election or Appointment: 2003 Member of the Advisory Board of Fidelity Securities Fund. Mr. Lynch is Vice Chairman and a Director of FMR, and Vice Chairman (2001- |
Kenneth B. Robins (38) | |
| Year of Election or Appointment: 2008 President and Treasurer of the fund. Mr. Robins also serves as President and Treasurer of Fidelity's Equity and High Income Funds (2008-present) and is an employee of FMR (2004-present). Before joining Fidelity Investments, Mr. Robins worked at KPMG LLP, where he was a partner in KPMG's department of professional practice (2002-2004). |
Walter C. Donovan (46) | |
| Year of Election or Appointment: 2007 Vice President of the fund. Mr. Donovan also serves as Vice President of Fidelity's Equity Funds, President of FMR and FMR Co., Inc., and Executive Vice President of Fidelity Investments Money Management, Inc. (2007-present). Previously, Mr. Donovan served as Executive Vice President of FMR and FMR Co., Inc. (2005-2007) and Senior Vice President of FMR (2003-2005) and FMR Co., Inc. (2004-2005). |
Bruce T. Herring (42) | |
| Year of Election or Appointment: 2006 Vice President of the fund. Mr. Herring also serves as Vice President of certain Equity Funds (2006-present) and Group Chief Investments Officer of FMR. Previously, Mr. Herring served as a portfolio manager for Fidelity U.S. Equity Funds. |
Scott C. Goebel (40) | |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of the fund. Mr. Goebel also serves as Secretary and CLO of other Fidelity funds (2008-present); General Counsel, Secretary, and Senior Vice President of FMR (2008-present); and Deputy General Counsel of FMR LLC. Previously, Mr. Goebel served as Assistant Secretary of the Funds (2007-2008) and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007). |
John B. McGinty, Jr. (45) | |
| Year of Election or Appointment: 2008 Assistant Secretary of the fund. Mr. McGinty also serves as Assistant Secretary of Fidelity's other Equity and High Income Funds (2008- |
Holly C. Laurent (54) | |
| Year of Election or Appointment: 2008 Anti-Money Laundering (AML) officer of the fund. Ms. Laurent also serves as AML officer of other Fidelity funds (2008-present) and is an employee of FMR LLC. Previously, Ms. Laurent was Senior Vice President and Head of Legal for Fidelity Business Services India Pvt. Ltd. (2006- |
Christine Reynolds (49) | |
| Year of Election or Appointment: 2008 Chief Financial Officer of the fund. Ms. Reynolds also serves as Chief Financial Officer of other Fidelity funds (2008-present). Ms. Reynolds became President of Fidelity Pricing and Cash Management Services (FPCMS) in August 2008. She served as Chief Operating Officer of FPCMS from 2007 through July 2008. Previously, Ms. Reynolds served as President, Treasurer, and Anti-Money Laundering officer of the Fidelity funds (2004-2007). Before joining Fidelity Investments, Ms. Reynolds worked at PricewaterhouseCoopers LLP (PwC) (1980- |
Kenneth A. Rathgeber (61) | |
| Year of Election or Appointment: 2004 Chief Compliance Officer of the fund. Mr. Rathgeber also serves as Chief Compliance Officer of Fidelity's Equity and High Income Funds (2004-present). He is Chief Compliance Officer of FMR (2005-present), FMR Co., Inc. (2005-present), Fidelity Management & Research (U.K.) Inc. (2005-present), Fidelity Research & Analysis Company (2005- |
Bryan A. Mehrmann (47) | |
| Year of Election or Appointment: 2005 Deputy Treasurer of the fund. Mr. Mehrmann also serves as Deputy Treasurer of other Fidelity funds (2005-present) and is an employee of FMR. Previously, Mr. Mehrmann served as Vice President of Fidelity Investments Institutional Services Group (FIIS)/Fidelity Investments Institutional Operations Corporation, Inc. (FIIOC) Client Services (1998-2004). |
Adrien E. Deberghes (40) | |
| Year of Election or Appointment: 2008 Deputy Treasurer of the fund. Mr. Deberghes also serves as Deputy Treasurer of Fidelity's Equity and High Income Funds (2008-present) and is an employee of FMR (2008-present). Previously, Mr. Deberghes served as Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005). |
Robert G. Byrnes (41) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of the fund. Mr. Byrnes also serves as Assistant Treasurer of other Fidelity funds (2005-present) and is an employee of FMR (2005-present). Previously, Mr. Byrnes served as Vice President of |
Peter L. Lydecker (54) | |
| Year of Election or Appointment: 2004 Assistant Treasurer of the fund. Mr. Lydecker also serves as Assistant Treasurer of other Fidelity funds (2004-present) and is an employee of FMR. |
Paul M. Murphy (61) | |
| Year of Election or Appointment: 2007 Assistant Treasurer of the fund. Mr. Murphy also serves as Assistant Treasurer of other Fidelity funds (2007-present) and is an employee of FMR (2007-present). Previously, Mr. Murphy served as Chief Financial Officer of the Fidelity Funds (2005-2006), Vice President and Associate General Counsel of FMR (2007), and Senior Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (1994-2007). |
Gary W. Ryan (49) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of the fund. Mr. Ryan also serves as Assistant Treasurer of other Fidelity funds (2005-present) and is an employee of FMR (2005-present). Previously, Mr. Ryan served as Vice President of Fund Reporting in Fidelity Pricing and Cash Management Services (FPCMS) (1999-2005). |
** FMR Corp. merged with and into FMR LLC on October 1, 2007. Any references to FMR LLC for prior periods are deemed to be references to the prior entity.
Annual Report
Distributions (Unaudited)
The Board of Trustees of Fidelity Blue Chip Growth 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 |
Retail Class | 09/12/08 | 09/15/08 | $0.168 | $0.71 |
Retirement Class | 09/12/08 | 09/15/08 | $0.184 | $0.71 |
The fund hereby designates as a capital gain dividend with respect to the taxable year ended July 31, 2008, $738,521,242, or, if subsequently determined to be different, the net capital gain of such year.
A total of 0.22% of the dividends distributed during the fiscal year was derived from interest on U.S. Government securities which is generally exempt from state income tax.
Retail Class designates 100% of the dividends distributed during the fiscal year as qualifying for the dividends-received deduction for corporate shareholders.
Retail Class designates 100% of the dividends distributed during the fiscal year as amounts which may be taken into account as a dividend for purposes of the maximum rate under section 1(h)(11) of the Internal Revenue Code.
The fund will notify shareholders in January 2009 of amounts for use in preparing 2008 income tax returns.
Annual Report
Proxy Voting Results
A special meeting of the fund's shareholders was held on May 14, 2008. The results of votes taken among shareholders on the proposals before them are reported below. Each vote reported represents one dollar of net asset value held on the record date for the meeting.
PROPOSAL 1 | ||
To elect a Board of Trustees.A | ||
| # of | % of |
James C. Curvey | ||
Affirmative | 30,242,569,269.49 | 94.915 |
Withheld | 1,620,182,942.38 | 5.085 |
TOTAL | 31,862,752,211.87 | 100.000 |
Dennis J. Dirks | ||
Affirmative | 30,356,248,026.80 | 95.272 |
Withheld | 1,506,504,185.07 | 4.728 |
TOTAL | 31,862,752,211.87 | 100.000 |
Edward C. Johnson 3d | ||
Affirmative | 30,163,300,902.81 | 94.666 |
Withheld | 1,699,451,309.06 | 5.334 |
TOTAL | 31,862,752,211.87 | 100.000 |
Alan J. Lacy | ||
Affirmative | 30,334,439,999.59 | 95.203 |
Withheld | 1,528,312,212.28 | 4.797 |
TOTAL | 31,862,752,211.87 | 100.000 |
Ned C. Lautenbach | ||
Affirmative | 30,317,381,535.59 | 95.150 |
Withheld | 1,545,370,676.28 | 4.850 |
TOTAL | 31,862,752,211.87 | 100.000 |
Joseph Mauriello | ||
Affirmative | 30,340,553,696.88 | 95.223 |
Withheld | 1,522,198,514.99 | 4.777 |
TOTAL | 31,862,752,211.87 | 100.000 |
Cornelia M. Small | ||
Affirmative | 30,337,552,071.15 | 95.213 |
Withheld | 1,525,200,140.72 | 4.787 |
TOTAL | 31,862,752,211.87 | 100.000 |
William S. Stavropoulos | ||
Affirmative | 30,240,356,579.51 | 94.908 |
Withheld | 1,622,395,632.36 | 5.092 |
TOTAL | 31,862,752,211.87 | 100.000 |
| # of | % of |
David M. Thomas | ||
Affirmative | 30,352,029,125.67 | 95.259 |
Withheld | 1,510,723,086.20 | 4.741 |
TOTAL | 31,862,752,211.87 | 100.000 |
Michael E. Wiley | ||
Affirmative | 30,333,540,290.12 | 95.201 |
Withheld | 1,529,211,921.75 | 4.799 |
TOTAL | 31,862,752,211.87 | 100.000 |
PROPOSAL 2 | ||
To amend the Declaration of Trust to reduce the required quorum for future shareholder meetings.A | ||
Affirmative | 23,747,670,372.95 | 74.531 |
Against | 5,357,217,831.03 | 16.814 |
Abstain | 1,587,233,084.08 | 4.981 |
Broker | 1,170,630,923.81 | 3.674 |
TOTAL | 31,862,752,211.87 | 100.000 |
A Denotes trust-wide proposal and voting results. |
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees
Fidelity Blue Chip Growth Fund
Each year, typically in July, the Board of Trustees, including the Independent Trustees (together, the Board), votes on the renewal of the management contract and sub-
advisory agreements (together, the Advisory Contracts) for the fund. The Board, assisted by the advice of fund counsel and Independent Trustees' counsel, requests and considers a broad range of information throughout the year.
The Board meets regularly and, acting directly and through its separate committees, requests and receives information concerning, and considers at each of its meetings factors that are relevant to, its annual consideration of the renewal of the fund's Advisory Contracts, including the services and support provided to the fund and its shareholders. At the time of the renewal, the Board had 12 standing committees, each composed of Independent Trustees with varying backgrounds, to which the Board has assigned specific subject matter responsibilities in order to enhance effective decision-making by the Board. Each committee has a written charter outlining the structure and purposes of the committee. The Board also meets as needed to consider matters specifically related to the Board's annual consideration of the renewal of Advisory Contracts.
At its July 2008 meeting, the Board of Trustees, including the Independent Trustees, unanimously determined to renew the fund's Advisory Contracts. In reaching its determination, the Board considered all factors it believed relevant, including (i) the nature, extent, and quality of the services to be provided to the fund and its shareholders (including the investment performance of the fund); (ii) the competitiveness of the fund's management fee and total expenses; (iii) the total costs of the services to be provided by and the profits to be realized by Fidelity from its relationship with the fund; (iv) the extent to which economies of scale would be realized as the fund grows; and (v) whether fee levels reflect these economies of scale, if any, for the benefit of fund shareholders. The Board also approved agreements with foreign sub-advisers Fidelity Management & Research (Japan) Inc. and Fidelity Management & Research (Hong Kong) Limited, as well as amendments to the fund's agreement with Fidelity Management & Research (U.K.) Inc.
In considering whether to renew the Advisory Contracts for the fund, the Board ultimately reached a determination, with the assistance of fund counsel and Independent Trustees' counsel and through the exercise of its business judgment, that the renewal of the Advisory Contracts and the compensation to be received by Fidelity under the management contract is consistent with Fidelity's fiduciary duty under applicable law. The Board's decision to renew the Advisory Contracts was not based on any single factor noted above, but rather was based on a comprehensive consideration of all the information provided to the Board at its meetings throughout the year. The Board, in reaching its determination to renew the Advisory Contracts, is aware that shareholders in the fund have a broad range of investment choices available to them, including a wide choice among mutual funds offered by competitors to Fidelity, and that the fund's shareholders, with the opportunity to review and weigh the disclosure provided by the fund in its prospectus and other public disclosures, have chosen to invest in this fund, managed by Fidelity.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
Nature, Extent, and Quality of Services Provided. The Board considered staffing within the investment adviser, FMR, and the sub-advisers (together, the Investment Advisers), including the backgrounds of the fund's investment personnel and the fund's investment objective and discipline. The Independent Trustees also had discussions with senior management of Fidelity's investment operations and investment groups. The Board considered the structure of the portfolio manager compensation program and whether this structure provides appropriate incentives.
Resources Dedicated to Investment Management and Support Services. The Board reviewed the size, education, and experience of the Investment Advisers' investment staff, their use of technology, and the Investment Advisers' approach to recruiting, training, and retaining portfolio managers and other research, advisory, and management personnel. The Board noted that Fidelity's analysts have access to a variety of technological tools that enable them to perform both fundamental and quantitative analysis and to specialize in various disciplines. The Board considered Fidelity's extensive global research capabilities that enable the Investment Advisers to aggregate data from various sources in an effort to produce positive investment results. The Board also considered that Fidelity's portfolio managers and analysts have access to daily portfolio attribution that allows for monitoring of a fund's portfolio, as well as an electronic communication system that provides immediate real-time access to research concerning issuers and credit enhancers.
Shareholder and Administrative Services. The Board considered (i) the nature, extent, quality, and cost of advisory, administrative, distribution, and shareholder services performed by the Investment Advisers and their affiliates under the Advisory Contracts and under separate agreements covering transfer agency, pricing and bookkeeping, and securities lending services for the fund; (ii) the nature and extent of the Investment Advisers' supervision of third party service providers, principally custodians and subcustodians; and (iii) the resources devoted to, and the record of compliance with, the fund's compliance policies and procedures. The Board also reviewed the allocation of fund brokerage, including allocations to brokers affiliated with the Investment Advisers, the use of brokerage commissions to pay fund expenses, and the use of "soft" commission dollars to pay for research services. The Board further considered that Fidelity voluntarily pays for market data out of its own resources.
The Board noted that the growth of fund assets across the complex allows Fidelity to reinvest in the development of services designed to enhance the value or convenience of the Fidelity funds as investment vehicles. These services include 24-hour access to account information and market information through phone representatives and over the Internet, and investor education materials and asset allocation tools.
Annual Report
Investment in a Large Fund Family. The Board considered the benefits to shareholders of investing in a Fidelity fund, including the benefits of investing in a fund that is part of a large family of funds offering a variety of investment disciplines and providing for a large variety of mutual fund investor services. For example, fund shareholders are offered the privilege of exchanging shares of the fund for shares of other Fidelity funds, as set forth in the fund's prospectus, without paying a sales charge. The Board noted that Fidelity has taken a number of actions over the previous year that benefited particular funds, including (i) dedicating additional resources to investment research and to restructure the investment research teams; (ii) contractually agreeing to reduce the management fees on Fidelity's Institutional Money Market Funds and launching Class IV and Institutional Class of certain of these funds; (iii) reducing the transfer agent fees for the Fidelity Select Portfolios and Investor Class of the VIP funds; and (iv) launching Class K of 29 equity funds as a lower-fee class available to certain employer-sponsored retirement plans.
Investment Performance. The Board considered whether the fund has operated within its investment objective, as well as its record of compliance with its investment restrictions. It also reviewed the fund's absolute investment performance, as well as the fund's relative investment performance measured against (i) a broad-based securities market index, and (ii) a peer group of mutual funds deemed appropriate by the Board over multiple periods. The following charts considered by the Board show, over the one-, three-, and five-year periods ended December 31, 2007, the fund's cumulative total returns, the cumulative total returns of a broad-based securities market index ("benchmark"), and a range of cumulative total returns of a peer group of mutual funds identified by Morningstar, Inc. as having an investment style similar to that of the fund based on underlying portfolio holdings. (The fund did not offer Class K as of December 31, 2007.) The box within each chart shows the 25th percentile return (bottom of box) and the 75th percentile return (top of box) of the peer group. Returns shown above the box are in the first quartile and returns shown below the box are in the fourth quartile. The percentage beaten number noted below each chart corresponds to the percentile box and represents the percentage of funds in the peer group whose performance was equal to or lower than that of the fund.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
Fidelity Blue Chip Growth Fund
The Board reviewed the fund's relative investment performance against its peer group and stated that the performance of the fund was in the third quartile for the one- and three-year periods and the fourth quartile for the five-year period. The Board also stated that the investment performance of the fund was lower than its benchmark for the three- and five-year periods, although the fund's one-year cumulative total return compared favorably to its benchmark. The Board discussed with FMR actions that may be taken by FMR to improve the fund's disappointing performance relative to its peer group. The Board will continue to 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 realizes that the performance adjustment provides FMR with a strong economic incentive to seek to achieve superior performance for the fund's shareholders and helps to more closely align the interests of FMR and the fund's shareholders.
The Board considered that FMR has taken steps to refocus and strengthen equity research, equity portfolio management, and compliance.
Based on its review, and giving particular weight to the nature and quality of the resources dedicated by the Investment Advisers to maintain and improve relative performance, the Board concluded that the nature, extent, and quality of the services provided to the fund will benefit the fund's shareholders, particularly in light of the Board's view that the fund's shareholders benefit from investing in a fund that is part of a large family of funds offering a variety of investment disciplines and services.
Annual Report
Competitiveness of Management Fee and Total Fund Expenses. The Board considered the fund's management fee and total expenses compared to "mapped groups" of competitive funds and classes. Fidelity creates "mapped groups" by combining similar Lipper investment objective categories that have comparable management fee characteristics. Combining Lipper investment objective categories aids the Board's management fee and total expense comparisons by broadening the competitive group used for comparison and by reducing the number of universes to which various Fidelity funds are compared. The Board also considered supplemental information about how the fund's management fee and total expenses ranked relative to groups based on Lipper classifications, which take into account a fund's market capitalization and style.
The Board considered two proprietary management fee comparisons for the 12-month periods shown in the chart below. The group of Lipper funds used by the Board for management fee comparisons is referred to below as the "Total Mapped Group." The Total Mapped Group comparison focuses on a fund's standing relative to the total universe of comparable funds available to investors, in terms of gross management fees before expense reimbursements or caps, and without giving effect to the fund's performance adjustment. "TMG %" represents the percentage of funds in the Total Mapped Group that had management fees that were lower than the fund's. For example, a TMG % of 9% means that 91% of the funds in the Total Mapped Group had higher management fees than the fund. The "Asset-Size Peer Group" (ASPG) comparison focuses on a fund's standing relative to non-Fidelity funds similar in size to the fund within the Total Mapped Group. The ASPG represents at least 15% of the funds in the Total Mapped Group with comparable asset size and management fee characteristics, subject to a minimum of 50 funds (or all funds in the Total Mapped Group if fewer than 50). Additional information, such as the ASPG quartile in which the fund's management fee ranked and the impact of the fund's performance adjustment, is also included in the chart and considered by the Board.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
Fidelity Blue Chip Growth 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 2007. 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.
Furthermore, the Board considered that shareholders approved a prospective change in the index used to calculate the fund's performance adjustment beginning June 1, 2006. The Board also considered that, because the performance adjustment is based on a rolling 36-month measurement period, during a transition period the fund's performance is compared to a blended index return that reflects the performance of the former index for the portion of the measurement period prior to June 1, 2006 and the performance of the current index for the remainder of the measurement period. The Board noted that the fund's performance adjustment for 2006 and 2007 shown in the chart above reflects the effect of using the blended index return to calculate the fund's performance adjustment.
In connection with the renewal of the fund's management contract, the Board also approved non-material amendments to the fund's management contract to clarify certain provisions regarding the calculation of the fund's performance adjustment.
Based on its review, the Board concluded that the fund's management fee was fair and reasonable in light of the services that the fund receives and the other factors considered.
Annual Report
In its review of the fund's total expenses, the Board considered the fund's management fee as well as other fund expenses, such as transfer agent fees, pricing and bookkeeping fees, and custodial, legal, and audit fees. The Board also noted the effects of any waivers and reimbursements on fees and expenses, as well as the impact of the fund's performance adjustment. As part of its review, the Board also considered current and historical total expenses of the fund compared to competitive fund median expenses. The fund is compared to those funds and classes in the Total Mapped Group (used by the Board for management fee comparisons) that have a similar sales load structure.
The Board noted that the fund's total expenses ranked below its competitive median for 2007.
In its review of total expenses, the Board also considered Fidelity fee structures and other information on clients that FMR and its affiliates service in other competitive markets, such as other mutual funds advised or subadvised by FMR or its affiliates, pension plan clients, and other institutional clients.
Based on its review, the Board concluded that the fund's total expenses were reasonable in light of the services that the fund and its shareholders receive and the other factors considered.
Costs of the Services and Profitability. The Board considered the revenues earned and the expenses incurred by Fidelity in conducting the business of developing, marketing, distributing, managing, administering and servicing the fund and its shareholders. The Board also considered the level of Fidelity's profits in respect of all the Fidelity funds.
On an annual basis, FMR presents to the Board Fidelity's profitability for the fund. Fidelity calculates the profitability for each fund, as well as aggregate profitability for groups of Fidelity funds and all Fidelity funds, using a series of detailed revenue and cost allocation methodologies which originate with the audited books and records of Fidelity. The Audit Committee of the Board reviews any significant changes from the prior year's methodologies.
PricewaterhouseCoopers LLP (PwC), independent registered public accounting firm and auditor to Fidelity and certain Fidelity funds, has been engaged annually by the Board as part of the Board's assessment of the results of Fidelity's profitability analysis. PwC's engagement includes the review and assessment of Fidelity's methodologies used in determining the revenues and expenses attributable to Fidelity's mutual fund business, and completion of agreed-upon procedures surrounding the mathematical accuracy of fund profitability and its conformity to allocation methodologies. After considering PwC's reports issued under the engagement and information provided by Fidelity, the Board believes that while other allocation methods may also be reasonable, Fidelity's profitability methodologies are reasonable in all material respects.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
The Board has also reviewed Fidelity's non-fund businesses and any fall-out benefits related to the mutual fund business as well as cases where Fidelity's affiliates may benefit from or be related to the fund's business.
The Board considered the costs of the services provided by and the profits realized by Fidelity in connection with the operation of the fund and determined that the amount of profit is a fair entrepreneurial profit for the management of the fund.
Economies of Scale. The Board considered whether there have been economies of scale in respect of the management of the Fidelity funds, whether the Fidelity funds (including the fund) have appropriately benefited from any such economies of scale, and whether there is potential for realization of any further economies of scale. The Board considered the extent to which the fund will benefit from economies of scale through increased services to the fund, through waivers or reimbursements, or through fee or expense reductions.
The Board recognized that the fund's management contract incorporates a "group fee" structure, which provides for lower group fee rates as total fund assets under FMR's management increase, and for higher group fee rates as total fund assets under FMR's management decrease. FMR determines the group fee rates based on a tiered asset "breakpoint" schedule. The Board considered that the group fee is designed to deliver the benefits of economies of scale to fund shareholders when total fund assets increase, even if assets of any particular fund are unchanged or have declined, because some portion of Fidelity's costs are attributable to services provided to all Fidelity funds, and all funds benefit if those costs can be allocated among more assets. The Board concluded that, given the group fee structure, fund shareholders will achieve a certain level of economies of scale as assets under FMR's management increase at the fund complex level, regardless of whether Fidelity achieves any such economies of scale.
The Board further concluded that any potential economies of scale are being shared between fund shareholders and Fidelity in an appropriate manner.
Additional Information Requested by the Board. In order to develop fully the factual basis for consideration of the Fidelity funds' Advisory Contracts, the Board requested and received additional information on certain topics, including (i) fund performance trends and actions to be taken by FMR to improve certain funds' overall performance; (ii) portfolio manager changes that have occurred during the past year; (iii) Fidelity's fund profitability methodology, the profitability of certain fund service providers, and profitability trends for certain funds; (iv) Fidelity's compensation structure for portfolio managers and key personnel, including its effects on fund profitability and the extent to which portfolio manager compensation is linked to fund performance; (v) Fidelity's fee structures and rationale for recommending different fees among categories of funds; and (vi) Fidelity's rationale for recommending which funds should have a performance adjustment component as part of their management fees.
Annual Report
Based on its evaluation of all of the conclusions noted above, and after considering all material factors, the Board ultimately concluded that the advisory fee structures are fair and reasonable, and that the fund's Advisory Contracts should be renewed.
Annual Report
Managing Your Investments
Fidelity offers several ways to conveniently manage your personal investments via your telephone or PC. You can access your account information, conduct trades and research your investments 24 hours a day.
By Phone
Fidelity Automated Service Telephone provides a single toll-free number to access account balances, positions, quotes and trading. It's easy to navigate the service, and on your first call, the system will help you create a personal identification number (PIN) for security.
(phone_graphic)
Fidelity Automated
Service Telephone (FAST®)
1-800-544-5555
Press
For mutual fund and brokerage trading.
For quotes.*
For account balances and holdings.
To review orders and mutual
fund activity.
To change your PIN.
To speak to a Fidelity representative.
By PC
Fidelity's web site on the Internet provides a wide range of information, including daily financial news, fund performance, interactive planning tools and news about Fidelity products and services.
(computer_graphic)
Fidelity's Web Site
www.fidelity.com
* When you call the quotes line, please remember that a fund's yield and return will vary and, except for money market funds, share price will also vary. This means that you may have a gain or loss when you sell your shares. There is no assurance that money market funds will be able to maintain a stable $1 share price; an investment in a money market fund is not insured or guaranteed by the U.S. government. Total returns are historical and include changes in share price, reinvestment of dividends and capital gains, and the effects of any sales charges.
Annual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Fidelity Research & Analysis Company
Fidelity Management & Research
(U.K.) Inc.
Fidelity Investments Japan Limited
Fidelity International Investment
Advisors
Fidelity International Investment
Advisors (U.K.) Limited
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Service Agents
Fidelity Investments Institutional
Operations Company, Inc.
Boston, MA
Fidelity Service Company, Inc.
Boston, MA
Custodian
Citibank, N.A.
New York, NY
BCF-UANN-0908 1.789244.105
Fidelity®
Blue Chip Value
Fund
Annual Report
July 31, 2008
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message | Ned Johnson's message to shareholders. | |
Performance | How the fund has done over time. | |
Management's Discussion | The manager's review of fund performance, strategy and outlook. | |
Shareholder Expense Example | An example of shareholder expenses. | |
Investment Changes | A summary of major shifts in the fund's investments over the past 6 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 |
| |
Proxy Voting Results |
| |
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 (search for "proxy voting guidelines") or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-800-544-8544 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company.
Annual Report
This report and the financial statements contained herein are submitted for the general information of the shareholders of the fund. This report is not authorized for distribution to prospective investors in the fund unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com or http://www.advisor.fidelity.com, as applicable.
NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE
Neither the fund nor Fidelity Distributors Corporation is a bank.
Annual Report
Chairman's Message
(photo_of_Edward_C_Johnson_3d)
Dear Shareholder:
Domestic and international securities markets have struggled thus far in 2008. High-grade fixed-income investments produced modestly positive results, but many stock benchmarks suffered double-digit losses through the first half of this year. Financial markets are always unpredictable, but there are a number of time-tested principles that can put the historical odds in your favor.
One of the basic tenets is to invest for the long term. Over time, riding out the markets' inevitable ups and downs has proven much more effective than selling into panic or chasing the hottest trend. Even missing only a few of the markets' best days can significantly diminish investor returns. Patience also affords the benefits of compounding - of earning interest on additional income or reinvested dividends and capital gains. There are tax advantages and cost benefits to consider as well. The more you sell, the more taxes you pay, and the more you trade, the higher the costs. While staying the course doesn't eliminate risk, it can considerably lessen the effect of short-term declines.
You can further manage your investing risk through diversification. And today, more than ever, geographic diversification should be taken into account. Studies indicate that asset allocation is the single most important determinant of a portfolio's long-term success. The right mix of stocks, bonds and cash - aligned to your particular risk tolerance and investment objective - is very important. Age-appropriate rebalancing is also an essential aspect of asset allocation. For younger investors, an emphasis on equities - which historically have been the best-performing asset class over time - is encouraged. As investors near their specific goal, such as retirement or sending a child to college, consideration may be given to replacing volatile assets (e.g. common stocks) with more-stable fixed investments (bonds or savings plans).
A third investment principle - investing regularly - can help lower the average cost of your purchases. Investing a certain amount of money each month or quarter helps ensure you won't pay for all your shares at market highs. This strategy - known as dollar cost averaging - also reduces unconstructive "emotion" from investing, helping shareholders avoid selling weak performers just prior to an upswing, or chasing a hot performer just before a correction.
We invite you to contact us via the Internet, through our Investor Centers or over the phone. It is our privilege to provide you the information you need to make the investments that are right for you.
Sincerely,
/s/Edward C. Johnson 3d
Edward C. Johnson 3d
Annual Report
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended July 31, 2008 | Past 1 | Past 5 | Life of |
Fidelity® Blue Chip Value Fund | -16.86% | 7.72% | 6.95% |
A From June 17, 2003.
$10,000 Over Life of Fund
Let's say hypothetically that $10,000 was invested in Fidelity® Blue Chip Value Fund on June 17, 2003, when the fund started. The chart shows how the value of your investment would have changed, and also shows how the Russell 1000® Value Index performed over the same period.
Annual Report
Management's Discussion of Fund Performance
Comments from Charles Hebard, Portfolio Manager of Fidelity® Blue Chip Value Fund
Grim news about the U.S. economy forced most domestic equity benchmarks into negative territory for the 12 months ending July 31, 2008. Oil prices north of $140 per barrel, gasoline prices in excess of $4 per gallon and soaring food costs drove inflation and consumer prices higher. In response, consumer discretionary spending trended lower as Main Street tightened its purse strings. Wall Street, meanwhile, struggled under the weight of massive write-downs in the financials sector, an ongoing credit crisis and bleak housing data. In an effort to staunch the bleeding, the Federal Reserve Board cut interest rates on seven occasions during the past year. Nevertheless, investors fled the equity markets, and both the Dow Jones Industrial AverageSM and the Standard & Poor's 500SM Index fell to a threshold that many believe marks the official start of a "bear market." For the 12 months overall, the Dow slid 11.71%, the S&P 500® dropped 11.09% and the technology-heavy NASDAQ Composite® Index dipped 7.98%.
For the year ending July 31, 2008, the fund returned -16.86%, trailing the -15.15% return of the Russell 1000® Value Index. Financial stocks made up the period's worst-performing sector in both the benchmark and the fund. In particular, my stock selection in the insurance and banking industries dragged on results, largely because I underestimated the severity of the housing crisis. Our positions in insurer American International Group (AIG), investment bank Lehman Brothers, mortgage lender Fannie Mae and financial services giant Citigroup all suffered from the same malady: mortgages that they held - particularly subprime mortgages - declined in value, forcing these companies to raise more capital, which they did in part by issuing new stock. Those additional shares diluted the value of existing shares, depressing their prices. Our position in AMBAC Financial Group, one of the country's largest bond insurers, plummeted as losses from subprime-mortgage-backed bonds cost the firm its AAA credit rating. By period end, the fund no longer held Lehman Brothers, Citigroup or AMBAC. On the positive side, I avoided Merrill Lynch for most of the period as its stock got crushed along with many other financial services firms, including those mentioned above. Late in the period, however, I bought shares of Merrill and the stock rallied. ConocoPhillips, a large, integrated oil company, benefited from rising oil prices. Similarly, rising coal prices boosted our stake in coal producer CONSOL Energy, which was not in the Russell index, and I sold the position after it reached my price target.
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 (February 1, 2008 to July 31, 2008).
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
| Beginning | Ending | Expenses Paid |
Actual | $ 1,000.00 | $ 877.30 | $ 4.39 |
Hypothetical (5% return per year before expenses) | $ 1,000.00 | $ 1,020.19 | $ 4.72 |
* Expenses are equal to the Fund's annualized expense ratio of .94%; multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
Annual Report
Investment Changes
Top Ten Stocks as of July 31, 2008 | ||
| % of fund's | % of fund's net assets |
Bank of America Corp. | 4.8 | 4.9 |
ConocoPhillips | 4.8 | 4.5 |
AT&T, Inc. | 3.5 | 3.7 |
JPMorgan Chase & Co. | 3.3 | 3.3 |
Exxon Mobil Corp. | 3.0 | 2.5 |
American International Group, Inc. | 2.7 | 3.7 |
General Electric Co. | 2.6 | 3.0 |
Verizon Communications, Inc. | 2.2 | 2.0 |
Wachovia Corp. | 1.7 | 0.9 |
Occidental Petroleum Corp. | 1.5 | 1.4 |
| 30.1 | |
Top Five Market Sectors as of July 31, 2008 | ||
| % of fund's | % of fund's net assets |
Financials | 27.3 | 30.4 |
Energy | 16.4 | 17.1 |
Industrials | 9.4 | 9.7 |
Health Care | 9.1 | 5.7 |
Consumer Discretionary | 7.8 | 7.9 |
Asset Allocation (% of fund's net assets) | |||||||
As of July 31, 2008* | As of January 31, 2008** | ||||||
Stocks and Investment |
| Stocks 99.4% |
| ||||
Convertible |
| Convertible |
| ||||
Short-Term |
| Short-Term |
| ||||
* Foreign investments | 12.4% |
| ** Foreign investments | 12.6% |
|
Annual Report
Investments July 31, 2008
Showing Percentage of Net Assets
Common Stocks - 98.8% | |||
Shares | Value | ||
CONSUMER DISCRETIONARY - 7.8% | |||
Auto Components - 0.2% | |||
Johnson Controls, Inc. | 42,700 | $ 1,287,832 | |
Automobiles - 0.3% | |||
Renault SA | 18,300 | 1,519,066 | |
Diversified Consumer Services - 0.4% | |||
H&R Block, Inc. | 94,000 | 2,287,020 | |
Hotels, Restaurants & Leisure - 0.3% | |||
Vail Resorts, Inc. (a) | 32,200 | 1,300,236 | |
Household Durables - 2.1% | |||
Black & Decker Corp. | 33,700 | 2,022,674 | |
Centex Corp. | 207,000 | 3,038,760 | |
KB Home | 256,100 | 4,504,799 | |
Whirlpool Corp. | 15,200 | 1,150,640 | |
| 10,716,873 | ||
Leisure Equipment & Products - 0.4% | |||
Brunswick Corp. | 52,400 | 675,960 | |
Eastman Kodak Co. | 89,800 | 1,314,672 | |
| 1,990,632 | ||
Media - 1.4% | |||
News Corp. Class A | 168,600 | 2,382,318 | |
Regal Entertainment Group Class A | 62,400 | 1,038,960 | |
Time Warner, Inc. | 272,100 | 3,896,472 | |
| 7,317,750 | ||
Specialty Retail - 2.6% | |||
Advance Auto Parts, Inc. | 51,300 | 2,107,917 | |
Home Depot, Inc. | 59,600 | 1,420,268 | |
PetSmart, Inc. | 63,200 | 1,435,272 | |
Ross Stores, Inc. | 93,300 | 3,541,668 | |
Staples, Inc. | 152,800 | 3,438,000 | |
Williams-Sonoma, Inc. (d) | 78,300 | 1,365,552 | |
| 13,308,677 | ||
Textiles, Apparel & Luxury Goods - 0.1% | |||
Liz Claiborne, Inc. | 56,100 | 733,227 | |
TOTAL CONSUMER DISCRETIONARY | 40,461,313 | ||
Common Stocks - continued | |||
Shares | Value | ||
CONSUMER STAPLES - 7.1% | |||
Beverages - 0.7% | |||
Molson Coors Brewing Co. Class B | 33,300 | $ 1,797,201 | |
The Coca-Cola Co. | 33,000 | 1,699,500 | |
| 3,496,701 | ||
Food & Staples Retailing - 1.8% | |||
CVS Caremark Corp. | 78,200 | 2,854,300 | |
Kroger Co. | 63,300 | 1,790,124 | |
SUPERVALU, Inc. | 54,500 | 1,396,290 | |
Sysco Corp. | 61,300 | 1,738,468 | |
Winn-Dixie Stores, Inc. (a) | 98,862 | 1,570,917 | |
| 9,350,099 | ||
Food Products - 1.7% | |||
Cermaq ASA | 65,800 | 668,611 | |
Marine Harvest ASA (a)(d) | 1,558,000 | 1,103,792 | |
Nestle SA (Reg.) | 160,410 | 7,037,387 | |
| 8,809,790 | ||
Household Products - 1.7% | |||
Energizer Holdings, Inc. (a) | 24,100 | 1,719,294 | |
Procter & Gamble Co. | 109,000 | 7,137,320 | |
| 8,856,614 | ||
Tobacco - 1.2% | |||
Altria Group, Inc. | 109,400 | 2,226,290 | |
British American Tobacco PLC sponsored ADR | 51,700 | 3,737,393 | |
| 5,963,683 | ||
TOTAL CONSUMER STAPLES | 36,476,887 | ||
ENERGY - 16.4% | |||
Energy Equipment & Services - 3.2% | |||
BJ Services Co. | 95,700 | 2,813,580 | |
ENSCO International, Inc. | 23,350 | 1,614,419 | |
Nabors Industries Ltd. (a) | 150,332 | 5,481,105 | |
National Oilwell Varco, Inc. (a) | 65,714 | 5,167,092 | |
Petroleum Geo-Services ASA | 49,500 | 1,142,303 | |
| 16,218,499 | ||
Oil, Gas & Consumable Fuels - 13.2% | |||
Chesapeake Energy Corp. | 79,400 | 3,981,910 | |
ConocoPhillips (d) | 302,700 | 24,706,374 | |
EOG Resources, Inc. | 28,700 | 2,885,211 | |
Exxon Mobil Corp. | 191,500 | 15,402,345 | |
Common Stocks - continued | |||
Shares | Value | ||
ENERGY - continued | |||
Oil, Gas & Consumable Fuels - continued | |||
Occidental Petroleum Corp. | 98,100 | $ 7,733,223 | |
Quicksilver Resources, Inc. (a) | 82,100 | 2,147,736 | |
Ultra Petroleum Corp. (a) | 80,100 | 5,717,538 | |
Uranium One, Inc. (a) | 85,700 | 306,355 | |
Valero Energy Corp. | 165,900 | 5,542,719 | |
| 68,423,411 | ||
TOTAL ENERGY | 84,641,910 | ||
FINANCIALS - 27.0% | |||
Capital Markets - 5.8% | |||
Bank of New York Mellon Corp. | 92,400 | 3,280,200 | |
Charles Schwab Corp. | 72,732 | 1,664,835 | |
Franklin Resources, Inc. | 36,900 | 3,712,509 | |
Julius Baer Holding AG | 28,224 | 1,789,670 | |
KKR Private Equity Investors, LP | 134,079 | 1,843,586 | |
KKR Private Equity Investors, LP Restricted Depositary Units (e) | 7,700 | 105,875 | |
Merrill Lynch & Co., Inc. | 110,500 | 2,944,825 | |
Morgan Stanley | 129,500 | 5,112,660 | |
State Street Corp. | 89,400 | 6,404,616 | |
T. Rowe Price Group, Inc. | 49,700 | 2,974,545 | |
| 29,833,321 | ||
Commercial Banks - 3.3% | |||
Associated Banc-Corp. | 51,037 | 851,808 | |
Fifth Third Bancorp | 116,900 | 1,633,093 | |
HSBC Holdings PLC sponsored ADR | 28,800 | 2,376,288 | |
Huntington Bancshares, Inc. (d) | 201,100 | 1,411,722 | |
KeyCorp | 96,600 | 1,019,130 | |
SunTrust Banks, Inc. (d) | 30,300 | 1,244,118 | |
Wachovia Corp. (d) | 502,642 | 8,680,627 | |
| 17,216,786 | ||
Consumer Finance - 0.4% | |||
Capital One Financial Corp. | 48,700 | 2,038,582 | |
Diversified Financial Services - 8.5% | |||
Bank of America Corp. | 762,346 | 25,081,185 | |
CIT Group, Inc. | 93,500 | 792,880 | |
JPMorgan Chase & Co. | 414,752 | 16,851,374 | |
KKR Financial Holdings LLC | 131,100 | 1,346,397 | |
| 44,071,836 | ||
Common Stocks - continued | |||
Shares | Value | ||
FINANCIALS - continued | |||
Insurance - 5.8% | |||
ACE Ltd. | 68,180 | $ 3,456,726 | |
American International Group, Inc. | 531,000 | 13,832,550 | |
Argo Group International Holdings, Ltd. (a) | 44,888 | 1,527,988 | |
Everest Re Group Ltd. | 26,200 | 2,143,160 | |
Hartford Financial Services Group, Inc. | 53,700 | 3,404,043 | |
IPC Holdings Ltd. | 72,032 | 2,312,227 | |
Principal Financial Group, Inc. | 50,000 | 2,125,500 | |
XL Capital Ltd. | 80,100 | 1,432,989 | |
| 30,235,183 | ||
Real Estate Investment Trusts - 1.7% | |||
Alexandria Real Estate Equities, Inc. | 23,600 | 2,436,936 | |
Annaly Capital Management, Inc. | 104,100 | 1,568,787 | |
CapitalSource, Inc. (d) | 113,000 | 1,313,060 | |
General Growth Properties, Inc. | 86,400 | 2,368,224 | |
Simon Property Group, Inc. | 9,100 | 842,933 | |
| 8,529,940 | ||
Real Estate Management & Development - 0.5% | |||
CB Richard Ellis Group, Inc. Class A (a) | 180,200 | 2,531,810 | |
Thrifts & Mortgage Finance - 1.0% | |||
Fannie Mae | 135,940 | 1,563,310 | |
Washington Federal, Inc. | 102,836 | 1,912,750 | |
Washington Mutual, Inc. | 362,042 | 1,929,684 | |
| 5,405,744 | ||
TOTAL FINANCIALS | 139,863,202 | ||
HEALTH CARE - 9.1% | |||
Biotechnology - 1.7% | |||
Amgen, Inc. (a) | 92,600 | 5,799,538 | |
Biogen Idec, Inc. (a) | 25,400 | 1,771,904 | |
Cephalon, Inc. (a) | 20,500 | 1,499,780 | |
| 9,071,222 | ||
Health Care Equipment & Supplies - 2.7% | |||
Baxter International, Inc. | 31,800 | 2,181,798 | |
Boston Scientific Corp. (a) | 153,800 | 1,828,682 | |
Covidien Ltd. | 105,985 | 5,218,701 | |
Medtronic, Inc. | 86,700 | 4,580,361 | |
| 13,809,542 | ||
Common Stocks - continued | |||
Shares | Value | ||
HEALTH CARE - continued | |||
Health Care Providers & Services - 0.7% | |||
Brookdale Senior Living, Inc. | 69,500 | $ 1,060,570 | |
UnitedHealth Group, Inc. | 100,000 | 2,808,000 | |
| 3,868,570 | ||
Life Sciences Tools & Services - 0.4% | |||
Thermo Fisher Scientific, Inc. (a) | 30,900 | 1,870,068 | |
Pharmaceuticals - 3.6% | |||
Bristol-Myers Squibb Co. | 71,500 | 1,510,080 | |
Johnson & Johnson | 32,300 | 2,211,581 | |
Merck & Co., Inc. | 193,300 | 6,359,570 | |
Pfizer, Inc. | 194,500 | 3,631,315 | |
Sepracor, Inc. (a) | 58,480 | 1,022,230 | |
Wyeth | 98,400 | 3,987,168 | |
| 18,721,944 | ||
TOTAL HEALTH CARE | 47,341,346 | ||
INDUSTRIALS - 9.4% | |||
Aerospace & Defense - 2.6% | |||
Honeywell International, Inc. | 111,860 | 5,686,962 | |
Raytheon Co. | 20,500 | 1,167,065 | |
The Boeing Co. | 20,100 | 1,228,311 | |
United Technologies Corp. | 84,100 | 5,380,718 | |
| 13,463,056 | ||
Air Freight & Logistics - 0.5% | |||
United Parcel Service, Inc. Class B | 41,900 | 2,643,052 | |
Airlines - 0.2% | |||
Delta Air Lines, Inc. (a) | 60,900 | 459,186 | |
Northwest Airlines Corp. (a) | 56,300 | 515,708 | |
| 974,894 | ||
Building Products - 0.5% | |||
Masco Corp. | 78,400 | 1,292,816 | |
Owens Corning (a) | 47,000 | 1,222,470 | |
| 2,515,286 | ||
Commercial Services & Supplies - 0.6% | |||
Allied Waste Industries, Inc. (a) | 135,400 | 1,638,340 | |
The Brink's Co. | 21,400 | 1,475,744 | |
| 3,114,084 | ||
Electrical Equipment - 0.2% | |||
SolarWorld AG | 24,500 | 1,141,921 | |
Common Stocks - continued | |||
Shares | Value | ||
INDUSTRIALS - continued | |||
Industrial Conglomerates - 3.4% | |||
General Electric Co. | 471,950 | $ 13,351,466 | |
Siemens AG sponsored ADR | 34,600 | 4,199,748 | |
| 17,551,214 | ||
Machinery - 1.2% | |||
Cummins, Inc. | 19,800 | 1,313,532 | |
Illinois Tool Works, Inc. | 24,400 | 1,143,140 | |
Ingersoll-Rand Co. Ltd. Class A | 51,500 | 1,854,000 | |
Sulzer AG (Reg.) | 15,180 | 1,819,996 | |
| 6,130,668 | ||
Road & Rail - 0.2% | |||
Con-way, Inc. | 23,900 | 1,208,384 | |
TOTAL INDUSTRIALS | 48,742,559 | ||
INFORMATION TECHNOLOGY - 6.5% | |||
Communications Equipment - 0.8% | |||
Cisco Systems, Inc. (a) | 134,900 | 2,966,451 | |
Motorola, Inc. | 135,600 | 1,171,584 | |
| 4,138,035 | ||
Computers & Peripherals - 2.0% | |||
Hewlett-Packard Co. | 116,900 | 5,237,120 | |
International Business Machines Corp. | 23,400 | 2,994,732 | |
NCR Corp. (a) | 78,100 | 2,097,766 | |
| 10,329,618 | ||
Electronic Equipment & Instruments - 1.7% | |||
Amphenol Corp. Class A | 9,400 | 448,098 | |
Arrow Electronics, Inc. (a) | 51,800 | 1,668,996 | |
Avnet, Inc. (a) | 94,600 | 2,578,796 | |
Flextronics International Ltd. (a) | 144,100 | 1,286,813 | |
Motech Industries, Inc. | 164,003 | 932,547 | |
Tyco Electronics Ltd. | 60,085 | 1,991,217 | |
| 8,906,467 | ||
Internet Software & Services - 0.2% | |||
VeriSign, Inc. (a) | 40,100 | 1,304,854 | |
IT Services - 0.5% | |||
The Western Union Co. | 89,300 | 2,468,252 | |
Semiconductors & Semiconductor Equipment - 1.3% | |||
Applied Materials, Inc. | 89,600 | 1,551,872 | |
ASML Holding NV (NY Shares) | 31,000 | 706,490 | |
Common Stocks - continued | |||
Shares | Value | ||
INFORMATION TECHNOLOGY - continued | |||
Semiconductors & Semiconductor Equipment - continued | |||
Atmel Corp. (a) | 156,200 | $ 551,386 | |
Lam Research Corp. (a) | 46,200 | 1,519,518 | |
Maxim Integrated Products, Inc. | 46,000 | 903,440 | |
Novellus Systems, Inc. (a) | 55,400 | 1,128,498 | |
ON Semiconductor Corp. (a) | 23,100 | 216,909 | |
| 6,578,113 | ||
TOTAL INFORMATION TECHNOLOGY | 33,725,339 | ||
MATERIALS - 2.8% | |||
Chemicals - 0.4% | |||
Albemarle Corp. | 45,290 | 1,763,140 | |
Containers & Packaging - 0.1% | |||
Temple-Inland, Inc. | 42,600 | 692,250 | |
Metals & Mining - 2.3% | |||
Agnico-Eagle Mines Ltd. | 8,500 | 465,742 | |
Alcoa, Inc. | 81,700 | 2,757,375 | |
ArcelorMittal SA (NY Shares) Class A | 36,700 | 3,208,314 | |
Freeport-McMoRan Copper & Gold, Inc. Class B | 13,200 | 1,277,100 | |
Lihir Gold Ltd. (a) | 448,526 | 1,148,804 | |
Newcrest Mining Ltd. | 55,804 | 1,549,110 | |
Randgold Resources Ltd. sponsored ADR | 29,400 | 1,504,692 | |
| 11,911,137 | ||
TOTAL MATERIALS | 14,366,527 | ||
TELECOMMUNICATION SERVICES - 6.4% | |||
Diversified Telecommunication Services - 6.4% | |||
AT&T, Inc. | 589,110 | 18,150,479 | |
Cincinnati Bell, Inc. (a) | 308,800 | 1,204,320 | |
Embarq Corp. | 27,400 | 1,254,098 | |
Qwest Communications International, Inc. | 327,700 | 1,255,091 | |
Verizon Communications, Inc. | 330,573 | 11,252,705 | |
| 33,116,693 | ||
UTILITIES - 6.3% | |||
Electric Utilities - 2.8% | |||
E.ON AG sponsored ADR | 28,500 | 1,799,205 | |
Edison International | 50,400 | 2,436,336 | |
Common Stocks - continued | |||
Shares | Value | ||
UTILITIES - continued | |||
Electric Utilities - continued | |||
Entergy Corp. | 52,000 | $ 5,559,840 | |
PPL Corp. | 98,000 | 4,602,080 | |
| 14,397,461 | ||
Independent Power Producers & Energy Traders - 2.6% | |||
AES Corp. (a) | 105,200 | 1,697,928 | |
Constellation Energy Group, Inc. | 78,100 | 6,494,796 | |
NRG Energy, Inc. (a) | 74,900 | 2,718,121 | |
Reliant Energy, Inc. (a) | 140,800 | 2,549,888 | |
| 13,460,733 | ||
Multi-Utilities - 0.9% | |||
CMS Energy Corp. | 106,300 | 1,435,050 | |
Sempra Energy | 37,600 | 2,111,616 | |
Wisconsin Energy Corp. | 28,500 | 1,285,920 | |
| 4,832,586 | ||
TOTAL UTILITIES | 32,690,780 | ||
TOTAL COMMON STOCKS (Cost $556,361,390) | 511,426,556 | ||
Convertible Preferred Stocks - 0.3% | |||
|
|
|
|
FINANCIALS - 0.3% | |||
Commercial Banks - 0.1% | |||
Wachovia Corp. 7.50% | 700 | 612,815 | |
Diversified Financial Services - 0.0% | |||
CIT Group, Inc. Series C, 8.75% | 5,100 | 239,292 | |
Thrifts & Mortgage Finance - 0.2% | |||
Fannie Mae 8.75% | 33,900 | 822,075 | |
TOTAL CONVERTIBLE PREFERRED STOCKS (Cost $2,650,000) | 1,674,182 | ||
Investment Companies - 0.2% | |||
|
|
|
|
Ares Capital Corp. | 91,646 | 1,047,514 | |
Money Market Funds - 3.5% | |||
Shares | Value | ||
Fidelity Cash Central Fund, 2.35% (b) | 3,839,349 | $ 3,839,349 | |
Fidelity Securities Lending Cash Central Fund, 2.37% (b)(c) | 14,424,400 | 14,424,400 | |
TOTAL MONEY MARKET FUNDS (Cost $18,263,749) | 18,263,749 | ||
TOTAL INVESTMENT PORTFOLIO - 102.8% (Cost $578,849,327) | 532,412,001 | ||
NET OTHER ASSETS - (2.8)% | (14,682,172) | ||
NET ASSETS - 100% | $ 517,729,829 |
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
(e) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the end of the period, the value of these securities amounted to $105,875 or 0.0% of net assets. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 125,451 |
Fidelity Securities Lending Cash Central Fund | 160,984 |
Total | $ 286,435 |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 87.6% |
Bermuda | 2.9% |
Switzerland | 2.8% |
United Kingdom | 1.8% |
Germany | 1.3% |
Canada | 1.2% |
Others (individually less than 1%) | 2.4% |
| 100.0% |
The fund intends to elect to defer to its fiscal year ending July 31, 2009 approximately $45,504,301 of losses recognized during the period November 1, 2007 to July 31, 2008. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements
Statement of Assets and Liabilities
| July 31, 2008 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $13,938,833) - See accompanying schedule: Unaffiliated issuers (cost $560,585,578) | $ 514,148,252 |
|
Fidelity Central Funds (cost $18,263,749) | 18,263,749 |
|
Total Investments (cost $578,849,327) |
| $ 532,412,001 |
Receivable for investments sold | 5,184,184 | |
Receivable for fund shares sold | 446,644 | |
Dividends receivable | 727,425 | |
Distributions receivable from Fidelity Central Funds | 11,993 | |
Prepaid expenses | 850 | |
Other receivables | 2,528 | |
Total assets | 538,785,625 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 5,581,995 | |
Payable for fund shares redeemed | 617,711 | |
Accrued management fee | 221,954 | |
Other affiliated payables | 158,321 | |
Other payables and accrued expenses | 51,418 | |
Collateral on securities loaned, at value | 14,424,400 | |
Total liabilities | 21,055,799 | |
|
|
|
Net Assets | $ 517,729,826 | |
Net Assets consist of: |
| |
Paid in capital | $ 607,344,829 | |
Undistributed net investment income | 5,379,168 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (48,560,723) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (46,433,448) | |
Net Assets, for 42,614,375 shares outstanding | $ 517,729,826 | |
Net Asset Value, offering price and redemption price per share ($517,729,826 ÷ 42,614,375 shares) | $ 12.15 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements - continued
Statement of Operations
| Year ended July 31, 2008 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 15,054,021 |
Interest |
| 1,404 |
Income from Fidelity Central Funds |
| 286,435 |
Total income |
| 15,341,860 |
|
|
|
Expenses | ||
Management fee | $ 3,591,675 | |
Performance adjustment | 64,825 | |
Transfer agent fees | 1,808,356 | |
Accounting and security lending fees | 237,415 | |
Custodian fees and expenses | 38,799 | |
Independent trustees' compensation | 2,768 | |
Registration fees | 36,669 | |
Audit | 60,621 | |
Legal | 2,959 | |
Interest | 12,367 | |
Miscellaneous | 61,306 | |
Total expenses before reductions | 5,917,760 | |
Expense reductions | (17,194) | 5,900,566 |
Net investment income (loss) | 9,441,294 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers (net of foreign taxes of $9) | (41,131,389) | |
Investments not meeting investment restrictions | 4,508 | |
Foreign currency transactions | (29,643) | |
Total net realized gain (loss) |
| (41,156,524) |
Change in net unrealized appreciation (depreciation) on: Investment securities (net of increase in deferred foreign taxes of $9) | (78,661,321) | |
Assets and liabilities in foreign currencies | 3,288 | |
Total change in net unrealized appreciation (depreciation) |
| (78,658,033) |
Net gain (loss) | (119,814,557) | |
Net increase (decrease) in net assets resulting from operations | $ (110,373,263) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 9,441,294 | $ 5,883,894 |
Net realized gain (loss) | (41,156,524) | 35,772,706 |
Change in net unrealized appreciation (depreciation) | (78,658,033) | 5,245,913 |
Net increase (decrease) in net assets resulting | (110,373,263) | 46,902,513 |
Distributions to shareholders from net investment income | (7,478,440) | (2,803,432) |
Distributions to shareholders from net realized gain | (31,750,791) | (12,620,941) |
Total distributions | (39,229,231) | (15,424,373) |
Share transactions | 228,027,796 | 640,676,434 |
Reinvestment of distributions | 37,874,831 | 14,852,830 |
Cost of shares redeemed | (329,921,789) | (228,357,433) |
Net increase (decrease) in net assets resulting from share transactions | (64,019,162) | 427,171,831 |
Total increase (decrease) in net assets | (213,621,656) | 458,649,971 |
|
|
|
Net Assets | ||
Beginning of period | 731,351,482 | 272,701,511 |
End of period (including undistributed net investment income of $5,379,168 and undistributed net investment income of $4,072,223, respectively) | $ 517,729,826 | $ 731,351,482 |
Other Information Shares | ||
Sold | 15,903,414 | 41,940,771 |
Issued in reinvestment of distributions | 2,583,422 | 1,040,054 |
Redeemed | (23,187,845) | (15,217,485) |
Net increase (decrease) | (4,701,009) | 27,763,340 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights
Years ended July 31, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, | $ 15.46 | $ 13.95 | $ 13.21 | $ 11.24 | $ 9.73 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .21 | .19 | .10 | .11 | .05 |
Net realized and unrealized gain (loss) | (2.68) | 2.05 | .95 | 2.03 | 1.52 |
Total from investment operations | (2.47) | 2.24 | 1.05 | 2.14 | 1.57 |
Distributions from net investment income | (.16) | (.13) | (.08) | (.09) | (.02) |
Distributions from net realized gain | (.68) | (.60) | (.23) | (.08) | (.04) |
Total distributions | (.84) | (.73) | (.31) | (.17) | (.06) |
Net asset value, end of period | $ 12.15 | $ 15.46 | $ 13.95 | $ 13.21 | $ 11.24 |
Total Return A | (16.86)% | 16.60% | 8.05% | 19.20% | 16.16% |
Ratios to Average Net Assets C, E |
|
|
|
| |
Expenses before reductions | .92% | .87% | .94% | .97% | 1.17% |
Expenses net of fee waivers, | .92% | .87% | .94% | .97% | 1.17% |
Expenses net of all reductions | .91% | .87% | .93% | .93% | 1.13% |
Net investment income (loss) | 1.46% | 1.25% | .76% | .85% | .50% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period | $ 517,730 | $ 731,351 | $ 272,702 | $ 182,071 | $ 68,541 |
Portfolio turnover rate D | 61% | 92% | 74% | 81% | 111% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Calculated based on average shares outstanding during the period.
C Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
D Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
E 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 other expense offset arrangements and do not represent the amount paid by the Fund 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 Fund.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended July 31, 2008
1. Organization.
Fidelity Blue Chip Value Fund (the Fund) is a fund of Fidelity Securities Fund (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 may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the SEC's web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. Wherever possible, the Fund uses independent pricing services approved by the Board of Trustees to value its investments.
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Investments in open-end mutual funds,
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3. Significant Accounting Policies - continued
Security Valuation - continued
including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is 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. 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
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Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Investment Transactions and Income - continued
realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The implementation of FIN 48 did not result in any unrecognized tax benefits in the accompanying financial statements. Each of the Fund's federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. In addition, the Fund will claim a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. Certain adjustments have been made to prior periods. Collectively, 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, certain foreign taxes, partnerships, losses deferred due to wash sales and excise tax regulations.
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3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows:
Unrealized appreciation | $49,253,719 |
Unrealized depreciation | (99,297,922) |
Net unrealized appreciation (depreciation) | (50,044,203) |
Undistributed ordinary income | 4,397,419 |
Undistributed long-term capital gain | 449,991 |
Cost for federal income tax purposes | $582,456,204 |
The tax character of distributions paid was as follows:
| July 31, 2008 | July 31, 2007 |
Ordinary Income | $ 19,140,744 | $ 3,302,868 |
Long-term Capital Gains | 20,088,487 | 12,121,505 |
Total | $ 39,229,231 | $ 15,424,373 |
New Accounting Pronouncement. In September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and results in expanded disclosures about fair value measurements.
4. Operating Policies.
Repurchase Agreements. FMR has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits the Fund and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts which are then invested in repurchase agreements. The Fund may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. The Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
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.
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Notes to Financial Statements - continued
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $391,991,113 and $486,629,163, respectively.
The Fund realized a gain on the sale of an investment not meeting the investment restrictions of the Fund.
6. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. In addition, the management fee is subject to a performance adjustment (up to a maximum of ± 20% of the Fund's average net assets over a 36 month performance period). The upward or downward adjustment to the management fee is based on the 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 ..57% of the Fund's average net assets.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the Fund's transfer, dividend disbursing and shareholder servicing agent. FIIOC receives account fees and asset-based fees that vary according to account size and type of account. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. Prior to January 1, 2008, Fidelity Service Company, Inc. (FSC), also an affiliate of FMR, was the transfer agent for Blue Chip Value. For the period the transfer agent fees were equivalent to an annual rate of .28% of average net assets.
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
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 $12,408 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 Daily | Weighted Average Interest Rate | Interest |
Borrower | $ 8,535,083 | 4.35% | $ 12,367 |
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $4.2 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro rata portion of the line of credit, which amounted to $1,540 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
8. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Net income from lending portfolio securities during the period amounted to $160,984.
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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 $6,177 for the period. In addition, through arrangements with the Fund's transfer agent, credits realized as a result of uninvested cash balances were used to reduce the Fund's expenses. During the period, these credits reduced the Fund's transfer agent expenses by $11,017.
10. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
In December 2006, the Independent Trustees, with the assistance of independent counsel, completed an investigation regarding gifts, gratuities and business entertainment provided by certain brokers to certain individuals who were employed on FMR's domestic equity trading desk during the period 2002 to 2004. The Independent Trustees and FMR agreed that, despite the absence of proof that the Fidelity mutual funds experienced diminished execution quality as a result of the improper receipt of gifts and business entertainment, the conduct at issue was serious and was worthy of redress. Accordingly, the Independent Trustees requested, and FMR agreed to make, a payment of $42 million plus accrued interest, which equaled approximately $7.3 million, to certain Fidelity mutual funds.
In March 2008, the Trustees approved a method for allocating this payment among the funds and, in total, FMR paid the fund $9,325 which is recorded in the accompanying Statement of Operations.
In a related administrative order dated March 5, 2008, the U.S. Securities and Exchange Commission ("SEC") announced a settlement with FMR and FMR Co., Inc. (an affiliate of FMR) involving the SEC's regulatory rules for investment advisers and the improper receipt of gifts, gratuities and business entertainment. Without admitting or denying the SEC's findings, FMR agreed to pay an $8 million civil penalty to the United States Treasury.
Annual Report
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Securities Fund and the Shareholders of Fidelity Blue Chip 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 Blue Chip Value Fund (a fund of Fidelity Securities Fund) at July 31, 2008, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and 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 Blue Chip 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 July 31, 2008 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
September 22, 2008
Annual Report
Trustees and Officers
The Trustees, Member of the Advisory Board, and executive officers of the trust and fund, as applicable, are listed below. The Board of Trustees governs the fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee the fund's activities, review contractual arrangements with companies that provide services to the fund, and review the fund's performance. Except for Edward C. Johnson 3d and James C. Curvey, each of the Trustees oversees 218 funds advised by FMR or an affiliate. Messrs. Johnson and Curvey oversee 377 funds advised by FMR or an affiliate.
The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust. Each Trustee who is not an interested person (as defined in the 1940 Act) (Independent Trustee), shall retire not later than the last day of the calendar year in which his or her 72nd birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board Member hold office without limit in time, except that any officer and Advisory Board Member may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years.
The fund's Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-800-544-8544.
Interested Trustees*:
Correspondence intended for each Trustee who is an interested person may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Edward C. Johnson 3d (78) | |
| Year of Election or Appointment: 1984 Mr. Johnson is Chairman of the Board of Trustees. Mr. Johnson serves as Chief Executive Officer, Chairman, and a Director of FMR LLC; Chairman and a Director of FMR; Chairman and a Director of Fidelity Research & Analysis Company (FRAC); Chairman and a Director of Fidelity Investments Money Management, Inc.; and Chairman and a Director of FMR Co., Inc. In addition, Mr. Johnson serves as Chairman and Director of FIL Limited. Previously, Mr. Johnson served as President of FMR LLC (2006-2007). |
James C. Curvey (73) | |
| Year of Election or Appointment: 2007 Mr. Curvey also serves as Trustee (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2006-present) and Director of FMR LLC. In addition, Mr. Curvey serves as an Overseer for the Boston Symphony Orchestra and a member of the Trustees of Villanova University. |
* Trustees have been determined to be "Interested Trustees" by virtue of, among other things, their affiliation with the trust or various entities under common control with FMR. FMR Corp. merged with and into FMR LLC on October 1, 2007. Any references to FMR LLC for prior periods are deemed to be references to the prior entity.
Independent Trustees:
Correspondence intended for each Independent Trustee (that is, the Trustees other than the Interested Trustees) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.
Name, Age; Principal Occupation | |
Dennis J. Dirks (60) | |
| Year of Election or Appointment: 2005 Prior to his retirement in May 2003, Mr. Dirks was Chief Operating Officer and a member of the Board of The Depository Trust & Clearing Corporation (DTCC) (1999-2003). He also served as President, Chief Operating Officer, and Board member of The Depository Trust Company (DTC) (1999-2003) and President and Board member of the National Securities Clearing Corporation (NSCC) (1999-2003). In addition, Mr. Dirks served as a Trustee and a member of the Finance Committee of Manhattan College (2005-2008), and as Chief Executive Officer and Board member of the Government Securities Clearing Corporation (2001-2003) and Chief Executive Officer and Board member of the Mortgage-Backed Securities Clearing Corporation (2001-2003). Mr. Dirks also serves as a Trustee and a member of the Finance Committee of AHRC of Nassau County (2006-present). |
Alan J. Lacy (54) | |
| Year of Election or Appointment: 2008 Mr. Lacy serves as Senior Adviser (2007-present) of Oak Hill Capital Partners, L.P. (a private equity firm). Mr. Lacy also served as Chief Executive Officer (2000-2005) and Vice Chairman (2005-2006) of Sears Holdings Corporation and Sears, Roebuck and Co. (retail). In addition, Mr. Lacy serves as a member of the Board of Directors of The Western Union Company (global money transfer, 2006-present) and Bristol-Myers Squibb (global pharmaceuticals, 2007-present). Mr. Lacy is a Trustee of the National Parks Conservation Association and The Field Museum of Natural History. |
Ned C. Lautenbach (64) | |
| Year of Election or Appointment: 2000 Mr. Lautenbach is Chairman of the Independent Trustees (2006-present). Mr. Lautenbach is an Advisory Partner of Clayton, Dubilier & Rice, Inc. (private equity investment firm). Previously, Mr. Lautenbach was with the International Business Machines Corporation (IBM) from 1968 until his retirement in 1998. Mr. Lautenbach serves as a Director of Eaton Corporation (diversified industrial) as well as the Philharmonic Center for the Arts in Naples, Florida. He also is a member of the Board of Trustees of Fairfield University (2005-present), as well as a member of the Council on Foreign Relations. Previously, Mr. Lautenbach served as a Director of Sony Corporation (2006-2007). |
Joseph Mauriello (63) | |
| 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 firm, 1965-2005). Mr. Mauriello currently serves as a member of the Board of Directors of XL Capital Ltd. (global insurance and re-insurance company, 2006-present) and of Arcadia Resources Inc. (health care services and products, 2007-present). He also served as a Director of the Hamilton Funds of the Bank of New York (2006-2007). |
Cornelia M. Small (64) | |
| Year of Election or Appointment: 2005 Ms. Small is a member of the Investment Committee, and Chair (2008-present) and a member of the Board of Trustees of Smith College. Ms. Small also serves on the Investment Committee of the Berkshire Taconic Community Foundation (2008-present). Previously, Ms. Small served as Chairperson of the Investment Committee (2002-2008) of Smith College and as Co-Chair (2000-2003) of the Annual Fund for the Fletcher School of Law and Diplomacy. In addition, she served as Chief Investment Officer, Director of Global Equity Investments, and a member of the Board of Directors of Scudder, Stevens & Clark and Scudder Kemper Investments. |
William S. Stavropoulos (69) | |
| Year of Election or Appointment: 2002 Mr. Stavropoulos is Chairman Emeritus of the Board of Directors of The Dow Chemical Company, where he previously served in numerous senior management positions, including President (1993-2000; 2002-2003), CEO (1995-2000; 2002-2004), Chairman of the Executive Committee (2000-2006), and as a member of the Board of Directors (1990-2006). Currently, he is a Director of Teradata Corporation (data warehousing and technology solutions, 2008-present), Chemical Financial Corporation, Maersk Inc. (industrial conglomerate), Tyco International, Inc. (multinational manufacturing and services, 2007-present), and a member of the Advisory Board for Metalmark Capital (private equity investment firm, 2005-present). He is a special advisor to Clayton, Dubilier & Rice, Inc. (private equity investment). In addition, Mr. Stavropoulos is a member of the University of Notre Dame Advisory Council for the College of Science. |
David M. Thomas (59) | |
| Year of Election or Appointment: 2008 Previously, Mr. Thomas served as Executive Chairman (2005-2006) and Chairman and Chief Executive Officer (2000-2005) of IMS Health, Inc. (pharmaceutical and healthcare information solutions). In addition, Mr. Thomas serves as a member of the Board of Directors of Fortune Brands, Inc. (consumer products holding company), and Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (57) | |
| Year of Election or Appointment: 2008 Mr. Wiley also serves as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-present). He serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), and a Director of Bill Barrett Corporation (exploration and production company, 2005-present). In addition, he also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a Sr. Energy Advisor of Katzenbach Partners, LLC (consulting firm, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment firm), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services company, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production company, 2001-2005). |
Advisory Board Member and Executive Officers**:
Correspondence intended for each executive officer and Mr. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Peter S. Lynch (64) | |
| Year of Election or Appointment: 2003 Member of the Advisory Board of Fidelity Securities Fund. Mr. Lynch is Vice Chairman and a Director of FMR, and Vice Chairman (2001-present) and a Director of FMR Co., Inc. Previously, Mr. Lynch served as a Trustee of the Fidelity funds (1990-2003). In addition, he serves as a Trustee of Boston College and as the Chairman of the Inner-City Scholarship Fund. |
Kenneth B. Robins (38) | |
| Year of Election or Appointment: 2008 President and Treasurer of Blue Chip Value. Mr. Robins also serves as President and Treasurer of Fidelity's Equity and High Income Funds (2008-present) and is an employee of FMR (2004-present). Before joining Fidelity Investments, Mr. Robins worked at KPMG LLP, where he was a partner in KPMG's department of professional practice (2002-2004). |
Walter C. Donovan (46) | |
| Year of Election or Appointment: 2007 Vice President of Blue Chip Value. Mr. Donovan also serves as Vice President of Fidelity's Equity Funds, President of FMR and FMR Co., Inc., and Executive Vice President of Fidelity Investments Money Management, Inc. (2007-present). Previously, Mr. Donovan served as Executive Vice President of FMR and FMR Co., Inc. (2005-2007) and Senior Vice President of FMR (2003-2005) and FMR Co., Inc. (2004-2005). |
Bruce T. Herring (42) | |
| Year of Election or Appointment: 2006 Vice President of Blue Chip Value. Mr. Herring also serves as Vice President of certain Equity Funds (2006-present) and Group Chief Investments Officer of FMR. Previously, Mr. Herring served as a portfolio manager for Fidelity U.S. Equity Funds. |
Scott C. Goebel (40) | |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of Blue Chip Value. Mr. Goebel also serves as Secretary and CLO of other Fidelity funds (2008-present); General Counsel, Secretary, and Senior Vice President of FMR (2008-present); and Deputy General Counsel of FMR LLC. Previously, Mr. Goebel served as Assistant Secretary of the Funds (2007-2008) and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007). |
John B. McGinty, Jr. (45) | |
| Year of Election or Appointment: 2008 Assistant Secretary of Blue Chip Value. Mr. McGinty also serves as Assistant Secretary of Fidelity's other Equity and High Income Funds (2008-present) and is an employee of FMR LLC (2004-present). Mr. McGinty also serves as Senior Vice President, Secretary, and Chief Legal Officer of FDC (2007-present). Before joining Fidelity Investments, Mr. McGinty practiced law at Ropes & Gray, LLP. |
Holly C. Laurent (54) | |
| Year of Election or Appointment: 2008 Anti-Money Laundering (AML) officer of Blue Chip Value. Ms. Laurent also serves as AML officer of other Fidelity funds (2008-present) and is an employee of FMR LLC. Previously, Ms. Laurent was Senior Vice President and Head of Legal for Fidelity Business Services India Pvt. Ltd. (2006-2008), Senior Vice President, Deputy General Counsel and Group Head for FMR LLC (2005-2006). |
Christine Reynolds (49) | |
| Year of Election or Appointment: 2008 Chief Financial Officer of Blue Chip Value. Ms. Reynolds also serves as Chief Financial Officer of other Fidelity funds (2008-present). Ms. Reynolds became President of Fidelity Pricing and Cash Management Services (FPCMS) in August 2008. She served as Chief Operating Officer of FPCMS from 2007 through July 2008. Previously, Ms. Reynolds served as President, Treasurer, and Anti-Money Laundering officer of the Fidelity funds (2004-2007). Before joining Fidelity Investments, Ms. Reynolds worked at PricewaterhouseCoopers LLP (PwC) (1980-2002), where she was an audit partner with PwC's investment management practice. |
Kenneth A. Rathgeber (61) | |
| Year of Election or Appointment: 2004 Chief Compliance Officer of Blue Chip Value. Mr. Rathgeber also serves as Chief Compliance Officer of Fidelity's Equity and High Income Funds (2004-present). He is Chief Compliance Officer of FMR (2005-present), FMR Co., Inc. (2005-present), Fidelity Management & Research (U.K.) Inc. (2005-present), Fidelity Research & Analysis Company (2005-present), Fidelity Investments Money Management, Inc. (2005-present), and Strategic Advisers, Inc. (2005-present). |
Bryan A. Mehrmann (47) | |
| Year of Election or Appointment: 2005 Deputy Treasurer of Blue Chip Value. Mr. Mehrmann also serves as Deputy Treasurer of other Fidelity funds (2005-present) and is an employee of FMR. Previously, Mr. Mehrmann served as Vice President of Fidelity Investments Institutional Services Group (FIIS)/Fidelity Investments Institutional Operations Corporation, Inc. (FIIOC) Client Services (1998-2004). |
Adrien E. Deberghes (40) | |
| Year of Election or Appointment: 2008 Deputy Treasurer of Blue Chip Value. Mr. Deberghes also serves as Deputy Treasurer of Fidelity's Equity and High Income Funds (2008-present) and is an employee of FMR (2008-present). Previously, Mr. Deberghes served as Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005). |
Robert G. Byrnes (41) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of Blue Chip Value. Mr. Byrnes also serves as Assistant Treasurer of other Fidelity funds (2005-present) and is an employee of FMR (2005-present). Previously, Mr. Byrnes served as Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (2003- 2005). Before joining Fidelity Investments, Mr. Byrnes worked at Deutsche Asset Management where he served as Vice President of the Investment Operations Group (2000-2003). |
Peter L. Lydecker (54) | |
| Year of Election or Appointment: 2004 Assistant Treasurer of Blue Chip Value. Mr. Lydecker also serves as Assistant Treasurer of other Fidelity funds (2004-present) and is an employee of FMR. |
Paul M. Murphy (61) | |
| Year of Election or Appointment: 2007 Assistant Treasurer of Blue Chip Value. Mr. Murphy also serves as Assistant Treasurer of other Fidelity funds (2007-present) and is an employee of FMR (2007-present). Previously, Mr. Murphy served as Chief Financial Officer of the Fidelity Funds (2005-2006), Vice President and Associate General Counsel of FMR (2007), and Senior Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (1994-2007). |
Gary W. Ryan (49) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of Blue Chip Value. Mr. Ryan also serves as Assistant Treasurer of other Fidelity funds (2005-present) and is an employee of FMR (2005-present). Previously, Mr. Ryan served as Vice President of Fund Reporting in Fidelity Pricing and Cash Management Services (FPCMS) (1999-2005). |
** FMR Corp. merged with and into FMR LLC on October 1, 2007. Any references to FMR LLC for prior periods are deemed to be references to the prior entity.
Annual Report
Distributions (Unaudited)
The Board of Trustees of Fidelity Blue Chip Value Fund voted to pay on September 15, 2008, to shareholders of record at the opening of business on September 12, 2008, a distribution of $.01 per share derived from capital gains realized from sales of portfolio securities and a dividend of $.11 per share from net investment income.
The fund hereby designates as a capital gain dividend with respect to the taxable year ended July 31, 2008, $7,155,817, or, if subsequently determined to be different, the net capital gain of such year.
The fund designates 38% and 100% of the dividends distributed in September and December, during the fiscal year as qualifying for the dividends-received deduction for corporate shareholders.
The fund designates 45% and 100% of the dividends distributed in September and December, respectively during the fiscal year as amounts which may be taken into account as a dividend for the purposes of the maximum rate under section 1(h)(11) of the Internal Revenue Code.
The fund will notify shareholders in January 2009 of amounts for use in preparing 2008 income tax returns.
Annual Report
Proxy Voting Results
A special meeting of the fund's shareholders was held on May 14, 2008. The results of votes taken among shareholders on the proposals before them are reported below. Each vote reported represents one dollar of net asset value held on the record date for the meeting.
PROPOSAL 1 | ||
To elect a Board of Trustees.A | ||
| # of | % of |
James C. Curvey | ||
Affirmative | 30,242,569,269.49 | 94.915 |
Withheld | 1,620,182,942.38 | 5.085 |
TOTAL | 31,862,752,211.87 | 100.000 |
Dennis J. Dirks | ||
Affirmative | 30,356,248,026.80 | 95.272 |
Withheld | 1,506,504,185.07 | 4.728 |
TOTAL | 31,862,752,211.87 | 100.000 |
Edward C. Johnson 3d | ||
Affirmative | 30,163,300,902.81 | 94.666 |
Withheld | 1,699,451,309.06 | 5.334 |
TOTAL | 31,862,752,211.87 | 100.000 |
Alan J. Lacy | ||
Affirmative | 30,334,439,999.59 | 95.203 |
Withheld | 1,528,312,212.28 | 4.797 |
TOTAL | 31,862,752,211.87 | 100.000 |
Ned C. Lautenbach | ||
Affirmative | 30,317,381,535.59 | 95.150 |
Withheld | 1,545,370,676.28 | 4.850 |
TOTAL | 31,862,752,211.87 | 100.000 |
Joseph Mauriello | ||
Affirmative | 30,340,553,696.88 | 95.223 |
Withheld | 1,522,198,514.99 | 4.777 |
TOTAL | 31,862,752,211.87 | 100.000 |
Cornelia M. Small | ||
Affirmative | 30,337,552,071.15 | 95.213 |
Withheld | 1,525,200,140.72 | 4.787 |
TOTAL | 31,862,752,211.87 | 100.000 |
William S. Stavropoulos | ||
Affirmative | 30,240,356,579.51 | 94.908 |
Withheld | 1,622,395,632.36 | 5.092 |
TOTAL | 31,862,752,211.87 | 100.000 |
| # of | % of |
David M. Thomas | ||
Affirmative | 30,352,029,125.67 | 95.259 |
Withheld | 1,510,723,086.20 | 4.741 |
TOTAL | 31,862,752,211.87 | 100.000 |
Michael E. Wiley | ||
Affirmative | 30,333,540,290.12 | 95.201 |
Withheld | 1,529,211,921.75 | 4.799 |
TOTAL | 31,862,752,211.87 | 100.000 |
PROPOSAL 2 | ||
To amend the Declaration of Trust to reduce the required quorum for future shareholder meetings.A | ||
Affirmative | 23,747,670,372.95 | 74.531 |
Against | 5,357,217,831.03 | 16.814 |
Abstain | 1,587,233,084.08 | 4.981 |
Broker | 1,170,630,923.81 | 3.674 |
TOTAL | 31,862,752,211.87 | 100.000 |
PROPOSAL 3 | ||
Shareholder proposal concerning "oversight procedures to screen out investments in companies that, in the judgment of the Board, substantially contribute to genocide, patterns of extraordinary and egregious violations of human rights, or crimes against humanity." | ||
Affirmative | 93,974,339.89 | 31.441 |
Against | 173,320,619.80 | 57.988 |
Abstain | 16,604,989.66 | 5.556 |
Broker | 14,991,363.38 | 5.015 |
TOTAL | 298,891,312.73 | 100.000 |
A Denotes trust-wide proposal and voting results. |
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees
Fidelity Blue Chip Value Fund
Each year, typically in July, the Board of Trustees, including the Independent Trustees (together, the Board), votes on the renewal of the management contract and sub-advisory agreements (together, the Advisory Contracts) for the fund. The Board, assisted by the advice of fund counsel and Independent Trustees' counsel, requests and considers a broad range of information throughout the year.
The Board meets regularly and, acting directly and through its separate committees, requests and receives information concerning, and considers at each of its meetings factors that are relevant to, its annual consideration of the renewal of the fund's Advisory Contracts, including the services and support provided to the fund and its shareholders. At the time of the renewal, the Board had 12 standing committees, each composed of Independent Trustees with varying backgrounds, to which the Board has assigned specific subject matter responsibilities in order to enhance effective decision-making by the Board. Each committee has a written charter outlining the structure and purposes of the committee. The Board also meets as needed to consider matters specifically related to the Board's annual consideration of the renewal of Advisory Contracts.
At its July 2008 meeting, the Board of Trustees, including the Independent Trustees, unanimously determined to renew the fund's Advisory Contracts. In reaching its determination, the Board considered all factors it believed relevant, including (i) the nature, extent, and quality of the services to be provided to the fund and its shareholders (including the investment performance of the fund); (ii) the competitiveness of the fund's management fee and total expenses; (iii) the total costs of the services to be provided by and the profits to be realized by Fidelity from its relationship with the fund; (iv) the extent to which economies of scale would be realized as the fund grows; and (v) whether fee levels reflect these economies of scale, if any, for the benefit of fund shareholders. The Board also approved agreements with foreign sub-advisers Fidelity Management & Research (Japan) Inc. and Fidelity Management & Research (Hong Kong) Limited, as well as amendments to the fund's agreement with Fidelity Management & Research (U.K.) Inc.
In considering whether to renew the Advisory Contracts for the fund, the Board ultimately reached a determination, with the assistance of fund counsel and Independent Trustees' counsel and through the exercise of its business judgment, that the renewal of the Advisory Contracts and the compensation to be received by Fidelity under the management contract is consistent with Fidelity's fiduciary duty under applicable law. The Board's decision to renew the Advisory Contracts was not based on any single factor noted above, but rather was based on a comprehensive consideration of all the information provided to the Board at its meetings throughout the year. The Board, in reaching its determination to renew the Advisory Contracts, is aware that shareholders in the fund have a broad range of investment choices available to them, including a wide choice among mutual funds offered by competitors to Fidelity, and that the fund's shareholders, with the opportunity to review and weigh the disclosure provided by the fund in its prospectus and other public disclosures, have chosen to invest in this fund, managed by Fidelity.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
Nature, Extent, and Quality of Services Provided. The Board considered staffing within the investment adviser, FMR, and the sub-advisers (together, the Investment Advisers), including the backgrounds of the fund's investment personnel and the fund's investment objective and discipline. The Independent Trustees also had discussions with senior management of Fidelity's investment operations and investment groups. The Board considered the structure of the portfolio manager compensation program and whether this structure provides appropriate incentives.
Resources Dedicated to Investment Management and Support Services. The Board reviewed the size, education, and experience of the Investment Advisers' investment staff, their use of technology, and the Investment Advisers' approach to recruiting, training, and retaining portfolio managers and other research, advisory, and management personnel. The Board noted that Fidelity's analysts have access to a variety of technological tools that enable them to perform both fundamental and quantitative analysis and to specialize in various disciplines. The Board considered Fidelity's extensive global research capabilities that enable the Investment Advisers to aggregate data from various sources in an effort to produce positive investment results. The Board also considered that Fidelity's portfolio managers and analysts have access to daily portfolio attribution that allows for monitoring of a fund's portfolio, as well as an electronic communication system that provides immediate real-time access to research concerning issuers and credit enhancers.
Shareholder and Administrative Services. The Board considered (i) the nature, extent, quality, and cost of advisory, administrative, distribution, and shareholder services performed by the Investment Advisers and their affiliates under the Advisory Contracts and under separate agreements covering transfer agency, pricing and bookkeeping, and securities lending services for the fund; (ii) the nature and extent of the Investment Advisers' supervision of third party service providers, principally custodians and subcustodians; and (iii) the resources devoted to, and the record of compliance with, the fund's compliance policies and procedures. The Board also reviewed the allocation of fund brokerage, including allocations to brokers affiliated with the Investment Advisers, the use of brokerage commissions to pay fund expenses, and the use of "soft" commission dollars to pay for research services. The Board further considered that Fidelity voluntarily pays for market data out of its own resources.
The Board noted that the growth of fund assets across the complex allows Fidelity to reinvest in the development of services designed to enhance the value or convenience of the Fidelity funds as investment vehicles. These services include 24-hour access to account information and market information through phone representatives and over the Internet, and investor education materials and asset allocation tools.
Annual Report
Investment in a Large Fund Family. The Board considered the benefits to shareholders of investing in a Fidelity fund, including the benefits of investing in a fund that is part of a large family of funds offering a variety of investment disciplines and providing for a large variety of mutual fund investor services. For example, fund shareholders are offered the privilege of exchanging shares of the fund for shares of other Fidelity funds, as set forth in the fund's prospectus, without paying a sales charge. The Board noted that Fidelity has taken a number of actions over the previous year that benefited particular funds, including (i) dedicating additional resources to investment research and to restructure the investment research teams; (ii) contractually agreeing to reduce the management fees on Fidelity's Institutional Money Market Funds and launching Class IV and Institutional Class of certain of these funds; (iii) reducing the transfer agent fees for the Fidelity Select Portfolios and Investor Class of the VIP funds; and (iv) launching Class K of 29 equity funds as a lower-fee class available to certain employer-sponsored retirement plans.
Investment Performance. The Board considered whether the fund has operated within its investment objective, as well as its record of compliance with its investment restrictions. It also reviewed the fund's absolute investment performance, as well as the fund's relative investment performance measured against (i) a broad-based securities market index, and (ii) a peer group of mutual funds deemed appropriate by the Board over multiple periods. Because the fund had been in existence less than five calendar years, the following charts considered by the Board show, over the one- and three-year periods ended December 31, 2007, the fund's cumulative total returns, the cumulative total returns of a broad-based securities market index ("benchmark"), and a range of cumulative total returns of a peer group of mutual funds identified by Morningstar, Inc. as having an investment style similar to that of the fund based on underlying portfolio holdings. The box within each chart shows the 25th percentile return (bottom of box) and the 75th percentile return (top of box) of the peer group. Returns shown above the box are in the first quartile and returns shown below the box are in the fourth quartile. The percentage beaten number noted below each chart corresponds to the percentile box and represents the percentage of funds in the peer group whose performance was equal to or lower than that of the fund.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
Fidelity Blue Chip Value Fund
The Board reviewed the fund's relative investment performance against its peer group and stated that the performance of the fund was in the second quartile for the one-year period and the first quartile for the three-year period. The Board also stated that the investment performance of the fund compared favorably to its benchmark for all the periods shown.
The Board also considered that the fund's management fee is subject to upward or downward adjustment depending upon whether, and to what extent, the fund's investment performance for the performance period exceeds, or is exceeded by, the record (over the same period) of a Board-approved performance adjustment index. The Board realizes that the performance adjustment provides FMR with a strong economic incentive to seek to achieve superior performance for the fund's shareholders and helps to more closely align the interests of FMR and the fund's shareholders.
The Board considered that FMR has taken steps to refocus and strengthen equity research, equity portfolio management, and compliance.
Based on its review, and giving particular weight to the nature and quality of the resources dedicated by the Investment Advisers to maintain and improve relative performance, the Board concluded that the nature, extent, and quality of the services provided to the fund will benefit the fund's shareholders, particularly in light of the Board's view that the fund's shareholders benefit from investing in a fund that is part of a large family of funds offering a variety of investment disciplines and services.
Annual Report
Competitiveness of Management Fee and Total Fund Expenses. The Board considered the fund's management fee and total expenses compared to "mapped groups" of competitive funds and classes. Fidelity creates "mapped groups" by combining similar Lipper investment objective categories that have comparable management fee characteristics. Combining Lipper investment objective categories aids the Board's management fee and total expense comparisons by broadening the competitive group used for comparison and by reducing the number of universes to which various Fidelity funds are compared. The Board also considered supplemental information about how the fund's management fee and total expenses ranked relative to groups based on Lipper classifications, which take into account a fund's market capitalization and style.
The Board considered two proprietary management fee comparisons for the 12-month (or shorter) periods shown in the chart below. The group of Lipper funds used by the Board for management fee comparisons is referred to below as the "Total Mapped Group." The Total Mapped Group comparison focuses on a fund's standing relative to the total universe of comparable funds available to investors, in terms of gross management fees before expense reimbursements or caps, and without giving effect to the fund's performance adjustment. "TMG %" represents the percentage of funds in the Total Mapped Group that had management fees that were lower than the fund's. For example, a TMG % of 9% means that 91% of the funds in the Total Mapped Group had higher management fees than the fund. The "Asset-Size Peer Group" (ASPG) comparison focuses on a fund's standing relative to non-Fidelity funds similar in size to the fund within the Total Mapped Group. The ASPG represents at least 15% of the funds in the Total Mapped Group with comparable asset size and management fee characteristics, subject to a minimum of 50 funds (or all funds in the Total Mapped Group if fewer than 50). Additional information, such as the ASPG quartile in which the fund's management fee ranked and the impact of the fund's performance adjustment, is also included in the chart and considered by the Board.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
Fidelity Blue Chip 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 2007. 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 was fair and reasonable in light of the services that the fund receives and the other factors considered.
In its review of the fund's total expenses, the Board considered the fund's management fee as well as other fund expenses, such as transfer agent fees, pricing and bookkeeping fees, and custodial, legal, and audit fees. The Board also noted the effects of any waivers and reimbursements on fees and expenses, as well as the impact of the fund's performance adjustment. As part of its review, the Board also considered current and historical total expenses of the fund compared to competitive fund median expenses. The fund is compared to those funds and classes in the Total Mapped Group (used by the Board for management fee comparisons) that have a similar sales load structure.
The Board noted that the fund's total expenses ranked below its competitive median for 2007.
In its review of total expenses, the Board also considered Fidelity fee structures and other information on clients that FMR and its affiliates service in other competitive markets, such as other mutual funds advised or subadvised by FMR or its affiliates, pension plan clients, and other institutional clients.
Annual Report
Based on its review, the Board concluded that the fund's total expenses were reasonable in light of the services that the fund and its shareholders receive and the other factors considered.
Costs of the Services and Profitability. The Board considered the revenues earned and the expenses incurred by Fidelity in conducting the business of developing, marketing, distributing, managing, administering and servicing the fund and its shareholders. The Board also considered the level of Fidelity's profits in respect of all the Fidelity funds.
On an annual basis, FMR presents to the Board Fidelity's profitability for the fund. Fidelity calculates the profitability for each fund, as well as aggregate profitability for groups of Fidelity funds and all Fidelity funds, using a series of detailed revenue and cost allocation methodologies which originate with the audited books and records of Fidelity. The Audit Committee of the Board reviews any significant changes from the prior year's methodologies.
PricewaterhouseCoopers LLP (PwC), independent registered public accounting firm and auditor to Fidelity and certain Fidelity funds, has been engaged annually by the Board as part of the Board's assessment of the results of Fidelity's profitability analysis. PwC's engagement includes the review and assessment of Fidelity's methodologies used in determining the revenues and expenses attributable to Fidelity's mutual fund business, and completion of agreed-upon procedures surrounding the mathematical accuracy of fund profitability and its conformity to allocation methodologies. After considering PwC's reports issued under the engagement and information provided by Fidelity, the Board believes that while other allocation methods may also be reasonable, Fidelity's profitability methodologies are reasonable in all material respects.
The Board has also reviewed Fidelity's non-fund businesses and any fall-out benefits related to the mutual fund business as well as cases where Fidelity's affiliates may benefit from or be related to the fund's business.
The Board considered the costs of the services provided by and the profits realized by Fidelity in connection with the operation of the fund and determined that the amount of profit is a fair entrepreneurial profit for the management of the fund.
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.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
The Board recognized that the fund's management contract incorporates a "group fee" structure, which provides for lower group fee rates as total fund assets under FMR's management increase, and for higher group fee rates as total fund assets under FMR's management decrease. FMR determines the group fee rates based on a tiered asset "breakpoint" schedule. The Board considered that the group fee is designed to deliver the benefits of economies of scale to fund shareholders when total fund assets increase, even if assets of any particular fund are unchanged or have declined, because some portion of Fidelity's costs are attributable to services provided to all Fidelity funds, and all funds benefit if those costs can be allocated among more assets. The Board concluded that, given the group fee structure, fund shareholders will achieve a certain level of economies of scale as assets under FMR's management increase at the fund complex level, regardless of whether Fidelity achieves any such economies of scale.
The Board further concluded that any potential economies of scale are being shared between fund shareholders and Fidelity in an appropriate manner.
Additional Information Requested by the Board. In order to develop fully the factual basis for consideration of the Fidelity funds' Advisory Contracts, the Board requested and received additional information on certain topics, including (i) fund performance trends and actions to be taken by FMR to improve certain funds' overall performance; (ii) portfolio manager changes that have occurred during the past year; (iii) Fidelity's fund profitability methodology, the profitability of certain fund service providers, and profitability trends for certain funds; (iv) Fidelity's compensation structure for portfolio managers and key personnel, including its effects on fund profitability and the extent to which portfolio manager compensation is linked to fund performance; (v) Fidelity's fee structures and rationale for recommending different fees among categories of funds; and (vi) Fidelity's rationale for recommending which funds should have a performance adjustment component as part of their management fees.
Based on its evaluation of all of the conclusions noted above, and after considering all material factors, the Board ultimately concluded that the advisory fee structures are fair and reasonable, and that the fund's Advisory Contracts should be renewed.
Annual Report
Managing Your Investments
Fidelity offers several ways to conveniently manage your personal investments via your telephone or PC. You can access your account information, conduct trades and research your investments 24 hours a day.
By Phone
Fidelity Automated Service Telephone provides a single toll-free number to access account balances, positions, quotes and trading. It's easy to navigate the service, and on your first call, the system will help you create a personal identification number (PIN) for security.
(phone_graphic)
Fidelity Automated
Service Telephone (FAST®)
1-800-544-5555
Press
For mutual fund and brokerage trading.
For quotes.*
For account balances and holdings.
To review orders and mutual
fund activity.
To change your PIN.
To speak to a Fidelity representative.
By PC
Fidelity's web site on the Internet provides a wide range of information, including daily financial news, fund performance, interactive planning tools and news about Fidelity products and services.
(computer_graphic)
Fidelity's Web Site
www.fidelity.com
* When you call the quotes line, please remember that a fund's yield and return will vary and, except for money market funds, share price will also vary. This means that you may have a gain or loss when you sell your shares. There is no assurance that money market funds will be able to maintain a stable $1 share price; an investment in a money market fund is not insured or guaranteed by the U.S. government. Total returns are historical and include changes in share price, reinvestment of dividends and capital gains, and the effects of any sales charges.
Annual Report
To Write Fidelity
We'll give your correspondence immediate attention and send you written confirmation upon completion of your request.
(letter_graphic)
Making Changes
To Your Account
(such as changing name, address, bank, etc.)
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0002
(letter_graphic)
For Non-Retirement
Accounts
Buying shares
Fidelity Investments
P.O. Box 770001
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Overnight Express
Fidelity Investments
Attn: Distribution Services
100 Crosby Parkway - KC1H
Covington, KY 41015
Selling shares
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0035
Overnight Express
Fidelity Investments
Attn: Distribution Services
100 Crosby Parkway - KC1H
Covington, KY 41015
General Correspondence
Fidelity Investments
P.O. Box 500
Merrimack, NH 03054-0500
(letter_graphic)
For Retirement
Accounts
Buying shares
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
Selling shares
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0035
Overnight Express
Fidelity Investments
Attn: Distribution Services
100 Crosby Parkway - KC1H
Covington, KY 41015
General Correspondence
Fidelity Investments
P.O. Box 500
Merrimack, NH 03054-0500
Annual Report
To Visit Fidelity
For directions and hours,
please call 1-800-544-9797.
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Annual Report
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Fidelity Brokerage Services, Inc., 100 Summer St., Boston, MA 02110 Member NYSE/SIPC
Annual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Fidelity Research & Analysis Company
Fidelity Management & Research
(U.K.) Inc.
Fidelity Investments Japan Limited
Fidelity International Investment
Advisors
Fidelity International Investment
Advisors (U.K.) Limited
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Service Agents
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Operations Company, Inc.
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Fidelity Service Company, Inc.
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Custodian
Brown Brothers Harriman & Co.
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The Fidelity Telephone Connection
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Fidelity®
Dividend Growth
Fund -
Dividend Growth
Class K
Annual Report
July 31, 2008
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message | Ned Johnson's message to shareholders. | |
Performance | How the fund has done over time. | |
Management's Discussion | The manager's review of fund performance, strategy and outlook. | |
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 |
| |
Proxy Voting Results |
| |
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 (search for "proxy voting guidelines") or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-800-544-8544 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company.
Annual Report
This report and the financial statements contained herein are submitted for the general information of the shareholders of the fund. This report is not authorized for distribution to prospective investors in the fund unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com or http://www.advisor.fidelity.com, as applicable.
NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE
Neither the fund nor Fidelity Distributors Corporation is a bank.
Annual Report
Chairman's Message
(photo_of_Edward_C_Johnson_3d)
Dear Shareholder:
Domestic and international securities markets have struggled thus far in 2008. High-grade fixed-income investments produced modestly positive results, but many stock benchmarks suffered double-digit losses through the first half of this year. Financial markets are always unpredictable, but there are a number of time-tested principles that can put the historical odds in your favor.
One of the basic tenets is to invest for the long term. Over time, riding out the markets' inevitable ups and downs has proven much more effective than selling into panic or chasing the hottest trend. Even missing only a few of the markets' best days can significantly diminish investor returns. Patience also affords the benefits of compounding - of earning interest on additional income or reinvested dividends and capital gains. There are tax advantages and cost benefits to consider as well. The more you sell, the more taxes you pay, and the more you trade, the higher the costs. While staying the course doesn't eliminate risk, it can considerably lessen the effect of short-term declines.
You can further manage your investing risk through diversification. And today, more than ever, geographic diversification should be taken into account. Studies indicate that asset allocation is the single most important determinant of a portfolio's long-term success. The right mix of stocks, bonds and cash - aligned to your particular risk tolerance and investment objective - is very important. Age-appropriate rebalancing is also an essential aspect of asset allocation. For younger investors, an emphasis on equities - which historically have been the best-performing asset class over time - is encouraged. As investors near their specific goal, such as retirement or sending a child to college, consideration may be given to replacing volatile assets (e.g. common stocks) with more-stable fixed investments (bonds or savings plans).
A third investment principle - investing regularly - can help lower the average cost of your purchases. Investing a certain amount of money each month or quarter helps ensure you won't pay for all your shares at market highs. This strategy - known as dollar cost averaging - also reduces unconstructive "emotion" from investing, helping shareholders avoid selling weak performers just prior to an upswing, or chasing a hot performer just before a correction.
We invite you to contact us via the Internet, through our Investor Centers or over the phone. It is our privilege to provide you the information you need to make the investments that are right for you.
Sincerely,
/s/Edward C. Johnson 3d
Edward C. Johnson 3d
Annual Report
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' 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 July 31, 2008 | Past 1 | Past 5 | Past 10 |
Dividend Growth | -15.45% | 4.06% | 3.60% |
Class K A | -15.42% | 4.07% | 3.60% |
A The initial offering of Class K shares took place on May 9, 2008. Returns prior to May 9, 2008 are those of Dividend Growth, the original class of the fund.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Dividend Growth, a class of the fund, on July 31, 1998. The chart shows how the value of your investment would have changed, and also shows how the Standard & Poor's 500SM Index performed over the same period.
Annual Report
Management's Discussion of Fund Performance
Comments from Charles Mangum, Portfolio Manager of Fidelity® Dividend Growth Fund
Grim news about the U.S. economy forced most domestic equity benchmarks into negative territory for the 12 months ending July 31, 2008. Oil prices north of $140 per barrel, gasoline prices in excess of $4 per gallon and soaring food costs drove inflation and consumer prices higher. In response, consumer discretionary spending trended lower as Main Street tightened its purse strings. Wall Street, meanwhile, struggled under the weight of massive write-downs in the financials sector, an ongoing credit crisis and bleak housing data. In an effort to staunch the bleeding, the Federal Reserve Board cut interest rates on seven occasions during the past year. Nevertheless, investors fled the equity markets, and both the Dow Jones Industrial AverageSM and the Standard & Poor's 500SM Index fell to a threshold that many believe marks the official start of a "bear market." For the 12 months overall, the Dow slid 11.71%, the S&P 500® dropped 11.09% and the technology-heavy NASDAQ Composite® Index dipped 7.98%.
For the year, the fund's Retail Class shares fell 15.45%, which lagged the S&P 500. (For specific performance results for the new Class K shares, please see the performance section of this shareholder report.) The fund was hurt by stock selection and an overweighting in financials. Underweighting consumer staples also detracted, as did stock selection and an overweighting in telecommunication services. The fund's holdings in technology hardware and equipment fared poorly as well, more than offsetting its strong results in the software and services segment. Global insurance giant American International Group (AIG) detracted, as did cellular phone manufacturer Motorola. Pharmaceutical and medical supply distributor Cardinal Health declined, while diversified media company Time Warner and bank Wachovia also languished. On the upside, stock selection in energy helped, though underweighting this strong-performing area of the market cancelled out any gains the fund posted in this sector. An overweighting in health care was positive, but results were tempered by unfavorable stock selection in the equipment and services group. Several energy stocks, including drillers Nabors Industries and Diamond Offshore Drilling and integrated energy corporation ConocoPhillips, were strong contributors. In health care, Johnson & Johnson helped, while technology stock Accenture also rose. Lastly, a modest stake in cash aided performance in a down market.
Note to Shareholders: Lawrence Rakers will become Portfolio Manager of the fund on September 9, 2008.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, and (2) ongoing costs, including management fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The actual expense Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (February 1, 2008 to July 31, 2008) for Dividend Growth and for the entire period (May 9, 2008 to July 31, 2008) for Class K. The hypothetical expense Example is based on an investment of $1,000 invested for the one half year period (February 1, 2008 to July 31, 2008).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Annual Report
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.
| Beginning | Ending | Expenses Paid |
Dividend Growth |
|
|
|
Actual | $ 1,000.00 | $ 914.30 | $ 2.95 B |
Hypothetical A | $ 1,000.00 | $ 1,021.78 | $ 3.12 C |
Class K |
|
|
|
Actual | $ 1,000.00 | $ 916.70 | $ 1.03 B |
Hypothetical A | $ 1,000.00 | $ 1,022.53 | $ 2.36 C |
A 5% return per year before expenses
B Actual expenses are equal to each Class' annualized expenses ratio (shown in the table below); multipled by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period) for Dividend Growth and multiplied by 84/366 (to reflect the period May 9, 2008 to July 31, 2008) for Class K.
C Hypothetical expenses are equal to each Class' annualized expenses ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
| Annualized |
Dividend Growth | .62% |
Class K | .47% |
Annual Report
Investment Changes (Unaudited)
Top Ten Stocks as of July 31, 2008 | ||
| % of fund's | % of fund's net assets |
Johnson & Johnson | 6.2 | 6.5 |
Cardinal Health, Inc. | 5.9 | 6.8 |
Time Warner, Inc. | 4.4 | 3.8 |
ConocoPhillips | 4.1 | 3.2 |
Cisco Systems, Inc. | 3.4 | 2.4 |
Microsoft Corp. | 3.1 | 2.8 |
Wyeth | 2.8 | 3.1 |
AT&T, Inc. | 2.6 | 1.9 |
Accenture Ltd. Class A | 2.6 | 1.6 |
American International Group, Inc. | 2.6 | 5.8 |
| 37.7 | |
Top Five Market Sectors as of July 31, 2008 | ||
| % of fund's | % of fund's net assets |
Information Technology | 20.0 | 19.5 |
Health Care | 19.8 | 18.3 |
Financials | 16.0 | 22.3 |
Consumer Discretionary | 11.2 | 12.2 |
Energy | 9.7 | 8.4 |
Asset Allocation (% of fund's net assets) | |||||||
As of July 31, 2008 * | As of January 31, 2008 ** | ||||||
Stocks 95.2% |
| Stocks 96.7% |
| ||||
Bonds 0.2% |
| Convertible |
| ||||
Convertible |
| Short-Term |
| ||||
Short-Term |
|
|
| ||||
* Foreign investments | 6.8% |
| ** Foreign investments | 4.4% |
|
Annual Report
Investments July 31, 2008
Showing Percentage of Net Assets
Common Stocks - 95.2% | |||
Shares | Value (000s) | ||
CONSUMER DISCRETIONARY - 11.1% | |||
Automobiles - 0.1% | |||
Harley-Davidson, Inc. | 399,100 | $ 15,102 | |
Leisure Equipment & Products - 0.2% | |||
Eastman Kodak Co. | 1,126,900 | 16,498 | |
Media - 6.2% | |||
CC Media Holdings, Inc. Class A (a) | 1,300,000 | 23,400 | |
Omnicom Group, Inc. | 2,962,250 | 126,458 | |
Time Warner, Inc. | 29,451,300 | 421,743 | |
Virgin Media, Inc. (d) | 1,509,300 | 16,934 | |
| 588,535 | ||
Multiline Retail - 1.8% | |||
Kohl's Corp. (a)(d) | 1,657,100 | 69,449 | |
Target Corp. (d) | 2,160,264 | 97,709 | |
| 167,158 | ||
Specialty Retail - 2.6% | |||
Abercrombie & Fitch Co. Class A | 545,200 | 30,106 | |
Home Depot, Inc. | 3,615,468 | 86,157 | |
Lowe's Companies, Inc. | 2,701,200 | 54,888 | |
Sherwin-Williams Co. | 344,930 | 18,368 | |
Staples, Inc. | 2,529,682 | 56,918 | |
| 246,437 | ||
Textiles, Apparel & Luxury Goods - 0.2% | |||
The Swatch Group AG (Bearer) | 81,123 | 18,825 | |
TOTAL CONSUMER DISCRETIONARY | 1,052,555 | ||
CONSUMER STAPLES - 5.4% | |||
Beverages - 1.4% | |||
PepsiCo, Inc. | 960,600 | 63,938 | |
The Coca-Cola Co. | 1,358,700 | 69,973 | |
| 133,911 | ||
Food & Staples Retailing - 3.0% | |||
CVS Caremark Corp. | 4,321,300 | 157,727 | |
Sysco Corp. | 1,173,700 | 33,286 | |
Wal-Mart Stores, Inc. | 1,548,047 | 90,747 | |
| 281,760 | ||
Common Stocks - continued | |||
Shares | Value (000s) | ||
CONSUMER STAPLES - continued | |||
Household Products - 1.0% | |||
Kimberly-Clark Corp. | 696,700 | $ 40,290 | |
Procter & Gamble Co. | 903,400 | 59,155 | |
| 99,445 | ||
TOTAL CONSUMER STAPLES | 515,116 | ||
ENERGY - 9.7% | |||
Energy Equipment & Services - 2.9% | |||
BJ Services Co. | 1,607,600 | 47,263 | |
Diamond Offshore Drilling, Inc. | 219,100 | 26,139 | |
Halliburton Co. | 1,086,000 | 48,675 | |
Nabors Industries Ltd. (a) | 3,194,682 | 116,478 | |
Transocean, Inc. (a) | 283,007 | 38,497 | |
| 277,052 | ||
Oil, Gas & Consumable Fuels - 6.8% | |||
Boardwalk Pipeline Partners, LP | 1,427,200 | 33,768 | |
Chesapeake Energy Corp. | 1,727,400 | 86,629 | |
ConocoPhillips (d) | 4,752,725 | 387,917 | |
Copano Energy LLC | 396,000 | 12,411 | |
Denbury Resources, Inc. (a) | 171,100 | 4,815 | |
Energy Transfer Equity LP | 163,800 | 4,868 | |
Quicksilver Resources, Inc. (a) | 487,100 | 12,743 | |
Ultra Petroleum Corp. (a) | 590,200 | 42,128 | |
Valero Energy Corp. | 1,765,645 | 58,990 | |
| 644,269 | ||
TOTAL ENERGY | 921,321 | ||
FINANCIALS - 16.0% | |||
Capital Markets - 3.0% | |||
Bank of New York Mellon Corp. | 1,422,407 | 50,495 | |
Credit Suisse Group sponsored ADR (d) | 706,500 | 35,240 | |
Franklin Resources, Inc. | 650,300 | 65,427 | |
Merrill Lynch & Co., Inc. | 2,534,500 | 67,544 | |
Morgan Stanley | 1,819,400 | 71,830 | |
| 290,536 | ||
Commercial Banks - 4.7% | |||
Fifth Third Bancorp | 1,500,000 | 20,955 | |
PNC Financial Services Group, Inc. | 2,901,607 | 206,856 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
FINANCIALS - continued | |||
Commercial Banks - continued | |||
SunTrust Banks, Inc. (d) | 729,100 | $ 29,937 | |
Wachovia Corp. (d) | 10,828,000 | 187,000 | |
| 444,748 | ||
Consumer Finance - 0.5% | |||
American Express Co. | 1,180,400 | 43,816 | |
Diversified Financial Services - 1.8% | |||
Bank of America Corp. | 4,888,442 | 160,830 | |
CIT Group, Inc. | 1,705,400 | 14,462 | |
| 175,292 | ||
Insurance - 5.5% | |||
American International Group, Inc. | 9,408,200 | 245,084 | |
Hartford Financial Services Group, Inc. | 3,385,920 | 214,633 | |
MetLife, Inc. | 900,500 | 45,718 | |
Prudential Financial, Inc. | 285,400 | 19,684 | |
| 525,119 | ||
Thrifts & Mortgage Finance - 0.5% | |||
Fannie Mae | 2,198,400 | 25,282 | |
Washington Mutual, Inc. | 3,428,514 | 18,274 | |
| 43,556 | ||
TOTAL FINANCIALS | 1,523,067 | ||
HEALTH CARE - 19.8% | |||
Biotechnology - 0.9% | |||
Amgen, Inc. (a) | 1,394,000 | 87,306 | |
Health Care Equipment & Supplies - 0.5% | |||
Medtronic, Inc. | 692,900 | 36,606 | |
Sonova Holding AG | 120,393 | 8,751 | |
| 45,357 | ||
Health Care Providers & Services - 6.2% | |||
Cardinal Health, Inc. (d) | 10,330,896 | 555,079 | |
UnitedHealth Group, Inc. | 1,114,100 | 31,284 | |
| 586,363 | ||
Pharmaceuticals - 12.2% | |||
Allergan, Inc. | 213,300 | 11,077 | |
Johnson & Johnson | 8,619,032 | 590,146 | |
Merck & Co., Inc. | 3,329,305 | 109,534 | |
Pfizer, Inc. | 7,357,700 | 137,368 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
HEALTH CARE - continued | |||
Pharmaceuticals - continued | |||
Schering-Plough Corp. | 2,497,430 | $ 52,646 | |
Wyeth | 6,526,060 | 264,436 | |
| 1,165,207 | ||
TOTAL HEALTH CARE | 1,884,233 | ||
INDUSTRIALS - 7.9% | |||
Aerospace & Defense - 2.8% | |||
Honeywell International, Inc. | 2,207,500 | 112,229 | |
Raytheon Co. | 1,615,100 | 91,948 | |
The Boeing Co. | 908,100 | 55,494 | |
| 259,671 | ||
Air Freight & Logistics - 1.1% | |||
FedEx Corp. | 266,400 | 21,003 | |
United Parcel Service, Inc. Class B | 1,319,290 | 83,221 | |
| 104,224 | ||
Airlines - 1.3% | |||
AMR Corp. (a) | 5,854,300 | 52,864 | |
Delta Air Lines, Inc. (a) | 4,375,600 | 32,992 | |
Northwest Airlines Corp. (a) | 4,128,800 | 37,820 | |
| 123,676 | ||
Electrical Equipment - 1.1% | |||
Cooper Industries Ltd. Class A | 2,518,173 | 106,191 | |
Industrial Conglomerates - 0.3% | |||
Tyco International Ltd. | 620,300 | 27,641 | |
Machinery - 1.3% | |||
Illinois Tool Works, Inc. | 1,796,574 | 84,169 | |
Ingersoll-Rand Co. Ltd. Class A | 1,163,700 | 41,893 | |
| 126,062 | ||
TOTAL INDUSTRIALS | 747,465 | ||
INFORMATION TECHNOLOGY - 19.8% | |||
Communications Equipment - 5.7% | |||
Cisco Systems, Inc. (a) | 14,614,900 | 321,382 | |
Corning, Inc. | 1,200,000 | 24,012 | |
Motorola, Inc. | 20,502,020 | 177,137 | |
QUALCOMM, Inc. | 291,300 | 16,121 | |
| 538,652 | ||
Common Stocks - continued | |||
Shares | Value (000s) | ||
INFORMATION TECHNOLOGY - continued | |||
Computers & Peripherals - 1.3% | |||
EMC Corp. (a) | 1,639,000 | $ 24,601 | |
Hewlett-Packard Co. | 2,223,200 | 99,599 | |
| 124,200 | ||
Electronic Equipment & Instruments - 1.0% | |||
Tyco Electronics Ltd. | 2,851,972 | 94,514 | |
IT Services - 3.9% | |||
Accenture Ltd. Class A | 5,913,160 | 246,934 | |
The Western Union Co. | 4,527,694 | 125,145 | |
| 372,079 | ||
Semiconductors & Semiconductor Equipment - 3.3% | |||
Analog Devices, Inc. (d) | 1,678,400 | 51,208 | |
Applied Materials, Inc. | 3,939,500 | 68,232 | |
Cymer, Inc. (a) | 500,000 | 13,245 | |
Lam Research Corp. (a) | 1,528,593 | 50,275 | |
Linear Technology Corp. (d) | 1,142,119 | 35,463 | |
National Semiconductor Corp. | 1,107,977 | 23,212 | |
Novellus Systems, Inc. (a)(d) | 1,752,500 | 35,698 | |
Taiwan Semiconductor Manufacturing Co. Ltd. sponsored ADR | 2,571,870 | 24,433 | |
Texas Instruments, Inc. | 497,700 | 12,134 | |
| 313,900 | ||
Software - 4.6% | |||
Microsoft Corp. | 11,533,787 | 296,649 | |
Oracle Corp. (a) | 6,493,700 | 139,809 | |
| 436,458 | ||
TOTAL INFORMATION TECHNOLOGY | 1,879,803 | ||
MATERIALS - 0.2% | |||
Metals & Mining - 0.2% | |||
Freeport-McMoRan Copper & Gold, Inc. Class B | 209,900 | 20,308 | |
TELECOMMUNICATION SERVICES - 5.2% | |||
Diversified Telecommunication Services - 5.1% | |||
AT&T, Inc. | 8,062,246 | 248,398 | |
Qwest Communications International, Inc. | 25,512,057 | 97,711 | |
Verizon Communications, Inc. | 3,928,432 | 133,724 | |
| 479,833 | ||
Common Stocks - continued | |||
Shares | Value (000s) | ||
TELECOMMUNICATION SERVICES - continued | |||
Wireless Telecommunication Services - 0.1% | |||
Sprint Nextel Corp. | 1,258,586 | $ 10,245 | |
TOTAL TELECOMMUNICATION SERVICES | 490,078 | ||
UTILITIES - 0.1% | |||
Multi-Utilities - 0.1% | |||
Wisconsin Energy Corp. | 200,000 | 9,024 | |
TOTAL COMMON STOCKS (Cost $9,171,388) | 9,042,970 |
Corporate Bonds - 0.4% | ||||
| Principal Amount (000s) |
| ||
Convertible Bonds - 0.2% | ||||
CONSUMER DISCRETIONARY - 0.1% | ||||
Automobiles - 0.1% | ||||
Ford Motor Co. 4.25% 12/15/36 | $ 12,030 | 8,332 | ||
INDUSTRIALS - 0.1% | ||||
Airlines - 0.1% | ||||
AMR Corp. 4.5% 2/15/24 | 18,060 | 15,983 | ||
TOTAL CONVERTIBLE BONDS | 24,315 | |||
Nonconvertible Bonds - 0.2% | ||||
INFORMATION TECHNOLOGY - 0.2% | ||||
Semiconductors & Semiconductor Equipment - 0.2% | ||||
Freescale Semiconductor, Inc. 10.125% 12/15/16 | 19,510 | 15,315 | ||
TOTAL CORPORATE BONDS (Cost $42,837) | 39,630 |
Money Market Funds - 7.9% | |||
Shares |
| ||
Fidelity Cash Central Fund, 2.35% (b) | 484,598,338 | 484,598 | |
Fidelity Securities Lending Cash Central Fund, 2.37% (b)(c) | 269,481,000 | 269,481 | |
TOTAL MONEY MARKET FUNDS (Cost $754,079) | 754,079 | ||
Cash Equivalents - 0.2% | |||
Maturity Amount (000s) | Value (000s) | ||
Investments in repurchase agreements in a joint trading account at 2.07%, dated 7/31/08 due 8/1/08 (Collateralized by U.S. Treasury Obligations) # | $ 16,719 | $ 16,718 | |
TOTAL INVESTMENT PORTFOLIO - 103.7% (Cost $9,985,022) | 9,853,397 | ||
NET OTHER ASSETS - (3.7)% | (351,255) | ||
NET ASSETS - 100% | $ 9,502,142 |
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
# Additional Information on each counterparty to the repurchase agreement is as follows: |
Repurchase Agreement / Counterparty | Value |
$16,718,000 due 8/01/08 at 2.07% | |
Banc of America Securities LLC | $ 3,325 |
Barclays Capital, Inc. | 4,650 |
ING Financial Markets LLC | 3,720 |
Lehman Brothers, Inc. | 5,023 |
| $ 16,718 |
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 | $ 15,805 |
Fidelity Securities Lending Cash Central Fund | 288 |
Total | $ 16,093 |
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) | July 31, 2008 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $263,653 and repurchase agreements of $16,718) - See accompanying schedule: Unaffiliated issuers (cost $9,230,943) | $ 9,099,318 |
|
Fidelity Central Funds (cost $754,079) | 754,079 |
|
Total Investments (cost $9,985,022) |
| $ 9,853,397 |
Cash | 86 | |
Receivable for investments sold | 28,188 | |
Receivable for fund shares sold | 7,292 | |
Dividends receivable | 11,853 | |
Interest receivable | 1,007 | |
Distributions receivable from Fidelity Central Funds | 922 | |
Prepaid expenses | 19 | |
Other receivables | 387 | |
Total assets | 9,903,151 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 113,938 | |
Payable for fund shares redeemed | 12,550 | |
Accrued management fee | 2,574 | |
Other affiliated payables | 2,098 | |
Other payables and accrued expenses | 368 | |
Collateral on securities loaned, at value | 269,481 | |
Total liabilities | 401,009 | |
|
|
|
Net Assets | $ 9,502,142 | |
Net Assets consist of: |
| |
Paid in capital | $ 9,118,880 | |
Undistributed net investment income | 96,848 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 418,032 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (131,618) | |
Net Assets | $ 9,502,142 |
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) | July 31, 2008 | |
|
|
|
Dividend Growth: Net Asset Value, offering price and redemption price per share ($9,502,050 ÷ 374,114.312 shares) | $ 25.40 | |
|
|
|
Class K: Net Asset Value, offering price and redemption price per share ($91.66 ÷ 3.607 shares) | $ 25.41 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Operations
Amounts in thousands | Year ended July 31, 2008 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 257,929 |
Interest |
| 2,249 |
Income from Fidelity Central Funds |
| 16,093 |
Total income |
| 276,271 |
|
|
|
Expenses | ||
Management fee | $ 73,111 | |
Performance adjustment | (21,625) | |
Transfer agent fees | 29,219 | |
Accounting and security lending fees | 1,429 | |
Custodian fees and expenses | 195 | |
Independent trustees' compensation | 57 | |
Registration fees | 88 | |
Audit | 98 | |
Legal | 76 | |
Miscellaneous | 933 | |
Total expenses before reductions | 83,581 | |
Expense reductions | (536) | 83,045 |
Net investment income (loss) | 193,226 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 740,762 | |
Foreign currency transactions | 34 | |
Futures contracts | (21,604) | |
Total net realized gain (loss) |
| 719,192 |
Change in net unrealized appreciation (depreciation) on: Investment securities | (2,925,401) | |
Assets and liabilities in foreign currencies | 7 | |
Total change in net unrealized appreciation (depreciation) |
| (2,925,394) |
Net gain (loss) | (2,206,202) | |
Net increase (decrease) in net assets resulting from operations | $ (2,012,976) |
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) | $ 193,226 | $ 271,266 |
Net realized gain (loss) | 719,192 | 1,153,624 |
Change in net unrealized appreciation (depreciation) | (2,925,394) | 986,456 |
Net increase (decrease) in net assets resulting | (2,012,976) | 2,411,346 |
Distributions to shareholders from net investment income | (220,835) | (237,313) |
Distributions to shareholders from net realized gain | (1,096,481) | (431,005) |
Total distributions | (1,317,316) | (668,318) |
Share transactions - net increase (decrease) | (3,432,228) | (1,000,968) |
Total increase (decrease) in net assets | (6,762,520) | 742,060 |
|
|
|
Net Assets | ||
Beginning of period | 16,264,662 | 15,522,602 |
End of period (including undistributed net investment income of $96,848 and undistributed net investment income of $139,799, respectively) | $ 9,502,142 | $ 16,264,662 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Dividend Growth
Years ended July 31, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 32.73 | $ 29.50 | $ 28.85 | $ 26.58 | $ 24.76 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .43 | .52 E | .35 | .45 F | .20 |
Net realized and unrealized gain (loss) | (5.08) | 3.98 | .99 | 2.21 | 1.84 |
Total from investment operations | (4.65) | 4.50 | 1.34 | 2.66 | 2.04 |
Distributions from net investment income | (.45) | (.45) | (.31) | (.39) | (.22) |
Distributions from net realized gain | (2.23) | (.82) | (.38) | - | - |
Total distributions | (2.68) | (1.27) | (.69) | (.39) | (.22) |
Net asset value, end of period | $ 25.40 | $ 32.73 | $ 29.50 | $ 28.85 | $ 26.58 |
Total Return A | (15.45)% | 15.62% | 4.73% | 10.08% | 8.27% |
Ratios to Average Net Assets C, G |
|
|
|
|
|
Expenses before reductions | .64% | .61% | .60% | .68% | .90% |
Expenses net of fee waivers, if any | .64% | .61% | .60% | .68% | .90% |
Expenses net of all reductions | .63% | .60% | .59% | .66% | .89% |
Net investment income (loss) | 1.47% | 1.62% E | 1.21% | 1.64% F | .75% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (in millions) | $ 9,502 | $ 16,265 | $ 15,523 | $ 17,399 | $ 18,387 |
Portfolio turnover rate D | 52% | 36% | 30% | 26% | 37% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Calculated based on average shares outstanding during the period.
C Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
D Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
E Investment income per share reflects a special dividend which amounted to $.07 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been 1.40%.
F Investment income per share reflects a special dividend which amounted to $.16 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been 1.06%.
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 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
For the period ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 27.72 |
Income from Investment Operations |
|
Net investment income (loss) D | .10 |
Net realized and unrealized gain (loss) | (2.41) |
Total from investment operations | (2.31) |
Net asset value, end of period | $ 25.41 |
Total Return B, C | (8.33)% |
Ratios to Average Net Assets E, H |
|
Expenses before reductions | .47% A |
Expenses net of fee waivers, if any | .47% A |
Expenses net of all reductions | .47% A |
Net investment income (loss) | 1.66% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 92 |
Portfolio turnover rate F | 52% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
G For the period May 9, 2008 (commencement of sale of shares) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended July 31, 2008
1. Organization.
Fidelity Dividend Growth Fund (the Fund) is a fund of Fidelity Securities Fund (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. On January 17, 2008, the Board of Trustees of the Fund approved the creation of an additional class of shares. The Fund commenced sale of shares of Class K and the existing class was designated Dividend Growth on May 9, 2008. The Fund offers Dividend Growth 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. In order to disclose class level financial information dollar amounts presented in the notes are unrounded. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent fees incurred. Certain expense reductions also differ by class.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the SEC's web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:
Annual Report
3. Significant Accounting Policies - continued
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. Wherever possible, the Fund uses independent pricing services approved by the Board of Trustees to value its investments.
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Debt securities, including restricted securities, are valued by independent pricing services or by dealers who make markets in such securities. Pricing services consider yield or price of bonds of comparable quality, coupon, maturity and type as well as dealer supplied prices. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date. The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Annual Report
Notes to Financial Statements - continued
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. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Deferred Trustee Compensation. Under a Deferred Compensation Plan (the Plan), independent Trustees must defer receipt of a portion of, and may elect to defer receipt of an additional 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 by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The implementation of FIN 48 did not result in any unrecognized tax benefits in the accompanying financial statements. Each of the Fund's federal tax returns for the prior three fiscal years remains subject to examination by the Internal
Annual Report
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
Revenue Service. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. In addition, the Fund will claim a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. Certain adjustments have been made to the accounts relating to prior periods. Collectively, 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 and losses deferred due to wash sales.
The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows:
Unrealized appreciation | $ 1,130,191,566 |
Unrealized depreciation | (1,302,263,478) |
Net unrealized appreciation (depreciation) | (172,071,912) |
Undistributed ordinary income | 75,717,665 |
Undistributed long-term capital gain | 357,831,100 |
|
|
Cost for federal income tax purposes | $ 10,025,469,118 |
The tax character of distributions paid was as follows:
| July 31, 2008 | July 31, 2007 |
Ordinary Income | $ 363,335,570 | $ 311,176,501 |
Long-term Capital Gains | 953,979,930 | 357,140,999 |
Total | $ 1,317,315,500 | $ 668,317,500 |
New Accounting Pronouncements. In September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and results in expanded disclosures about fair value measurements.
In addition, in March 2008, Statement of Financial Accounting Standards No. 161, Disclosures about Derivative Instruments and Hedging Activities (SFAS 161), was
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
New Accounting Pronouncements - continued
issued and is effective for fiscal years beginning after November 15, 2008. SFAS 161 requires enhanced disclosures to provide information about the reasons the Fund invests in derivative instruments, the accounting treatment and the effect derivatives have on financial performance. Management is currently evaluating the impact the adoption of SFAS 161 will have on the Fund's financial statement disclosures.
4. Operating Policies.
Repurchase Agreements. FMR has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits the Fund and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts which are then invested in repurchase agreements. The Fund may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. The Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
Futures Contracts. The Fund may use futures contracts to manage its exposure to the stock market. Buying futures tends to increase a fund's exposure to the underlying instrument, while selling futures tends to decrease a fund's exposure to the underlying instrument or hedge other fund investments. Upon entering into a futures contract, a fund is required to deposit with a clearing broker, no later than the following business day, an amount ("initial margin") equal to a certain percentage of the face value of the contract. The initial margin may be in the form of cash or securities and is transferred to a segregated account on settlement date. Subsequent payments ("variation margin") are made or received by a fund depending on the daily fluctuations in the value of the futures contract and are accounted for as unrealized gains or losses. Realized gains (losses) are recorded upon the expiration or closing of the futures contract. Losses may arise from changes in the value of the underlying instruments or if the counterparties do not perform under the contract's terms. Futures contracts are valued at the settlement price established each day by the board of trade or exchange on which they are traded.
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $6,643,499,943 and $11,211,288,748, respectively.
Annual Report
6. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. In addition, the management fee is subject to a performance adjustment (up to a maximum of ±.20% of the Fund's average net assets over a 36 month performance period). The upward or downward adjustment to the management fee is based on the relative investment performance of the retail class of the Fund, Dividend Growth, as compared to an appropriate benchmark index. For the period, the total annual management fee rate, including the performance adjustment, was .39% of the Fund's average net assets.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to account size and type of account of the shareholders of Dividend Growth and asset-based fees of .05% of average net assets for Class K. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. Prior to January 1, 2008, Fidelity Service Company, Inc. (FSC), also an affiliate of FMR, was the transfer agent for Dividend Growth. For the period, the transfer agent fees for Dividend Growth were equivalent to an annual rate of .22% of average net assets.
For the period, the total transfer agent fees paid by each class were as follows:
| Amount |
Dividend Growth | $ 29,219,085 |
Class K | $ 12 |
Accounting and Security Lending Fees. FSC, an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $90,961 for the period.
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $4.2 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to
Annual Report
Notes to Financial Statements - continued
7. Committed Line of Credit - continued
pay commitment fees on its pro rata portion of the line of credit, which amounted to $33,462 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
8. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Net income from lending portfolio securities during the period amounted to $288,035.
9. Expense Reductions.
FMR voluntarily agreed to reimburse a portion of Dividend Growth's operating expenses. During the period, this reimbursement reduced the class' expenses by $12,755.
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 $3,233 for the period.
In addition, through arrangements with the Fund's custodian and each class' transfer agent, credits realized as a result of uninvested cash balances were used to reduce the Fund's expenses. During the period, these credits reduced the Fund's custody expenses by $11,125. During the period, credits reduced each class' transfer agent expense as noted in the table below.
| Transfer Agent |
Dividend Growth | $ 508,775 |
Annual Report
10. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
In December 2006, the Independent Trustees, with the assistance of independent counsel, completed an investigation regarding gifts, gratuities and business entertainment provided by certain brokers to certain individuals who were employed on FMR's domestic equity trading desk during the period 2002 to 2004. The Independent Trustees and FMR agreed that, despite the absence of proof that the Fidelity mutual funds experienced diminished execution quality as a result of the improper receipt of gifts and business entertainment, the conduct at issue was serious and was worthy of redress. Accordingly, the Independent Trustees requested, and FMR agreed to make, a payment of $42 million plus accrued interest, which equaled approximately $7.3 million, to certain Fidelity mutual funds.
In March 2008, the Trustees approved a method for allocating this payment among the funds and, in total, FMR paid the fund $1,579,880, which is recorded in the accompanying Statement of Operations.
In a related administrative order dated March 5, 2008, the U.S. Securities and Exchange Commission ("SEC") announced a settlement with FMR and FMR Co., Inc. (an affiliate of FMR) involving the SEC's regulatory rules for investment advisers and the improper receipt of gifts, gratuities and business entertainment. Without admitting or denying the SEC's findings, FMR agreed to pay an $8 million civil penalty to the United States Treasury.
11. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended July 31, | 2008 | 2007 |
From net investment income |
|
|
Dividend Growth | $ 220,834,689 | $ 237,312,655 |
From net realized gain |
|
|
Dividend Growth | $ 1,096,480,687 | $ 431,004,745 |
Annual Report
Notes to Financial Statements - continued
12. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
Years ended July 31, | 2008 A | 2007 | 2008 A | 2007 |
Dividend Growth |
|
|
|
|
Shares sold | 49,078,011 | 88,615,138 | $ 1,434,898,815 | $ 2,819,194,121 |
Reinvestment of distributions . | 41,882,633 | 21,336,033 | 1,277,083,594 | 650,321,523 |
Shares redeemed | (213,761,463) | (139,296,250) | (6,144,310,730) | (4,470,484,054) |
Net increase (decrease) | (122,800,819) | (29,345,079) | $ (3,432,328,321) | $ (1,000,968,410) |
Class K |
|
|
|
|
Shares sold | 3,608 | - | $ 100,000 | $ - |
Net increase (decrease) | 3,608 | - | $ 100,000 | $ - |
A Share transactions for Class K are for the period May 9, 2008 (commencement of sale of shares) to July 31, 2008.
Annual Report
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Securities Fund and the Shareholders of Fidelity Dividend Growth 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 Dividend Growth Fund (a fund of Fidelity Securities Fund) at July 31, 2008, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and 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 Dividend Growth 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 July 31, 2008 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
September 22, 2008
Annual Report
Trustees and Officers
The Trustees, Member of the Advisory Board, and executive officers of the trust and fund, as applicable, are listed below. The Board of Trustees governs the fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee the fund's activities, review contractual arrangements with companies that provide services to the fund, and review the fund's performance. Except for Edward C. Johnson 3d and James C. Curvey, each of the Trustees oversees 218 funds advised by FMR or an affiliate. Messrs. Johnson and Curvey oversee 377 funds advised by FMR or an affiliate.
The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust. Each Trustee who is not an interested person (as defined in the 1940 Act) (Independent Trustee), shall retire not later than the last day of the calendar year in which his or her 72nd birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board Member hold office without limit in time, except that any officer and Advisory Board Member may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years.
The fund's Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-800-544-8544.
Interested Trustees*:
Correspondence intended for each Trustee who is an interested person may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Edward C. Johnson 3d (78) | |
| Year of Election or Appointment: 1984 Mr. Johnson is Chairman of the Board of Trustees. Mr. Johnson serves as Chief Executive Officer, Chairman, and a Director of FMR LLC; Chairman and a Director of FMR; Chairman and a Director of Fidelity Research & Analysis Company (FRAC); Chairman and a Director of Fidelity Investments Money Management, Inc.; and Chairman and a Director of FMR Co., Inc. In addition, Mr. Johnson serves as Chairman and Director of FIL Limited. Previously, Mr. Johnson served as President of FMR LLC (2006-2007). |
James C. Curvey (73) | |
| Year of Election or Appointment: 2007 Mr. Curvey also serves as Trustee (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2006- |
* Trustees have been determined to be "Interested Trustees" by virtue of, among other things, their affiliation with the trust or various entities under common control with FMR. FMR Corp. merged with and into FMR LLC on October 1, 2007. Any references to FMR LLC for prior periods are deemed to be references to the prior entity.
Independent Trustees:
Correspondence intended for each Independent Trustee (that is, the Trustees other than the Interested Trustees) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.
Name, Age; Principal Occupation | |
Dennis J. Dirks (60) | |
| Year of Election or Appointment: 2005 Prior to his retirement in May 2003, Mr. Dirks was Chief Operating Officer and a member of the Board of The Depository Trust & Clearing Corporation (DTCC) (1999-2003). He also served as President, Chief Operating Officer, and Board member of The Depository Trust Company (DTC) (1999-2003) and President and Board member of the National Securities Clearing Corporation (NSCC) (1999-2003). In addition, Mr. Dirks served as a Trustee and a member of the Finance Committee of Manhattan College (2005-2008), and as Chief Executive Officer and Board member of the Government Securities Clearing Corporation (2001-2003) and Chief Executive Officer and Board member of the Mortgage-Backed Securities Clearing Corporation (2001-2003). Mr. Dirks also serves as a Trustee and a member of the Finance Committee of AHRC of Nassau County (2006-present). |
Alan J. Lacy (54) | |
| Year of Election or Appointment: 2008 Mr. Lacy serves as Senior Adviser (2007-present) of Oak Hill Capital Partners, L.P. (a private equity firm). Mr. Lacy also served as Chief Executive Officer (2000-2005) and Vice Chairman (2005-2006) of Sears Holdings Corporation and Sears, Roebuck and Co. (retail). In addition, Mr. Lacy serves as a member of the Board of Directors of The Western Union Company (global money transfer, 2006-present) and Bristol-Myers Squibb (global pharmaceuticals, 2007-present). Mr. Lacy is a Trustee of the National Parks Conservation Association and The Field Museum of Natural History. |
Ned C. Lautenbach (64) | |
| Year of Election or Appointment: 2000 Mr. Lautenbach is Chairman of the Independent Trustees (2006-present). Mr. Lautenbach is an Advisory Partner of Clayton, Dubilier & Rice, Inc. (private equity investment firm). Previously, Mr. Lautenbach was with the International Business Machines Corporation (IBM) from 1968 until his retirement in 1998. Mr. Lautenbach serves as a Director of Eaton Corporation (diversified industrial) as well as the Philharmonic Center for the Arts in Naples, Florida. He also is a member of the Board of Trustees of Fairfield University (2005-present), as well as a member of the Council on Foreign Relations. Previously, Mr. Lautenbach served as a Director of Sony Corporation (2006-2007). |
Joseph Mauriello (63) | |
| 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 firm, 1965-2005). Mr. Mauriello currently serves as a member of the Board of Directors of XL Capital Ltd. (global insurance and re-insurance company, 2006-present) and of Arcadia Resources Inc. (health care services and products, 2007-present). He also served as a Director of the Hamilton Funds of the Bank of New York (2006-2007). |
Cornelia M. Small (64) | |
| Year of Election or Appointment: 2005 Ms. Small is a member of the Investment Committee, and Chair (2008-present) and a member of the Board of Trustees of Smith College. Ms. Small also serves on the Investment Committee of the Berkshire Taconic Community Foundation (2008-present). Previously, Ms. Small served as Chairperson of the Investment Committee (2002-2008) of Smith College and as Co-Chair (2000-2003) of the Annual Fund for the Fletcher School of Law and Diplomacy. In addition, she served as Chief Investment Officer, Director of Global Equity Investments, and a member of the Board of Directors of Scudder, Stevens & Clark and Scudder Kemper Investments. |
William S. Stavropoulos (69) | |
| Year of Election or Appointment: 2002 Mr. Stavropoulos is Chairman Emeritus of the Board of Directors of The Dow Chemical Company, where he previously served in numerous senior management positions, including President (1993-2000; 2002-2003), CEO (1995-2000; 2002-2004), Chairman of the Executive Committee (2000-2006), and as a member of the Board of Directors (1990-2006). Currently, he is a Director of Teradata Corporation (data warehousing and technology solutions, 2008-present), Chemical Financial Corporation, Maersk Inc. (industrial conglomerate), Tyco International, Inc. (multinational manufacturing and services, 2007-present), and a member of the Advisory Board for Metalmark Capital (private equity investment firm, 2005-present). He is a special advisor to Clayton, Dubilier & Rice, Inc. (private equity investment). In addition, Mr. Stavropoulos is a member of the University of Notre Dame Advisory Council for the College of Science. |
David M. Thomas (59) | |
| Year of Election or Appointment: 2008 Previously, Mr. Thomas served as Executive Chairman (2005-2006) and Chairman and Chief Executive Officer (2000-2005) of IMS Health, Inc. (pharmaceutical and healthcare information solutions). In addition, Mr. Thomas serves as a member of the Board of Directors of Fortune Brands, Inc. (consumer products holding company), and Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (57) | |
| Year of Election or Appointment: 2008 Mr. Wiley also serves as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-present). He serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005- |
Advisory Board Member and Executive Officers**:
Correspondence intended for each executive officer and Mr. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Peter S. Lynch (64) | |
| Year of Election or Appointment: 2003 Member of the Advisory Board of Fidelity Securities Fund. Mr. Lynch is Vice Chairman and a Director of FMR, and Vice Chairman (2001- |
Kenneth B. Robins (38) | |
| Year of Election or Appointment: 2008 President and Treasurer of the fund. Mr. Robins also serves as President and Treasurer of Fidelity's Equity and High Income Funds (2008-present) and is an employee of FMR (2004-present). Before joining Fidelity Investments, Mr. Robins worked at KPMG LLP, where he was a partner in KPMG's department of professional practice (2002-2004). |
Walter C. Donovan (46) | |
| Year of Election or Appointment: 2007 Vice President of the fund. Mr. Donovan also serves as Vice President of Fidelity's Equity Funds, President of FMR and FMR Co., Inc., and Executive Vice President of Fidelity Investments Money Management, Inc. (2007-present). Previously, Mr. Donovan served as Executive Vice President of FMR and FMR Co., Inc. (2005-2007) and Senior Vice President of FMR (2003-2005) and FMR Co., Inc. (2004-2005). |
Bruce T. Herring (42) | |
| Year of Election or Appointment: 2006 Vice President of the fund. Mr. Herring also serves as Vice President of certain Equity Funds (2006-present) and Group Chief Investments Officer of FMR. Previously, Mr. Herring served as a portfolio manager for Fidelity U.S. Equity Funds. |
Scott C. Goebel (40) | |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of the fund. Mr. Goebel also serves as Secretary and CLO of other Fidelity funds (2008-present); General Counsel, Secretary, and Senior Vice President of FMR (2008-present); and Deputy General Counsel of FMR LLC. Previously, Mr. Goebel served as Assistant Secretary of the Funds (2007-2008) and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007). |
John B. McGinty, Jr. (45) | |
| Year of Election or Appointment: 2008 Assistant Secretary of the fund. Mr. McGinty also serves as Assistant Secretary of Fidelity's other Equity and High Income Funds (2008- |
Holly C. Laurent (54) | |
| Year of Election or Appointment: 2008 Anti-Money Laundering (AML) officer of the fund. Ms. Laurent also serves as AML officer of other Fidelity funds (2008-present) and is an employee of FMR LLC. Previously, Ms. Laurent was Senior Vice President and Head of Legal for Fidelity Business Services India Pvt. Ltd. (2006- |
Christine Reynolds (49) | |
| Year of Election or Appointment: 2008 Chief Financial Officer of the fund. Ms. Reynolds also serves as Chief Financial Officer of other Fidelity funds (2008-present). Ms. Reynolds became President of Fidelity Pricing and Cash Management Services (FPCMS) in August 2008. She served as Chief Operating Officer of FPCMS from 2007 through July 2008. Previously, Ms. Reynolds served as President, Treasurer, and Anti-Money Laundering officer of the Fidelity funds (2004-2007). Before joining Fidelity Investments, Ms. Reynolds worked at PricewaterhouseCoopers LLP (PwC) (1980-2002), where she was an audit partner with PwC's investment management practice. |
Kenneth A. Rathgeber (61) | |
| Year of Election or Appointment: 2004 Chief Compliance Officer of the fund. Mr. Rathgeber also serves as Chief Compliance Officer of Fidelity's Equity and High Income Funds (2004-present). He is Chief Compliance Officer of FMR (2005-present), FMR Co., Inc. (2005-present), Fidelity Management & Research (U.K.) Inc. (2005-present), Fidelity Research & Analysis Company (2005- |
Bryan A. Mehrmann (47) | |
| Year of Election or Appointment: 2005 Deputy Treasurer of the fund. Mr. Mehrmann also serves as Deputy Treasurer of other Fidelity funds (2005-present) and is an employee of FMR. Previously, Mr. Mehrmann served as Vice President of Fidelity Investments Institutional Services Group (FIIS)/Fidelity Investments Institutional Operations Corporation, Inc. (FIIOC) Client Services (1998-2004). |
Adrien E. Deberghes (40) | |
| Year of Election or Appointment: 2008 Deputy Treasurer of the fund. Mr. Deberghes also serves as Deputy Treasurer of Fidelity's Equity and High Income Funds (2008-present) and is an employee of FMR (2008-present). Previously, Mr. Deberghes served as Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005). |
Robert G. Byrnes (41) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of the fund. Mr. Byrnes also serves as Assistant Treasurer of other Fidelity funds (2005-present) and is an employee of FMR (2005-present). Previously, Mr. Byrnes served as Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (2003-2005). Before joining Fidelity Investments, Mr. Byrnes worked at Deutsche Asset Management where he served as Vice President of the Investment Operations Group (2000-2003). |
Peter L. Lydecker (54) | |
| Year of Election or Appointment: 2004 Assistant Treasurer of the fund. Mr. Lydecker also serves as Assistant Treasurer of other Fidelity funds (2004-present) and is an employee of FMR. |
Paul M. Murphy (61) | |
| Year of Election or Appointment: 2007 Assistant Treasurer of the fund. Mr. Murphy also serves as Assistant Treasurer of other Fidelity funds (2007-present) and is an employee of FMR (2007-present). Previously, Mr. Murphy served as Chief Financial Officer of the Fidelity Funds (2005-2006), Vice President and Associate General Counsel of FMR (2007), and Senior Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (1994-2007). |
Gary W. Ryan (49) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of the fund. Mr. Ryan also serves as Assistant Treasurer of other Fidelity funds (2005-present) and is an employee of FMR (2005-present). Previously, Mr. Ryan served as Vice President of Fund Reporting in Pricing and Cash Management Services (FPCMS) (1999-2005). |
** FMR Corp. merged with and into FMR LLC on October 1, 2007. Any references to FMR LLC for prior periods are deemed to be references to the prior entity.
Annual Report
Distributions (Unaudited)
The Board of Trustees of Fidelity Dividend Growth 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 the sales of portfolio securities, and dividends derived from net investment income:
Fund | Pay Date | Record Date | Dividends | Capital Gains |
Dividend Growth | 09/15/08 | 09/12/08 | $.208 | $1.00 |
Class K | 09/15/08 | 09/12/08 | $.219 | $1.00 |
The fund hereby designates as a capital gain dividend with respect to the taxable year ended July 31, 2008 $673,432,751, or, if subsequently determined to be different, the net capital gain of such year.
A percentage of the dividends distributed during the fiscal year qualify for the dividends-received deduction for corporate shareholders.
| Dividend Growth | Class K |
September 2007 | 78% | - |
December 2007 | 92% | - |
A percentage of the dividends distributed during the fiscal year 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.
| Dividend Growth | Class K |
September 2007 | 81% | - |
December 2007 | 94% | - |
The fund will notify shareholders in January 2009 of amounts for use in preparing 2008 income tax returns.
Annual Report
Proxy Voting Results
A special meeting of the fund's shareholders was held on May 14, 2008. The results of votes taken among shareholders on the proposals before them are reported below. Each vote reported represents one dollar of net asset value held on the record date for the meeting.
PROPOSAL 1 | ||
To elect a Board of Trustees.A | ||
| # of | % of |
James C. Curvey | ||
Affirmative | 30,242,569,269.49 | 94.915 |
Withheld | 1,620,182,942.38 | 5.085 |
TOTAL | 31,862,752,211.87 | 100.000 |
Dennis J. Dirks | ||
Affirmative | 30,356,248,026.80 | 95.272 |
Withheld | 1,506,504,185.07 | 4.728 |
TOTAL | 31,862,752,211.87 | 100.000 |
Edward C. Johnson 3d | ||
Affirmative | 30,163,300,902.81 | 94.666 |
Withheld | 1,699,451,309.06 | 5.334 |
TOTAL | 31,862,752,211.87 | 100.000 |
Alan J. Lacy | ||
Affirmative | 30,334,439,999.59 | 95.203 |
Withheld | 1,528,312,212.28 | 4.797 |
TOTAL | 31,862,752,211.87 | 100.000 |
Ned C. Lautenbach | ||
Affirmative | 30,317,381,535.59 | 95.150 |
Withheld | 1,545,370,676.28 | 4.850 |
TOTAL | 31,862,752,211.87 | 100.000 |
Joseph Mauriello | ||
Affirmative | 30,340,553,696.88 | 95.223 |
Withheld | 1,522,198,514.99 | 4.777 |
TOTAL | 31,862,752,211.87 | 100.000 |
Cornelia M. Small | ||
Affirmative | 30,337,552,071.15 | 95.213 |
Withheld | 1,525,200,140.72 | 4.787 |
TOTAL | 31,862,752,211.87 | 100.000 |
William S. Stavropoulos | ||
Affirmative | 30,240,356,579.51 | 94.908 |
Withheld | 1,622,395,632.36 | 5.092 |
TOTAL | 31,862,752,211.87 | 100.000 |
David M. Thomas | ||
Affirmative | 30,352,029,125.67 | 95.259 |
Withheld | 1,510,723,086.20 | 4.741 |
TOTAL | 31,862,752,211.87 | 100.000 |
Michael E. Wiley | ||
Affirmative | 30,333,540,290.12 | 95.201 |
Withheld | 1,529,211,921.75 | 4.799 |
TOTAL | 31,862,752,211.87 | 100.000 |
PROPOSAL 2 | ||
To amend the Declaration of Trust to reduce the required quorum for future shareholder meetings.A | ||
Affirmative | 23,747,670,372.95 | 74.531 |
Against | 5,357,217,831.03 | 16.814 |
Abstain | 1,587,233,084.08 | 4.981 |
Broker | 1,170,630,923.81 | 3.674 |
TOTAL | 31,862,752,211.87 | 100.000 |
PROPOSAL 3 | ||
A shareholder proposal concerning "oversight procedures to screen out investments in companies that, in the judgement of the Board, substantially contribute to genocide, patterns of extraordinary and egregious violations of human rights, or crimes against humanity." The fund did not achieve quorum with respect to this proposal, and therefore no action was taken at the meeting and subsequent adjournments. Because sufficient votes in favor of the proposal were not received, on June 18, 2008, the proxies in their discretion determined not to adjourn the meeting further on this item. | ||
A Denotes trust-wide proposal and voting results. |
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees
Fidelity Dividend Growth Fund
Each year, typically in July, the Board of Trustees, including the Independent Trustees (together, the Board), votes on the renewal of the management contract and sub-advisory agreements (together, the Advisory Contracts) for the fund. The Board, assisted by the advice of fund counsel and Independent Trustees' counsel, requests and considers a broad range of information throughout the year.
The Board meets regularly and, acting directly and through its separate committees, requests and receives information concerning, and considers at each of its meetings factors that are relevant to, its annual consideration of the renewal of the fund's Advisory Contracts, including the services and support provided to the fund and its shareholders. At the time of the renewal, the Board had 12 standing committees, each composed of Independent Trustees with varying backgrounds, to which the Board has assigned specific subject matter responsibilities in order to enhance effective decision-making by the Board. Each committee has a written charter outlining the structure and purposes of the committee. The Board also meets as needed to consider matters specifically related to the Board's annual consideration of the renewal of Advisory Contracts.
At its July 2008 meeting, the Board of Trustees, including the Independent Trustees, unanimously determined to renew the fund's Advisory Contracts. In reaching its determination, the Board considered all factors it believed relevant, including (i) the nature, extent, and quality of the services to be provided to the fund and its shareholders (including the investment performance of the fund); (ii) the competitiveness of the fund's management fee and total expenses; (iii) the total costs of the services to be provided by and the profits to be realized by Fidelity from its relationship with the fund; (iv) the extent to which economies of scale would be realized as the fund grows; and (v) whether fee levels reflect these economies of scale, if any, for the benefit of fund shareholders. The Board also approved agreements with foreign sub-advisers Fidelity Management & Research (Japan) Inc. and Fidelity Management & Research (Hong Kong) Limited, as well as amendments to the fund's agreement with Fidelity Management & Research (U.K.) Inc.
In considering whether to renew the Advisory Contracts for the fund, the Board ultimately reached a determination, with the assistance of fund counsel and Independent Trustees' counsel and through the exercise of its business judgment, that the renewal of the Advisory Contracts and the compensation to be received by Fidelity under the management contract is consistent with Fidelity's fiduciary duty under applicable law. The Board's decision to renew the Advisory Contracts was not based on any single factor noted above, but rather was based on a comprehensive consideration of all the information provided to the Board at its meetings throughout the year. The Board, in reaching its determination to renew the Advisory Contracts, is aware that shareholders in the fund have a broad range of investment choices available to them, including a wide choice among mutual funds offered by competitors to Fidelity, and that the fund's shareholders, with the opportunity to review and weigh the disclosure provided by the fund in its prospectus and other public disclosures, have chosen to invest in this fund, managed by Fidelity.
Annual Report
Nature, Extent, and Quality of Services Provided. The Board considered staffing within the investment adviser, FMR, and the sub-advisers (together, the Investment Advisers), including the backgrounds of the fund's investment personnel and the fund's investment objective and discipline. The Independent Trustees also had discussions with senior management of Fidelity's investment operations and investment groups. The Board considered the structure of the portfolio manager compensation program and whether this structure provides appropriate incentives.
Resources Dedicated to Investment Management and Support Services. The Board reviewed the size, education, and experience of the Investment Advisers' investment staff, their use of technology, and the Investment Advisers' approach to recruiting, training, and retaining portfolio managers and other research, advisory, and management personnel. The Board noted that Fidelity's analysts have access to a variety of technological tools that enable them to perform both fundamental and quantitative analysis and to specialize in various disciplines. The Board considered Fidelity's extensive global research capabilities that enable the Investment Advisers to aggregate data from various sources in an effort to produce positive investment results. The Board also considered that Fidelity's portfolio managers and analysts have access to daily portfolio attribution that allows for monitoring of a fund's portfolio, as well as an electronic communication system that provides immediate real-time access to research concerning issuers and credit enhancers.
Shareholder and Administrative Services. The Board considered (i) the nature, extent, quality, and cost of advisory, administrative, distribution, and shareholder services performed by the Investment Advisers and their affiliates under the Advisory Contracts and under separate agreements covering transfer agency, pricing and bookkeeping, and securities lending services for the fund; (ii) the nature and extent of the Investment Advisers' supervision of third party service providers, principally custodians and subcustodians; and (iii) the resources devoted to, and the record of compliance with, the fund's compliance policies and procedures. The Board also reviewed the allocation of fund brokerage, including allocations to brokers affiliated with the Investment Advisers, the use of brokerage commissions to pay fund expenses, and the use of "soft" commission dollars to pay for research services. The Board further considered that Fidelity voluntarily pays for market data out of its own resources.
The Board noted that the growth of fund assets across the complex allows Fidelity to reinvest in the development of services designed to enhance the value or convenience of the Fidelity funds as investment vehicles. These services include 24-hour access to account information and market information through phone representatives and over the Internet, and investor education materials and asset allocation tools.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
Investment in a Large Fund Family. The Board considered the benefits to shareholders of investing in a Fidelity fund, including the benefits of investing in a fund that is part of a large family of funds offering a variety of investment disciplines and providing for a large variety of mutual fund investor services. For example, fund shareholders are offered the privilege of exchanging shares of the fund for shares of other Fidelity funds, as set forth in the fund's prospectus, without paying a sales charge. The Board noted that Fidelity has taken a number of actions over the previous year that benefited particular funds, including (i) dedicating additional resources to investment research and to restructure the investment research teams; (ii) contractually agreeing to reduce the management fees on Fidelity's Institutional Money Market Funds and launching Class IV and Institutional Class of certain of these funds; (iii) reducing the transfer agent fees for the Fidelity Select Portfolios and Investor Class of the VIP funds; and (iv) launching Class K of 29 equity funds as a lower-fee class available to certain employer-sponsored retirement plans.
Investment Performance. The Board considered whether the fund has operated within its investment objective, as well as its record of compliance with its investment restrictions. It also reviewed the fund's absolute investment performance, as well as the fund's relative investment performance measured against (i) a broad-based securities market index, and (ii) a peer group of mutual funds deemed appropriate by the Board over multiple periods. The following charts considered by the Board show, over the one-, three-, and five-year periods ended December 31, 2007, the fund's cumulative total returns, the cumulative total returns of a broad-based securities market index ("benchmark"), and a range of cumulative total returns of a peer group of mutual funds identified by Morningstar, Inc. as having an investment style similar to that of the fund based on underlying portfolio holdings. (The fund did not offer Class K as of December 31, 2007.) The box within each chart shows the 25th percentile return (bottom of box) and the 75th percentile return (top of box) of the peer group. Returns shown above the box are in the first quartile and returns shown below the box are in the fourth quartile. The percentage beaten number noted below each chart corresponds to the percentile box and represents the percentage of funds in the peer group whose performance was equal to or lower than that of the fund.
Annual Report
Fidelity Dividend Growth Fund
The Board reviewed the fund's relative investment performance against its peer group and stated that the performance of the fund was in the fourth quartile for all the periods shown. The Board also stated that the investment performance of the fund was lower than its benchmark for all the periods shown. The Board discussed with FMR actions that may be taken by FMR to improve the fund's disappointing performance relative to its peer group and benchmark. The Board will continue to closely monitor the performance of the fund in the coming year and discuss with FMR other appropriate actions to address the performance of the fund.
The Board also considered that the fund's management fee is subject to upward or downward adjustment depending upon whether, and to what extent, the fund's investment performance for the performance period exceeds, or is exceeded by, the record (over the same period) of a Board-approved performance adjustment index. The Board realizes that the performance adjustment provides FMR with a strong economic incentive to seek to achieve superior performance for the fund's shareholders and helps to more closely align the interests of FMR and the fund's shareholders.
The Board considered that FMR has taken steps to refocus and strengthen equity research, equity portfolio management, and compliance.
Based on its review, and giving particular weight to the nature and quality of the resources dedicated by the Investment Advisers to maintain and improve relative performance, the Board concluded that the nature, extent, and quality of the services provided to the fund will benefit the fund's shareholders, particularly in light of the Board's view that the fund's shareholders benefit from investing in a fund that is part of a large family of funds offering a variety of investment disciplines and services.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
Competitiveness of Management Fee and Total Fund Expenses. The Board considered the fund's management fee and total expenses compared to "mapped groups" of competitive funds and classes. Fidelity creates "mapped groups" by combining similar Lipper investment objective categories that have comparable management fee characteristics. Combining Lipper investment objective categories aids the Board's management fee and total expense comparisons by broadening the competitive group used for comparison and by reducing the number of universes to which various Fidelity funds are compared. The Board also considered supplemental information about how the fund's management fee and total expenses ranked relative to groups based on Lipper classifications, which take into account a fund's market capitalization and style.
The Board considered two proprietary management fee comparisons for the 12-month periods shown in the chart below. The group of Lipper funds used by the Board for management fee comparisons is referred to below as the "Total Mapped Group." The Total Mapped Group comparison focuses on a fund's standing relative to the total universe of comparable funds available to investors, in terms of gross management fees before expense reimbursements or caps, and without giving effect to the fund's performance adjustment. "TMG %" represents the percentage of funds in the Total Mapped Group that had management fees that were lower than the fund's. For example, a TMG % of 9% means that 91% of the funds in the Total Mapped Group had higher management fees than the fund. The "Asset-Size Peer Group" (ASPG) comparison focuses on a fund's standing relative to non-Fidelity funds similar in size to the fund within the Total Mapped Group. The ASPG represents at least 15% of the funds in the Total Mapped Group with comparable asset size and management fee characteristics, subject to a minimum of 50 funds (or all funds in the Total Mapped Group if fewer than 50). Additional information, such as the ASPG quartile in which the fund's management fee ranked and the impact of the fund's performance adjustment, is also included in the chart and considered by the Board.
Annual Report
Fidelity Dividend Growth 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 2007. 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.
In connection with the renewal of the fund's management contract, the Board also approved non-material amendments to the fund's management contract to clarify certain provisions regarding the calculation of the fund's performance adjustment.
Based on its review, the Board concluded that the fund's management fee was fair and reasonable in light of the services that the fund receives and the other factors considered.
In its review of the fund's total expenses, the Board considered the fund's management fee as well as other fund expenses, such as transfer agent fees, pricing and bookkeeping fees, and custodial, legal, and audit fees. The Board also noted the effects of any waivers and reimbursements on fees and expenses, as well as the impact of the fund's performance adjustment. As part of its review, the Board also considered current and historical total expenses of the fund compared to competitive fund median expenses. The fund is compared to those funds and classes in the Total Mapped Group (used by the Board for management fee comparisons) that have a similar sales load structure.
The Board noted that the fund's total expenses ranked below its competitive median for 2007.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
In its review of total expenses, the Board also considered Fidelity fee structures and other information on clients that FMR and its affiliates service in other competitive markets, such as other mutual funds advised or subadvised by FMR or its affiliates, pension plan clients, and other institutional clients.
Based on its review, the Board concluded that the fund's total expenses were reasonable in light of the services that the fund and its shareholders receive and the other factors considered.
Costs of the Services and Profitability. The Board considered the revenues earned and the expenses incurred by Fidelity in conducting the business of developing, marketing, distributing, managing, administering and servicing the fund and its shareholders. The Board also considered the level of Fidelity's profits in respect of all the Fidelity funds.
On an annual basis, FMR presents to the Board Fidelity's profitability for the fund. Fidelity calculates the profitability for each fund, as well as aggregate profitability for groups of Fidelity funds and all Fidelity funds, using a series of detailed revenue and cost allocation methodologies which originate with the audited books and records of Fidelity. The Audit Committee of the Board reviews any significant changes from the prior year's methodologies.
PricewaterhouseCoopers LLP (PwC), independent registered public accounting firm and auditor to Fidelity and certain Fidelity funds, has been engaged annually by the Board as part of the Board's assessment of the results of Fidelity's profitability analysis. PwC's engagement includes the review and assessment of Fidelity's methodologies used in determining the revenues and expenses attributable to Fidelity's mutual fund business, and completion of agreed-upon procedures surrounding the mathematical accuracy of fund profitability and its conformity to allocation methodologies. After considering PwC's reports issued under the engagement and information provided by Fidelity, the Board believes that while other allocation methods may also be reasonable, Fidelity's profitability methodologies are reasonable in all material respects.
The Board has also reviewed Fidelity's non-fund businesses and any fall-out benefits related to the mutual fund business as well as cases where Fidelity's affiliates may benefit from or be related to the fund's business.
The Board considered the costs of the services provided by and the profits realized by Fidelity in connection with the operation of the fund and determined that the amount of profit is a fair entrepreneurial profit for the management of the fund.
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.
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 determines the group fee rates based on a tiered asset "breakpoint" schedule. The Board considered that the group fee is designed to deliver the benefits of economies of scale to fund shareholders when total fund assets increase, even if assets of any particular fund are unchanged or have declined, because some portion of Fidelity's costs are attributable to services provided to all Fidelity funds, and all funds benefit if those costs can be allocated among more assets. The Board concluded that, given the group fee structure, fund shareholders will achieve a certain level of economies of scale as assets under FMR's management increase at the fund complex level, regardless of whether Fidelity achieves any such economies of scale.
The Board further concluded that any potential economies of scale are being shared between fund shareholders and Fidelity in an appropriate manner.
Additional Information Requested by the Board. In order to develop fully the factual basis for consideration of the Fidelity funds' Advisory Contracts, the Board requested and received additional information on certain topics, including (i) fund performance trends and actions to be taken by FMR to improve certain funds' overall performance; (ii) portfolio manager changes that have occurred during the past year; (iii) Fidelity's fund profitability methodology, the profitability of certain fund service providers, and profitability trends for certain funds; (iv) Fidelity's compensation structure for portfolio managers and key personnel, including its effects on fund profitability and the extent to which portfolio manager compensation is linked to fund performance; (v) Fidelity's fee structures and rationale for recommending different fees among categories of funds; and (vi) Fidelity's rationale for recommending which funds should have a performance adjustment component as part of their management fees.
Based on its evaluation of all of the conclusions noted above, and after considering all material factors, the Board ultimately concluded that the advisory fee structures are fair and reasonable, and that the fund's Advisory Contracts should be renewed.
Annual Report
Managing Your Investments
Fidelity offers several ways to conveniently manage your personal investments via your telephone or PC. You can access your account information, conduct trades and research your investments 24 hours a day.
By Phone
Fidelity Automated Service Telephone provides a single toll-free number to access account balances, positions, quotes and trading. It's easy to navigate the service, and on your first call, the system will help you create a personal identification number (PIN) for security.
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By PC
Fidelity's web site on the Internet provides a wide range of information, including daily financial news, fund performance, interactive planning tools and news about Fidelity products and services.
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Fidelity's Web Site
www.fidelity.com
* When you call the quotes line, please remember that a fund's yield and return will vary and, except for money market funds, share price will also vary. This means that you may have a gain or loss when you sell your shares. There is no assurance that money market funds will be able to maintain a stable $1 share price; an investment in a money market fund is not insured or guaranteed by the U.S. government. Total returns are historical and include changes in share price, reinvestment of dividends and capital gains, and the effects of any sales charges.
Annual Report
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Annual Report
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Annual Report
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Annual Report
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DGF-UANN-0908 1.789245.105
Fidelity®
Growth & Income
Portfolio -
Growth & Income
Class K
Annual Report
July 31, 2008
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message | Ned Johnson's message to shareholders. | |
Performance | How the fund has done over time. | |
Management's Discussion | The manager's review of fund performance, strategy and outlook. | |
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 |
| |
Proxy Voting Results |
| |
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 (search for "proxy voting guidelines") or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-800-544-8544 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company.
Annual Report
This report and the financial statements contained herein are submitted for the general information of the shareholders of the fund. This report is not authorized for distribution to prospective investors in the fund unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com or http://www.fidelity.advisor.com, as applicable.
NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE
Neither the fund nor Fidelity Distributors Corporation is a bank.
Annual Report
Chairman's Message
(photo_of_Edward_C_Johnson_3d)
Dear Shareholder:
Domestic and international securities markets have struggled thus far in 2008. High-grade fixed-income investments produced modestly positive results, but many stock benchmarks suffered double-digit losses through the first half of this year. Financial markets are always unpredictable, but there are a number of time-tested principles that can put the historical odds in your favor.
One of the basic tenets is to invest for the long term. Over time, riding out the markets' inevitable ups and downs has proven much more effective than selling into panic or chasing the hottest trend. Even missing only a few of the markets' best days can significantly diminish investor returns. Patience also affords the benefits of compounding - of earning interest on additional income or reinvested dividends and capital gains. There are tax advantages and cost benefits to consider as well. The more you sell, the more taxes you pay, and the more you trade, the higher the costs. While staying the course doesn't eliminate risk, it can considerably lessen the effect of short-term declines.
You can further manage your investing risk through diversification. And today, more than ever, geographic diversification should be taken into account. Studies indicate that asset allocation is the single most important determinant of a portfolio's long-term success. The right mix of stocks, bonds and cash - aligned to your particular risk tolerance and investment objective - is very important. Age-appropriate rebalancing is also an essential aspect of asset allocation. For younger investors, an emphasis on equities - which historically have been the best-performing asset class over time - is encouraged. As investors near their specific goal, such as retirement or sending a child to college, consideration may be given to replacing volatile assets (e.g. common stocks) with more-stable fixed investments (bonds or savings plans).
A third investment principle - investing regularly - can help lower the average cost of your purchases. Investing a certain amount of money each month or quarter helps ensure you won't pay for all your shares at market highs. This strategy - known as dollar cost averaging - also reduces unconstructive "emotion" from investing, helping shareholders avoid selling weak performers just prior to an upswing, or chasing a hot performer just before a correction.
We invite you to contact us via the Internet, through our Investor Centers or over the phone. It is our privilege to provide you the information you need to make the investments that are right for you.
Sincerely,
/s/Edward C. Johnson 3d
Edward C. Johnson 3d
Annual Report
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' 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 July 31, 2008 | Past 1 | Past 5 | Past 10 |
Growth & Income | -20.91% | 2.12% | 0.79% |
Class K A | -20.89% | 2.13% | 0.80% |
A The initial offering of Class K shares took place on May 9, 2008. Returns prior to May 9, 2008 are those of Growth & Income, the original class of the fund.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Growth & Income, a class of the fund, on July 31, 1998. The chart shows how the value of your investment would have changed, and also shows how the Standard & Poor's 500SM Index (S&P 500®) performed over the same period.
Annual Report
Management's Discussion of Fund Performance
Comments from Timothy Cohen, Portfolio Manager of Fidelity® Growth & Income Portfolio
Grim news about the U.S. economy forced most domestic equity benchmarks into negative territory for the 12 months ending July 31, 2008. Oil prices north of $140 per barrel, gasoline prices in excess of $4 per gallon and soaring food costs drove inflation and consumer prices higher. In response, consumer discretionary spending trended lower as Main Street tightened its purse strings. Wall Street, meanwhile, struggled under the weight of massive write-downs in the financials sector, an ongoing credit crisis and bleak housing data. In an effort to staunch the bleeding, the Federal Reserve Board cut interest rates on seven occasions during the past year. Nevertheless, investors fled the equity markets, and both the Dow Jones Industrial AverageSM and the Standard & Poor's 500SM Index fell to a threshold that many believe marks the official start of a "bear market." For the 12 months overall, the Dow slid 11.71%, the S&P 500® dropped 11.09% and the technology-heavy NASDAQ Composite® Index dipped 7.98%.
Growth & Income's Retail Class shares underperformed the benchmark, returning -20.91% for the year, versus the S&P 500's better results. (For specific performance results of the fund's new Class K shares, please refer to the performance section of this report.) The vast majority of the fund's underperformance came from the financials sector, where the fund maintained a large overweighting and caught the brunt of the subprime-mortgage-induced turmoil challenging the world's capital markets during the period. Unproductive stock picks in that toxic sector hurt as well, with the fund's seven-biggest detractors all falling within that group, including global insurance conglomerate American International Group, banking giant Wachovia, bond guarantor AMBAC Financial and investment banker Lehman Brothers. Offsetting some of the bad news were a few rewarding stock picks in the energy and health care sectors, among them natural gas producer Chesapeake Energy and genetics technology provider Illumina, an out-of-index holding.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, and (2) ongoing costs, including management fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The actual expense Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (February 1, 2008 to July 31, 2008) for Growth & Income and for the entire period (May 9, 2008 to July 31, 2008) for Class K. The hypothetical expense Example is based on an investment of $1,000 invested for the one half year period (February 1, 2008 to July 31, 2008).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Annual Report
Shareholder Expense Example - continued
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.
| Beginning | Ending | Expenses Paid |
Growth and Income |
|
|
|
Actual | $ 1,000.00 | $ 846.60 | $ 3.17 B |
HypotheticalA | $ 1,000.00 | $ 1,021.43 | $ 3.47 C |
Class K |
|
|
|
Actual | $ 1,000.00 | $ 867.80 | $ 1.18 B |
HypotheticalA | $ 1,000.00 | $ 1,022.13 | $ 2.77 C |
A 5% return per year before expenses
B Actual expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period) for Growth & Income and multiplied by 84/366 (to reflect the period May 9, 2008 to July 31, 2008) for Class K.
C Hypothetical expenses are equal to each Class' annualized expense ratio (shown in the table below) multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
| Annualized |
Growth and Income | .69% |
Class K | .55% |
Annual Report
Investment Changes (Unaudited)
Top Ten Stocks as of July 31, 2008 | ||
| % of fund's | % of fund's net assets |
Bank of America Corp. | 6.0 | 5.4 |
American International Group, Inc. | 5.4 | 6.4 |
Procter & Gamble Co. | 3.9 | 3.0 |
Wachovia Corp. | 3.5 | 4.4 |
Cisco Systems, Inc. | 3.0 | 0.0 |
Hewlett-Packard Co. | 2.6 | 1.8 |
Google, Inc. Class A (sub. vtg.) | 2.3 | 2.3 |
Staples, Inc. | 2.1 | 2.2 |
CVS Caremark Corp. | 2.0 | 1.2 |
General Electric Co. | 2.0 | 5.5 |
| 32.8 | |
Top Five Market Sectors as of July 31, 2008 | ||
| % of fund's | % of fund's net assets |
Financials | 29.7 | 33.3 |
Information Technology | 17.7 | 12.3 |
Health Care | 11.9 | 12.0 |
Industrials | 11.1 | 12.3 |
Consumer Discretionary | 10.6 | 11.6 |
Asset Allocation (% of fund's net assets) | |||||||
As of July 31, 2008* | As of January 31, 2008** | ||||||
Stocks 99.1% |
| Stocks 99.4% |
| ||||
Convertible |
| Convertible |
| ||||
Short-Term |
| Short-Term |
| ||||
* Foreign investments | 23.0% |
| ** Foreign investments | 18.8% |
|
Annual Report
Investments July 31, 2008
Showing Percentage of Net Assets
Common Stocks - 99.1% | |||
Shares | Value (000s) | ||
CONSUMER DISCRETIONARY - 10.6% | |||
Automobiles - 0.3% | |||
Fiat SpA | 2,200,000 | $ 37,850 | |
Distributors - 0.6% | |||
Li & Fung Ltd. | 22,000,000 | 75,151 | |
Diversified Consumer Services - 0.6% | |||
Apollo Group, Inc. Class A (non-vtg.) (a) | 1,300,000 | 80,977 | |
Household Durables - 3.3% | |||
Centex Corp. | 3,000,000 | 44,040 | |
D.R. Horton, Inc. (d) | 7,000,000 | 77,840 | |
KB Home (d) | 3,800,000 | 66,842 | |
Ryland Group, Inc. (e) | 2,500,000 | 51,475 | |
Toll Brothers, Inc. (a)(d) | 4,700,000 | 94,423 | |
Whirlpool Corp. | 1,000,000 | 75,700 | |
| 410,320 | ||
Media - 3.3% | |||
Cablevision Systems Corp. - NY Group Class A (a)(d) | 1,500,000 | 36,420 | |
Central European Media Enterprises Ltd. Class A (a) | 700,000 | 58,275 | |
Comcast Corp. Class A | 9,400,000 | 193,828 | |
Focus Media Holding Ltd. ADR (a)(d) | 2,100,000 | 62,391 | |
Grupo Televisa SA de CV (CPO) sponsored ADR | 2,700,000 | 60,723 | |
| 411,637 | ||
Specialty Retail - 2.1% | |||
Staples, Inc. | 11,500,000 | 258,750 | |
Textiles, Apparel & Luxury Goods - 0.4% | |||
Coach, Inc. (a) | 1,000,000 | 25,510 | |
Ports Design Ltd. | 9,167,400 | 24,794 | |
| 50,304 | ||
TOTAL CONSUMER DISCRETIONARY | 1,324,989 | ||
CONSUMER STAPLES - 7.1% | |||
Food & Staples Retailing - 2.5% | |||
CVS Caremark Corp. | 7,000,000 | 255,500 | |
X5 Retail Group NV GDR (a)(f) | 2,000,000 | 60,000 | |
| 315,500 | ||
Food Products - 0.7% | |||
Nestle SA (Reg.) | 2,000,000 | 87,742 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
CONSUMER STAPLES - continued | |||
Household Products - 3.9% | |||
Procter & Gamble Co. | 7,500,000 | $ 491,100 | |
TOTAL CONSUMER STAPLES | 894,342 | ||
ENERGY - 8.9% | |||
Energy Equipment & Services - 4.3% | |||
BJ Services Co. | 2,800,000 | 82,320 | |
National Oilwell Varco, Inc. (a) | 1,000,000 | 78,630 | |
Schlumberger Ltd. (NY Shares) | 2,500,000 | 254,000 | |
Smith International, Inc. | 700,000 | 52,066 | |
Weatherford International Ltd. (a) | 2,100,000 | 79,233 | |
| 546,249 | ||
Oil, Gas & Consumable Fuels - 4.6% | |||
Canadian Natural Resources Ltd. | 300,000 | 23,444 | |
Chesapeake Energy Corp. | 2,200,000 | 110,330 | |
EOG Resources, Inc. | 1,150,000 | 115,610 | |
Occidental Petroleum Corp. | 2,000,000 | 157,660 | |
Plains Exploration & Production Co. (a) | 1,150,000 | 64,366 | |
Ultra Petroleum Corp. (a) | 1,000,000 | 71,380 | |
XTO Energy, Inc. | 700,000 | 33,061 | |
| 575,851 | ||
TOTAL ENERGY | 1,122,100 | ||
FINANCIALS - 29.3% | |||
Capital Markets - 3.6% | |||
AP Alternative Assets, L.P. Restricted Depositary Units (a)(f) | 4,454,200 | 48,952 | |
KKR Private Equity Investors, LP | 4,229,227 | 58,152 | |
KKR Private Equity Investors, LP Restricted Depositary Units (f) | 6,842,100 | 94,079 | |
Lehman Brothers Holdings, Inc. (d) | 4,500,000 | 78,030 | |
State Street Corp. | 2,400,000 | 171,936 | |
| 451,149 | ||
Commercial Banks - 4.2% | |||
Wachovia Corp. (d) | 25,000,000 | 431,750 | |
Wells Fargo & Co. | 3,000,000 | 90,810 | |
| 522,560 | ||
Common Stocks - continued | |||
Shares | Value (000s) | ||
FINANCIALS - continued | |||
Consumer Finance - 1.6% | |||
American Express Co. | 3,500,000 | $ 129,920 | |
Capital One Financial Corp. (d) | 1,700,000 | 71,162 | |
| 201,082 | ||
Diversified Financial Services - 8.0% | |||
Bank of America Corp. | 23,000,000 | 756,696 | |
CIT Group, Inc. | 3,316,400 | 28,123 | |
Citigroup, Inc. | 5,000,000 | 93,450 | |
JPMorgan Chase & Co. | 3,100,000 | 125,953 | |
| 1,004,222 | ||
Insurance - 10.7% | |||
ACE Ltd. | 2,800,000 | 141,960 | |
AMBAC Financial Group, Inc. (d)(e) | 21,000,000 | 52,920 | |
American International Group, Inc. (d) | 26,000,000 | 677,300 | |
Assured Guaranty Ltd. (e) | 6,000,000 | 68,760 | |
Everest Re Group Ltd. | 500,000 | 40,900 | |
Hartford Financial Services Group, Inc. | 2,400,000 | 152,136 | |
MBIA, Inc. (d) | 5,000,000 | 29,650 | |
RenaissanceRe Holdings Ltd. | 2,650,000 | 134,806 | |
XL Capital Ltd. | 1,562,500 | 27,953 | |
XL Capital Ltd. Class A | 937,500 | 16,772 | |
| 1,343,157 | ||
Real Estate Management & Development - 0.4% | |||
CB Richard Ellis Group, Inc. Class A (a)(d) | 4,070,922 | 57,196 | |
Thrifts & Mortgage Finance - 0.8% | |||
Fannie Mae | 6,000,000 | 69,000 | |
MGIC Investment Corp. (d) | 4,500,000 | 28,800 | |
Radian Group, Inc. (d) | 3,500,000 | 6,090 | |
| 103,890 | ||
TOTAL FINANCIALS | 3,683,256 | ||
HEALTH CARE - 11.9% | |||
Biotechnology - 5.7% | |||
Amgen, Inc. (a) | 3,400,000 | 212,942 | |
Celgene Corp. (a) | 1,250,000 | 94,363 | |
Cephalon, Inc. (a) | 1,000,000 | 73,160 | |
Genentech, Inc. (a) | 1,250,000 | 119,063 | |
MannKind Corp. (a)(d) | 3,500,000 | 12,705 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
HEALTH CARE - continued | |||
Biotechnology - continued | |||
Myriad Genetics, Inc. (a)(d) | 1,400,000 | $ 93,100 | |
Vertex Pharmaceuticals, Inc. (a) | 3,100,000 | 106,950 | |
| 712,283 | ||
Health Care Providers & Services - 2.5% | |||
CIGNA Corp. | 1,600,000 | 59,232 | |
Medco Health Solutions, Inc. (a) | 2,100,000 | 104,118 | |
UnitedHealth Group, Inc. | 2,900,000 | 81,432 | |
WellPoint, Inc. (a) | 1,300,000 | 68,185 | |
| 312,967 | ||
Life Sciences Tools & Services - 0.7% | |||
Illumina, Inc. (a)(d) | 950,000 | 88,578 | |
Pharmaceuticals - 3.0% | |||
Allergan, Inc. | 2,600,000 | 135,018 | |
Elan Corp. PLC sponsored ADR (a) | 3,500,000 | 70,175 | |
Roche Holding AG (participation certificate) | 600,000 | 110,873 | |
Teva Pharmaceutical Industries Ltd. sponsored ADR (d) | 1,300,000 | 58,292 | |
| 374,358 | ||
TOTAL HEALTH CARE | 1,488,186 | ||
INDUSTRIALS - 11.1% | |||
Aerospace & Defense - 1.6% | |||
Honeywell International, Inc. | 3,900,000 | 198,276 | |
Airlines - 0.1% | |||
UAL Corp. | 2,200,000 | 18,282 | |
Commercial Services & Supplies - 1.3% | |||
Robert Half International, Inc. | 6,500,000 | 164,385 | |
Electrical Equipment - 4.3% | |||
Evergreen Solar, Inc. (a)(d)(e) | 9,000,000 | 84,060 | |
Q-Cells AG (a)(d) | 1,200,000 | 116,258 | |
Renewable Energy Corp. AS (a) | 3,300,000 | 95,567 | |
SolarWorld AG | 2,400,000 | 111,862 | |
Sunpower Corp. Class A (a)(d) | 400,000 | 31,508 | |
Suntech Power Holdings Co. Ltd. sponsored ADR (a)(d) | 2,800,000 | 93,688 | |
| 532,943 | ||
Industrial Conglomerates - 2.0% | |||
General Electric Co. | 9,000,000 | 254,610 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
INDUSTRIALS - continued | |||
Machinery - 1.8% | |||
Eaton Corp. | 700,000 | $ 49,728 | |
Illinois Tool Works, Inc. | 3,700,000 | 173,345 | |
| 223,073 | ||
TOTAL INDUSTRIALS | 1,391,569 | ||
INFORMATION TECHNOLOGY - 17.7% | |||
Communications Equipment - 4.3% | |||
Cisco Systems, Inc. (a) | 17,000,000 | 373,830 | |
Corning, Inc. | 8,500,000 | 170,085 | |
| 543,915 | ||
Computers & Peripherals - 2.6% | |||
Hewlett-Packard Co. | 7,300,000 | 327,040 | |
Electronic Equipment & Instruments - 1.1% | |||
Hon Hai Precision Industry Co. Ltd. (Foxconn) | 20,000,000 | 96,652 | |
Motech Industries, Inc. | 7,000,000 | 39,803 | |
| 136,455 | ||
Internet Software & Services - 2.3% | |||
Google, Inc. Class A (sub. vtg.) (a) | 600,000 | 284,250 | |
IT Services - 3.6% | |||
Accenture Ltd. Class A | 1,500,000 | 62,640 | |
Cognizant Technology Solutions Corp. Class A (a) | 7,200,000 | 202,104 | |
Infosys Technologies Ltd. sponsored ADR | 1,400,000 | 55,146 | |
Satyam Computer Services Ltd. sponsored ADR | 2,700,000 | 57,618 | |
Visa, Inc. | 950,000 | 69,407 | |
| 446,915 | ||
Semiconductors & Semiconductor Equipment - 3.3% | |||
Applied Materials, Inc. | 5,000,000 | 86,600 | |
ARM Holdings PLC | 61,000,000 | 115,054 | |
ASML Holding NV (NY Shares) | 2,500,000 | 56,975 | |
MediaTek, Inc. | 4,040,000 | 41,895 | |
Taiwan Semiconductor Manufacturing Co. Ltd. | 65,327,716 | 118,021 | |
| 418,545 | ||
Software - 0.5% | |||
Autonomy Corp. PLC (a) | 3,000,000 | 63,208 | |
TOTAL INFORMATION TECHNOLOGY | 2,220,328 | ||
Common Stocks - continued | |||
Shares | Value (000s) | ||
MATERIALS - 0.9% | |||
Metals & Mining - 0.9% | |||
ArcelorMittal SA (NY Shares) Class A | 450,000 | $ 39,339 | |
Timminco Ltd. (a)(d) | 3,200,000 | 75,636 | |
| 114,975 | ||
UTILITIES - 1.6% | |||
Electric Utilities - 0.9% | |||
Entergy Corp. | 1,000,000 | 106,920 | |
Independent Power Producers & Energy Traders - 0.7% | |||
Constellation Energy Group, Inc. | 1,100,000 | 91,476 | |
TOTAL UTILITIES | 198,396 | ||
TOTAL COMMON STOCKS (Cost $14,393,039) | 12,438,141 | ||
Convertible Preferred Stocks - 0.4% | |||
|
|
|
|
FINANCIALS - 0.4% | |||
Capital Markets - 0.4% | |||
Lehman Brothers Holdings, Inc. Series P, 7.25% | 75,000 | 48,750 | |
Diversified Financial Services - 0.0% | |||
CIT Group, Inc. Series C, 8.75% | 133,100 | 6,245 | |
TOTAL CONVERTIBLE PREFERRED STOCKS (Cost $81,655) | 54,995 | ||
Money Market Funds - 7.5% | |||
|
|
|
|
Fidelity Securities Lending Cash Central Fund, 2.37% (b)(c) | 936,400,089 | 936,400 | |
TOTAL INVESTMENT PORTFOLIO - 107.0% (Cost $15,411,094) | 13,429,536 | ||
NET OTHER ASSETS - (7.0)% | (877,752) | ||
NET ASSETS - 100% | $ 12,551,784 |
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
(e) Affiliated company |
(f) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the end of the period, the value of these securities amounted to $203,031,000 or 1.6% of net assets. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 1,970 |
Fidelity Securities Lending Cash Central Fund | 7,184 |
Total | $ 9,154 |
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, |
AMBAC Financial Group, Inc. | $ - | $ 372,206 | $ 3,374 | $ 1,941 | $ 52,920 |
Assured Guaranty Ltd. | - | 121,200 | 5,014 | 261 | 68,760 |
Evergreen Solar, Inc. | 31,654 | 59,040 | - | - | 84,060 |
Illumina, Inc. | 132,153 | - | 134,477 | - | - |
MGIC Investment Corp. | 180,856 | 8,429 | 15,616 | 1,497 | - |
RenaissanceRe Holdings Ltd. | 208,806 | - | 59,390 | 2,722 | - |
Robert Half International, Inc. | 305,910 | 8,323 | 75,747 | 3,501 | - |
Ryland Group, Inc. | 106,400 | 13,164 | 36,918 | 1,488 | 51,475 |
Sirtris Pharmaceuticals, Inc. | 4,238 | 20,791 | 37,875 | - | - |
Standard Pacific Corp. | 59,240 | - | 13,303 | 160 | - |
Total | $ 1,029,257 | $ 603,153 | $ 381,714 | $ 11,570 | $ 257,215 |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 77.0% |
Bermuda | 3.2% |
United Kingdom | 3.0% |
Switzerland | 2.7% |
Taiwan | 2.3% |
Netherlands Antilles | 2.0% |
Germany | 1.8% |
Canada | 1.4% |
Netherlands | 1.0% |
Others (individually less than 1%) | 5.6% |
| 100.0% |
Income Tax Information |
The fund intends to elect to defer to its fiscal year ending July 31, 2009 approximately $69,150,000 of losses recognized during the period November 1, 2007 to July 31, 2008. |
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) | July 31, 2008 | |
Assets | ||
Investment in securities, at value (including securities loaned of $921,664) - See accompanying schedule: Unaffiliated issuers (cost $13,815,555) | $ 12,235,921 |
|
Fidelity Central Funds (cost $936,400) | 936,400 |
|
Other affiliated issuers (cost $659,139) | 257,215 |
|
Total Investments (cost $15,411,094) |
| $ 13,429,536 |
Cash | 1 | |
Foreign currency held at value (cost $1,215) | 1,209 | |
Receivable for investments sold | 198,163 | |
Receivable for fund shares sold | 5,063 | |
Dividends receivable | 14,665 | |
Distributions receivable from Fidelity Central Funds | 678 | |
Prepaid expenses | 26 | |
Other receivables | 923 | |
Total assets | 13,650,264 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 81,320 | |
Payable for fund shares redeemed | 58,558 | |
Accrued management fee | 4,733 | |
Notes payable to affiliates | 13,704 | |
Other affiliated payables | 2,632 | |
Other payables and accrued expenses | 1,133 | |
Collateral on securities loaned, at value | 936,400 | |
Total liabilities | 1,098,480 | |
|
|
|
Net Assets | $ 12,551,784 | |
Net Assets consist of: |
| |
Paid in capital | $ 14,586,897 | |
Undistributed net investment income | 17,315 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (70,798) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (1,981,630) | |
Net Assets | $ 12,551,784 |
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) | July 31, 2008 | |
Growth and Income: | $ 21.88 | |
|
|
|
Class K: | $ 21.88 |
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 July 31, 2008 | |
Investment Income |
|
|
Dividends (including $11,570 earned from other affiliated issuers) |
| $ 339,876 |
Interest |
| 376 |
Income from Fidelity Central Funds |
| 9,154 |
Total income |
| 349,406 |
|
|
|
Expenses | ||
Management fee | $ 81,290 | |
Transfer agent fees | 35,081 | |
Accounting and security lending fees | 1,742 | |
Custodian fees and expenses | 946 | |
Independent trustees' compensation | 80 | |
Depreciation in deferred trustee compensation account | (6) | |
Registration fees | 78 | |
Audit | 146 | |
Legal | 385 | |
Interest | 421 | |
Miscellaneous | 1,249 | |
Total expenses before reductions | 121,412 | |
Expense reductions | (1,309) | 120,103 |
Net investment income (loss) | 229,303 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 797,181 | |
Other affiliated issuers | (61,531) |
|
Foreign currency transactions | (788) | |
Total net realized gain (loss) |
| 734,862 |
Change in net unrealized appreciation (depreciation) on: Investment securities | (4,659,531) | |
Assets and liabilities in foreign currencies | (73) | |
Total change in net unrealized appreciation (depreciation) |
| (4,659,604) |
Net gain (loss) | (3,924,742) | |
Net increase (decrease) in net assets resulting from operations | $ (3,695,439) |
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) | $ 229,303 | $ 245,493 |
Net realized gain (loss) | 734,862 | 4,016,569 |
Change in net unrealized appreciation (depreciation) | (4,659,604) | (36,094) |
Net increase (decrease) in net assets resulting | (3,695,439) | 4,225,968 |
Distributions to shareholders from net investment income | (214,589) | (249,549) |
Distributions to shareholders from net realized gain | (2,632,786) | (5,102,919) |
Total distributions | (2,847,375) | (5,352,468) |
Share transactions - net increase (decrease) | (3,598,621) | (5,041,032) |
Total increase (decrease) in net assets | (10,141,435) | (6,167,532) |
|
|
|
Net Assets | ||
Beginning of period | 22,693,219 | 28,860,751 |
End of period (including undistributed net investment income of $17,315 and distributions in excess of net investment income of $1,828, respectively) | $ 12,551,784 | $ 22,693,219 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Growth and Income
Years ended July 31, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 31.92 | $ 34.16 | $ 38.42 | $ 35.46 | $ 32.84 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .35 | .27 | .34 | .60 E | .40 |
Net realized and unrealized gain (loss) | (6.25) | 3.84 | .18 | 3.31 | 2.63 |
Total from investment operations | (5.90) | 4.11 | .52 | 3.91 | 3.03 |
Distributions from net investment income | (.33) | (.27) | (.38) | (.61) | (.41) |
Distributions from net realized gain | (3.81) | (6.08) | (4.40) | (.34) | - |
Total distributions | (4.14) | (6.35) | (4.78) | (.95) | (.41) |
Net asset value, end of period | $ 21.88 | $ 31.92 | $ 34.16 | $ 38.42 | $ 35.46 |
Total Return A | (20.91)% | 14.28% | 1.22% | 11.15% | 9.24% |
Ratios to Average Net Assets C,F |
|
|
|
| |
Expenses before reductions | .68% | .68% | .69% | .69% | .70% |
Expenses net of fee waivers, if any | .68% | .68% | .69% | .69% | .70% |
Expenses net of all reductions | .67% | .67% | .65% | .68% | .69% |
Net investment income (loss) | 1.29% | .84% | .94% | 1.63% E | 1.13% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (in millions) | $ 12,552 | $ 22,693 | $ 28,861 | $ 31,789 | $ 29,776 |
Portfolio turnover rate D | 52% | 52% | 120% | 31% | 30% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Calculated based on average shares outstanding during the period.
C Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
D Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
E Investment income per share reflects a special dividend which amounted to $.13 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been 1.27%.
F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class K
Period ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 25.34 |
Income from Investment Operations |
|
Net investment income (loss) D | .09 |
Net realized and unrealized gain (loss) | (3.45) |
Total from investment operations | (3.36) |
Distributions from net investment income | (.10) |
Net asset value, end of period | $ 21.88 |
Total Return B,C | (13.22)% |
Ratios to Average Net Assets E,H |
|
Expenses before reductions | .55% A |
Expenses net of fee waivers, if any | .55% A |
Expenses net of all reductions | .55% A |
Net investment income (loss) | 1.73% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 87 |
Portfolio turnover rate F | 52% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
G For the period May 9, 2008 (commencement of sale of shares) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended July 31, 2008
1. Organization.
Fidelity Growth & Income Portfolio (the Fund) is a fund of Fidelity Securities Fund (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. On January 17, 2008, the Board of Trustees of the Fund approved the creation of an additional class of shares. The Fund commenced sale of shares of Class K and the existing class was designated Growth & Income on May 9, 2008. The Fund offers Growth & Income, 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. In order to disclose class level financial information dollar amounts presented in the notes are unrounded. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent fees incurred. Certain expense reductions also differ by class.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the SEC's web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. Wherever possible, the Fund uses independent pricing services approved by the Board of Trustees to value its investments.
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Investments in open-end mutual funds , including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date. The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
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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. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Deferred Trustee Compensation. Under a Deferred Compensation Plan (the Plan), independent Trustees must defer receipt of a portion of, and may elect to defer receipt of an additional 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 by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The implementation of FIN 48 did not result in any unrecognized tax benefits in the accompanying financial statements. Each of the Fund's federal tax
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. In addition, the Fund will claim a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. Certain adjustments have been made to the accounts relating to prior periods. Collectively, these adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, partnerships, deferred trustees compensation and losses deferred due to wash sales, and excise tax regulations.
The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows:
Unrealized appreciation | $ 1,590,500,597 |
Unrealized depreciation | (3,680,904,709) |
Net unrealized appreciation (depreciation) | (2,090,404,112) |
Undistributed ordinary income | 18,031,173 |
Undistributed long-term capital gain | 16,990,994 |
|
|
Cost for federal income tax purposes | $ 15,519,940,032 |
The tax character of distributions paid was as follows:
| July 31, 2008 | July 31, 2007 |
Ordinary Income | $ 576,239,769 | $ 371,432,998 |
Long-term Capital Gains | 2,271,135,045 | 4,981,034,126 |
Total | $ 2,847,374,814 | $ 5,352,467,124 |
New Accounting Pronouncement. In September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and results in expanded disclosures about fair value measurements.
Annual Report
4. Operating Policies.
Repurchase Agreements. FMR has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits the Fund and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts which are then invested in repurchase agreements. The Fund may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. The Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
Restricted Securities. The Fund may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities is included at the end of the Fund's Schedule of Investments.
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $9,313,899,839 and $15,391,353,178, respectively.
6. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .20% of the Fund's average net assets and a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .46% of the Fund's average net assets.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to account size and type of account of the shareholders of Growth & Income and asset-based fees of .05% of average net assets for Class K. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. Prior
Annual Report
Notes to Financial Statements - continued
6. Fees and Other Transactions with Affiliates - continued
Transfer Agent Fees - continued
to January 1, 2008, Fidelity Service Company, Inc. (FSC), also an affiliate of FMR, was the transfer agent for Growth & Income. For the period, the transfer agent fees for Growth & Income were equivalent to an annual rate of .20% of average net assets.
For the period, the total transfer agent fees paid by each class were as follows:
| Amount |
Growth and Income | $ 35,081,280 |
Class K | 12 |
Accounting and Security Lending Fees. FSC maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $111,419 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. Any open loans, including accrued interest, at period end are presented under the caption "Notes Payable to Affiliates" in the Fund's Statement of Assets and Liabilities. The Fund's activity in this program during the period for which loans were outstanding was as follows:
Borrower or Lender | Average Daily | Weighted Average Interest Rate | Interest |
Borrower | $ 24,776,136 | 4.38% | $ 355,333 |
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $4.2 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro rata portion of the line of credit, which amounted to $48,636 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
Annual Report
8. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Net income from lending portfolio securities during the period amounted to $7,183,755.
9. Bank Borrowings.
The Fund is permitted to have bank borrowings for temporary or emergency purposes to fund shareholder redemptions. The Fund has established borrowing arrangements with certain banks. The interest rate on the borrowings is the bank's base rate, as revised from time to time. The average daily loan balance during the period for which loans were outstanding amounted to $44,633,727. The weighted average interest rate was 4.84%. The interest expense amounted to $66,037 under the bank borrowing program. At period end, there were no bank borrowings outstanding.
10. Expense Reductions.
FMR voluntarily agreed to reimburse a portion of Growth & Income's operating expenses. During the period, this reimbursement reduced the class' expenses by $12,755.
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 $547,312 for the period. In addition, through arrangements with the Fund's custodian and each class' transfer agent, credits realized as a result of uninvested cash balances were used to reduce the Fund's expenses. During the period, these credits reduced the Fund's custody expenses by $5,415. During the period, credits reduced each class' transfer agent expense as noted in the table below.
| Transfer Agent |
Growth and Income | $ 743,683 |
Annual Report
Notes to Financial Statements - continued
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.
In December 2006, the Independent Trustees, with the assistance of independent counsel, completed an investigation regarding gifts, gratuities and business entertainment provided by certain brokers to certain individuals who were employed on FMR's domestic equity trading desk during the period 2002 to 2004. The Independent Trustees and FMR agreed that, despite the absence of proof that the Fidelity mutual funds experienced diminished execution quality as a result of the improper receipt of gifts and business entertainment, the conduct at issue was serious and was worthy of redress. Accordingly, the Independent Trustees requested, and FMR agreed to make, a payment of $42 million plus accrued interest, which equaled approximately $7.3 million, to certain Fidelity mutual funds.
In March 2008, the Trustees approved a method for allocating this payment among the funds and, in total, FMR paid the fund $1,812,898, which is recorded in the accompanying Statement of Operations.
In a related administrative order dated March 5, 2008, the U.S. Securities and Exchange Commission ("SEC") announced a settlement with FMR and FMR Co., Inc. (an affiliate of FMR) involving the SEC's regulatory rules for investment advisers and the improper receipt of gifts, gratuities and business entertainment. Without admitting or denying the SEC's findings, FMR agreed to pay an $8 million civil penalty to the United States Treasury.
12. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended July 31, | 2008 A | 2007 |
From net investment income |
|
|
Growth and Income | $ 214,588,903 | $ 249,548,538 |
Class K | 406 | - |
Total | $ 214,589,309 | $ 249,548,538 |
From net realized gain |
|
|
Growth and Income | $ 2,632,785,503 | $ 5,102,918,586 |
Class K | - | - |
Total | $ 2,632,785,503 | $ 5,102,918,586 |
A Distributions for Class K are for the period May 9, 2008 (commencement of sale of shares) to July 31, 2008.
Annual Report
13. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
Years ended July 31, | 2008 A | 2007 | 2008 A | 2007 |
Growth and Income |
|
|
|
|
Shares sold | 47,943,646 | 104,430,427 | $ 1,282,795,975 | $ 3,378,424,748 |
Reinvestment of distributions | 99,265,243 | 180,580,075 | 2,778,444,196 | 5,231,624,230 |
Shares redeemed | (284,542,625) | (418,890,443) | (7,659,963,140) | (13,651,080,773) |
Net increase (decrease) | (137,333,736) | (133,879,941) | $ (3,598,722,969) | $ (5,041,031,795) |
Class K |
|
|
|
|
Shares sold | 3,946 | - | $ 100,000 | - |
Reinvestment of distributions | 20 | - | 406 | - |
Shares redeemed | - | - | - | - |
Net increase (decrease) | 3,966 | - | $ 100,406 | $ - |
A Share transactions for Class K are for the period May 9, 2008 (commencement of sale of shares) to July 31, 2008.
Annual Report
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Securities Fund and the Shareholders of Fidelity Growth & Income Portfolio:
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 Growth & Income Portfolio (a fund of Fidelity Securities Fund) at July 31, 2008, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and 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 Growth & Income Portfolio'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 July 31, 2008 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
September 22, 2008
Annual Report
Trustees and Officers
The Trustees, Member of the Advisory Board, and executive officers of the trust and fund, as applicable, are listed below. The Board of Trustees governs the fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee the fund's activities, review contractual arrangements with companies that provide services to the fund, and review the fund's performance. Except for Edward C. Johnson 3d and James C. Curvey, each of the Trustees oversees 218 funds advised by FMR or an affiliate. Messrs. Johnson and Curvey oversee 377 funds advised by FMR or an affiliate.
The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust. Each Trustee who is not an interested person (as defined in the 1940 Act) (Independent Trustee), shall retire not later than the last day of the calendar year in which his or her 72nd birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board Member hold office without limit in time, except that any officer and Advisory Board Member may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years.
The fund's Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-800-544-8544.
Interested Trustees*:
Correspondence intended for each Trustee who is an interested person may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Edward C. Johnson 3d (78) | |
| Year of Election or Appointment: 1984 Mr. Johnson is Chairman of the Board of Trustees. Mr. Johnson serves as Chief Executive Officer, Chairman, and a Director of FMR LLC; Chairman and a Director of FMR; Chairman and a Director of Fidelity Research & Analysis Company (FRAC); Chairman and a Director of Fidelity Investments Money Management, Inc.; and Chairman and a Director of FMR Co., Inc. In addition, Mr. Johnson serves as Chairman and Director of FIL Limited. Previously, Mr. Johnson served as President of FMR LLC (2006-2007). |
James C. Curvey (73) | |
| Year of Election or Appointment: 2007 Mr. Curvey also serves as Trustee (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2006- |
* Trustees have been determined to be "Interested Trustees" by virtue of, among other things, their affiliation with the trust or various entities under common control with FMR. FMR Corp. merged with and into FMR LLC on October 1, 2007. Any references to FMR LLC for prior periods are deemed to be references to the prior entity.
Independent Trustees:
Correspondence intended for each Independent Trustee (that is, the Trustees other than the Interested Trustees) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.
Name, Age; Principal Occupation | |
Dennis J. Dirks (60) | |
| Year of Election or Appointment: 2005 Prior to his retirement in May 2003, Mr. Dirks was Chief Operating Officer and a member of the Board of The Depository Trust & Clearing Corporation (DTCC) (1999-2003). He also served as President, Chief Operating Officer, and Board member of The Depository Trust Company (DTC) (1999-2003) and President and Board member of the National Securities Clearing Corporation (NSCC) (1999-2003). In addition, Mr. Dirks served as a Trustee and a member of the Finance |
Alan J. Lacy (54) | |
| Year of Election or Appointment: 2008 Mr. Lacy serves as Senior Adviser (2007-present) of Oak Hill Capital Partners, L.P. (a private equity firm). Mr. Lacy also served as Chief Executive Officer (2000-2005) and Vice Chairman (2005-2006) of Sears Holdings Corporation and Sears, Roebuck and Co. (retail). In addition, Mr. Lacy serves as a member of the Board of Directors of The Western Union Company (global money transfer, 2006-present) and Bristol-Myers Squibb (global pharmaceuticals, 2007-present). Mr. Lacy is a Trustee of the National Parks Conservation Association and The Field Museum of Natural History. |
Ned C. Lautenbach (64) | |
| Year of Election or Appointment: 2000 Mr. Lautenbach is Chairman of the Independent Trustees (2006-present). Mr. Lautenbach is an Advisory Partner of Clayton, Dubilier & Rice, Inc. (private equity investment firm). Previously, Mr. Lautenbach was with the International Business Machines Corporation (IBM) from 1968 until his retirement in 1998. Mr. Lautenbach serves as a Director of Eaton Corporation (diversified industrial) as well as the Philharmonic Center for the Arts in Naples, Florida. He also is a member of the Board of Trustees of Fairfield University (2005-present), as well as a member of the Council on Foreign Relations. Previously, Mr. Lautenbach served as a Director of Sony Corporation (2006-2007). |
Joseph Mauriello (63) | |
| 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 firm, 1965-2005). Mr. Mauriello currently serves as a member of the Board of Directors of XL Capital Ltd. (global insurance and re-insurance company, 2006-present) and of Arcadia Resources Inc. (health care services and products, 2007-present). He also served as a Director of the Hamilton Funds of the Bank of New York (2006-2007). |
Cornelia M. Small (64) | |
| Year of Election or Appointment: 2005 Ms. Small is a member of the Investment Committee, and Chair (2008-present) and a member of the Board of Trustees of Smith College. Ms. Small also serves on the Investment Committee of the Berkshire Taconic Community Foundation (2008-present). Previously, Ms. Small served as Chairperson of the Investment Committee (2002-2008) of Smith College and as Co-Chair (2000-2003) of the Annual Fund for the Fletcher School of Law and Diplomacy. In addition, she served as Chief Investment Officer, Director of Global Equity Investments, and a member of the Board of Directors of Scudder, Stevens & Clark and Scudder Kemper Investments. |
William S. Stavropoulos (69) | |
| Year of Election or Appointment: 2002 Mr. Stavropoulos is Chairman Emeritus of the Board of Directors of The Dow Chemical Company, where he previously served in numerous senior management positions, including President (1993-2000; 2002-2003), CEO (1995-2000; 2002-2004), Chairman of the Executive Committee (2000-2006), and as a member of the Board of Directors (1990-2006). Currently, he is a Director of Teradata Corporation (data warehousing and technology solutions, 2008-present), Chemical Financial Corporation, Maersk Inc. (industrial conglomerate), Tyco International, Inc. (multinational manufacturing and services, 2007-present), and a member of the Advisory Board for Metalmark Capital (private equity investment firm, 2005-present). He is a special advisor to Clayton, Dubilier & Rice, Inc. (private equity investment). In addition, Mr. Stavropoulos is a member of the University of Notre Dame Advisory Council for the College of Science. |
David M. Thomas (59) | |
| Year of Election or Appointment: 2008 Previously, Mr. Thomas served as Executive Chairman (2005-2006) and Chairman and Chief Executive Officer (2000-2005) of IMS Health, Inc. (pharmaceutical and healthcare information solutions). In addition, Mr. Thomas serves as a member of the Board of Directors of Fortune Brands, Inc. (consumer products holding company), and Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (57) | |
| Year of Election or Appointment: 2008 Mr. Wiley also serves as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-present). He serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005- |
Advisory Board Member and Executive Officers**:
Correspondence intended for each executive officer and Mr. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Peter S. Lynch (64) | |
| Year of Election or Appointment: 2003 Member of the Advisory Board of Fidelity Securities Fund. Mr. Lynch is Vice Chairman and a Director of FMR, and Vice Chairman (2001-present) and a Director of FMR Co., Inc. Previously, Mr. Lynch served as a Trustee of the Fidelity funds (1990-2003). In addition, he serves as a Trustee of Boston College and as the Chairman of the Inner-City Scholarship Fund. |
Kenneth B. Robins (38) | |
| Year of Election or Appointment: 2008 President and Treasurer of the fund. Mr. Robins also serves as President and Treasurer of Fidelity's Equity and High Income Funds (2008-present) and is an employee of FMR (2004-present). Before joining Fidelity Investments, Mr. Robins worked at KPMG LLP, where he was a partner in KPMG's department of professional practice (2002-2004). |
Walter C. Donovan (46) | |
| Year of Election or Appointment: 2007 Vice President of the fund. Mr. Donovan also serves as Vice President of Fidelity's Equity Funds, President of FMR and FMR Co., Inc., and Executive Vice President of Fidelity Investments Money Management, Inc. (2007-present). Previously, Mr. Donovan served as Executive Vice President of FMR and FMR Co., Inc. (2005-2007) and Senior Vice President of FMR (2003-2005) and FMR Co., Inc. (2004-2005). |
Bruce T. Herring (42) | |
| Year of Election or Appointment: 2006 Vice President of the fund. Mr. Herring also serves as Vice President of certain Equity Funds (2006-present) and Group Chief Investments Officer of FMR. Previously, Mr. Herring served as a portfolio manager for Fidelity U.S. Equity Funds. |
Scott C. Goebel (40) | |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of the fund. Mr. Goebel also serves as Secretary and CLO of other Fidelity funds (2008-present); General Counsel, Secretary, and Senior Vice President of FMR (2008-present); and Deputy General Counsel of FMR LLC. Previously, Mr. Goebel served as Assistant Secretary of the Funds (2007-2008) and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007). |
John B. McGinty, Jr. (45) | |
| Year of Election or Appointment: 2008 Assistant Secretary of the fund. Mr. McGinty also serves as Assistant Secretary of Fidelity's other Equity and High Income Funds (2008-present) and is an employee of FMR LLC (2004-present). Mr. McGinty also serves as Senior Vice President, Secretary, and Chief Legal Officer of FDC (2007-present). Before joining Fidelity Investments, Mr. McGinty practiced law at Ropes & Gray, LLP. |
Holly C. Laurent (54) | |
| Year of Election or Appointment: 2008 Anti-Money Laundering (AML) officer of the fund. Ms. Laurent also serves as AML officer of other Fidelity funds (2008-present) and is an employee of FMR LLC. Previously, Ms. Laurent was Senior Vice President and Head of Legal for Fidelity Business Services India Pvt. Ltd. (2006-2008), Senior Vice President, Deputy General Counsel and Group Head for FMR LLC (2005-2006). |
Christine Reynolds (49) | |
| Year of Election or Appointment: 2008 Chief Financial Officer of the fund. Ms. Reynolds also serves as Chief Financial Officer of other Fidelity funds (2008-present). Ms. Reynolds became President of Fidelity Pricing and Cash Management Services (FPCMS) in August 2008. She served as Chief Operating Officer of FPCMS from 2007 through July 2008. Previously, Ms. Reynolds served as President, Treasurer, and Anti-Money Laundering officer of the Fidelity funds (2004-2007). Before joining Fidelity Investments, Ms. |
Kenneth A. Rathgeber (61) | |
| Year of Election or Appointment: 2004 Chief Compliance Officer of the fund. Mr. Rathgeber also serves as Chief Compliance Officer of Fidelity's Equity and High Income Funds (2004-present). He is Chief Compliance Officer of FMR (2005-present), FMR Co., Inc. (2005-present), Fidelity Management & Research (U.K.) Inc. (2005-present), Fidelity Research & Analysis Company (2005-present), Fidelity Investments Money Management, Inc. (2005-present), and Strategic Advisers, Inc. (2005-present). |
Bryan A. Mehrmann (47) | |
| Year of Election or Appointment: 2005 Deputy Treasurer of the fund. Mr. Mehrmann also serves as Deputy Treasurer of other Fidelity funds (2005-present) and is an employee of FMR. Previously, Mr. Mehrmann served as Vice President of Fidelity Investments Institutional Services Group (FIIS)/Fidelity Investments Institutional Operations Corporation, Inc. (FIIOC) Client Services (1998-2004). |
Adrien E. Deberghes (40) | |
| Year of Election or Appointment: 2008 Deputy Treasurer of the fund. Mr. Deberghes also serves as Deputy Treasurer of Fidelity's Equity and High Income Funds (2008-present) and is an employee of FMR (2008-present). Previously, Mr. Deberghes served as Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005). |
Robert G. Byrnes (41) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of the fund. Mr. Byrnes also serves as Assistant Treasurer of other Fidelity funds (2005-present) and is an employee of FMR (2005-present). Previously, Mr. Byrnes served as Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (2003-2005). Before joining Fidelity Investments, Mr. Byrnes worked at Deutsche Asset Management where he served as Vice President of the Investment Operations Group (2000-2003). |
Peter L. Lydecker (54) | |
| Year of Election or Appointment: 2004 Assistant Treasurer of the fund. Mr. Lydecker also serves as Assistant Treasurer of other Fidelity funds (2004-present) and is an employee of FMR. |
Paul M. Murphy (61) | |
| Year of Election or Appointment: 2007 Assistant Treasurer of the fund. Mr. Murphy also serves as Assistant Treasurer of other Fidelity funds (2007-present) and is an employee of FMR (2007-present). Previously, Mr. Murphy served as Chief Financial Officer of the Fidelity Funds (2005-2006), Vice President and Associate General Counsel of FMR (2007), and Senior Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (1994-2007). |
Gary W. Ryan (49) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of the fund. Mr. Ryan also serves as Assistant Treasurer of other Fidelity funds (2005-present) and is an employee of FMR (2005-present). Previously, Mr. Ryan served as Vice President of Fund Reporting in Fidelity Pricing and Cash Management Services (FPCMS) (1999-2005). |
** FMR Corp. merged with and into FMR LLC on October 1, 2007. Any references to FMR LLC for prior periods are deemed to be references to the prior entity.
Annual Report
Distributions (Unaudited)
The Board of Trustees of Fidelity Growth & Income Portfolio voted to pay to shareholders of record at the opening of business on record date, the following distributions derived from capital gains realized from sales of portfolio securities, and dividends derived from net investment income.
| Pay Date | Record Date | Dividends | Capital Gains |
Growth & Income Class | 09/15/08 | 09/12/08 | - | $0.03 |
Class K | 09/15/08 | 09/12/08 | - | $0.03 |
The fund hereby designates as a capital gain dividend with respect to the taxable year ended July 31, 2008, $860,250,349, or, if subsequently determined to be different, the net capital gain of such year.
A total of 0.06% of the dividends distributed during the fiscal year was derived from interest on U.S. Government securities which is generally exempt from state income tax.
A percentage of the dividends distributed during the fiscal year 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.
| Growth & Income Class | Class K |
September 2007 | 29% | - |
October 2007 | 100% | - |
December 2007 | 100% | - |
April 2008 | 100% | - |
July 2008 | 100% | 100% |
A percentage of the dividends distributed during the fiscal year qualify for the dividends-received deduction for corporate shareholders.
| Growth & Income Class | Class K |
September 2007 | 15% | - |
October 2007 | 100% | - |
December 2007 | 100% | - |
April 2008 | 100% | - |
July 2008 | 100% | 100% |
The fund will notify shareholders in January 2009 of amounts for use in preparing 2008 income tax returns.
Annual Report
Proxy Voting Results
A special meeting of the fund's shareholders was held on May 14, 2008. The results of votes taken among shareholders on the proposals before them are reported below. Each vote reported represents one dollar of net asset value held on the record date for the meeting.
PROPOSAL 1 | ||
To elect a Board of Trustees.A | ||
| # of | % of |
James C. Curvey | ||
Affirmative | 30,242,569,269.49 | 94.915 |
Withheld | 1,620,182,942.38 | 5.085 |
TOTAL | 31,862,752,211.87 | 100.000 |
Dennis J. Dirks | ||
Affirmative | 30,356,248,026.80 | 95.272 |
Withheld | 1,506,504,185.07 | 4.728 |
TOTAL | 31,862,752,211.87 | 100.000 |
Edward C. Johnson 3d | ||
Affirmative | 30,163,300,902.81 | 94.666 |
Withheld | 1,699,451,309.06 | 5.334 |
TOTAL | 31,862,752,211.87 | 100.000 |
Alan J. Lacy | ||
Affirmative | 30,334,439,999.59 | 95.203 |
Withheld | 1,528,312,212.28 | 4.797 |
TOTAL | 31,862,752,211.87 | 100.000 |
Ned C. Lautenbach | ||
Affirmative | 30,317,381,535.59 | 95.150 |
Withheld | 1,545,370,676.28 | 4.850 |
TOTAL | 31,862,752,211.87 | 100.000 |
Joseph Mauriello | ||
Affirmative | 30,340,553,696.88 | 95.223 |
Withheld | 1,522,198,514.99 | 4.777 |
TOTAL | 31,862,752,211.87 | 100.000 |
Cornelia M. Small | ||
Affirmative | 30,337,552,071.15 | 95.213 |
Withheld | 1,525,200,140.72 | 4.787 |
TOTAL | 31,862,752,211.87 | 100.000 |
William S. Stavropoulos | ||
Affirmative | 30,240,356,579.51 | 94.908 |
Withheld | 1,622,395,632.36 | 5.092 |
TOTAL | 31,862,752,211.87 | 100.000 |
David M. Thomas | ||
Affirmative | 30,352,029,125.67 | 95.259 |
Withheld | 1,510,723,086.20 | 4.741 |
TOTAL | 31,862,752,211.87 | 100.000 |
Michael E. Wiley | ||
Affirmative | 30,333,540,290.12 | 95.201 |
Withheld | 1,529,211,921.75 | 4.799 |
TOTAL | 31,862,752,211.87 | 100.000 |
PROPOSAL 2 | ||
To amend the Declaration of Trust to reduce the required quorum for future shareholder meetings.A | ||
Affirmative | 23,747,670,372.95 | 74.531 |
Against | 5,357,217,831.03 | 16.814 |
Abstain | 1,587,233,084.08 | 4.981 |
Broker | 1,170,630,923.81 | 3.674 |
TOTAL | 31,862,752,211.87 | 100.000 |
PROPOSAL 3 | ||
A shareholder proposal concerning "oversight procedures to screen out investments in companies that, in the The fund did not achieve quorum with respect to this proposal, and therefore no action was taken at the meeting and subsequent adjournments. Because sufficient votes in favor of the proposal were not received, on June 18, 2008, the proxies in their discretion determined not to adjourn the meeting further on this item. | ||
A Denotes trust-wide proposal and voting results. |
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees
Fidelity Growth & Income Portfolio
Each year, typically in July, the Board of Trustees, including the Independent Trustees (together, the Board), votes on the renewal of the management contract and sub-advisory agreements (together, the Advisory Contracts) for the fund. The Board, assisted by the advice of fund counsel and Independent Trustees' counsel, requests and considers a broad range of information throughout the year.
The Board meets regularly and, acting directly and through its separate committees, requests and receives information concerning, and considers at each of its meetings factors that are relevant to, its annual consideration of the renewal of the fund's Advisory Contracts, including the services and support provided to the fund and its shareholders. At the time of the renewal, the Board had 12 standing committees, each composed of Independent Trustees with varying backgrounds, to which the Board has assigned specific subject matter responsibilities in order to enhance effective decision-making by the Board. Each committee has a written charter outlining the structure and purposes of the committee. The Board also meets as needed to consider matters specifically related to the Board's annual consideration of the renewal of Advisory Contracts.
At its July 2008 meeting, the Board of Trustees, including the Independent Trustees, unanimously determined to renew the fund's Advisory Contracts. In reaching its determination, the Board considered all factors it believed relevant, including (i) the nature, extent, and quality of the services to be provided to the fund and its shareholders (including the investment performance of the fund); (ii) the competitiveness of the fund's management fee and total expenses; (iii) the total costs of the services to be provided by and the profits to be realized by Fidelity from its relationship with the fund; (iv) the extent to which economies of scale would be realized as the fund grows; and (v) whether fee levels reflect these economies of scale, if any, for the benefit of fund shareholders. The Board also approved agreements with foreign sub-advisers Fidelity Management & Research (Japan) Inc. and Fidelity Management & Research (Hong Kong) Limited, as well as amendments to the fund's agreement with Fidelity Management & Research (U.K.) Inc.
In considering whether to renew the Advisory Contracts for the fund, the Board ultimately reached a determination, with the assistance of fund counsel and Independent Trustees' counsel and through the exercise of its business judgment, that the renewal of the Advisory Contracts and the compensation to be received by Fidelity under the management contract is consistent with Fidelity's fiduciary duty under applicable law. The Board's decision to renew the Advisory Contracts was not based on any single factor noted above, but rather was based on a comprehensive consideration of all the information provided to the Board at its meetings throughout the year. The Board, in reaching its determination to renew the Advisory Contracts, is aware that shareholders in the fund have a broad range of investment choices available to them, including a wide choice among mutual funds offered by competitors to Fidelity, and that the fund's shareholders, with the opportunity to review and weigh the disclosure provided by the fund in its prospectus and other public disclosures, have chosen to invest in this fund, managed by Fidelity.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
Nature, Extent, and Quality of Services Provided. The Board considered staffing within the investment adviser, FMR, and the sub-advisers (together, the Investment Advisers), including the backgrounds of the fund's investment personnel and the fund's investment objective and discipline. The Independent Trustees also had discussions with senior management of Fidelity's investment operations and investment groups. The Board considered the structure of the portfolio manager compensation program and whether this structure provides appropriate incentives.
Resources Dedicated to Investment Management and Support Services. The Board reviewed the size, education, and experience of the Investment Advisers' investment staff, their use of technology, and the Investment Advisers' approach to recruiting, training, and retaining portfolio managers and other research, advisory, and management personnel. The Board noted that Fidelity's analysts have access to a variety of technological tools that enable them to perform both fundamental and quantitative analysis and to specialize in various disciplines. The Board considered Fidelity's extensive global research capabilities that enable the Investment Advisers to aggregate data from various sources in an effort to produce positive investment results. The Board also considered that Fidelity's portfolio managers and analysts have access to daily portfolio attribution that allows for monitoring of a fund's portfolio, as well as an electronic communication system that provides immediate real-time access to research concerning issuers and credit enhancers.
Shareholder and Administrative Services. The Board considered (i) the nature, extent, quality, and cost of advisory, administrative, distribution, and shareholder services performed by the Investment Advisers and their affiliates under the Advisory Contracts and under separate agreements covering transfer agency, pricing and bookkeeping, and securities lending services for the fund; (ii) the nature and extent of the Investment Advisers' supervision of third party service providers, principally custodians and subcustodians; and (iii) the resources devoted to, and the record of compliance with, the fund's compliance policies and procedures. The Board also reviewed the allocation of fund brokerage, including allocations to brokers affiliated with the Investment Advisers, the use of brokerage commissions to pay fund expenses, and the use of "soft" commission dollars to pay for research services. The Board further considered that Fidelity voluntarily pays for market data out of its own resources.
The Board noted that the growth of fund assets across the complex allows Fidelity to reinvest in the development of services designed to enhance the value or convenience of the Fidelity funds as investment vehicles. These services include 24-hour access to account information and market information through phone representatives and over the Internet, and investor education materials and asset allocation tools.
Annual Report
Investment in a Large Fund Family. The Board considered the benefits to shareholders of investing in a Fidelity fund, including the benefits of investing in a fund that is part of a large family of funds offering a variety of investment disciplines and providing for a large variety of mutual fund investor services. For example, fund shareholders are offered the privilege of exchanging shares of the fund for shares of other Fidelity funds, as set forth in the fund's prospectus, without paying a sales charge. The Board noted that Fidelity has taken a number of actions over the previous year that benefited particular funds, including (i) dedicating additional resources to investment research and to restructure the investment research teams; (ii) contractually agreeing to reduce the management fees on Fidelity's Institutional Money Market Funds and launching Class IV and Institutional Class of certain of these funds; (iii) reducing the transfer agent fees for the Fidelity Select Portfolios and Investor Class of the VIP funds; and (iv) launching Class K of 29 equity funds as a lower-fee class available to certain employer-sponsored retirement plans.
Investment Performance. The Board considered whether the fund has operated within its investment objective, as well as its record of compliance with its investment restrictions. It also reviewed the fund's absolute investment performance, as well as the fund's relative investment performance measured against (i) a broad-based securities market index, and (ii) a peer group of mutual funds deemed appropriate by the Board over multiple periods. The following charts considered by the Board show, over the one-, three-, and five-year periods ended December 31, 2007, the fund's cumulative total returns, the cumulative total returns of a broad-based securities market index ("benchmark"), and a range of cumulative total returns of a peer group of mutual funds identified by Morningstar, Inc. as having an investment style similar to that of the fund based on underlying portfolio holdings. (The fund did not offer Class K as of December 31, 2007.) The box within each chart shows the 25th percentile return (bottom of box) and the 75th percentile return (top of box) of the peer group. Returns shown above the box are in the first quartile and returns shown below the box are in the fourth quartile. The percentage beaten number noted below each chart corresponds to the percentile box and represents the percentage of funds in the peer group whose performance was equal to or lower than that of the fund.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
Fidelity Growth & Income Portfolio
The Board reviewed the fund's relative investment performance against its peer group and stated that the performance of the fund was in the fourth quartile for all the periods shown. The Board also stated that the investment performance of the fund was lower than its benchmark for all the periods shown. The Board discussed with FMR actions that may be taken by FMR to improve the fund's disappointing performance relative to its peer group and benchmark. The Board will continue to closely monitor the performance of the fund in the coming year and discuss with FMR other appropriate actions to address the performance of the fund.
The Board considered that FMR has taken steps to refocus and strengthen equity research, equity portfolio management, and compliance.
Based on its review, and giving particular weight to the nature and quality of the resources dedicated by the Investment Advisers to maintain and improve relative performance, the Board concluded that the nature, extent, and quality of the services provided to the fund will benefit the fund's shareholders, particularly in light of the Board's view that the fund's shareholders benefit from investing in a fund that is part of a large family of funds offering a variety of investment disciplines and services.
Competitiveness of Management Fee and Total Fund Expenses. The Board considered the fund's management fee and total expenses compared to "mapped groups" of competitive funds and classes. Fidelity creates "mapped groups" by combining similar Lipper investment objective categories that have comparable management fee characteristics. Combining Lipper investment objective categories aids the Board's management fee and total expense comparisons by broadening the competitive group used for comparison and by reducing the number of universes to which various Fidelity funds are compared. The Board also considered supplemental information about how the fund's management fee and total expenses ranked relative to groups based on Lipper classifications, which take into account a fund's market capitalization and style.
Annual Report
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. "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 11% means that 89% 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, is also included in the chart and considered by the Board.
Fidelity Growth & Income Portfolio
The Board noted that the fund's management fee ranked below the median of its Total Mapped Group and below the median of its ASPG for 2007.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
Based on its review, the Board concluded that the fund's management fee was fair and reasonable in light of the services that the fund receives and the other factors considered.
In its review of the fund's total expenses, the Board considered the fund's management fee as well as other fund expenses, such as transfer agent fees, pricing and bookkeeping fees, and custodial, legal, and audit fees. The Board also noted the effects of any waivers and reimbursements on fees and expenses. As part of its review, the Board also considered current and historical total expenses of the fund compared to competitive fund median expenses. The fund is compared to those funds and classes in the Total Mapped Group (used by the Board for management fee comparisons) that have a similar sales load structure.
The Board noted that the fund's total expenses ranked below its competitive median for 2007.
In its review of total expenses, the Board also considered Fidelity fee structures and other information on clients that FMR and its affiliates service in other competitive markets, such as other mutual funds advised or subadvised by FMR or its affiliates, pension plan clients, and other institutional clients.
Based on its review, the Board concluded that the fund's total expenses were reasonable in light of the services that the fund and its shareholders receive and the other factors considered.
Costs of the Services and Profitability. The Board considered the revenues earned and the expenses incurred by Fidelity in conducting the business of developing, marketing, distributing, managing, administering and servicing the fund and its shareholders. The Board also considered the level of Fidelity's profits in respect of all the Fidelity funds.
On an annual basis, FMR presents to the Board Fidelity's profitability for the fund. Fidelity calculates the profitability for each fund, as well as aggregate profitability for groups of Fidelity funds and all Fidelity funds, using a series of detailed revenue and cost allocation methodologies which originate with the audited books and records of Fidelity. The Audit Committee of the Board reviews any significant changes from the prior year's methodologies.
PricewaterhouseCoopers LLP (PwC), independent registered public accounting firm and auditor to Fidelity and certain Fidelity funds, has been engaged annually by the Board as part of the Board's assessment of the results of Fidelity's profitability analysis. PwC's engagement includes the review and assessment of Fidelity's methodologies used in determining the revenues and expenses attributable to Fidelity's mutual fund business, and completion of agreed-upon procedures surrounding the mathematical accuracy of fund profitability and its conformity to allocation methodologies. After considering PwC's reports issued under the engagement and information provided by Fidelity, the Board believes that while other allocation methods may also be reasonable, Fidelity's profitability methodologies are reasonable in all material respects.
Annual Report
The Board has also reviewed Fidelity's non-fund businesses and any fall-out benefits related to the mutual fund business as well as cases where Fidelity's affiliates may benefit from or be related to the fund's business.
The Board considered the costs of the services provided by and the profits realized by Fidelity in connection with the operation of the fund and determined that the amount of profit is a fair entrepreneurial profit for the management of the fund.
Economies of Scale. The Board considered whether there have been economies of scale in respect of the management of the Fidelity funds, whether the Fidelity funds (including the fund) have appropriately benefited from any such economies of scale, and whether there is potential for realization of any further economies of scale. The Board considered the extent to which the fund will benefit from economies of scale through increased services to the fund, through waivers or reimbursements, or through fee or expense reductions.
The Board recognized that the fund's management contract incorporates a "group fee" structure, which provides for lower group fee rates as total fund assets under FMR's management increase, and for higher group fee rates as total fund assets under FMR's management decrease. FMR determines the group fee rates based on a tiered asset "breakpoint" schedule. The Board considered that the group fee is designed to deliver the benefits of economies of scale to fund shareholders when total fund assets increase, even if assets of any particular fund are unchanged or have declined, because some portion of Fidelity's costs are attributable to services provided to all Fidelity funds, and all funds benefit if those costs can be allocated among more assets. The Board concluded that, given the group fee structure, fund shareholders will achieve a certain level of economies of scale as assets under FMR's management increase at the fund complex level, regardless of whether Fidelity achieves any such economies of scale.
The Board further concluded that any potential economies of scale are being shared between fund shareholders and Fidelity in an appropriate manner.
Additional Information Requested by the Board. In order to develop fully the factual basis for consideration of the Fidelity funds' Advisory Contracts, the Board requested and received additional information on certain topics, including (i) fund performance trends and actions to be taken by FMR to improve certain funds' overall performance; (ii) portfolio manager changes that have occurred during the past year; (iii) Fidelity's fund profitability methodology, the profitability of certain fund service providers, and profitability trends for certain funds; (iv) Fidelity's compensation structure for portfolio managers and key personnel, including its effects on fund profitability and the extent to which portfolio manager compensation is linked to fund performance; (v) Fidelity's fee structures and rationale for recommending different fees among categories of funds; and (vi) Fidelity's rationale for recommending which funds should have a performance adjustment component as part of their management fees.
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 material factors, the Board ultimately concluded that the advisory fee structures are fair and reasonable, and that the fund's Advisory Contracts should be renewed.
Annual Report
Managing Your Investments
Fidelity offers several ways to conveniently manage your personal investments via your telephone or PC. You can access your account information, conduct trades and research your investments 24 hours a day.
By Phone
Fidelity Automated Service Telephone provides a single toll-free number to access account balances, positions, quotes and trading. It's easy to navigate the service, and on your first call, the system will help you create a personal identification number (PIN) for security.
(phone_graphic)
Fidelity Automated
Service Telephone (FAST®)
1-800-544-5555
Press
For mutual fund and brokerage trading.
For quotes.*
For account balances and holdings.
To review orders and mutual
fund activity.
To change your PIN.
To speak to a Fidelity representative.
By PC
Fidelity's web site on the Internet provides a wide range of information, including daily financial news, fund performance, interactive planning tools and news about Fidelity products and services.
(computer_graphic)
Fidelity's Web Site
www.fidelity.com
* When you call the quotes line, please remember that a fund's yield and return will vary and, except for money market funds, share price will also vary. This means that you may have a gain or loss when you sell your shares. There is no assurance that money market funds will be able to maintain a stable $1 share price; an investment in a money market fund is not insured or guaranteed by the U.S. government. Total returns are historical and include changes in share price, reinvestment of dividends and capital gains, and the effects of any sales charges.
Annual Report
To Write Fidelity
We'll give your correspondence immediate attention and send you written confirmation upon completion of your request.
(letter_graphic)
Making Changes
To Your Account
(such as changing name, address, bank, etc.)
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0002
(letter_graphic)
For Non-Retirement
Accounts
Buying shares
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
Overnight Express
Fidelity Investments
Attn: Distribution Services
100 Crosby Parkway - KC1H
Covington, KY 41015
Selling shares
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0035
Overnight Express
Fidelity Investments
Attn: Distribution Services
100 Crosby Parkway - KC1H
Covington, KY 41015
General Correspondence
Fidelity Investments
P.O. Box 500
Merrimack, NH 03054-0500
(letter_graphic)
For Retirement
Accounts
Buying shares
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
Selling shares
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0035
Overnight Express
Fidelity Investments
Attn: Distribution Services
100 Crosby Parkway - KC1H
Covington, KY 41015
General Correspondence
Fidelity Investments
P.O. Box 500
Merrimack, NH 03054-0500
Annual Report
To Visit Fidelity
For directions and hours,
please call 1-800-544-9797.
Arizona
7001 West Ray Road
Chandler, AZ
15445 N. Scottsdale Road
Scottsdale, AZ
California
815 East Birch Street
Brea, CA
1411 Chapin Avenue
Burlingame, CA
851 East Hamilton Avenue
Campbell, CA
19200 Von Karman Avenue
Irvine, CA
601 Larkspur Landing Circle
Larkspur, CA
2000 Avenue of the Stars
Los Angeles, CA
27101 Puerta Real
Mission Viejo, CA
73-575 El Paseo
Palm Desert, CA
251 University Avenue
Palo Alto, CA
123 South Lake Avenue
Pasadena, CA
16656 Bernardo Ctr. Drive
Rancho Bernardo, CA
1220 Roseville Parkway
Roseville, CA
1740 Arden Way
Sacramento, CA
7676 Hazard Center Drive
San Diego, CA
11943 El Camino Real
San Diego, CA
8 Montgomery Street
San Francisco, CA
3793 State Street
Santa Barbara, CA
1200 Wilshire Boulevard
Santa Monica, CA
398 West El Camino Real
Sunnyvale, CA
111 South Westlake Blvd
Thousand Oaks, CA
21701 Hawthorne Boulevard
Torrance, CA
2001 North Main Street
Walnut Creek, CA
6326 Canoga Avenue
Woodland Hills, CA
Colorado
281 East Flatiron Circle
Broomfield, CO
1625 Broadway
Denver, CO
9185 Westview Road
Lone Tree, CO
Connecticut
48 West Putnam Avenue
Greenwich, CT
265 Church Street
New Haven, CT
300 Atlantic Street
Stamford, CT
29 South Main Street
West Hartford, CT
Delaware
400 Delaware Avenue
Wilmington, DE
Florida
175 East Altamonte Drive
Altamonte Springs, FL
4400 N. Federal Highway
Boca Raton, FL
121 Alhambra Plaza
Coral Gables, FL
2948 N. Federal Highway
Ft. Lauderdale, FL
4671 Town Center Parkway
Jacksonville, FL
8880 Tamiami Trail, North
Naples, FL
230 Royal Palm Way
Palm Beach, FL
3501 PGA Boulevard
Palm Beach Gardens, FL
3550 Tamiami Trail, South
Sarasota, FL
1502 N. Westshore Blvd.
Tampa, FL
2465 State Road 7
Wellington, FL
Georgia
3445 Peachtree Road, N.E.
Atlanta, GA
1000 Abernathy Road
Atlanta, GA
Illinois
One North LaSalle Street
Chicago, IL
401 North Michigan Avenue
Chicago, IL
One Skokie Valley Road
Highland Park, IL
1415 West 22nd Street
Oak Brook, IL
15105 S LaGrange Road
Orland Park, IL
1572 East Golf Road
Schaumburg, IL
Indiana
4729 East 82nd Street
Indianapolis, IN
8480 Keystone Crossing
Indianapolis, IN
Kansas
5400 College Boulevard
Overland Park, KS
Maine
Three Canal Plaza
Portland, ME
Maryland
7315 Wisconsin Avenue
Bethesda, MD
610 York Road
Towson, MD
Massachusetts
801 Boylston Street
Boston, MA
155 Congress Street
Boston, MA
300 Granite Street
Braintree, MA
44 Mall Road
Burlington, MA
238 Main Street
Cambridge, MA
200 Endicott Street
Danvers, MA
Annual Report
405 Cochituate Road
Framingham, MA
551 Boston Turnpike
Shrewsbury, MA
Michigan
500 E. Eisenhower Pkwy.
Ann Arbor, MI
280 Old N. Woodward Ave.
Birmingham, MI
30200 Northwestern Hwy.
Farmington Hills, MI
43420 Grand River Avenue
Novi, MI
Minnesota
7740 France Avenue South
Edina, MN
8342 3rd Street North
Oakdale, MN
Missouri
1524 South Lindbergh Blvd.
St. Louis, MO
Nevada
2225 Village Walk Drive
Henderson, NV
New Jersey
501 Route 73 South
Marlton, NJ
150 Essex Street
Millburn, NJ
35 Morris Street
Morristown, NJ
396 Route 17, North
Paramus, NJ
3518 Route 1 North
Princeton, NJ
530 Broad Street
Shrewsbury, NJ
New Mexico
2261 Q Street NE
Albuquerque, NM
New York
1130 Franklin Avenue
Garden City, NY
37 West Jericho Turnpike
Huntington Station, NY
1271 Avenue of the Americas
New York, NY
980 Madison Avenue
New York, NY
61 Broadway
New York, NY
350 Park Avenue
New York, NY
200 Fifth Avenue
New York, NY
733 Third Avenue
New York, NY
11 Penn Plaza
New York, NY
2070 Broadway
New York, NY
1075 Northern Blvd.
Roslyn, NY
799 Central Park Avenue
Scarsdale, NY
North Carolina
4611 Sharon Road
Charlotte, NC
7011 Fayetteville Road
Durham, NC
Ohio
3805 Edwards Road
Cincinnati, OH
1324 Polaris Parkway
Columbus, OH
1800 Crocker Road
Westlake, OH
28699 Chagrin Boulevard
Woodmere Village, OH
Oregon
7493 SW Bridgeport Road
Tigard, OR
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600 West DeKalb Pike
King of Prussia, PA
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Rhode Island
10 Memorial Boulevard
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3018 Peoples Street
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10000 Research Boulevard
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279 West South Temple
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1861 International Drive
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10500 NE 8th Street
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Washington, DC
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Washington, DC
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Fidelity Brokerage Services, Inc., 100 Summer St., Boston, MA 02110 Member NYSE/SIPC
Annual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Fidelity Research & Analysis Company
Fidelity Management & Research
(U.K.) Inc.
Fidelity Investments Japan Limited
Fidelity International Investment
Advisors
Fidelity International Investment
Advisors (U.K.) Limited
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Fidelity Distributors Corporation
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Operations Company, Inc.
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Fidelity Service Company, Inc.
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Custodian
JPMorgan Chase Bank
New York, NY
GAI-UANN-0908 1.874515.100
Fidelity®
International Real Estate
Fund
Annual Report
July 31, 2008
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message | Ned Johnson's message to shareholders. | |
Performance | How the fund has done over time. | |
Management's Discussion | The manager's review of fund performance, strategy and outlook. | |
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 |
| |
Proxy Voting Results |
| |
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 (search for "proxy voting guidelines") or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-800-544-8544 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company.
Annual Report
This report and the financial statements contained herein are submitted for the general information of the shareholders of the fund. This report is not authorized for distribution to prospective investors in the fund unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com or http://www.advisor.fidelity.com, as applicable.
NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE
Neither the fund nor Fidelity Distributors Corporation is a bank.
Annual Report
Chairman's Message
(photo_of_Edward_C_Johnson_3d)
Dear Shareholder:
Domestic and international securities markets have struggled thus far in 2008. High-grade fixed-income investments produced modestly positive results, but many stock benchmarks suffered double-digit losses through the first half of this year. Financial markets are always unpredictable, but there are a number of time-tested principles that can put the historical odds in your favor.
One of the basic tenets is to invest for the long term. Over time, riding out the markets' inevitable ups and downs has proven much more effective than selling into panic or chasing the hottest trend. Even missing only a few of the markets' best days can significantly diminish investor returns. Patience also affords the benefits of compounding - of earning interest on additional income or reinvested dividends and capital gains. There are tax advantages and cost benefits to consider as well. The more you sell, the more taxes you pay, and the more you trade, the higher the costs. While staying the course doesn't eliminate risk, it can considerably lessen the effect of short-term declines.
You can further manage your investing risk through diversification. And today, more than ever, geographic diversification should be taken into account. Studies indicate that asset allocation is the single most important determinant of a portfolio's long-term success. The right mix of stocks, bonds and cash - aligned to your particular risk tolerance and investment objective - is very important. Age-appropriate rebalancing is also an essential aspect of asset allocation. For younger investors, an emphasis on equities - which historically have been the best-performing asset class over time - is encouraged. As investors near their specific goal, such as retirement or sending a child to college, consideration may be given to replacing volatile assets (e.g. common stocks) with more-stable fixed investments (bonds or savings plans).
A third investment principle - investing regularly - can help lower the average cost of your purchases. Investing a certain amount of money each month or quarter helps ensure you won't pay for all your shares at market highs. This strategy - known as dollar cost averaging - also reduces unconstructive "emotion" from investing, helping shareholders avoid selling weak performers just prior to an upswing, or chasing a hot performer just before a correction.
We invite you to contact us via the Internet, through our Investor Centers or over the phone. It is our privilege to provide you the information you need to make the investments that are right for you.
Sincerely,
/s/Edward C. Johnson 3d
Edward C. Johnson 3d
Annual Report
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' 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 July 31, 2008 | Past 1 | Life of fund A |
International Real Estate | -22.97% | 9.50% |
A From September 8, 2004.
$10,000 Over Life of Fund
Let's say hypothetically that $10,000 was invested in International Real Estate, a class of the fund, on September 8, 2004, when the fund started. The chart shows how the value of your investment would have changed, and also shows how the MSCI® Europe, Australasia, Far East (MSCI EAFE®) Index performed over the same period.
Annual Report
Management's Discussion of Fund Performance
Comments from Steven Buller, Portfolio Manager of Fidelity® International Real Estate Fund
The year ending July 31, 2008, was extremely challenging for investors in international property stocks, although a weaker dollar helped temper the negative performance for U.S. investors. Commercial real estate values fell around the world, although not all at the same time or to the same degree. The troubles began in the United Kingdom, which struggled with declining demand for property coupled with excess supply. Next was continental Europe, which faced similar trends, although its challenges tended to be more demand- than supply-driven. The same was true of Japan. While Australia's property market remained fundamentally intact, many companies in that country struggled with balance sheet problems and excess debt levels. Hong Kong, Singapore and most emerging markets were the last to slow down, although they were hardly immune from the global credit crunch. In all, international property stocks, as measured by the EPRA/NAREIT Global Real Estate ex North America Index, declined 20.95% during the past year. The broad international stock market, as measured by the MSCI® Europe, Australasia, Far East Index (MSCI EAFE®), dropped 12.04%.
International Real Estate returned -22.97% during the past year, lagging the EPRA/NAREIT and the MSCI EAFE indexes. Relative to the EPRA/NAREIT index, the fund was hurt by weak security selection, especially in the United Kingdom. Timely U.K. trading, however, helped counter some of that negative impact. Weak stock picks in Japan and the Philippines also detracted, as did poor results among residential property companies. In contrast, a combination of positive stock and country selection in Australia and Greece contributed, as did a modest cash position. The fund's biggest individual detractor was U.K.-based retail company and funds manager Capital & Regional. This position - which I sold in the second half of the period - lagged as a result of the weak U.K. economic and retail environment. Another weak performer was German residential developer Patrizia Immobilien, which was hurt by poor execution of its business model. I sold this stock as well. Diversified Australian developer and funds manager Charter Hall Group also lagged. In contrast, the biggest individual positive was avoiding benchmark component Centro Property Group, an Australian company hurt by relatively high debt levels and an overly aggressive business model. Overweighting Greek developer Babis Vovos also contributed.
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 (February 1, 2008 to July 31, 2008).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Annual Report
Shareholder Expense Example - continued
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Beginning | Ending | Expenses Paid |
Class A |
|
|
|
Actual | $ 1,000.00 | $ 836.30 | $ 6.30 |
HypotheticalA | $ 1,000.00 | $ 1,018.00 | $ 6.92 |
Class T |
|
|
|
Actual | $ 1,000.00 | $ 835.60 | $ 7.44 |
HypotheticalA | $ 1,000.00 | $ 1,016.76 | $ 8.17 |
Class B |
|
|
|
Actual | $ 1,000.00 | $ 833.10 | $ 9.75 |
HypotheticalA | $ 1,000.00 | $ 1,014.22 | $ 10.72 |
Class C |
|
|
|
Actual | $ 1,000.00 | $ 832.90 | $ 9.75 |
HypotheticalA | $ 1,000.00 | $ 1,014.22 | $ 10.72 |
International Real Estate |
|
|
|
Actual | $ 1,000.00 | $ 837.60 | $ 5.12 |
HypotheticalA | $ 1,000.00 | $ 1,019.29 | $ 5.62 |
Institutional Class |
|
|
|
Actual | $ 1,000.00 | $ 837.40 | $ 5.21 |
HypotheticalA | $ 1,000.00 | $ 1,019.19 | $ 5.72 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
| Annualized |
Class A | 1.38% |
Class T | 1.63% |
Class B | 2.14% |
Class C | 2.14% |
International Real Estate | 1.12% |
Institutional Class | 1.14% |
Annual Report
Investment Changes (Unaudited)
Top Ten Stocks as of July 31, 2008 | ||
| % of fund's | % of fund's net assets |
Westfield Group unit | 7.8 | 7.4 |
Sun Hung Kai Properties Ltd. | 7.2 | 7.7 |
Mitsubishi Estate Co. Ltd. | 7.2 | 5.1 |
Unibail-Rodamco | 6.7 | 5.2 |
Mitsui Fudosan Co. Ltd. | 5.5 | 2.9 |
Land Securities Group PLC | 3.3 | 4.5 |
CapitaLand Ltd. | 3.2 | 2.3 |
Babis Vovos International Technical SA | 3.1 | 2.8 |
China Overseas Land & Investment Ltd. | 3.1 | 1.8 |
Hong Kong Land Holdings Ltd. | 2.9 | 2.3 |
| 50.0 | |
Top Five Countries as of July 31, 2008 | ||
(excluding cash equivalents) | % of fund's | % of fund's net assets |
Hong Kong | 22.2 | 20.6 |
Japan | 18.5 | 15.3 |
Australia | 15.7 | 17.3 |
France | 9.5 | 6.3 |
United Kingdom | 9.5 | 17.5 |
Percentages are adjusted for the effect of open futures contracts, if applicable. |
Top Five REIT Sectors as of July 31, 2008 | ||
| % of fund's | % of fund's net assets |
REITs - Management/Investment | 27.4 | 29.4 |
REITs - Office Buildings | 6.8 | 9.2 |
REITs - Shopping Centers | 5.3 | 4.3 |
REITs - Industrial Buildings | 4.9 | 2.5 |
REITs - Apartments | 0.0 | 1.5 |
Asset Allocation (% of fund's net assets) | |||||||
As of July 31, 2008 * | As of January 31, 2008 ** | ||||||
Stocks and Investment Companies 96.9% |
| Stocks and Investment Companies 96.7% |
| ||||
Short-Term |
| Short-Term |
| ||||
* Foreign investments | 96.2% |
| ** Foreign investments | 96.7% |
|
Annual Report
Investments July 31, 2008
Showing Percentage of Net Assets
Common Stocks - 96.4% | |||
Shares | Value | ||
Australia - 15.7% | |||
CFS Retail Property Trust (d) | 5,171,178 | $ 9,933,657 | |
Charter Hall Group unit | 5,796,676 | 5,130,934 | |
DEXUS Property Group unit | 4,598,485 | 6,062,229 | |
Goodman Group unit | 5,106,779 | 12,262,436 | |
Stockland Corp. Ltd. unit | 2,462,106 | 10,734,387 | |
The GPT Group unit | 2,119,378 | 3,033,483 | |
Westfield Group unit | 3,067,771 | 46,740,242 | |
TOTAL AUSTRALIA | 93,897,368 | ||
Bermuda - 0.6% | |||
HKC Holdings Ltd. | 23,359,000 | 3,862,427 | |
Brazil - 0.7% | |||
Iguatemi Empresa de Shopping Centers SA | 326,000 | 4,161,924 | |
Cayman Islands - 1.3% | |||
Central China Real Estate Ltd. | 2,251,000 | 628,997 | |
KWG Property Holding Ltd. | 2,210,000 | 1,291,735 | |
New World China Land Ltd. (d) | 12,406,200 | 5,740,666 | |
TOTAL CAYMAN ISLANDS | 7,661,398 | ||
China - 1.0% | |||
China Resources Land Ltd. | 4,302,000 | 5,701,738 | |
Cyprus - 0.3% | |||
Mirland Development Corp. PLC (a) | 293,400 | 1,591,443 | |
Finland - 1.9% | |||
Citycon Oyj (d) | 3,003,403 | 11,456,160 | |
France - 9.5% | |||
Fonciere Des Regions | 87,800 | 11,013,192 | |
Societe de la Tour Eiffel | 48,800 | 5,768,704 | |
Unibail-Rodamco | 179,417 | 40,136,826 | |
TOTAL FRANCE | 56,918,722 | ||
Germany - 1.0% | |||
DIC Asset AG | 241,960 | 5,717,389 | |
Greece - 3.1% | |||
Babis Vovos International Technical SA (a) | 611,830 | 18,679,326 | |
Hong Kong - 22.2% | |||
China Overseas Land & Investment Ltd. | 10,382,000 | 18,603,922 | |
Hang Lung Properties Ltd. | 5,409,000 | 17,228,985 | |
Hong Kong Land Holdings Ltd. | 4,238,000 | 17,502,940 | |
Hysan Development Co. Ltd. | 1,058,032 | 3,031,047 | |
Kerry Properties Ltd. | 1,521,411 | 8,132,029 | |
Common Stocks - continued | |||
Shares | Value | ||
Hong Kong - continued | |||
Link (REIT) | 1,881,915 | $ 4,221,379 | |
New World Development Co. Ltd. | 6,413,000 | 12,083,560 | |
Sino Land Co. | 4,414,174 | 8,883,118 | |
Sun Hung Kai Properties Ltd. | 2,890,000 | 43,341,109 | |
TOTAL HONG KONG | 133,028,089 | ||
Italy - 1.0% | |||
Immobiliare Grande Distribuzione SpA | 1,817,700 | 5,811,661 | |
Japan - 18.5% | |||
Aeon Mall Co. Ltd. | 162,600 | 4,867,903 | |
Kenedix Realty Investment Corp. | 1,491 | 7,421,142 | |
Kenedix, Inc. | 2,372 | 1,728,049 | |
Mitsubishi Estate Co. Ltd. | 1,780,000 | 42,868,010 | |
Mitsui Fudosan Co. Ltd. | 1,459,000 | 33,007,028 | |
Nippon Building Fund, Inc. | 1,454 | 17,250,163 | |
ORIX JREIT, Inc. | 605 | 3,375,753 | |
TOTAL JAPAN | 110,518,048 | ||
Netherlands - 1.5% | |||
Eurocommercial Properties NV (Certificaten Van Aandelen) unit | 190,432 | 8,944,429 | |
Norway - 0.4% | |||
Norwegian Property ASA (d) | 517,000 | 2,108,208 | |
Philippines - 1.2% | |||
Ayala Land, Inc. | 20,636,760 | 4,572,985 | |
Filinvest Land, Inc. | 159,414,000 | 2,883,690 | |
TOTAL PHILIPPINES | 7,456,675 | ||
Russia - 0.6% | |||
PIK Group GDR (e) | 163,600 | 3,762,800 | |
Singapore - 5.7% | |||
Ascendas Real Estate Investment Trust (A-REIT) | 3,806,000 | 6,401,784 | |
CapitaLand Ltd. | 4,644,900 | 19,362,242 | |
CapitaMall Trust | 3,434,000 | 7,534,006 | |
City Developments Ltd. | 121,900 | 1,023,411 | |
TOTAL SINGAPORE | 34,321,443 | ||
United Kingdom - 9.5% | |||
Big Yellow Group PLC (d) | 315,000 | 1,938,599 | |
British Land Co. PLC | 878,600 | 12,153,635 | |
Hammerson PLC | 768,500 | 14,530,504 | |
Land Securities Group PLC | 772,600 | 19,659,110 | |
Common Stocks - continued | |||
Shares | Value | ||
United Kingdom - continued | |||
Minerva PLC (a) | 580,000 | $ 1,507,538 | |
Unite Group PLC | 1,807,900 | 7,072,457 | |
TOTAL UNITED KINGDOM | 56,861,843 | ||
United States of America - 0.7% | |||
ProLogis Trust | 85,000 | 4,154,800 | |
TOTAL COMMON STOCKS (Cost $658,770,977) | 576,615,891 | ||
Investment Companies - 0.5% | |||
|
|
|
|
Luxembourg - 0.5% | |||
ProLogis European Properties Fund | 252,000 | 3,298,789 | |
Money Market Funds - 4.8% | |||
|
|
|
|
Fidelity Cash Central Fund, 2.35% (b) | 15,561,585 | 15,561,585 | |
Fidelity Securities Lending Cash Central Fund, 2.37% (b)(c) | 13,091,628 | 13,091,628 | |
TOTAL MONEY MARKET FUNDS (Cost $28,653,213) | 28,653,213 | ||
TOTAL INVESTMENT PORTFOLIO - 101.7% (Cost $692,330,133) | 608,567,893 | ||
NET OTHER ASSETS - (1.7)% | (10,344,855) | ||
NET ASSETS - 100% | $ 598,223,038 |
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
(e) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the end of the period, the value of these securities amounted to $3,762,800 or 0.6% of net assets. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 737,983 |
Fidelity Securities Lending Cash Central Fund | 603,846 |
Total | $ 1,341,829 |
Income Tax Information |
The fund intends to elect to defer to its fiscal year ending July 31, 2009 approximately $91,247,042 of losses recognized during the period November 1, 2007 to July 31, 2008. |
The fund intends to elect to defer to its fiscal year ending July 31, 2009 approximately $51,983,093 of passive foreign investment company losses recognized during the period November 1, 2007 to July 31, 2008. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements
Statement of Assets and Liabilities
| July 31, 2008 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $11,793,441) - See accompanying schedule: Unaffiliated issuers (cost $663,676,920) | $ 579,914,680 |
|
Fidelity Central Funds (cost $28,653,213) | 28,653,213 |
|
Total Investments (cost $692,330,133) |
| $ 608,567,893 |
Receivable for investments sold | 415,537 | |
Receivable for fund shares sold | 895,865 | |
Dividends receivable | 2,642,340 | |
Distributions receivable from Fidelity Central Funds | 104,668 | |
Prepaid expenses | 1,115 | |
Other receivables | 560,226 | |
Total assets | 613,187,644 | |
|
|
|
Liabilities | ||
Payable for fund shares redeemed | $ 1,222,720 | |
Accrued management fee | 353,446 | |
Distribution fees payable | 7,991 | |
Other affiliated payables | 189,988 | |
Other payables and accrued expenses | 98,833 | |
Collateral on securities loaned, at value | 13,091,628 | |
Total liabilities | 14,964,606 | |
|
|
|
Net Assets | $ 598,223,038 | |
Net Assets consist of: |
| |
Paid in capital | $ 836,782,523 | |
Distributions in excess of net investment income | (51,983,093) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (102,800,219) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (83,776,173) | |
Net Assets | $ 598,223,038 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements - continued
Statement of Assets and Liabilities - continued
| July 31, 2008 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 10.63 | |
|
|
|
Maximum offering price per share (100/94.25 of $10.63) | $ 11.28 | |
Class T: | $ 10.62 | |
|
|
|
Maximum offering price per share (100/96.50 of $10.62) | $ 11.01 | |
Class B: | $ 10.58 | |
|
|
|
Class C: | $ 10.57 | |
|
|
|
|
|
|
International Real Estate | $ 10.68 | |
|
|
|
Institutional Class: | $ 10.66 |
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
| Year ended July 31, 2008 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 24,245,635 |
Interest |
| 22,594 |
Income from Fidelity Central Funds |
| 1,341,829 |
|
| 25,610,058 |
Less foreign taxes withheld |
| (2,019,537) |
Total income |
| 23,590,521 |
|
|
|
Expenses | ||
Management fee | $ 5,688,515 | |
Transfer agent fees | 2,218,287 | |
Distribution fees | 82,995 | |
Accounting and security lending fees | 390,709 | |
Custodian fees and expenses | 365,705 | |
Independent trustees' compensation | 3,595 | |
Registration fees | 90,287 | |
Audit | 69,362 | |
Legal | 5,241 | |
Interest | 23,066 | |
Miscellaneous | 71,028 | |
Total expenses before reductions | 9,008,790 | |
Expense reductions | (316,464) | 8,692,326 |
Net investment income (loss) | 14,898,195 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | (74,943,285) | |
Foreign currency transactions | 66,799 | |
Total net realized gain (loss) |
| (74,876,486) |
Change in net unrealized appreciation (depreciation) on: Investment securities | (134,156,478) | |
Assets and liabilities in foreign currencies | (88,300) | |
Total change in net unrealized appreciation (depreciation) |
| (134,244,778) |
Net gain (loss) | (209,121,264) | |
Net increase (decrease) in net assets resulting from operations | $ (194,223,069) |
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) | $ 14,898,195 | $ 19,060,502 |
Net realized gain (loss) | (74,876,486) | 65,469,181 |
Change in net unrealized appreciation (depreciation) | (134,244,778) | 11,371,284 |
Net increase (decrease) in net assets resulting | (194,223,069) | 95,900,967 |
Distributions to shareholders from net investment income | (18,764,211) | (8,677,416) |
Distributions to shareholders from net realized gain | (91,321,071) | (61,685,812) |
Total distributions | (110,085,282) | (70,363,228) |
Share transactions - net increase (decrease) | (143,878,212) | 571,194,492 |
Redemption fees | 522,585 | 1,300,956 |
Total increase (decrease) in net assets | (447,663,978) | 598,033,187 |
|
|
|
Net Assets | ||
Beginning of period | 1,045,887,016 | 447,853,829 |
End of period (including distributions in excess of net investment income of $51,983,093 and undistributed net investment income of $15,501,269, respectively) | $ 598,223,038 | $ 1,045,887,016 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended July 31, | 2008 | 2007 I |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 15.71 | $ 17.46 |
Income from Investment Operations |
|
|
Net investment income (loss) E | .20 | .11 |
Net realized and unrealized gain (loss) | (3.48) | (1.87) H |
Total from investment operations | (3.28) | (1.76) |
Distributions from net investment income | (.31) | - |
Distributions from net realized gain | (1.50) | - |
Total distributions | (1.81) | - |
Redemption fees added to paid in capital E | .01 | .01 |
Net asset value, end of period | $ 10.63 | $ 15.71 |
Total Return B, C, D | (23.20)% | (10.02)% |
Ratios to Average Net Assets F, J |
|
|
Expenses before reductions | 1.38% | 1.37% A |
Expenses net of fee waivers, if any | 1.38% | 1.37% A |
Expenses net of all reductions | 1.35% | 1.26% A |
Net investment income (loss) | 1.58% | 2.08% A |
Supplemental Data |
|
|
Net assets, end of period (000 omitted) | $ 9,976 | $ 5,087 |
Portfolio turnover rate G | 63% | 144% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
H The amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchases of shares in relation to fluctuating market values of the investments of the Fund.
I For the period April 4, 2007 (commencement of sale of shares) to July 31, 2007.
J Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class T
Years ended July 31, | 2008 | 2007 I |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 15.70 | $ 17.46 |
Income from Investment Operations |
|
|
Net investment income (loss) E | .17 | .10 |
Net realized and unrealized gain (loss) | (3.48) | (1.87) H |
Total from investment operations | (3.31) | (1.77) |
Distributions from net investment income | (.28) | - |
Distributions from net realized gain | (1.50) | - |
Total distributions | (1.78) | - |
Redemption fees added to paid in capital E | .01 | .01 |
Net asset value, end of period | $ 10.62 | $ 15.70 |
Total Return B, C, D | (23.39)% | (10.08)% |
Ratios to Average Net Assets F, J |
|
|
Expenses before reductions | 1.64% | 1.61% A |
Expenses net of fee waivers, if any | 1.64% | 1.61% A |
Expenses net of all reductions | 1.60% | 1.51% A |
Net investment income (loss) | 1.32% | 1.90% A |
Supplemental Data |
|
|
Net assets, end of period (000 omitted) | $ 7,566 | $ 2,398 |
Portfolio turnover rate G | 63% | 144% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
H The amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchases of shares in relation to fluctuating market values of the investments of the Fund.
I For the period April 4, 2007 (commencement of sale of shares) to July 31, 2007.
J Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class B
Years ended July 31, | 2008 | 2007 I |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 15.67 | $ 17.46 |
Income from Investment Operations |
|
|
Net investment income (loss) E | .11 | .07 |
Net realized and unrealized gain (loss) | (3.48) | (1.87) H |
Total from investment operations | (3.37) | (1.80) |
Distributions from net investment income | (.23) | - |
Distributions from net realized gain | (1.50) | - |
Total distributions | (1.73) | - |
Redemption fees added to paid in capital E | .01 | .01 |
Net asset value, end of period | $ 10.58 | $ 15.67 |
Total Return B, C, D | (23.80)% | (10.25)% |
Ratios to Average Net Assets F, J |
|
|
Expenses before reductions | 2.14% | 2.11% A |
Expenses net of fee waivers, if any | 2.14% | 2.11% A |
Expenses net of all reductions | 2.11% | 2.01% A |
Net investment income (loss) | .82% | 1.38% A |
Supplemental Data |
|
|
Net assets, end of period (000 omitted) | $ 930 | $ 1,158 |
Portfolio turnover rate G | 63% | 144% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the contingent deferred sales charge.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
H The amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchases of shares in relation to fluctuating market values of the investments of the Fund.
I For the period April 4, 2007 (commencement of sale of shares) to July 31, 2007.
J Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class C
Years ended July 31, | 2008 | 2007 I |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 15.67 | $ 17.46 |
Income from Investment Operations |
|
|
Net investment income (loss) E | .11 | .07 |
Net realized and unrealized gain (loss) | (3.48) | (1.87) H |
Total from investment operations | (3.37) | (1.80) |
Distributions from net investment income | (.24) | - |
Distributions from net realized gain | (1.50) | - |
Total distributions | (1.74) | - |
Redemption fees added to paid in capital E | .01 | .01 |
Net asset value, end of period | $ 10.57 | $ 15.67 |
Total Return B, C, D | (23.78)% | (10.25)% |
Ratios to Average Net Assets F, J |
|
|
Expenses before reductions | 2.14% | 2.10% A |
Expenses net of fee waivers, if any | 2.14% | 2.10% A |
Expenses net of all reductions | 2.11% | 2.00% A |
Net investment income (loss) | .82% | 1.35% A |
Supplemental Data |
|
|
Net assets, end of period (000 omitted) | $ 3,477 | $ 2,629 |
Portfolio turnover rate G | 63% | 144% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the contingent deferred sales charge.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
H The amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchases of shares in relation to fluctuating market values of the investments of the Fund.
I For the period April 4, 2007 (commencement of sale of shares) to July 31, 2007.
J Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - International Real Estate
Years ended July 31, | 2008 | 2007 | 2006 | 2005 G |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 15.73 | $ 14.69 | $ 12.09 | $ 10.00 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss) D | .25 | .31 | .30 | .23 |
Net realized and unrealized gain (loss) | (3.50) | 2.35 | 2.93 | 1.91 |
Total from investment operations | (3.25) | 2.66 | 3.23 | 2.14 |
Distributions from net investment income | (.31) | (.22) | (.24) | (.03) |
Distributions from net realized gain | (1.50) | (1.42) | (.40) | (.03) |
Total distributions | (1.81) | (1.64) | (.64) | (.06) |
Redemption fees added to paid in capital D | .01 | .02 | .01 | .01 |
Net asset value, end of period | $ 10.68 | $ 15.73 | $ 14.69 | $ 12.09 |
Total Return B, C | (22.97)% | 19.01% | 27.85% | 21.53% |
Ratios to Average Net Assets E, H |
|
|
|
|
Expenses before reductions | 1.11% | 1.07% | 1.12% | 1.29% A |
Expenses net of fee waivers, if any | 1.10% | 1.06% | 1.12% | 1.29% A |
Expenses net of all reductions | 1.07% | .96% | .91% | 1.27% A |
Net investment income (loss) | 1.86% | 1.86% | 2.23% | 2.21% A |
Supplemental Data |
|
|
|
|
Net assets, end of period (000 omitted) | $ 572,985 | $ 1,032,138 | $ 447,854 | $ 160,980 |
Portfolio turnover rate F | 63% | 144% | 234% | 36% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
G For the period September 8, 2004 (commencement of operations) to July 31, 2005.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. 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 - Institutional Class
Years ended July 31, | 2008 | 2007 H |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 15.73 | $ 17.46 |
Income from Investment Operations |
|
|
Net investment income (loss) D | .24 | .12 |
Net realized and unrealized gain (loss) | (3.49) | (1.86) G |
Total from investment operations | (3.25) | (1.74) |
Distributions from net investment income | (.33) | - |
Distributions from net realized gain | (1.50) | - |
Total distributions | (1.83) | - |
Redemption fees added to paid in capital D | .01 | .01 |
Net asset value, end of period | $ 10.66 | $ 15.73 |
Total Return B, C | (22.98)% | (9.91)% |
Ratios to Average Net Assets E, I |
|
|
Expenses before reductions | 1.13% | 1.08% A |
Expenses net of fee waivers, if any | 1.13% | 1.08% A |
Expenses net of all reductions | 1.10% | .97% A |
Net investment income (loss) | 1.83% | 2.27% A |
Supplemental Data |
|
|
Net assets, end of period (000 omitted) | $ 3,289 | $ 2,477 |
Portfolio turnover rate F | 63% | 144% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
G The amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchases of shares in relation to fluctuating market values of the investments of the Fund.
H For the period April 4, 2007 (commencement of sale of shares) to July 31, 2007.
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 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 July 31, 2008
1. Organization.
Fidelity International Real Estate Fund (the Fund) is a non-diversified fund of Fidelity Securities Fund (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 B, Class C, International Real Estate, and Institutional Class 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 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 also differ by class.The Fund's investments in emerging markets can be subject to social, economic, regulatory, and political uncertainties and can be extremely volatile.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the SEC's web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
could differ from those estimates. 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. Wherever possible, the Fund uses independent pricing services approved by the Board of Trustees to value its investments.
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
Annual Report
3. Significant Accounting Policies - continued
Foreign Currency - continued
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The implementation of FIN 48 did not result in any unrecognized tax benefits in the accompanying financial statements. Each of the Fund's federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service. 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 recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles.
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, certain foreign taxes, passive foreign investment companies (PFIC), losses deferred due to wash sales and excise tax regulations.
The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows:
Unrealized appreciation | $ 27,453,391 |
Unrealized depreciation | (122,768,811) |
Net unrealized appreciation (depreciation) | (95,315,420) |
|
|
Cost for federal income tax purposes | $ 703,883,313 |
The tax character of distributions paid was as follows:
| July 31, 2008 | July 31, 2007 |
Ordinary Income | $ 104,576,814 | $ 58,738,310 |
Long-term Capital Gains | 5,508,468 | 11,624,918 |
Total | $ 110,085,282 | $ 70,363,228 |
Short-Term Trading (Redemption) Fees. Shares held in the Fund less than 90 days are subject to a redemption fee equal to 1.50% of the proceeds of the redeemed shares. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the Fund and accounted for as an addition to paid in capital.
New Accounting Pronouncement. In September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and results in expanded disclosures about fair value measurements.
Annual Report
4. Operating Policies.
Repurchase Agreements. FMR has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits the Fund and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts which are then invested in repurchase agreements. The Fund may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. The Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
Restricted Securities. The Fund may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities is included at the end of the Fund's Schedule of Investments.
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $499,304,933 and $740,810,801, 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 .45% of the Fund's average net assets and a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .71% of the Fund's average net assets.
Distribution and Service Plan. 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
Annual Report
Notes to Financial Statements - continued
6. Fees and Other Transactions with Affiliates - continued
Distribution and Service Plan - continued
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 and the total amounts paid to and retained by FDC were as follows:
| Distribution | Service | Paid to | Retained |
Class A | 0% | .25% | $ 19,604 | $ 2,553 |
Class T | .25% | .25% | 18,242 | - |
Class B | .75% | .25% | 11,621 | 8,890 |
Class C | .75% | .25% | 33,528 | 23,565 |
|
|
| $ 82,995 | $ 35,008 |
Sales Load. FDC receives 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. FDC receives the proceeds of contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. These charges depend on the holding period. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, 1.00% to .50% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained |
Class A | $ 17,704 |
Class T | 3,326 |
Class B* | 769 |
Class C* | 1,717 |
| $ 23,516 |
* 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. Prior to January 1, 2008, Fidelity Service
Annual Report
6. Fees and Other Transactions with Affiliates - continued
Transfer Agent Fees - continued
Company, Inc. (FSC), also an affiliate of FMR, was the transfer agent for International Real Estate shares. For the period, each class paid the following transfer agent fees:
| Amount | % of |
Class A | $ 23,524 | .30 |
Class T | 11,255 | .31 |
Class B | 3,607 | .31 |
Class C | 10,271 | .31 |
International Real Estate | 2,159,996 | .27 |
Institutional Class | 9,634 | .30 |
| $ 2,218,287 |
|
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $90 for the period.
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. The Fund's activity in this program during the period for which loans were outstanding was as follows:
Borrower or Lender | Average Daily | Weighted Average | Interest |
Borrower | $ 12,036,923 | 5.31% | $ 23,066 |
Annual Report
Notes to Financial Statements - continued
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $4.2 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro rata portion of the line of credit, which amounted to $2,205 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
8. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Net income from lending portfolio securities during the period amounted to $603,846.
9. Expense Reductions.
FMR voluntarily agreed to reimburse a portion of the International Real Estate's operating expenses. During the period, this reimbursement reduced the class' expenses by $45,332.
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 $261,873 for the period. In addition, through arrangements with each class' transfer agent, credits realized as a result of
Annual Report
9. Expense Reductions - continued
uninvested cash balances were used to reduce the Fund's expenses. During the period, credits reduced each class' transfer agent expense as noted in the table below.
| Transfer Agent |
|
Class A | $ 31 |
|
International Real Estate | 9,228 |
|
| $ 9,259 |
|
10. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
11. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended July 31, | 2008 | 2007 |
From net investment income |
|
|
Class A | $ 129,243 | $ - |
Class T | 47,714 | - |
Class B | 18,349 | - |
Class C | 47,789 | - |
International Real Estate | 18,458,440 | 8,677,416 |
Institutional Class | 62,676 | - |
Total | $ 18,764,211 | $ 8,677,416 |
From net realized gain |
|
|
Class A | $ 682,544 | $ - |
Class T | 265,212 | - |
Class B | 121,612 | - |
Class C | 311,919 | - |
International Real Estate | 89,636,941 | 61,685,812 |
Institutional Class | 302,843 | - |
Total | $ 91,321,071 | $ 61,685,812 |
Annual Report
Notes to Financial Statements - continued
12. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
Years ended July 31, | 2008 | 2007A | 2008 | 2007A |
Class A |
|
|
|
|
Shares sold | 900,194 | 352,797 | $ 11,742,685 | $ 6,021,703 |
Reinvestment of distributions | 55,923 | - | 765,385 | - |
Shares redeemed | (341,825) | (28,946) | (4,339,419) | (470,996) |
Net increase (decrease) | 614,292 | 323,851 | $ 8,168,651 | $ 5,550,707 |
Class T |
|
|
|
|
Shares sold | 633,863 | 163,911 | $ 7,676,814 | $ 2,804,594 |
Reinvestment of distributions | 21,513 | - | 296,970 | - |
Shares redeemed | (95,643) | (11,190) | (1,262,734) | (189,267) |
Net increase (decrease) | 559,733 | 152,721 | $ 6,711,050 | $ 2,615,327 |
Class B |
|
|
|
|
Shares sold | 50,624 | 74,357 | $ 676,962 | $ 1,273,355 |
Reinvestment of distributions | 9,315 | - | 128,955 | - |
Shares redeemed | (45,973) | (460) | (599,735) | (7,526) |
Net increase (decrease) | 13,966 | 73,897 | $ 206,182 | $ 1,265,829 |
Class C |
|
|
|
|
Shares sold | 207,359 | 188,521 | $ 2,751,080 | $ 3,213,374 |
Reinvestment of distributions | 24,058 | - | 331,352 | - |
Shares redeemed | (70,253) | (20,772) | (919,320) | (352,540) |
Net increase (decrease) | 161,164 | 167,749 | $ 2,163,112 | $ 2,860,834 |
International Real Estate |
|
|
|
|
Shares sold | 21,686,399 | 78,643,461 | $ 295,025,902 | $ 1,288,512,778 |
Reinvestment of distributions | 7,157,452 | 4,249,998 | 99,352,759 | 65,004,744 |
Shares redeemed | (40,815,706) | (47,753,325) | (557,680,698) | (797,297,400) |
Net increase (decrease) | (11,971,855) | 35,140,134 | $ (163,302,037) | $ 556,220,122 |
Institutional Class |
|
|
|
|
Shares sold | 282,296 | 158,866 | $ 3,825,173 | $ 2,704,482 |
Reinvestment of distributions | 22,489 | - | 308,363 | - |
Shares redeemed | (153,644) | (1,378) | (1,958,706) | (22,809) |
Net increase (decrease) | 151,141 | 157,488 | $ 2,174,830 | $ 2,681,673 |
A Share transactions for Class A, Class T, Class B, Class C and Institutional Class are for the period April 4, 2007 (commencement of sale of shares) to July 31, 2007.
Annual Report
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Securities Fund and the Shareholders of Fidelity International Real Estate 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 International Real Estate Fund (a fund of Fidelity Securities Fund) at July 31, 2008, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and 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 International Real Estate 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 July 31, 2008 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
September 22, 2008
Annual Report
Trustees and Officers
The Trustees, Member of the Advisory Board, and executive officers of the trust and fund, as applicable, are listed below. The Board of Trustees governs the fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee the fund's activities, review contractual arrangements with companies that provide services to the fund, and review the fund's performance. Except for Edward C. Johnson 3d and James C. Curvey, each of the Trustees oversees 218 funds advised by FMR or an affiliate. Messrs. Johnson and Curvey oversee 377 funds advised by FMR or an affiliate.
The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust. Each Trustee who is not an interested person (as defined in the 1940 Act) (Independent Trustee), shall retire not later than the last day of the calendar year in which his or her 72nd birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board Member hold office without limit in time, except that any officer and Advisory Board Member may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years.
The fund's Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-800-544-8544.
Interested Trustees*:
Correspondence intended for each Trustee who is an interested person may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Edward C. Johnson 3d (78) | |
| Year of Election or Appointment: 1984 Mr. Johnson is Chairman of the Board of Trustees. Mr. Johnson serves as Chief Executive Officer, Chairman, and a Director of FMR LLC; Chairman and a Director of FMR; Chairman and a Director of Fidelity Research & Analysis Company (FRAC); Chairman and a Director of Fidelity Investments Money Management, Inc.; and Chairman and a Director of FMR Co., Inc. In addition, Mr. Johnson serves as Chairman and Director of FIL Limited. Previously, Mr. Johnson served as President of FMR LLC (2006-2007). |
James C. Curvey (73) | |
| Year of Election or Appointment: 2007 Mr. Curvey also serves as Trustee (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2006-present) and Director of FMR LLC. In addition, Mr. Curvey serves as an Overseer for the Boston Symphony Orchestra and a member of the Trustees of Villanova University. |
* Trustees have been determined to be "Interested Trustees" by virtue of, among other things, their affiliation with the trust or various entities under common control with FMR. FMR Corp. merged with and into FMR LLC on October 1, 2007. Any references to FMR LLC for prior periods are deemed to be references to the prior entity.
Independent Trustees:
Correspondence intended for each Independent Trustee (that is, the Trustees other than the Interested Trustees) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.
Name, Age; Principal Occupation | |
Dennis J. Dirks (60) | |
| Year of Election or Appointment: 2005 Prior to his retirement in May 2003, Mr. Dirks was Chief Operating Officer and a member of the Board of The Depository Trust & Clearing Corporation (DTCC) (1999-2003). He also served as President, Chief Operating Officer, and Board member of The Depository Trust Company (DTC) (1999-2003) and President and Board member of the National Securities Clearing Corporation (NSCC) (1999-2003). In addition, Mr. Dirks served as a Trustee and a member of the Finance Committee of Manhattan College (2005-2008), and as Chief Executive Officer and Board member of the Government Securities Clearing Corporation (2001-2003) and Chief Executive Officer and Board member of the Mortgage-Backed Securities Clearing Corporation (2001-2003). Mr. Dirks also serves as a Trustee and a member of the Finance Committee of AHRC of Nassau County (2006-present). |
Alan J. Lacy (54) | |
| Year of Election or Appointment: 2008 Mr. Lacy serves as Senior Adviser (2007-present) of Oak Hill Capital Partners, L.P. (a private equity firm). Mr. Lacy also served as Chief Executive Officer (2000-2005) and Vice Chairman (2005-2006) of Sears Holdings Corporation and Sears, Roebuck and Co. (retail). In addition, Mr. Lacy serves as a member of the Board of Directors of The Western Union Company (global money transfer, 2006-present) and Bristol-Myers Squibb (global pharmaceuticals, 2007-present). Mr. Lacy is a Trustee of the National Parks Conservation Association and The Field Museum of Natural History. |
Ned C. Lautenbach (64) | |
| Year of Election or Appointment: 2000 Mr. Lautenbach is Chairman of the Independent Trustees (2006-present). Mr. Lautenbach is an Advisory Partner of Clayton, Dubilier & Rice, Inc. (private equity investment firm). Previously, Mr. Lautenbach was with the International Business Machines Corporation (IBM) from 1968 until his retirement in 1998. Mr. Lautenbach serves as a Director of Eaton Corporation (diversified industrial) as well as the Philharmonic Center for the Arts in Naples, Florida. He also is a member of the Board of Trustees of Fairfield University (2005-present), as well as a member of the Council on Foreign Relations. Previously, Mr. Lautenbach served as a Director of Sony Corporation (2006-2007). |
Joseph Mauriello (63) | |
| 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 firm, 1965-2005). Mr. Mauriello currently serves as a member of the Board of Directors of XL Capital Ltd. (global insurance and re-insurance company, 2006-present) and of Arcadia Resources Inc. (health care services and products, 2007-present). He also served as a Director of the Hamilton Funds of the Bank of New York (2006-2007). |
Cornelia M. Small (64) | |
| Year of Election or Appointment: 2005 Ms. Small is a member of the Investment Committee, and Chair (2008-present) and a member of the Board of Trustees of Smith College. Ms. Small also serves on the Investment Committee of the Berkshire Taconic Community Foundation (2008-present). Previously, Ms. Small served as Chairperson of the Investment Committee (2002-2008) of Smith College and as Co-Chair (2000-2003) of the Annual Fund for the Fletcher School of Law and Diplomacy. In addition, she served as Chief Investment Officer, Director of Global Equity Investments, and a member of the Board of Directors of Scudder, Stevens & Clark and Scudder Kemper Investments. |
William S. Stavropoulos (69) | |
| Year of Election or Appointment: 2002 Mr. Stavropoulos is Chairman Emeritus of the Board of Directors of The Dow Chemical Company, where he previously served in numerous senior management positions, including President (1993-2000; 2002-2003), CEO (1995-2000; 2002-2004), Chairman of the Executive Committee (2000-2006), and as a member of the Board of Directors (1990-2006). Currently, he is a Director of Teradata Corporation (data warehousing and technology solutions, 2008-present), Chemical Financial Corporation, Maersk Inc. (industrial conglomerate), Tyco International, Inc. (multinational manufacturing and services, 2007-present), and a member of the Advisory Board for Metalmark Capital (private equity investment firm, 2005-present). He is a special advisor to Clayton, Dubilier & Rice, Inc. (private equity investment). In addition, Mr. Stavropoulos is a member of the University of Notre Dame Advisory Council for the College of Science. |
David M. Thomas (59) | |
| Year of Election or Appointment: 2008 Previously, Mr. Thomas served as Executive Chairman (2005-2006) and Chairman and Chief Executive Officer (2000-2005) of IMS Health, Inc. (pharmaceutical and healthcare information solutions). In addition, Mr. Thomas serves as a member of the Board of Directors of Fortune Brands, Inc. (consumer products holding company), and Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (57) | |
| Year of Election or Appointment: 2008 Mr. Wiley also serves as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-present). He serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), and a Director of Bill Barrett Corporation (exploration and production company, 2005-present). In addition, he also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a Sr. Energy Advisor of Katzenbach Partners, LLC (consulting firm, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment firm), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services company, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production company, 2001-2005). |
Advisory Board Member and Executive Officers**:
Correspondence intended for each executive officer and Mr. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Peter S. Lynch (64) | |
| Year of Election or Appointment: 2003 Member of the Advisory Board of Fidelity Securities Fund. Mr. Lynch is Vice Chairman and a Director of FMR, and Vice Chairman (2001-present) and a Director of FMR Co., Inc. Previously, Mr. Lynch served as a Trustee of the Fidelity funds (1990-2003). In addition, he serves as a Trustee of Boston College and as the Chairman of the Inner-City Scholarship Fund. |
Kenneth B. Robins (38) | |
| Year of Election or Appointment: 2008 President and Treasurer of International Real Estate. Mr. Robins also serves as President and Treasurer of Fidelity's Equity and High Income Funds (2008-present) and is an employee of FMR (2004-present). Before joining Fidelity Investments, Mr. Robins worked at KPMG LLP, where he was a partner in KPMG's department of professional practice (2002-2004). |
Brian B. Hogan (43) | |
| Year of Election or Appointment: 2007 Vice President of International Real Estate. Mr. Hogan also serves as Vice President of Sector Funds (2007-present) and Senior Vice President, Equity Research of FMR. Previously, Mr. Hogan served as a portfolio manager. |
Scott C. Goebel (40) | |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of International Real Estate. Mr. Goebel also serves as Secretary and CLO of other Fidelity funds (2008-present); General Counsel, Secretary, and Senior Vice President of FMR (2008-present); and Deputy General Counsel of FMR LLC. Previously, Mr. Goebel served as Assistant Secretary of the Funds (2007-2008) and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007). |
John B. McGinty, Jr. (45) | |
| Year of Election or Appointment: 2008 Assistant Secretary of International Real Estate. Mr. McGinty also serves as Assistant Secretary of Fidelity's other Equity and High Income Funds (2008-present) and is an employee of FMR LLC (2004-present). Mr. McGinty also serves as Senior Vice President, Secretary, and Chief Legal Officer of FDC (2007-present). Before joining Fidelity Investments, Mr. McGinty practiced law at Ropes & Gray, LLP. |
Holly C. Laurent (54) | |
| Year of Election or Appointment: 2008 Anti-Money Laundering (AML) officer of International Real Estate. Ms. Laurent also serves as AML officer of other Fidelity funds (2008-present) and is an employee of FMR LLC. Previously, Ms. Laurent was Senior Vice President and Head of Legal for Fidelity Business Services India Pvt. Ltd. (2006-2008), Senior Vice President, Deputy General Counsel and Group Head for FMR LLC (2005-2006). |
Christine Reynolds (49) | |
| Year of Election or Appointment: 2008 Chief Financial Officer of International Real Estate. Ms. Reynolds also serves as Chief Financial Officer of other Fidelity funds (2008-present). Ms. Reynolds became President of Fidelity Pricing and Cash Management Services (FPCMS) in August 2008. She served as Chief Operating Officer of FPCMS from 2007 through July 2008. Previously, Ms. Reynolds served as President, Treasurer, and Anti-Money Laundering officer of the Fidelity funds (2004-2007). Before joining Fidelity Investments, Ms. Reynolds worked at PricewaterhouseCoopers LLP (PwC) (1980-2002), where she was an audit partner with PwC's investment management practice. |
Kenneth A. Rathgeber (61) | |
| Year of Election or Appointment: 2004 Chief Compliance Officer of International Real Estate. Mr. Rathgeber also serves as Chief Compliance Officer of Fidelity's Equity and High Income Funds (2004-present). He is Chief Compliance Officer of FMR (2005-present), FMR Co., Inc. (2005-present), Fidelity Management & Research (U.K.) Inc. (2005-present), Fidelity Research & Analysis Company (2005-present), Fidelity Investments Money Management, Inc. (2005-present), and Strategic Advisers, Inc. (2005-present). |
Bryan A. Mehrmann (47) | |
| Year of Election or Appointment: 2005 Deputy Treasurer of International Real Estate. Mr. Mehrmann also serves as Deputy Treasurer of other Fidelity funds (2005-present) and is an employee of FMR. Previously, Mr. Mehrmann served as Vice President of Fidelity Investments Institutional Services Group (FIIS)/Fidelity Investments Institutional Operations Corporation, Inc. (FIIOC) Client Services (1998-2004). |
Adrien E. Deberghes (40) | |
| Year of Election or Appointment: 2008 Deputy Treasurer of International Real Estate. Mr. Deberghes also serves as Deputy Treasurer of Fidelity's Equity and High Income Funds (2008-present) and is an employee of FMR (2008-present). Previously, Mr. Deberghes served as Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005). |
Robert G. Byrnes (41) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of International Real Estate. Mr. Byrnes also serves as Assistant Treasurer of other Fidelity funds (2005-present) and is an employee of FMR (2005-present). Previously, Mr. Byrnes served as Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (2003-2005). Before joining Fidelity Investments, Mr. Byrnes worked at Deutsche Asset Management where he served as Vice President of the Investment Operations Group (2000-2003). |
Peter L. Lydecker (54) | |
| Year of Election or Appointment: 2004 Assistant Treasurer of International Real Estate. Mr. Lydecker also serves as Assistant Treasurer of other Fidelity funds (2004-present) and is an employee of FMR. |
Paul M. Murphy (61) | |
| Year of Election or Appointment: 2007 Assistant Treasurer of International Real Estate. Mr. Murphy also serves as Assistant Treasurer of other Fidelity funds (2007-present) and is an employee of FMR (2007-present). Previously, Mr. Murphy served as Chief Financial Officer of the Fidelity Funds (2005-2006), Vice President and Associate General Counsel of FMR (2007), and Senior Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (1994-2007). |
Gary W. Ryan (49) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of International Real Estate. Mr. Ryan also serves as Assistant Treasurer of other Fidelity funds (2005-present) and is an employee of FMR (2005-present). Previously, Mr. Ryan served as Vice President of Fund Reporting in Fidelity Pricing and Cash Management Services (FPCMS) (1999-2005). |
** FMR Corp. merged with and into FMR LLC on October 1, 2007. Any references to FMR LLC for prior periods are deemed to be references to the prior entity.
Annual Report
Distributions (Unaudited)
The fund hereby designates as a capital gain dividend with respect to the taxable year ended July 31, 2008, $600,573, or, if subsequently determined to be different, the net capital gain of such year.
The fund designates 11% and 4% of the dividends distributed in September and December, respectively 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 amounts per share which represents income derived from sources within, and taxes paid to, foreign countries or possessions of the United States are as follows:
Pay Date | Income | Taxes |
09/10/2007 | $0.331 | $0.0426 |
12/24/2007 | $0.113 | $0.0105 |
The fund will notify shareholders in January 2009 of amounts for use in preparing 2008 income tax returns.
Annual Report
Proxy Voting Results
A special meeting of the fund's shareholders was held on May 14, 2008. The results of votes taken among shareholders on the proposals before them are reported below. Each vote reported represents one dollar of net asset value held on the record date for the meeting.
PROPOSAL 1 | ||
To elect a Board of Trustees.A | ||
| # of | % of |
James C. Curvey | ||
Affirmative | 30,242,569,269.49 | 94.915 |
Withheld | 1,620,182,942.38 | 5.085 |
TOTAL | 31,862,752,211.87 | 100.000 |
Dennis J. Dirks | ||
Affirmative | 30,356,248,026.80 | 95.272 |
Withheld | 1,506,504,185.07 | 4.728 |
TOTAL | 31,862,752,211.87 | 100.000 |
Edward C. Johnson 3d | ||
Affirmative | 30,163,300,902.81 | 94.666 |
Withheld | 1,699,451,309.06 | 5.334 |
TOTAL | 31,862,752,211.87 | 100.000 |
Alan J. Lacy | ||
Affirmative | 30,334,439,999.59 | 95.203 |
Withheld | 1,528,312,212.28 | 4.797 |
TOTAL | 31,862,752,211.87 | 100.000 |
Ned C. Lautenbach | ||
Affirmative | 30,317,381,535.59 | 95.150 |
Withheld | 1,545,370,676.28 | 4.850 |
TOTAL | 31,862,752,211.87 | 100.000 |
Joseph Mauriello | ||
Affirmative | 30,340,553,696.88 | 95.223 |
Withheld | 1,522,198,514.99 | 4.777 |
TOTAL | 31,862,752,211.87 | 100.000 |
Cornelia M. Small | ||
Affirmative | 30,337,552,071.15 | 95.213 |
Withheld | 1,525,200,140.72 | 4.787 |
TOTAL | 31,862,752,211.87 | 100.000 |
William S. Stavropoulos | ||
Affirmative | 30,240,356,579.51 | 94.908 |
Withheld | 1,622,395,632.36 | 5.092 |
TOTAL | 31,862,752,211.87 | 100.000 |
| # of | % of |
David M. Thomas | ||
Affirmative | 30,352,029,125.67 | 95.259 |
Withheld | 1,510,723,086.20 | 4.741 |
TOTAL | 31,862,752,211.87 | 100.000 |
Michael E. Wiley | ||
Affirmative | 30,333,540,290.12 | 95.201 |
Withheld | 1,529,211,921.75 | 4.799 |
TOTAL | 31,862,752,211.87 | 100.000 |
PROPOSAL 2 | ||
To amend the Declaration of Trust to reduce the required quorum for future shareholder meetings.A | ||
Affirmative | 23,747,670,372.95 | 74.531 |
Against | 5,357,217,831.03 | 16.814 |
Abstain | 1,587,233,084.08 | 4.981 |
Broker | 1,170,630,923.81 | 3.674 |
TOTAL | 31,862,752,211.87 | 100.000 |
A Denotes trust-wide proposal and voting results. |
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees
Fidelity International Real Estate Fund
Each year, typically in July, the Board of Trustees, including the Independent Trustees (together, the Board), votes on the renewal of the management contract and sub-advisory agreements (together, the Advisory Contracts) for the fund. The Board, assisted by the advice of fund counsel and Independent Trustees' counsel, requests and considers a broad range of information throughout the year.
The Board meets regularly and, acting directly and through its separate committees, requests and receives information concerning, and considers at each of its meetings factors that are relevant to, its annual consideration of the renewal of the fund's Advisory Contracts, including the services and support provided to the fund and its shareholders. At the time of the renewal, the Board had 12 standing committees, each composed of Independent Trustees with varying backgrounds, to which the Board has assigned specific subject matter responsibilities in order to enhance effective decision-making by the Board. Each committee has a written charter outlining the structure and purposes of the committee. The Board also meets as needed to consider matters specifically related to the Board's annual consideration of the renewal of Advisory Contracts.
At its July 2008 meeting, the Board of Trustees, including the Independent Trustees, unanimously determined to renew the fund's Advisory Contracts. In reaching its determination, the Board considered all factors it believed relevant, including (i) the nature, extent, and quality of the services to be provided to the fund and its shareholders (including the investment performance of the fund); (ii) the competitiveness of the management fee and total expenses; (iii) the total costs of the services to be provided by and the profits to be realized by Fidelity from its relationship with the fund; (iv) the extent to which economies of scale would be realized as the fund grows; and (v) whether fee levels reflect these economies of scale, if any, for the benefit of fund shareholders. The Board also approved agreements with foreign sub-advisers Fidelity Management & Research (Japan) Inc. and Fidelity Management & Research (Hong Kong) Limited, as well as amendments to the fund's agreement with Fidelity Management & Research (U.K.) Inc..
In considering whether to renew the Advisory Contracts for the fund, the Board ultimately reached a determination, with the assistance of fund counsel and Independent Trustees' counsel and through the exercise of its business judgment, that the renewal of the Advisory Contracts and the compensation to be received by Fidelity under the management contract is consistent with Fidelity's fiduciary duty under applicable law. The Board's decision to renew the Advisory Contracts was not based on any single factor noted above, but rather was based on a comprehensive consideration of all the information provided to the Board at its meetings throughout the year. The Board, in reaching its determination to renew the Advisory Contracts, is aware that shareholders in the fund have a broad range of investment choices available to them, including a wide choice among mutual funds offered by competitors to Fidelity, and that the fund's shareholders, with the opportunity to review and weigh the disclosure provided by the fund in its prospectus and other public disclosures, have chosen to invest in this fund, managed by Fidelity.
Annual Report
Nature, Extent, and Quality of Services Provided. The Board considered staffing within the investment adviser, FMR, and the sub-advisers (together, the Investment Advisers), including the backgrounds of the fund's investment personnel and the fund's investment objective and discipline. The Independent Trustees also had discussions with senior management of Fidelity's investment operations and investment groups. The Board considered the structure of the portfolio manager compensation program and whether this structure provides appropriate incentives.
Resources Dedicated to Investment Management and Support Services. The Board reviewed the size, education, and experience of the Investment Advisers' investment staff, their use of technology, and the Investment Advisers' approach to recruiting, training, and retaining portfolio managers and other research, advisory, and management personnel. The Board noted that Fidelity's analysts have access to a variety of technological tools that enable them to perform both fundamental and quantitative analysis and to specialize in various disciplines. The Board considered Fidelity's extensive global research capabilities that enable the Investment Advisers to aggregate data from various sources in an effort to produce positive investment results. The Board also considered that Fidelity's portfolio managers and analysts have access to daily portfolio attribution that allows for monitoring of a fund's portfolio, as well as an electronic communication system that provides immediate real-time access to research concerning issuers and credit enhancers.
Shareholder and Administrative Services. The Board considered (i) the nature, extent, quality, and cost of advisory, administrative, distribution, and shareholder services performed by the Investment Advisers and their affiliates under the Advisory Contracts and under separate agreements covering transfer agency, pricing and bookkeeping, and securities lending services for the fund; (ii) the nature and extent of the Investment Advisers' supervision of third party service providers, principally custodians and subcustodians; and (iii) the resources devoted to, and the record of compliance with, the fund's compliance policies and procedures. The Board also reviewed the allocation of fund brokerage, including allocations to brokers affiliated with the Investment Advisers, the use of brokerage commissions to pay fund expenses, and the use of "soft" commission dollars to pay for research services. The Board further considered that Fidelity voluntarily pays for market data out of its own resources.
The Board noted that the growth of fund assets across the complex allows Fidelity to reinvest in the development of services designed to enhance the value or convenience of the Fidelity funds as investment vehicles. These services include 24-hour access to account information and market information through phone representatives and over the Internet, and investor education materials and asset allocation tools.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
Investment in a Large Fund Family. The Board considered the benefits to shareholders of investing in a Fidelity fund, including the benefits of investing in a fund that is part of a large family of funds offering a variety of investment disciplines and providing for a large variety of mutual fund investor services. For example, fund shareholders are offered the privilege of exchanging shares of the fund for shares of other Fidelity funds, as set forth in the fund's prospectus, without paying a sales charge. The Board noted that Fidelity has taken a number of actions over the previous year that benefited particular funds, including (i) dedicating additional resources to investment research and to restructure the investment research teams; (ii) contractually agreeing to reduce the management fees on Fidelity's Institutional Money Market Funds and launching Class IV and Institutional Class of certain of these funds; (iii) reducing the transfer agent fees for the Fidelity Select Portfolios and Investor Class of the VIP funds; and (iv) launching Class K of 29 equity funds as a lower-fee class available to certain employer-sponsored retirement plans.
Investment Performance. The Board considered whether the fund has operated within its investment objective, as well as its record of compliance with its investment restrictions. It also reviewed the fund's absolute investment performance for Fidelity International Real Estate (retail class), as well as the fund's relative investment performance for Fidelity International Real Estate (retail class) measured against a broad-based securities market index. The Board noted that FMR does not believe that a meaningful peer group exists against which to compare the fund's performance. Because the fund had been in existence less than five calendar years, the following charts considered by the Board show, for the one- and three-year periods ended December 31, 2007, the cumulative total returns of Fidelity International Real Estate (retail class) of the fund and the cumulative total returns of a broad-based securities market index ("benchmark"). (The Advisor Classes of the fund had less than one year of performance as of December 31, 2007.)
Annual Report
Fidelity International Real Estate Fund
The Board stated that the investment performance of the fund was lower than its benchmark for all the periods shown. The Board discussed with FMR actions that will be taken by FMR to attempt to improve the fund's below-benchmark performance. The Board will continue to closely monitor the performance of the fund in the coming year.
The Board considered that FMR has taken steps to refocus and strengthen equity research, equity portfolio management, and compliance.
Based on its review, and giving particular weight to the nature and quality of the resources dedicated by the Investment Advisers to maintain and improve relative performance, the Board concluded that the nature, extent, and quality of the services provided to the fund will benefit the fund's shareholders, particularly in light of the Board's view that the fund's shareholders benefit from investing in a fund that is part of a large family of funds offering a variety of investment disciplines and services.
Competitiveness of Management Fee and Total Fund Expenses. The Board considered the fund's management fee and total expenses compared to "mapped groups" of competitive funds and classes. Fidelity creates "mapped groups" by combining similar Lipper investment objective categories that have comparable management fee characteristics. Combining Lipper investment objective categories aids the Board's management fee and total expense comparisons by broadening the competitive group used for comparison and by reducing the number of universes to which various Fidelity funds are compared. The Board also considered supplemental information about how the fund's management fee and total expenses ranked relative to groups based on Lipper classifications, which take into account a fund's market capitalization and style.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
The Board considered two proprietary management fee comparisons for the 12-month (or shorter) 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. "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 29% means that 71% 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, is also included in the chart and considered by the Board.
Fidelity International Real Estate 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 2007.
Based on its review, the Board concluded that the fund's management fee was fair and reasonable in light of the services that the fund receives and the other factors considered.
In its review of the each class's total expenses, 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 part of its review, the Board also considered current and historical total expenses 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.
Annual Report
The Board noted that the total expenses each of Class A, Class B, Class C, Institutional Class, and Fidelity International Real Estate (retail class) ranked below its competitive median for 2007, and the total expenses of Class T ranked above its competitive median for 2007. The Board considered that the total expenses for Class T were above the median primarily because its 12b-1 fee is higher than the typical front-end load class. 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 expenses 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.
In its review of total expenses, the Board also considered Fidelity fee structures and other information on clients that FMR and its affiliates service in other competitive markets, such as other mutual funds advised or subadvised by FMR or its affiliates, pension plan clients, and other institutional clients.
Based on its review, the Board concluded that the total expenses of each class of the fund were reasonable, although in one case 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 audited books and records of Fidelity. The Audit Committee of the Board reviews any significant changes from the prior year's methodologies.
PricewaterhouseCoopers LLP (PwC), independent registered public accounting firm and auditor to Fidelity and certain Fidelity funds, has been engaged annually by the Board as part of the Board's assessment of the results of Fidelity's profitability analysis. PwC's engagement includes the review and assessment of Fidelity's methodologies used in determining the revenues and expenses attributable to Fidelity's mutual fund business, and completion of agreed-upon procedures surrounding the mathematical accuracy of fund profitability and its conformity to allocation methodologies. After considering PwC's reports issued under the engagement and information provided by Fidelity, the Board believes that while other allocation methods may also be reasonable, Fidelity's profitability methodologies are reasonable in all material respects.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
The Board has also reviewed Fidelity's non-fund businesses and any fall-out benefits related to the mutual fund business as well as cases where Fidelity's affiliates may benefit from or be related to the fund's business.
The Board considered the costs of the services provided by and the profits realized by Fidelity in connection with the operation of the fund and determined that the amount of profit is a fair entrepreneurial profit for the management of the fund.
Economies of Scale. The Board considered whether there have been economies of scale in respect of the management of the Fidelity funds, whether the Fidelity funds (including the fund) have appropriately benefited from any such economies of scale, and whether there is potential for realization of any further economies of scale. The Board considered the extent to which the fund will benefit from economies of scale through increased services to the fund, through waivers or reimbursements, or through fee or expense reductions.
The Board recognized that the fund's management contract incorporates a "group fee" structure, which provides for lower group fee rates as total fund assets under FMR's management increase, and for higher group fee rates as total fund assets under FMR's management decrease. FMR determines the group fee rates based on a tiered asset "breakpoint" schedule. The Board considered that the group fee is designed to deliver the benefits of economies of scale to fund shareholders when total fund assets increase, even if assets of any particular fund are unchanged or have declined, because some portion of Fidelity's costs are attributable to services provided to all Fidelity funds, and all funds benefit if those costs can be allocated among more assets. The Board concluded that, given the group fee structure, fund shareholders will achieve a certain level of economies of scale as assets under FMR's management increase at the fund complex level, regardless of whether Fidelity achieves any such economies of scale.
The Board further concluded that any potential economies of scale are being shared between fund shareholders and Fidelity in an appropriate manner.
Additional Information Requested by the Board. In order to develop fully the factual basis for consideration of the Fidelity funds' Advisory Contracts, the Board requested and received additional information on certain topics, including (i) fund performance trends and actions to be taken by FMR to improve certain funds' overall performance; (ii) portfolio manager changes that have occurred during the past year; (iii) Fidelity's fund profitability methodology, the profitability of certain fund service providers, and profitability trends for certain funds; (iv) Fidelity's compensation structure for portfolio managers and key personnel, including its effects on fund profitability and the extent to which portfolio manager compensation is linked to fund performance; (v) Fidelity's fee structures and rationale for recommending different fees among categories of funds; and (vi) Fidelity's rationale for recommending which funds should have a performance adjustment component as part of their management fees.
Annual Report
Based on its evaluation of all of the conclusions noted above, and after considering all material factors, the Board ultimately concluded that the advisory fee structures are fair and reasonable, and that the fund's Advisory Contracts should be renewed.
Annual Report
Managing Your Investments
Fidelity offers several ways to conveniently manage your personal investments via your telephone or PC. You can access your account information, conduct trades and research your investments 24 hours a day.
By Phone
Fidelity Automated Service Telephone provides a single toll-free number to access account balances, positions, quotes and trading. It's easy to navigate the service, and on your first call, the system will help you create a personal identification number (PIN) for security.
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Fidelity Automated
Service Telephone (FAST®)
1-800-544-5555
Press
For mutual fund and brokerage trading.
For quotes.*
For account balances and holdings.
To review orders and mutual
fund activity.
To change your PIN.
To speak to a Fidelity representative.
By PC
Fidelity's web site on the Internet provides a wide range of information, including daily financial news, fund performance, interactive planning tools and news about Fidelity products and services.
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Fidelity's Web Site
www.fidelity.com
* When you call the quotes line, please remember that a fund's yield and return will vary and, except for money market funds, share price will also vary. This means that you may have a gain or loss when you sell your shares. There is no assurance that money market funds will be able to maintain a stable $1 share price; an investment in a money market fund is not insured or guaranteed by the U.S. government. Total returns are historical and include changes in share price, reinvestment of dividends and capital gains, and the effects of any sales charges.
Annual Report
To Write Fidelity
We'll give your correspondence immediate attention and send you written confirmation upon completion of your request.
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Making Changes
To Your Account
(such as changing name, address, bank, etc.)
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0002
(letter_graphic)
For Non-Retirement
Accounts
Buying shares
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
Overnight Express
Fidelity Investments
Attn: Distribution Services
100 Crosby Parkway - KC1H
Covington, KY 41015
Selling shares
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0035
Overnight Express
Fidelity Investments
Attn: Distribution Services
100 Crosby Parkway - KC1H
Covington, KY 41015
General Correspondence
Fidelity Investments
P.O. Box 500
Merrimack, NH 03054-0500
(letter_graphic)
For Retirement
Accounts
Buying shares
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
Selling shares
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0035
Overnight Express
Fidelity Investments
Attn: Distribution Services
100 Crosby Parkway - KC1H
Covington, KY 41015
General Correspondence
Fidelity Investments
P.O. Box 500
Merrimack, NH 03054-0500
Annual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Fidelity Research & Analysis Company
Fidelity Management & Research
(U.K.) Inc.
Fidelity Investments Japan Limited
Fidelity International Investment
Advisers
Fidelity International Investment
Advisers (U.K.) Limited
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Service Agents
Fidelity Investments Institutional
Operations Company, Inc.
Boston, MA
Fidelity Service Company, Inc.
Boston, MA
Custodian
Mellon Bank, N.A.
Pittsburgh, PA
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
IRE-UANN-0908 1.801327.103
(Fidelity Investment logo)(registered trademark)
Fidelity Advisor
International Real Estate
Fund - Class A, Class T,
Class B, and Class C
Annual Report
July 31, 2008
Class A, Class T, Class B,
and Class C are classes
of Fidelity® International
Real Estate Fund
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message | Ned Johnson's message to shareholders. | |
Performance | How the fund has done over time. | |
Management's Discussion | The manager's review of fund performance, strategy and outlook. | |
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 |
| |
Proxy Voting Results |
| |
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 (search for "proxy voting guidelines") or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-877-208-0098 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company.
Annual Report
This report and the financial statements contained herein are submitted for the general information of the shareholders of the fund. This report is not authorized for distribution to prospective investors in the fund unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com or http://www.advisor.fidelity.com, as applicable.
NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE
Neither the fund nor Fidelity Distributors Corporation is a bank.
Annual Report
Chairman's Message
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Dear Shareholder:
Domestic and international securities markets have struggled thus far in 2008. High-grade fixed-income investments produced modestly positive results, but many stock benchmarks suffered double-digit losses through the first half of this year. Financial markets are always unpredictable, but there are a number of time-tested principles that can put the historical odds in your favor.
One of the basic tenets is to invest for the long term. Over time, riding out the markets' inevitable ups and downs has proven much more effective than selling into panic or chasing the hottest trend. Even missing only a few of the markets' best days can significantly diminish investor returns. Patience also affords the benefits of compounding - of earning interest on additional income or reinvested dividends and capital gains. There are tax advantages and cost benefits to consider as well. The more you sell, the more taxes you pay, and the more you trade, the higher the costs. While staying the course doesn't eliminate risk, it can considerably lessen the effect of short-term declines.
You can further manage your investing risk through diversification. And today, more than ever, geographic diversification should be taken into account. Studies indicate that asset allocation is the single most important determinant of a portfolio's long-term success. The right mix of stocks, bonds and cash - aligned to your particular risk tolerance and investment objective - is very important. Age-appropriate rebalancing is also an essential aspect of asset allocation. For younger investors, an emphasis on equities - which historically have been the best-performing asset class over time - is encouraged. As investors near their specific goal, such as retirement or sending a child to college, consideration may be given to replacing volatile assets (e.g. common stocks) with more-stable fixed investments (bonds or savings plans).
A third investment principle - investing regularly - can help lower the average cost of your purchases. Investing a certain amount of money each month or quarter helps ensure you won't pay for all your shares at market highs. This strategy - known as dollar cost averaging - also reduces unconstructive "emotion" from investing, helping shareholders avoid selling weak performers just prior to an upswing, or chasing a hot performer just before a correction.
We invite you to contact us via the Internet, through our Investor Centers or over the phone. It is our privilege to provide you the information you need to make the investments that are right for you.
Sincerely,
/s/Edward C. Johnson 3d
Edward C. Johnson 3d
Annual Report
Fidelity Advisor International Real Estate Fund - Class A, T, B, and C
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' 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 July 31, 2008 | Past 1 | Life of |
Class A (incl. 5.75% sales charge) B | -27.62% | 7.73% |
Class T (incl. 3.50% sales charge) C | -26.07% | 8.30% |
Class B (incl. contingent deferred sales charge) D | -27.17% | 8.49% |
Class C (incl. contingent deferred sales charge) E | -24.46% | 9.10% |
A From September 8, 2004.
B Class A shares bear a 0.25% 12b-1 fee. The initial offering of Class A shares took place on April 4, 2007. Returns prior to April 4, 2007 are those of International Real Estate, the original retail class of the fund, which does not bear a 12b-1 fee. Had Class A shares' 12b-1 fee been reflected, returns prior to April 4, 2007 would have been lower.
C Class T shares bear a 0.50% 12b-1 fee. The initial offering of Class T shares took place on April 4, 2007. Returns prior to April 4, 2007 are those of International Real Estate, the original retail class of the fund, which does not bear a 12b-1 fee. Had Class T shares' 12b-1 fee been reflected, returns prior to April 4, 2007 would have been lower.
D Class B shares bear a 1.00% 12b-1 fee. The initial offering of Class B shares took place on April 4, 2007. Returns prior to April 4, 2007 are those of International Real Estate, the original retail class of the fund, which does not bear a 12b-1 fee. Had Class B shares' 12b-1 fee been reflected, returns prior to April 4, 2007 would have been lower. Class B shares' contingent deferred sales charges included in past one year and life of fund total return figures are 5% and 3%, respectively.
E Class C shares bear a 1.00% 12b-1 fee. The initial offering of Class C shares took place on April 4, 2007. Returns prior to April 4, 2007 are those of International Real Estate, the original retail class of the fund, which does not bear a 12b-1 fee. Had Class C shares' 12b-1 fee been reflected, returns prior to April 4, 2007 would have been lower. Class C shares' contingent deferred sales charges included in the past one year and life of fund total return figures are 1% and 0%, respectively.
Annual Report
$10,000 Over Life of Fund
Let's say hypothetically that $10,000 was invested in Fidelity Advisor International Real Estate Fund - Class A on September 8, 2004, when the fund started, 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 MSCI® Europe, Australasia, Far East (MSCI EAFE®) Index performed over the same period. The initial offering of International Real Estate took place on September 8, 2004. See previous page for additional information regarding the performance of Class A.
In prior years, the performance from year to year was represented by the performance of Class T. Going forward, the fund's performance will be represented by Class A for consistency with other fund materials.
Annual Report
Management's Discussion of Fund Performance
Comments from Steven Buller, Portfolio Manager of Fidelity Advisor International Real Estate Fund
The year ending July 31, 2008, was extremely challenging for investors in international property stocks, although a weaker dollar helped temper the negative performance for U.S. investors. Commercial real estate values fell around the world, although not all at the same time or to the same degree. The troubles began in the United Kingdom, which struggled with declining demand for property coupled with excess supply. Next was continental Europe, which faced similar trends, although its challenges tended to be more demand- than supply-driven. The same was true of Japan. While Australia's property market remained fundamentally intact, many companies in that country struggled with balance sheet problems and excess debt levels. Hong Kong, Singapore and most emerging markets were the last to slow down, although they were hardly immune from the global credit crunch. In all, international property stocks, as measured by the EPRA/NAREIT Global Real Estate ex North America Index, declined 20.95% during the past year. The broad international stock market, as measured by the MSCI® Europe, Australasia, Far East Index (MSCI EAFE®), dropped 12.04%.
During the past year, the fund's Class A, Class T, Class B and Class C shares returned -23.20%, -23.39%, -23.80% and -23.78%, respectively (excluding sales charges), lagging the EPRA/NAREIT and MSCI EAFE indexes. Relative to the EPRA/NAREIT index, the fund was hurt by weak security selection, especially in the United Kingdom. Timely U.K. trading, however, helped counter some of that negative impact. Weak stock picks in Japan and the Philippines also detracted, as did poor results among residential property companies. In contrast, a combination of positive stock and country selection in Australia and Greece contributed, as did a modest cash position. The fund's biggest individual detractor was U.K.-based retail company and funds manager Capital & Regional. This position - which I sold in the second half of the period - lagged as a result of the weak U.K. economic and retail environment. Another weak performer was German residential developer Patrizia Immobilien, which was hurt by poor execution of its business model. I sold this stock as well. Diversified Australian developer and funds manager Charter Hall Group also lagged. In contrast, the biggest individual positive was avoiding benchmark component Centro Property Group, an Australian company hurt by relatively high debt levels and an overly aggressive business model. Overweighting Greek developer Babis Vovos also contributed.
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 (February 1, 2008 to July 31, 2008).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Annual Report
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Beginning | Ending | Expenses Paid |
Class A |
|
|
|
Actual | $ 1,000.00 | $ 836.30 | $ 6.30 |
HypotheticalA | $ 1,000.00 | $ 1,018.00 | $ 6.92 |
Class T |
|
|
|
Actual | $ 1,000.00 | $ 835.60 | $ 7.44 |
HypotheticalA | $ 1,000.00 | $ 1,016.76 | $ 8.17 |
Class B |
|
|
|
Actual | $ 1,000.00 | $ 833.10 | $ 9.75 |
HypotheticalA | $ 1,000.00 | $ 1,014.22 | $ 10.72 |
Class C |
|
|
|
Actual | $ 1,000.00 | $ 832.90 | $ 9.75 |
HypotheticalA | $ 1,000.00 | $ 1,014.22 | $ 10.72 |
International Real Estate |
|
|
|
Actual | $ 1,000.00 | $ 837.60 | $ 5.12 |
HypotheticalA | $ 1,000.00 | $ 1,019.29 | $ 5.62 |
Institutional Class |
|
|
|
Actual | $ 1,000.00 | $ 837.40 | $ 5.21 |
HypotheticalA | $ 1,000.00 | $ 1,019.19 | $ 5.72 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
| Annualized |
Class A | 1.38% |
Class T | 1.63% |
Class B | 2.14% |
Class C | 2.14% |
International Real Estate | 1.12% |
Institutional Class | 1.14% |
Annual Report
Investment Changes (Unaudited)
Top Ten Stocks as of July 31, 2008 | ||
| % of fund's | % of fund's net assets |
Westfield Group unit | 7.8 | 7.4 |
Sun Hung Kai Properties Ltd. | 7.2 | 7.7 |
Mitsubishi Estate Co. Ltd. | 7.2 | 5.1 |
Unibail-Rodamco | 6.7 | 5.2 |
Mitsui Fudosan Co. Ltd. | 5.5 | 2.9 |
Land Securities Group PLC | 3.3 | 4.5 |
CapitaLand Ltd. | 3.2 | 2.3 |
Babis Vovos International Technical SA | 3.1 | 2.8 |
China Overseas Land & Investment Ltd. | 3.1 | 1.8 |
Hong Kong Land Holdings Ltd. | 2.9 | 2.3 |
| 50.0 | |
Top Five Countries as of July 31, 2008 | ||
(excluding cash equivalents) | % of fund's | % of fund's net assets |
Hong Kong | 22.2 | 20.6 |
Japan | 18.5 | 15.3 |
Australia | 15.7 | 17.3 |
France | 9.5 | 6.3 |
United Kingdom | 9.5 | 17.5 |
Percentages are adjusted for the effect of open futures contracts, if applicable. |
Top Five REIT Sectors as of July 31, 2008 | ||
| % of fund's | % of fund's net assets |
REITs - Management/Investment | 27.4 | 29.4 |
REITs - Office Buildings | 6.8 | 9.2 |
REITs - Shopping Centers | 5.3 | 4.3 |
REITs - Industrial Buildings | 4.9 | 2.5 |
REITs - Apartments | 0.0 | 1.5 |
Asset Allocation (% of fund's net assets) | |||||||
As of July 31, 2008 * | As of January 31, 2008 ** | ||||||
Stocks and Investment Companies 96.9% |
| Stocks and Investment Companies 96.7% |
| ||||
Short-Term |
| Short-Term |
| ||||
* Foreign investments | 96.2% |
| ** Foreign investments | 96.7% |
|
Annual Report
Investments July 31, 2008
Showing Percentage of Net Assets
Common Stocks - 96.4% | |||
Shares | Value | ||
Australia - 15.7% | |||
CFS Retail Property Trust (d) | 5,171,178 | $ 9,933,657 | |
Charter Hall Group unit | 5,796,676 | 5,130,934 | |
DEXUS Property Group unit | 4,598,485 | 6,062,229 | |
Goodman Group unit | 5,106,779 | 12,262,436 | |
Stockland Corp. Ltd. unit | 2,462,106 | 10,734,387 | |
The GPT Group unit | 2,119,378 | 3,033,483 | |
Westfield Group unit | 3,067,771 | 46,740,242 | |
TOTAL AUSTRALIA | 93,897,368 | ||
Bermuda - 0.6% | |||
HKC Holdings Ltd. | 23,359,000 | 3,862,427 | |
Brazil - 0.7% | |||
Iguatemi Empresa de Shopping Centers SA | 326,000 | 4,161,924 | |
Cayman Islands - 1.3% | |||
Central China Real Estate Ltd. | 2,251,000 | 628,997 | |
KWG Property Holding Ltd. | 2,210,000 | 1,291,735 | |
New World China Land Ltd. (d) | 12,406,200 | 5,740,666 | |
TOTAL CAYMAN ISLANDS | 7,661,398 | ||
China - 1.0% | |||
China Resources Land Ltd. | 4,302,000 | 5,701,738 | |
Cyprus - 0.3% | |||
Mirland Development Corp. PLC (a) | 293,400 | 1,591,443 | |
Finland - 1.9% | |||
Citycon Oyj (d) | 3,003,403 | 11,456,160 | |
France - 9.5% | |||
Fonciere Des Regions | 87,800 | 11,013,192 | |
Societe de la Tour Eiffel | 48,800 | 5,768,704 | |
Unibail-Rodamco | 179,417 | 40,136,826 | |
TOTAL FRANCE | 56,918,722 | ||
Germany - 1.0% | |||
DIC Asset AG | 241,960 | 5,717,389 | |
Greece - 3.1% | |||
Babis Vovos International Technical SA (a) | 611,830 | 18,679,326 | |
Hong Kong - 22.2% | |||
China Overseas Land & Investment Ltd. | 10,382,000 | 18,603,922 | |
Hang Lung Properties Ltd. | 5,409,000 | 17,228,985 | |
Hong Kong Land Holdings Ltd. | 4,238,000 | 17,502,940 | |
Hysan Development Co. Ltd. | 1,058,032 | 3,031,047 | |
Kerry Properties Ltd. | 1,521,411 | 8,132,029 | |
Common Stocks - continued | |||
Shares | Value | ||
Hong Kong - continued | |||
Link (REIT) | 1,881,915 | $ 4,221,379 | |
New World Development Co. Ltd. | 6,413,000 | 12,083,560 | |
Sino Land Co. | 4,414,174 | 8,883,118 | |
Sun Hung Kai Properties Ltd. | 2,890,000 | 43,341,109 | |
TOTAL HONG KONG | 133,028,089 | ||
Italy - 1.0% | |||
Immobiliare Grande Distribuzione SpA | 1,817,700 | 5,811,661 | |
Japan - 18.5% | |||
Aeon Mall Co. Ltd. | 162,600 | 4,867,903 | |
Kenedix Realty Investment Corp. | 1,491 | 7,421,142 | |
Kenedix, Inc. | 2,372 | 1,728,049 | |
Mitsubishi Estate Co. Ltd. | 1,780,000 | 42,868,010 | |
Mitsui Fudosan Co. Ltd. | 1,459,000 | 33,007,028 | |
Nippon Building Fund, Inc. | 1,454 | 17,250,163 | |
ORIX JREIT, Inc. | 605 | 3,375,753 | |
TOTAL JAPAN | 110,518,048 | ||
Netherlands - 1.5% | |||
Eurocommercial Properties NV (Certificaten Van Aandelen) unit | 190,432 | 8,944,429 | |
Norway - 0.4% | |||
Norwegian Property ASA (d) | 517,000 | 2,108,208 | |
Philippines - 1.2% | |||
Ayala Land, Inc. | 20,636,760 | 4,572,985 | |
Filinvest Land, Inc. | 159,414,000 | 2,883,690 | |
TOTAL PHILIPPINES | 7,456,675 | ||
Russia - 0.6% | |||
PIK Group GDR (e) | 163,600 | 3,762,800 | |
Singapore - 5.7% | |||
Ascendas Real Estate Investment Trust (A-REIT) | 3,806,000 | 6,401,784 | |
CapitaLand Ltd. | 4,644,900 | 19,362,242 | |
CapitaMall Trust | 3,434,000 | 7,534,006 | |
City Developments Ltd. | 121,900 | 1,023,411 | |
TOTAL SINGAPORE | 34,321,443 | ||
United Kingdom - 9.5% | |||
Big Yellow Group PLC (d) | 315,000 | 1,938,599 | |
British Land Co. PLC | 878,600 | 12,153,635 | |
Hammerson PLC | 768,500 | 14,530,504 | |
Land Securities Group PLC | 772,600 | 19,659,110 | |
Common Stocks - continued | |||
Shares | Value | ||
United Kingdom - continued | |||
Minerva PLC (a) | 580,000 | $ 1,507,538 | |
Unite Group PLC | 1,807,900 | 7,072,457 | |
TOTAL UNITED KINGDOM | 56,861,843 | ||
United States of America - 0.7% | |||
ProLogis Trust | 85,000 | 4,154,800 | |
TOTAL COMMON STOCKS (Cost $658,770,977) | 576,615,891 | ||
Investment Companies - 0.5% | |||
|
|
|
|
Luxembourg - 0.5% | |||
ProLogis European Properties Fund | 252,000 | 3,298,789 | |
Money Market Funds - 4.8% | |||
|
|
|
|
Fidelity Cash Central Fund, 2.35% (b) | 15,561,585 | 15,561,585 | |
Fidelity Securities Lending Cash Central Fund, 2.37% (b)(c) | 13,091,628 | 13,091,628 | |
TOTAL MONEY MARKET FUNDS (Cost $28,653,213) | 28,653,213 | ||
TOTAL INVESTMENT PORTFOLIO - 101.7% (Cost $692,330,133) | 608,567,893 | ||
NET OTHER ASSETS - (1.7)% | (10,344,855) | ||
NET ASSETS - 100% | $ 598,223,038 |
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
(e) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the end of the period, the value of these securities amounted to $3,762,800 or 0.6% of net assets. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 737,983 |
Fidelity Securities Lending Cash Central Fund | 603,846 |
Total | $ 1,341,829 |
Income Tax Information |
The fund intends to elect to defer to its fiscal year ending July 31, 2009 approximately $91,247,042 of losses recognized during the period November 1, 2007 to July 31, 2008. |
The fund intends to elect to defer to its fiscal year ending July 31, 2009 approximately $51,983,093 of passive foreign investment company losses recognized during the period November 1, 2007 to July 31, 2008. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements
Statement of Assets and Liabilities
| July 31, 2008 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $11,793,441) - See accompanying schedule: Unaffiliated issuers (cost $663,676,920) | $ 579,914,680 |
|
Fidelity Central Funds (cost $28,653,213) | 28,653,213 |
|
Total Investments (cost $692,330,133) |
| $ 608,567,893 |
Receivable for investments sold | 415,537 | |
Receivable for fund shares sold | 895,865 | |
Dividends receivable | 2,642,340 | |
Distributions receivable from Fidelity Central Funds | 104,668 | |
Prepaid expenses | 1,115 | |
Other receivables | 560,226 | |
Total assets | 613,187,644 | |
|
|
|
Liabilities | ||
Payable for fund shares redeemed | $ 1,222,720 | |
Accrued management fee | 353,446 | |
Distribution fees payable | 7,991 | |
Other affiliated payables | 189,988 | |
Other payables and accrued expenses | 98,833 | |
Collateral on securities loaned, at value | 13,091,628 | |
Total liabilities | 14,964,606 | |
|
|
|
Net Assets | $ 598,223,038 | |
Net Assets consist of: |
| |
Paid in capital | $ 836,782,523 | |
Distributions in excess of net investment income | (51,983,093) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (102,800,219) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (83,776,173) | |
Net Assets | $ 598,223,038 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Assets and Liabilities - continued
| July 31, 2008 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 10.63 | |
|
|
|
Maximum offering price per share (100/94.25 of $10.63) | $ 11.28 | |
Class T: | $ 10.62 | |
|
|
|
Maximum offering price per share (100/96.50 of $10.62) | $ 11.01 | |
Class B: | $ 10.58 | |
|
|
|
Class C: | $ 10.57 | |
|
|
|
|
|
|
International Real Estate | $ 10.68 | |
|
|
|
Institutional Class: | $ 10.66 |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements - continued
Statement of Operations
| Year ended July 31, 2008 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 24,245,635 |
Interest |
| 22,594 |
Income from Fidelity Central Funds |
| 1,341,829 |
|
| 25,610,058 |
Less foreign taxes withheld |
| (2,019,537) |
Total income |
| 23,590,521 |
|
|
|
Expenses | ||
Management fee | $ 5,688,515 | |
Transfer agent fees | 2,218,287 | |
Distribution fees | 82,995 | |
Accounting and security lending fees | 390,709 | |
Custodian fees and expenses | 365,705 | |
Independent trustees' compensation | 3,595 | |
Registration fees | 90,287 | |
Audit | 69,362 | |
Legal | 5,241 | |
Interest | 23,066 | |
Miscellaneous | 71,028 | |
Total expenses before reductions | 9,008,790 | |
Expense reductions | (316,464) | 8,692,326 |
Net investment income (loss) | 14,898,195 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | (74,943,285) | |
Foreign currency transactions | 66,799 | |
Total net realized gain (loss) |
| (74,876,486) |
Change in net unrealized appreciation (depreciation) on: Investment securities | (134,156,478) | |
Assets and liabilities in foreign currencies | (88,300) | |
Total change in net unrealized appreciation (depreciation) |
| (134,244,778) |
Net gain (loss) | (209,121,264) | |
Net increase (decrease) in net assets resulting from operations | $ (194,223,069) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 14,898,195 | $ 19,060,502 |
Net realized gain (loss) | (74,876,486) | 65,469,181 |
Change in net unrealized appreciation (depreciation) | (134,244,778) | 11,371,284 |
Net increase (decrease) in net assets resulting | (194,223,069) | 95,900,967 |
Distributions to shareholders from net investment income | (18,764,211) | (8,677,416) |
Distributions to shareholders from net realized gain | (91,321,071) | (61,685,812) |
Total distributions | (110,085,282) | (70,363,228) |
Share transactions - net increase (decrease) | (143,878,212) | 571,194,492 |
Redemption fees | 522,585 | 1,300,956 |
Total increase (decrease) in net assets | (447,663,978) | 598,033,187 |
|
|
|
Net Assets | ||
Beginning of period | 1,045,887,016 | 447,853,829 |
End of period (including distributions in excess of net investment income of $51,983,093 and undistributed net investment income of $15,501,269, respectively) | $ 598,223,038 | $ 1,045,887,016 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended July 31, | 2008 | 2007 I |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 15.71 | $ 17.46 |
Income from Investment Operations |
|
|
Net investment income (loss) E | .20 | .11 |
Net realized and unrealized gain (loss) | (3.48) | (1.87) H |
Total from investment operations | (3.28) | (1.76) |
Distributions from net investment income | (.31) | - |
Distributions from net realized gain | (1.50) | - |
Total distributions | (1.81) | - |
Redemption fees added to paid in capital E | .01 | .01 |
Net asset value, end of period | $ 10.63 | $ 15.71 |
Total Return B, C, D | (23.20)% | (10.02)% |
Ratios to Average Net Assets F, J |
|
|
Expenses before reductions | 1.38% | 1.37% A |
Expenses net of fee waivers, if any | 1.38% | 1.37% A |
Expenses net of all reductions | 1.35% | 1.26% A |
Net investment income (loss) | 1.58% | 2.08% A |
Supplemental Data |
|
|
Net assets, end of period (000 omitted) | $ 9,976 | $ 5,087 |
Portfolio turnover rate G | 63% | 144% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
H The amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchases of shares in relation to fluctuating market values of the investments of the Fund.
I For the period April 4, 2007 (commencement of sale of shares) to July 31, 2007.
J Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class T
Years ended July 31, | 2008 | 2007 I |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 15.70 | $ 17.46 |
Income from Investment Operations |
|
|
Net investment income (loss) E | .17 | .10 |
Net realized and unrealized gain (loss) | (3.48) | (1.87) H |
Total from investment operations | (3.31) | (1.77) |
Distributions from net investment income | (.28) | - |
Distributions from net realized gain | (1.50) | - |
Total distributions | (1.78) | - |
Redemption fees added to paid in capital E | .01 | .01 |
Net asset value, end of period | $ 10.62 | $ 15.70 |
Total Return B, C, D | (23.39)% | (10.08)% |
Ratios to Average Net Assets F, J |
|
|
Expenses before reductions | 1.64% | 1.61% A |
Expenses net of fee waivers, if any | 1.64% | 1.61% A |
Expenses net of all reductions | 1.60% | 1.51% A |
Net investment income (loss) | 1.32% | 1.90% A |
Supplemental Data |
|
|
Net assets, end of period (000 omitted) | $ 7,566 | $ 2,398 |
Portfolio turnover rate G | 63% | 144% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
H The amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchases of shares in relation to fluctuating market values of the investments of the Fund.
I For the period April 4, 2007 (commencement of sale of shares) to July 31, 2007.
J Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class B
Years ended July 31, | 2008 | 2007 I |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 15.67 | $ 17.46 |
Income from Investment Operations |
|
|
Net investment income (loss) E | .11 | .07 |
Net realized and unrealized gain (loss) | (3.48) | (1.87) H |
Total from investment operations | (3.37) | (1.80) |
Distributions from net investment income | (.23) | - |
Distributions from net realized gain | (1.50) | - |
Total distributions | (1.73) | - |
Redemption fees added to paid in capital E | .01 | .01 |
Net asset value, end of period | $ 10.58 | $ 15.67 |
Total Return B, C, D | (23.80)% | (10.25)% |
Ratios to Average Net Assets F, J |
|
|
Expenses before reductions | 2.14% | 2.11% A |
Expenses net of fee waivers, if any | 2.14% | 2.11% A |
Expenses net of all reductions | 2.11% | 2.01% A |
Net investment income (loss) | .82% | 1.38% A |
Supplemental Data |
|
|
Net assets, end of period (000 omitted) | $ 930 | $ 1,158 |
Portfolio turnover rate G | 63% | 144% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the contingent deferred sales charge.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
H The amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchases of shares in relation to fluctuating market values of the investments of the Fund.
I For the period April 4, 2007 (commencement of sale of shares) to July 31, 2007.
J Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class C
Years ended July 31, | 2008 | 2007 I |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 15.67 | $ 17.46 |
Income from Investment Operations |
|
|
Net investment income (loss) E | .11 | .07 |
Net realized and unrealized gain (loss) | (3.48) | (1.87) H |
Total from investment operations | (3.37) | (1.80) |
Distributions from net investment income | (.24) | - |
Distributions from net realized gain | (1.50) | - |
Total distributions | (1.74) | - |
Redemption fees added to paid in capital E | .01 | .01 |
Net asset value, end of period | $ 10.57 | $ 15.67 |
Total Return B, C, D | (23.78)% | (10.25)% |
Ratios to Average Net Assets F, J |
|
|
Expenses before reductions | 2.14% | 2.10% A |
Expenses net of fee waivers, if any | 2.14% | 2.10% A |
Expenses net of all reductions | 2.11% | 2.00% A |
Net investment income (loss) | .82% | 1.35% A |
Supplemental Data |
|
|
Net assets, end of period (000 omitted) | $ 3,477 | $ 2,629 |
Portfolio turnover rate G | 63% | 144% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the contingent deferred sales charge.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
H The amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchases of shares in relation to fluctuating market values of the investments of the Fund.
I For the period April 4, 2007 (commencement of sale of shares) to July 31, 2007.
J Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - International Real Estate
Years ended July 31, | 2008 | 2007 | 2006 | 2005 G |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 15.73 | $ 14.69 | $ 12.09 | $ 10.00 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss) D | .25 | .31 | .30 | .23 |
Net realized and unrealized gain (loss) | (3.50) | 2.35 | 2.93 | 1.91 |
Total from investment operations | (3.25) | 2.66 | 3.23 | 2.14 |
Distributions from net investment income | (.31) | (.22) | (.24) | (.03) |
Distributions from net realized gain | (1.50) | (1.42) | (.40) | (.03) |
Total distributions | (1.81) | (1.64) | (.64) | (.06) |
Redemption fees added to paid in capital D | .01 | .02 | .01 | .01 |
Net asset value, end of period | $ 10.68 | $ 15.73 | $ 14.69 | $ 12.09 |
Total Return B, C | (22.97)% | 19.01% | 27.85% | 21.53% |
Ratios to Average Net Assets E, H |
|
|
|
|
Expenses before reductions | 1.11% | 1.07% | 1.12% | 1.29% A |
Expenses net of fee waivers, if any | 1.10% | 1.06% | 1.12% | 1.29% A |
Expenses net of all reductions | 1.07% | .96% | .91% | 1.27% A |
Net investment income (loss) | 1.86% | 1.86% | 2.23% | 2.21% A |
Supplemental Data |
|
|
|
|
Net assets, end of period (000 omitted) | $ 572,985 | $ 1,032,138 | $ 447,854 | $ 160,980 |
Portfolio turnover rate F | 63% | 144% | 234% | 36% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
G For the period September 8, 2004 (commencement of operations) to July 31, 2005.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. 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 - Institutional Class
Years ended July 31, | 2008 | 2007 H |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 15.73 | $ 17.46 |
Income from Investment Operations |
|
|
Net investment income (loss) D | .24 | .12 |
Net realized and unrealized gain (loss) | (3.49) | (1.86) G |
Total from investment operations | (3.25) | (1.74) |
Distributions from net investment income | (.33) | - |
Distributions from net realized gain | (1.50) | - |
Total distributions | (1.83) | - |
Redemption fees added to paid in capital D | .01 | .01 |
Net asset value, end of period | $ 10.66 | $ 15.73 |
Total Return B, C | (22.98)% | (9.91)% |
Ratios to Average Net Assets E, I |
|
|
Expenses before reductions | 1.13% | 1.08% A |
Expenses net of fee waivers, if any | 1.13% | 1.08% A |
Expenses net of all reductions | 1.10% | .97% A |
Net investment income (loss) | 1.83% | 2.27% A |
Supplemental Data |
|
|
Net assets, end of period (000 omitted) | $ 3,289 | $ 2,477 |
Portfolio turnover rate F | 63% | 144% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
G The amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchases of shares in relation to fluctuating market values of the investments of the Fund.
H For the period April 4, 2007 (commencement of sale of shares) to July 31, 2007.
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 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 July 31, 2008
1. Organization.
Fidelity International Real Estate Fund (the Fund) is a non-diversified fund of Fidelity Securities Fund (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 B, Class C, International Real Estate, and Institutional Class 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 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 also differ by class.The Fund's investments in emerging markets can be subject to social, economic, regulatory, and political uncertainties and can be extremely volatile.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the SEC's web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results
Annual Report
3. Significant Accounting Policies - continued
could differ from those estimates. 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. Wherever possible, the Fund uses independent pricing services approved by the Board of Trustees to value its investments.
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Foreign Currency - continued
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The implementation of FIN 48 did not result in any unrecognized tax benefits in the accompanying financial statements. Each of the Fund's federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service. 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 recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles.
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, certain foreign taxes, passive foreign investment companies (PFIC), losses deferred due to wash sales and excise tax regulations.
The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows:
Unrealized appreciation | $ 27,453,391 |
Unrealized depreciation | (122,768,811) |
Net unrealized appreciation (depreciation) | (95,315,420) |
|
|
Cost for federal income tax purposes | $ 703,883,313 |
The tax character of distributions paid was as follows:
| July 31, 2008 | July 31, 2007 |
Ordinary Income | $ 104,576,814 | $ 58,738,310 |
Long-term Capital Gains | 5,508,468 | 11,624,918 |
Total | $ 110,085,282 | $ 70,363,228 |
Short-Term Trading (Redemption) Fees. Shares held in the Fund less than 90 days are subject to a redemption fee equal to 1.50% of the proceeds of the redeemed shares. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the Fund and accounted for as an addition to paid in capital.
New Accounting Pronouncement. In September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and results in expanded disclosures about fair value measurements.
Annual Report
Notes to Financial Statements - continued
4. Operating Policies.
Repurchase Agreements. FMR has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits the Fund and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts which are then invested in repurchase agreements. The Fund may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. The Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
Restricted Securities. The Fund may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities is included at the end of the Fund's Schedule of Investments.
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $499,304,933 and $740,810,801, 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 .45% of the Fund's average net assets and a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .71% of the Fund's average net assets.
Distribution and Service Plan. 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
Annual Report
6. Fees and Other Transactions with Affiliates - continued
Distribution and Service Plan - continued
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 and the total amounts paid to and retained by FDC were as follows:
| Distribution | Service | Paid to | Retained |
Class A | 0% | .25% | $ 19,604 | $ 2,553 |
Class T | .25% | .25% | 18,242 | - |
Class B | .75% | .25% | 11,621 | 8,890 |
Class C | .75% | .25% | 33,528 | 23,565 |
|
|
| $ 82,995 | $ 35,008 |
Sales Load. FDC receives 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. FDC receives the proceeds of contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. These charges depend on the holding period. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, 1.00% to .50% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained |
Class A | $ 17,704 |
Class T | 3,326 |
Class B* | 769 |
Class C* | 1,717 |
| $ 23,516 |
* 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. Prior to January 1, 2008, Fidelity Service
Annual Report
Notes to Financial Statements - continued
6. Fees and Other Transactions with Affiliates - continued
Transfer Agent Fees - continued
Company, Inc. (FSC), also an affiliate of FMR, was the transfer agent for International Real Estate shares. For the period, each class paid the following transfer agent fees:
| Amount | % of |
Class A | $ 23,524 | .30 |
Class T | 11,255 | .31 |
Class B | 3,607 | .31 |
Class C | 10,271 | .31 |
International Real Estate | 2,159,996 | .27 |
Institutional Class | 9,634 | .30 |
| $ 2,218,287 |
|
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $90 for the period.
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. The Fund's activity in this program during the period for which loans were outstanding was as follows:
Borrower or Lender | Average Daily | Weighted Average | Interest |
Borrower | $ 12,036,923 | 5.31% | $ 23,066 |
Annual Report
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $4.2 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro rata portion of the line of credit, which amounted to $2,205 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
8. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Net income from lending portfolio securities during the period amounted to $603,846.
9. Expense Reductions.
FMR voluntarily agreed to reimburse a portion of the International Real Estate's operating expenses. During the period, this reimbursement reduced the class' expenses by $45,332.
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 $261,873 for the period. In addition, through arrangements with each class' transfer agent, credits realized as a result of
Annual Report
Notes to Financial Statements - continued
9. Expense Reductions - continued
uninvested cash balances were used to reduce the Fund's expenses. During the period, credits reduced each class' transfer agent expense as noted in the table below.
| Transfer Agent |
Class A | $ 31 |
International Real Estate | 9,228 |
| $ 9,259 |
10. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
11. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended July 31, | 2008 | 2007 |
From net investment income |
|
|
Class A | $ 129,243 | $ - |
Class T | 47,714 | - |
Class B | 18,349 | - |
Class C | 47,789 | - |
International Real Estate | 18,458,440 | 8,677,416 |
Institutional Class | 62,676 | - |
Total | $ 18,764,211 | $ 8,677,416 |
From net realized gain |
|
|
Class A | $ 682,544 | $ - |
Class T | 265,212 | - |
Class B | 121,612 | - |
Class C | 311,919 | - |
International Real Estate | 89,636,941 | 61,685,812 |
Institutional Class | 302,843 | - |
Total | $ 91,321,071 | $ 61,685,812 |
Annual Report
12. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
Years ended July 31, | 2008 | 2007A | 2008 | 2007A |
Class A |
|
|
|
|
Shares sold | 900,194 | 352,797 | $ 11,742,685 | $ 6,021,703 |
Reinvestment of distributions | 55,923 | - | 765,385 | - |
Shares redeemed | (341,825) | (28,946) | (4,339,419) | (470,996) |
Net increase (decrease) | 614,292 | 323,851 | $ 8,168,651 | $ 5,550,707 |
Class T |
|
|
|
|
Shares sold | 633,863 | 163,911 | $ 7,676,814 | $ 2,804,594 |
Reinvestment of distributions | 21,513 | - | 296,970 | - |
Shares redeemed | (95,643) | (11,190) | (1,262,734) | (189,267) |
Net increase (decrease) | 559,733 | 152,721 | $ 6,711,050 | $ 2,615,327 |
Class B |
|
|
|
|
Shares sold | 50,624 | 74,357 | $ 676,962 | $ 1,273,355 |
Reinvestment of distributions | 9,315 | - | 128,955 | - |
Shares redeemed | (45,973) | (460) | (599,735) | (7,526) |
Net increase (decrease) | 13,966 | 73,897 | $ 206,182 | $ 1,265,829 |
Class C |
|
|
|
|
Shares sold | 207,359 | 188,521 | $ 2,751,080 | $ 3,213,374 |
Reinvestment of distributions | 24,058 | - | 331,352 | - |
Shares redeemed | (70,253) | (20,772) | (919,320) | (352,540) |
Net increase (decrease) | 161,164 | 167,749 | $ 2,163,112 | $ 2,860,834 |
International Real Estate |
|
|
|
|
Shares sold | 21,686,399 | 78,643,461 | $ 295,025,902 | $ 1,288,512,778 |
Reinvestment of distributions | 7,157,452 | 4,249,998 | 99,352,759 | 65,004,744 |
Shares redeemed | (40,815,706) | (47,753,325) | (557,680,698) | (797,297,400) |
Net increase (decrease) | (11,971,855) | 35,140,134 | $ (163,302,037) | $ 556,220,122 |
Institutional Class |
|
|
|
|
Shares sold | 282,296 | 158,866 | $ 3,825,173 | $ 2,704,482 |
Reinvestment of distributions | 22,489 | - | 308,363 | - |
Shares redeemed | (153,644) | (1,378) | (1,958,706) | (22,809) |
Net increase (decrease) | 151,141 | 157,488 | $ 2,174,830 | $ 2,681,673 |
A Share transactions for Class A, Class T, Class B, Class C and Institutional Class are for the period April 4, 2007 (commencement of sale of shares) to July 31, 2007.
Annual Report
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Securities Fund and the Shareholders of Fidelity International Real Estate 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 International Real Estate Fund (a fund of Fidelity Securities Fund) at July 31, 2008, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and 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 International Real Estate 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 July 31, 2008 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
September 22, 2008
Annual Report
Trustees and Officers
The Trustees, Member of the Advisory Board, and executive officers of the trust and fund, as applicable, are listed below. The Board of Trustees governs the fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee the fund's activities, review contractual arrangements with companies that provide services to the fund, and review the fund's performance. Except for Edward C. Johnson 3d and James C. Curvey, each of the Trustees oversees 218 funds advised by FMR or an affiliate. Messrs. Johnson and Curvey oversee 377 funds advised by FMR or an affiliate.
The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust. Each Trustee who is not an interested person (as defined in the 1940 Act) (Independent Trustee), shall retire not later than the last day of the calendar year in which his or her 72nd birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board Member hold office without limit in time, except that any officer and Advisory Board Member may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years.
The fund's Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-800-544-8544.
Interested Trustees*:
Correspondence intended for each Trustee who is an interested person may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Edward C. Johnson 3d (78) | |
| Year of Election or Appointment: 1984 Mr. Johnson is Chairman of the Board of Trustees. Mr. Johnson serves as Chief Executive Officer, Chairman, and a Director of FMR LLC; Chairman and a Director of FMR; Chairman and a Director of Fidelity Research & Analysis Company (FRAC); Chairman and a Director of Fidelity Investments Money Management, Inc.; and Chairman and a Director of FMR Co., Inc. In addition, Mr. Johnson serves as Chairman and Director of FIL Limited. Previously, Mr. Johnson served as President of FMR LLC (2006-2007). |
James C. Curvey (73) | |
| Year of Election or Appointment: 2007 Mr. Curvey also serves as Trustee (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2006-present) and Director of FMR LLC. In addition, Mr. Curvey serves as an Overseer for the Boston Symphony Orchestra and a member of the Trustees of Villanova University. |
* Trustees have been determined to be "Interested Trustees" by virtue of, among other things, their affiliation with the trust or various entities under common control with FMR. FMR Corp. merged with and into FMR LLC on October 1, 2007. Any references to FMR LLC for prior periods are deemed to be references to the prior entity.
Independent Trustees:
Correspondence intended for each Independent Trustee (that is, the Trustees other than the Interested Trustees) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.
Name, Age; Principal Occupation | |
Dennis J. Dirks (60) | |
| Year of Election or Appointment: 2005 Prior to his retirement in May 2003, Mr. Dirks was Chief Operating Officer and a member of the Board of The Depository Trust & Clearing Corporation (DTCC) (1999-2003). He also served as President, Chief Operating Officer, and Board member of The Depository Trust Company (DTC) (1999-2003) and President and Board member of the National Securities Clearing Corporation (NSCC) (1999-2003). In addition, Mr. Dirks served as a Trustee and a member of the Finance Committee of Manhattan College (2005-2008), and as Chief Executive Officer and Board member of the Government Securities Clearing Corporation (2001-2003) and Chief Executive Officer and Board member of the Mortgage-Backed Securities Clearing Corporation (2001-2003). Mr. Dirks also serves as a Trustee and a member of the Finance Committee of AHRC of Nassau County (2006-present). |
Alan J. Lacy (54) | |
| Year of Election or Appointment: 2008 Mr. Lacy serves as Senior Adviser (2007-present) of Oak Hill Capital Partners, L.P. (a private equity firm). Mr. Lacy also served as Chief Executive Officer (2000-2005) and Vice Chairman (2005-2006) of Sears Holdings Corporation and Sears, Roebuck and Co. (retail). In addition, Mr. Lacy serves as a member of the Board of Directors of The Western Union Company (global money transfer, 2006-present) and Bristol-Myers Squibb (global pharmaceuticals, 2007-present). Mr. Lacy is a Trustee of the National Parks Conservation Association and The Field Museum of Natural History. |
Ned C. Lautenbach (64) | |
| Year of Election or Appointment: 2000 Mr. Lautenbach is Chairman of the Independent Trustees (2006-present). Mr. Lautenbach is an Advisory Partner of Clayton, Dubilier & Rice, Inc. (private equity investment firm). Previously, Mr. Lautenbach was with the International Business Machines Corporation (IBM) from 1968 until his retirement in 1998. Mr. Lautenbach serves as a Director of Eaton Corporation (diversified industrial) as well as the Philharmonic Center for the Arts in Naples, Florida. He also is a member of the Board of Trustees of Fairfield University (2005-present), as well as a member of the Council on Foreign Relations. Previously, Mr. Lautenbach served as a Director of Sony Corporation (2006-2007). |
Joseph Mauriello (63) | |
| 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 firm, 1965-2005). Mr. Mauriello currently serves as a member of the Board of Directors of XL Capital Ltd. (global insurance and re-insurance company, 2006-present) and of Arcadia Resources Inc. (health care services and products, 2007-present). He also served as a Director of the Hamilton Funds of the Bank of New York (2006-2007). |
Cornelia M. Small (64) | |
| Year of Election or Appointment: 2005 Ms. Small is a member of the Investment Committee, and Chair (2008-present) and a member of the Board of Trustees of Smith College. Ms. Small also serves on the Investment Committee of the Berkshire Taconic Community Foundation (2008-present). Previously, Ms. Small served as Chairperson of the Investment Committee (2002-2008) of Smith College and as Co-Chair (2000-2003) of the Annual Fund for the Fletcher School of Law and Diplomacy. In addition, she served as Chief Investment Officer, Director of Global Equity Investments, and a member of the Board of Directors of Scudder, Stevens & Clark and Scudder Kemper Investments. |
William S. Stavropoulos (69) | |
| Year of Election or Appointment: 2002 Mr. Stavropoulos is Chairman Emeritus of the Board of Directors of The Dow Chemical Company, where he previously served in numerous senior management positions, including President (1993-2000; 2002-2003), CEO (1995-2000; 2002-2004), Chairman of the Executive Committee (2000-2006), and as a member of the Board of Directors (1990-2006). Currently, he is a Director of Teradata Corporation (data warehousing and technology solutions, 2008-present), Chemical Financial Corporation, Maersk Inc. (industrial conglomerate), Tyco International, Inc. (multinational manufacturing and services, 2007-present), and a member of the Advisory Board for Metalmark Capital (private equity investment firm, 2005-present). He is a special advisor to Clayton, Dubilier & Rice, Inc. (private equity investment). In addition, Mr. Stavropoulos is a member of the University of Notre Dame Advisory Council for the College of Science. |
David M. Thomas (59) | |
| Year of Election or Appointment: 2008 Previously, Mr. Thomas served as Executive Chairman (2005-2006) and Chairman and Chief Executive Officer (2000-2005) of IMS Health, Inc. (pharmaceutical and healthcare information solutions). In addition, Mr. Thomas serves as a member of the Board of Directors of Fortune Brands, Inc. (consumer products holding company), and Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (57) | |
| Year of Election or Appointment: 2008 Mr. Wiley also serves as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-present). He serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), and a Director of Bill Barrett Corporation (exploration and production company, 2005-present). In addition, he also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a Sr. Energy Advisor of Katzenbach Partners, LLC (consulting firm, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment firm), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services company, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production company, 2001-2005). |
Advisory Board Member and Executive Officers**:
Correspondence intended for each executive officer and Mr. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Peter S. Lynch (64) | |
| Year of Election or Appointment: 2003 Member of the Advisory Board of Fidelity Securities Fund. Mr. Lynch is Vice Chairman and a Director of FMR, and Vice Chairman (2001-present) and a Director of FMR Co., Inc. Previously, Mr. Lynch served as a Trustee of the Fidelity funds (1990-2003). In addition, he serves as a Trustee of Boston College and as the Chairman of the Inner-City Scholarship Fund. |
Kenneth B. Robins (38) | |
| Year of Election or Appointment: 2008 President and Treasurer of International Real Estate. Mr. Robins also serves as President and Treasurer of Fidelity's Equity and High Income Funds (2008-present) and is an employee of FMR (2004-present). Before joining Fidelity Investments, Mr. Robins worked at KPMG LLP, where he was a partner in KPMG's department of professional practice (2002-2004). |
Brian B. Hogan (43) | |
| Year of Election or Appointment: 2007 Vice President of International Real Estate. Mr. Hogan also serves as Vice President of Sector Funds (2007-present) and Senior Vice President, Equity Research of FMR. Previously, Mr. Hogan served as a portfolio manager. |
Scott C. Goebel (40) | |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of International Real Estate. Mr. Goebel also serves as Secretary and CLO of other Fidelity funds (2008-present); General Counsel, Secretary, and Senior Vice President of FMR (2008-present); and Deputy General Counsel of FMR LLC. Previously, Mr. Goebel served as Assistant Secretary of the Funds (2007-2008) and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007). |
John B. McGinty, Jr. (45) | |
| Year of Election or Appointment: 2008 Assistant Secretary of International Real Estate. Mr. McGinty also serves as Assistant Secretary of Fidelity's other Equity and High Income Funds (2008-present) and is an employee of FMR LLC (2004-present). Mr. McGinty also serves as Senior Vice President, Secretary, and Chief Legal Officer of FDC (2007-present). Before joining Fidelity Investments, Mr. McGinty practiced law at Ropes & Gray, LLP. |
Holly C. Laurent (54) | |
| Year of Election or Appointment: 2008 Anti-Money Laundering (AML) officer of International Real Estate. Ms. Laurent also serves as AML officer of other Fidelity funds (2008-present) and is an employee of FMR LLC. Previously, Ms. Laurent was Senior Vice President and Head of Legal for Fidelity Business Services India Pvt. Ltd. (2006-2008), Senior Vice President, Deputy General Counsel and Group Head for FMR LLC (2005-2006). |
Christine Reynolds (49) | |
| Year of Election or Appointment: 2008 Chief Financial Officer of International Real Estate. Ms. Reynolds also serves as Chief Financial Officer of other Fidelity funds (2008-present). Ms. Reynolds became President of Fidelity Pricing and Cash Management Services (FPCMS) in August 2008. She served as Chief Operating Officer of FPCMS from 2007 through July 2008. Previously, Ms. Reynolds served as President, Treasurer, and Anti-Money Laundering officer of the Fidelity funds (2004-2007). Before joining Fidelity Investments, Ms. Reynolds worked at PricewaterhouseCoopers LLP (PwC) (1980-2002), where she was an audit partner with PwC's investment management practice. |
Kenneth A. Rathgeber (61) | |
| Year of Election or Appointment: 2004 Chief Compliance Officer of International Real Estate. Mr. Rathgeber also serves as Chief Compliance Officer of Fidelity's Equity and High Income Funds (2004-present). He is Chief Compliance Officer of FMR (2005-present), FMR Co., Inc. (2005-present), Fidelity Management & Research (U.K.) Inc. (2005-present), Fidelity Research & Analysis Company (2005-present), Fidelity Investments Money Management, Inc. (2005-present), and Strategic Advisers, Inc. (2005-present). |
Bryan A. Mehrmann (47) | |
| Year of Election or Appointment: 2005 Deputy Treasurer of International Real Estate. Mr. Mehrmann also serves as Deputy Treasurer of other Fidelity funds (2005-present) and is an employee of FMR. Previously, Mr. Mehrmann served as Vice President of Fidelity Investments Institutional Services Group (FIIS)/Fidelity Investments Institutional Operations Corporation, Inc. (FIIOC) Client Services (1998-2004). |
Adrien E. Deberghes (40) | |
| Year of Election or Appointment: 2008 Deputy Treasurer of International Real Estate. Mr. Deberghes also serves as Deputy Treasurer of Fidelity's Equity and High Income Funds (2008-present) and is an employee of FMR (2008-present). Previously, Mr. Deberghes served as Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005). |
Robert G. Byrnes (41) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of International Real Estate. Mr. Byrnes also serves as Assistant Treasurer of other Fidelity funds (2005-present) and is an employee of FMR (2005-present). Previously, Mr. Byrnes served as Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (2003-2005). Before joining Fidelity Investments, Mr. Byrnes worked at Deutsche Asset Management where he served as Vice President of the Investment Operations Group (2000-2003). |
Peter L. Lydecker (54) | |
| Year of Election or Appointment: 2004 Assistant Treasurer of International Real Estate. Mr. Lydecker also serves as Assistant Treasurer of other Fidelity funds (2004-present) and is an employee of FMR. |
Paul M. Murphy (61) | |
| Year of Election or Appointment: 2007 Assistant Treasurer of International Real Estate. Mr. Murphy also serves as Assistant Treasurer of other Fidelity funds (2007-present) and is an employee of FMR (2007-present). Previously, Mr. Murphy served as Chief Financial Officer of the Fidelity Funds (2005-2006), Vice President and Associate General Counsel of FMR (2007), and Senior Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (1994-2007). |
Gary W. Ryan (49) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of International Real Estate. Mr. Ryan also serves as Assistant Treasurer of other Fidelity funds (2005-present) and is an employee of FMR (2005-present). Previously, Mr. Ryan served as Vice President of Fund Reporting in Fidelity Pricing and Cash Management Services (FPCMS) (1999-2005). |
** FMR Corp. merged with and into FMR LLC on October 1, 2007. Any references to FMR LLC for prior periods are deemed to be references to the prior entity.
Annual Report
Distributions (Unaudited)
The fund hereby designates as a capital gain dividend with respect to the taxable year ended July 31, 2008, $600,573, or, if subsequently determined to be different, the net capital gain of such year.
Class A designates 11% and 4%; Class T designates 11% and 4%; Class B designates 11% and 4%; Class C designates 11% and 4% of the dividend distributed in September 2007 and December 2007 respectively, as amounts which may be taken into account as a dividend for purposes of the maximum rate under section 1(h)(11) of the Internal Revenue Code.
The amounts per share which represents income derived from sources within, and taxes paid to, foreign countries or possessions of the United States are as follows:
| Pay Date | Income | Taxes |
Class A
| 09/10/2007 12/24/2007 | $0.336 $0.112 | $0.0426 $0.0105 |
Class T
| 09/10/2007 12/24/2007 | $0.332 $0.109 | $0.0426 $0.0105 |
Class B
| 09/10/2007 12/24/2007 | $0.327 $0.104 | $0.0426 $0.0105 |
Class C
| 09/10/2007 12/24/2007 | $0.329 $0.105 | $0.0426 $0.0105 |
The fund will notify shareholders in January 2009 of amounts for use in preparing 2008 income tax returns.
Annual Report
Proxy Voting Results
A special meeting of the fund's shareholders was held on May 14, 2008. The results of votes taken among shareholders on the proposals before them are reported below. Each vote reported represents one dollar of net asset value held on the record date for the meeting.
PROPOSAL 1 | ||
To elect a Board of Trustees.A | ||
| # of | % of |
James C. Curvey | ||
Affirmative | 30,242,569,269.49 | 94.915 |
Withheld | 1,620,182,942.38 | 5.085 |
TOTAL | 31,862,752,211.87 | 100.000 |
Dennis J. Dirks | ||
Affirmative | 30,356,248,026.80 | 95.272 |
Withheld | 1,506,504,185.07 | 4.728 |
TOTAL | 31,862,752,211.87 | 100.000 |
Edward C. Johnson 3d | ||
Affirmative | 30,163,300,902.81 | 94.666 |
Withheld | 1,699,451,309.06 | 5.334 |
TOTAL | 31,862,752,211.87 | 100.000 |
Alan J. Lacy | ||
Affirmative | 30,334,439,999.59 | 95.203 |
Withheld | 1,528,312,212.28 | 4.797 |
TOTAL | 31,862,752,211.87 | 100.000 |
Ned C. Lautenbach | ||
Affirmative | 30,317,381,535.59 | 95.150 |
Withheld | 1,545,370,676.28 | 4.850 |
TOTAL | 31,862,752,211.87 | 100.000 |
Joseph Mauriello | ||
Affirmative | 30,340,553,696.88 | 95.223 |
Withheld | 1,522,198,514.99 | 4.777 |
TOTAL | 31,862,752,211.87 | 100.000 |
Cornelia M. Small | ||
Affirmative | 30,337,552,071.15 | 95.213 |
Withheld | 1,525,200,140.72 | 4.787 |
TOTAL | 31,862,752,211.87 | 100.000 |
William S. Stavropoulos | ||
Affirmative | 30,240,356,579.51 | 94.908 |
Withheld | 1,622,395,632.36 | 5.092 |
TOTAL | 31,862,752,211.87 | 100.000 |
| # of | % of |
David M. Thomas | ||
Affirmative | 30,352,029,125.67 | 95.259 |
Withheld | 1,510,723,086.20 | 4.741 |
TOTAL | 31,862,752,211.87 | 100.000 |
Michael E. Wiley | ||
Affirmative | 30,333,540,290.12 | 95.201 |
Withheld | 1,529,211,921.75 | 4.799 |
TOTAL | 31,862,752,211.87 | 100.000 |
PROPOSAL 2 | ||
To amend the Declaration of Trust to reduce the required quorum for future shareholder meetings.A | ||
Affirmative | 23,747,670,372.95 | 74.531 |
Against | 5,357,217,831.03 | 16.814 |
Abstain | 1,587,233,084.08 | 4.981 |
Broker | 1,170,630,923.81 | 3.674 |
TOTAL | 31,862,752,211.87 | 100.000 |
A Denotes trust-wide proposal and voting results. |
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees
Fidelity International Real Estate Fund
Each year, typically in July, the Board of Trustees, including the Independent Trustees (together, the Board), votes on the renewal of the management contract and sub-advisory agreements (together, the Advisory Contracts) for the fund. The Board, assisted by the advice of fund counsel and Independent Trustees' counsel, requests and considers a broad range of information throughout the year.
The Board meets regularly and, acting directly and through its separate committees, requests and receives information concerning, and considers at each of its meetings factors that are relevant to, its annual consideration of the renewal of the fund's Advisory Contracts, including the services and support provided to the fund and its shareholders. At the time of the renewal, the Board had 12 standing committees, each composed of Independent Trustees with varying backgrounds, to which the Board has assigned specific subject matter responsibilities in order to enhance effective decision-making by the Board. Each committee has a written charter outlining the structure and purposes of the committee. The Board also meets as needed to consider matters specifically related to the Board's annual consideration of the renewal of Advisory Contracts.
At its July 2008 meeting, the Board of Trustees, including the Independent Trustees, unanimously determined to renew the fund's Advisory Contracts. In reaching its determination, the Board considered all factors it believed relevant, including (i) the nature, extent, and quality of the services to be provided to the fund and its shareholders (including the investment performance of the fund); (ii) the competitiveness of the management fee and total expenses; (iii) the total costs of the services to be provided by and the profits to be realized by Fidelity from its relationship with the fund; (iv) the extent to which economies of scale would be realized as the fund grows; and (v) whether fee levels reflect these economies of scale, if any, for the benefit of fund shareholders. The Board also approved agreements with foreign sub-advisers Fidelity Management & Research (Japan) Inc. and Fidelity Management & Research (Hong Kong) Limited, as well as amendments to the fund's agreement with Fidelity Management & Research (U.K.) Inc..
In considering whether to renew the Advisory Contracts for the fund, the Board ultimately reached a determination, with the assistance of fund counsel and Independent Trustees' counsel and through the exercise of its business judgment, that the renewal of the Advisory Contracts and the compensation to be received by Fidelity under the management contract is consistent with Fidelity's fiduciary duty under applicable law. The Board's decision to renew the Advisory Contracts was not based on any single factor noted above, but rather was based on a comprehensive consideration of all the information provided to the Board at its meetings throughout the year. The Board, in reaching its determination to renew the Advisory Contracts, is aware that shareholders in the fund have a broad range of investment choices available to them, including a wide choice among mutual funds offered by competitors to Fidelity, and that the fund's shareholders, with the opportunity to review and weigh the disclosure provided by the fund in its prospectus and other public disclosures, have chosen to invest in this fund, managed by Fidelity.
Annual Report
Nature, Extent, and Quality of Services Provided. The Board considered staffing within the investment adviser, FMR, and the sub-advisers (together, the Investment Advisers), including the backgrounds of the fund's investment personnel and the fund's investment objective and discipline. The Independent Trustees also had discussions with senior management of Fidelity's investment operations and investment groups. The Board considered the structure of the portfolio manager compensation program and whether this structure provides appropriate incentives.
Resources Dedicated to Investment Management and Support Services. The Board reviewed the size, education, and experience of the Investment Advisers' investment staff, their use of technology, and the Investment Advisers' approach to recruiting, training, and retaining portfolio managers and other research, advisory, and management personnel. The Board noted that Fidelity's analysts have access to a variety of technological tools that enable them to perform both fundamental and quantitative analysis and to specialize in various disciplines. The Board considered Fidelity's extensive global research capabilities that enable the Investment Advisers to aggregate data from various sources in an effort to produce positive investment results. The Board also considered that Fidelity's portfolio managers and analysts have access to daily portfolio attribution that allows for monitoring of a fund's portfolio, as well as an electronic communication system that provides immediate real-time access to research concerning issuers and credit enhancers.
Shareholder and Administrative Services. The Board considered (i) the nature, extent, quality, and cost of advisory, administrative, distribution, and shareholder services performed by the Investment Advisers and their affiliates under the Advisory Contracts and under separate agreements covering transfer agency, pricing and bookkeeping, and securities lending services for the fund; (ii) the nature and extent of the Investment Advisers' supervision of third party service providers, principally custodians and subcustodians; and (iii) the resources devoted to, and the record of compliance with, the fund's compliance policies and procedures. The Board also reviewed the allocation of fund brokerage, including allocations to brokers affiliated with the Investment Advisers, the use of brokerage commissions to pay fund expenses, and the use of "soft" commission dollars to pay for research services. The Board further considered that Fidelity voluntarily pays for market data out of its own resources.
The Board noted that the growth of fund assets across the complex allows Fidelity to reinvest in the development of services designed to enhance the value or convenience of the Fidelity funds as investment vehicles. These services include 24-hour access to account information and market information through phone representatives and over the Internet, and investor education materials and asset allocation tools.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
Investment in a Large Fund Family. The Board considered the benefits to shareholders of investing in a Fidelity fund, including the benefits of investing in a fund that is part of a large family of funds offering a variety of investment disciplines and providing for a large variety of mutual fund investor services. For example, fund shareholders are offered the privilege of exchanging shares of the fund for shares of other Fidelity funds, as set forth in the fund's prospectus, without paying a sales charge. The Board noted that Fidelity has taken a number of actions over the previous year that benefited particular funds, including (i) dedicating additional resources to investment research and to restructure the investment research teams; (ii) contractually agreeing to reduce the management fees on Fidelity's Institutional Money Market Funds and launching Class IV and Institutional Class of certain of these funds; (iii) reducing the transfer agent fees for the Fidelity Select Portfolios and Investor Class of the VIP funds; and (iv) launching Class K of 29 equity funds as a lower-fee class available to certain employer-sponsored retirement plans.
Investment Performance. The Board considered whether the fund has operated within its investment objective, as well as its record of compliance with its investment restrictions. It also reviewed the fund's absolute investment performance for Fidelity International Real Estate (retail class), as well as the fund's relative investment performance for Fidelity International Real Estate (retail class) measured against a broad-based securities market index. The Board noted that FMR does not believe that a meaningful peer group exists against which to compare the fund's performance. Because the fund had been in existence less than five calendar years, the following charts considered by the Board show, for the one- and three-year periods ended December 31, 2007, the cumulative total returns of Fidelity International Real Estate (retail class) of the fund and the cumulative total returns of a broad-based securities market index ("benchmark"). (The Advisor Classes of the fund had less than one year of performance as of December 31, 2007.)
Annual Report
Fidelity International Real Estate Fund
The Board stated that the investment performance of the fund was lower than its benchmark for all the periods shown. The Board discussed with FMR actions that will be taken by FMR to attempt to improve the fund's below-benchmark performance. The Board will continue to closely monitor the performance of the fund in the coming year.
The Board considered that FMR has taken steps to refocus and strengthen equity research, equity portfolio management, and compliance.
Based on its review, and giving particular weight to the nature and quality of the resources dedicated by the Investment Advisers to maintain and improve relative performance, the Board concluded that the nature, extent, and quality of the services provided to the fund will benefit the fund's shareholders, particularly in light of the Board's view that the fund's shareholders benefit from investing in a fund that is part of a large family of funds offering a variety of investment disciplines and services.
Competitiveness of Management Fee and Total Fund Expenses. The Board considered the fund's management fee and total expenses compared to "mapped groups" of competitive funds and classes. Fidelity creates "mapped groups" by combining similar Lipper investment objective categories that have comparable management fee characteristics. Combining Lipper investment objective categories aids the Board's management fee and total expense comparisons by broadening the competitive group used for comparison and by reducing the number of universes to which various Fidelity funds are compared. The Board also considered supplemental information about how the fund's management fee and total expenses ranked relative to groups based on Lipper classifications, which take into account a fund's market capitalization and style.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
The Board considered two proprietary management fee comparisons for the 12-month (or shorter) 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. "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 29% means that 71% 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, is also included in the chart and considered by the Board.
Fidelity International Real Estate 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 2007.
Based on its review, the Board concluded that the fund's management fee was fair and reasonable in light of the services that the fund receives and the other factors considered.
In its review of the each class's total expenses, 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 part of its review, the Board also considered current and historical total expenses 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.
Annual Report
The Board noted that the total expenses each of Class A, Class B, Class C, Institutional Class, and Fidelity International Real Estate (retail class) ranked below its competitive median for 2007, and the total expenses of Class T ranked above its competitive median for 2007. The Board considered that the total expenses for Class T were above the median primarily because its 12b-1 fee is higher than the typical front-end load class. 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 expenses 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.
In its review of total expenses, the Board also considered Fidelity fee structures and other information on clients that FMR and its affiliates service in other competitive markets, such as other mutual funds advised or subadvised by FMR or its affiliates, pension plan clients, and other institutional clients.
Based on its review, the Board concluded that the total expenses of each class of the fund were reasonable, although in one case 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 audited books and records of Fidelity. The Audit Committee of the Board reviews any significant changes from the prior year's methodologies.
PricewaterhouseCoopers LLP (PwC), independent registered public accounting firm and auditor to Fidelity and certain Fidelity funds, has been engaged annually by the Board as part of the Board's assessment of the results of Fidelity's profitability analysis. PwC's engagement includes the review and assessment of Fidelity's methodologies used in determining the revenues and expenses attributable to Fidelity's mutual fund business, and completion of agreed-upon procedures surrounding the mathematical accuracy of fund profitability and its conformity to allocation methodologies. After considering PwC's reports issued under the engagement and information provided by Fidelity, the Board believes that while other allocation methods may also be reasonable, Fidelity's profitability methodologies are reasonable in all material respects.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
The Board has also reviewed Fidelity's non-fund businesses and any fall-out benefits related to the mutual fund business as well as cases where Fidelity's affiliates may benefit from or be related to the fund's business.
The Board considered the costs of the services provided by and the profits realized by Fidelity in connection with the operation of the fund and determined that the amount of profit is a fair entrepreneurial profit for the management of the fund.
Economies of Scale. The Board considered whether there have been economies of scale in respect of the management of the Fidelity funds, whether the Fidelity funds (including the fund) have appropriately benefited from any such economies of scale, and whether there is potential for realization of any further economies of scale. The Board considered the extent to which the fund will benefit from economies of scale through increased services to the fund, through waivers or reimbursements, or through fee or expense reductions.
The Board recognized that the fund's management contract incorporates a "group fee" structure, which provides for lower group fee rates as total fund assets under FMR's management increase, and for higher group fee rates as total fund assets under FMR's management decrease. FMR determines the group fee rates based on a tiered asset "breakpoint" schedule. The Board considered that the group fee is designed to deliver the benefits of economies of scale to fund shareholders when total fund assets increase, even if assets of any particular fund are unchanged or have declined, because some portion of Fidelity's costs are attributable to services provided to all Fidelity funds, and all funds benefit if those costs can be allocated among more assets. The Board concluded that, given the group fee structure, fund shareholders will achieve a certain level of economies of scale as assets under FMR's management increase at the fund complex level, regardless of whether Fidelity achieves any such economies of scale.
The Board further concluded that any potential economies of scale are being shared between fund shareholders and Fidelity in an appropriate manner.
Additional Information Requested by the Board. In order to develop fully the factual basis for consideration of the Fidelity funds' Advisory Contracts, the Board requested and received additional information on certain topics, including (i) fund performance trends and actions to be taken by FMR to improve certain funds' overall performance; (ii) portfolio manager changes that have occurred during the past year; (iii) Fidelity's fund profitability methodology, the profitability of certain fund service providers, and profitability trends for certain funds; (iv) Fidelity's compensation structure for portfolio managers and key personnel, including its effects on fund profitability and the extent to which portfolio manager compensation is linked to fund performance; (v) Fidelity's fee structures and rationale for recommending different fees among categories of funds; and (vi) Fidelity's rationale for recommending which funds should have a performance adjustment component as part of their management fees.
Annual Report
Based on its evaluation of all of the conclusions noted above, and after considering all material factors, the Board ultimately concluded that the advisory fee structures are fair and reasonable, and that the fund's Advisory Contracts should be renewed.
Annual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Fidelity Research & Analysis Company
Fidelity Management & Research
(U.K.) Inc.
Fidelity Investments Japan Limited
Fidelity International Investment
Advisers
Fidelity International Investment
Advisers (U.K.) Limited
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Service Agents
Fidelity Investments Institutional
Operations Company, Inc.
Boston, MA
Fidelity Service Company, Inc.
Boston, MA
Custodian
Mellon Bank, N.A.
Pittsburgh, PA
AIRE-UANN-0908 1.843178.101
(Fidelity Investment logo)(registered trademark)
Fidelity Advisor
International Real Estate
Fund - Institutional Class
Annual Report
July 31, 2008
Institutional Class is a
class of Fidelity®
International Real Estate Fund
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message | 4 | Ned Johnson's message to shareholders. |
Performance | 5 | How the fund has done over time. |
Management's Discussion | 6 | The manager's review of fund performance, strategy and outlook. |
Shareholder Expense Example | 7 | An example of shareholder expenses. |
Investment Changes | 9 | A summary of major shifts in the fund's investments over the past six months. |
Investments | 11 | A complete list of the fund's investments with their market values. |
Financial Statements | 15 | Statements of assets and liabilities, operations, and changes in net assets, |
Notes | 25 | Notes to the financial statements. |
Report of Independent Registered Public Accounting Firm | 35 |
|
Trustees and Officers | 36 |
|
Distributions | 44 |
|
Proxy Voting Results | 45 |
|
Board Approval of Investment Advisory Contracts and Management Fees | 46 |
|
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com (search for "proxy voting guidelines") or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-877-208-0098 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company.
Annual Report
This report and the financial statements contained herein are submitted for the general information of the shareholders of the fund. This report is not authorized for distribution to prospective investors in the fund unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com or http://www.advisor.fidelity.com, as applicable.
NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE
Neither the fund nor Fidelity Distributors Corporation is a bank.
Annual Report
Chairman's Message
(photo_of_Edward_C_Johnson_3d)
Dear Shareholder:
Domestic and international securities markets have struggled thus far in 2008. High-grade fixed-income investments produced modestly positive results, but many stock benchmarks suffered double-digit losses through the first half of this year. Financial markets are always unpredictable, but there are a number of time-tested principles that can put the historical odds in your favor.
One of the basic tenets is to invest for the long term. Over time, riding out the markets' inevitable ups and downs has proven much more effective than selling into panic or chasing the hottest trend. Even missing only a few of the markets' best days can significantly diminish investor returns. Patience also affords the benefits of compounding - of earning interest on additional income or reinvested dividends and capital gains. There are tax advantages and cost benefits to consider as well. The more you sell, the more taxes you pay, and the more you trade, the higher the costs. While staying the course doesn't eliminate risk, it can considerably lessen the effect of short-term declines.
You can further manage your investing risk through diversification. And today, more than ever, geographic diversification should be taken into account. Studies indicate that asset allocation is the single most important determinant of a portfolio's long-term success. The right mix of stocks, bonds and cash - aligned to your particular risk tolerance and investment objective - is very important. Age-appropriate rebalancing is also an essential aspect of asset allocation. For younger investors, an emphasis on equities - which historically have been the best-performing asset class over time - is encouraged. As investors near their specific goal, such as retirement or sending a child to college, consideration may be given to replacing volatile assets (e.g. common stocks) with more-stable fixed investments (bonds or savings plans).
A third investment principle - investing regularly - can help lower the average cost of your purchases. Investing a certain amount of money each month or quarter helps ensure you won't pay for all your shares at market highs. This strategy - known as dollar cost averaging - also reduces unconstructive "emotion" from investing, helping shareholders avoid selling weak performers just prior to an upswing, or chasing a hot performer just before a correction.
We invite you to contact us via the Internet, through our Investor Centers or over the phone. It is our privilege to provide you the information you need to make the investments that are right for you.
Sincerely,
/s/Edward C. Johnson 3d
Edward C. Johnson 3d
Annual Report
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' 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 July 31, 2008 | Past 1 | Life of |
Institutional Class B | -22.98% | 9.50% |
A From September 8, 2004.
B The initial offering of Institutional Class shares took place on April 4, 2007. Returns prior to April 4, 2007 are those of International Real Estate, the original class of the fund.
$10,000 Over Life of Fund
Let's say hypothetically that $10,000 was invested in Fidelity Advisor International Real Estate Fund - Institutional Class on September 8, 2004, when the fund started. The chart shows how the value of your investment would have changed, and also shows how the MSCI® Europe, Australasia, Far East (MSCI EAFE®) Index performed over the same period. The initial offering of International Real Estate took place on September 8, 2004. See above for additional information regarding the performance of Institutional Class.
Annual Report
Management's Discussion of Fund Performance
Comments from Steven Buller, Portfolio Manager of Fidelity Advisor International Real Estate Fund
The year ending July 31, 2008, was extremely challenging for investors in international property stocks, although a weaker dollar helped temper the negative performance for U.S. investors. Commercial real estate values fell around the world, although not all at the same time or to the same degree. The troubles began in the United Kingdom, which struggled with declining demand for property coupled with excess supply. Next was continental Europe, which faced similar trends, although its challenges tended to be more demand- than supply-driven. The same was true of Japan. While Australia's property market remained fundamentally intact, many companies in that country struggled with balance sheet problems and excess debt levels. Hong Kong, Singapore and most emerging markets were the last to slow down, although they were hardly immune from the global credit crunch. In all, international property stocks, as measured by the EPRA/NAREIT Global Real Estate ex North America Index, declined 20.95% during the past year. The broad international stock market, as measured by the MSCI® Europe, Australasia, Far East Index (MSCI EAFE®), dropped 12.04%.
The fund's Institutional Class shares returned -22.98% during the past year, lagging the EPRA/NAREIT and MSCI EAFE indexes. Relative to the EPRA/NAREIT index, the fund was hurt by weak security selection, especially in the United Kingdom. Timely U.K. trading, however, helped counter some of that negative impact. Weak stock picks in Japan and the Philippines also detracted, as did poor results among residential property companies. In contrast, a combination of positive stock and country selection in Australia and Greece contributed, as did a modest cash position. The fund's biggest individual detractor was U.K.-based retail property company and funds manager Capital & Regional. This position - which I sold in the second half of the period - lagged as a result of the weak U.K. economic and retail environment. Another weak performer was German residential real estate developer Patrizia Immobilien, which was hurt by poor execution of its business model. I sold this stock as well. Diversified Australian property developer and funds manager Charter Hall Group also lagged. In contrast, the biggest individual positive was avoiding benchmark component Centro Property Group, an Australian real estate company hurt by relatively high debt levels and an overly aggressive business model. Overweighting Greek property developer Babis Vovos also contributed.
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 (February 1, 2008 to July 31, 2008).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Annual Report
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Beginning | Ending | Expenses Paid |
Class A |
|
|
|
Actual | $ 1,000.00 | $ 836.30 | $ 6.30 |
HypotheticalA | $ 1,000.00 | $ 1,018.00 | $ 6.92 |
Class T |
|
|
|
Actual | $ 1,000.00 | $ 835.60 | $ 7.44 |
HypotheticalA | $ 1,000.00 | $ 1,016.76 | $ 8.17 |
Class B |
|
|
|
Actual | $ 1,000.00 | $ 833.10 | $ 9.75 |
HypotheticalA | $ 1,000.00 | $ 1,014.22 | $ 10.72 |
Class C |
|
|
|
Actual | $ 1,000.00 | $ 832.90 | $ 9.75 |
HypotheticalA | $ 1,000.00 | $ 1,014.22 | $ 10.72 |
International Real Estate |
|
|
|
Actual | $ 1,000.00 | $ 837.60 | $ 5.12 |
HypotheticalA | $ 1,000.00 | $ 1,019.29 | $ 5.62 |
Institutional Class |
|
|
|
Actual | $ 1,000.00 | $ 837.40 | $ 5.21 |
HypotheticalA | $ 1,000.00 | $ 1,019.19 | $ 5.72 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
| Annualized |
Class A | 1.38% |
Class T | 1.63% |
Class B | 2.14% |
Class C | 2.14% |
International Real Estate | 1.12% |
Institutional Class | 1.14% |
Annual Report
Investment Changes (Unaudited)
Top Ten Stocks as of July 31, 2008 | ||
| % of fund's | % of fund's net assets |
Westfield Group unit | 7.8 | 7.4 |
Sun Hung Kai Properties Ltd. | 7.2 | 7.7 |
Mitsubishi Estate Co. Ltd. | 7.2 | 5.1 |
Unibail-Rodamco | 6.7 | 5.2 |
Mitsui Fudosan Co. Ltd. | 5.5 | 2.9 |
Land Securities Group PLC | 3.3 | 4.5 |
CapitaLand Ltd. | 3.2 | 2.3 |
Babis Vovos International Technical SA | 3.1 | 2.8 |
China Overseas Land & Investment Ltd. | 3.1 | 1.8 |
Hong Kong Land Holdings Ltd. | 2.9 | 2.3 |
| 50.0 | |
Top Five Countries as of July 31, 2008 | ||
(excluding cash equivalents) | % of fund's | % of fund's net assets |
Hong Kong | 22.2 | 20.6 |
Japan | 18.5 | 15.3 |
Australia | 15.7 | 17.3 |
France | 9.5 | 6.3 |
United Kingdom | 9.5 | 17.5 |
Percentages are adjusted for the effect of open futures contracts, if applicable. |
Top Five REIT Sectors as of July 31, 2008 | ||
| % of fund's | % of fund's net assets |
REITs - Management/Investment | 27.4 | 29.4 |
REITs - Office Buildings | 6.8 | 9.2 |
REITs - Shopping Centers | 5.3 | 4.3 |
REITs - Industrial Buildings | 4.9 | 2.5 |
REITs - Apartments | 0.0 | 1.5 |
Asset Allocation (% of fund's net assets) | |||||||
As of July 31, 2008 * | As of January 31, 2008 ** | ||||||
Stocks and Investment Companies 96.9% |
| Stocks and Investment Companies 96.7% |
| ||||
Short-Term |
| Short-Term |
| ||||
* Foreign investments | 96.2% |
| ** Foreign investments | 96.7% |
|
Annual Report
Investments July 31, 2008
Showing Percentage of Net Assets
Common Stocks - 96.4% | |||
Shares | Value | ||
Australia - 15.7% | |||
CFS Retail Property Trust (d) | 5,171,178 | $ 9,933,657 | |
Charter Hall Group unit | 5,796,676 | 5,130,934 | |
DEXUS Property Group unit | 4,598,485 | 6,062,229 | |
Goodman Group unit | 5,106,779 | 12,262,436 | |
Stockland Corp. Ltd. unit | 2,462,106 | 10,734,387 | |
The GPT Group unit | 2,119,378 | 3,033,483 | |
Westfield Group unit | 3,067,771 | 46,740,242 | |
TOTAL AUSTRALIA | 93,897,368 | ||
Bermuda - 0.6% | |||
HKC Holdings Ltd. | 23,359,000 | 3,862,427 | |
Brazil - 0.7% | |||
Iguatemi Empresa de Shopping Centers SA | 326,000 | 4,161,924 | |
Cayman Islands - 1.3% | |||
Central China Real Estate Ltd. | 2,251,000 | 628,997 | |
KWG Property Holding Ltd. | 2,210,000 | 1,291,735 | |
New World China Land Ltd. (d) | 12,406,200 | 5,740,666 | |
TOTAL CAYMAN ISLANDS | 7,661,398 | ||
China - 1.0% | |||
China Resources Land Ltd. | 4,302,000 | 5,701,738 | |
Cyprus - 0.3% | |||
Mirland Development Corp. PLC (a) | 293,400 | 1,591,443 | |
Finland - 1.9% | |||
Citycon Oyj (d) | 3,003,403 | 11,456,160 | |
France - 9.5% | |||
Fonciere Des Regions | 87,800 | 11,013,192 | |
Societe de la Tour Eiffel | 48,800 | 5,768,704 | |
Unibail-Rodamco | 179,417 | 40,136,826 | |
TOTAL FRANCE | 56,918,722 | ||
Germany - 1.0% | |||
DIC Asset AG | 241,960 | 5,717,389 | |
Greece - 3.1% | |||
Babis Vovos International Technical SA (a) | 611,830 | 18,679,326 | |
Hong Kong - 22.2% | |||
China Overseas Land & Investment Ltd. | 10,382,000 | 18,603,922 | |
Hang Lung Properties Ltd. | 5,409,000 | 17,228,985 | |
Hong Kong Land Holdings Ltd. | 4,238,000 | 17,502,940 | |
Hysan Development Co. Ltd. | 1,058,032 | 3,031,047 | |
Kerry Properties Ltd. | 1,521,411 | 8,132,029 | |
Common Stocks - continued | |||
Shares | Value | ||
Hong Kong - continued | |||
Link (REIT) | 1,881,915 | $ 4,221,379 | |
New World Development Co. Ltd. | 6,413,000 | 12,083,560 | |
Sino Land Co. | 4,414,174 | 8,883,118 | |
Sun Hung Kai Properties Ltd. | 2,890,000 | 43,341,109 | |
TOTAL HONG KONG | 133,028,089 | ||
Italy - 1.0% | |||
Immobiliare Grande Distribuzione SpA | 1,817,700 | 5,811,661 | |
Japan - 18.5% | |||
Aeon Mall Co. Ltd. | 162,600 | 4,867,903 | |
Kenedix Realty Investment Corp. | 1,491 | 7,421,142 | |
Kenedix, Inc. | 2,372 | 1,728,049 | |
Mitsubishi Estate Co. Ltd. | 1,780,000 | 42,868,010 | |
Mitsui Fudosan Co. Ltd. | 1,459,000 | 33,007,028 | |
Nippon Building Fund, Inc. | 1,454 | 17,250,163 | |
ORIX JREIT, Inc. | 605 | 3,375,753 | |
TOTAL JAPAN | 110,518,048 | ||
Netherlands - 1.5% | |||
Eurocommercial Properties NV (Certificaten Van Aandelen) unit | 190,432 | 8,944,429 | |
Norway - 0.4% | |||
Norwegian Property ASA (d) | 517,000 | 2,108,208 | |
Philippines - 1.2% | |||
Ayala Land, Inc. | 20,636,760 | 4,572,985 | |
Filinvest Land, Inc. | 159,414,000 | 2,883,690 | |
TOTAL PHILIPPINES | 7,456,675 | ||
Russia - 0.6% | |||
PIK Group GDR (e) | 163,600 | 3,762,800 | |
Singapore - 5.7% | |||
Ascendas Real Estate Investment Trust (A-REIT) | 3,806,000 | 6,401,784 | |
CapitaLand Ltd. | 4,644,900 | 19,362,242 | |
CapitaMall Trust | 3,434,000 | 7,534,006 | |
City Developments Ltd. | 121,900 | 1,023,411 | |
TOTAL SINGAPORE | 34,321,443 | ||
United Kingdom - 9.5% | |||
Big Yellow Group PLC (d) | 315,000 | 1,938,599 | |
British Land Co. PLC | 878,600 | 12,153,635 | |
Hammerson PLC | 768,500 | 14,530,504 | |
Land Securities Group PLC | 772,600 | 19,659,110 | |
Common Stocks - continued | |||
Shares | Value | ||
United Kingdom - continued | |||
Minerva PLC (a) | 580,000 | $ 1,507,538 | |
Unite Group PLC | 1,807,900 | 7,072,457 | |
TOTAL UNITED KINGDOM | 56,861,843 | ||
United States of America - 0.7% | |||
ProLogis Trust | 85,000 | 4,154,800 | |
TOTAL COMMON STOCKS (Cost $658,770,977) | 576,615,891 | ||
Investment Companies - 0.5% | |||
|
|
|
|
Luxembourg - 0.5% | |||
ProLogis European Properties Fund | 252,000 | 3,298,789 | |
Money Market Funds - 4.8% | |||
|
|
|
|
Fidelity Cash Central Fund, 2.35% (b) | 15,561,585 | 15,561,585 | |
Fidelity Securities Lending Cash Central Fund, 2.37% (b)(c) | 13,091,628 | 13,091,628 | |
TOTAL MONEY MARKET FUNDS (Cost $28,653,213) | 28,653,213 | ||
TOTAL INVESTMENT PORTFOLIO - 101.7% (Cost $692,330,133) | 608,567,893 | ||
NET OTHER ASSETS - (1.7)% | (10,344,855) | ||
NET ASSETS - 100% | $ 598,223,038 |
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
(e) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the end of the period, the value of these securities amounted to $3,762,800 or 0.6% of net assets. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 737,983 |
Fidelity Securities Lending Cash Central Fund | 603,846 |
Total | $ 1,341,829 |
Income Tax Information |
The fund intends to elect to defer to its fiscal year ending July 31, 2009 approximately $91,247,042 of losses recognized during the period November 1, 2007 to July 31, 2008. |
The fund intends to elect to defer to its fiscal year ending July 31, 2009 approximately $51,983,093 of passive foreign investment company losses recognized during the period November 1, 2007 to July 31, 2008. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements
Statement of Assets and Liabilities
| July 31, 2008 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $11,793,441) - See accompanying schedule: Unaffiliated issuers (cost $663,676,920) | $ 579,914,680 |
|
Fidelity Central Funds (cost $28,653,213) | 28,653,213 |
|
Total Investments (cost $692,330,133) |
| $ 608,567,893 |
Receivable for investments sold | 415,537 | |
Receivable for fund shares sold | 895,865 | |
Dividends receivable | 2,642,340 | |
Distributions receivable from Fidelity Central Funds | 104,668 | |
Prepaid expenses | 1,115 | |
Other receivables | 560,226 | |
Total assets | 613,187,644 | |
|
|
|
Liabilities | ||
Payable for fund shares redeemed | $ 1,222,720 | |
Accrued management fee | 353,446 | |
Distribution fees payable | 7,991 | |
Other affiliated payables | 189,988 | |
Other payables and accrued expenses | 98,833 | |
Collateral on securities loaned, at value | 13,091,628 | |
Total liabilities | 14,964,606 | |
|
|
|
Net Assets | $ 598,223,038 | |
Net Assets consist of: |
| |
Paid in capital | $ 836,782,523 | |
Distributions in excess of net investment income | (51,983,093) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (102,800,219) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (83,776,173) | |
Net Assets | $ 598,223,038 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Assets and Liabilities - continued
| July 31, 2008 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 10.63 | |
|
|
|
Maximum offering price per share (100/94.25 of $10.63) | $ 11.28 | |
Class T: | $ 10.62 | |
|
|
|
Maximum offering price per share (100/96.50 of $10.62) | $ 11.01 | |
Class B: | $ 10.58 | |
|
|
|
Class C: | $ 10.57 | |
|
|
|
|
|
|
International Real Estate | $ 10.68 | |
|
|
|
Institutional Class: | $ 10.66 |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements - continued
Statement of Operations
| Year ended July 31, 2008 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 24,245,635 |
Interest |
| 22,594 |
Income from Fidelity Central Funds |
| 1,341,829 |
|
| 25,610,058 |
Less foreign taxes withheld |
| (2,019,537) |
Total income |
| 23,590,521 |
|
|
|
Expenses | ||
Management fee | $ 5,688,515 | |
Transfer agent fees | 2,218,287 | |
Distribution fees | 82,995 | |
Accounting and security lending fees | 390,709 | |
Custodian fees and expenses | 365,705 | |
Independent trustees' compensation | 3,595 | |
Registration fees | 90,287 | |
Audit | 69,362 | |
Legal | 5,241 | |
Interest | 23,066 | |
Miscellaneous | 71,028 | |
Total expenses before reductions | 9,008,790 | |
Expense reductions | (316,464) | 8,692,326 |
Net investment income (loss) | 14,898,195 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | (74,943,285) | |
Foreign currency transactions | 66,799 | |
Total net realized gain (loss) |
| (74,876,486) |
Change in net unrealized appreciation (depreciation) on: Investment securities | (134,156,478) | |
Assets and liabilities in foreign currencies | (88,300) | |
Total change in net unrealized appreciation (depreciation) |
| (134,244,778) |
Net gain (loss) | (209,121,264) | |
Net increase (decrease) in net assets resulting from operations | $ (194,223,069) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 14,898,195 | $ 19,060,502 |
Net realized gain (loss) | (74,876,486) | 65,469,181 |
Change in net unrealized appreciation (depreciation) | (134,244,778) | 11,371,284 |
Net increase (decrease) in net assets resulting | (194,223,069) | 95,900,967 |
Distributions to shareholders from net investment income | (18,764,211) | (8,677,416) |
Distributions to shareholders from net realized gain | (91,321,071) | (61,685,812) |
Total distributions | (110,085,282) | (70,363,228) |
Share transactions - net increase (decrease) | (143,878,212) | 571,194,492 |
Redemption fees | 522,585 | 1,300,956 |
Total increase (decrease) in net assets | (447,663,978) | 598,033,187 |
|
|
|
Net Assets | ||
Beginning of period | 1,045,887,016 | 447,853,829 |
End of period (including distributions in excess of net investment income of $51,983,093 and undistributed net investment income of $15,501,269, respectively) | $ 598,223,038 | $ 1,045,887,016 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended July 31, | 2008 | 2007 I |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 15.71 | $ 17.46 |
Income from Investment Operations |
|
|
Net investment income (loss) E | .20 | .11 |
Net realized and unrealized gain (loss) | (3.48) | (1.87) H |
Total from investment operations | (3.28) | (1.76) |
Distributions from net investment income | (.31) | - |
Distributions from net realized gain | (1.50) | - |
Total distributions | (1.81) | - |
Redemption fees added to paid in capital E | .01 | .01 |
Net asset value, end of period | $ 10.63 | $ 15.71 |
Total Return B, C, D | (23.20)% | (10.02)% |
Ratios to Average Net Assets F, J |
|
|
Expenses before reductions | 1.38% | 1.37% A |
Expenses net of fee waivers, if any | 1.38% | 1.37% A |
Expenses net of all reductions | 1.35% | 1.26% A |
Net investment income (loss) | 1.58% | 2.08% A |
Supplemental Data |
|
|
Net assets, end of period (000 omitted) | $ 9,976 | $ 5,087 |
Portfolio turnover rate G | 63% | 144% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
H The amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchases of shares in relation to fluctuating market values of the investments of the Fund.
I For the period April 4, 2007 (commencement of sale of shares) to July 31, 2007.
J Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class T
Years ended July 31, | 2008 | 2007 I |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 15.70 | $ 17.46 |
Income from Investment Operations |
|
|
Net investment income (loss) E | .17 | .10 |
Net realized and unrealized gain (loss) | (3.48) | (1.87) H |
Total from investment operations | (3.31) | (1.77) |
Distributions from net investment income | (.28) | - |
Distributions from net realized gain | (1.50) | - |
Total distributions | (1.78) | - |
Redemption fees added to paid in capital E | .01 | .01 |
Net asset value, end of period | $ 10.62 | $ 15.70 |
Total Return B, C, D | (23.39)% | (10.08)% |
Ratios to Average Net Assets F, J |
|
|
Expenses before reductions | 1.64% | 1.61% A |
Expenses net of fee waivers, if any | 1.64% | 1.61% A |
Expenses net of all reductions | 1.60% | 1.51% A |
Net investment income (loss) | 1.32% | 1.90% A |
Supplemental Data |
|
|
Net assets, end of period (000 omitted) | $ 7,566 | $ 2,398 |
Portfolio turnover rate G | 63% | 144% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
H The amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchases of shares in relation to fluctuating market values of the investments of the Fund.
I For the period April 4, 2007 (commencement of sale of shares) to July 31, 2007.
J Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class B
Years ended July 31, | 2008 | 2007 I |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 15.67 | $ 17.46 |
Income from Investment Operations |
|
|
Net investment income (loss) E | .11 | .07 |
Net realized and unrealized gain (loss) | (3.48) | (1.87) H |
Total from investment operations | (3.37) | (1.80) |
Distributions from net investment income | (.23) | - |
Distributions from net realized gain | (1.50) | - |
Total distributions | (1.73) | - |
Redemption fees added to paid in capital E | .01 | .01 |
Net asset value, end of period | $ 10.58 | $ 15.67 |
Total Return B, C, D | (23.80)% | (10.25)% |
Ratios to Average Net Assets F, J |
|
|
Expenses before reductions | 2.14% | 2.11% A |
Expenses net of fee waivers, if any | 2.14% | 2.11% A |
Expenses net of all reductions | 2.11% | 2.01% A |
Net investment income (loss) | .82% | 1.38% A |
Supplemental Data |
|
|
Net assets, end of period (000 omitted) | $ 930 | $ 1,158 |
Portfolio turnover rate G | 63% | 144% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the contingent deferred sales charge.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
H The amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchases of shares in relation to fluctuating market values of the investments of the Fund.
I For the period April 4, 2007 (commencement of sale of shares) to July 31, 2007.
J Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class C
Years ended July 31, | 2008 | 2007 I |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 15.67 | $ 17.46 |
Income from Investment Operations |
|
|
Net investment income (loss) E | .11 | .07 |
Net realized and unrealized gain (loss) | (3.48) | (1.87) H |
Total from investment operations | (3.37) | (1.80) |
Distributions from net investment income | (.24) | - |
Distributions from net realized gain | (1.50) | - |
Total distributions | (1.74) | - |
Redemption fees added to paid in capital E | .01 | .01 |
Net asset value, end of period | $ 10.57 | $ 15.67 |
Total Return B, C, D | (23.78)% | (10.25)% |
Ratios to Average Net Assets F, J |
|
|
Expenses before reductions | 2.14% | 2.10% A |
Expenses net of fee waivers, if any | 2.14% | 2.10% A |
Expenses net of all reductions | 2.11% | 2.00% A |
Net investment income (loss) | .82% | 1.35% A |
Supplemental Data |
|
|
Net assets, end of period (000 omitted) | $ 3,477 | $ 2,629 |
Portfolio turnover rate G | 63% | 144% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the contingent deferred sales charge.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
H The amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchases of shares in relation to fluctuating market values of the investments of the Fund.
I For the period April 4, 2007 (commencement of sale of shares) to July 31, 2007.
J Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - International Real Estate
Years ended July 31, | 2008 | 2007 | 2006 | 2005 G |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 15.73 | $ 14.69 | $ 12.09 | $ 10.00 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss) D | .25 | .31 | .30 | .23 |
Net realized and unrealized gain (loss) | (3.50) | 2.35 | 2.93 | 1.91 |
Total from investment operations | (3.25) | 2.66 | 3.23 | 2.14 |
Distributions from net investment income | (.31) | (.22) | (.24) | (.03) |
Distributions from net realized gain | (1.50) | (1.42) | (.40) | (.03) |
Total distributions | (1.81) | (1.64) | (.64) | (.06) |
Redemption fees added to paid in capital D | .01 | .02 | .01 | .01 |
Net asset value, end of period | $ 10.68 | $ 15.73 | $ 14.69 | $ 12.09 |
Total Return B, C | (22.97)% | 19.01% | 27.85% | 21.53% |
Ratios to Average Net Assets E, H |
|
|
|
|
Expenses before reductions | 1.11% | 1.07% | 1.12% | 1.29% A |
Expenses net of fee waivers, if any | 1.10% | 1.06% | 1.12% | 1.29% A |
Expenses net of all reductions | 1.07% | .96% | .91% | 1.27% A |
Net investment income (loss) | 1.86% | 1.86% | 2.23% | 2.21% A |
Supplemental Data |
|
|
|
|
Net assets, end of period (000 omitted) | $ 572,985 | $ 1,032,138 | $ 447,854 | $ 160,980 |
Portfolio turnover rate F | 63% | 144% | 234% | 36% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
G For the period September 8, 2004 (commencement of operations) to July 31, 2005.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. 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 - Institutional Class
Years ended July 31, | 2008 | 2007 H |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 15.73 | $ 17.46 |
Income from Investment Operations |
|
|
Net investment income (loss) D | .24 | .12 |
Net realized and unrealized gain (loss) | (3.49) | (1.86) G |
Total from investment operations | (3.25) | (1.74) |
Distributions from net investment income | (.33) | - |
Distributions from net realized gain | (1.50) | - |
Total distributions | (1.83) | - |
Redemption fees added to paid in capital D | .01 | .01 |
Net asset value, end of period | $ 10.66 | $ 15.73 |
Total Return B, C | (22.98)% | (9.91)% |
Ratios to Average Net Assets E, I |
|
|
Expenses before reductions | 1.13% | 1.08% A |
Expenses net of fee waivers, if any | 1.13% | 1.08% A |
Expenses net of all reductions | 1.10% | .97% A |
Net investment income (loss) | 1.83% | 2.27% A |
Supplemental Data |
|
|
Net assets, end of period (000 omitted) | $ 3,289 | $ 2,477 |
Portfolio turnover rate F | 63% | 144% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
G The amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchases of shares in relation to fluctuating market values of the investments of the Fund.
H For the period April 4, 2007 (commencement of sale of shares) to July 31, 2007.
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 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 July 31, 2008
1. Organization.
Fidelity International Real Estate Fund (the Fund) is a non-diversified fund of Fidelity Securities Fund (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 B, Class C, International Real Estate, and Institutional Class 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 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 also differ by class.The Fund's investments in emerging markets can be subject to social, economic, regulatory, and political uncertainties and can be extremely volatile.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the SEC's web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results
Annual Report
3. Significant Accounting Policies - continued
could differ from those estimates. 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. Wherever possible, the Fund uses independent pricing services approved by the Board of Trustees to value its investments.
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Foreign Currency - continued
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The implementation of FIN 48 did not result in any unrecognized tax benefits in the accompanying financial statements. Each of the Fund's federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service. 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 recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles.
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, certain foreign taxes, passive foreign investment companies (PFIC), losses deferred due to wash sales and excise tax regulations.
The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows:
Unrealized appreciation | $ 27,453,391 |
Unrealized depreciation | (122,768,811) |
Net unrealized appreciation (depreciation) | (95,315,420) |
|
|
Cost for federal income tax purposes | $ 703,883,313 |
The tax character of distributions paid was as follows:
| July 31, 2008 | July 31, 2007 |
Ordinary Income | $ 104,576,814 | $ 58,738,310 |
Long-term Capital Gains | 5,508,468 | 11,624,918 |
Total | $ 110,085,282 | $ 70,363,228 |
Short-Term Trading (Redemption) Fees. Shares held in the Fund less than 90 days are subject to a redemption fee equal to 1.50% of the proceeds of the redeemed shares. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the Fund and accounted for as an addition to paid in capital.
New Accounting Pronouncement. In September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and results in expanded disclosures about fair value measurements.
Annual Report
Notes to Financial Statements - continued
4. Operating Policies.
Repurchase Agreements. FMR has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits the Fund and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts which are then invested in repurchase agreements. The Fund may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. The Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
Restricted Securities. The Fund may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities is included at the end of the Fund's Schedule of Investments.
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $499,304,933 and $740,810,801, 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 .45% of the Fund's average net assets and a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .71% of the Fund's average net assets.
Distribution and Service Plan. 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
Annual Report
6. Fees and Other Transactions with Affiliates - continued
Distribution and Service Plan - continued
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 and the total amounts paid to and retained by FDC were as follows:
| Distribution | Service | Paid to | Retained |
Class A | 0% | .25% | $ 19,604 | $ 2,553 |
Class T | .25% | .25% | 18,242 | - |
Class B | .75% | .25% | 11,621 | 8,890 |
Class C | .75% | .25% | 33,528 | 23,565 |
|
|
| $ 82,995 | $ 35,008 |
Sales Load. FDC receives 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. FDC receives the proceeds of contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. These charges depend on the holding period. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, 1.00% to .50% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained |
Class A | $ 17,704 |
Class T | 3,326 |
Class B* | 769 |
Class C* | 1,717 |
| $ 23,516 |
* 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. Prior to January 1, 2008, Fidelity Service
Annual Report
Notes to Financial Statements - continued
6. Fees and Other Transactions with Affiliates - continued
Transfer Agent Fees - continued
Company, Inc. (FSC), also an affiliate of FMR, was the transfer agent for International Real Estate shares. For the period, each class paid the following transfer agent fees:
| Amount | % of |
Class A | $ 23,524 | .30 |
Class T | 11,255 | .31 |
Class B | 3,607 | .31 |
Class C | 10,271 | .31 |
International Real Estate | 2,159,996 | .27 |
Institutional Class | 9,634 | .30 |
| $ 2,218,287 |
|
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $90 for the period.
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. The Fund's activity in this program during the period for which loans were outstanding was as follows:
Borrower or Lender | Average Daily | Weighted Average | Interest |
Borrower | $ 12,036,923 | 5.31% | $ 23,066 |
Annual Report
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $4.2 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro rata portion of the line of credit, which amounted to $2,205 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
8. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Net income from lending portfolio securities during the period amounted to $603,846.
9. Expense Reductions.
FMR voluntarily agreed to reimburse a portion of the International Real Estate's operating expenses. During the period, this reimbursement reduced the class' expenses by $45,332.
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 $261,873 for the period. In addition, through arrangements with each class' transfer agent, credits realized as a result of
Annual Report
Notes to Financial Statements - continued
9. Expense Reductions - continued
uninvested cash balances were used to reduce the Fund's expenses. During the period, credits reduced each class' transfer agent expense as noted in the table below.
| Transfer Agent |
Class A | $ 31 |
International Real Estate | 9,228 |
| $ 9,259 |
10. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
11. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended July 31, | 2008 | 2007 |
From net investment income |
|
|
Class A | $ 129,243 | $ - |
Class T | 47,714 | - |
Class B | 18,349 | - |
Class C | 47,789 | - |
International Real Estate | 18,458,440 | 8,677,416 |
Institutional Class | 62,676 | - |
Total | $ 18,764,211 | $ 8,677,416 |
From net realized gain |
|
|
Class A | $ 682,544 | $ - |
Class T | 265,212 | - |
Class B | 121,612 | - |
Class C | 311,919 | - |
International Real Estate | 89,636,941 | 61,685,812 |
Institutional Class | 302,843 | - |
Total | $ 91,321,071 | $ 61,685,812 |
Annual Report
12. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
Years ended July 31, | 2008 | 2007A | 2008 | 2007A |
Class A |
|
|
|
|
Shares sold | 900,194 | 352,797 | $ 11,742,685 | $ 6,021,703 |
Reinvestment of distributions | 55,923 | - | 765,385 | - |
Shares redeemed | (341,825) | (28,946) | (4,339,419) | (470,996) |
Net increase (decrease) | 614,292 | 323,851 | $ 8,168,651 | $ 5,550,707 |
Class T |
|
|
|
|
Shares sold | 633,863 | 163,911 | $ 7,676,814 | $ 2,804,594 |
Reinvestment of distributions | 21,513 | - | 296,970 | - |
Shares redeemed | (95,643) | (11,190) | (1,262,734) | (189,267) |
Net increase (decrease) | 559,733 | 152,721 | $ 6,711,050 | $ 2,615,327 |
Class B |
|
|
|
|
Shares sold | 50,624 | 74,357 | $ 676,962 | $ 1,273,355 |
Reinvestment of distributions | 9,315 | - | 128,955 | - |
Shares redeemed | (45,973) | (460) | (599,735) | (7,526) |
Net increase (decrease) | 13,966 | 73,897 | $ 206,182 | $ 1,265,829 |
Class C |
|
|
|
|
Shares sold | 207,359 | 188,521 | $ 2,751,080 | $ 3,213,374 |
Reinvestment of distributions | 24,058 | - | 331,352 | - |
Shares redeemed | (70,253) | (20,772) | (919,320) | (352,540) |
Net increase (decrease) | 161,164 | 167,749 | $ 2,163,112 | $ 2,860,834 |
International Real Estate |
|
|
|
|
Shares sold | 21,686,399 | 78,643,461 | $ 295,025,902 | $ 1,288,512,778 |
Reinvestment of distributions | 7,157,452 | 4,249,998 | 99,352,759 | 65,004,744 |
Shares redeemed | (40,815,706) | (47,753,325) | (557,680,698) | (797,297,400) |
Net increase (decrease) | (11,971,855) | 35,140,134 | $ (163,302,037) | $ 556,220,122 |
Institutional Class |
|
|
|
|
Shares sold | 282,296 | 158,866 | $ 3,825,173 | $ 2,704,482 |
Reinvestment of distributions | 22,489 | - | 308,363 | - |
Shares redeemed | (153,644) | (1,378) | (1,958,706) | (22,809) |
Net increase (decrease) | 151,141 | 157,488 | $ 2,174,830 | $ 2,681,673 |
A Share transactions for Class A, Class T, Class B, Class C and Institutional Class are for the period April 4, 2007 (commencement of sale of shares) to July 31, 2007.
Annual Report
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Securities Fund and the Shareholders of Fidelity International Real Estate 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 International Real Estate Fund (a fund of Fidelity Securities Fund) at July 31, 2008, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and 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 International Real Estate 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 July 31, 2008 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
September 22, 2008
Annual Report
Trustees and Officers
The Trustees, Member of the Advisory Board, and executive officers of the trust and fund, as applicable, are listed below. The Board of Trustees governs the fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee the fund's activities, review contractual arrangements with companies that provide services to the fund, and review the fund's performance. Except for Edward C. Johnson 3d and James C. Curvey, each of the Trustees oversees 218 funds advised by FMR or an affiliate. Messrs. Johnson and Curvey oversee 377 funds advised by FMR or an affiliate.
The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust. Each Trustee who is not an interested person (as defined in the 1940 Act) (Independent Trustee), shall retire not later than the last day of the calendar year in which his or her 72nd birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board Member hold office without limit in time, except that any officer and Advisory Board Member may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years.
The fund's Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-800-544-8544.
Interested Trustees*:
Correspondence intended for each Trustee who is an interested person may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Edward C. Johnson 3d (78) | |
| Year of Election or Appointment: 1984 Mr. Johnson is Chairman of the Board of Trustees. Mr. Johnson serves as Chief Executive Officer, Chairman, and a Director of FMR LLC; Chairman and a Director of FMR; Chairman and a Director of Fidelity Research & Analysis Company (FRAC); Chairman and a Director of Fidelity Investments Money Management, Inc.; and Chairman and a Director of FMR Co., Inc. In addition, Mr. Johnson serves as Chairman and Director of FIL Limited. Previously, Mr. Johnson served as President of FMR LLC (2006-2007). |
James C. Curvey (73) | |
| Year of Election or Appointment: 2007 Mr. Curvey also serves as Trustee (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2006-present) and Director of FMR LLC. In addition, Mr. Curvey serves as an Overseer for the Boston Symphony Orchestra and a member of the Trustees of Villanova University. |
* Trustees have been determined to be "Interested Trustees" by virtue of, among other things, their affiliation with the trust or various entities under common control with FMR. FMR Corp. merged with and into FMR LLC on October 1, 2007. Any references to FMR LLC for prior periods are deemed to be references to the prior entity.
Independent Trustees:
Correspondence intended for each Independent Trustee (that is, the Trustees other than the Interested Trustees) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.
Name, Age; Principal Occupation | |
Dennis J. Dirks (60) | |
| Year of Election or Appointment: 2005 Prior to his retirement in May 2003, Mr. Dirks was Chief Operating Officer and a member of the Board of The Depository Trust & Clearing Corporation (DTCC) (1999-2003). He also served as President, Chief Operating Officer, and Board member of The Depository Trust Company (DTC) (1999-2003) and President and Board member of the National Securities Clearing Corporation (NSCC) (1999-2003). In addition, Mr. Dirks served as a Trustee and a member of the Finance Committee of Manhattan College (2005-2008), and as Chief Executive Officer and Board member of the Government Securities Clearing Corporation (2001-2003) and Chief Executive Officer and Board member of the Mortgage-Backed Securities Clearing Corporation (2001-2003). Mr. Dirks also serves as a Trustee and a member of the Finance Committee of AHRC of Nassau County (2006-present). |
Alan J. Lacy (54) | |
| Year of Election or Appointment: 2008 Mr. Lacy serves as Senior Adviser (2007-present) of Oak Hill Capital Partners, L.P. (a private equity firm). Mr. Lacy also served as Chief Executive Officer (2000-2005) and Vice Chairman (2005-2006) of Sears Holdings Corporation and Sears, Roebuck and Co. (retail). In addition, Mr. Lacy serves as a member of the Board of Directors of The Western Union Company (global money transfer, 2006-present) and Bristol-Myers Squibb (global pharmaceuticals, 2007-present). Mr. Lacy is a Trustee of the National Parks Conservation Association and The Field Museum of Natural History. |
Ned C. Lautenbach (64) | |
| Year of Election or Appointment: 2000 Mr. Lautenbach is Chairman of the Independent Trustees (2006-present). Mr. Lautenbach is an Advisory Partner of Clayton, Dubilier & Rice, Inc. (private equity investment firm). Previously, Mr. Lautenbach was with the International Business Machines Corporation (IBM) from 1968 until his retirement in 1998. Mr. Lautenbach serves as a Director of Eaton Corporation (diversified industrial) as well as the Philharmonic Center for the Arts in Naples, Florida. He also is a member of the Board of Trustees of Fairfield University (2005-present), as well as a member of the Council on Foreign Relations. Previously, Mr. Lautenbach served as a Director of Sony Corporation (2006-2007). |
Joseph Mauriello (63) | |
| 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 firm, 1965-2005). Mr. Mauriello currently serves as a member of the Board of Directors of XL Capital Ltd. (global insurance and re-insurance company, 2006-present) and of Arcadia Resources Inc. (health care services and products, 2007-present). He also served as a Director of the Hamilton Funds of the Bank of New York (2006-2007). |
Cornelia M. Small (64) | |
| Year of Election or Appointment: 2005 Ms. Small is a member of the Investment Committee, and Chair (2008-present) and a member of the Board of Trustees of Smith College. Ms. Small also serves on the Investment Committee of the Berkshire Taconic Community Foundation (2008-present). Previously, Ms. Small served as Chairperson of the Investment Committee (2002-2008) of Smith College and as Co-Chair (2000-2003) of the Annual Fund for the Fletcher School of Law and Diplomacy. In addition, she served as Chief Investment Officer, Director of Global Equity Investments, and a member of the Board of Directors of Scudder, Stevens & Clark and Scudder Kemper Investments. |
William S. Stavropoulos (69) | |
| Year of Election or Appointment: 2002 Mr. Stavropoulos is Chairman Emeritus of the Board of Directors of The Dow Chemical Company, where he previously served in numerous senior management positions, including President (1993-2000; 2002-2003), CEO (1995-2000; 2002-2004), Chairman of the Executive Committee (2000-2006), and as a member of the Board of Directors (1990-2006). Currently, he is a Director of Teradata Corporation (data warehousing and technology solutions, 2008-present), Chemical Financial Corporation, Maersk Inc. (industrial conglomerate), Tyco International, Inc. (multinational manufacturing and services, 2007-present), and a member of the Advisory Board for Metalmark Capital (private equity investment firm, 2005-present). He is a special advisor to Clayton, Dubilier & Rice, Inc. (private equity investment). In addition, Mr. Stavropoulos is a member of the University of Notre Dame Advisory Council for the College of Science. |
David M. Thomas (59) | |
| Year of Election or Appointment: 2008 Previously, Mr. Thomas served as Executive Chairman (2005-2006) and Chairman and Chief Executive Officer (2000-2005) of IMS Health, Inc. (pharmaceutical and healthcare information solutions). In addition, Mr. Thomas serves as a member of the Board of Directors of Fortune Brands, Inc. (consumer products holding company), and Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (57) | |
| Year of Election or Appointment: 2008 Mr. Wiley also serves as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-present). He serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), and a Director of Bill Barrett Corporation (exploration and production company, 2005-present). In addition, he also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a Sr. Energy Advisor of Katzenbach Partners, LLC (consulting firm, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment firm), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services company, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production company, 2001-2005). |
Advisory Board Member and Executive Officers**:
Correspondence intended for each executive officer and Mr. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Peter S. Lynch (64) | |
| Year of Election or Appointment: 2003 Member of the Advisory Board of Fidelity Securities Fund. Mr. Lynch is Vice Chairman and a Director of FMR, and Vice Chairman (2001-present) and a Director of FMR Co., Inc. Previously, Mr. Lynch served as a Trustee of the Fidelity funds (1990-2003). In addition, he serves as a Trustee of Boston College and as the Chairman of the Inner-City Scholarship Fund. |
Kenneth B. Robins (38) | |
| Year of Election or Appointment: 2008 President and Treasurer of International Real Estate. Mr. Robins also serves as President and Treasurer of Fidelity's Equity and High Income Funds (2008-present) and is an employee of FMR (2004-present). Before joining Fidelity Investments, Mr. Robins worked at KPMG LLP, where he was a partner in KPMG's department of professional practice (2002-2004). |
Brian B. Hogan (43) | |
| Year of Election or Appointment: 2007 Vice President of International Real Estate. Mr. Hogan also serves as Vice President of Sector Funds (2007-present) and Senior Vice President, Equity Research of FMR. Previously, Mr. Hogan served as a portfolio manager. |
Scott C. Goebel (40) | |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of International Real Estate. Mr. Goebel also serves as Secretary and CLO of other Fidelity funds (2008-present); General Counsel, Secretary, and Senior Vice President of FMR (2008-present); and Deputy General Counsel of FMR LLC. Previously, Mr. Goebel served as Assistant Secretary of the Funds (2007-2008) and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007). |
John B. McGinty, Jr. (45) | |
| Year of Election or Appointment: 2008 Assistant Secretary of International Real Estate. Mr. McGinty also serves as Assistant Secretary of Fidelity's other Equity and High Income Funds (2008-present) and is an employee of FMR LLC (2004-present). Mr. McGinty also serves as Senior Vice President, Secretary, and Chief Legal Officer of FDC (2007-present). Before joining Fidelity Investments, Mr. McGinty practiced law at Ropes & Gray, LLP. |
Holly C. Laurent (54) | |
| Year of Election or Appointment: 2008 Anti-Money Laundering (AML) officer of International Real Estate. Ms. Laurent also serves as AML officer of other Fidelity funds (2008-present) and is an employee of FMR LLC. Previously, Ms. Laurent was Senior Vice President and Head of Legal for Fidelity Business Services India Pvt. Ltd. (2006-2008), Senior Vice President, Deputy General Counsel and Group Head for FMR LLC (2005-2006). |
Christine Reynolds (49) | |
| Year of Election or Appointment: 2008 Chief Financial Officer of International Real Estate. Ms. Reynolds also serves as Chief Financial Officer of other Fidelity funds (2008-present). Ms. Reynolds became President of Fidelity Pricing and Cash Management Services (FPCMS) in August 2008. She served as Chief Operating Officer of FPCMS from 2007 through July 2008. Previously, Ms. Reynolds served as President, Treasurer, and Anti-Money Laundering officer of the Fidelity funds (2004-2007). Before joining Fidelity Investments, Ms. Reynolds worked at PricewaterhouseCoopers LLP (PwC) (1980-2002), where she was an audit partner with PwC's investment management practice. |
Kenneth A. Rathgeber (61) | |
| Year of Election or Appointment: 2004 Chief Compliance Officer of International Real Estate. Mr. Rathgeber also serves as Chief Compliance Officer of Fidelity's Equity and High Income Funds (2004-present). He is Chief Compliance Officer of FMR (2005-present), FMR Co., Inc. (2005-present), Fidelity Management & Research (U.K.) Inc. (2005-present), Fidelity Research & Analysis Company (2005-present), Fidelity Investments Money Management, Inc. (2005-present), and Strategic Advisers, Inc. (2005-present). |
Bryan A. Mehrmann (47) | |
| Year of Election or Appointment: 2005 Deputy Treasurer of International Real Estate. Mr. Mehrmann also serves as Deputy Treasurer of other Fidelity funds (2005-present) and is an employee of FMR. Previously, Mr. Mehrmann served as Vice President of Fidelity Investments Institutional Services Group (FIIS)/Fidelity Investments Institutional Operations Corporation, Inc. (FIIOC) Client Services (1998-2004). |
Adrien E. Deberghes (40) | |
| Year of Election or Appointment: 2008 Deputy Treasurer of International Real Estate. Mr. Deberghes also serves as Deputy Treasurer of Fidelity's Equity and High Income Funds (2008-present) and is an employee of FMR (2008-present). Previously, Mr. Deberghes served as Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005). |
Robert G. Byrnes (41) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of International Real Estate. Mr. Byrnes also serves as Assistant Treasurer of other Fidelity funds (2005-present) and is an employee of FMR (2005-present). Previously, Mr. Byrnes served as Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (2003-2005). Before joining Fidelity Investments, Mr. Byrnes worked at Deutsche Asset Management where he served as Vice President of the Investment Operations Group (2000-2003). |
Peter L. Lydecker (54) | |
| Year of Election or Appointment: 2004 Assistant Treasurer of International Real Estate. Mr. Lydecker also serves as Assistant Treasurer of other Fidelity funds (2004-present) and is an employee of FMR. |
Paul M. Murphy (61) | |
| Year of Election or Appointment: 2007 Assistant Treasurer of International Real Estate. Mr. Murphy also serves as Assistant Treasurer of other Fidelity funds (2007-present) and is an employee of FMR (2007-present). Previously, Mr. Murphy served as Chief Financial Officer of the Fidelity Funds (2005-2006), Vice President and Associate General Counsel of FMR (2007), and Senior Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (1994-2007). |
Gary W. Ryan (49) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of International Real Estate. Mr. Ryan also serves as Assistant Treasurer of other Fidelity funds (2005-present) and is an employee of FMR (2005-present). Previously, Mr. Ryan served as Vice President of Fund Reporting in Fidelity Pricing and Cash Management Services (FPCMS) (1999-2005). |
** FMR Corp. merged with and into FMR LLC on October 1, 2007. Any references to FMR LLC for prior periods are deemed to be references to the prior entity.
Annual Report
Distributions (Unaudited)
The fund hereby designates as a capital gain dividend with respect to the taxable year ended July 31, 2008, $600,573, or, if subsequently determined to be different, the net capital gain of such year.
The fund designates 11% and 4% of the dividends distributed in September and December, respectively 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 amounts per share which represents income derived from sources within, and taxes paid to, foreign countries or possessions of the United States are as follows:
Pay Date | Income | Taxes |
09/10/2007 12/24/2007 | $0.339 $0.113 | $0.0426 $0.0105 |
The fund will notify shareholders in January 2009 of amounts for use in preparing 2008 income tax returns.
Annual Report
Proxy Voting Results
A special meeting of the fund's shareholders was held on May 14, 2008. The results of votes taken among shareholders on the proposals before them are reported below. Each vote reported represents one dollar of net asset value held on the record date for the meeting.
PROPOSAL 1 | ||
To elect a Board of Trustees.A | ||
| # of | % of |
James C. Curvey | ||
Affirmative | 30,242,569,269.49 | 94.915 |
Withheld | 1,620,182,942.38 | 5.085 |
TOTAL | 31,862,752,211.87 | 100.000 |
Dennis J. Dirks | ||
Affirmative | 30,356,248,026.80 | 95.272 |
Withheld | 1,506,504,185.07 | 4.728 |
TOTAL | 31,862,752,211.87 | 100.000 |
Edward C. Johnson 3d | ||
Affirmative | 30,163,300,902.81 | 94.666 |
Withheld | 1,699,451,309.06 | 5.334 |
TOTAL | 31,862,752,211.87 | 100.000 |
Alan J. Lacy | ||
Affirmative | 30,334,439,999.59 | 95.203 |
Withheld | 1,528,312,212.28 | 4.797 |
TOTAL | 31,862,752,211.87 | 100.000 |
Ned C. Lautenbach | ||
Affirmative | 30,317,381,535.59 | 95.150 |
Withheld | 1,545,370,676.28 | 4.850 |
TOTAL | 31,862,752,211.87 | 100.000 |
Joseph Mauriello | ||
Affirmative | 30,340,553,696.88 | 95.223 |
Withheld | 1,522,198,514.99 | 4.777 |
TOTAL | 31,862,752,211.87 | 100.000 |
Cornelia M. Small | ||
Affirmative | 30,337,552,071.15 | 95.213 |
Withheld | 1,525,200,140.72 | 4.787 |
TOTAL | 31,862,752,211.87 | 100.000 |
William S. Stavropoulos | ||
Affirmative | 30,240,356,579.51 | 94.908 |
Withheld | 1,622,395,632.36 | 5.092 |
TOTAL | 31,862,752,211.87 | 100.000 |
| # of | % of |
David M. Thomas | ||
Affirmative | 30,352,029,125.67 | 95.259 |
Withheld | 1,510,723,086.20 | 4.741 |
TOTAL | 31,862,752,211.87 | 100.000 |
Michael E. Wiley | ||
Affirmative | 30,333,540,290.12 | 95.201 |
Withheld | 1,529,211,921.75 | 4.799 |
TOTAL | 31,862,752,211.87 | 100.000 |
PROPOSAL 2 | ||
To amend the Declaration of Trust to reduce the required quorum for future shareholder meetings.A | ||
Affirmative | 23,747,670,372.95 | 74.531 |
Against | 5,357,217,831.03 | 16.814 |
Abstain | 1,587,233,084.08 | 4.981 |
Broker | 1,170,630,923.81 | 3.674 |
TOTAL | 31,862,752,211.87 | 100.000 |
A Denotes trust-wide proposal and voting results. |
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees
Fidelity International Real Estate Fund
Each year, typically in July, the Board of Trustees, including the Independent Trustees (together, the Board), votes on the renewal of the management contract and sub-advisory agreements (together, the Advisory Contracts) for the fund. The Board, assisted by the advice of fund counsel and Independent Trustees' counsel, requests and considers a broad range of information throughout the year.
The Board meets regularly and, acting directly and through its separate committees, requests and receives information concerning, and considers at each of its meetings factors that are relevant to, its annual consideration of the renewal of the fund's Advisory Contracts, including the services and support provided to the fund and its shareholders. At the time of the renewal, the Board had 12 standing committees, each composed of Independent Trustees with varying backgrounds, to which the Board has assigned specific subject matter responsibilities in order to enhance effective decision-making by the Board. Each committee has a written charter outlining the structure and purposes of the committee. The Board also meets as needed to consider matters specifically related to the Board's annual consideration of the renewal of Advisory Contracts.
At its July 2008 meeting, the Board of Trustees, including the Independent Trustees, unanimously determined to renew the fund's Advisory Contracts. In reaching its determination, the Board considered all factors it believed relevant, including (i) the nature, extent, and quality of the services to be provided to the fund and its shareholders (including the investment performance of the fund); (ii) the competitiveness of the management fee and total expenses; (iii) the total costs of the services to be provided by and the profits to be realized by Fidelity from its relationship with the fund; (iv) the extent to which economies of scale would be realized as the fund grows; and (v) whether fee levels reflect these economies of scale, if any, for the benefit of fund shareholders. The Board also approved agreements with foreign sub-advisers Fidelity Management & Research (Japan) Inc. and Fidelity Management & Research (Hong Kong) Limited, as well as amendments to the fund's agreement with Fidelity Management & Research (U.K.) Inc..
In considering whether to renew the Advisory Contracts for the fund, the Board ultimately reached a determination, with the assistance of fund counsel and Independent Trustees' counsel and through the exercise of its business judgment, that the renewal of the Advisory Contracts and the compensation to be received by Fidelity under the management contract is consistent with Fidelity's fiduciary duty under applicable law. The Board's decision to renew the Advisory Contracts was not based on any single factor noted above, but rather was based on a comprehensive consideration of all the information provided to the Board at its meetings throughout the year. The Board, in reaching its determination to renew the Advisory Contracts, is aware that shareholders in the fund have a broad range of investment choices available to them, including a wide choice among mutual funds offered by competitors to Fidelity, and that the fund's shareholders, with the opportunity to review and weigh the disclosure provided by the fund in its prospectus and other public disclosures, have chosen to invest in this fund, managed by Fidelity.
Annual Report
Nature, Extent, and Quality of Services Provided. The Board considered staffing within the investment adviser, FMR, and the sub-advisers (together, the Investment Advisers), including the backgrounds of the fund's investment personnel and the fund's investment objective and discipline. The Independent Trustees also had discussions with senior management of Fidelity's investment operations and investment groups. The Board considered the structure of the portfolio manager compensation program and whether this structure provides appropriate incentives.
Resources Dedicated to Investment Management and Support Services. The Board reviewed the size, education, and experience of the Investment Advisers' investment staff, their use of technology, and the Investment Advisers' approach to recruiting, training, and retaining portfolio managers and other research, advisory, and management personnel. The Board noted that Fidelity's analysts have access to a variety of technological tools that enable them to perform both fundamental and quantitative analysis and to specialize in various disciplines. The Board considered Fidelity's extensive global research capabilities that enable the Investment Advisers to aggregate data from various sources in an effort to produce positive investment results. The Board also considered that Fidelity's portfolio managers and analysts have access to daily portfolio attribution that allows for monitoring of a fund's portfolio, as well as an electronic communication system that provides immediate real-time access to research concerning issuers and credit enhancers.
Shareholder and Administrative Services. The Board considered (i) the nature, extent, quality, and cost of advisory, administrative, distribution, and shareholder services performed by the Investment Advisers and their affiliates under the Advisory Contracts and under separate agreements covering transfer agency, pricing and bookkeeping, and securities lending services for the fund; (ii) the nature and extent of the Investment Advisers' supervision of third party service providers, principally custodians and subcustodians; and (iii) the resources devoted to, and the record of compliance with, the fund's compliance policies and procedures. The Board also reviewed the allocation of fund brokerage, including allocations to brokers affiliated with the Investment Advisers, the use of brokerage commissions to pay fund expenses, and the use of "soft" commission dollars to pay for research services. The Board further considered that Fidelity voluntarily pays for market data out of its own resources.
The Board noted that the growth of fund assets across the complex allows Fidelity to reinvest in the development of services designed to enhance the value or convenience of the Fidelity funds as investment vehicles. These services include 24-hour access to account information and market information through phone representatives and over the Internet, and investor education materials and asset allocation tools.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
Investment in a Large Fund Family. The Board considered the benefits to shareholders of investing in a Fidelity fund, including the benefits of investing in a fund that is part of a large family of funds offering a variety of investment disciplines and providing for a large variety of mutual fund investor services. For example, fund shareholders are offered the privilege of exchanging shares of the fund for shares of other Fidelity funds, as set forth in the fund's prospectus, without paying a sales charge. The Board noted that Fidelity has taken a number of actions over the previous year that benefited particular funds, including (i) dedicating additional resources to investment research and to restructure the investment research teams; (ii) contractually agreeing to reduce the management fees on Fidelity's Institutional Money Market Funds and launching Class IV and Institutional Class of certain of these funds; (iii) reducing the transfer agent fees for the Fidelity Select Portfolios and Investor Class of the VIP funds; and (iv) launching Class K of 29 equity funds as a lower-fee class available to certain employer-sponsored retirement plans.
Investment Performance. The Board considered whether the fund has operated within its investment objective, as well as its record of compliance with its investment restrictions. It also reviewed the fund's absolute investment performance for Fidelity International Real Estate (retail class), as well as the fund's relative investment performance for Fidelity International Real Estate (retail class) measured against a broad-based securities market index. The Board noted that FMR does not believe that a meaningful peer group exists against which to compare the fund's performance. Because the fund had been in existence less than five calendar years, the following charts considered by the Board show, for the one- and three-year periods ended December 31, 2007, the cumulative total returns of Fidelity International Real Estate (retail class) of the fund and the cumulative total returns of a broad-based securities market index ("benchmark"). (The Advisor Classes of the fund had less than one year of performance as of December 31, 2007.)
Annual Report
Fidelity International Real Estate Fund
The Board stated that the investment performance of the fund was lower than its benchmark for all the periods shown. The Board discussed with FMR actions that will be taken by FMR to attempt to improve the fund's below-benchmark performance. The Board will continue to closely monitor the performance of the fund in the coming year.
The Board considered that FMR has taken steps to refocus and strengthen equity research, equity portfolio management, and compliance.
Based on its review, and giving particular weight to the nature and quality of the resources dedicated by the Investment Advisers to maintain and improve relative performance, the Board concluded that the nature, extent, and quality of the services provided to the fund will benefit the fund's shareholders, particularly in light of the Board's view that the fund's shareholders benefit from investing in a fund that is part of a large family of funds offering a variety of investment disciplines and services.
Competitiveness of Management Fee and Total Fund Expenses. The Board considered the fund's management fee and total expenses compared to "mapped groups" of competitive funds and classes. Fidelity creates "mapped groups" by combining similar Lipper investment objective categories that have comparable management fee characteristics. Combining Lipper investment objective categories aids the Board's management fee and total expense comparisons by broadening the competitive group used for comparison and by reducing the number of universes to which various Fidelity funds are compared. The Board also considered supplemental information about how the fund's management fee and total expenses ranked relative to groups based on Lipper classifications, which take into account a fund's market capitalization and style.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
The Board considered two proprietary management fee comparisons for the 12-month (or shorter) 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. "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 29% means that 71% 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, is also included in the chart and considered by the Board.
Fidelity International Real Estate 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 2007.
Based on its review, the Board concluded that the fund's management fee was fair and reasonable in light of the services that the fund receives and the other factors considered.
In its review of the each class's total expenses, 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 part of its review, the Board also considered current and historical total expenses 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.
Annual Report
The Board noted that the total expenses each of Class A, Class B, Class C, Institutional Class, and Fidelity International Real Estate (retail class) ranked below its competitive median for 2007, and the total expenses of Class T ranked above its competitive median for 2007. The Board considered that the total expenses for Class T were above the median primarily because its 12b-1 fee is higher than the typical front-end load class. 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 expenses 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.
In its review of total expenses, the Board also considered Fidelity fee structures and other information on clients that FMR and its affiliates service in other competitive markets, such as other mutual funds advised or subadvised by FMR or its affiliates, pension plan clients, and other institutional clients.
Based on its review, the Board concluded that the total expenses of each class of the fund were reasonable, although in one case 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 audited books and records of Fidelity. The Audit Committee of the Board reviews any significant changes from the prior year's methodologies.
PricewaterhouseCoopers LLP (PwC), independent registered public accounting firm and auditor to Fidelity and certain Fidelity funds, has been engaged annually by the Board as part of the Board's assessment of the results of Fidelity's profitability analysis. PwC's engagement includes the review and assessment of Fidelity's methodologies used in determining the revenues and expenses attributable to Fidelity's mutual fund business, and completion of agreed-upon procedures surrounding the mathematical accuracy of fund profitability and its conformity to allocation methodologies. After considering PwC's reports issued under the engagement and information provided by Fidelity, the Board believes that while other allocation methods may also be reasonable, Fidelity's profitability methodologies are reasonable in all material respects.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
The Board has also reviewed Fidelity's non-fund businesses and any fall-out benefits related to the mutual fund business as well as cases where Fidelity's affiliates may benefit from or be related to the fund's business.
The Board considered the costs of the services provided by and the profits realized by Fidelity in connection with the operation of the fund and determined that the amount of profit is a fair entrepreneurial profit for the management of the fund.
Economies of Scale. The Board considered whether there have been economies of scale in respect of the management of the Fidelity funds, whether the Fidelity funds (including the fund) have appropriately benefited from any such economies of scale, and whether there is potential for realization of any further economies of scale. The Board considered the extent to which the fund will benefit from economies of scale through increased services to the fund, through waivers or reimbursements, or through fee or expense reductions.
The Board recognized that the fund's management contract incorporates a "group fee" structure, which provides for lower group fee rates as total fund assets under FMR's management increase, and for higher group fee rates as total fund assets under FMR's management decrease. FMR determines the group fee rates based on a tiered asset "breakpoint" schedule. The Board considered that the group fee is designed to deliver the benefits of economies of scale to fund shareholders when total fund assets increase, even if assets of any particular fund are unchanged or have declined, because some portion of Fidelity's costs are attributable to services provided to all Fidelity funds, and all funds benefit if those costs can be allocated among more assets. The Board concluded that, given the group fee structure, fund shareholders will achieve a certain level of economies of scale as assets under FMR's management increase at the fund complex level, regardless of whether Fidelity achieves any such economies of scale.
The Board further concluded that any potential economies of scale are being shared between fund shareholders and Fidelity in an appropriate manner.
Additional Information Requested by the Board. In order to develop fully the factual basis for consideration of the Fidelity funds' Advisory Contracts, the Board requested and received additional information on certain topics, including (i) fund performance trends and actions to be taken by FMR to improve certain funds' overall performance; (ii) portfolio manager changes that have occurred during the past year; (iii) Fidelity's fund profitability methodology, the profitability of certain fund service providers, and profitability trends for certain funds; (iv) Fidelity's compensation structure for portfolio managers and key personnel, including its effects on fund profitability and the extent to which portfolio manager compensation is linked to fund performance; (v) Fidelity's fee structures and rationale for recommending different fees among categories of funds; and (vi) Fidelity's rationale for recommending which funds should have a performance adjustment component as part of their management fees.
Annual Report
Based on its evaluation of all of the conclusions noted above, and after considering all material factors, the Board ultimately concluded that the advisory fee structures are fair and reasonable, and that the fund's Advisory Contracts should be renewed.
Annual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Fidelity Research & Analysis Company
Fidelity Management & Research
(U.K.) Inc.
Fidelity Investments Japan Limited
Fidelity International Investment
Advisers
Fidelity International Investment
Advisers (U.K.) Limited
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Service Agents
Fidelity Investments Institutional
Operations Company, Inc.
Boston, MA
Fidelity Service Company, Inc.
Boston, MA
Custodian
Mellon Bank, N.A.
Pittsburgh, PA
AIREI-UANN-0908 1.843171.101
Fidelity®
Leveraged Company Stock
Fund -
Leveraged Company Stock
Class K
Annual Report
July 31, 2008
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message | Ned Johnson's message to shareholders. | |
Performance | How the fund has done over time. | |
Management's Discussion | The manager's review of fund performance, strategy and outlook. | |
Shareholder Expense Example | An example of shareholder expenses. | |
Investment Changes | A summary of major shifts in the fund's investments over the last 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 |
| |
Proxy Voting Results |
| |
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 (search for "proxy voting guidelines") or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-800-544-8544 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company.
Annual Report
This report and the financial statements contained herein are submitted for the general information of the shareholders of the fund. This report is not authorized for distribution to prospective investors in the fund unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com or http://www.advisor.fidelity.com, as applicable.
NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE
Neither the fund nor Fidelity Distributors Corporation is a bank.
Annual Report
Chairman's Message
(photo_of_Edward_C_Johnson_3d)
Dear Shareholder:
Domestic and international securities markets have struggled thus far in 2008. High-grade fixed-income investments produced modestly positive results, but many stock benchmarks suffered double-digit losses through the first half of this year. Financial markets are always unpredictable, but there are a number of time-tested principles that can put the historical odds in your favor.
One of the basic tenets is to invest for the long term. Over time, riding out the markets' inevitable ups and downs has proven much more effective than selling into panic or chasing the hottest trend. Even missing only a few of the markets' best days can significantly diminish investor returns. Patience also affords the benefits of compounding - of earning interest on additional income or reinvested dividends and capital gains. There are tax advantages and cost benefits to consider as well. The more you sell, the more taxes you pay, and the more you trade, the higher the costs. While staying the course doesn't eliminate risk, it can considerably lessen the effect of short-term declines.
You can further manage your investing risk through diversification. And today, more than ever, geographic diversification should be taken into account. Studies indicate that asset allocation is the single most important determinant of a portfolio's long-term success. The right mix of stocks, bonds and cash - aligned to your particular risk tolerance and investment objective - is very important. Age-appropriate rebalancing is also an essential aspect of asset allocation. For younger investors, an emphasis on equities - which historically have been the best-performing asset class over time - is encouraged. As investors near their specific goal, such as retirement or sending a child to college, consideration may be given to replacing volatile assets (e.g. common stocks) with more-stable fixed investments (bonds or savings plans).
A third investment principle - investing regularly - can help lower the average cost of your purchases. Investing a certain amount of money each month or quarter helps ensure you won't pay for all your shares at market highs. This strategy - known as dollar cost averaging - also reduces unconstructive "emotion" from investing, helping shareholders avoid selling weak performers just prior to an upswing, or chasing a hot performer just before a correction.
We invite you to contact us via the Internet, through our Investor Centers or over the phone. It is our privilege to provide you the information you need to make the investments that are right for you.
Sincerely,
/s/Edward C. Johnson 3d
Edward C. Johnson 3d
Annual Report
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' 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 July 31, 2008 | Past 1 | Past 5 | Life of |
Leveraged Company Stock | -2.76% | 20.71% | 19.59% A |
Class K B | -2.70% | 20.72% | 19.60% A |
A From December 19, 2000.
B The initial offering of Class K shares took place on May 9, 2008. Returns prior to May 9, 2008 are those of Leveraged Company Stock, the original class of the fund.
$10,000 Over Life of Fund
Let's say hypothetically that $10,000 was invested in Leveraged Company Stock on December 19, 2000, when the fund started. The chart shows how the value of your investment would have changed, and also shows how the Standard & Poor's 500SM Index (S&P 500®) performed over the same period.
Annual Report
Management's Discussion of Fund Performance
Comments from Thomas Soviero, Portfolio Manager of Fidelity® Leveraged Company Stock Fund
Grim news about the U.S. economy forced most domestic equity benchmarks into negative territory for the 12 months ending July 31, 2008. Oil prices north of $140 per barrel, gasoline prices in excess of $4 per gallon and soaring food costs drove inflation and consumer prices higher. In response, consumer discretionary spending trended lower as Main Street tightened its purse strings. Wall Street, meanwhile, struggled under the weight of massive write-downs in the financials sector, an ongoing credit crisis and bleak housing data. In an effort to staunch the bleeding, the Federal Reserve Board cut interest rates on seven occasions during the past year. Nevertheless, investors fled the equity markets, and both the Dow Jones Industrial AverageSM and the Standard & Poor's 500SM Index fell to a threshold that many believe marks the official start of a "bear market." For the 12 months overall, the Dow slid 11.71%, the S&P 500® dropped 11.09% and the technology-heavy NASDAQ Composite® Index dipped 7.98%.
For the 12 months that ended July 31, 2008, the fund's Retail Class shares returned -2.76%, significantly outperforming the S&P 500 and the -13.27% return of the Credit Suisse Leveraged Equity Index. (For specific performance results for the fund's new Class K shares, please see the performance section of this report.) Very successful stock selection and a significant overweighting in the energy group were the main drivers of the fund's solid performance relative to the S&P 500. A considerable underweighting within financials helped further. Conversely, unfavorable security selection and an underweighting in both information technology and consumer staples detracted. Top contributors to the fund's outperformance included coal producers Alpha Natural Resources, Peabody Energy and Massey Energy; independent oil and natural gas companies Forest Oil, Chesapeake Energy and Petrohawk Energy; energy exploration and production firm Range Resources; and diversified financials firm Citigroup, which I'd heavily underweighted. Among the detractors were compressed natural gas products and services provider Exterran Holdings; semiconductor manufacturer Advanced Micro Devices (no longer held); printing company Cenveo; oil and natural gas refiner/marketer Frontier Oil; and cable TV company Charter Communications. Some of the stocks mentioned here were not part of the S&P 500.
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, 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 actual expense Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (February 1, 2008 to July 31, 2008) for Leveraged Company Stock and for the entire period (May 9, 2008 to July 31, 2008) for Class K.
The hypothetical expense Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (February 1, 2008 to July 31, 2008).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Annual Report
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Beginning | Ending | Expenses Paid |
Leveraged Company Stock |
|
|
|
Actual | $ 1,000.00 | $ 1,054.60 | $ 4.24 B |
Hypothetical A | $ 1,000.00 | $ 1,020.74 | $ 4.17 C |
Class K |
|
|
|
Actual | $ 1,000.00 | $ 912.30 | $ 1.54 B |
Hypothetical A | $ 1,000.00 | $ 1,021.38 | $ 3.52 C |
A 5% return per year before expenses
B Actual expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period) for Leveraged Company Stock and multiplied by 84/366 (to reflect the period May 9, 2008 to July 31, 2008) for Class K.
C Hypothetical expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
| Annualized |
Leveraged Company Stock | .83% |
Class K | .70% |
Annual Report
Investment Changes (Unaudited)
Top Ten Stocks as of July 31, 2008 | ||
| % of fund's | % of fund's net assets |
Freeport-McMoRan Copper & Gold, Inc. Class B | 5.2 | 2.9 |
Alpha Natural Resources, Inc. | 3.8 | 1.8 |
Forest Oil Corp. | 3.4 | 3.2 |
Chesapeake Energy Corp. | 3.4 | 2.6 |
Peabody Energy Corp. | 3.2 | 2.0 |
El Paso Corp. | 3.0 | 2.4 |
Exterran Holdings, Inc. | 3.0 | 4.1 |
ON Semiconductor Corp. | 2.7 | 1.7 |
Celanese Corp. Class A | 2.2 | 2.6 |
Service Corp. International | 2.1 | 2.8 |
| 32.0 | |
Top Five Market Sectors as of July 31, 2008 | ||
| % of fund's | % of fund's net assets |
Energy | 42.6 | 41.1 |
Materials | 12.1 | 12.1 |
Industrials | 11.8 | 13.9 |
Information Technology | 8.8 | 12.0 |
Consumer Discretionary | 5.6 | 6.6 |
Asset Allocation (% of fund's net assets) | |||||||
As of July 31, 2008 * | As of January 31, 2008 ** | ||||||
Stocks 95.5% |
| Stocks 97.8% |
| ||||
Bonds 0.7% |
| Bonds 0.2% |
| ||||
Convertible |
| Convertible |
| ||||
Other Investments 0.1% |
| Other Investments 0.1% |
| ||||
Short-Term |
| Short-Term |
| ||||
* Foreign investments | 11.8% |
| ** Foreign investments | 13.5% |
|
Annual Report
Investments July 31, 2008
Showing Percentage of Net Assets
Common Stocks - 95.5% | |||
Shares | Value (000s) | ||
CONSUMER DISCRETIONARY - 5.5% | |||
Auto Components - 0.3% | |||
The Goodyear Tire & Rubber Co. (a) | 564,063 | $ 11,073 | |
WABCO Holdings, Inc. | 211,533 | 9,553 | |
| 20,626 | ||
Automobiles - 0.2% | |||
Daimler AG | 338,000 | 19,499 | |
Diversified Consumer Services - 2.6% | |||
Carriage Services, Inc. Class A (a) | 266,200 | 1,650 | |
Regis Corp. | 319,946 | 8,955 | |
Service Corp. International (d)(e) | 17,505,900 | 167,531 | |
Stewart Enterprises, Inc. Class A (d) | 2,979,752 | 26,550 | |
| 204,686 | ||
Hotels, Restaurants & Leisure - 0.4% | |||
Bally Technologies, Inc. (a)(d) | 852,360 | 27,097 | |
Penn National Gaming, Inc. (a) | 119,900 | 3,421 | |
The Steak n Shake Co. (a)(d) | 659,400 | 4,543 | |
| 35,061 | ||
Household Durables - 0.6% | |||
Lennar Corp. Class A (d) | 983,400 | 11,899 | |
Newell Rubbermaid, Inc. | 2,332,300 | 38,553 | |
| 50,452 | ||
Leisure Equipment & Products - 0.1% | |||
Callaway Golf Co. | 870,287 | 11,035 | |
Media - 0.7% | |||
Charter Communications, Inc. Class A (a)(d) | 12,399,171 | 14,135 | |
Cinemark Holdings, Inc. (d) | 1,554,497 | 22,789 | |
Comcast Corp. Class A | 315,700 | 6,510 | |
Gray Television, Inc. | 1,995,535 | 4,989 | |
Knology, Inc. (a) | 113,144 | 1,181 | |
Nexstar Broadcasting Group, Inc. Class A (a) | 1,130,500 | 3,335 | |
| 52,939 | ||
Specialty Retail - 0.2% | |||
Gamestop Corp. Class A (a) | 152,000 | 6,158 | |
The Pep Boys - Manny, Moe & Jack (d) | 1,185,692 | 8,750 | |
| 14,908 | ||
Textiles, Apparel & Luxury Goods - 0.4% | |||
Coach, Inc. (a) | 1,189,320 | 30,340 | |
TOTAL CONSUMER DISCRETIONARY | 439,546 | ||
Common Stocks - continued | |||
Shares | Value (000s) | ||
CONSUMER STAPLES - 3.8% | |||
Food & Staples Retailing - 1.5% | |||
Koninklijke Ahold NV sponsored ADR | 2,484,960 | $ 28,105 | |
Kroger Co. | 339,300 | 9,595 | |
Safeway, Inc. | 783,800 | 20,943 | |
SUPERVALU, Inc. | 2,399,117 | 61,465 | |
| 120,108 | ||
Food Products - 2.2% | |||
Corn Products International, Inc. (d) | 994,019 | 46,232 | |
Darling International, Inc. (a) | 2,498,930 | 40,433 | |
Dean Foods Co. (a) | 989,600 | 21,078 | |
Pilgrims Pride Corp. Class B (d) | 3,256,585 | 39,698 | |
Smithfield Foods, Inc. (a)(d) | 1,521,976 | 32,692 | |
| 180,133 | ||
Personal Products - 0.1% | |||
Revlon, Inc. Class A (sub. vtg.) (a) | 3,694,361 | 4,470 | |
TOTAL CONSUMER STAPLES | 304,711 | ||
ENERGY - 42.6% | |||
Energy Equipment & Services - 9.5% | |||
Exterran Holdings, Inc. (a)(e) | 4,235,627 | 239,059 | |
FMC Technologies, Inc. (a) | 120,600 | 7,451 | |
Grey Wolf, Inc. (a)(e) | 10,589,450 | 90,434 | |
Halliburton Co. | 1,062,250 | 47,610 | |
Hercules Offshore, Inc. (a) | 1,713,531 | 42,787 | |
Nabors Industries Ltd. (a) | 808,800 | 29,489 | |
National Oilwell Varco, Inc. (a) | 1,272,290 | 100,040 | |
Noble Corp. | 696,000 | 36,102 | |
Oil States International, Inc. (a) | 270,700 | 14,856 | |
Parker Drilling Co. (a) | 1,200,000 | 9,684 | |
Petroleum Geo-Services ASA | 1,049,100 | 24,210 | |
Petroleum Geo-Services ASA sponsored ADR | 2,244,777 | 51,765 | |
Pride International, Inc. (a) | 646,100 | 25,043 | |
Rowan Companies, Inc. | 321,100 | 12,780 | |
Schoeller-Bleckmann Oilfield Equipment AG | 387,300 | 35,539 | |
| 766,849 | ||
Oil, Gas & Consumable Fuels - 33.1% | |||
Alpha Natural Resources, Inc. (a) | 3,109,734 | 307,708 | |
Anadarko Petroleum Corp. | 340,948 | 19,744 | |
Arch Coal, Inc. | 688,255 | 38,756 | |
Cabot Oil & Gas Corp. | 787,400 | 34,653 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
ENERGY - continued | |||
Oil, Gas & Consumable Fuels - continued | |||
Chesapeake Energy Corp. | 5,468,600 | $ 274,250 | |
ConocoPhillips | 414,631 | 33,842 | |
El Paso Corp. (d) | 13,439,476 | 240,970 | |
EOG Resources, Inc. | 140,700 | 14,145 | |
EXCO Resources, Inc. (a)(f) | 1,421,052 | 37,018 | |
Forest Oil Corp. (a)(d)(e) | 4,814,100 | 274,548 | |
Frontier Oil Corp. | 2,172,600 | 39,650 | |
General Maritime Corp. (e) | 2,849,200 | 76,757 | |
Mariner Energy, Inc. (a) | 2,921,653 | 77,307 | |
Massey Energy Co. | 1,554,400 | 115,414 | |
Nexen, Inc. | 763,200 | 24,010 | |
OPTI Canada, Inc. (a) | 1,311,300 | 24,898 | |
Overseas Shipholding Group, Inc. (e) | 2,008,500 | 158,169 | |
Paladin Energy Ltd. (a)(d) | 2,042,400 | 10,482 | |
Peabody Energy Corp. | 3,747,813 | 253,540 | |
Petrohawk Energy Corp. (a)(d) | 2,896,148 | 96,500 | |
Plains Exploration & Production Co. (a) | 360,660 | 20,186 | |
Range Resources Corp. | 3,289,300 | 159,728 | |
Ship Finance International Ltd.: | |||
(Norway) | 53,099 | 1,371 | |
(NY Shares) | 1,275,051 | 37,920 | |
Teekay Corp. | 3,343,200 | 145,998 | |
Teekay Tankers Ltd. (d) | 64,100 | 1,453 | |
Valero Energy Corp. | 1,302,400 | 43,513 | |
Western Refining, Inc. (d) | 973,900 | 7,752 | |
Williams Companies, Inc. | 1,784,400 | 57,190 | |
XTO Energy, Inc. | 571,245 | 26,980 | |
| 2,654,452 | ||
TOTAL ENERGY | 3,421,301 | ||
FINANCIALS - 2.0% | |||
Capital Markets - 0.1% | |||
Legg Mason, Inc. | 290,701 | 11,730 | |
Commercial Banks - 1.0% | |||
KeyCorp | 3,995,500 | 42,153 | |
PNC Financial Services Group, Inc. | 157,200 | 11,207 | |
Wachovia Corp. | 1,507,300 | 26,031 | |
| 79,391 | ||
Common Stocks - continued | |||
Shares | Value (000s) | ||
FINANCIALS - continued | |||
Diversified Financial Services - 0.4% | |||
Bank of America Corp. | 410,300 | $ 13,499 | |
CIT Group, Inc. | 334,900 | 2,840 | |
Citigroup, Inc. | 902,100 | 16,860 | |
| 33,199 | ||
Real Estate Management & Development - 0.1% | |||
CB Richard Ellis Group, Inc. Class A (a) | 553,200 | 7,772 | |
Thrifts & Mortgage Finance - 0.4% | |||
Washington Mutual, Inc. (d) | 5,917,500 | 31,541 | |
TOTAL FINANCIALS | 163,633 | ||
HEALTH CARE - 5.2% | |||
Biotechnology - 0.0% | |||
Lexicon Pharmaceuticals, Inc. (a) | 392,187 | 965 | |
Health Care Equipment & Supplies - 1.1% | |||
Baxter International, Inc. | 430,100 | 29,509 | |
Beckman Coulter, Inc. | 304,200 | 22,006 | |
Hospira, Inc. (a) | 361,900 | 13,810 | |
Inverness Medical Innovations, Inc. (a) | 518,708 | 17,486 | |
TomoTherapy, Inc. (a)(d) | 302,420 | 2,949 | |
| 85,760 | ||
Health Care Providers & Services - 4.1% | |||
Community Health Systems, Inc. (a) | 1,862,829 | 61,436 | |
DaVita, Inc. (a) | 2,042,600 | 114,079 | |
Rural/Metro Corp. (a) | 834,200 | 1,535 | |
Sun Healthcare Group, Inc. (a) | 1,205,054 | 17,220 | |
Tenet Healthcare Corp. (a) | 22,955,183 | 132,911 | |
| 327,181 | ||
Pharmaceuticals - 0.0% | |||
Salix Pharmaceuticals Ltd. (a)(d) | 632,610 | 5,048 | |
TOTAL HEALTH CARE | 418,954 | ||
INDUSTRIALS - 11.8% | |||
Aerospace & Defense - 0.8% | |||
American Science & Engineering, Inc. (d)(e) | 510,091 | 28,830 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
INDUSTRIALS - continued | |||
Aerospace & Defense - continued | |||
Teledyne Technologies, Inc. (a) | 368,594 | $ 23,185 | |
United Technologies Corp. | 261,450 | 16,728 | |
| 68,743 | ||
Air Freight & Logistics - 0.0% | |||
Park-Ohio Holdings Corp. (a) | 179,465 | 3,128 | |
Airlines - 0.8% | |||
AirTran Holdings, Inc. (a)(d) | 861,500 | 2,516 | |
AMR Corp. (a) | 670,630 | 6,056 | |
Delta Air Lines, Inc. (a) | 7,058,176 | 53,219 | |
Northwest Airlines Corp. (a) | 217,971 | 1,997 | |
UAL Corp. | 280,400 | 2,330 | |
| 66,118 | ||
Building Products - 1.7% | |||
Armstrong World Industries, Inc. | 121,433 | 4,094 | |
Owens Corning (a)(d) | 4,928,290 | 128,185 | |
Owens Corning warrants 10/31/13 (a) | 406,600 | 1,488 | |
| 133,767 | ||
Commercial Services & Supplies - 2.7% | |||
Allied Waste Industries, Inc. (a) | 5,612,500 | 67,911 | |
Cenveo, Inc. (a)(d)(e) | 3,858,300 | 35,651 | |
Deluxe Corp. | 1,473,836 | 21,076 | |
Republic Services, Inc. | 744,750 | 24,204 | |
The Brink's Co. | 244,500 | 16,861 | |
Waste Management, Inc. | 1,494,300 | 53,107 | |
| 218,810 | ||
Construction & Engineering - 0.3% | |||
Foster Wheeler Ltd. (a) | 257,500 | 14,618 | |
Great Lakes Dredge & Dock Corp. | 429,400 | 2,791 | |
Layne Christensen Co. (a) | 72,376 | 3,305 | |
| 20,714 | ||
Electrical Equipment - 1.1% | |||
Baldor Electric Co. (d) | 404,900 | 13,787 | |
Belden, Inc. (d) | 1,270,366 | 46,902 | |
Emerson Electric Co. | 389,900 | 18,988 | |
General Cable Corp. (a)(d) | 197,700 | 11,393 | |
| 91,070 | ||
Industrial Conglomerates - 0.1% | |||
Tyco International Ltd. | 167,400 | 7,459 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
INDUSTRIALS - continued | |||
Machinery - 2.1% | |||
Accuride Corp. (a) | 1,384,197 | $ 3,807 | |
Badger Meter, Inc. (d) | 366,854 | 20,665 | |
Cummins, Inc. | 824,000 | 54,664 | |
Dynamic Materials Corp. | 541,040 | 17,816 | |
Eaton Corp. | 478,800 | 34,014 | |
FreightCar America, Inc. | 151,247 | 5,761 | |
Ingersoll-Rand Co. Ltd. Class A | 145,958 | 5,254 | |
Middleby Corp. (a)(d) | 414,457 | 19,397 | |
Thermadyne Holdings Corp. (a)(d) | 64,900 | 1,116 | |
Timken Co. | 92,800 | 3,064 | |
| 165,558 | ||
Marine - 2.1% | |||
Britannia Bulk Holdings, Inc. | 435,100 | 5,730 | |
Excel Maritime Carriers Ltd. | 122,900 | 4,555 | |
Genco Shipping & Trading Ltd. | 1,433,223 | 97,717 | |
Navios Maritime Holdings, Inc. | 4,811,986 | 45,521 | |
OceanFreight, Inc. (e) | 740,600 | 14,375 | |
| 167,898 | ||
Trading Companies & Distributors - 0.0% | |||
H&E Equipment Services, Inc. (a) | 12,900 | 164 | |
Transportation Infrastructure - 0.1% | |||
Aegean Marine Petroleum Network, Inc. | 215,300 | 7,794 | |
TOTAL INDUSTRIALS | 951,223 | ||
INFORMATION TECHNOLOGY - 8.8% | |||
Computers & Peripherals - 0.3% | |||
EMC Corp. (a) | 1,807,600 | 27,132 | |
Electronic Equipment & Instruments - 2.7% | |||
Avnet, Inc. (a) | 298,600 | 8,140 | |
Bell Microproducts, Inc. (a) | 623,761 | 1,435 | |
Cogent, Inc. (a)(d) | 1,966,117 | 19,936 | |
DDi Corp. (a) | 295,899 | 1,760 | |
Flextronics International Ltd. (a) | 13,177,863 | 117,678 | |
Itron, Inc. (a) | 200,800 | 18,540 | |
Merix Corp. (a)(e) | 1,545,123 | 3,059 | |
TTM Technologies, Inc. (a) | 1,402,619 | 15,779 | |
Tyco Electronics Ltd. | 631,050 | 20,913 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
INFORMATION TECHNOLOGY - continued | |||
Electronic Equipment & Instruments - continued | |||
Viasystems Group, Inc. (a) | 775,300 | $ 6,978 | |
Viasystems Group, Inc. (h) | 625,780 | 5,632 | |
| 219,850 | ||
Internet Software & Services - 0.1% | |||
VeriSign, Inc. (a) | 194,300 | 6,323 | |
IT Services - 0.6% | |||
CACI International, Inc. Class A (a) | 348,000 | 15,646 | |
Cognizant Technology Solutions Corp. Class A (a) | 56,200 | 1,578 | |
SAIC, Inc. (a)(d) | 1,381,400 | 26,095 | |
| 43,319 | ||
Semiconductors & Semiconductor Equipment - 4.6% | |||
Amkor Technology, Inc. (a) | 5,642,218 | 49,426 | |
Atmel Corp. (a) | 5,381,223 | 18,996 | |
Cypress Semiconductor Corp. (a) | 651,200 | 17,745 | |
Infineon Technologies AG sponsored ADR (a) | 4,881,700 | 36,710 | |
Intel Corp. | 693,100 | 15,380 | |
ON Semiconductor Corp. (a)(d)(e) | 23,079,802 | 216,719 | |
Spansion, Inc. Class A (a) | 7,119,753 | 16,304 | |
| 371,280 | ||
Software - 0.5% | |||
Symantec Corp. (a) | 1,949,400 | 41,074 | |
TOTAL INFORMATION TECHNOLOGY | 708,978 | ||
MATERIALS - 12.1% | |||
Chemicals - 5.9% | |||
Agrium, Inc. | 344,200 | 30,250 | |
Albemarle Corp. | 1,377,906 | 53,642 | |
Arch Chemicals, Inc. | 648,542 | 20,818 | |
Celanese Corp. Class A | 4,687,200 | 180,598 | |
FMC Corp. | 60,100 | 4,470 | |
Georgia Gulf Corp. (d) | 873,676 | 2,534 | |
H.B. Fuller Co. (e) | 2,983,010 | 74,575 | |
Monsanto Co. | 469,600 | 55,934 | |
Nalco Holding Co. | 894,300 | 21,016 | |
NOVA Chemicals Corp. (d) | 544,200 | 13,995 | |
Phosphate Holdings, Inc. (h) | 307,500 | 11,224 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
MATERIALS - continued | |||
Chemicals - continued | |||
Pliant Corp. (a) | 567 | $ 0 | |
Texas Petrochemicals, Inc. (a) | 11,700 | 246 | |
| 469,302 | ||
Containers & Packaging - 0.5% | |||
Owens-Illinois, Inc. (a) | 307,325 | 12,981 | |
Rock-Tenn Co. Class A | 657,892 | 23,388 | |
Temple-Inland, Inc. | 365,400 | 5,938 | |
| 42,307 | ||
Metals & Mining - 5.3% | |||
Freeport-McMoRan Copper & Gold, Inc. Class B | 4,297,179 | 415,748 | |
Ormet Corp. (a) | 330,000 | 2,805 | |
Ormet Corp. (a)(h) | 1,075,000 | 8,224 | |
| 426,777 | ||
Paper & Forest Products - 0.4% | |||
Domtar Corp. (a) | 2,059,700 | 11,740 | |
Neenah Paper, Inc. | 518,300 | 9,682 | |
Weyerhaeuser Co. | 194,300 | 10,387 | |
| 31,809 | ||
TOTAL MATERIALS | 970,195 | ||
TELECOMMUNICATION SERVICES - 0.8% | |||
Diversified Telecommunication Services - 0.4% | |||
PAETEC Holding Corp. (a) | 2,980,233 | 17,554 | |
Qwest Communications International, Inc. (d) | 2,403,500 | 9,205 | |
| 26,759 | ||
Wireless Telecommunication Services - 0.4% | |||
Centennial Communications Corp. Class A (a) | 827,032 | 6,649 | |
Syniverse Holdings, Inc. (a) | 1,638,827 | 26,549 | |
| 33,198 | ||
TOTAL TELECOMMUNICATION SERVICES | 59,957 | ||
UTILITIES - 2.9% | |||
Gas Utilities - 0.2% | |||
Equitable Resources, Inc. | 28,900 | 1,510 | |
ONEOK, Inc. | 317,600 | 14,444 | |
| 15,954 | ||
Common Stocks - continued | |||
Shares | Value (000s) | ||
UTILITIES - continued | |||
Independent Power Producers & Energy Traders - 2.3% | |||
AES Corp. (a) | 8,357,733 | $ 134,894 | |
Calpine Corp. (a) | 601,800 | 10,471 | |
Dynegy, Inc. Class A (a) | 1,987,000 | 13,373 | |
Mirant Corp. (a)(d) | 714,500 | 21,871 | |
| 180,609 | ||
Multi-Utilities - 0.4% | |||
CMS Energy Corp. | 2,404,800 | 32,465 | |
TOTAL UTILITIES | 229,028 | ||
TOTAL COMMON STOCKS (Cost $6,312,617) | 7,667,526 | ||
Preferred Stocks - 1.3% | |||
|
|
|
|
Convertible Preferred Stocks - 1.3% | |||
FINANCIALS - 1.3% | |||
Capital Markets - 0.3% | |||
Lehman Brothers Holdings, Inc. Series P, 7.25% | 37,640 | 24,466 | |
Diversified Financial Services - 0.1% | |||
CIT Group, Inc. Series C, 8.75% | 62,300 | 2,923 | |
Insurance - 0.9% | |||
American International Group, Inc. Series A, 8.50% | 1,285,900 | 73,609 | |
TOTAL FINANCIALS | 100,998 | ||
Nonconvertible Preferred Stocks - 0.0% | |||
MATERIALS - 0.0% | |||
Chemicals - 0.0% | |||
Pliant Corp. Series AA 13.00% | 5,008 | 501 | |
TOTAL PREFERRED STOCKS (Cost $139,609) | 101,499 |
Corporate Bonds - 0.9% | ||||
| Principal Amount (000s) | Value (000s) | ||
Convertible Bonds - 0.2% | ||||
TELECOMMUNICATION SERVICES - 0.2% | ||||
Wireless Telecommunication Services - 0.2% | ||||
ICO North America, Inc. 7.5% 8/15/09 (h) | $ 16,153 | $ 13,407 | ||
Nonconvertible Bonds - 0.7% | ||||
FINANCIALS - 0.7% | ||||
Consumer Finance - 0.0% | ||||
General Motors Acceptance Corp.: | ||||
6.75% 12/1/14 | 4,285 | 2,421 | ||
6.875% 9/15/11 | 635 | 416 | ||
6.875% 8/28/12 | 2,140 | 1,343 | ||
| 4,180 | |||
Thrifts & Mortgage Finance - 0.7% | ||||
Residential Capital LLC 9.625% 5/15/15 (f) | 140,932 | 54,963 | ||
TOTAL FINANCIALS | 59,143 | |||
INDUSTRIALS - 0.0% | ||||
Airlines - 0.0% | ||||
Delta Air Lines, Inc. 8% 12/15/07 (a)(f) | 4,145 | 52 | ||
Northwest Airlines, Inc. 9.875% 3/15/07 (a) | 7,000 | 70 | ||
| 122 | |||
TOTAL NONCONVERTIBLE BONDS | 59,265 | |||
TOTAL CORPORATE BONDS (Cost $100,452) | 72,672 | |||
Floating Rate Loans - 0.1% | ||||
| ||||
CONSUMER DISCRETIONARY - 0.1% | ||||
Media - 0.1% | ||||
Univision Communications, Inc. Tranche 1LN, term loan 5.1242% 9/29/14 (g) | 13,885 | 11,386 | ||
(Cost $10,990) |
|
Money Market Funds - 5.7% | |||
Shares | Value (000s) | ||
Fidelity Cash Central Fund, 2.35% (b) | 218,455,952 | $ 218,456 | |
Fidelity Securities Lending Cash Central Fund, 2.37% (b)(c) | 242,332,821 | 242,333 | |
TOTAL MONEY MARKET FUNDS (Cost $460,789) | 460,789 | ||
Other - 0.0% | |||
|
|
|
|
Other - 0.0% | |||
Delta Air Lines ALPA Claim (a) | 64,750,000 | 1,457 | |
TOTAL INVESTMENT PORTFOLIO - 103.5% (Cost $7,025,206) | 8,315,329 | ||
NET OTHER ASSETS - (3.5)% | (283,222) | ||
NET ASSETS - 100% | $ 8,032,107 |
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
(e) Affiliated company |
(f) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the end of the period, the value of these securities amounted to $92,033,000 or 1.1% of net assets. |
(g) The coupon rate shown on floating or adjustable rate securities represents the rate at period end. |
(h) Restricted securities - Investment in securities not registered under the Securities Act of 1933 (excluding 144A issues). At the end of the period, the value of restricted securities (excluding 144A issues) amounted to $38,487,000 or 0.5% of net assets. |
Additional information on each holding is as follows: |
Security | Acquisition Date | Acquisition Cost (000s) |
ICO North America, Inc. 7.5% 8/15/09 | 8/12/05 - 2/15/08 | $ 16,314 |
Ormet Corp. | 2/27/07 - 4/4/07 | $ 20,556 |
Phosphate Holdings, Inc. | 1/25/08 | $ 9,994 |
Viasystems Group, Inc. | 2/13/04 | $ 12,594 |
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 | $ 5,256 |
Fidelity Securities Lending Cash Central Fund | 3,177 |
Total | $ 8,433 |
Other Affiliated Issuers |
An affiliated company is a company in which the fund has ownership of at least 5% of the voting securities. Fiscal year to date transactions with companies which are or were affiliates are as follows: |
Affiliates | Value, beginning of period | Purchases | Sales Proceeds | Dividend Income | Value, |
Alpha Natural Resources, Inc. | $ 68,371 | $ 8,344 | $ 34,924 | $ - | $ - |
American Science & Engineering, Inc. | 17,435 | 9,626 | - | 260 | 28,830 |
AMIS Holdings, Inc. | 46,648 | - | - | - | - |
Amkor Technology, Inc. | 155,734 | - | 70,055 | - | - |
Cenveo, Inc. | 80,855 | 202 | - | - | 35,651 |
Dht Maritime, Inc. | 40,938 | - | 23,916 | 2,551 | - |
Exterran Holdings, Inc. | - | 54,324 | - | - | 239,059 |
Forest Oil Corp. | 160,969 | 34,970 | - | - | 274,548 |
Friendly Ice Cream Corp. | 6,478 | - | 6,563 | - | - |
General Maritime Corp. | 84,479 | - | 10,605 | 5,212 | 76,757 |
Grey Wolf, Inc. | 61,700 | 19,383 | - | - | 90,434 |
H.B. Fuller Co. | 50,977 | 33,500 | - | 779 | 74,575 |
Interstate Bakeries Corp. | 5,678 | - | 139 | - | - |
Merix Corp. | 11,635 | - | - | - | 3,059 |
Navios Maritime Holdings, Inc. | 73,496 | 5,140 | 14,277 | 1,707 | - |
OceanFreight, Inc. | 17,693 | - | - | 1,695 | 14,375 |
ON Semiconductor Corp. | 211,301 | - | - | - | 216,719 |
Overseas Shipholding Group, Inc. | 140,663 | 13,883 | - | 2,450 | 158,169 |
Service Corp. International | 192,786 | 19,354 | 4,257 | 2,426 | 167,531 |
The Bon-Ton Stores, Inc. | - | 15,705 | 5,208 | 37 | - |
Affiliates | Value, beginning of period | Purchases | Sales Proceeds | Dividend Income | Value, |
Universal Compression Holdings, Inc. | 148,600 | - | - | - | - |
Total | $ 1,576,436 | $ 214,431 | $ 169,944 | $ 17,117 | $ 1,379,707 |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 88.2% |
Marshall Islands | 4.9% |
Singapore | 1.5% |
Canada | 1.2% |
Bermuda | 1.2% |
Others (individually less than 1%) | 3.0% |
| 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) | July 31, 2008 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $231,233) - See accompanying schedule: Unaffiliated issuers (cost $5,493,523) | $ 6,474,833 |
|
Fidelity Central Funds (cost $460,789) | 460,789 |
|
Other affiliated issuers (cost $1,070,894) | 1,379,707 |
|
Total Investments (cost $7,025,206) |
| $ 8,315,329 |
Cash | 649 | |
Receivable for investments sold | 35,449 | |
Receivable for fund shares sold | 17,341 | |
Dividends receivable | 6,011 | |
Interest receivable | 2,892 | |
Distributions receivable from Fidelity Central Funds | 735 | |
Prepaid expenses | 9 | |
Other receivables | 32 | |
Total assets | 8,378,447 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 87,391 | |
Payable for fund shares redeemed | 10,838 | |
Accrued management fee | 4,154 | |
Other affiliated payables | 1,481 | |
Other payables and accrued expenses | 143 | |
Collateral on securities loaned, at value | 242,333 | |
Total liabilities | 346,340 | |
|
|
|
Net Assets | $ 8,032,107 | |
Net Assets consist of: |
| |
Paid in capital | $ 6,650,450 | |
Undistributed net investment income | 11,678 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 79,856 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 1,290,123 | |
Net Assets | $ 8,032,107 |
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) | July 31, 2008 | |
|
|
|
Leveraged Company Stock: | $ 31.09 | |
|
|
|
Class K: | $ 31.11 |
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 July 31, 2008 | |
|
|
|
Investment Income |
|
|
Dividends (including $17,117 earned from other affiliated issuers) |
| $ 80,622 |
Interest |
| 7,843 |
Income from Fidelity Central Funds |
| 8,433 |
Total income |
| 96,898 |
|
|
|
Expenses | ||
Management fee | $ 46,484 | |
Transfer agent fees | 14,881 | |
Accounting and security lending fees | 1,277 | |
Custodian fees and expenses | 107 | |
Independent trustees' compensation | 32 | |
Registration fees | 266 | |
Audit | 69 | |
Legal | 33 | |
Interest | 2 | |
Miscellaneous | 464 | |
Total expenses before reductions | 63,615 | |
Expense reductions | (187) | 63,428 |
Net investment income (loss) | 33,470 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 142,372 | |
Other affiliated issuers | 8,588 |
|
Foreign currency transactions | 100 | |
Total net realized gain (loss) |
| 151,060 |
Change in net unrealized appreciation (depreciation) on: Investment securities | (527,172) | |
Assets and liabilities in foreign currencies | (15) | |
Total change in net unrealized appreciation (depreciation) |
| (527,187) |
Net gain (loss) | (376,127) | |
Net increase (decrease) in net assets resulting from operations | $ (342,657) |
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) | $ 33,470 | $ 80,309 |
Net realized gain (loss) | 151,060 | 319,520 |
Change in net unrealized appreciation (depreciation) | (527,187) | 841,301 |
Net increase (decrease) in net assets resulting | (342,657) | 1,241,130 |
Distributions to shareholders from net investment income | (89,831) | (19,040) |
Distributions to shareholders from net realized gain | (319,818) | (219,421) |
Total distributions | (409,649) | (238,461) |
Share transactions - net increase (decrease) | 950,964 | 2,652,026 |
Redemption fees | 3,350 | 1,519 |
Total increase (decrease) in net assets | 202,008 | 3,656,214 |
|
|
|
Net Assets | ||
Beginning of period | 7,830,099 | 4,173,885 |
End of period (including undistributed net investment income of $11,678 and undistributed net investment income of $73,047, respectively) | $ 8,032,107 | $ 7,830,099 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Leveraged Company Stock
Years ended July 31, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 33.78 | $ 28.07 | $ 25.48 | $ 20.18 | $ 14.93 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .14 | .44 E | .16 | .24 F | .04 |
Net realized and unrealized gain (loss) | (1.06) | 6.78 | 3.04 | 6.21 | 5.45 |
Total from investment operations | (.92) | 7.22 | 3.20 | 6.45 | 5.49 |
Distributions from net investment income | (.39) | (.12) | (.21) | (.04) | - |
Distributions from net realized gain | (1.39) | (1.40) | (.41) | (1.12) | (.27) |
Total distributions | (1.78) | (1.52) | (.62) | (1.16) | (.27) |
Redemption fees added to paid in capital B | .01 | .01 | .01 | .01 | .03 |
Net asset value, end of period | $ 31.09 | $ 33.78 | $ 28.07 | $ 25.48 | $ 20.18 |
Total Return A | (2.76)% | 27.08% | 12.80% | 33.93% | 37.27% |
Ratios to Average Net Assets C, G |
|
|
|
|
|
Expenses before reductions | .83% | .83% | .86% | .87% | .88% |
Expenses net of fee waivers, if any | .83% | .83% | .86% | .87% | .88% |
Expenses net of all reductions | .83% | .83% | .85% | .84% | .85% |
Net investment income (loss) | .44% | 1.43% E | .60% | 1.04% F | .23% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period | $ 8,032 | $ 7,830 | $ 4,174 | $ 3,328 | $ 1,504 |
Portfolio turnover rate D | 30% | 20% | 23% | 16% | 35% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Calculated based on average shares outstanding during the period.
C Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
D Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
E Investment income per share reflects a special dividend which amounted to $.26 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been .59%.
F Investment income per share reflects an in-kind dividend received in a corporate reorganization which amounted to $.10 per share. Excluding this dividend the ratio of net investment income (loss) to average net assets would have been .61%.
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 other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class K
Year ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 34.10 |
Income from Investment Operations |
|
Net investment income (loss) D | .05 |
Net realized and unrealized gain (loss) | (3.04) |
Total from investment operations | (2.99) |
Redemption fees added to paid in capital D | - I |
Net asset value, end of period | $ 31.11 |
Total Return B, C | (8.77)% |
Ratios to Average Net Assets E, H |
|
Expenses before reductions | .70% A |
Expenses net of fee waivers, if any | .70% A |
Expenses net of all reductions | .70% A |
Net investment income (loss) | .58% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 91 |
Portfolio turnover rate F | 30% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
G For the period May 9, 2008 (commencement of sale of shares) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
I 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 July 31, 2008
1. Organization.
Fidelity Leveraged Company Stock Fund (the Fund) is a fund of Fidelity Securities Fund (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. On January 17, 2008, the Board of Trustees of the Fund approved the creation of an additional class of shares. The Fund commenced sale of shares of Class K and the existing class was designated Leveraged Company Stock on May 9, 2008. The Fund offers Leveraged Company Stock 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. In order to disclose Class level financial information dollar amounts presented in the notes are unrounded. 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 also differ by class.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the SEC's web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
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. Wherever possible, the Fund uses independent pricing services approved by the Board of Trustees to value its investments.
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Debt securities, including restricted securities, are valued by independent pricing services or by dealers who make markets in such securities. Pricing services consider yield or price of bonds of comparable quality, coupon, maturity and type as well as dealer supplied prices. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
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. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The implementation of FIN 48 did not result in any unrecognized tax benefits in the accompanying financial statements. Each of the Fund's federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
generally accepted accounting principles. In addition, the Fund will claim a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. Certain adjustments have been made to the accounts relating to the prior periods. Collectively, 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, market discount and losses deferred due to wash sales.
The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows:
Unrealized appreciation | $ 2,110,354,430 |
Unrealized depreciation | (819,990,197) |
Net unrealized appreciation (depreciation) | 1,290,364,233 |
Undistributed ordinary income | 24,466,239 |
Undistributed long-term capital gain | 48,469,109 |
|
|
Cost for federal income tax purposes | $ 7,024,964,835 |
The tax character of distributions paid was as follows:
| July 31, 2008 | July 31, 2007 |
Ordinary Income | $ 113,319,906 | $ 31,376,424 |
Long-term Capital Gains | 296,328,698 | 207,084,824 |
Total | $ 409,648,604 | $ 238,461,248 |
Short-Term Trading (Redemption) Fees. Shares held in the Fund less than 90 days are subject to a redemption fee equal to 1.50% of the proceeds of the redeemed shares. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the Fund and accounted for as an addition to paid in capital.
New Accounting Pronouncement. In September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and results in expanded disclosures about fair value measurements.
Annual Report
4. Operating Policies.
Repurchase Agreements. FMR has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits the Fund and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts which are then invested in repurchase agreements. The Fund may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. The Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
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.
Loans and Other Direct Debt Instruments. The Fund may invest in loans and loan participations, trade claims or other receivables. These investments may include standby financing commitments, including revolving credit facilities, that obligate the Fund to supply additional cash to the borrower on demand. Loan participations involve a risk of insolvency of the lending bank or other financial intermediary. The Fund may be contractually obligated to receive approval from the agent bank and/or borrower prior to the sale of these investments.
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $2,911,654,475 and $2,277,621,856, 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 a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and
Annual Report
Notes to Financial Statements - continued
6. Fees and Other Transactions with Affiliates - continued
Management Fee - continued
increases as assets under management decrease. For the period, the total annual management fee rate was .61% of the Fund's average net assets.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to account size and type of account of the shareholders of Leveraged Company Stock and asset-based fees of .05% of average net assets for Class K. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. Prior to January 1, 2008, Fidelity Service Company, Inc. (FSC), also affiliate of FMR, was the fund's transfer agent for Leverage Company Stock. For the period, the transfer agent fees for Leveraged Company Stock were equivalent to an annual rate of .19% of average net assets.
For the period, the total transfer agent fees paid by each class were as follows:
| Amount |
Leveraged Company Stock | $ 14,881,323 |
Leveraged Company Stock Class K | 12 |
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $68,879 for the period.
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. The Fund's activity in this program during the period for which loans were outstanding was as follows:
Borrower or Lender | Average Daily Loan Balance | Weighted Average Interest Rate | Interest |
Borrower | $ 14,993,000 | 3.69% | $ 1,535 |
Annual Report
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $4.2 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro rata portion of the line of credit, which amounted to $17,469 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
8. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Net income from lending portfolio securities during the period amounted to $3,177,301.
9. Expense Reductions.
FMR voluntarily agreed to reimburse a portion of Leverage Company Stock's operating expenses. During the period, this reimbursement reduced the class' expenses by $12,755.
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 $42,677 for the period. In addition, through arrangements with the Fund's custodian and each class' transfer agent, credits realized as a result of uninvested cash balances were used to reduce the Fund's expenses. During the period, these credits reduced the Fund's custody expenses by $32,279.
Annual Report
Notes to Financial Statements - continued
9. Expense Reductions - continued
During the period, credits reduced each class' transfer agent expense as noted in the table below.
| Transfer Agent |
Leveraged Company Stock | $ 99,740 |
10. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
In December 2006, the Independent Trustees, with the assistance of independent counsel, completed an investigation regarding gifts, gratuities and business entertainment provided by certain brokers to certain individuals who were employed on FMR's domestic equity trading desk during the period 2002 to 2004. The Independent Trustees and FMR agreed that, despite the absence of proof that the Fidelity mutual funds experienced diminished execution quality as a result of the improper receipt of gifts and business entertainment, the conduct at issue was serious and was worthy of redress. Accordingly, the Independent Trustees requested, and FMR agreed to make, a payment of $42 million plus accrued interest, which equaled approximately $7.3 million, to certain Fidelity mutual funds.
In March 2008, the Trustees approved a method for allocating this payment among the funds and, in total, FMR paid the fund $80,231, which is recorded in the accompanying Statement of Operations.
In a related administrative order dated March 5, 2008, the U.S. Securities and Exchange Commission ("SEC") announced a settlement with FMR and FMR Co., Inc. (an affiliate of FMR) involving the SEC's regulatory rules for investment advisers and the improper receipt of gifts, gratuities and business entertainment. Without admitting or denying the SEC's findings, FMR agreed to pay an $8 million civil penalty to the United States Treasury.
Annual Report
11. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended July 31, | 2008 | 2007 |
From net investment income |
|
|
Leveraged Company Stock | $ 89,830,628 | $ 19,039,816 |
From net realized gain |
|
|
Leveraged Company Stock | $ 319,817,976 | $ 219,421,432 |
12. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
Years ended July 31, | 2008 A | 2007 | 2008 A | 2007 |
Leveraged Company Stock |
|
|
|
|
Shares sold | 100,393,686 | 116,056,005 | $ 3,279,173,386 | $ 3,685,329,714 |
Reinvestment of distributions | 12,304,505 | 8,327,633 | 391,353,016 | 228,497,809 |
Shares redeemed | (86,186,097) | (41,246,569) | (2,719,660,523) | (1,261,800,921) |
Net increase (decrease) | 26,512,094 | 83,137,069 | $ 950,865,879 | $ 2,652,026,602 |
Class K |
|
|
|
|
Shares sold | 2,933 | - | $ 100,000 | $ - |
Net increase (decrease) | 2,933 | - | $ 100,000 | $ - |
A Share transactions for Class K are for the period May 9, 2008 (commencement of sale of shares) to July 31, 2008.
Annual Report
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Securities Fund and the Shareholders of Fidelity Leveraged Company 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 Leveraged Company Stock Fund (a fund of Fidelity Securities Fund) at July 31, 2008, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and 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 Leveraged Company 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 July 31, 2008 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
September 22, 2008
Annual Report
Trustees and Officers
The Trustees, Member of the Advisory Board, and executive officers of the trust and fund, as applicable, are listed below. The Board of Trustees governs the fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee the fund's activities, review contractual arrangements with companies that provide services to the fund, and review the fund's performance. Except for Edward C. Johnson 3d and James C. Curvey, each of the Trustees oversees 218 funds advised by FMR or an affiliate. Messrs. Johnson and Curvey oversee 377 funds advised by FMR or an affiliate.
The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust. Each Trustee who is not an interested person (as defined in the 1940 Act) (Independent Trustee), shall retire not later than the last day of the calendar year in which his or her 72nd birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board Member hold office without limit in time, except that any officer and Advisory Board Member may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years.
The fund's Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-800-544-8544.
Interested Trustees*:
Correspondence intended for each Trustee who is an interested person may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Edward C. Johnson 3d (78) | |
| Year of Election or Appointment: 1984 Mr. Johnson is Chairman of the Board of Trustees. Mr. Johnson serves as Chief Executive Officer, Chairman, and a Director of FMR LLC; Chairman and a Director of FMR; Chairman and a Director of Fidelity Research & Analysis Company (FRAC); Chairman and a Director of Fidelity Investments Money Management, Inc.; and Chairman and a Director of FMR Co., Inc. In addition, Mr. Johnson serves as Chairman and Director of FIL Limited. Previously, Mr. Johnson served as President of FMR LLC (2006-2007). |
James C. Curvey (73) | |
| Year of Election or Appointment: 2007 Mr. Curvey also serves as Trustee (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2006- present) and Director of FMR LLC. In addition, Mr. Curvey serves as an Overseer for the Boston Symphony Orchestra and a member of the Trustees of Villanova University. |
* Trustees have been determined to be "Interested Trustees" by virtue of, among other things, their affiliation with the trust or various entities under common control with FMR. FMR Corp. merged with and into FMR LLC on October 1, 2007. Any references to FMR LLC for prior periods are deemed to be references to the prior entity.
Independent Trustees:
Correspondence intended for each Independent Trustee (that is, the Trustees other than the Interested Trustees) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.
Name, Age; Principal Occupation | |
Dennis J. Dirks (60) | |
| Year of Election or Appointment: 2005 Prior to his retirement in May 2003, Mr. Dirks was Chief Operating Officer and a member of the Board of The Depository Trust & Clearing Corporation (DTCC) (1999-2003). He also served as President, Chief Operating Officer, and Board member of The Depository Trust Company (DTC) (1999-2003) and President and Board member of the National Securities Clearing Corporation (NSCC) (1999-2003). In addition, Mr. Dirks served as a Trustee and a member of the Finance Committee of Manhattan College (2005-2008), and as Chief Executive Officer and Board member of the Government Securities Clearing Corporation (2001-2003) and Chief Executive Officer and Board member of the Mortgage-Backed Securities Clearing Corporation (2001-2003). Mr. Dirks also serves as a Trustee and a member of the Finance Committee of AHRC of Nassau County (2006-present). |
Alan J. Lacy (54) | |
| Year of Election or Appointment: 2008 Mr. Lacy serves as Senior Adviser (2007-present) of Oak Hill Capital Partners, L.P. (a private equity firm). Mr. Lacy also served as Chief Executive Officer (2000-2005) and Vice Chairman (2005-2006) of Sears Holdings Corporation and Sears, Roebuck and Co. (retail). In addition, Mr. Lacy serves as a member of the Board of Directors of The Western Union Company (global money transfer, 2006-present) and Bristol-Myers Squibb (global pharmaceuticals, 2007-present). Mr. Lacy is a Trustee of the National Parks Conservation Association and The Field Museum of Natural History. |
Ned C. Lautenbach (64) | |
| Year of Election or Appointment: 2000 Mr. Lautenbach is Chairman of the Independent Trustees (2006-present). Mr. Lautenbach is an Advisory Partner of Clayton, Dubilier & Rice, Inc. (private equity investment firm). Previously, Mr. Lautenbach was with the International Business Machines Corporation (IBM) from 1968 until his retirement in 1998. Mr. Lautenbach serves as a Director of Eaton Corporation (diversified industrial) as well as the Philharmonic Center for the Arts in Naples, Florida. He also is a member of the Board of Trustees of Fairfield University (2005-present), as well as a member of the Council on Foreign Relations. Previously, Mr. Lautenbach served as a Director of Sony Corporation (2006-2007). |
Joseph Mauriello (63) | |
| 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 firm, 1965-2005). Mr. Mauriello currently serves as a member of the Board of Directors of XL Capital Ltd. (global insurance and re-insurance company, 2006-present) and of Arcadia Resources Inc. (health care services and products, 2007-present). He also served as a Director of the Hamilton Funds of the Bank of New York (2006-2007). |
Cornelia M. Small (64) | |
| Year of Election or Appointment: 2005 Ms. Small is a member of the Investment Committee, and Chair (2008-present) and a member of the Board of Trustees of Smith College. Ms. Small also serves on the Investment Committee of the Berkshire Taconic Community Foundation (2008-present). Previously, Ms. Small served as Chairperson of the Investment Committee (2002-2008) of Smith College and as Co-Chair (2000-2003) of the Annual Fund for the Fletcher School of Law and Diplomacy. In addition, she served as Chief Investment Officer, Director of Global Equity Investments, and a member of the Board of Directors of Scudder, Stevens & Clark and Scudder Kemper Investments. |
William S. Stavropoulos (69) | |
| Year of Election or Appointment: 2002 Mr. Stavropoulos is Chairman Emeritus of the Board of Directors of The Dow Chemical Company, where he previously served in numerous senior management positions, including President (1993-2000; 2002-2003), CEO (1995-2000; 2002-2004), Chairman of the Executive Committee (2000-2006), and as a member of the Board of Directors (1990-2006). Currently, he is a Director of Teradata Corporation (data warehousing and technology solutions, 2008-present), Chemical Financial Corporation, Maersk Inc. (industrial conglomerate), Tyco International, Inc. (multinational manufacturing and services, 2007-present), and a member of the Advisory Board for Metalmark Capital (private equity investment firm, 2005-present). He is a special advisor to Clayton, Dubilier & Rice, Inc. (private equity investment). In addition, Mr. Stavropoulos is a member of the University of Notre Dame Advisory Council for the College of Science. |
David M. Thomas (59) | |
| Year of Election or Appointment: 2008 Previously, Mr. Thomas served as Executive Chairman (2005-2006) and Chairman and Chief Executive Officer (2000-2005) of IMS Health, Inc. (pharmaceutical and healthcare information solutions). In addition, Mr. Thomas serves as a member of the Board of Directors of Fortune Brands, Inc. (consumer products holding company), and Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (57) | |
| Year of Election or Appointment: 2008 Mr. Wiley also serves as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-present). He serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005- present), and a Director of Bill Barrett Corporation (exploration and production company, 2005-present). In addition, he also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a Sr. Energy Advisor of Katzenbach Partners, LLC (consulting firm, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment firm), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services company, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production company, 2001-2005). |
Advisory Board Member and Executive Officers**:
Correspondence intended for each executive officer and Mr. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Peter S. Lynch (64) | |
| Year of Election or Appointment: 2003 Member of the Advisory Board of Fidelity Securities Fund. Mr. Lynch is Vice Chairman and a Director of FMR, and Vice Chairman (2001- present) and a Director of FMR Co., Inc. Previously, Mr. Lynch served as a Trustee of the Fidelity funds (1990-2003). In addition, he serves as a Trustee of Boston College and as the Chairman of the Inner-City Scholarship Fund. |
Kenneth B. Robins (38) | |
| Year of Election or Appointment: 2008 President and Treasurer of the fund. Mr. Robins also serves as President and Treasurer of Fidelity's Equity and High Income Funds (2008-present) and is an employee of FMR (2004-present). Before joining Fidelity Investments, Mr. Robins worked at KPMG LLP, where he was a partner in KPMG's department of professional practice (2002-2004). |
Walter C. Donovan (46) | |
| Year of Election or Appointment: 2007 Vice President of the fund. Mr. Donovan also serves as Vice President of Fidelity's Equity Funds, President of FMR and FMR Co., Inc., and Executive Vice President of Fidelity Investments Money Management, Inc. (2007-present). Previously, Mr. Donovan served as Executive Vice President of FMR and FMR Co., Inc. (2005-2007) and Senior Vice President of FMR (2003-2005) and FMR Co., Inc. (2004-2005). |
Thomas C. Hense (44) | |
| Year of Election or Appointment: 2008 Vice President of the fund. Mr. Hense also serves as Vice President of Fidelity's High Income and Small Cap Funds (2008-present). Previously, Mr. Hense served as a portfolio manager for Fidelity's Institutional Money Management Group (Pyramis) (2003-2008). |
Scott C. Goebel (40) | |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of the fund. Mr. Goebel also serves as Secretary and CLO of other Fidelity funds (2008-present); General Counsel, Secretary, and Senior Vice President of FMR (2008-present); and Deputy General Counsel of FMR LLC. Previously, Mr. Goebel served as Assistant Secretary of the Funds (2007-2008) and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007). |
John B. McGinty, Jr. (45) | |
| Year of Election or Appointment: 2008 Assistant Secretary of the fund. Mr. McGinty also serves as Assistant Secretary of Fidelity's other Equity and High Income Funds (2008- present) and is an employee of FMR LLC (2004-present). Mr. McGinty also serves as Senior Vice President, Secretary, and Chief Legal Officer of FDC (2007-present). Before joining Fidelity Investments, Mr. McGinty practiced law at Ropes & Gray, LLP. |
Holly C. Laurent (54) | |
| Year of Election or Appointment: 2008 Anti-Money Laundering (AML) officer of the fund. Ms. Laurent also serves as AML officer of other Fidelity funds (2008-present) and is an employee of FMR LLC. Previously, Ms. Laurent was Senior Vice President and Head of Legal for Fidelity Business Services India Pvt. Ltd. (2006-2008), Senior Vice President, Deputy General Counsel and Group Head for FMR LLC (2005-2006). |
Christine Reynolds (49) | |
| Year of Election or Appointment: 2008 Chief Financial Officer of the fund. Ms. Reynolds also serves as Chief Financial Officer of other Fidelity funds (2008-present). Ms. Reynolds became President of Fidelity Pricing and Cash Management Services (FPCMS) in August 2008. She served as Chief Operating Officer of FPCMS from 2007 through July 2008. Previously, Ms. Reynolds served as President, Treasurer, and Anti-Money Laundering officer of the Fidelity funds (2004-2007). Before joining Fidelity Investments, Ms. Reynolds worked at PricewaterhouseCoopers LLP (PwC) (1980-2002), where she was an audit partner with PwC's investment management practice. |
Kenneth A. Rathgeber (61) | |
| Year of Election or Appointment: 2004 Chief Compliance Officer of the fund. Mr. Rathgeber also serves as Chief Compliance Officer of Fidelity's Equity and High Income Funds (2004-present). He is Chief Compliance Officer of FMR (2005-present), FMR Co., Inc. (2005-present), Fidelity Management & Research (U.K.) Inc. (2005-present), Fidelity Research & Analysis Company (2005- present), Fidelity Investments Money Management, Inc. (2005-present), and Strategic Advisers, Inc. (2005-present). |
Bryan A. Mehrmann (47) | |
| Year of Election or Appointment: 2005 Deputy Treasurer of the fund. Mr. Mehrmann also serves as Deputy Treasurer of other Fidelity funds (2005-present) and is an employee of FMR. Previously, Mr. Mehrmann served as Vice President of Fidelity Investments Institutional Services Group (FIIS)/Fidelity Investments Institutional Operations Corporation, Inc. (FIIOC) Client Services (1998-2004). |
Adrien E. Deberghes (40) | |
| Year of Election or Appointment: 2008 Deputy Treasurer of the fund. Mr. Deberghes also serves as Deputy Treasurer of Fidelity's Equity and High Income Funds (2008-present) and is an employee of FMR (2008-present). Previously, Mr. Deberghes served as Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005). |
Robert G. Byrnes (41) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of the fund. Mr. Byrnes also serves as Assistant Treasurer of other Fidelity funds (2005-present) and is an employee of FMR (2005-present). Previously, Mr. Byrnes served as Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (2003-2005). Before joining Fidelity Investments, Mr. Byrnes worked at Deutsche Asset Management where he served as Vice President of the Investment Operations Group (2000-2003). |
Peter L. Lydecker (54) | |
| Year of Election or Appointment: 2004 Assistant Treasurer of the fund. Mr. Lydecker also serves as Assistant Treasurer of other Fidelity funds (2004-present) and is an employee of FMR. |
Paul M. Murphy (61) | |
| Year of Election or Appointment: 2007 Assistant Treasurer of the fund. Mr. Murphy also serves as Assistant Treasurer of other Fidelity funds (2007-present) and is an employee of FMR (2007-present). Previously, Mr. Murphy served as Chief Financial Officer of the Fidelity Funds (2005-2006), Vice President and Associate General Counsel of FMR (2007), and Senior Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (1994-2007). |
Gary W. Ryan (49) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of the fund. Mr. Ryan also serves as Assistant Treasurer of other Fidelity funds (2005-present) and is an employee of FMR (2005-present). Previously, Mr. Ryan served as Vice President of Fund Reporting in Fidelity Pricing and Cash Management Services (FPCMS) (1999-2005). |
** FMR Corp. merged with and into FMR LLC on October 1, 2007. Any references to FMR LLC for prior periods are deemed to be references to the prior entity.
Annual Report
Distributions (Unaudited)
The Board of Trustees of Fidelity Leveraged Company Stock 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 the sales of portfolio securities, and dividends derived from net investment income:
| Pay Date | Record Date | Dividends | Capital Gains |
Leveraged Company Stock | 09/15/08 | 09/12/08 | $.037 | $.25 |
Class K | 09/15/08 | 09/12/08 | $.047 | $.25 |
The fund hereby designates as a capital gain dividend with respect to the taxable year ended July 31, 2008, $96,359,466, or, if subsequently determined to be different, the net capital gain of such year.
Leveraged Company Stock designates 29% and 32% of the dividends distributed in September and December, 2007, respectively during the fiscal year as qualifying for the dividends-received deduction for corporate shareholders.
Leveraged Company Stock designates 100% and 82%; of the dividends distributed in September and December, 2007, respectively during the fiscal year as amounts which may be taken into account as a dividend for purposes of the maximum rate under section 1(h)(11) of the Internal Revenue Code.
The fund will notify shareholders in January 2009 of amounts for use in preparing 2008 income tax returns.
Annual Report
Proxy Voting Results
A special meeting of the fund's shareholders was held on May 14, 2008. The results of votes taken among shareholders on the proposals before them are reported below. Each vote reported represents one dollar of net asset value held on the record date for the meeting.
PROPOSAL 1 | ||
To elect a Board of Trustees.A | ||
| # of | % of |
James C. Curvey | ||
Affirmative | 30,242,569,269.49 | 94.915 |
Withheld | 1,620,182,942.38 | 5.085 |
TOTAL | 31,862,752,211.87 | 100.000 |
Dennis J. Dirks | ||
Affirmative | 30,356,248,026.80 | 95.272 |
Withheld | 1,506,504,185.07 | 4.728 |
TOTAL | 31,862,752,211.87 | 100.000 |
Edward C. Johnson 3d | ||
Affirmative | 30,163,300,902.81 | 94.666 |
Withheld | 1,699,451,309.06 | 5.334 |
TOTAL | 31,862,752,211.87 | 100.000 |
Alan J. Lacy | ||
Affirmative | 30,334,439,999.59 | 95.203 |
Withheld | 1,528,312,212.28 | 4.797 |
TOTAL | 31,862,752,211.87 | 100.000 |
Ned C. Lautenbach | ||
Affirmative | 30,317,381,535.59 | 95.150 |
Withheld | 1,545,370,676.28 | 4.850 |
TOTAL | 31,862,752,211.87 | 100.000 |
Joseph Mauriello | ||
Affirmative | 30,340,553,696.88 | 95.223 |
Withheld | 1,522,198,514.99 | 4.777 |
TOTAL | 31,862,752,211.87 | 100.000 |
Cornelia M. Small | ||
Affirmative | 30,337,552,071.15 | 95.213 |
Withheld | 1,525,200,140.72 | 4.787 |
TOTAL | 31,862,752,211.87 | 100.000 |
William S. Stavropoulos | ||
Affirmative | 30,240,356,579.51 | 94.908 |
Withheld | 1,622,395,632.36 | 5.092 |
TOTAL | 31,862,752,211.87 | 100.000 |
| # of | % of |
David M. Thomas | ||
Affirmative | 30,352,029,125.67 | 95.259 |
Withheld | 1,510,723,086.20 | 4.741 |
TOTAL | 31,862,752,211.87 | 100.000 |
Michael E. Wiley | ||
Affirmative | 30,333,540,290.12 | 95.201 |
Withheld | 1,529,211,921.75 | 4.799 |
TOTAL | 31,862,752,211.87 | 100.000 |
PROPOSAL 2 | ||
| # of | % of |
To amend the Declaration of Trust to reduce the required quorum for future shareholder meetings.A | ||
Affirmative | 23,747,670,372.95 | 74.531 |
Against | 5,357,217,831.03 | 16.814 |
Abstain | 1,587,233,084.08 | 4.981 |
Broker | 1,170,630,923.81 | 3.674 |
TOTAL | 31,862,752,211.87 | 100.000 |
A Denotes trust-wide proposal and voting results. |
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees
Fidelity Leveraged Company Stock Fund
Each year, typically in July, the Board of Trustees, including the Independent Trustees (together, the Board), votes on the renewal of the management contract and sub-advisory agreements (together, the Advisory Contracts) for the fund. The Board, assisted by the advice of fund counsel and Independent Trustees' counsel, requests and considers a broad range of information throughout the year.
The Board meets regularly and, acting directly and through its separate committees, requests and receives information concerning, and considers at each of its meetings factors that are relevant to, its annual consideration of the renewal of the fund's Advisory Contracts, including the services and support provided to the fund and its shareholders. At the time of the renewal, the Board had 12 standing committees, each composed of Independent Trustees with varying backgrounds, to which the Board has assigned specific subject matter responsibilities in order to enhance effective decision-making by the Board. Each committee has a written charter outlining the structure and purposes of the committee. The Board also meets as needed to consider matters specifically related to the Board's annual consideration of the renewal of Advisory Contracts.
At its July 2008 meeting, the Board of Trustees, including the Independent Trustees, unanimously determined to renew the fund's Advisory Contracts. In reaching its determination, the Board considered all factors it believed relevant, including (i) the nature, extent, and quality of the services to be provided to the fund and its shareholders (including the investment performance of the fund); (ii) the competitiveness of the fund's management fee and total expenses; (iii) the total costs of the services to be provided by and the profits to be realized by Fidelity from its relationship with the fund; (iv) the extent to which economies of scale would be realized as the fund grows; and (v) whether fee levels reflect these economies of scale, if any, for the benefit of fund shareholders. The Board also approved agreements with foreign sub-advisers Fidelity Management & Research (Japan) Inc. and Fidelity Management & Research (Hong Kong) Limited, as well as amendments to the fund's agreement with Fidelity Management & Research (U.K.) Inc.
In considering whether to renew the Advisory Contracts for the fund, the Board ultimately reached a determination, with the assistance of fund counsel and Independent Trustees' counsel and through the exercise of its business judgment, that the renewal of the Advisory Contracts and the compensation to be received by Fidelity under the management contract is consistent with Fidelity's fiduciary duty under applicable law. The Board's decision to renew the Advisory Contracts was not based on any single factor noted above, but rather was based on a comprehensive consideration of all the information provided to the Board at its meetings throughout the year. The Board, in reaching its determination to renew the Advisory Contracts, is aware that shareholders in the fund have a broad range of investment choices available to them, including a wide choice among mutual funds offered by competitors to Fidelity, and that the fund's shareholders, with the opportunity to review and weigh the disclosure provided by the fund in its prospectus and other public disclosures, have chosen to invest in this fund, managed by Fidelity.
Annual Report
Nature, Extent, and Quality of Services Provided. The Board considered staffing within the investment adviser, FMR, and the sub-advisers (together, the Investment Advisers), including the backgrounds of the fund's investment personnel and the fund's investment objective and discipline. The Independent Trustees also had discussions with senior management of Fidelity's investment operations and investment groups. The Board considered the structure of the portfolio manager compensation program and whether this structure provides appropriate incentives.
Resources Dedicated to Investment Management and Support Services. The Board reviewed the size, education, and experience of the Investment Advisers' investment staff, their use of technology, and the Investment Advisers' approach to recruiting, training, and retaining portfolio managers and other research, advisory, and management personnel. The Board noted that Fidelity's analysts have access to a variety of technological tools that enable them to perform both fundamental and quantitative analysis and to specialize in various disciplines. The Board considered Fidelity's extensive global research capabilities that enable the Investment Advisers to aggregate data from various sources in an effort to produce positive investment results. The Board also considered that Fidelity's portfolio managers and analysts have access to daily portfolio attribution that allows for monitoring of a fund's portfolio, as well as an electronic communication system that provides immediate real-time access to research concerning issuers and credit enhancers.
Shareholder and Administrative Services. The Board considered (i) the nature, extent, quality, and cost of advisory, administrative, distribution, and shareholder services performed by the Investment Advisers and their affiliates under the Advisory Contracts and under separate agreements covering transfer agency, pricing and bookkeeping, and securities lending services for the fund; (ii) the nature and extent of the Investment Advisers' supervision of third party service providers, principally custodians and subcustodians; and (iii) the resources devoted to, and the record of compliance with, the fund's compliance policies and procedures. The Board also reviewed the allocation of fund brokerage, including allocations to brokers affiliated with the Investment Advisers, the use of brokerage commissions to pay fund expenses, and the use of "soft" commission dollars to pay for research services. The Board further considered that Fidelity voluntarily pays for market data out of its own resources.
The Board noted that the growth of fund assets across the complex allows Fidelity to reinvest in the development of services designed to enhance the value or convenience of the Fidelity funds as investment vehicles. These services include 24-hour access to account information and market information through phone representatives and over the Internet, and investor education materials and asset allocation tools.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
Investment in a Large Fund Family. The Board considered the benefits to shareholders of investing in a Fidelity fund, including the benefits of investing in a fund that is part of a large family of funds offering a variety of investment disciplines and providing for a large variety of mutual fund investor services. For example, fund shareholders are offered the privilege of exchanging shares of the fund for shares of other Fidelity funds, as set forth in the fund's prospectus, without paying a sales charge. The Board noted that Fidelity has taken a number of actions over the previous year that benefited particular funds, including (i) dedicating additional resources to investment research and to restructure the investment research teams; (ii) contractually agreeing to reduce the management fees on Fidelity's Institutional Money Market Funds and launching Class IV and Institutional Class of certain of these funds; (iii) reducing the transfer agent fees for the Fidelity Select Portfolios and Investor Class of the VIP funds; and (iv) launching Class K of 29 equity funds as a lower-fee class available to certain employer-sponsored retirement plans.
Investment Performance. The Board considered whether the fund has operated within its investment objective, as well as its record of compliance with its investment restrictions. It also reviewed the fund's absolute investment performance, as well as the fund's relative investment performance measured against (i) a broad-based securities market index, and (ii) a custom peer group of mutual funds deemed appropriate by the Board over multiple periods. The following charts considered by the Board show, over the one-, three-, and five-year periods ended December 31, 2007, the fund's cumulative total returns, the cumulative total returns of a broad-based securities market index ("benchmark"), and a range of cumulative total returns of a custom peer group of mutual funds defined by FMR based on categories assigned by Morningstar, Inc. (The fund did not offer Class K as of December 31, 2007.) The box within each chart shows the 25th percentile return (bottom of box) and the 75th percentile return (top of box) of the peer group. Returns shown above the box are in the first quartile and returns shown below the box are in the fourth quartile. The percentage beaten number noted below each chart corresponds to the percentile box and represents the percentage of funds in the peer group whose performance was equal to or lower than that of the fund. 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 Leveraged Company Stock Fund
The Board reviewed the fund's relative investment performance against its peer group and stated that the performance of the fund was in the first quartile for all the periods shown. The Board also stated that the investment performance of the fund compared favorably to its benchmark for all the periods shown.
The Board considered that FMR has taken steps to refocus and strengthen equity research, equity portfolio management, and compliance.
Based on its review, and giving particular weight to the nature and quality of the resources dedicated by the Investment Advisers to maintain and improve relative performance, the Board concluded that the nature, extent, and quality of the services provided to the fund will benefit the fund's shareholders, particularly in light of the Board's view that the fund's shareholders benefit from investing in a fund that is part of a large family of funds offering a variety of investment disciplines and services.
Competitiveness of Management Fee and Total Fund Expenses. The Board considered the fund's management fee and total expenses compared to "mapped groups" of competitive funds and classes. Fidelity creates "mapped groups" by combining similar Lipper investment objective categories that have comparable management fee characteristics. Combining Lipper investment objective categories aids the Board's management fee and total expense comparisons by broadening the competitive group used for comparison and by reducing the number of universes to which various Fidelity funds are compared. The Board also considered supplemental information about how the fund's management fee and total expenses ranked relative to groups based on Lipper classifications, which take into account a fund's market capitalization and style.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
The Board considered two proprietary management fee comparisons for the 12-month periods shown in the chart below. The group of Lipper funds used by the Board for management fee comparisons is referred to below as the "Total Mapped Group." The Total Mapped Group comparison focuses on a fund's standing relative to the total universe of comparable funds available to investors, in terms of gross management fees before expense reimbursements or caps. "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 16% means that 84% 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, is also included in the chart and considered by the Board.
Fidelity Leveraged Company 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 2007.
Based on its review, the Board concluded that the fund's management fee was fair and reasonable in light of the services that the fund receives and the other factors considered.
In its review of the fund's total expenses, the Board considered the fund's management fee as well as other fund expenses, such as transfer agent fees, pricing and bookkeeping fees, and custodial, legal, and audit fees. The Board also noted the effects of any waivers and reimbursements on fees and expenses. As part of its review, the Board also considered current and historical total expenses of the fund compared to competitive fund median expenses. The fund is compared to those funds and classes in the Total Mapped Group (used by the Board for management fee comparisons) that have a similar sales load structure.
Annual Report
The Board noted that the fund's total expenses ranked below its competitive median for 2007.
In its review of total expenses, the Board also considered Fidelity fee structures and other information on clients that FMR and its affiliates service in other competitive markets, such as other mutual funds advised or subadvised by FMR or its affiliates, pension plan clients, and other institutional clients.
Based on its review, the Board concluded that the fund's total expenses were reasonable in light of the services that the fund and its shareholders receive and the other factors considered.
Costs of the Services and Profitability. The Board considered the revenues earned and the expenses incurred by Fidelity in conducting the business of developing, marketing, distributing, managing, administering and servicing the fund and its shareholders. The Board also considered the level of Fidelity's profits in respect of all the Fidelity funds.
On an annual basis, FMR presents to the Board Fidelity's profitability for the fund. Fidelity calculates the profitability for each fund, as well as aggregate profitability for groups of Fidelity funds and all Fidelity funds, using a series of detailed revenue and cost allocation methodologies which originate with the audited books and records of Fidelity. The Audit Committee of the Board reviews any significant changes from the prior year's methodologies.
PricewaterhouseCoopers LLP (PwC), independent registered public accounting firm and auditor to Fidelity and certain Fidelity funds, has been engaged annually by the Board as part of the Board's assessment of the results of Fidelity's profitability analysis. PwC's engagement includes the review and assessment of Fidelity's methodologies used in determining the revenues and expenses attributable to Fidelity's mutual fund business, and completion of agreed-upon procedures surrounding the mathematical accuracy of fund profitability and its conformity to allocation methodologies. After considering PwC's reports issued under the engagement and information provided by Fidelity, the Board believes that while other allocation methods may also be reasonable, Fidelity's profitability methodologies are reasonable in all material respects.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
The Board has also reviewed Fidelity's non-fund businesses and any fall-out benefits related to the mutual fund business as well as cases where Fidelity's affiliates may benefit from or be related to the fund's business.
The Board considered the costs of the services provided by and the profits realized by Fidelity in connection with the operation of the fund and determined that the amount of profit is a fair entrepreneurial profit for the management of the fund.
Economies of Scale. The Board considered whether there have been economies of scale in respect of the management of the Fidelity funds, whether the Fidelity funds (including the fund) have appropriately benefited from any such economies of scale, and whether there is potential for realization of any further economies of scale. The Board considered the extent to which the fund will benefit from economies of scale through increased services to the fund, through waivers or reimbursements, or through fee or expense reductions.
The Board recognized that the fund's management contract incorporates a "group fee" structure, which provides for lower group fee rates as total fund assets under FMR's management increase, and for higher group fee rates as total fund assets under FMR's management decrease. FMR determines the group fee rates based on a tiered asset "breakpoint" schedule. The Board considered that the group fee is designed to deliver the benefits of economies of scale to fund shareholders when total fund assets increase, even if assets of any particular fund are unchanged or have declined, because some portion of Fidelity's costs are attributable to services provided to all Fidelity funds, and all funds benefit if those costs can be allocated among more assets. The Board concluded that, given the group fee structure, fund shareholders will achieve a certain level of economies of scale as assets under FMR's management increase at the fund complex level, regardless of whether Fidelity achieves any such economies of scale.
The Board further concluded that any potential economies of scale are being shared between fund shareholders and Fidelity in an appropriate manner.
Additional Information Requested by the Board. In order to develop fully the factual basis for consideration of the Fidelity funds' Advisory Contracts, the Board requested and received additional information on certain topics, including (i) fund performance trends and actions to be taken by FMR to improve certain funds' overall performance; (ii) portfolio manager changes that have occurred during the past year; (iii) Fidelity's fund profitability methodology, the profitability of certain fund service providers, and profitability trends for certain funds; (iv) Fidelity's compensation structure for portfolio managers and key personnel, including its effects on fund profitability and the extent to which portfolio manager compensation is linked to fund performance; (v) Fidelity's fee structures and rationale for recommending different fees among categories of funds; and (vi) Fidelity's rationale for recommending which funds should have a performance adjustment component as part of their management fees.
Annual Report
Based on its evaluation of all of the conclusions noted above, and after considering all material factors, the Board ultimately concluded that the advisory fee structures are fair and reasonable, and that the fund's Advisory Contracts should be renewed.
Annual Report
Managing Your Investments
Fidelity offers several ways to conveniently manage your personal investments via your telephone or PC. You can access your account information, conduct trades and research your investments 24 hours a day.
By Phone
Fidelity Automated Service Telephone provides a single toll-free number to access account balances, positions, quotes and trading. It's easy to navigate the service, and on your first call, the system will help you create a personal identification number (PIN) for security.
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Fidelity Automated
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For mutual fund and brokerage trading.
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To change your PIN.
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By PC
Fidelity's web site on the Internet provides a wide range of information, including daily financial news, fund performance, interactive planning tools and news about Fidelity products and services.
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Fidelity's Web Site
www.fidelity.com
* When you call the quotes line, please remember that a fund's yield and return will vary and, except for money market funds, share price will also vary. This means that you may have a gain or loss when you sell your shares. There is no assurance that money market funds will be able to maintain a stable $1 share price; an investment in a money market fund is not insured or guaranteed by the U.S. government. Total returns are historical and include changes in share price, reinvestment of dividends and capital gains, and the effects of any sales charges.
Annual Report
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Annual Report
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Annual Report
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Annual Report
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LSF-UANN-0908 1.789248.105
Fidelity®
OTC
Portfolio -
OTC
Class K
Annual Report
July 31, 2008
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message | Ned Johnson's message to shareholders. | |
Performance | How the fund has done over time. | |
Management's Discussion | The manager's review of fund performance, strategy and outlook. | |
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 |
| |
Proxy Voting Results |
| |
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 (search for "proxy voting guidelines") or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-800-544-8544 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company.
Annual Report
This report and the financial statements contained herein are submitted for the general information of the shareholders of the fund. This report is not authorized for distribution to prospective investors in the fund unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com or http://www.advisor.fidelity.com, as applicable.
NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE
Neither the fund nor Fidelity Distributors Corporation is a bank.
Annual Report
Chairman's Message
(photo_of_Edward_C_Johnson_3d)
Dear Shareholder:
Domestic and international securities markets have struggled thus far in 2008. High-grade fixed-income investments produced modestly positive results, but many stock benchmarks suffered double-digit losses through the first half of this year. Financial markets are always unpredictable, but there are a number of time-tested principles that can put the historical odds in your favor.
One of the basic tenets is to invest for the long term. Over time, riding out the markets' inevitable ups and downs has proven much more effective than selling into panic or chasing the hottest trend. Even missing only a few of the markets' best days can significantly diminish investor returns. Patience also affords the benefits of compounding - of earning interest on additional income or reinvested dividends and capital gains. There are tax advantages and cost benefits to consider as well. The more you sell, the more taxes you pay, and the more you trade, the higher the costs. While staying the course doesn't eliminate risk, it can considerably lessen the effect of short-term declines.
You can further manage your investing risk through diversification. And today, more than ever, geographic diversification should be taken into account. Studies indicate that asset allocation is the single most important determinant of a portfolio's long-term success. The right mix of stocks, bonds and cash - aligned to your particular risk tolerance and investment objective - is very important. Age-appropriate rebalancing is also an essential aspect of asset allocation. For younger investors, an emphasis on equities - which historically have been the best-performing asset class over time - is encouraged. As investors near their specific goal, such as retirement or sending a child to college, consideration may be given to replacing volatile assets (e.g. common stocks) with more-stable fixed investments (bonds or savings plans).
A third investment principle - investing regularly - can help lower the average cost of your purchases. Investing a certain amount of money each month or quarter helps ensure you won't pay for all your shares at market highs. This strategy - known as dollar cost averaging - also reduces unconstructive "emotion" from investing, helping shareholders avoid selling weak performers just prior to an upswing, or chasing a hot performer just before a correction.
We invite you to contact us via the Internet, through our Investor Centers or over the phone. It is our privilege to provide you the information you need to make the investments that are right for you.
Sincerely,
/s/Edward C. Johnson 3d
Edward C. Johnson 3d
Annual Report
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' 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 July 31, 2008 | Past 1 | Past 5 | Past 10 |
OTC | -5.16% | 9.79% | 5.01% |
Class K A | -5.12% | 9.80% | 5.02% |
A The initial offering of Class K shares took place on May 9, 2008. Returns prior to May 9, 2008 are those of OTC, the original class of the fund.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in OTC, a class of the fund, on July 31, 1998. The chart shows how the value of your investment would have changed, and also shows how the NASDAQ Composite® Index performed over the same period.
Annual Report
Management's Discussion of Fund Performance
Comments from Sonu Kalra, Portfolio Manager of Fidelity® OTC Portfolio
Grim news about the U.S. economy forced most domestic equity benchmarks into negative territory for the 12 months ending July 31, 2008. Oil prices north of $140 per barrel, gasoline prices in excess of $4 per gallon and soaring food costs drove inflation and consumer prices higher. In response, consumer discretionary spending trended lower as Main Street tightened its purse strings. Wall Street, meanwhile, struggled under the weight of massive write-downs in the financials sector, an ongoing credit crisis and bleak housing data. In an effort to staunch the bleeding, the Federal Reserve Board cut interest rates on seven occasions during the past year. Nevertheless, investors fled the equity markets, and both the Dow Jones Industrial AverageSM and the Standard & Poor's 500SM Index fell to a threshold that many believe marks the official start of a "bear market." For the 12 months overall, the Dow slid 11.71%, the S&P 500® dropped 11.09% and the technology-heavy NASDAQ Composite® Index dipped 7.93%.
During the past year, the fund's Retail Class shares returned -5.16%, beating the NASDAQ Composite Index. (For specific performance results for the fund's new Class K shares, please see the performance section of this report.) Favorable stock selection in information technology, consumer discretionary, materials and energy aided performance. Additionally, currency fluctuations benefited the fund's foreign holdings. Versus the benchmark, Canada-based Research In Motion was the fund's top contributor. The maker of the BlackBerry "smartphone" continued to expand into the consumer market and also internationally. Japan-based video game maker Nintendo, an out-of-index pick, also helped, as did Apple, the fund's largest position at period end. Other contributors included agricultural products producer Monsanto, an out-of-index position, and Illumina, a maker of gene analysis tools and equipment. Conversely, our results were hampered by poor stock selection in industrials, consumer staples and financials, although underweighting the latter, a weak-performing sector, helped. At the stock level, underweighting software giant and major index component Microsoft hampered performance. The fund had its lightest exposure to the stock in the first half of the period, when it enjoyed stronger performance. A small position in investment bank Lehman Brothers - an out-of-index holding that I sold off entirely - went awry. An underweighting in enterprise software supplier Oracle further detracted, along with a position in drug maker Sepracor.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, and (2) ongoing costs, including management fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The actual expense Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (February 1, 2008 to July 31, 2008) for OTC and for the entire period (May 9, 2008 to July 31, 2008) for Class K. The hypothetical expense Example is based on an investment of $1,000 invested for the one half period (February 1, 2008 to July 31, 2008).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Annual Report
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.
| Beginning | Ending | Expenses Paid |
OTC |
|
|
|
Actual | $ 1,000.00 | $ 992.40 | $ 5.35 B |
Hypothetical A | $ 1,000.00 | $ 1,019.49 | $ 5.42 C |
Class K |
|
|
|
Actual | $ 1,000.00 | $ 934.90 | $ 2.02 B |
Hypothetical A | $ 1,000.00 | $ 1,020.34 | $ 4.57 C |
A 5% return per year before expenses
B Actual expenses are equal to each Class' annualized expenses ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period) for OTC and multiplied by 84/366 (to reflect the period May 9, 2008 to July 31, 2008) for Class K.
C Hypothetical expenses are equal to each Class' annualized expenses ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
| Annualized |
OTC | 1.08% |
Class K | .91% |
Annual Report
Investment Changes (Unaudited)
Top Ten Stocks as of July 31, 2008 | ||
| % of fund's | % of fund's net assets |
Apple, Inc. | 8.1 | 2.1 |
Google, Inc. Class A (sub. vtg.) | 6.6 | 9.4 |
QUALCOMM, Inc. | 4.7 | 1.3 |
Microsoft Corp. | 4.3 | 6.9 |
Cisco Systems, Inc. | 3.8 | 5.1 |
Research In Motion Ltd. | 3.5 | 3.5 |
Nintendo Co. Ltd. ADR | 3.2 | 10.1 |
Celgene Corp. | 2.3 | 2.0 |
Biogen Idec, Inc. | 2.2 | 1.9 |
Gilead Sciences, Inc. | 1.9 | 1.7 |
| 40.6 | |
Top Five Market Sectors as of July 31, 2008 | ||
| % of fund's | % of fund's net assets |
Information Technology | 50.2 | 57.3 |
Health Care | 19.7 | 19.3 |
Industrials | 7.8 | 7.8 |
Consumer Discretionary | 7.6 | 6.7 |
Materials | 5.7 | 1.8 |
Asset Allocation (% of fund's net assets) | |||||||
As of July 31, 2008 * | As of January 31, 2008 ** | ||||||
Stocks 99.7% |
| Stocks 98.8% |
| ||||
Short-Term |
| Short-Term |
| ||||
* Foreign investments | 14.1% |
| ** Foreign investments | 22.1% |
|
Annual Report
Investments July 31, 2008
Showing Percentage of Net Assets
Common Stocks - 99.7% | |||
Shares | Value (000s) | ||
CONSUMER DISCRETIONARY - 7.6% | |||
Diversified Consumer Services - 0.2% | |||
New Oriental Education & Technology Group, Inc. sponsored ADR (a) | 221,300 | $ 15,491 | |
Hotels, Restaurants & Leisure - 0.6% | |||
Buffalo Wild Wings, Inc. (a)(d) | 460,991 | 15,180 | |
California Pizza Kitchen, Inc. (a) | 698,100 | 9,110 | |
Red Robin Gourmet Burgers, Inc. (a)(d) | 358,000 | 8,889 | |
Starbucks Corp. (a) | 507,700 | 7,458 | |
| 40,637 | ||
Internet & Catalog Retail - 1.3% | |||
Amazon.com, Inc. (a) | 1,149,500 | 87,753 | |
Gaiam, Inc. Class A (a) | 405,618 | 5,946 | |
| 93,699 | ||
Media - 1.6% | |||
Comcast Corp. Class A | 3,191,600 | 65,811 | |
The DIRECTV Group, Inc. (a) | 1,478,400 | 39,946 | |
VisionChina Media, Inc. ADR (d) | 100,000 | 2,504 | |
| 108,261 | ||
Multiline Retail - 0.1% | |||
Golden Eagle Retail Group Ltd. (H Shares) | 1,739,000 | 1,478 | |
Parkson Retail Group Ltd. | 2,465,000 | 3,412 | |
| 4,890 | ||
Specialty Retail - 2.1% | |||
bebe Stores, Inc. (d) | 1,677,900 | 17,400 | |
Citi Trends, Inc. (a) | 319,066 | 7,380 | |
Gymboree Corp. (a) | 191,000 | 7,143 | |
Jo-Ann Stores, Inc. (a)(d) | 562,864 | 12,366 | |
Jos. A. Bank Clothiers, Inc. (a) | 200,000 | 4,480 | |
Ross Stores, Inc. | 338,500 | 12,849 | |
Staples, Inc. | 983,400 | 22,127 | |
The Children's Place Retail Stores, Inc. (a)(d) | 986,600 | 37,540 | |
Urban Outfitters, Inc. (a)(d) | 647,800 | 21,384 | |
| 142,669 | ||
Textiles, Apparel & Luxury Goods - 1.7% | |||
American Apparel, Inc. (a) | 1,200,911 | 7,061 | |
Deckers Outdoor Corp. (a) | 556,600 | 62,901 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
CONSUMER DISCRETIONARY - continued | |||
Textiles, Apparel & Luxury Goods - continued | |||
Lululemon Athletica, Inc. (d) | 1,217,873 | $ 27,037 | |
Provogue (India) Ltd. (e) | 1,105,999 | 22,092 | |
| 119,091 | ||
TOTAL CONSUMER DISCRETIONARY | 524,738 | ||
CONSUMER STAPLES - 0.3% | |||
Food & Staples Retailing - 0.3% | |||
Costco Wholesale Corp. | 209,600 | 13,138 | |
Winn-Dixie Stores, Inc. (a)(d) | 584,900 | 9,294 | |
| 22,432 | ||
ENERGY - 3.7% | |||
Energy Equipment & Services - 0.9% | |||
ENSCO International, Inc. | 100,000 | 6,914 | |
Hercules Offshore, Inc. (a) | 921,700 | 23,015 | |
Nabors Industries Ltd. (a) | 187,500 | 6,836 | |
National Oilwell Varco, Inc. (a) | 100,400 | 7,894 | |
Patterson-UTI Energy, Inc. | 594,100 | 16,884 | |
| 61,543 | ||
Oil, Gas & Consumable Fuels - 2.8% | |||
Alpha Natural Resources, Inc. (a) | 250,600 | 24,797 | |
Arch Coal, Inc. | 243,300 | 13,700 | |
Chesapeake Energy Corp. | 547,300 | 27,447 | |
EnCana Corp. | 92,300 | 6,662 | |
GMX Resources, Inc. (a)(d) | 89,500 | 5,254 | |
International Coal Group, Inc. (a)(d) | 996,800 | 10,436 | |
James River Coal Co. (a)(d) | 711,800 | 30,857 | |
Patriot Coal Corp. (a) | 300,463 | 37,903 | |
Petroleo Brasileiro SA - Petrobras sponsored ADR | 169,600 | 9,482 | |
Reliance Industries Ltd. | 172,404 | 8,958 | |
Southwestern Energy Co. (a) | 492,800 | 17,894 | |
| 193,390 | ||
TOTAL ENERGY | 254,933 | ||
FINANCIALS - 4.5% | |||
Capital Markets - 2.5% | |||
Charles Schwab Corp. | 2,047,200 | 46,860 | |
Goldman Sachs Group, Inc. | 163,500 | 30,091 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
FINANCIALS - continued | |||
Capital Markets - continued | |||
India Infoline Ltd. | 380,000 | $ 5,813 | |
Morgan Stanley | 635,700 | 25,097 | |
T. Rowe Price Group, Inc. | 1,024,000 | 61,286 | |
| 169,147 | ||
Commercial Banks - 0.5% | |||
Boston Private Financial Holdings, Inc. | 406,800 | 3,185 | |
Fifth Third Bancorp (d) | 2,212,700 | 30,911 | |
| 34,096 | ||
Diversified Financial Services - 1.4% | |||
Bank of America Corp. | 877,200 | 28,860 | |
CME Group, Inc. | 137,800 | 49,626 | |
Hong Kong Exchanges & Clearing Ltd. | 1,193,100 | 17,786 | |
| 96,272 | ||
Real Estate Investment Trusts - 0.0% | |||
SWA REIT Ltd. unit | 154,800 | 96 | |
Real Estate Management & Development - 0.1% | |||
Cheung Kong Holdings Ltd. | 469,000 | 6,625 | |
TOTAL FINANCIALS | 306,236 | ||
HEALTH CARE - 19.7% | |||
Biotechnology - 13.2% | |||
Alexion Pharmaceuticals, Inc. (a) | 217,880 | 20,426 | |
Alkermes, Inc. (a) | 1,213,741 | 19,116 | |
Alnylam Pharmaceuticals, Inc. (a) | 48,400 | 1,683 | |
Amgen, Inc. (a) | 1,580,100 | 98,962 | |
Amylin Pharmaceuticals, Inc. (a)(d) | 1,677,500 | 52,925 | |
Biogen Idec, Inc. (a) | 2,156,875 | 150,464 | |
Celgene Corp. (a) | 2,076,792 | 156,777 | |
Cephalon, Inc. (a) | 726,300 | 53,136 | |
Cougar Biotechnology, Inc. (a) | 968,145 | 32,579 | |
CV Therapeutics, Inc. (a) | 250,000 | 2,343 | |
Gilead Sciences, Inc. (a) | 2,447,900 | 132,138 | |
GTx, Inc. (a)(d) | 544,100 | 10,142 | |
InterMune, Inc. (a)(d) | 828,200 | 14,228 | |
Isis Pharmaceuticals, Inc. (a) | 1,335,749 | 22,881 | |
Myriad Genetics, Inc. (a) | 251,289 | 16,711 | |
ONYX Pharmaceuticals, Inc. (a)(d) | 283,200 | 11,470 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
HEALTH CARE - continued | |||
Biotechnology - continued | |||
OREXIGEN Therapeutics, Inc. (a) | 400,752 | $ 3,507 | |
Regeneron Pharmaceuticals, Inc. (a)(d) | 1,258,100 | 27,540 | |
Rigel Pharmaceuticals, Inc. (a) | 833,284 | 21,199 | |
Seattle Genetics, Inc. (a) | 1,133,303 | 12,874 | |
Transition Therapeutics, Inc. (a) | 674,633 | 6,734 | |
Vertex Pharmaceuticals, Inc. (a) | 1,114,688 | 38,457 | |
| 906,292 | ||
Health Care Equipment & Supplies - 0.5% | |||
China Medical Technologies, Inc. sponsored ADR (d) | 313,800 | 15,037 | |
Gen-Probe, Inc. (a) | 429,100 | 22,880 | |
| 37,917 | ||
Health Care Providers & Services - 1.9% | |||
Express Scripts, Inc. (a) | 1,550,200 | 109,351 | |
IPC The Hospitalist Co., Inc. | 276,077 | 5,949 | |
UnitedHealth Group, Inc. | 506,200 | 14,214 | |
| 129,514 | ||
Life Sciences Tools & Services - 2.0% | |||
Exelixis, Inc. (a) | 1,858,872 | 13,012 | |
Illumina, Inc. (a)(d) | 1,039,046 | 96,881 | |
Illumina, Inc.: | |||
warrants 11/22/10 (a)(f) | 354,776 | 8,878 | |
warrants 1/19/11 (a)(f) | 452,917 | 11,353 | |
Sequenom, Inc. (a) | 350,000 | 7,476 | |
| 137,600 | ||
Pharmaceuticals - 2.1% | |||
Elan Corp. PLC sponsored ADR (a) | 2,984,900 | 59,847 | |
Sepracor, Inc. (a) | 1,300,900 | 22,740 | |
Shire PLC sponsored ADR | 234,100 | 11,785 | |
Teva Pharmaceutical Industries Ltd. sponsored ADR (d) | 1,104,600 | 49,530 | |
| 143,902 | ||
TOTAL HEALTH CARE | 1,355,225 | ||
INDUSTRIALS - 7.8% | |||
Airlines - 0.7% | |||
Continental Airlines, Inc. Class B (a) | 742,500 | 10,195 | |
Delta Air Lines, Inc. (a) | 685,249 | 5,167 | |
JetBlue Airways Corp. (a) | 1,105,500 | 5,826 | |
Northwest Airlines Corp. (a) | 412,900 | 3,782 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
INDUSTRIALS - continued | |||
Airlines - continued | |||
UAL Corp. | 1,199,577 | $ 9,968 | |
US Airways Group, Inc. (a)(d) | 2,081,500 | 10,532 | |
| 45,470 | ||
Construction & Engineering - 0.2% | |||
Hindustan Construction Co. Ltd. | 131,062 | 269 | |
Larsen & Toubro Ltd. | 180,000 | 11,040 | |
| 11,309 | ||
Electrical Equipment - 3.7% | |||
Bharat Heavy Electricals Ltd. | 421,762 | 16,698 | |
Canadian Solar, Inc. (a)(d) | 558,900 | 16,080 | |
China High Speed Transmission Equipment Group Co. Ltd. | 2,284,000 | 4,333 | |
Energy Conversion Devices, Inc. (a)(d) | 166,500 | 11,643 | |
First Solar, Inc. (a)(d) | 458,100 | 130,609 | |
GrafTech International Ltd. (a) | 246,500 | 5,780 | |
JA Solar Holdings Co. Ltd. ADR (a) | 953,200 | 14,460 | |
Sunpower Corp. Class A (a)(d) | 583,900 | 45,994 | |
Woodward Governor Co. | 193,100 | 8,690 | |
| 254,287 | ||
Industrial Conglomerates - 0.0% | |||
Walter Industries, Inc. | 39,400 | 4,132 | |
Machinery - 1.9% | |||
Bucyrus International, Inc. Class A (d) | 395,000 | 27,654 | |
Cummins, Inc. | 323,500 | 21,461 | |
FreightCar America, Inc. (d)(e) | 635,000 | 24,187 | |
Joy Global, Inc. | 731,500 | 52,829 | |
TurboChef Technologies, Inc. (a)(d) | 1,049,994 | 5,512 | |
| 131,643 | ||
Road & Rail - 1.3% | |||
Arkansas Best Corp. (d) | 100,000 | 3,714 | |
J.B. Hunt Transport Services, Inc. (d) | 1,303,500 | 48,203 | |
Landstar System, Inc. | 494,200 | 24,997 | |
YRC Worldwide, Inc. (a)(d) | 852,143 | 14,401 | |
| 91,315 | ||
TOTAL INDUSTRIALS | 538,156 | ||
INFORMATION TECHNOLOGY - 50.2% | |||
Communications Equipment - 13.2% | |||
Cisco Systems, Inc. (a) | 11,882,800 | 261,303 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
INFORMATION TECHNOLOGY - continued | |||
Communications Equipment - continued | |||
Infinera Corp. (a) | 865,142 | $ 9,741 | |
Juniper Networks, Inc. (a) | 1,532,400 | 39,888 | |
Polycom, Inc. (a) | 593,000 | 13,995 | |
QUALCOMM, Inc. | 5,805,700 | 321,287 | |
Research In Motion Ltd. (a) | 1,944,666 | 238,844 | |
Starent Networks Corp. (a) (d) | 1,411,500 | 18,491 | |
| 903,549 | ||
Computers & Peripherals - 10.6% | |||
Apple, Inc. (a) | 3,504,700 | 557,076 | |
Dell, Inc. (a) | 340,900 | 8,376 | |
Hewlett-Packard Co. | 841,700 | 37,708 | |
NetApp, Inc. (a) | 3,649,900 | 93,255 | |
Palm, Inc. (d) | 5,013,159 | 32,987 | |
| 729,402 | ||
Electronic Equipment & Instruments - 0.4% | |||
DTS, Inc. (a)(d) | 140,200 | 4,008 | |
Trimble Navigation Ltd. (a) | 780,100 | 25,899 | |
| 29,907 | ||
Internet Software & Services - 8.1% | |||
Akamai Technologies, Inc. (a)(d) | 2,029,795 | 47,375 | |
Art Technology Group, Inc. (a) | 22,329 | 82 | |
eBay, Inc. (a) | 618,239 | 15,561 | |
Google, Inc. Class A (sub. vtg.) (a) | 953,840 | 451,882 | |
Mercadolibre, Inc. | 653,850 | 23,441 | |
NHN Corp. (a) | 20,000 | 3,284 | |
Yahoo!, Inc. (a) | 786,416 | 15,642 | |
| 557,267 | ||
IT Services - 3.0% | |||
Cognizant Technology Solutions Corp. Class A (a) | 3,977,820 | 111,657 | |
Infosys Technologies Ltd. sponsored ADR | 889,200 | 35,026 | |
MasterCard, Inc. Class A | 26,600 | 6,494 | |
Visa, Inc. | 678,700 | 49,586 | |
| 202,763 | ||
Semiconductors & Semiconductor Equipment - 4.6% | |||
Advanced Energy Industries, Inc. (a) | 250,000 | 3,455 | |
Altera Corp. | 940,443 | 20,643 | |
Applied Materials, Inc. | 2,473,951 | 42,849 | |
ASML Holding NV (NY Shares) | 1,380,434 | 31,460 | |
Broadcom Corp. Class A (a)(d) | 1,772,305 | 43,049 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
INFORMATION TECHNOLOGY - continued | |||
Semiconductors & Semiconductor Equipment - continued | |||
Cavium Networks, Inc. (a) | 1,694,519 | $ 27,197 | |
Cypress Semiconductor Corp. (a) | 813,950 | 22,180 | |
Intel Corp. | 361,100 | 8,013 | |
Intersil Corp. Class A | 859,900 | 20,749 | |
Lam Research Corp. (a) | 882,000 | 29,009 | |
Netlogic Microsystems, Inc. (a)(d) | 100,000 | 3,201 | |
ON Semiconductor Corp. (a) | 180,800 | 1,698 | |
Power Integrations, Inc. (a) | 313,200 | 8,557 | |
Skyworks Solutions, Inc. (a) | 1,636,100 | 15,478 | |
Varian Semiconductor Equipment Associates, Inc. (a) | 1,372,100 | 40,093 | |
| 317,631 | ||
Software - 10.3% | |||
Activision Blizzard, Inc. (a) | 1,435,500 | 51,649 | |
Autonomy Corp. PLC (a) | 450,300 | 9,487 | |
Microsoft Corp. | 11,461,800 | 294,797 | |
Nintendo Co. Ltd. | 132,000 | 60,984 | |
Nintendo Co. Ltd. ADR | 2,783,598 | 160,753 | |
Oracle Corp. (a) | 721,800 | 15,540 | |
Shanda Interactive Entertainment Ltd. sponsored ADR (a) | 1,232,000 | 31,823 | |
SuccessFactors, Inc. (d) | 1,285,500 | 13,536 | |
Symantec Corp. (a) | 1,391,600 | 29,321 | |
Synchronoss Technologies, Inc. (a)(d) | 938,800 | 11,003 | |
TiVo, Inc. (a)(d) | 3,754,075 | 28,831 | |
| 707,724 | ||
TOTAL INFORMATION TECHNOLOGY | 3,448,243 | ||
MATERIALS - 5.7% | |||
Chemicals - 4.2% | |||
CF Industries Holdings, Inc. | 213,100 | 34,833 | |
FMC Corp. | 102,500 | 7,623 | |
Innophos Holdings, Inc. | 20,263 | 595 | |
Monsanto Co. | 538,000 | 64,081 | |
Potash Corp. of Saskatchewan, Inc. | 128,000 | 26,147 | |
Terra Industries, Inc. (d) | 891,400 | 48,136 | |
The Mosaic Co. | 843,300 | 107,276 | |
| 288,691 | ||
Containers & Packaging - 0.1% | |||
Owens-Illinois, Inc. (a) | 151,000 | 6,378 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
MATERIALS - continued | |||
Metals & Mining - 1.4% | |||
Advanced Metallurgical Group NV | 181,000 | $ 14,814 | |
Freeport-McMoRan Copper & Gold, Inc. Class B | 166,800 | 16,138 | |
Steel Dynamics, Inc. | 1,111,100 | 35,200 | |
Timminco Ltd. (a) | 1,119,500 | 26,461 | |
| 92,613 | ||
TOTAL MATERIALS | 387,682 | ||
UTILITIES - 0.2% | |||
Electric Utilities - 0.1% | |||
Enernoc, Inc. (a)(d) | 510,600 | 8,241 | |
Independent Power Producers & Energy Traders - 0.1% | |||
Ormat Technologies, Inc. (d) | 162,000 | 7,779 | |
TOTAL UTILITIES | 16,020 | ||
TOTAL COMMON STOCKS (Cost $6,326,238) | 6,853,665 | ||
Money Market Funds - 4.4% | |||
|
|
|
|
Fidelity Cash Central Fund, 2.35% (b) | 9,588,418 | 9,588 | |
Fidelity Securities Lending Cash Central Fund, 2.37% (b)(c) | 289,869,625 | 289,870 | |
TOTAL MONEY MARKET FUNDS (Cost $299,458) | 299,458 | ||
TOTAL INVESTMENT PORTFOLIO - 104.1% (Cost $6,625,696) | 7,153,123 | ||
NET OTHER ASSETS - (4.1)% | (282,402) | ||
NET ASSETS - 100% | $ 6,870,721 |
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
(e) Affiliated company |
(f) Restricted securities - Investment in securities not registered under the Securities Act of 1933 (excluding 144A issues). At the end of the period, the value of restricted securities (excluding 144A issues) amounted to $20,231,000 or 0.3% of net assets. |
Additional information on each holding is as follows: |
Security | Acquisition Date | Acquisition Cost (000s) |
Illumina, Inc. warrants 11/22/10 | 11/21/05 | $ - |
1/19/11 | 1/18/06 | $ - |
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 | $ 2,039 |
Fidelity Securities Lending Cash Central Fund | 7,264 |
Total | $ 9,303 |
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, |
Deckers Outdoor Corp. | $ 69,644 | $ 9,078 | $ 26,030 | $ - | $ - |
FreightCar America, Inc. | - | 26,999 | - | - | 24,187 |
Indevus Pharmaceuticals, Inc. | - | 29,730 | 5,205 | - | - |
Omnivision Technologies, Inc. | 67,769 | 1,938 | 69,535 | - | - |
Provogue (India) Ltd. | 5,586 | 89 | - | 15 | 22,092 |
True Religion Apparel, Inc. | - | 33,339 | 29,010 | - | - |
Total | $ 142,999 | $ 101,173 | $ 129,780 | $ 15 | $ 46,279 |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 85.9% |
Canada | 4.7% |
Japan | 3.2% |
India | 1.4% |
Others (individually less than 1%) | 4.8% |
| 100.0% |
Income Tax Information |
At July 31, 2008, the fund had a capital loss carryforward of approximately $2,131,358,000 of which $881,463,000 and $1,249,895,000 will expire on July 31, 2010 and 2011, respectively. |
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) | July 31, 2008 | |
Assets | ||
Investment in securities, at value (including securities loaned of $278,415) - See accompanying schedule: Unaffiliated issuers (cost $6,289,567) | $ 6,807,386 |
|
Fidelity Central Funds (cost $299,458) | 299,458 |
|
Other affiliated issuers (cost $36,671) | 46,279 |
|
Total Investments (cost $6,625,696) |
| $ 7,153,123 |
Receivable for investments sold | 107,447 | |
Receivable for fund shares sold | 4,708 | |
Dividends receivable | 438 | |
Distributions receivable from Fidelity Central Funds | 657 | |
Prepaid expenses | 11 | |
Other receivables | 813 | |
Total assets | 7,267,197 | |
|
|
|
Liabilities | ||
Payable to custodian bank | $ 1,812 | |
Payable for investments purchased | 85,591 | |
Payable for fund shares redeemed | 12,422 | |
Accrued management fee | 4,883 | |
Other affiliated payables | 1,435 | |
Other payables and accrued expenses | 463 | |
Collateral on securities loaned, at value | 289,870 | |
Total liabilities | 396,476 | |
|
|
|
Net Assets | $ 6,870,721 | |
Net Assets consist of: |
| |
Paid in capital | $ 8,541,749 | |
Accumulated net investment loss | (170) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (2,198,657) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 527,799 | |
Net Assets | $ 6,870,721 |
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) | July 31, 2008 | |
|
|
|
OTC: | $ 44.66 | |
|
|
|
Class K: | $ 44.68 |
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 July 31, 2008 | |
Investment Income |
|
|
Dividends (including $15 earned from other affiliated issuers) |
| $ 40,908 |
Interest |
| 404 |
Income from Fidelity Central Funds (including $7,264 from security lending) |
| 9,303 |
Total income |
| 50,615 |
|
|
|
Expenses | ||
Management fee | $ 49,035 | |
Performance adjustment | 16,524 | |
Transfer agent fees | 17,255 | |
Accounting and security lending fees | 1,277 | |
Custodian fees and expenses | 383 | |
Independent trustees' compensation | 34 | |
Registration fees | 143 | |
Audit | 92 | |
Legal | 52 | |
Interest | 23 | |
Miscellaneous | 565 | |
Total expenses before reductions | 85,383 | |
Expense reductions | (612) | 84,771 |
Net investment income (loss) | (34,156) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers (net of foreign taxes of $2,218) | 859,980 | |
Other affiliated issuers | (9,178) |
|
Foreign currency transactions | (968) | |
Total net realized gain (loss) |
| 849,834 |
Change in net unrealized appreciation (depreciation) on: Investment securities (net of decrease in deferred foreign taxes of $974) | (1,152,517) | |
Assets and liabilities in foreign currencies | 78 | |
Total change in net unrealized appreciation (depreciation) |
| (1,152,439) |
Net gain (loss) | (302,605) | |
Net increase (decrease) in net assets resulting from operations | $ (336,761) |
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) | $ (34,156) | $ (39,204) |
Net realized gain (loss) | 849,834 | 817,535 |
Change in net unrealized appreciation (depreciation) | (1,152,439) | 1,784,972 |
Net increase (decrease) in net assets resulting | (336,761) | 2,563,303 |
Share transactions - net increase (decrease) | (1,570,431) | (1,154,900) |
Total increase (decrease) in net assets | (1,907,192) | 1,408,403 |
|
|
|
Net Assets | ||
Beginning of period | 8,777,913 | 7,369,510 |
End of period (including accumulated net investment loss of $170 and accumulated net investment loss of $92, respectively) | $ 6,870,721 | $ 8,777,913 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - OTC
Years ended July 31, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 47.09 | $ 34.70 | $ 35.99 | $ 30.43 | $ 28.33 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | (.20) | (.19) | (.10) E | .37 F | (.17) |
Net realized and unrealized gain (loss) | (2.23) | 12.58 | (1.19) | 5.60 | 2.27 |
Total from investment operations | (2.43) | 12.39 | (1.29) | 5.97 | 2.10 |
Distributions from net investment income | - | - | - | (.41) | - |
Net asset value, end of period | $ 44.66 | $ 47.09 | $ 34.70 | $ 35.99 | $ 30.43 |
Total Return A | (5.16)% | 35.71% | (3.58)% | 19.70% | 7.41% |
Ratios to Average Net Assets C,G |
|
|
|
|
|
Expenses before reductions | 1.06% | .96% | .80% | .81% | .91% |
Expenses net of fee waivers, if any | 1.06% | .96% | .80% | .81% | .91% |
Expenses net of all reductions | 1.05% | .95% | .75% | .75% | .89% |
Net investment income (loss) | (.42)% | (.45)% | (.26)%E | 1.13% F | (.53)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (in millions) | $ 6,871 | $ 8,778 | $ 7,370 | $ 8,063 | $ 7,322 |
Portfolio turnover rate D | 145% | 121% | 149% | 117% | 61% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Calculated based on average shares outstanding during the period.
C Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
D Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
E Investment income per share reflects a special dividend which amounted to $.03 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.34)%.
F Investment income per share reflects a special dividend which amounted to $.46 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.27)%.
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 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
Period ended July 31, | 2008 G |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 47.79 |
Income from Investment Operations |
|
Net investment income (loss) D | (.05) |
Net realized and unrealized gain (loss) | (3.06) |
Total from investment operations | (3.11) |
Net asset value, end of period | $ 44.68 |
Total Return B,C | (6.51)% |
Ratios to Average Net Assets E,H |
|
Expenses before reductions | .91% A |
Expenses net of fee waivers, if any | .91% A |
Expenses net of all reductions | .91% A |
Net investment income (loss) | (.47)% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 93 |
Portfolio turnover rate F | 145% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
G For the period May 9, 2008 (commencement of sale of shares) to July 31, 2008.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended July 31, 2008
1. Organization.
Fidelity OTC Portfolio (the Fund) is a non-diversified fund of Fidelity Securities Fund (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. On January 17, 2008, the Board of Trustees of the Fund approved the creation of additional classes of shares. The Fund commenced sale of shares of Class K and the existing class was designated OTC on May 9, 2008. The fund offers OTC and Class K shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive rights with respect to matters that effect that class. In order to disclose class level financial information dollar amounts presented in the notes are unrounded. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent fees incurred. Certain expense reductions also differ by class.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the SEC's web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:
Annual Report
3. Significant Accounting Policies - continued
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. Wherever possible, the Fund uses independent pricing services approved by the Board of Trustees to value its investments.
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE) normally
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Investment Transactions and Income - continued
4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Deferred Trustee Compensation. Under a Deferred Compensation Plan (the Plan), independent Trustees must defer receipt of a portion of, and may elect to defer receipt of an additional 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 by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The implementation of FIN 48 did not result in any unrecognized tax benefits in the accompanying financial statements. Each of the Fund's federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service. 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 recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles.
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, certain foreign taxes, partnerships, deferred trustees compensation, net operating losses, capital loss carryforwards, and losses deferred due to wash sales.
The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows:
Unrealized appreciation | $ 1,150,532,709 |
Unrealized depreciation | (690,403,699) |
Net unrealized appreciation (depreciation) | $ 460,129,010 |
|
|
Capital loss carryforward | (2,131,358,441) |
|
|
Cost for federal income tax purposes | $ 6,692,994,098 |
New Accounting Pronouncement. In September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and results in expanded disclosures about fair value measurements.
4. Operating Policies.
Repurchase Agreements. FMR has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits the Fund and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts which are then invested in repurchase agreements. The Fund may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. The Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement
Annual Report
Notes to Financial Statements - continued
4. Operating Policies - continued
Repurchase Agreements - continued
(including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
Restricted Securities. The Fund may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities is included at the end of the Fund's Schedule of Investments.
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $11,690,147,918 and $13,229,691,759, 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 a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. In addition, the management fee is subject to a performance adjustment (up to a maximum of ± .20% of the Fund's average net assets over a 36 month performance period). The upward or downward adjustment to the management fee is based on the investment performance of the retail class of the Fund, OTC as compared to an appropriate benchmark index. For the period, the total annual management fee rate, including the performance adjustment, was .81% of the Fund's average net assets.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to account size and type of account of the shareholders of OTC and asset-based fees of .05% of average net assets for Class K. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. Prior to January 1, 2008, Fidelity Service Company, Inc. (FSC), also an affiliate of FMR, was the transfer
Annual Report
6. Fees and Other Transactions with Affiliates - continued
Transfer Agent Fees - continued
agent for OTC. For the period, the transfer agent fees for OTC were equivalent to an annual rate of .21% of average net assets.
For the period, the total transfer agent fees paid by each class were as follows:
| Amount |
OTC | $ 17,254,829 |
Class K | 12 |
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $214,576 for the period.
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. The Fund's activity in this program during the period for which loans were outstanding was as follows:
Borrower or Lender | Average Daily Loan Balance | Weighted Average Interest Rate | Interest |
Borrower | $ 12,585,292 | 2.71% | $ 22,739 |
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $4.2 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro rata portion of the line of credit, which amounted to $19,399 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
Annual Report
Notes to Financial Statements - continued
8. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds.
9. Expense Reductions.
FMR voluntarily agreed to reimburse a portion of OTC's operating expenses. During the period, this reimbursement reduced the class' expenses by $12,755.
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 $214,917 for the period. In addition, through arrangements with the Fund's custodian and each class' transfer agent, credits realized as a result of uninvested cash balances were used to reduce the Fund's expenses. During the period, these credits reduced the Fund's custody expenses by $11,530. During the period, credits reduced each class' transfer agent expense as noted in the table below.
| Transfer Agent |
OTC | $ 372,915 |
10. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future
Annual Report
10. Other - continued
claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
In December 2006, the Independent Trustees, with the assistance of independent counsel, completed an investigation regarding gifts, gratuities and business entertainment provided by certain brokers to certain individuals who were employed on FMR's domestic equity trading desk during the period 2002 to 2004. The Independent Trustees and FMR agreed that, despite the absence of proof that the Fidelity mutual funds experienced diminished execution quality as a result of the improper receipt of gifts and business entertainment, the conduct at issue was serious and was worthy of redress. Accordingly, the Independent Trustees requested, and FMR agreed to make, a payment of $42 million plus accrued interest, which equaled approximately $7.3 million, to certain Fidelity mutual funds.
In March 2008, the Trustees approved a method for allocating this payment among the funds and, in total, FMR paid the fund $1,245,658, which is recorded in the accompanying Statement of Operations.
In a related administrative order dated March 5, 2008, the U.S. Securities and Exchange Commission ("SEC") announced a settlement with FMR and FMR Co., Inc. (an affiliate of FMR) involving the SEC's regulatory rules for investment advisers and the improper receipt of gifts, gratuities and business entertainment. Without admitting or denying the SEC's findings, FMR agreed to pay an $8 million civil penalty to the United States Treasury.
11. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
Years ended July 31, | 2008 A | 2007 | 2008 A | 2007 |
OTC |
|
|
|
|
Shares sold | 36,635,212 | 29,892,483 | $ 1,795,996,233 | $ 1,230,037,169 |
Shares redeemed | (69,177,964) | (55,876,175) | (3,366,527,729) | (2,384,936,731) |
Net increase (decrease) | (32,542,752) | (25,983,692) | $(1,570,531,496) | $(1,154,899,562) |
Class K |
|
|
|
|
Shares sold | 2,092 | - | $ 100,000 | $ - |
Net increase (decrease) | 2,092 | - | $ 100,000 | $ - |
A Share transactions for Class K are for the period May 9, 2008 (commencement of sale of shares) to July 31, 2008.
Annual Report
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Securities Fund and Shareholders of Fidelity OTC Portfolio:
We have audited the accompanying statement of assets and liabilities of Fidelity OTC Portfolio (the Fund), a fund of Fidelity Securities Fund, including the schedule of investments, as of July 31, 2008, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of July 31, 2008, by correspondence with the custodians and brokers; where replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Fidelity OTC Portfolio as of July 31, 2008, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and its financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Boston, Massachusetts
September 22, 2008
Annual Report
Trustees and Officers
The Trustees, Member of the Advisory Board, and executive officers of the trust and fund, as applicable, are listed below. The Board of Trustees governs the fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee the fund's activities, review contractual arrangements with companies that provide services to the fund, and review the fund's performance. Except for Edward C. Johnson 3d and James C. Curvey, each of the Trustees oversees 218 funds advised by FMR or an affiliate. Messrs. Johnson and Curvey oversee 377 funds advised by FMR or an affiliate.
The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust. Each Trustee who is not an interested person (as defined in the 1940 Act) (Independent Trustee), shall retire not later than the last day of the calendar year in which his or her 72nd birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board Member hold office without limit in time, except that any officer and Advisory Board Member may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years.
The Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-800-544-8544.
Interested Trustees*:
Correspondence intended for each Trustee who is an interested person may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Edward C. Johnson 3d (78) | |
| Year of Election or Appointment: 1984 Mr. Johnson is Chairman of the Board of Trustees. Mr. Johnson serves as Chief Executive Officer, Chairman, and a Director of FMR LLC; Chairman and a Director of FMR; Chairman and a Director of Fidelity Research & Analysis Company (FRAC); Chairman and a Director of Fidelity Investments Money Management, Inc.; and Chairman and a Director of FMR Co., Inc. In addition, Mr. Johnson serves as Chairman and Director of FIL Limited. Previously, Mr. Johnson served as President of FMR LLC (2006-2007). |
James C. Curvey (73) | |
| Year of Election or Appointment: 2007 Mr. Curvey also serves as Trustee (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2006- |
* Trustees have been determined to be "Interested Trustees" by virtue of, among other things, their affiliation with the trust or various entities under common control with FMR. FMR Corp. merged with and into FMR LLC on October 1, 2007. Any references to FMR LLC for prior periods are deemed to be references to the prior entity.
Independent Trustees:
Correspondence intended for each Independent Trustee (that is, the Trustees other than the Interested Trustees) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.
Name, Age; Principal Occupation | |
Dennis J. Dirks (60) | |
| Year of Election or Appointment: 2005 Prior to his retirement in May 2003, Mr. Dirks was Chief Operating Officer and a member of the Board of The Depository Trust & Clearing Corporation (DTCC) (1999-2003). He also served as President, Chief Operating Officer, and Board member of The Depository Trust Company (DTC) (1999-2003) and President and Board member of the National Securities Clearing Corporation (NSCC) (1999-2003). In addition, Mr. Dirks served as a Trustee and a member of the Finance Committee of Manhattan College (2005-2008), and as Chief Executive Officer and Board member of the Government Securities Clearing Corporation (2001-2003) and Chief Executive Officer and Board member of the Mortgage-Backed Securities Clearing Corporation (2001-2003). Mr. Dirks also serves as a Trustee and a member of the Finance Committee of AHRC of Nassau County (2006-present). |
Alan J. Lacy (54) | |
| Year of Election or Appointment: 2008 Mr. Lacy serves as Senior Adviser (2007-present) of Oak Hill Capital Partners, L.P. (a private equity firm). Mr. Lacy also served as Chief Executive Officer (2000-2005) and Vice Chairman (2005-2006) of Sears Holdings Corporation and Sears, Roebuck and Co. (retail). In addition, Mr. Lacy serves as a member of the Board of Directors of The Western Union Company (global money transfer, 2006-present) and Bristol-Myers Squibb (global pharmaceuticals, 2007-present). Mr. Lacy is a Trustee of the National Parks Conservation Association and The Field Museum of Natural History. |
Ned C. Lautenbach (64) | |
| Year of Election or Appointment: 2000 Mr. Lautenbach is Chairman of the Independent Trustees (2006-present). Mr. Lautenbach is an Advisory Partner of Clayton, Dubilier & Rice, Inc. (private equity investment firm). Previously, Mr. Lautenbach was with the International Business Machines Corporation (IBM) from 1968 until his retirement in 1998. Mr. Lautenbach serves as a Director of Eaton Corporation (diversified industrial) as well as the Philharmonic Center for the Arts in Naples, Florida. He also is a member of the Board of Trustees of Fairfield University (2005-present), as well as a member of the Council on Foreign Relations. Previously, Mr. Lautenbach served as a Director of Sony Corporation (2006-2007). |
Joseph Mauriello (63) | |
| 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 firm, 1965- |
Cornelia M. Small (64) | |
| Year of Election or Appointment: 2005 Ms. Small is a member of the Investment Committee, and Chair (2008-present) and a member of the Board of Trustees of Smith College. Ms. Small also serves on the Investment Committee of the Berkshire Taconic Community Foundation (2008-present). Previously, Ms. Small served as Chairperson of the Investment Committee (2002-2008) of Smith College and as Co-Chair (2000-2003) of the Annual Fund for the Fletcher School of Law and Diplomacy. In addition, she served as Chief Investment Officer, Director of Global Equity Investments, and a member of the Board of Directors of Scudder, Stevens & Clark and Scudder Kemper Investments. |
William S. Stavropoulos (69) | |
| Year of Election or Appointment: 2002 Mr. Stavropoulos is Chairman Emeritus of the Board of Directors of The Dow Chemical Company, where he previously served in numerous senior management positions, including President (1993-2000; 2002- |
David M. Thomas (59) | |
| Year of Election or Appointment: 2008 Previously, Mr. Thomas served as Executive Chairman (2005-2006) and Chairman and Chief Executive Officer (2000-2005) of IMS Health, Inc. (pharmaceutical and healthcare information solutions). In addition, Mr. Thomas serves as a member of the Board of Directors of Fortune Brands, Inc. (consumer products holding company), and Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (57) | |
| Year of Election or Appointment: 2008 Mr. Wiley also serves as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-present). He serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005- |
Correspondence intended for each executive officer and Mr. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Peter S. Lynch (64) | |
| Year of Election or Appointment: 2003 Member of the Advisory Board of Fidelity Securities Fund. Mr. Lynch is Vice Chairman and a Director of FMR, and Vice Chairman (2001- |
Kenneth B. Robins (38) | |
| Year of Election or Appointment: 2008 President and Treasurer of the fund. Mr. Robins also serves as President and Treasurer of Fidelity's Equity and High Income Funds (2008-present) and is an employee of FMR (2004-present). Before joining Fidelity Investments, Mr. Robins worked at KPMG LLP, where he was a partner in KPMG's department of professional practice (2002-2004). |
Walter C. Donovan (46) | |
| Year of Election or Appointment: 2007 Vice President of the fund. Mr. Donovan also serves as Vice President of Fidelity's Equity Funds, President of FMR and FMR Co., Inc., and Executive Vice President of Fidelity Investments Money Management, Inc. (2007-present). Previously, Mr. Donovan served as Executive Vice President of FMR and FMR Co., Inc. (2005-2007) and Senior Vice President of FMR (2003-2005) and FMR Co., Inc. (2004-2005). |
Bruce T. Herring (42) | |
| Year of Election or Appointment: 2006 Vice President of the fund. Mr. Herring also serves as Vice President of certain Equity Funds (2006-present) and Group Chief Investments Officer of FMR. Previously, Mr. Herring served as a portfolio manager for Fidelity U.S. Equity Funds . |
Scott C. Goebel (40) | |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of the fund. Mr. Goebel also serves as Secretary and CLO of other Fidelity funds (2008-present); General Counsel, Secretary, and Senior Vice President of FMR (2008- |
John B. McGinty, Jr. (45) | |
| Year of Election or Appointment: 2008 Assistant Secretary of the fund. Mr. McGinty also serves as Assistant Secretary of Fidelity's other Equity and High Income Funds (2008- |
Holly C. Laurent (54) | |
| Year of Election or Appointment: 2008 Anti-Money Laundering (AML) officer of the fund. Ms. Laurent also serves as AML officer of other Fidelity funds (2008-present) and is an employee of FMR LLC. Previously, Ms. Laurent was Senior Vice President and Head of Legal for Fidelity Business Services India Pvt. Ltd. (2006- |
Christine Reynolds (49) | |
| Year of Election or Appointment: 2008 Chief Financial Officer of the fund. Ms. Reynolds also serves as Chief Financial Officer of other Fidelity funds (2008-present). Ms. Reynolds became President of Fidelity Pricing and Cash Management Services (FPCMS) in August 2008. She served as Chief Operating Officer of FPCMS from 2007 through July 2008. Previously, Ms. Reynolds served as President, Treasurer, and Anti-Money Laundering officer of the Fidelity funds (2004-2007). Before joining Fidelity Investments, Ms. Reynolds worked at PricewaterhouseCoopers LLP (PwC) (1980-2002), where she was an audit partner with PwC's investment management practice. |
Kenneth A. Rathgeber (61) | |
| Year of Election or Appointment: 2004 Chief Compliance Officer of the fund. Mr. Rathgeber also serves as Chief Compliance Officer of Fidelity's Equity and High Income Funds (2004-present). He is Chief Compliance Officer of FMR (2005-present), FMR Co., Inc. (2005-present), Fidelity Management & Research (U.K.) Inc. (2005-present), Fidelity Research & Analysis Company (2005- |
Bryan A. Mehrmann (47) | |
| Year of Election or Appointment: 2005 Deputy Treasurer of the fund. Mr. Mehrmann also serves as Deputy Treasurer of other Fidelity funds (2005-present) and is an employee of FMR. Previously, Mr. Mehrmann served as Vice President of Fidelity Investments Institutional Services Group (FIIS)/Fidelity Investments Institutional Operations Corporation, Inc. (FIIOC) Client Services (1998-2004). |
Adrien E. Deberghes (40) | |
| Year of Election or Appointment: 2008 Deputy Treasurer of the fund. Mr. Deberghes also serves as Deputy Treasurer of Fidelity's Equity and High Income Funds (2008-present) and is an employee of FMR (2008-present). Previously, Mr. Deberghes served as Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005). |
Robert G. Byrnes (41) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of the fund. Mr. Byrnes also serves as Assistant Treasurer of other Fidelity funds (2005-present) and is an employee of FMR (2005-present). Previously, Mr. Byrnes served as Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (2003-2005). Before joining Fidelity Investments, Mr. Byrnes worked at Deutsche Asset Management where he served as Vice President of the Investment Operations Group (2000-2003). |
Peter L. Lydecker (54) | |
| Year of Election or Appointment: 2004 Assistant Treasurer of the fund. Mr. Lydecker also serves as Assistant Treasurer of other Fidelity funds (2004-present) and is an employee of FMR. |
Paul M. Murphy (61) | |
| Year of Election or Appointment: 2007 Assistant Treasurer of the fund. Mr. Murphy also serves as Assistant Treasurer of other Fidelity funds (2007-present) and is an employee of FMR (2007-present). Previously, Mr. Murphy served as Chief Financial Officer of the Fidelity Funds (2005-2006), Vice President and Associate General Counsel of FMR (2007), and Senior Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (1994-2007). |
Gary W. Ryan (49) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of the fund. Mr. Ryan also serves as Assistant Treasurer of other Fidelity funds (2005-present) and is an employee of FMR (2005-present). Previously, Mr. Ryan served as Vice President of Fund Reporting in Fidelity Pricing and Cash Management Services (FPCMS) (1999-2005). |
** FMR Corp. merged with and into FMR LLC on October 1, 2007. Any references to FMR LLC for prior periods are deemed to be references to the prior entity.
Annual Report
Proxy Voting Results
A special meeting of the fund's shareholders was held on May 14, 2008. The results of votes taken among shareholders on the proposals before them are reported below. Each vote reported represents one dollar of net asset value held on the record date for the meeting.
PROPOSAL 1 | ||
To elect a Board of Trustees.A | ||
| # of | % of |
James C. Curvey | ||
Affirmative | 30,242,569,269.49 | 94.915 |
Withheld | 1,620,182,942.38 | 5.085 |
TOTAL | 31,862,752,211.87 | 100.000 |
Dennis J. Dirks | ||
Affirmative | 30,356,248,026.80 | 95.272 |
Withheld | 1,506,504,185.07 | 4.728 |
TOTAL | 31,862,752,211.87 | 100.000 |
Edward C. Johnson 3d | ||
Affirmative | 30,163,300,902.81 | 94.666 |
Withheld | 1,699,451,309.06 | 5.334 |
TOTAL | 31,862,752,211.87 | 100.000 |
Alan J. Lacy | ||
Affirmative | 30,334,439,999.59 | 95.203 |
Withheld | 1,528,312,212.28 | 4.797 |
TOTAL | 31,862,752,211.87 | 100.000 |
Ned C. Lautenbach | ||
Affirmative | 30,317,381,535.59 | 95.150 |
Withheld | 1,545,370,676.28 | 4.850 |
TOTAL | 31,862,752,211.87 | 100.000 |
Joseph Mauriello | ||
Affirmative | 30,340,553,696.88 | 95.223 |
Withheld | 1,522,198,514.99 | 4.777 |
TOTAL | 31,862,752,211.87 | 100.000 |
Cornelia M. Small | ||
Affirmative | 30,337,552,071.15 | 95.213 |
Withheld | 1,525,200,140.72 | 4.787 |
TOTAL | 31,862,752,211.87 | 100.000 |
William S. Stavropoulos | ||
Affirmative | 30,240,356,579.51 | 94.908 |
Withheld | 1,622,395,632.36 | 5.092 |
TOTAL | 31,862,752,211.87 | 100.000 |
| # of | % of |
David M. Thomas | ||
Affirmative | 30,352,029,125.67 | 95.259 |
Withheld | 1,510,723,086.20 | 4.741 |
TOTAL | 31,862,752,211.87 | 100.000 |
Michael E. Wiley | ||
Affirmative | 30,333,540,290.12 | 95.201 |
Withheld | 1,529,211,921.75 | 4.799 |
TOTAL | 31,862,752,211.87 | 100.000 |
PROPOSAL 2 | ||
To amend the Declaration of Trust to reduce the required quorum for future shareholder meetings.A | ||
| # of | % of |
Affirmative | 23,747,670,372.95 | 74.531 |
Against | 5,357,217,831.03 | 16.814 |
Abstain | 1,587,233,084.08 | 4.981 |
Broker | 1,170,630,923.81 | 3.674 |
TOTAL | 31,862,752,211.87 | 100.000 |
A Denotes trust-wide proposal and voting results. |
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees
Fidelity OTC Portfolio
Each year, typically in July, the Board of Trustees, including the Independent Trustees (together, the Board), votes on the renewal of the management contract and sub-advisory agreements (together, the Advisory Contracts) for the fund. The Board, assisted by the advice of fund counsel and Independent Trustees' counsel, requests and considers a broad range of information throughout the year.
The Board meets regularly and, acting directly and through its separate committees, requests and receives information concerning, and considers at each of its meetings factors that are relevant to, its annual consideration of the renewal of the fund's Advisory Contracts, including the services and support provided to the fund and its shareholders. At the time of the renewal, the Board had 12 standing committees, each composed of Independent Trustees with varying backgrounds, to which the Board has assigned specific subject matter responsibilities in order to enhance effective decision-making by the Board. Each committee has a written charter outlining the structure and purposes of the committee. The Board also meets as needed to consider matters specifically related to the Board's annual consideration of the renewal of Advisory Contracts.
At its July 2008 meeting, the Board of Trustees, including the Independent Trustees, unanimously determined to renew the fund's Advisory Contracts. In reaching its determination, the Board considered all factors it believed relevant, including (i) the nature, extent, and quality of the services to be provided to the fund and its shareholders (including the investment performance of the fund); (ii) the competitiveness of the fund's management fee and total expenses; (iii) the total costs of the services to be provided by and the profits to be realized by Fidelity from its relationship with the fund; (iv) the extent to which economies of scale would be realized as the fund grows; and (v) whether fee levels reflect these economies of scale, if any, for the benefit of fund shareholders. The Board also approved amendments to the fund's agreements with foreign sub-advisers Fidelity Management & Research (Japan) Inc. and Fidelity Management & Research (Hong Kong) Limited, as well as amendments to the fund's agreement with Fidelity Management & Research (U.K.) Inc.
In considering whether to renew the Advisory Contracts for the fund, the Board ultimately reached a determination, with the assistance of fund counsel and Independent Trustees' counsel and through the exercise of its business judgment, that the renewal of the Advisory Contracts and the compensation to be received by Fidelity under the management contract is consistent with Fidelity's fiduciary duty under applicable law. The Board's decision to renew the Advisory Contracts was not based on any single factor noted above, but rather was based on a comprehensive consideration of all the information provided to the Board at its meetings throughout the year. The Board, in reaching its determination to renew the Advisory Contracts, is aware that shareholders in the fund have a broad range of investment choices available to them, including a wide choice among mutual funds offered by competitors to Fidelity, and that the fund's shareholders, with the opportunity to review and weigh the disclosure provided by the fund in its prospectus and other public disclosures, have chosen to invest in this fund, managed by Fidelity.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
Nature, Extent, and Quality of Services Provided. The Board considered staffing within the investment adviser, FMR, and the sub-advisers (together, the Investment Advisers), including the backgrounds of the fund's investment personnel and the fund's investment objective and discipline. The Independent Trustees also had discussions with senior management of Fidelity's investment operations and investment groups. The Board considered the structure of the portfolio manager compensation program and whether this structure provides appropriate incentives.
Resources Dedicated to Investment Management and Support Services. The Board reviewed the size, education, and experience of the Investment Advisers' investment staff, their use of technology, and the Investment Advisers' approach to recruiting, training, and retaining portfolio managers and other research, advisory, and management personnel. The Board noted that Fidelity's analysts have access to a variety of technological tools that enable them to perform both fundamental and quantitative analysis and to specialize in various disciplines. The Board considered Fidelity's extensive global research capabilities that enable the Investment Advisers to aggregate data from various sources in an effort to produce positive investment results. The Board also considered that Fidelity's portfolio managers and analysts have access to daily portfolio attribution that allows for monitoring of a fund's portfolio, as well as an electronic communication system that provides immediate real-time access to research concerning issuers and credit enhancers.
Shareholder and Administrative Services. The Board considered (i) the nature, extent, quality, and cost of advisory, administrative, distribution, and shareholder services performed by the Investment Advisers and their affiliates under the Advisory Contracts and under separate agreements covering transfer agency, pricing and bookkeeping, and securities lending services for the fund; (ii) the nature and extent of the Investment Advisers' supervision of third party service providers, principally custodians and subcustodians; and (iii) the resources devoted to, and the record of compliance with, the fund's compliance policies and procedures. The Board also reviewed the allocation of fund brokerage, including allocations to brokers affiliated with the Investment Advisers, the use of brokerage commissions to pay fund expenses, and the use of "soft" commission dollars to pay for research services. The Board further considered that Fidelity voluntarily pays for market data out of its own resources.
The Board noted that the growth of fund assets across the complex allows Fidelity to reinvest in the development of services designed to enhance the value or convenience of the Fidelity funds as investment vehicles. These services include 24-hour access to account information and market information through phone representatives and over the Internet, and investor education materials and asset allocation tools.
Annual Report
Investment in a Large Fund Family. The Board considered the benefits to shareholders of investing in a Fidelity fund, including the benefits of investing in a fund that is part of a large family of funds offering a variety of investment disciplines and providing for a large variety of mutual fund investor services. For example, fund shareholders are offered the privilege of exchanging shares of the fund for shares of other Fidelity funds, as set forth in the fund's prospectus, without paying a sales charge. The Board noted that Fidelity has taken a number of actions over the previous year that benefited particular funds, including (i) dedicating additional resources to investment research and to restructure the investment research teams; (ii) contractually agreeing to reduce the management fees on Fidelity's Institutional Money Market Funds and launching Class IV and Institutional Class of certain of these funds; (iii) reducing the transfer agent fees for the Fidelity Select Portfolios and Investor Class of the VIP funds; and (iv) launching Class K of 29 equity funds as a lower-fee class available to certain employer-sponsored retirement plans.
Investment Performance. The Board considered whether the fund has operated within its investment objective, as well as its record of compliance with its investment restrictions. It also reviewed the fund's absolute investment performance, as well as the fund's relative investment performance measured against a broad-based securities market index over multiple periods. The Board noted that FMR does not believe that a meaningful peer group exists against which to compare the fund's performance. The following charts considered by the Board show, over the one-, three-, and five-year periods ended December 31, 2007, the fund's cumulative total returns and the cumulative total returns of a broad-based securities market index ("benchmark"). (The fund did not offer Class K as of December 31, 2007.)
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
Fidelity OTC Portfolio
The Board stated that the investment performance of the fund compared favorably to its benchmark for all the periods shown.
The Board also considered that the fund's management fee is subject to upward or downward adjustment depending upon whether, and to what extent, the fund's investment performance for the performance period exceeds, or is exceeded by, the record (over the same period) of a Board-approved performance adjustment index. The Board realizes that the performance adjustment provides FMR with a strong economic incentive to seek to achieve superior performance for the fund's shareholders and helps to more closely align the interests of FMR and the fund's shareholders.
The Board considered that FMR has taken steps to refocus and strengthen equity research, equity portfolio management, and compliance.
Based on its review, and giving particular weight to the nature and quality of the resources dedicated by the Investment Advisers to maintain and improve relative performance, the Board concluded that the nature, extent, and quality of the services provided to the fund will benefit the fund's shareholders, particularly in light of the Board's view that the fund's shareholders benefit from investing in a fund that is part of a large family of funds offering a variety of investment disciplines and services.
Competitiveness of Management Fee and Total Fund Expenses. The Board considered the fund's management fee and total expenses compared to "mapped groups" of competitive funds and classes. Fidelity creates "mapped groups" by combining similar Lipper investment objective categories that have comparable management fee characteristics. Combining Lipper investment objective categories aids the Board's management fee and total expense comparisons by broadening the competitive group used for comparison and by reducing the number of universes to which various Fidelity funds are compared. The Board also considered supplemental information about how the fund's management fee and total expenses ranked relative to groups based on Lipper classifications, which take into account a fund's market capitalization and style.
Annual Report
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 16% means that 84% of the funds in the Total Mapped Group had higher management fees than the fund. The "Asset-Size Peer Group" (ASPG) comparison focuses on a fund's standing relative to non-Fidelity funds similar in size to the fund within the Total Mapped Group. The ASPG represents at least 15% of the funds in the Total Mapped Group with comparable asset size and management fee characteristics, subject to a minimum of 50 funds (or all funds in the Total Mapped Group if fewer than 50). Additional information, such as the ASPG quartile in which the fund's management fee ranked and the impact of the fund's performance adjustment, is also included in the chart and considered by the Board.
Fidelity OTC Portfolio
The Board noted that the fund's management fee ranked below the median of its Total Mapped Group and below the median of its ASPG for 2007. The Board also noted the effect of the fund's positive performance adjustment on the fund's management fee ranking. The Board noted that the performance adjustment for each year represents calculations for performance periods that differ from the periods shown in the performance charts above.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
In connection with the renewal of the fund's management contract, the Board also approved non-material amendments to the fund's management contract to clarify certain provisions regarding the calculation of the fund's performance adjustment.
Based on its review, the Board concluded that the fund's management fee was fair and reasonable in light of the services that the fund receives and the other factors considered.
In its review of the fund's total expenses, the Board considered the fund's management fee as well as other fund expenses, such as transfer agent fees, pricing and bookkeeping fees, and custodial, legal, and audit fees. The Board also noted the effects of any waivers and reimbursements on fees and expenses, as well as the impact of the fund's performance adjustment. As part of its review, the Board also considered current and historical total expenses of the fund compared to competitive fund median expenses. The fund is compared to those funds and classes in the Total Mapped Group (used by the Board for management fee comparisons) that have a similar sales load structure.
The Board noted that the fund's total expenses ranked below its competitive median for 2007.
In its review of total expenses, the Board also considered Fidelity fee structures and other information on clients that FMR and its affiliates service in other competitive markets, such as other mutual funds advised or subadvised by FMR or its affiliates, pension plan clients, and other institutional clients.
Based on its review, the Board concluded that the fund's total expenses were reasonable in light of the services that the fund and its shareholders receive and the other factors considered.
Costs of the Services and Profitability. The Board considered the revenues earned and the expenses incurred by Fidelity in conducting the business of developing, marketing, distributing, managing, administering and servicing the fund and its shareholders. The Board also considered the level of Fidelity's profits in respect of all the Fidelity funds.
On an annual basis, FMR presents to the Board Fidelity's profitability for the fund. Fidelity calculates the profitability for each fund, as well as aggregate profitability for groups of Fidelity funds and all Fidelity funds, using a series of detailed revenue and cost allocation methodologies which originate with the audited books and records of Fidelity. The Audit Committee of the Board reviews any significant changes from the prior year's methodologies.
Annual Report
PricewaterhouseCoopers LLP (PwC), independent registered public accounting firm and auditor to Fidelity and certain Fidelity funds, has been engaged annually by the Board as part of the Board's assessment of the results of Fidelity's profitability analysis. PwC's engagement includes the review and assessment of Fidelity's methodologies used in determining the revenues and expenses attributable to Fidelity's mutual fund business, and completion of agreed-upon procedures surrounding the mathematical accuracy of fund profitability and its conformity to allocation methodologies. After considering PwC's reports issued under the engagement and information provided by Fidelity, the Board believes that while other allocation methods may also be reasonable, Fidelity's profitability methodologies are reasonable in all material respects.
The Board has also reviewed Fidelity's non-fund businesses and any fall-out benefits related to the mutual fund business as well as cases where Fidelity's affiliates may benefit from or be related to the fund's business.
The Board considered the costs of the services provided by and the profits realized by Fidelity in connection with the operation of the fund and determined that the amount of profit is a fair entrepreneurial profit for the management of the fund.
Economies of Scale. The Board considered whether there have been economies of scale in respect of the management of the Fidelity funds, whether the Fidelity funds (including the fund) have appropriately benefited from any such economies of scale, and whether there is potential for realization of any further economies of scale. The Board considered the extent to which the fund will benefit from economies of scale through increased services to the fund, through waivers or reimbursements, or through fee or expense reductions.
The Board recognized that the fund's management contract incorporates a "group fee" structure, which provides for lower group fee rates as total fund assets under FMR's management increase, and for higher group fee rates as total fund assets under FMR's management decrease. FMR determines the group fee rates based on a tiered asset "breakpoint" schedule. The Board considered that the group fee is designed to deliver the benefits of economies of scale to fund shareholders when total fund assets increase, even if assets of any particular fund are unchanged or have declined, because some portion of Fidelity's costs are attributable to services provided to all Fidelity funds, and all funds benefit if those costs can be allocated among more assets. The Board concluded that, given the group fee structure, fund shareholders will achieve a certain level of economies of scale as assets under FMR's management increase at the fund complex level, regardless of whether Fidelity achieves any such economies of scale.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
The Board further concluded that any potential economies of scale are being shared between fund shareholders and Fidelity in an appropriate manner.
Additional Information Requested by the Board. In order to develop fully the factual basis for consideration of the Fidelity funds' Advisory Contracts, the Board requested and received additional information on certain topics, including (i) fund performance trends and actions to be taken by FMR to improve certain funds' overall performance; (ii) portfolio manager changes that have occurred during the past year; (iii) Fidelity's fund profitability methodology, the profitability of certain fund service providers, and profitability trends for certain funds; (iv) Fidelity's compensation structure for portfolio managers and key personnel, including its effects on fund profitability and the extent to which portfolio manager compensation is linked to fund performance; (v) Fidelity's fee structures and rationale for recommending different fees among categories of funds; and (vi) Fidelity's rationale for recommending which funds should have a performance adjustment component as part of their management fees.
Based on its evaluation of all of the conclusions noted above, and after considering all material factors, the Board ultimately concluded that the advisory fee structures are fair and reasonable, and that the fund's Advisory Contracts should be renewed.
Annual Report
Managing Your Investments
Fidelity offers several ways to conveniently manage your personal investments via your telephone or PC. You can access your account information, conduct trades and research your investments 24 hours a day.
By Phone
Fidelity Automated Service Telephone provides a single toll-free number to access account balances, positions, quotes and trading. It's easy to navigate the service, and on your first call, the system will help you create a personal identification number (PIN) for security.
(phone_graphic)
Fidelity Automated
Service Telephone (FAST®)
1-800-544-5555
Press
For mutual fund and brokerage trading.
For quotes.*
For account balances and holdings.
To review orders and mutual
fund activity.
To change your PIN.
To speak to a Fidelity representative.
By PC
Fidelity's web site on the Internet provides a wide range of information, including daily financial news, fund performance, interactive planning tools and news about Fidelity products and services.
(computer_graphic)
Fidelity's Web Site
www.fidelity.com
* When you call the quotes line, please remember that a fund's yield and return will vary and, except for money market funds, share price will also vary. This means that you may have a gain or loss when you sell your shares. There is no assurance that money market funds will be able to maintain a stable $1 share price; an investment in a money market fund is not insured or guaranteed by the U.S. government. Total returns are historical and include changes in share price, reinvestment of dividends and capital gains, and the effects of any sales charges.
Annual Report
To Write Fidelity
We'll give your correspondence immediate attention and send you written confirmation upon completion of your request.
(letter_graphic)
Making Changes
To Your Account
(such as changing name, address, bank, etc.)
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0002
(letter_graphic)
For Non-Retirement
Accounts
Buying shares
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
Overnight Express
Fidelity Investments
Attn: Distribution Services
100 Crosby Parkway - KC1H
Covington, KY 41015
Selling shares
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0035
Overnight Express
Fidelity Investments
Attn: Distribution Services
100 Crosby Parkway - KC1H
Covington, KY 41015
General Correspondence
Fidelity Investments
P.O. Box 500
Merrimack, NH 03054-0500
(letter_graphic)
For Retirement
Accounts
Buying shares
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
Selling shares
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0035
Overnight Express
Fidelity Investments
Attn: Distribution Services
100 Crosby Parkway - KC1H
Covington, KY 41015
General Correspondence
Fidelity Investments
P.O. Box 500
Merrimack, NH 03054-0500
Annual Report
To Visit Fidelity
For directions and hours,
please call 1-800-544-9797.
Arizona
7001 West Ray Road
Chandler, AZ
15445 N. Scottsdale Road
Scottsdale, AZ
California
815 East Birch Street
Brea, CA
1411 Chapin Avenue
Burlingame, CA
851 East Hamilton Avenue
Campbell, CA
19200 Von Karman Avenue
Irvine, CA
601 Larkspur Landing Circle
Larkspur, CA
2000 Avenue of the Stars
Los Angeles, CA
27101 Puerta Real
Mission Viejo, CA
73-575 El Paseo
Palm Desert, CA
251 University Avenue
Palo Alto, CA
123 South Lake Avenue
Pasadena, CA
16656 Bernardo Ctr. Drive
Rancho Bernardo, CA
1220 Roseville Parkway
Roseville, CA
1740 Arden Way
Sacramento, CA
7676 Hazard Center Drive
San Diego, CA
11943 El Camino Real
San Diego, CA
8 Montgomery Street
San Francisco, CA
3793 State Street
Santa Barbara, CA
1200 Wilshire Boulevard
Santa Monica, CA
398 West El Camino Real
Sunnyvale, CA
111 South Westlake Blvd
Thousand Oaks, CA
21701 Hawthorne Boulevard
Torrance, CA
2001 North Main Street
Walnut Creek, CA
6326 Canoga Avenue
Woodland Hills, CA
Colorado
281 East Flatiron Circle
Broomfield, CO
1625 Broadway
Denver, CO
9185 Westview Road
Lone Tree, CO
Connecticut
48 West Putnam Avenue
Greenwich, CT
265 Church Street
New Haven, CT
300 Atlantic Street
Stamford, CT
29 South Main Street
West Hartford, CT
Delaware
400 Delaware Avenue
Wilmington, DE
Florida
175 East Altamonte Drive
Altamonte Springs, FL
4400 N. Federal Highway
Boca Raton, FL
121 Alhambra Plaza
Coral Gables, FL
2948 N. Federal Highway
Ft. Lauderdale, FL
4671 Town Center Parkway
Jacksonville, FL
8880 Tamiami Trail, North
Naples, FL
230 Royal Palm Way
Palm Beach, FL
3501 PGA Boulevard
Palm Beach Gardens, FL
3550 Tamiami Trail, South
Sarasota, FL
1502 N. Westshore Blvd.
Tampa, FL
2465 State Road 7
Wellington, FL
Georgia
3445 Peachtree Road, N.E.
Atlanta, GA
1000 Abernathy Road
Atlanta, GA
Illinois
One North LaSalle Street
Chicago, IL
401 North Michigan Avenue
Chicago, IL
One Skokie Valley Road
Highland Park, IL
1415 West 22nd Street
Oak Brook, IL
15105 S LaGrange Road
Orland Park, IL
1572 East Golf Road
Schaumburg, IL
Indiana
4729 East 82nd Street
Indianapolis, IN
8480 Keystone Crossing
Indianapolis, IN
Kansas
5400 College Boulevard
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Maine
Three Canal Plaza
Portland, ME
Maryland
7315 Wisconsin Avenue
Bethesda, MD
610 York Road
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Massachusetts
801 Boylston Street
Boston, MA
155 Congress Street
Boston, MA
300 Granite Street
Braintree, MA
44 Mall Road
Burlington, MA
238 Main Street
Cambridge, MA
200 Endicott Street
Danvers, MA
Fidelity Brokerage Services, Inc., 100 Summer St., Boston, MA 02110 Member NYSE/SIPC
Annual Report
405 Cochituate Road
Framingham, MA
551 Boston Turnpike
Shrewsbury, MA
Michigan
500 E. Eisenhower Pkwy.
Ann Arbor, MI
280 Old N. Woodward Ave.
Birmingham, MI
30200 Northwestern Hwy.
Farmington Hills, MI
43420 Grand River Avenue
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Minnesota
7740 France Avenue South
Edina, MN
8342 3rd Street North
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Missouri
1524 South Lindbergh Blvd.
St. Louis, MO
Nevada
2225 Village Walk Drive
Henderson, NV
New Jersey
501 Route 73 South
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150 Essex Street
Millburn, NJ
35 Morris Street
Morristown, NJ
396 Route 17, North
Paramus, NJ
3518 Route 1 North
Princeton, NJ
530 Broad Street
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New Mexico
2261 Q Street NE
Albuquerque, NM
New York
1130 Franklin Avenue
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37 West Jericho Turnpike
Huntington Station, NY
1271 Avenue of the Americas
New York, NY
980 Madison Avenue
New York, NY
61 Broadway
New York, NY
350 Park Avenue
New York, NY
200 Fifth Avenue
New York, NY
733 Third Avenue
New York, NY
11 Penn Plaza
New York, NY
2070 Broadway
New York, NY
1075 Northern Blvd.
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799 Central Park Avenue
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North Carolina
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Ohio
3805 Edwards Road
Cincinnati, OH
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Oregon
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Pennsylvania
600 West DeKalb Pike
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12001 Perry Highway
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Rhode Island
10 Memorial Boulevard
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Tennessee
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Texas
10000 Research Boulevard
Austin, TX
4001 Northwest Parkway
Dallas, TX
12532 Memorial Drive
Houston, TX
2701 Drexel Drive
Houston, TX
6560 Fannin Street
Houston, TX
1701 Lake Robbins Drive
The Woodlands, TX
6500 N. MacArthur Blvd.
Irving, TX
6005 West Park Boulevard
Plano, TX
14100 San Pedro
San Antonio, TX
1576 East Southlake Blvd.
Southlake, TX
Utah
279 West South Temple
Salt Lake City, UT
Virginia
1861 International Drive
McLean, VA
Washington
10500 NE 8th Street
Bellevue, WA
1518 6th Avenue
Seattle, WA
Washington, DC
1900 K Street, N.W.
Washington, DC
Wisconsin
16020 West Bluemound Road
Brookfield, WI
Annual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Fidelity Research & Analysis Company
Fidelity Management & Research
(U.K.) Inc.
Fidelity Investments Japan Limited
Fidelity International Investments
Advisors
Fidelity International Investments
Advisors (U.K.) Limited
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Service Agents
Fidelity Investments Institutional
Operations Company, Inc.
Boston, MA
Fidelity Service Company, Inc.
Boston, MA
Custodian
The Northern Trust Company
Chicago, IL
OTC-UANN-0908 1.789250.105
Fidelity®
Real Estate Income
Fund
Annual Report
July 31, 2008
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message | Ned Johnson's message to shareholders. | |
Performance | How the fund has done over time. | |
Management's Discussion | The manager's review of fund performance, strategy and outlook. | |
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 |
| |
Proxy Voting Results |
| |
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 (search for "proxy voting guidelines") or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-800-544-8544 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company.
Annual Report
This report and the financial statements contained herein are submitted for the general information of the shareholders of the fund. This report is not authorized for distribution to prospective investors in the fund unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com or http://www.advisor.fidelity.com, as applicable.
NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE
Neither the fund nor Fidelity Distributors Corporation is a bank.
Annual Report
Chairman's Message
(photo_of_Edward_C_Johnson_3d)
Dear Shareholder:
Domestic and international securities markets have struggled thus far in 2008. High-grade fixed-income investments produced modestly positive results, but many stock benchmarks suffered double-digit losses through the first half of this year. Financial markets are always unpredictable, but there are a number of time-tested principles that can put the historical odds in your favor.
One of the basic tenets is to invest for the long term. Over time, riding out the markets' inevitable ups and downs has proven much more effective than selling into panic or chasing the hottest trend. Even missing only a few of the markets' best days can significantly diminish investor returns. Patience also affords the benefits of compounding - of earning interest on additional income or reinvested dividends and capital gains. There are tax advantages and cost benefits to consider as well. The more you sell, the more taxes you pay, and the more you trade, the higher the costs. While staying the course doesn't eliminate risk, it can considerably lessen the effect of short-term declines.
You can further manage your investing risk through diversification. And today, more than ever, geographic diversification should be taken into account. Studies indicate that asset allocation is the single most important determinant of a portfolio's long-term success. The right mix of stocks, bonds and cash - aligned to your particular risk tolerance and investment objective - is very important. Age-appropriate rebalancing is also an essential aspect of asset allocation. For younger investors, an emphasis on equities - which historically have been the best-performing asset class over time - is encouraged. As investors near their specific goal, such as retirement or sending a child to college, consideration may be given to replacing volatile assets (e.g. common stocks) with more-stable fixed investments (bonds or savings plans).
A third investment principle - investing regularly - can help lower the average cost of your purchases. Investing a certain amount of money each month or quarter helps ensure you won't pay for all your shares at market highs. This strategy - known as dollar cost averaging - also reduces unconstructive "emotion" from investing, helping shareholders avoid selling weak performers just prior to an upswing, or chasing a hot performer just before a correction.
We invite you to contact us via the Internet, through our Investor Centers or over the phone. It is our privilege to provide you the information you need to make the investments that are right for you.
Sincerely,
/s/Edward C. Johnson 3d
Edward C. Johnson 3d
Annual Report
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended July 31, 2008 | Past 1 | Past 5 | Life of |
Fidelity Real Estate Income Fund | -8.43% | 4.23% | 5.64% |
A From February 4, 2003.
$10,000 Over Life of Fund
Let's say hypothetically that $10,000 was invested in Fidelity® Real Estate Income Fund on February 4, 2003, when the fund started. The chart shows how the value of your investment would have changed, and also shows how the Standard and Poor's 500SM Index (S&P 500®)performed over the same period.
Annual Report
Management's Discussion of Fund Performance
Comments from Mark Snyderman, Portfolio Manager of Fidelity® Real Estate Income Fund
The 12 months ending July 31, 2008, was dominated by troubles with subprime mortgage loans and the subsequent credit crunch, which spread to nearly every area of the financial markets. Liquidity dried up, as demand for all structured finance securities including commercial mortgage-backed securities (CMBS) waned. As the market became more risk-averse, debt became much more difficult to obtain - a particular negative for the capital-intensive real estate sector. The combination of reduced demand and the more-difficult financing environment resulted in rising credit spreads - - meaning an increase in the amount of income paid to investors to take on added credit risk. Against this backdrop, the U.S. real estate investment trust (REIT) market, as measured by the FTSE NAREIT All REIT index (NAREIT index), fell 5.95%, compared with the drop of 11.09% for the broad U.S. stock market, as measured by the Standard & Poor's 500SM Index. During the same time frame, the Merrill Lynch® U.S. Real Estate Corporate Bond Index - a market-capitalization-weighted index that measures the performance of investment-grade public debt of corporate issuers in the domestic real estate sector - declined 1.59%, while the Lehman Brothers® U.S. Aggregate Index returned 6.15%.
For the year ending July 31, 2008, the fund lost 8.43%. That compared unfavorably with the Fidelity Real Estate Income Composite Index - a 40/40/20 blend of the Morgan Stanley® REIT Preferred Index, the Merrill Lynch U.S. Real Estate Corporate Bond Index and the NAREIT index, respectively - which lost 5.08% during the same time frame. The fund did, however, beat the S&P 500®. In a very challenging environment, the fund was hurt by most of the asset types in which I invest. My allocation to high-yield and investment-grade CMBS was a big negative, as all structured finance security spreads widened considerably. The fund's preferred stock holdings also generally did poorly. On the plus side, my common stock holdings were modest positives, as the fund benefited from its focus on health care property companies and other relatively conservative real estate stocks. Investment-grade bonds, benefiting from their generally higher credit quality, also helped performance. The fund's biggest negative at the issuer level was homebuilder Kimball Hill, while Annaly Capital Management, an agency mortgage-owning REIT, added to results.
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 redemption fees, 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 (February 1, 2008 to July 31, 2008).
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.
Annual Report
Shareholder Expense Example - continued
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Beginning | Ending | Expenses Paid |
Actual | $ 1,000.00 | $ 938.00 | $ 4.63 |
Hypothetical (5% return per year before expenses) | $ 1,000.00 | $ 1,020.09 | $ 4.82 |
* Expenses are equal to the Fund's annualized expense ratio of .96%; multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
Annual Report
Investment Changes (Unaudited)
Top Five Stocks as of July 31, 2008 | ||
| % of fund's | % of fund's net assets |
MFA Mortgage Investments, Inc. | 2.2 | 1.2 |
Annaly Capital Management, Inc. | 1.8 | 3.0 |
MFA Mortgage Investments, Inc. Series A, 8.50% | 1.4 | 1.6 |
Anworth Mortgage Asset Corp. Series A, 8.625% | 1.2 | 1.3 |
Ventas, Inc. | 1.1 | 0.7 |
| 7.7 | |
Top 5 Bonds as of July 31, 2008 | ||
| % of fund's | % of fund's net assets |
Ventas Realty LP 9% 5/1/12 | 1.5 | 1.4 |
Senior Housing Properties Trust 8.625% 1/15/12 | 1.3 | 1.5 |
iStar Financial, Inc. 5.8% 3/15/11 | 1.0 | 0.0 |
Health Care Property Investors, Inc. 6.3% 9/15/16 | 1.0 | 1.0 |
Omega Healthcare Investors, Inc. 7% 4/1/14 | 1.0 | 0.9 |
| 5.8 |
Asset Allocation (% of fund's net assets) | |||||||
As of July 31, 2008 * | As of January 31, 2008 ** | ||||||
Common Stocks 19.7% |
| Common Stocks 17.9% |
| ||||
Preferred Stocks 16.3% |
| Preferred Stocks 18.1% |
| ||||
Bonds 51.6% |
| Bonds 50.7% |
| ||||
Convertible |
| Convertible |
| ||||
Other Investments 2.4% |
| Other Investments 3.8% |
| ||||
Short-Term |
| Short-Term |
| ||||
* Foreign investments | 4.9% |
| ** Foreign investments | 5.1% |
|
Annual Report
Investments July 31, 2008
Showing Percentage of Net Assets
Common Stocks - 19.7% | |||
Shares | Value | ||
CONSUMER DISCRETIONARY - 0.2% | |||
Hotels, Restaurants & Leisure - 0.2% | |||
Red Lion Hotels Corp. (a) | 59,270 | $ 501,424 | |
Starwood Hotels & Resorts Worldwide, Inc. | 9,880 | 338,785 | |
| 840,209 | ||
FINANCIALS - 18.1% | |||
Capital Markets - 0.1% | |||
W.P. Carey & Co. LLC | 14,600 | 428,656 | |
Real Estate Investment Trusts - 17.8% | |||
Acadia Realty Trust (SBI) | 92,000 | 2,087,480 | |
Alexandria Real Estate Equities, Inc. | 29,200 | 3,015,192 | |
AMB Property Corp. (SBI) | 48,500 | 2,374,560 | |
Annaly Capital Management, Inc. | 483,000 | 7,278,810 | |
Anworth Mortgage Asset Corp. | 101,400 | 603,330 | |
Apartment Investment & Management Co. Class A | 33,800 | 1,154,946 | |
AvalonBay Communities, Inc. | 26,900 | 2,682,199 | |
Boston Properties, Inc. | 11,300 | 1,086,947 | |
CapitalSource, Inc. | 48,600 | 564,732 | |
CapLease, Inc. | 199,000 | 1,556,180 | |
Cedar Shopping Centers, Inc. | 23,800 | 303,688 | |
Corporate Office Properties Trust (SBI) | 16,500 | 641,520 | |
Cypress Sharpridge Investments, Inc. (e) | 146,458 | 2,284,745 | |
Cypress Sharpridge Investments, Inc. warrants 4/30/11 (a)(e) | 40,000 | 0 | |
DCT Industrial Trust, Inc. | 17,800 | 150,766 | |
Developers Diversified Realty Corp. | 42,300 | 1,351,908 | |
DiamondRock Hospitality Co. | 25,700 | 236,954 | |
Equity Lifestyle Properties, Inc. | 38,030 | 1,825,820 | |
Equity Residential (SBI) | 43,900 | 1,895,163 | |
Federal Realty Investment Trust (SBI) | 23,600 | 1,713,596 | |
Franklin Street Properties Corp. | 2,700 | 33,129 | |
General Growth Properties, Inc. | 61,940 | 1,697,775 | |
Hatteras Financial Corp. | 16,600 | 380,970 | |
HCP, Inc. | 109,000 | 3,931,630 | |
Highwoods Properties, Inc. (SBI) | 42,000 | 1,533,000 | |
Host Hotels & Resorts, Inc. | 94,449 | 1,238,226 | |
Inland Real Estate Corp. | 107,900 | 1,613,105 | |
iStar Financial, Inc. | 42,500 | 348,925 | |
Kilroy Realty Corp. | 12,700 | 581,787 | |
Kimco Realty Corp. | 32,600 | 1,150,454 | |
LaSalle Hotel Properties (SBI) | 48,100 | 1,092,351 | |
LTC Properties, Inc. | 10,100 | 295,223 | |
MFA Mortgage Investments, Inc. | 1,320,881 | 8,519,679 | |
Common Stocks - continued | |||
Shares | Value | ||
FINANCIALS - continued | |||
Real Estate Investment Trusts - continued | |||
National Retail Properties, Inc. | 41,800 | $ 883,652 | |
Nationwide Health Properties, Inc. | 60,300 | 2,237,733 | |
Potlatch Corp. | 2,200 | 102,454 | |
ProLogis Trust | 24,166 | 1,181,234 | |
Simon Property Group, Inc. | 12,604 | 1,167,509 | |
UDR, Inc. | 101,800 | 2,599,972 | |
Ventas, Inc. | 100,900 | 4,526,374 | |
Vornado Realty Trust | 20,200 | 1,920,414 | |
| 69,844,132 | ||
Real Estate Management & Development - 0.2% | |||
Meruelo Maddux Properties, Inc. (a) | 421,634 | 813,754 | |
TOTAL FINANCIALS | 71,086,542 | ||
HEALTH CARE - 1.4% | |||
Health Care Providers & Services - 1.4% | |||
Brookdale Senior Living, Inc. | 76,500 | 1,167,390 | |
Capital Senior Living Corp. (a) | 108,000 | 749,520 | |
Emeritus Corp. (a) | 136,200 | 2,294,970 | |
Sun Healthcare Group, Inc. (a) | 91,000 | 1,300,390 | |
| 5,512,270 | ||
TOTAL COMMON STOCKS (Cost $75,393,570) | 77,439,021 | ||
Preferred Stocks - 16.7% | |||
|
|
|
|
Convertible Preferred Stocks - 0.4% | |||
FINANCIALS - 0.4% | |||
Real Estate Investment Trusts - 0.4% | |||
HRPT Properties Trust 6.50% | 80,000 | 1,350,080 | |
Lexington Corporate Properties Trust Series C 6.50% | 7,800 | 277,290 | |
| 1,627,370 | ||
Nonconvertible Preferred Stocks - 16.3% | |||
FINANCIALS - 16.3% | |||
Diversified Financial Services - 0.6% | |||
DRA CRT Acquisition Corp. Series A, 8.50% | 25,000 | 326,250 | |
Preferred Stocks - continued | |||
Shares | Value | ||
Nonconvertible Preferred Stocks - continued | |||
FINANCIALS - continued | |||
Diversified Financial Services - continued | |||
Red Lion Hotels Capital Trust 9.50% | 77,750 | $ 1,789,028 | |
W2007 Grace Acquisition I, Inc. Series B, 8.75% | 35,300 | 261,442 | |
| 2,376,720 | ||
Insurance - 0.3% | |||
Hilltop Holdings, Inc. Series A, 8.25% | 74,805 | 1,346,490 | |
Real Estate Investment Trusts - 14.7% | |||
Alexandria Real Estate Equities, Inc. Series C, 8.375% | 67,000 | 1,636,810 | |
American Home Mtg Investment Corp.: | |||
Series A, 9.375% (c) | 120,300 | 1,805 | |
Series B, 9.25% (c) | 124,100 | 25 | |
Annaly Capital Management, Inc. Series A, 7.875% | 182,900 | 3,786,030 | |
Anworth Mortgage Asset Corp. Series A, 8.625% | 229,327 | 4,701,204 | |
Apartment Investment & Management Co.: | |||
Series G, 9.375% | 66,600 | 1,601,730 | |
Series T, 8.00% | 57,500 | 1,289,725 | |
Ashford Hospitality Trust, Inc. Series A, 8.55% | 85,000 | 1,258,000 | |
AvalonBay Communities, Inc. Series H, 8.70% | 1,200 | 30,060 | |
Cedar Shopping Centers, Inc. 8.875% | 66,000 | 1,491,600 | |
CenterPoint Properties Trust Series D, 5.377% | 3,575 | 2,502,500 | |
Colonial Properties Trust (depositary shares) Series D, 8.125% | 39,000 | 897,000 | |
Cousins Properties, Inc. Series A, 7.75% | 71,700 | 1,404,603 | |
Developers Diversified Realty Corp. (depositary shares) | 25,100 | 552,200 | |
Digital Realty Trust, Inc. Series A, 8.50% | 75,000 | 1,687,500 | |
Duke Realty LP 8.375% | 60,000 | 1,410,000 | |
Eagle Hospitality Properties Trust, Inc. Series A, 8.25% | 24,000 | 192,000 | |
Glimcher Realty Trust Series F, 8.75% | 27,000 | 396,900 | |
Gramercy Capital Corp. Series A, 8.125% | 10,800 | 151,200 | |
HomeBanc Mortgage Corp. Series A, 10.00% (c) | 104,685 | 523 | |
Hospitality Properties Trust: | |||
Series B, 8.875% | 77,975 | 1,658,528 | |
Series C, 7.00% | 79,000 | 1,278,220 | |
Host Hotels & Resorts, Inc. Series E, 8.875% | 45,200 | 1,096,100 | |
HRPT Properties Trust Series B, 8.75% | 23,961 | 560,687 | |
Innkeepers USA Trust Series C, 8.00% | 62,400 | 624,000 | |
Kimco Realty Corp. Series G, 7.75% | 73,500 | 1,704,465 | |
LaSalle Hotel Properties: | |||
Series B, 8.375% | 21,500 | 456,875 | |
Series E, 8.00% | 19,950 | 384,038 | |
Preferred Stocks - continued | |||
Shares | Value | ||
Nonconvertible Preferred Stocks - continued | |||
FINANCIALS - continued | |||
Real Estate Investment Trusts - continued | |||
LaSalle Hotel Properties: - continued | |||
Series G, 7.25% | 11,060 | $ 188,131 | |
LBA Realty Fund II: | |||
Series A, 8.75% (e) | 69,000 | 2,622,000 | |
Series B, 7.625% | 31,240 | 515,460 | |
Lexington Corporate Properties Trust Series B, 8.05% | 29,000 | 517,650 | |
Lexington Realty Trust 7.55% | 23,800 | 395,080 | |
LTC Properties, Inc. Series F, 8.00% | 56,800 | 1,320,600 | |
MFA Mortgage Investments, Inc. Series A, 8.50% | 274,400 | 5,350,800 | |
Mid-America Apartment Communities, Inc. Series H, 8.30% | 42,800 | 1,017,784 | |
Newcastle Investment Corp.: | |||
Series B, 9.75% | 199,700 | 2,196,700 | |
Series D, 8.375% | 51,300 | 481,194 | |
Omega Healthcare Investors, Inc. Series D, 8.375% | 64,800 | 1,496,880 | |
ProLogis Trust Series C, 8.54% | 6,478 | 319,689 | |
PS Business Parks, Inc.: | |||
(depositary shares) Series L, 7.60% | 5,890 | 120,863 | |
Series P, 6.70% | 35,000 | 642,600 | |
Public Storage: | |||
Series I, 7.25% | 10,300 | 226,600 | |
Series K, 7.25% | 20,000 | 439,800 | |
Realty Income Corp.: | |||
6.75% | 600 | 12,744 | |
8.25% | 33,057 | 829,731 | |
Regency Centers Corp. 7.25% | 10,000 | 206,500 | |
Saul Centers, Inc. 8.00% | 98,400 | 2,386,200 | |
Simon Property Group, Inc. Series J, 8.375% | 2,900 | 165,387 | |
Strategic Hotel & Resorts, Inc. 8.50% (e) | 119,500 | 1,553,500 | |
Sunstone Hotel Investors, Inc. Series A, 8.00% | 20,000 | 335,200 | |
Weingarten Realty Investors (SBI) Series F, 6.50% | 81,050 | 1,588,580 | |
| 57,684,001 | ||
Thrifts & Mortgage Finance - 0.7% | |||
Fannie Mae Series S, 8.25% | 56,836 | 954,276 | |
Preferred Stocks - continued | |||
Shares | Value | ||
Nonconvertible Preferred Stocks - continued | |||
FINANCIALS - continued | |||
Thrifts & Mortgage Finance - continued | |||
Freddie Mac Series Z, 8.375% | 54,169 | $ 918,165 | |
MFH Financial Trust I 9.50% (e) | 22,660 | 883,740 | |
| 2,756,181 | ||
TOTAL FINANCIALS | 64,163,392 | ||
TOTAL PREFERRED STOCKS (Cost $95,209,629) | 65,790,762 |
Corporate Bonds - 35.1% | ||||
| Principal Amount (d) |
| ||
Convertible Bonds - 3.5% | ||||
FINANCIALS - 3.5% | ||||
Real Estate Investment Trusts - 3.0% | ||||
Anthracite Capital, Inc.: | ||||
11.75% 9/1/27 (e) | $ 500,000 | 405,350 | ||
11.75% 9/1/27 | 300,000 | 243,210 | ||
BioMed Realty LP 4.5% 10/1/26 (e) | 1,000,000 | 904,900 | ||
Brandywine Operating Partnership LP 3.875% 10/15/26 | 1,000,000 | 877,485 | ||
CapLease, Inc. 7.5% 10/1/27 (e) | 4,180,000 | 3,583,514 | ||
Hospitality Properties Trust 3.8% 3/15/27 | 1,500,000 | 1,235,700 | ||
Lexington Master Ltd. Partnership 5.45% 1/15/27 (e) | 1,500,000 | 1,316,250 | ||
MPT Operating Partnership LP 9.25% 4/1/13 (e) | 1,000,000 | 1,024,120 | ||
PREIT Associates LP 4% 6/1/12 (e) | 1,000,000 | 711,560 | ||
ProLogis Trust 1.875% 11/15/37 | 500,000 | 408,715 | ||
SL Green Realty Corp. 3% 3/30/27 (e) | 500,000 | 401,712 | ||
Washington (REIT) 3.875% 9/15/26 | 750,000 | 683,025 | ||
| 11,795,541 | |||
Real Estate Management & Development - 0.5% | ||||
First Potomac Realty Investment LP 4% 12/15/11 (e) | 1,000,000 | 830,800 | ||
Kilroy Realty LP 3.25% 4/15/12 (e) | 1,530,000 | 1,219,869 | ||
| 2,050,669 | |||
TOTAL FINANCIALS | 13,846,210 | |||
Corporate Bonds - continued | ||||
| Principal Amount (d) | Value | ||
Nonconvertible Bonds - 31.6% | ||||
CONSUMER DISCRETIONARY - 5.7% | ||||
Hotels, Restaurants & Leisure - 0.7% | ||||
Host Marriott LP 7% 8/15/12 | $ 2,000,000 | $ 1,865,000 | ||
Times Square Hotel Trust 8.528% 8/1/26 (e) | 890,311 | 890,311 | ||
| 2,755,311 | |||
Household Durables - 5.0% | ||||
Beazer Homes USA, Inc.: | ||||
8.125% 6/15/16 | 1,000,000 | 705,000 | ||
8.375% 4/15/12 | 1,000,000 | 765,000 | ||
D.R. Horton, Inc. 4.875% 1/15/10 | 1,000,000 | 970,000 | ||
K. Hovnanian Enterprises, Inc.: | ||||
6% 1/15/10 | 420,000 | 359,100 | ||
6.25% 1/15/15 | 250,000 | 151,250 | ||
6.25% 1/15/16 | 1,000,000 | 630,000 | ||
7.5% 5/15/16 | 1,000,000 | 615,000 | ||
7.75% 5/15/13 | 4,000,000 | 2,690,000 | ||
KB Home: | ||||
5.875% 1/15/15 | 2,000,000 | 1,640,000 | ||
6.25% 6/15/15 | 3,500,000 | 2,913,750 | ||
Kimball Hill, Inc. 10.5% 12/15/12 (c) | 4,625,000 | 92,500 | ||
Lennar Corp.: | ||||
5.5% 9/1/14 | 1,000,000 | 715,000 | ||
5.95% 10/17/11 | 1,000,000 | 840,000 | ||
M/I Homes, Inc. 6.875% 4/1/12 | 2,150,000 | 1,849,000 | ||
Meritage Homes Corp. 6.25% 3/15/15 | 2,500,000 | 1,906,250 | ||
Stanley-Martin Communities LLC 9.75% 8/15/15 | 4,620,000 | 1,848,000 | ||
Toll Brothers, Inc. 8.25% 2/1/11 | 1,000,000 | 960,000 | ||
| 19,649,850 | |||
TOTAL CONSUMER DISCRETIONARY | 22,405,161 | |||
CONSUMER STAPLES - 0.4% | ||||
Food & Staples Retailing - 0.4% | ||||
Ahold Lease Series 2001 A1 pass thru trust certificates 7.82% 1/2/20 | 1,370,227 | 1,431,887 | ||
FINANCIALS - 24.9% | ||||
Real Estate Investment Trusts - 21.1% | ||||
AMB Property LP 6.3% 6/1/13 | 1,000,000 | 997,311 | ||
AvalonBay Communities, Inc. 5.5% 1/15/12 | 1,000,000 | 987,765 | ||
Corporate Bonds - continued | ||||
| Principal Amount (d) | Value | ||
Nonconvertible Bonds - continued | ||||
FINANCIALS - continued | ||||
Real Estate Investment Trusts - continued | ||||
Brandywine Operating Partnership LP: | ||||
4.5% 11/1/09 | $ 1,000,000 | $ 966,692 | ||
5.75% 4/1/12 | 1,000,000 | 937,621 | ||
BRE Properties, Inc. 5.75% 9/1/09 | 1,800,000 | 1,795,777 | ||
Camden Property Trust: | ||||
4.375% 1/15/10 | 2,370,000 | 2,314,028 | ||
4.7% 7/15/09 | 500,000 | 493,455 | ||
Colonial Properties Trust 6.875% 8/15/12 | 1,000,000 | 990,349 | ||
Colonial Realty LP 6.05% 9/1/16 | 1,000,000 | 873,244 | ||
Commercial Net Lease Realty, Inc.: | ||||
6.15% 12/15/15 | 100,000 | 86,030 | ||
6.25% 6/15/14 | 500,000 | 480,119 | ||
Developers Diversified Realty Corp.: | ||||
4.625% 8/1/10 | 500,000 | 481,509 | ||
5% 5/3/10 | 1,000,000 | 972,219 | ||
7.5% 7/15/18 | 200,000 | 190,127 | ||
Duke Realty LP: | ||||
5.25% 1/15/10 | 200,000 | 197,981 | ||
5.625% 8/15/11 | 560,000 | 543,149 | ||
6.8% 2/12/09 | 1,500,000 | 1,508,211 | ||
Health Care Property Investors, Inc.: | ||||
6% 3/1/15 | 500,000 | 441,987 | ||
6% 1/30/17 | 1,000,000 | 825,602 | ||
6.3% 9/15/16 | 4,500,000 | 3,820,851 | ||
Health Care REIT, Inc.: | ||||
6% 11/15/13 | 1,000,000 | 959,554 | ||
6.2% 6/1/16 | 750,000 | 688,850 | ||
8% 9/12/12 | 2,450,000 | 2,474,988 | ||
Healthcare Realty Trust, Inc. 8.125% 5/1/11 | 2,290,000 | 2,359,996 | ||
Highwoods/Forsyth LP 5.85% 3/15/17 | 1,000,000 | 830,000 | ||
HMB Capital Trust V 6.37% 12/15/36 (c)(e)(f) | 2,530,000 | 25,300 | ||
Hospitality Properties Trust: | ||||
5.625% 3/15/17 | 915,000 | 700,213 | ||
6.75% 2/15/13 | 610,000 | 567,462 | ||
Host Hotels & Resorts LP 6.875% 11/1/14 | 500,000 | 445,000 | ||
HRPT Properties Trust: | ||||
3.3763% 3/16/11 (f) | 787,000 | 750,726 | ||
6.5% 1/15/13 | 200,000 | 189,153 | ||
Corporate Bonds - continued | ||||
| Principal Amount (d) | Value | ||
Nonconvertible Bonds - continued | ||||
FINANCIALS - continued | ||||
Real Estate Investment Trusts - continued | ||||
iStar Financial, Inc.: | ||||
3.0269% 3/9/10 (f) | $ 1,500,000 | $ 1,177,643 | ||
3.1163% 9/15/09 (f) | 1,000,000 | 846,392 | ||
5.125% 4/1/11 | 2,500,000 | 1,912,500 | ||
5.375% 4/15/10 | 2,000,000 | 1,600,000 | ||
5.8% 3/15/11 | 4,950,000 | 3,861,000 | ||
Kimco Realty Corp. 6.875% 2/10/09 | 1,000,000 | 1,004,845 | ||
Mack-Cali Realty LP 7.25% 3/15/09 | 180,000 | 181,827 | ||
Nationwide Health Properties, Inc.: | ||||
6.25% 2/1/13 | 1,000,000 | 986,008 | ||
6.5% 7/15/11 | 2,000,000 | 2,029,130 | ||
8.25% 7/1/12 | 1,300,000 | 1,366,183 | ||
Omega Healthcare Investors, Inc. 7% 4/1/14 | 3,970,000 | 3,801,275 | ||
Reckson Operating Partnership LP 7.75% 3/15/09 | 1,600,000 | 1,584,261 | ||
Rouse Co.: | ||||
5.375% 11/26/13 | 3,200,000 | 2,460,598 | ||
7.2% 9/15/12 | 3,920,000 | 3,399,538 | ||
Rouse Co. LP/TRC, Inc. 6.75% 5/1/13 (e) | 2,250,000 | 1,867,500 | ||
Senior Housing Properties Trust: | ||||
7.875% 4/15/15 | 355,000 | 353,225 | ||
8.625% 1/15/12 | 5,050,000 | 5,151,000 | ||
Shurgard Storage Centers, Inc.: | ||||
5.875% 3/15/13 | 1,000,000 | 978,367 | ||
7.75% 2/22/11 | 500,000 | 531,104 | ||
Simon Property Group LP 5.375% 8/28/08 | 550,000 | 550,065 | ||
Simon Property Group, Inc. 3.75% 1/30/09 | 500,000 | 495,146 | ||
UDR, Inc. 5.5% 4/1/14 | 500,000 | 466,955 | ||
United Dominion Realty Trust, Inc.: | ||||
5% 1/15/12 | 1,000,000 | 959,241 | ||
5.13% 1/15/14 | 500,000 | 462,134 | ||
6.05% 6/1/13 | 2,500,000 | 2,440,470 | ||
6.5% 6/15/09 | 325,000 | 328,872 | ||
Ventas Realty LP: | ||||
6.625% 10/15/14 | 2,920,000 | 2,766,700 | ||
6.75% 6/1/10 | 2,100,000 | 2,089,500 | ||
8.75% 5/1/09 | 800,000 | 802,000 | ||
Corporate Bonds - continued | ||||
| Principal Amount (d) | Value | ||
Nonconvertible Bonds - continued | ||||
FINANCIALS - continued | ||||
Real Estate Investment Trusts - continued | ||||
Ventas Realty LP: - continued | ||||
9% 5/1/12 | $ 5,511,000 | $ 5,807,216 | ||
Vornado Realty LP 4.5% 8/15/09 | 1,000,000 | 970,962 | ||
| 83,126,926 | |||
Real Estate Management & Development - 2.9% | ||||
American Real Estate Partners/American Real Estate Finance Corp. 8.125% 6/1/12 | 2,190,000 | 2,091,450 | ||
ERP Operating LP 5.2% 4/1/13 | 1,000,000 | 942,147 | ||
First Industrial LP: | ||||
5.25% 6/15/09 | 1,000,000 | 992,492 | ||
7.375% 3/15/11 | 2,507,000 | 2,518,968 | ||
Post Apartment Homes LP: | ||||
5.125% 10/12/11 | 2,500,000 | 2,376,430 | ||
7.7% 12/20/10 | 2,500,000 | 2,550,905 | ||
| 11,472,392 | |||
Thrifts & Mortgage Finance - 0.9% | ||||
Wrightwood Capital LLC 9% 6/1/14 (e) | 4,000,000 | 3,380,000 | ||
TOTAL FINANCIALS | 97,979,318 | |||
HEALTH CARE - 0.6% | ||||
Health Care Providers & Services - 0.6% | ||||
Skilled Healthcare Group, Inc. 11% 1/15/14 | 500,000 | 527,500 | ||
Sun Healthcare Group, Inc. 9.125% 4/15/15 | 1,650,000 | 1,641,750 | ||
| 2,169,250 | |||
TOTAL NONCONVERTIBLE BONDS | 123,985,616 | |||
TOTAL CORPORATE BONDS (Cost $158,112,908) | 137,831,826 | |||
Asset-Backed Securities - 5.0% | ||||
| ||||
American Tower Trust I Series 2007-1A Class D, 5.9568% 4/15/37 (e) | 4,000,000 | 3,340,080 | ||
Ameriquest Mortgage Securities, Inc. Series 2004-R9 Class M9, 4.9613% 10/25/34 (e)(f) | 426,223 | 14,918 | ||
Asset-Backed Securities - continued | ||||
| Principal Amount (d) | Value | ||
Anthracite CDO II Ltd. Series 2002-2A Class F, 7.6% 12/24/37 (e) | $ 2,260,000 | $ 1,943,600 | ||
Capital Trust RE CDO Ltd. Series 2005-1A Class D, 4.2863% 3/20/50 (e)(f) | 2,250,000 | 1,307,700 | ||
CapitalSource Real Estate Loan Trust Series 2006-1A Class A2A, 3.0675% 1/20/37 (e)(f) | 1,500,000 | 990,000 | ||
Concord Real Estate CDO Ltd./LLC Series 2006-1A Class F, 4.2113% 12/25/46 (e)(f) | 750,000 | 210,000 | ||
Conseco Finance Securitizations Corp. Series 2002-2 Class M2, 9.163% 3/1/33 | 500,000 | 359,772 | ||
Crest Clarendon Street Ltd./Crest Clarendon Corp. Series 2002-1A: | ||||
Class B1, 6.065% 12/28/35 (e) | 1,570,000 | 1,334,500 | ||
Class B2, 4.0213% 12/28/35 (e)(f) | 1,575,000 | 1,323,000 | ||
Class D, 9% 12/28/35 (e) | 500,000 | 440,007 | ||
Crest Dartmouth Street Ltd./Crest Dartmouth Street Corp. Series 2003-1A Class D, 9% 6/28/38 (e) | 850,000 | 722,500 | ||
Crown Castle Towers LLC/Crown Atlantic Holdings Sub LLC/Crown Communication, Inc. Series 2005-1 | 2,000,000 | 1,889,900 | ||
Fairfield Street Solar Corp. Series 2004-1A Class E1, 6.0106% 11/28/39 (e)(f) | 550,000 | 198,530 | ||
Green Tree Financial Corp. Series 1996-4 Class M1, 7.75% 6/15/27 | 1,788,179 | 1,412,661 | ||
GSR Mortgage Loan Trust Series 2005-HE3 Class B3, 4.9613% 6/25/35 (f)(h) | 1,259,000 | 218,613 | ||
Guggenheim Structured Real Estate Funding Ltd./Guggenheim Structured Real Estate Funding LLC Series 2005-2A: | ||||
Class D, 4.0113% 8/26/30 (e)(f) | 735,000 | 399,032 | ||
Class E, 4.4613% 8/26/30 (e)(f) | 1,420,000 | 710,710 | ||
Lehman ABS Manufactured Housing Contract Trust | 1,500,000 | 420,000 | ||
Merit Securities Corp. Series 13 Class M1, 8.63% 12/28/33 | 1,923,000 | 1,519,170 | ||
N-Star Real Estate CDO Ltd. Series 1A Class C1B, 7.696% 8/28/38 (e) | 883,000 | 734,311 | ||
Park Place Securities, Inc. Series 2004-WHQ2 | 739,124 | 15,706 | ||
Asset-Backed Securities - continued | ||||
| Principal Amount (d) | Value | ||
Taberna Preferred Funding III Ltd. Series 2005-3A | $ 3,102,115 | $ 31,021 | ||
Wrightwood Capital Real Estate CDO Ltd. | 250,000 | 75,000 | ||
TOTAL ASSET-BACKED SECURITIES (Cost $28,243,953) | 19,610,731 | |||
Collateralized Mortgage Obligations - 4.2% | ||||
| ||||
Private Sponsor - 4.1% | ||||
Countrywide Home Loans, Inc.: | ||||
Series 2002-38 Class B3, 5% 2/25/18 (e) | 171,817 | 135,620 | ||
Series 2002-R2 Class 2B3, 6.1101% 7/25/33 (e)(f) | 255,355 | 93,742 | ||
Series 2003-40 Class B3, 4.5% 10/25/18 (e) | 222,949 | 111,475 | ||
Series 2003-R2 Class B3, 5.5% 5/25/43 (e) | 554,695 | 151,385 | ||
Series 2003-R3: | ||||
Class B2, 5.5% 11/25/33 (e) | 1,761,405 | 508,156 | ||
Class B3, 5.5% 11/25/33 (e) | 527,421 | 111,953 | ||
Series 2004-R1 Class 1B3, 5.5% 11/25/34 (e)(f) | 574,065 | 72,196 | ||
Diversified REIT Trust: | ||||
Series 1999-1A Class H, 6.78% 3/18/11 (e)(f) | 1,785,000 | 1,779,325 | ||
Series 2000-1A: | ||||
Class F, 6.971% 3/8/10 (e) | 1,512,000 | 1,450,220 | ||
Class G, 6.971% 3/8/10 (e) | 1,720,000 | 1,646,470 | ||
Merrill Lynch Floating Trust floater Series 2006-1 | 2,449,089 | 2,118,462 | ||
Merrill Lynch Mortgage Trust Series 2002-MW1 Class E, 6.219% 7/12/34 (e) | 1,465,000 | 1,390,169 | ||
RESI Finance LP/RESI Finance DE Corp. floater: | ||||
Series 2003-B Class B9, 14.4088% 7/10/35 (e)(f) | 894,537 | 906,443 | ||
Series 2004-C Class B5, 3.8088% 9/10/36 (e)(f) | 376,802 | 266,293 | ||
Series 2005-A Class B6, 4.4588% 3/10/37 (e)(f) | 1,896,781 | 1,082,721 | ||
Series 2005-B Class B6, 4.0588% 6/10/37 (e)(f) | 938,390 | 521,723 | ||
Series 2005-D Class B6, 4.71% 12/15/37 (e)(f) | 473,629 | 165,345 | ||
Series 2006-B Class B6, 4.16% 7/15/38 (e)(f) | 981,871 | 434,631 | ||
Residential Funding Mortgage Securities I, Inc. | 70,268 | 56,214 | ||
Residential Funding Securities Corp. Series 2002-RM1 Class BI1, 5.5% 12/25/17 (e) | 145,979 | 94,613 | ||
RESIX Finance Ltd. floater: | ||||
Series 2003-D Class B8, 8.9588% 12/10/35 (e)(f) | 682,726 | 529,996 | ||
Series 2004-A Class B7, 6.7088% 2/10/36 (e)(f) | 651,020 | 472,218 | ||
Collateralized Mortgage Obligations - continued | ||||
| Principal Amount (d) | Value | ||
Private Sponsor - continued | ||||
RESIX Finance Ltd. floater: - continued | ||||
Series 2004-B Class B7, 6.4588% 2/10/36 (e)(f) | $ 782,070 | $ 527,866 | ||
Series 2005-C Class B7, 5.5588% 9/10/37 (e)(f) | 1,916,478 | 956,292 | ||
Series 2006-B Class B7, 6.31% 7/15/38 (e)(f) | 981,871 | 438,774 | ||
Series 2007-A Class BB, 5.81% 2/15/39 (e)(f) | 791,595 | 158,876 | ||
TOTAL PRIVATE SPONSOR | 16,181,178 | |||
U.S. Government Agency - 0.1% | ||||
Fannie Mae REMIC Trust: | ||||
Series 2001-W3 subordinate REMIC pass thru certificates, Class B3, 7% 9/25/41 (h) | 240,693 | 95,352 | ||
Series 2002-W1 subordinate REMIC pass thru certificates, Class 3B3, 5.8698% 2/25/42 (e)(f) | 143,468 | 73,412 | ||
Series 2003-W1 subordinate REMIC pass thru certificates, Class B3, 5.75% 12/25/42 (h) | 310,099 | 82,990 | ||
Series 2003-W10 subordinate REMIC pass thru certificates, Class 2B3, 6.123% 6/25/43 (e)(f) | 182,878 | 117,383 | ||
Series 2003-W4 subordinate REMIC pass thru certificates, Class 2B3, 6.2364% 10/25/42 (e)(f) | 78,976 | 54,555 | ||
TOTAL U.S. GOVERNMENT AGENCY | 423,692 | |||
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (Cost $24,387,583) | 16,604,870 | |||
Commercial Mortgage Securities - 10.8% | ||||
| ||||
Asset Securitization Corp. Series 1997-D4 Class B2, 7.525% 4/14/29 | 515,000 | 531,802 | ||
Banc of America Commercial Mortgage, Inc. | ||||
Class BWF, 7.55% 10/11/37 (e) | 495,695 | 551,811 | ||
Class BWG, 8.155% 10/11/37 (e) | 480,413 | 547,636 | ||
Class BWK, 10.676% 10/11/37 (e) | 325,688 | 407,523 | ||
Class BWL, 10.1596% 10/11/37 (e) | 549,180 | 674,647 | ||
Banc of America Large Loan, Inc. floater | 700,000 | 568,094 | ||
Credit Suisse First Boston Mortgage Securities Corp.: | ||||
Series 1997-C2 Class F, 7.46% 1/17/35 (f) | 2,000,000 | 2,033,520 | ||
Series 2004-TF2A Class AX, 0% 11/15/19 (e)(f)(g) | 4,742,624 | 474 | ||
Crest Ltd. Series 2001-1A Class C, 9% 2/25/34 (e) | 1,000,000 | 938,679 | ||
Commercial Mortgage Securities - continued | ||||
| Principal Amount (d) | Value | ||
Crown Castle Towers LLC/Crown Atlantic Holdings Sub LLC/Crown Communication, Inc. Series 2006-1A Class D, 5.7724% 11/15/36 (e) | $ 915,000 | $ 819,922 | ||
Deutsche Mortgage & Asset Receiving Corp. | 1,200,000 | 764,342 | ||
First Chicago/Lennar Trust I Series 1997-CHL1 Class E, 8.0454% 4/29/39 (e)(f) | 757,370 | 757,370 | ||
GE Capital Commercial Mortgage Corp. | 921,000 | 882,516 | ||
Global Signal Trust II Series 2004-2A Class E, 5.587% 12/15/14 (e) | 1,245,000 | 1,204,015 | ||
Global Signal Trust III Series 2006-1: | ||||
Class E, 6.495% 2/15/36 (e) | 570,000 | 529,935 | ||
Class F, 7.036% 2/15/36 | 1,015,000 | 939,941 | ||
Global Towers Partners Acquisition Partners I LLC | 1,000,000 | 888,930 | ||
GMAC Commercial Mortgage Securities, Inc.: | ||||
Series 1997-C2: | ||||
Class F, 6.75% 4/15/29 (f) | 2,767,000 | 2,696,719 | ||
Class G, 6.75% 4/15/29 (f) | 1,000,000 | 780,041 | ||
Series 1999-C3 Class J, 6.974% 8/15/36 (e) | 1,500,000 | 1,452,158 | ||
Series 2000-C1: | ||||
Class H, 7% 3/15/33 (e) | 950,000 | 921,908 | ||
Class K, 7% 3/15/33 (e) | 1,100,000 | 987,466 | ||
Greenwich Capital Commercial Funding Corp. | 750,000 | 704,658 | ||
GS Mortgage Securities Corp. II floater Series 2007-EOP Class L, 3.7625% 3/1/20 (e)(f) | 1,400,000 | 1,347,304 | ||
JPMorgan Chase Commercial Mortgage Securities Corp.: | ||||
Series 2001-A: | ||||
Class G, 6% 10/15/32 (e)(f) | 2,895,000 | 2,292,029 | ||
Class X, 1.7982% 10/15/32 (e)(f)(g) | 18,254,958 | 277,475 | ||
Series 2002-CIB4 Class E, 6.7138% 5/12/34 (e)(f) | 1,500,000 | 1,461,260 | ||
JPMorgan Commercial Mortgage Finance Corp.: | ||||
Series 1997-C5 Class F, 7.5605% 9/15/29 | 2,000,000 | 1,817,980 | ||
Series 1999-C7 Class F, 6% 10/15/35 (e) | 350,000 | 351,663 | ||
Series 1999-C8: | ||||
Class G, 6% 7/15/31 (e) | 1,385,000 | 1,208,690 | ||
Class H, 6% 7/15/31 (e) | 2,638,000 | 1,781,125 | ||
Merrill Lynch Financial Asset, Inc. Series 2005-CA16: | ||||
Class F, 4.384% 7/12/15 | CAD | 710,000 | 543,087 | |
Class G, 4.384% 7/12/15 | CAD | 355,000 | 264,066 | |
Class H, 4.384% 7/12/15 | CAD | 236,000 | 157,665 | |
Commercial Mortgage Securities - continued | ||||
| Principal Amount (d) | Value | ||
Merrill Lynch Financial Asset, Inc. Series 2005-CA16: - continued | ||||
Class J, 4.384% 7/12/15 | CAD | $ 355,000 | $ 226,502 | |
Class K, 4.384% 7/12/15 | CAD | 355,000 | 214,687 | |
Class L, 4.384% 7/12/15 | CAD | 236,000 | 135,360 | |
Class M, 4.384% 7/12/15 | CAD | 995,000 | 324,489 | |
Merrill Lynch Mortgage Investors Trust Series 1999-C1 Class G, 6.71% 11/15/31 (e) | 3,359,000 | 1,175,650 | ||
Mezz Capital Commercial Mortgage Trust | ||||
Class D, 6.988% 9/15/13 | 750,000 | 648,375 | ||
Class E, 7.983% 10/15/13 | 1,453,000 | 1,230,228 | ||
Class IO, 8.0079% 1/15/18 (f)(g) | 6,865,351 | 1,615,276 | ||
Morgan Stanley Capital I Trust Series 2005-HQ7 | 750,000 | 596,775 | ||
SBA CMBS Trust Series 2006-1A Class J, 7.825% 11/15/36 (e) | 1,000,000 | 904,549 | ||
TimberStar Trust I Series 2006-1 Class F, 7.5296% 10/15/36 (e) | 2,000,000 | 1,620,660 | ||
UBS Commercial Mortgage Trust Series 2007-FL1 | 1,200,000 | 1,076,625 | ||
Wachovia Ltd./Wachovia LLC Series 2006-1 Class 1ML, 10.7025% 9/25/26 (e)(f) | 2,000,000 | 700,000 | ||
TOTAL COMMERCIAL MORTGAGE SECURITIES (Cost $48,306,396) | 42,555,627 | |||
Floating Rate Loans - 2.2% | ||||
| ||||
CONSUMER DISCRETIONARY - 1.2% | ||||
Hotels, Restaurants & Leisure - 0.3% | ||||
Intrawest Resorts term loan 5.8854% 10/23/08 (f) | 1,082,578 | 1,039,275 | ||
Specialty Retail - 0.9% | ||||
The Pep Boys - Manny, Moe & Jack term loan 4.65% 10/27/13 (f) | 29,041 | 27,081 | ||
Toys 'R' US, Inc. term loan 5.4706% 12/9/08 (f) | 4,100,000 | 3,761,750 | ||
| 3,788,831 | |||
TOTAL CONSUMER DISCRETIONARY | 4,828,106 | |||
FINANCIALS - 0.7% | ||||
Diversified Financial Services - 0.3% | ||||
LandSource Holding Co. LLC term loan 8.25% 5/31/09 (f) | 1,767,124 | 1,201,644 | ||
Floating Rate Loans - continued | ||||
| Principal Amount (d) | Value | ||
FINANCIALS - continued | ||||
Real Estate Investment Trusts - 0.1% | ||||
General Growth Properties, Inc. Tranche A1, term loan 3.62% 2/24/10 (f) | $ 697,368 | $ 613,684 | ||
Real Estate Management & Development - 0.3% | ||||
MDS Realty Holdings LLC Tranche M3, term loan 5.95% 1/1/09 (f) | 55,020 | 52,269 | ||
Realogy Corp.: | ||||
Credit-Linked Deposit 5.4625% 10/10/13 (f) | 210,000 | 168,000 | ||
Tranche B, term loan 5.4588% 10/10/13 (f) | 780,000 | 624,000 | ||
Tishman Speyer Properties term loan 4.21% 12/27/12 (f) | 210,000 | 174,300 | ||
| 1,018,569 | |||
TOTAL FINANCIALS | 2,833,897 | |||
HEALTH CARE - 0.3% | ||||
Health Care Providers & Services - 0.3% | ||||
HealthSouth Corp. term loan 5.29% 3/10/13 (f) | 1,201,139 | 1,132,074 | ||
TOTAL FLOATING RATE LOANS (Cost $10,117,349) | 8,794,077 |
Preferred Securities - 0.2% | |||
|
|
|
|
FINANCIALS - 0.2% | |||
Diversified Financial Services - 0.2% | |||
Cairn High Grade ABS CDO PLC Series 2006-2A Class SUB, 1/13/47 (e) | 1,000,000 | 938 | |
Crest Clarendon Street 2002-1 Ltd. Series 2002-1A Class PS, 12/28/35 (e) | 500,000 | 262,918 | |
Crest Dartmouth Street 2003 1 Ltd. Series 2003-1A Class PS, 6/28/38 (e) | 590,000 | 346,932 | |
Harp High Grade CDO I Ltd. Series 2006-1, 7/8/46 (e) | 810,000 | 8,100 | |
Ipswich Street CDO Series 2006-1, 6/27/46 (c)(e) | 1,350,000 | 0 | |
Kent Funding III Ltd. 11/5/47 (e) | 1,650,000 | 16,500 | |
| 635,388 | ||
TOTAL PREFERRED SECURITIES (Cost $5,662,331) | 635,388 | ||
Money Market Funds - 5.4% | |||
Shares | Value | ||
Fidelity Cash Central Fund, 2.35% (b) | 21,076,742 | $ 21,076,742 | |
TOTAL INVESTMENT PORTFOLIO - 99.3% (Cost $466,510,461) | 390,339,044 | ||
NET OTHER ASSETS - 0.7% | 2,808,131 | ||
NET ASSETS - 100% | $ 393,147,175 |
Currency Abbreviation | ||
CAD | - | Canadian dollar |
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c) Non-income producing - Issuer is in default. |
(d) Principal amount is stated in United States dollars unless otherwise noted. |
(e) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the end of the period, the value of these securities amounted to $83,626,160 or 21.3% of net assets. |
(f) The coupon rate shown on floating or adjustable rate securities represents the rate at period end. |
(g) Security represents right to receive monthly interest payments on an underlying pool of mortgages or assets. Principal shown is the outstanding par amount of the pool held as of the end of the period. |
(h) Restricted securities - Investment in securities not registered under the Securities Act of 1933 (excluding 144A issues). At the end of the period, the value of restricted securities (excluding 144A issues) amounted to $396,955 or 0.1% of net assets. |
Additional information on each holding is as follows: |
Security | Acquisition Date | Acquisition Cost |
Fannie Mae REMIC Trust: Series 2001-W3 subordinate REMIC pass thru certificates, Class B3, 7% 9/25/41 | 5/21/03 | $ 202,439 |
Series 2003-W1 subordinate REMIC pass thru certificates, Class B3, 5.75% 12/25/42 | 3/25/03 | $ 227,780 |
Security | Acquisition Date | Acquisition Cost |
GSR Mortgage Loan Trust Series 2005-HE3 Class B3, 4.9613% 6/25/35 | 6/3/05 | $ 1,110,697 |
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 | $ 991,159 |
Other Information |
The composition of credit quality ratings as a percentage of net assets is as follows (ratings are unaudited): |
U.S. Government and U.S. | 0.1% |
AAA,AA,A | 4.6% |
BBB | 21.7% |
BB | 14.8% |
B | 5.6% |
CCC,CC,C | 3.4% |
D | 0.0% |
Not Rated | 7.3% |
Equities | 36.4% |
Short-Term Investments and Net | 6.1% |
| 100.0% |
We have used ratings from Moody's® Investors Services, Inc. Where Moody's ratings are not available, we have used S&P® ratings. |
Income Tax Information |
At July 31, 2008, the fund had a capital loss carryforward of approximately $1,722,470 all of which will expire on |
The fund intends to elect to defer to its fiscal year ending July 31, 2009 approximately $8,001,905 of losses recognized during the period November 1, 2007 to July 31, 2008. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements
Statement of Assets and Liabilities
| July 31, 2008 | |
Assets | ||
Investment in securities, at value - See accompanying schedule: Unaffiliated issuers (cost $445,433,719) | $ 369,262,302 |
|
Fidelity Central Funds (cost $21,076,742) | 21,076,742 |
|
Total Investments (cost $466,510,461) |
| $ 390,339,044 |
Cash | 1,311 | |
Receivable for investments sold | 37,198 | |
Receivable for fund shares sold | 431,239 | |
Dividends receivable | 337,166 | |
Interest receivable | 3,303,100 | |
Distributions receivable from Fidelity Central Funds | 41,201 | |
Prepaid expenses | 525 | |
Other receivables | 7 | |
Total assets | 394,490,791 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 49,221 | |
Payable for fund shares redeemed | 930,665 | |
Accrued management fee | 182,296 | |
Transfer agent fee payable | 103,619 | |
Other affiliated payables | 16,117 | |
Other payables and accrued expenses | 61,698 | |
Total liabilities | 1,343,616 | |
|
|
|
Net Assets | $ 393,147,175 | |
Net Assets consist of: |
| |
Paid in capital | $ 474,080,557 | |
Undistributed net investment income | 5,213,042 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (9,974,879) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (76,171,545) | |
Net Assets, for 41,681,469 shares outstanding | $ 393,147,175 | |
Net Asset Value, offering price and redemption price per share ($393,147,175 ÷ 41,681,469 shares) | $ 9.43 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements - continued
Statement of Operations
| Year ended July 31, 2008 | |
Investment Income |
|
|
Dividends |
| $ 9,679,366 |
Interest |
| 18,230,058 |
Income from Fidelity Central Funds |
| 991,159 |
Total income |
| 28,900,583 |
|
|
|
Expenses | ||
Management fee | $ 2,395,114 | |
Transfer agent fees | 1,231,467 | |
Accounting fees and expenses | 211,648 | |
Custodian fees and expenses | 12,389 | |
Independent trustees' compensation | 1,872 | |
Registration fees | 49,937 | |
Audit | 103,369 | |
Legal | 4,027 | |
Miscellaneous | 40,159 | |
Total expenses before reductions | 4,049,982 | |
Expense reductions | (15,460) | 4,034,522 |
Net investment income (loss) | 24,866,061 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | (9,813,294) | |
Foreign currency transactions | (2,063) | |
Total net realized gain (loss) |
| (9,815,357) |
Change in net unrealized appreciation (depreciation) on: Investment securities | (53,367,364) | |
Assets and liabilities in foreign currencies | 24 | |
Total change in net unrealized appreciation (depreciation) |
| (53,367,340) |
Net gain (loss) | (63,182,697) | |
Net increase (decrease) in net assets resulting from operations | $ (38,316,636) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 24,866,061 | $ 32,679,170 |
Net realized gain (loss) | (9,815,357) | 16,041,559 |
Change in net unrealized appreciation (depreciation) | (53,367,340) | (32,410,471) |
Net increase (decrease) in net assets resulting | (38,316,636) | 16,310,258 |
Distributions to shareholders from net investment income | (27,623,042) | (30,097,730) |
Distributions to shareholders from net realized gain | (10,229,882) | (12,079,504) |
Total distributions | (37,852,924) | (42,177,234) |
Share transactions | 160,139,773 | 234,666,945 |
Reinvestment of distributions | 33,576,156 | 36,245,899 |
Cost of shares redeemed | (240,856,702) | (250,130,676) |
Net increase (decrease) in net assets resulting from share transactions | (47,140,773) | 20,782,168 |
Redemption fees | 189,883 | 87,744 |
Total increase (decrease) in net assets | (123,120,450) | (4,997,064) |
|
|
|
Net Assets | ||
Beginning of period | 516,267,625 | 521,264,689 |
End of period (including undistributed net investment income of $5,213,042 and undistributed net investment income of $8,186,585, respectively) | $ 393,147,175 | $ 516,267,625 |
Other Information Shares | ||
Sold | 15,810,826 | 19,631,419 |
Issued in reinvestment of distributions | 3,247,810 | 3,063,466 |
Redeemed | (23,376,733) | (20,928,409) |
Net increase (decrease) | (4,318,097) | 1,766,476 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights
Years ended July 31, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 11.22 | $ 11.78 | $ 12.17 | $ 11.49 | $ 10.91 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .59 | .63 | .66 | .60 | .59 |
Net realized and unrealized gain (loss) | (1.48) | (.37) | (.11) | .83 | .60 |
Total from investment operations | (.89) | .26 | .55 | 1.43 | 1.19 |
Distributions from net investment income | (.66) | (.58) | (.67) | (.57) | (.55) |
Distributions from net realized gain | (.24) | (.24) | (.27) | (.18) | (.07) |
Total distributions | (.90) | (.82) | (.94) | (.75) | (.62) |
Redemption fees added to paid in capital B | - F | - F | - F | - F | .01 |
Net asset value, end of period | $ 9.43 | $ 11.22 | $ 11.78 | $ 12.17 | $ 11.49 |
Total Return A | (8.43)% | 2.00% | 4.82% | 12.90% | 11.31% |
Ratios to Average Net Assets C,E |
|
|
|
|
|
Expenses before reductions | .94% | .88% | .85% | .85% | .85% |
Expenses net of fee waivers, if any | .94% | .88% | .85% | .85% | .85% |
Expenses net of all reductions | .94% | .88% | .85% | .85% | .85% |
Net investment income (loss) | 5.77% | 5.30% | 5.61% | 5.13% | 5.25% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 393,147 | $ 516,268 | $ 521,265 | $ 667,403 | $ 422,551 |
Portfolio turnover rate D | 32% | 45% | 27% | 30% | 61% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Calculated based on average shares outstanding during the period.
C Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
D Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
E 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 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 July 31, 2008
1. Organization.
Fidelity Real Estate Income Fund (the Fund) is a fund of Fidelity Securities Fund (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 may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the SEC's web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds are available on the SEC's web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. Wherever possible, the Fund uses independent pricing services approved by the Board of Trustees to value its investments.
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Debt securities, including restricted securities, are valued by independent pricing services or by dealers who make markets in such securities. Pricing services consider yield or price of bonds of comparable quality, coupon, maturity and type as well as dealer supplied prices. Investments in open-end
Annual Report
3. Significant Accounting Policies - continued
Security Valuation - continued
mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 pm 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. 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
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Investment Transactions and Income - continued
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. The Fund follows the provisions of Emerging Issues Task Force Issue No. 99-20 (EITF 99-20), "Recognition of Interest Income and Impairment on Purchased and Retained Beneficial Interests in Securitized Financial Assets" for certain lower credit quality securitized assets that have contractual cash flows (for example, asset backed securities, collateralized mortgage obligations and commercial mortgage-backed securities). Under EITF 99-20, if there is a change in the estimated cash flows for any of these securities, based on an evaluation of current information, then the estimated yield is adjusted on a prospective basis over the remaining life of the security. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain. Debt obligations may be placed on non-accrual status and related interest income may be reduced by ceasing current accruals and writing off interest receivables when the collection of all or a portion of interest has become doubtful based on consistently applied procedures. A debt obligation is removed from non-accrual status when the issuer resumes interest payments or when collectibility of interest is reasonably assured.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The implementation of FIN 48 did not result in any unrecognized tax benefits in the accompanying financial statements. Each of the Fund's federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from
Annual Report
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
generally accepted accounting principles. In addition, the Fund will claim a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. Certain adjustments have been made to the accounts relating to prior periods. Collectively, these adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to the foreign currency transactions, passive foreign investment companies (PFIC), market discount, partnerships and losses deferred due to wash sales and excise tax regulations.
The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows:
Unrealized appreciation | $ 11,543,511 |
Unrealized depreciation | (87,914,205) |
Net unrealized appreciation (depreciation) | (76,370,694) |
Undistributed ordinary income | 5,159,576 |
Capital loss carryforward | (1,722,470) |
|
|
Cost for federal income tax purposes | $ 466,709,738 |
The tax character of distributions paid was as follows:
| July 31, | July 31, |
Ordinary Income | $ 27,623,042 | $ 30,097,730 |
Long-term Capital Gains | 10,229,882 | 12,079,504 |
Total | $ 37,852,924 | $ 42,177,234 |
Short-Term Trading (Redemption) Fees. Shares held in the Fund less than 90 days are subject to a redemption fee equal to .75% of the proceeds of the redeemed shares. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the Fund and accounted for as an addition to paid in capital.
New Accounting Pronouncement. In September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and results in expanded disclosures about fair value measurements.
Annual Report
Notes to Financial Statements - continued
4. Operating Policies.
Repurchase Agreements. FMR has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits the Fund and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts which are then invested in repurchase agreements. The Fund may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. The Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
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.
Loans and Other Direct Debt Instruments. The Fund may invest in loans and loan participations, trade claims or other receivables. These investments may include standby financing commitments, including revolving credit facilities, that obligate the Fund to supply additional cash to the borrower on demand. Loan participations involve a risk of insolvency of the lending bank or other financial intermediary. The Fund may be contractually obligated to receive approval from the agent bank and/or borrower prior to the sale of these investments.
5. Purchases and Sales of Investments.
Purchases and sales of securities other than short-term securities and U.S. government securities, aggregated $128,295,176 and $180,158,898, respectively.
6. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and
Annual Report
6. Fees and Other Transactions with Affiliates - continued
Management Fee - continued
increases as assets under management decrease. For the period, the total annual management fee rate was .56% of the Fund's average net assets.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the Fund's transfer, dividend disbursing and shareholder servicing agent. FIIOC receives account fees and asset-based fees that vary according to account size and type of account. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. Prior to January 1, 2008, Fidelity Service Company, Inc. (FSC), also an affiliate of FMR, was the Fund's transfer agent. For the period the transfer agent fees were equivalent to an annual rate of .29% of average net assets.
Accounting Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the Fund's accounting records. The fee is based on the level of average net assets for the month.
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 $1,598 for the period.
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $4.2 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro rata portion of the line of credit, which amounted to $1,110 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
8. Expense Reductions.
Through arrangements with the Fund's custodian and transfer agent, credits realized as a result of uninvested cash balances were used to reduce the Fund's expenses. During the period, these credits reduced the Fund's custody and transfer agent expenses by $12,389 and $3,071, respectively.
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
Annual Report
Notes to Financial Statements - continued
9. Other - continued
enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
In December 2006, the Independent Trustees, with the assistance of independent counsel, completed an investigation regarding gifts, gratuities and business entertainment provided by certain brokers to certain individuals who were employed on FMR's domestic equity trading desk during the period 2002 to 2004. The Independent Trustees and FMR agreed that, despite the absence of proof that the Fidelity mutual funds experienced diminished execution quality as a result of the improper receipt of gifts and business entertainment, the conduct at issue was serious and was worthy of redress. Accordingly, the Independent Trustees requested, and FMR agreed to make, a payment of $42 million plus accrued interest, which equaled approximately $7.3 million, to certain Fidelity mutual funds.
In March 2008, the Trustees approved a method for allocating this payment among the funds and, in total, FMR paid the fund $7,853, which is recorded in the accompanying Statement of Operations.
In a related administrative order dated March 5, 2008, the U.S. Securities and Exchange Commission ("SEC") announced a settlement with FMR and FMR Co., Inc. (an affiliate of FMR) involving the SEC's regulatory rules for investment advisers and the improper receipt of gifts, gratuities and business entertainment. Without admitting or denying the SEC's findings, FMR agreed to pay an $8 million civil penalty to the United States Treasury.
Annual Report
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Securities Fund and Shareholders of Fidelity Real Estate Income Fund:
We have audited the accompanying statement of assets and liabilities of Fidelity Real Estate Income Fund (the Fund), a fund of Fidelity Securities Fund, including the schedule of investments, as of July 31, 2008, and the related statements of operations for the year then ended, the statement of changes in net assets for each of the two years in the period ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of July 31, 2008, by correspondence with the custodians and brokers; where replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Fidelity Real Estate Income Fund as of July 31, 2008, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Boston, Massachusetts
September 22, 2008
Annual Report
Trustees and Officers
The Trustees, Member of the Advisory Board, and executive officers of the trust and fund, as applicable, are listed below. The Board of Trustees governs the fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee the fund's activities, review contractual arrangements with companies that provide services to the fund, and review the fund's performance. Except for Edward C. Johnson 3d and James C. Curvey, each of the Trustees oversees 218 funds advised by FMR or an affiliate. Messrs. Johnson and Curvey oversees 377 funds advised by FMR or an affiliate.
The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust. Each Trustee who is not an interested person (as defined in the 1940 Act) (Independent Trustee), shall retire not later than the last day of the calendar year in which his or her 72nd birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board Member hold office without limit in time, except that any officer and Advisory Board Member may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years.
The fund's Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-800-544-8544.
Interested Trustees*:
Correspondence intended for each Trustee who is an interested person may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Edward C. Johnson 3d (78) | |
| Year of Election or Appointment: 1984 Mr. Johnson is Chairman of the Board of Trustees. Mr. Johnson serves as Chief Executive Officer, Chairman, and a Director of FMR LLC; Chairman and a Director of FMR; Chairman and a Director of Fidelity Research & Analysis Company (FRAC); Chairman and a Director of Fidelity Investments Money Management, Inc.; and Chairman and a Director of FMR Co., Inc. In addition, Mr. Johnson serves as Chairman and Director of FIL Limited. Previously, Mr. Johnson served as President of FMR LLC (2006-2007). |
James C. Curvey (73) | |
| Year of Election or Appointment: 2007 Mr. Curvey also serves as Trustee (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2006- |
* Trustees have been determined to be "Interested Trustees" by virtue of, among other things, their affiliation with the trust or various entities under common control with FMR. FMR Corp. merged with and into FMR LLC on October 1, 2007. Any references to FMR LLC for prior periods are deemed to be references to the prior entity.
Independent Trustees:
Correspondence intended for each Independent Trustee (that is, the Trustees other than the Interested Trustees) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.
Name, Age; Principal Occupation | |
Dennis J. Dirks (60) | |
| Year of Election or Appointment: 2005 Prior to his retirement in May 2003, Mr. Dirks was Chief Operating Officer and a member of the Board of The Depository Trust & Clearing Corporation (DTCC) (1999-2003). He also served as President, Chief Operating Officer, and Board member of The Depository Trust Company (DTC) (1999-2003) and President and Board member of the National Securities Clearing Corporation (NSCC) (1999-2003). In addition, Mr. Dirks served as a Trustee and a member of the Finance Committee of Manhattan College (2005-2008), and as Chief Executive Officer and Board member of the Government Securities Clearing Corporation (2001-2003) and Chief Executive Officer and Board member of the Mortgage-Backed Securities Clearing Corporation (2001-2003). Mr. Dirks also serves as a Trustee and a member of the Finance Committee of AHRC of Nassau County (2006-present). |
Alan J. Lacy (54) | |
| Year of Election or Appointment: 2008 Mr. Lacy serves as Senior Adviser (2007-present) of Oak Hill Capital Partners, L.P. (a private equity firm). Mr. Lacy also served as Chief Executive Officer (2000-2005) and Vice Chairman (2005-2006) of Sears Holdings Corporation and Sears, Roebuck and Co. (retail). In addition, Mr. Lacy serves as a member of the Board of Directors of The Western Union Company (global money transfer, 2006-present) and Bristol-Myers Squibb (global pharmaceuticals, 2007-present). Mr. Lacy is a Trustee of the National Parks Conservation Association and The Field Museum of Natural History. |
Ned C. Lautenbach (64) | |
| Year of Election or Appointment: 2000 Mr. Lautenbach is Chairman of the Independent Trustees (2006-present). Mr. Lautenbach is an Advisory Partner of Clayton, Dubilier & Rice, Inc. (private equity investment firm). Previously, Mr. Lautenbach was with the International Business Machines Corporation (IBM) from 1968 until his retirement in 1998. Mr. Lautenbach serves as a Director of Eaton Corporation (diversified industrial) as well as the Philharmonic Center for the Arts in Naples, Florida. He also is a member of the Board of Trustees of Fairfield University (2005-present), as well as a member of the Council on Foreign Relations. Previously, Mr. Lautenbach served as a Director of Sony Corporation (2006-2007). |
Joseph Mauriello (63) | |
| 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 firm, 1965- |
Cornelia M. Small (64) | |
| Year of Election or Appointment: 2005 Ms. Small is a member of the Investment Committee, and Chair (2008-present) and a member of the Board of Trustees of Smith College. Ms. Small also serves on the Investment Committee of the Berkshire Taconic Community Foundation (2008-present). Previously, Ms. Small served as Chairperson of the Investment Committee (2002-2008) of Smith College and as Co-Chair (2000-2003) of the Annual Fund for the Fletcher School of Law and Diplomacy. In addition, she served as Chief Investment Officer, Director of Global Equity Investments, and a member of the Board of Directors of Scudder, Stevens & Clark and Scudder Kemper Investments. |
William S. Stavropoulos (69) | |
| Year of Election or Appointment: 2002 Mr. Stavropoulos is Chairman Emeritus of the Board of Directors of The Dow Chemical Company, where he previously served in numerous senior management positions, including President (1993-2000; 2002- |
David M. Thomas (59) | |
| Year of Election or Appointment: 2008 Previously, Mr. Thomas served as Executive Chairman (2005-2006) and Chairman and Chief Executive Officer (2000-2005) of IMS Health, Inc. (pharmaceutical and healthcare information solutions). In addition, Mr. Thomas serves as a member of the Board of Directors of Fortune Brands, Inc. (consumer products holding company), and Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (57) | |
| Year of Election or Appointment: 2008 Mr. Wiley also serves as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-present). He serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005- |
Advisory Board Member and Executive Officers**:
Correspondence intended for each executive officer and Mr. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Peter S. Lynch (64) | |
| Year of Election or Appointment: 2003 Member of the Advisory Board of Fidelity Securities Fund. Mr. Lynch is Vice Chairman and a Director of FMR, and Vice Chairman (2001- |
Kenneth B. Robins (38) | |
| Year of Election or Appointment: 2008 President and Treasurer of Real Estate Income Fund. Mr. Robins also serves as President and Treasurer of Fidelity's Equity and High Income Funds (2008-present) and is an employee of FMR (2004-present). Before joining Fidelity Investments, Mr. Robins worked at KPMG LLP, where he was a partner in KPMG's department of professional practice (2002-2004). |
Thomas C. Hense (44) | |
| Year of Election or Appointment: 2008 Vice President of Real Estate Income Fund. Mr. Hense also serves as Vice President of Fidelity's High Income and Small Cap Funds (2008- |
Scott C. Goebel (40) | |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of Real Estate Income Fund. Mr. Goebel also serves as Secretary and CLO of other Fidelity funds (2008- |
John B. McGinty, Jr. (45) | |
| Year of Election or Appointment: 2008 Assistant Secretary of Real Estate Income Fund. Mr. McGinty also serves as Assistant Secretary of Fidelity's other Equity and High Income Funds (2008-present) and is an employee of FMR LLC (2004-present). Mr. McGinty also serves as Senior Vice President, Secretary, and Chief Legal Officer of FDC (2007-present). Before joining Fidelity Investments, Mr. McGinty practiced law at Ropes & Gray, LLP. |
Holly C. Laurent (54) | |
| Year of Election or Appointment: 2008 Anti-Money Laundering (AML) officer of Real Estate Income Fund. Ms. Laurent also serves as AML officer of other Fidelity funds (2008-present) and is an employee of FMR LLC. Previously, Ms. Laurent was Senior Vice President and Head of Legal for Fidelity Business Services India Pvt. Ltd. (2006-2008), Senior Vice President, Deputy General Counsel and Group Head for FMR LLC (2005-2006). |
Christine Reynolds (49) | |
| Year of Election or Appointment: 2008 Chief Financial Officer of Real Estate Income Fund. Ms. Reynolds also serves as Chief Financial Officer of other Fidelity funds (2008-present). Ms. Reynolds became President of Fidelity Pricing and Cash Management Services (FPCMS) in August 2008. She served as Chief Operating Officer of FPCMS from 2007 through July 2008. Previously, Ms. |
Kenneth A. Rathgeber (61) | |
| Year of Election or Appointment: 2004 Chief Compliance Officer of Real Estate Income Fund. Mr. Rathgeber also serves as Chief Compliance Officer of Fidelity's Equity and High Income Funds (2004-present). He is Chief Compliance Officer of FMR (2005-present), FMR Co., Inc. (2005-present), Fidelity Management & Research (U.K.) Inc. (2005-present), Fidelity Research & Analysis Company (2005-present), Fidelity Investments Money Management, Inc. (2005-present), and Strategic Advisers, Inc. (2005-present). |
Bryan A. Mehrmann (47) | |
| Year of Election or Appointment: 2005 Deputy Treasurer of Real Estate Income Fund. Mr. Mehrmann also serves as Deputy Treasurer of other Fidelity funds (2005-present) and is an employee of FMR. Previously, Mr. Mehrmann served as Vice President of Fidelity Investments Institutional Services Group (FIIS)/Fidelity Investments Institutional Operations Corporation, Inc. (FIIOC) Client Services (1998-2004). |
Adrien E. Deberghes (40) | |
| Year of Election or Appointment: 2008 Deputy Treasurer of Real Estate Income Fund. Mr. Deberghes also serves as Deputy Treasurer of Fidelity's Equity and High Income Funds (2008- |
Robert G. Byrnes (41) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of Real Estate Income Fund. Mr. Byrnes also serves as Assistant Treasurer of other Fidelity funds (2005-present) and is an employee of FMR (2005-present). Previously, Mr. Byrnes served as Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (2003-2005). Before joining Fidelity Investments, Mr. Byrnes worked at Deutsche Asset Management where he served as Vice President of the Investment Operations Group (2000-2003). |
Peter L. Lydecker (54) | |
| Year of Election or Appointment: 2004 Assistant Treasurer of Real Estate Income Fund. Mr. Lydecker also serves as Assistant Treasurer of other Fidelity funds (2004-present) and is an employee of FMR. |
Paul M. Murphy (61) | |
| Year of Election or Appointment: 2007 Assistant Treasurer of Real Estate Income Fund. Mr. Murphy also serves as Assistant Treasurer of other Fidelity funds (2007-present) and is an employee of FMR (2007-present). Previously, Mr. Murphy served as Chief Financial Officer of the Fidelity Funds (2005-2006), Vice President and Associate General Counsel of FMR (2007), and Senior Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (1994-2007). |
Gary W. Ryan (49) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of Real Estate Income Fund. Mr. Ryan also serves as Assistant Treasurer of other Fidelity funds (2005-present) and is an employee of FMR (2005-present). Previously, Mr. Ryan served as Vice President of Fund Reporting in Fidelity Pricing and Cash Management Services (FPCMS) (1999-2005). |
** FMR Corp. merged with and into FMR LLC on October 1, 2007. Any references to FMR LLC for prior periods are deemed to be references to the prior entity.
Annual Report
Distributions (Unaudited)
A total of 0.35% of the dividends distributed during the fiscal year was derived from interest on U.S. Government securities which is generally exempt from state income tax.
The fund will notify shareholders in January 2009 of amounts for use in preparing 2008 income tax returns.
Annual Report
Proxy Voting Results
A special meeting of the fund's shareholders was held on May 14, 2008. The results of votes taken among shareholders on the proposals before them are reported below. Each vote reported represents one dollar of net asset value held on the record date for the meeting.
PROPOSAL 1 | ||
To elect a Board of Trustees.A | ||
| # of | % of |
James C. Curvey | ||
Affirmative | 30,242,569,269.49 | 94.915 |
Withheld | 1,620,182,942.38 | 5.085 |
TOTAL | 31,862,752,211.87 | 100.000 |
Dennis J. Dirks | ||
Affirmative | 30,356,248,026.80 | 95.272 |
Withheld | 1,506,504,185.07 | 4.728 |
TOTAL | 31,862,752,211.87 | 100.000 |
Edward C. Johnson 3d | ||
Affirmative | 30,163,300,902.81 | 94.666 |
Withheld | 1,699,451,309.06 | 5.334 |
TOTAL | 31,862,752,211.87 | 100.000 |
Alan J. Lacy | ||
Affirmative | 30,334,439,999.59 | 95.203 |
Withheld | 1,528,312,212.28 | 4.797 |
TOTAL | 31,862,752,211.87 | 100.000 |
Ned C. Lautenbach | ||
Affirmative | 30,317,381,535.59 | 95.150 |
Withheld | 1,545,370,676.28 | 4.850 |
TOTAL | 31,862,752,211.87 | 100.000 |
Joseph Mauriello | ||
Affirmative | 30,340,553,696.88 | 95.223 |
Withheld | 1,522,198,514.99 | 4.777 |
TOTAL | 31,862,752,211.87 | 100.000 |
Cornelia M. Small | ||
Affirmative | 30,337,552,071.15 | 95.213 |
Withheld | 1,525,200,140.72 | 4.787 |
TOTAL | 31,862,752,211.87 | 100.000 |
William S. Stavropoulos | ||
Affirmative | 30,240,356,579.51 | 94.908 |
Withheld | 1,622,395,632.36 | 5.092 |
TOTAL | 31,862,752,211.87 | 100.000 |
| # of | % of |
David M. Thomas | ||
Affirmative | 30,352,029,125.67 | 95.259 |
Withheld | 1,510,723,086.20 | 4.741 |
TOTAL | 31,862,752,211.87 | 100.000 |
Michael E. Wiley | ||
Affirmative | 30,333,540,290.12 | 95.201 |
Withheld | 1,529,211,921.75 | 4.799 |
TOTAL | 31,862,752,211.87 | 100.000 |
PROPOSAL 2 | ||
To amend the Declaration of Trust to reduce the required quorum for future shareholder meetings.A | ||
| # of | % of |
Affirmative | 23,747,670,372.95 | 74.531 |
Against | 5,357,217,831.03 | 16.814 |
Abstain | 1,587,233,084.08 | 4.981 |
Broker | 1,170,630,923.81 | 3.674 |
TOTAL | 31,862,752,211.87 | 100.000 |
A Denotes trust-wide proposal and voting results. |
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees
Fidelity Real Estate Income Fund
Each year, typically in July, the Board of Trustees, including the Independent Trustees (together, the Board), votes on the renewal of the management contract and sub-advisory agreements (together, the Advisory Contracts) for the fund. The Board, assisted by the advice of fund counsel and Independent Trustees' counsel, requests and considers a broad range of information throughout the year.
The Board meets regularly and, acting directly and through its separate committees, requests and receives information concerning, and considers at each of its meetings factors that are relevant to, its annual consideration of the renewal of the fund's Advisory Contracts, including the services and support provided to the fund and its shareholders. At the time of the renewal, the Board had 12 standing committees, each composed of Independent Trustees with varying backgrounds, to which the Board has assigned specific subject matter responsibilities in order to enhance effective decision-making by the Board. Each committee has a written charter outlining the structure and purposes of the committee. The Board also meets as needed to consider matters specifically related to the Board's annual consideration of the renewal of Advisory Contracts.
At its July 2008 meeting, the Board of Trustees, including the Independent Trustees, unanimously determined to renew the fund's Advisory Contracts. In reaching its determination, the Board considered all factors it believed relevant, including (i) the nature, extent, and quality of the services to be provided to the fund and its shareholders (including the investment performance of the fund); (ii) the competitiveness of the fund's management fee and total expenses; (iii) the total costs of the services to be provided by and the profits to be realized by Fidelity from its relationship with the fund; (iv) the extent to which economies of scale would be realized as the fund grows; and (v) whether fee levels reflect these economies of scale, if any, for the benefit of fund shareholders. The Board also approved agreements with foreign sub-advisers Fidelity Management & Research (Japan) Inc. and Fidelity Management & Research (Hong Kong) Limited, as well as amendments to the fund's agreement with Fidelity Management & Research (U.K.) Inc.
In considering whether to renew the Advisory Contracts for the fund, the Board ultimately reached a determination, with the assistance of fund counsel and Independent Trustees' counsel and through the exercise of its business judgment, that the renewal of the Advisory Contracts and the compensation to be received by Fidelity under the management contract is consistent with Fidelity's fiduciary duty under applicable law. The Board's decision to renew the Advisory Contracts was not based on any single factor noted above, but rather was based on a comprehensive consideration of all the information provided to the Board at its meetings throughout the year. The Board, in reaching its determination to renew the Advisory Contracts, is aware that shareholders in the fund have a broad range of investment choices available to them, including a wide choice among mutual funds offered by competitors to Fidelity, and that the fund's shareholders, with the opportunity to review and weigh the disclosure provided by the fund in its prospectus and other public disclosures, have chosen to invest in this fund, managed by Fidelity.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
Nature, Extent, and Quality of Services Provided. The Board considered staffing within the investment adviser, FMR, and the sub-advisers (together, the Investment Advisers), including the backgrounds of the fund's investment personnel and the fund's investment objective and discipline. The Independent Trustees also had discussions with senior management of Fidelity's investment operations and investment groups. The Board considered the structure of the portfolio manager compensation program and whether this structure provides appropriate incentives.
Resources Dedicated to Investment Management and Support Services. The Board reviewed the size, education, and experience of the Investment Advisers' investment staff, their use of technology, and the Investment Advisers' approach to recruiting, training, and retaining portfolio managers and other research, advisory, and management personnel. The Board noted that Fidelity's analysts have access to a variety of technological tools that enable them to perform both fundamental and quantitative analysis and to specialize in various disciplines. The Board considered Fidelity's extensive global research capabilities that enable the Investment Advisers to aggregate data from various sources in an effort to produce positive investment results. The Board also considered that Fidelity's portfolio managers and analysts have access to daily portfolio attribution that allows for monitoring of a fund's portfolio, as well as an electronic communication system that provides immediate real-time access to research concerning issuers and credit enhancers.
Shareholder and Administrative Services. The Board considered (i) the nature, extent, quality, and cost of advisory, administrative, distribution, and shareholder services performed by the Investment Advisers and their affiliates under the Advisory Contracts and under separate agreements covering transfer agency, pricing and bookkeeping, and securities lending services for the fund; (ii) the nature and extent of the Investment Advisers' supervision of third party service providers, principally custodians and subcustodians; and (iii) the resources devoted to, and the record of compliance with, the fund's compliance policies and procedures. The Board also reviewed the allocation of fund brokerage, including allocations to brokers affiliated with the Investment Advisers, the use of brokerage commissions to pay fund expenses, and the use of "soft" commission dollars to pay for research services. The Board further considered that Fidelity voluntarily pays for market data out of its own resources.
Annual Report
The Board noted that the growth of fund assets across the complex allows Fidelity to reinvest in the development of services designed to enhance the value or convenience of the Fidelity funds as investment vehicles. These services include 24-hour access to account information and market information through phone representatives and over the Internet, and investor education materials and asset allocation tools.
Investment in a Large Fund Family. The Board considered the benefits to shareholders of investing in a Fidelity fund, including the benefits of investing in a fund that is part of a large family of funds offering a variety of investment disciplines and providing for a large variety of mutual fund investor services. For example, fund shareholders are offered the privilege of exchanging shares of the fund for shares of other Fidelity funds, as set forth in the fund's prospectus, without paying a sales charge. The Board noted that Fidelity has taken a number of actions over the previous year that benefited particular funds, including (i) dedicating additional resources to investment research and to restructure the investment research teams; (ii) contractually agreeing to reduce the management fees on Fidelity's Institutional Money Market Funds and launching Class IV and Institutional Class of certain of these funds; (iii) reducing the transfer agent fees for the Fidelity Select Portfolios and Investor Class of the VIP funds; and (iv) launching Class K of 29 equity funds as a lower-fee class available to certain employer-sponsored retirement plans.
Investment Performance. The Board considered whether the fund has operated within its investment objective, as well as its record of compliance with its investment restrictions. It also reviewed the fund's absolute investment performance, as well as the fund's relative investment performance measured against (i) a proprietary custom index, and (ii) a peer group of mutual funds over multiple periods. Because the fund had been in existence less than five calendar years, the following charts considered by the Board show, over the one- and three-year periods ended December 31, 2007, the fund's cumulative total returns, the cumulative total returns of a proprietary custom index ("benchmark"), and a range of cumulative total returns of a peer group of mutual funds identified by Lipper Inc. as having an investment objective similar to that of the fund. The box within each chart shows the 25th percentile return (bottom of box) and the 75th percentile return (top of box) of the peer group. Returns shown above the box are in the first quartile and returns shown below the box are in the fourth quartile. The percentage beaten number noted below each chart corresponds to the percentile box and represents the percentage of funds in the peer group whose performance was equal to or lower than that of the fund. The fund's proprietary custom index is an index developed by FMR that represents the performance of the fund's unmanaged indexes.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
Fidelity Real Estate Income Fund
The Board reviewed the fund's relative investment performance against its peer group and stated that the performance of the fund was in the first quartile for the one-year period and the fourth quartile for the three-year period. The Board noted that FMR does not consider that peer group to be a particularly meaningful comparison for the fund, however, because unlike many of its peers, which invest primarily in common stocks of real estate companies, the fund invests primarily in common, preferred and debt securities of real estate entities. The Board also stated that the investment performance of the fund compared favorably to its benchmark for all the periods shown.
The Board considered that FMR has taken steps to refocus and strengthen equity research, equity portfolio management, and compliance.
Based on its review, and giving particular weight to the nature and quality of the resources dedicated by the Investment Advisers to maintain and improve relative performance, the Board concluded that the nature, extent, and quality of the services provided to the fund will benefit the fund's shareholders, particularly in light of the Board's view that the fund's shareholders benefit from investing in a fund that is part of a large family of funds offering a variety of investment disciplines and services.
Competitiveness of Management Fee and Total Fund Expenses. The Board considered the fund's management fee and total expenses compared to "mapped groups" of competitive funds and classes. Fidelity creates "mapped groups" by combining similar Lipper investment objective categories that have comparable management fee characteristics. Combining Lipper investment objective categories aids the Board's management fee and total expense comparisons by broadening the competitive group used for comparison and by reducing the number of universes to which various Fidelity funds are compared. The Board also considered supplemental information about how the fund's management fee and total expenses ranked relative to groups based on Lipper classifications, which take into account a fund's market capitalization and style.
Annual Report
The Board considered two proprietary management fee comparisons for the 12-month (or shorter) 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" and, for the reasons explained above, is broader than the Lipper peer group used by the Board for performance comparisons. 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. "TMG %" represents the percentage of funds in the Total Mapped Group that had management fees that were lower than the fund's. For example, a TMG % of 6% means that 94% of the funds in the Total Mapped Group had higher management fees than the fund. The "Asset-Size Peer Group" (ASPG) comparison focuses on a fund's standing relative to non-Fidelity funds similar in size to the fund within the Total Mapped Group. The ASPG represents at least 15% of the funds in the Total Mapped Group with comparable asset size and management fee characteristics, subject to a minimum of 50 funds (or all funds in the Total Mapped Group if fewer than 50). Additional information, such as the ASPG quartile in which the fund's management fee ranked, is also included in the chart and considered by the Board.
Fidelity Real Estate Income Fund
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
The Board noted that the fund's management fee ranked below the median of its Total Mapped Group and below the median of its ASPG for 2007.
Based on its review, the Board concluded that the fund's management fee was fair and reasonable in light of the services that the fund receives and the other factors considered.
In its review of the fund's total expenses, the Board considered the fund's management fee as well as other fund expenses, such as transfer agent fees, pricing and bookkeeping fees, and custodial, legal, and audit fees. The Board also noted the effects of any waivers and reimbursements on fees and expenses. As part of its review, the Board also considered current and historical total expenses of the fund compared to competitive fund median expenses. The fund is compared to those funds and classes in the Total Mapped Group (used by the Board for management fee comparisons) that have a similar sales load structure.
The Board noted that the fund's total expenses ranked below its competitive median for 2007.
In its review of total expenses, the Board also considered Fidelity fee structures and other information on clients that FMR and its affiliates service in other competitive markets, such as other mutual funds advised or subadvised by FMR or its affiliates, pension plan clients, and other institutional clients.
Based on its review, the Board concluded that the fund's total expenses were reasonable in light of the services that the fund and its shareholders receive and the other factors considered.
Costs of the Services and Profitability. The Board considered the revenues earned and the expenses incurred by Fidelity in conducting the business of developing, marketing, distributing, managing, administering and servicing the fund and its shareholders. The Board also considered the level of Fidelity's profits in respect of all the Fidelity funds.
On an annual basis, FMR presents to the Board Fidelity's profitability for the fund. Fidelity calculates the profitability for each fund, as well as aggregate profitability for groups of Fidelity funds and all Fidelity funds, using a series of detailed revenue and cost allocation methodologies which originate with the audited books and records of Fidelity. The Audit Committee of the Board reviews any significant changes from the prior year's methodologies.
PricewaterhouseCoopers LLP (PwC), independent registered public accounting firm and auditor to Fidelity and certain Fidelity funds, has been engaged annually by the Board as part of the Board's assessment of the results of Fidelity's profitability analysis. PwC's engagement includes the review and assessment of Fidelity's methodologies used in determining the revenues and expenses attributable to Fidelity's mutual fund business, and completion of agreed-upon procedures surrounding the mathematical accuracy of fund profitability and its conformity to allocation methodologies. After considering PwC's reports issued under the engagement and information provided by Fidelity, the Board believes that while other allocation methods may also be reasonable, Fidelity's profitability methodologies are reasonable in all material respects.
Annual Report
The Board has also reviewed Fidelity's non-fund businesses and any fall-out benefits related to the mutual fund business as well as cases where Fidelity's affiliates may benefit from or be related to the fund's business.
The Board considered the costs of the services provided by and the profits realized by Fidelity in connection with the operation of the fund and determined that the amount of profit is a fair entrepreneurial profit for the management of the fund.
Economies of Scale. The Board considered whether there have been economies of scale in respect of the management of the Fidelity funds, whether the Fidelity funds (including the fund) have appropriately benefited from any such economies of scale, and whether there is potential for realization of any further economies of scale. The Board considered the extent to which the fund will benefit from economies of scale through increased services to the fund, through waivers or reimbursements, or through fee or expense reductions.
The Board recognized that the fund's management contract incorporates a "group fee" structure, which provides for lower group fee rates as total fund assets under FMR's management increase, and for higher group fee rates as total fund assets under FMR's management decrease. FMR determines the group fee rates based on a tiered asset "breakpoint" schedule. The Board considered that the group fee is designed to deliver the benefits of economies of scale to fund shareholders when total fund assets increase, even if assets of any particular fund are unchanged or have declined, because some portion of Fidelity's costs are attributable to services provided to all Fidelity funds, and all funds benefit if those costs can be allocated among more assets. The Board concluded that, given the group fee structure, fund shareholders will achieve a certain level of economies of scale as assets under FMR's management increase at the fund complex level, regardless of whether Fidelity achieves any such economies of scale.
The Board further concluded that any potential economies of scale are being shared between fund shareholders and Fidelity in an appropriate manner.
Additional Information Requested by the Board. In order to develop fully the factual basis for consideration of the Fidelity funds' Advisory Contracts, the Board requested and received additional information on certain topics, including (i) fund performance trends and actions to be taken by FMR to improve certain funds' overall performance; (ii) portfolio manager changes that have occurred during the past year; (iii) Fidelity's fund profitability methodology, the profitability of certain fund service providers, and profitability trends for certain funds; (iv) Fidelity's compensation structure for portfolio managers and key personnel, including its effects on fund profitability and the extent to which portfolio manager compensation is linked to fund performance; (v) Fidelity's fee structures and rationale for recommending different fees among categories of funds; and (vi) Fidelity's rationale for recommending which funds should have a performance adjustment component as part of their management fees.
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 material factors, the Board ultimately concluded that the advisory fee structures are fair and reasonable, and that the fund's Advisory Contracts should be renewed.
Annual Report
Managing Your Investments
Fidelity offers several ways to conveniently manage your personal investments via your telephone or PC. You can access your account information, conduct trades and research your investments 24 hours a day.
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* When you call the quotes line, please remember that a fund's yield and return will vary and, except for money market funds, share price will also vary. This means that you may have a gain or loss when you sell your shares. There is no assurance that money market funds will be able to maintain a stable $1 share price; an investment in a money market fund is not insured or guaranteed by the U.S. government. Total returns are historical and include changes in share price, reinvestment of dividends and capital gains, and the effects of any sales charges.
Annual Report
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Annual Report
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Annual Report
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REI-UANN-0908 1.789710.105
Fidelity®
Small Cap Growth
Fund
Annual Report
July 31, 2008
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message | Ned Johnson's message to shareholders. | |
Performance | How the fund has done over time. | |
Management's Discussion | The manager's review of fund performance, strategy and outlook. | |
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 |
| |
Proxy Voting Results |
| |
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 (search for "proxy voting guidelines.") or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-800-544-8544 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company.
Annual Report
This report and the financial statements contained herein are submitted for the general information of the shareholders of the fund. This report is not authorized for distribution to prospective investors in the fund unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the fund's most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com or http://www.advisor.fidelity.com, as applicable.
NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE
Neither the fund nor Fidelity Distributors Corporation is a bank.
Annual Report
Chairman's Message
(photo_of_Edward_C_Johnson_3d)
Dear Shareholder:
Domestic and international securities markets have struggled thus far in 2008. High-grade fixed-income investments produced modestly positive results, but many stock benchmarks suffered double-digit losses through the first half of this year. Financial markets are always unpredictable, but there are a number of time-tested principles that can put the historical odds in your favor.
One of the basic tenets is to invest for the long term. Over time, riding out the markets' inevitable ups and downs has proven much more effective than selling into panic or chasing the hottest trend. Even missing only a few of the markets' best days can significantly diminish investor returns. Patience also affords the benefits of compounding - of earning interest on additional income or reinvested dividends and capital gains. There are tax advantages and cost benefits to consider as well. The more you sell, the more taxes you pay, and the more you trade, the higher the costs. While staying the course doesn't eliminate risk, it can considerably lessen the effect of short-term declines.
You can further manage your investing risk through diversification. And today, more than ever, geographic diversification should be taken into account. Studies indicate that asset allocation is the single most important determinant of a portfolio's long-term success. The right mix of stocks, bonds and cash - aligned to your particular risk tolerance and investment objective - is very important. Age-appropriate rebalancing is also an essential aspect of asset allocation. For younger investors, an emphasis on equities - which historically have been the best-performing asset class over time - is encouraged. As investors near their specific goal, such as retirement or sending a child to college, consideration may be given to replacing volatile assets (e.g. common stocks) with more-stable fixed investments (bonds or savings plans).
A third investment principle - investing regularly - can help lower the average cost of your purchases. Investing a certain amount of money each month or quarter helps ensure you won't pay for all your shares at market highs. This strategy - known as dollar cost averaging - also reduces unconstructive "emotion" from investing, helping shareholders avoid selling weak performers just prior to an upswing, or chasing a hot performer just before a correction.
We invite you to contact us via the Internet, through our Investor Centers or over the phone. It is our privilege to provide you the information you need to make the investments that are right for you.
Sincerely,
/s/Edward C. Johnson 3d
Edward C. Johnson 3d
Annual Report
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of Small Cap Growth's dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended July 31, 2008 | Past 1 | Life of |
Small Cap Growth | -11.98% | 10.48% |
A From November 3, 2004.
$10,000 Over Life of Fund
Let's say hypothetically that $10,000 was invested in Small Cap Growth on November 3, 2004, when the fund started. The chart shows how the value of your investment would have changed, and also shows how the Russell 2000® Growth Index performed over the same period.
Annual Report
Management's Discussion of Fund Performance
Comments from Lionel Harris, Portfolio Manager of Fidelity® Small Cap Growth Fund
Grim news about the U.S. economy forced most domestic equity benchmarks into negative territory for the 12 months ending July 31, 2008. Oil prices north of $140 per barrel, gasoline prices in excess of $4 per gallon and soaring food costs drove inflation and consumer prices higher. In response, consumer discretionary spending trended lower as Main Street tightened its purse strings. Wall Street, meanwhile, struggled under the weight of massive write-downs in the financials sector, an ongoing credit crisis and bleak housing data. In an effort to staunch the bleeding, the Federal Reserve Board cut interest rates on seven occasions during the past year. Nevertheless, investors fled the equity markets, and both the Dow Jones Industrial AverageSM and the Standard & Poor's 500SM Index fell to a threshold that many believe marks the official start of a "bear market." For the 12 months overall, the Dow slid 11.71%, the S&P 500® dropped 11.09% and the technology-heavy NASDAQ Composite® Index dipped 7.98%.
Small Cap Growth lost 11.98% during the 12 months ending July 31, 2008, significantly lagging the Russell 2000® Growth Index, which declined 3.76%. Although the fund benefited from an overweighting in energy stocks, poor security selection - being too heavily exposed to refining companies and not owning enough coal stocks, especially - was a big negative. Among refineries, I owned two out-of-benchmark stocks - Western Refining and Tesoro - that lagged, while the fund lacked positions in strong-performing coal producers Alpha Natural Resources and Walter Industries, both of which were benchmark components. I was also significantly underweighted in consumer-related names, which helped, but, unfortunately, not enough to make up for weak stock selection in the group. An underweighting in pharmaceutical-related companies within health care also detracted. In industrials, however, stock selection in capital goods was a plus, while a small cash position in a weak market helped as well. Despite our relative underweighting in the coal industry, the portfolio did include a helpful out-of-benchmark position in coal producer Massey Energy, while Flowserve, an out-of-benchmark maker of pumps, valves and seals used in infrastructure projects, was a significant positive. As global demand for Flowserve's products increased, investors became quite optimistic about the company's potential earnings power. At period end, Western Refining, Massey and Flowserve were no longer in the portfolio.
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 (February 1, 2008 to July 31, 2008).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Annual Report
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Beginning | Ending | Expenses Paid |
Class A |
|
|
|
Actual | $ 1,000.00 | $ 919.86 | $ 6.64 |
HypotheticalA | $ 1,000.00 | $ 1,017.95 | $ 6.97 |
Class T |
|
|
|
Actual | $ 1,000.00 | $ 918.41 | $ 7.87 |
HypotheticalA | $ 1,000.00 | $ 1,016.66 | $ 8.27 |
Class B |
|
|
|
Actual | $ 1,000.00 | $ 916.32 | $ 10.24 |
HypotheticalA | $ 1,000.00 | $ 1,014.17 | $ 10.77 |
Class C |
|
|
|
Actual | $ 1,000.00 | $ 916.14 | $ 10.20 |
HypotheticalA | $ 1,000.00 | $ 1,014.22 | $ 10.72 |
Small Cap Growth |
|
|
|
Actual | $ 1,000.00 | $ 921.00 | $ 5.30 |
HypotheticalA | $ 1,000.00 | $ 1,019.34 | $ 5.57 |
Institutional Class |
|
|
|
Actual | $ 1,000.00 | $ 921.69 | $ 4.97 |
HypotheticalA | $ 1,000.00 | $ 1,019.69 | $ 5.22 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
| Annualized |
Class A | 1.39% |
Class T | 1.65% |
Class B | 2.15% |
Class C | 2.14% |
Small Cap Growth | 1.11% |
Institutional Class | 1.04% |
Annual Report
Investment Changes (Unaudited)
Top Ten Stocks as of July 31, 2008 | ||
| % of fund's | % of fund's net assets |
Harris Corp. | 1.4 | 1.4 |
j2 Global Communications, Inc. | 1.4 | 1.3 |
Foundation Coal Holdings, Inc. | 1.4 | 0.0 |
Hercules Offshore, Inc. | 1.4 | 0.0 |
Huron Consulting Group, Inc. | 1.4 | 1.3 |
Concho Resources, Inc. | 1.4 | 0.0 |
Corn Products International, Inc. | 1.4 | 0.5 |
EXCO Resources, Inc. | 1.3 | 0.6 |
Superior Energy Services, Inc. | 1.3 | 1.5 |
Atwood Oceanics, Inc. | 1.3 | 1.2 |
| 13.7 | |
Top Five Market Sectors as of July 31, 2008 | ||
| % of fund's | % of fund's net assets |
Health Care | 20.1 | 19.4 |
Industrials | 18.8 | 18.0 |
Information Technology | 18.5 | 22.0 |
Energy | 12.4 | 13.3 |
Consumer Discretionary | 9.4 | 8.2 |
Asset Allocation (% of fund's net assets) | |||||||
As of July 31, 2008 * | As of January 31, 2008 ** | ||||||
Stocks 95.8% |
| Stocks 97.4% |
| ||||
Short-Term |
| Short-Term |
| ||||
* Foreign investments | 13.4% |
| ** Foreign investments | 13.9% |
|
Annual Report
Investments July 31, 2008
Showing Percentage of Net Assets
Common Stocks - 95.8% | |||
Shares | Value | ||
CONSUMER DISCRETIONARY - 9.4% | |||
Distributors - 1.0% | |||
LKQ Corp. (a) | 629,900 | $ 12,912,950 | |
Diversified Consumer Services - 1.8% | |||
Apollo Group, Inc. Class A (non-vtg.) (a) | 215,200 | 13,404,808 | |
Hillenbrand, Inc. | 443,800 | 10,273,970 | |
| 23,678,778 | ||
Hotels, Restaurants & Leisure - 1.5% | |||
Bally Technologies, Inc. (a) | 434,600 | 13,815,934 | |
Penn National Gaming, Inc. (a) | 230,000 | 6,561,900 | |
| 20,377,834 | ||
Household Durables - 0.9% | |||
Ryland Group, Inc. | 131,500 | 2,707,585 | |
Whirlpool Corp. | 121,000 | 9,159,700 | |
| 11,867,285 | ||
Internet & Catalog Retail - 0.6% | |||
Priceline.com, Inc. (a)(d) | 74,000 | 8,506,300 | |
Media - 0.3% | |||
Virgin Media, Inc. | 405,000 | 4,544,100 | |
Specialty Retail - 1.8% | |||
Advance Auto Parts, Inc. | 164,900 | 6,775,741 | |
Citi Trends, Inc. (a)(d) | 292,985 | 6,776,743 | |
The Men's Wearhouse, Inc. | 269,900 | 5,373,709 | |
Tween Brands, Inc. (a) | 315,000 | 4,337,550 | |
| 23,263,743 | ||
Textiles, Apparel & Luxury Goods - 1.5% | |||
Deckers Outdoor Corp. (a) | 93,500 | 10,566,435 | |
Iconix Brand Group, Inc. (a) | 748,600 | 8,983,200 | |
| 19,549,635 | ||
TOTAL CONSUMER DISCRETIONARY | 124,700,625 | ||
CONSUMER STAPLES - 4.8% | |||
Food Products - 2.3% | |||
Corn Products International, Inc. (d) | 381,900 | 17,762,169 | |
Dean Foods Co. (a) | 583,400 | 12,426,420 | |
| 30,188,589 | ||
Household Products - 0.6% | |||
Energizer Holdings, Inc. (a) | 122,000 | 8,703,480 | |
Common Stocks - continued | |||
Shares | Value | ||
CONSUMER STAPLES - continued | |||
Personal Products - 1.9% | |||
Bare Escentuals, Inc. (a)(d) | 329,500 | $ 3,802,430 | |
Chattem, Inc. (a)(d) | 248,300 | 16,007,901 | |
Physicians Formula Holdings, Inc. (a) | 518,005 | 4,832,987 | |
| 24,643,318 | ||
TOTAL CONSUMER STAPLES | 63,535,387 | ||
ENERGY - 12.4% | |||
Energy Equipment & Services - 5.4% | |||
Atwood Oceanics, Inc. (a) | 375,800 | 17,252,978 | |
Complete Production Services, Inc. (a) | 246,100 | 7,835,824 | |
Hercules Offshore, Inc. (a) | 737,219 | 18,408,358 | |
Hornbeck Offshore Services, Inc. (a)(d) | 248,900 | 11,095,962 | |
Superior Energy Services, Inc. (a) | 364,400 | 17,283,492 | |
| 71,876,614 | ||
Oil, Gas & Consumable Fuels - 7.0% | |||
Cabot Oil & Gas Corp. | 185,100 | 8,146,251 | |
Concho Resources, Inc. | 544,800 | 17,842,200 | |
EXCO Resources, Inc. (a) | 666,400 | 17,359,720 | |
Foundation Coal Holdings, Inc. | 316,000 | 18,770,400 | |
Holly Corp. | 110,000 | 3,143,800 | |
Petrohawk Energy Corp. (a)(d) | 265,200 | 8,836,464 | |
Range Resources Corp. | 177,850 | 8,636,396 | |
Tesoro Corp. | 639,700 | 9,876,968 | |
| 92,612,199 | ||
TOTAL ENERGY | 164,488,813 | ||
FINANCIALS - 4.6% | |||
Capital Markets - 1.2% | |||
FCStone Group, Inc. (a) | 258,000 | 4,969,080 | |
Janus Capital Group, Inc. | 342,800 | 10,400,552 | |
| 15,369,632 | ||
Insurance - 1.1% | |||
Aspen Insurance Holdings Ltd. | 336,100 | 8,533,579 | |
StanCorp Financial Group, Inc. | 137,982 | 6,814,931 | |
| 15,348,510 | ||
Real Estate Investment Trusts - 0.7% | |||
American Campus Communities, Inc. | 319,200 | 9,346,176 | |
Common Stocks - continued | |||
Shares | Value | ||
FINANCIALS - continued | |||
Real Estate Management & Development - 1.2% | |||
CB Richard Ellis Group, Inc. Class A (a) | 253,100 | $ 3,556,055 | |
Jones Lang LaSalle, Inc. (d) | 249,000 | 11,862,360 | |
| 15,418,415 | ||
Thrifts & Mortgage Finance - 0.4% | |||
Washington Federal, Inc. | 285,765 | 5,315,229 | |
TOTAL FINANCIALS | 60,797,962 | ||
HEALTH CARE - 20.1% | |||
Biotechnology - 2.3% | |||
BioMarin Pharmaceutical, Inc. (a) | 247,000 | 8,039,850 | |
Cephalon, Inc. (a) | 170,800 | 12,495,728 | |
Grifols SA | 326,802 | 9,775,458 | |
| 30,311,036 | ||
Health Care Equipment & Supplies - 5.8% | |||
Abaxis, Inc. (a)(d) | 403,300 | 8,021,637 | |
American Medical Systems Holdings, Inc. (a)(d) | 1,016,400 | 16,740,108 | |
Hill-Rom Holdings, Inc. (d) | 465,500 | 13,075,895 | |
Immucor, Inc. (a) | 473,900 | 14,278,607 | |
Integra LifeSciences Holdings Corp. (a)(d) | 320,200 | 14,620,332 | |
Meridian Bioscience, Inc. | 372,000 | 9,675,720 | |
| 76,412,299 | ||
Health Care Providers & Services - 5.2% | |||
Air Methods Corp. (a) | 181,000 | 5,189,270 | |
Brookdale Senior Living, Inc. | 22,000 | 335,720 | |
Henry Schein, Inc. (a) | 102,900 | 5,511,324 | |
Patterson Companies, Inc. (a) | 406,000 | 12,679,380 | |
Pediatrix Medical Group, Inc. (a) | 268,900 | 13,081,985 | |
PSS World Medical, Inc. (a) | 922,499 | 15,461,083 | |
Sun Healthcare Group, Inc. (a) | 678,800 | 9,700,052 | |
Universal American Financial Corp. (a) | 665,031 | 6,976,175 | |
| 68,934,989 | ||
Life Sciences Tools & Services - 5.8% | |||
Charles River Laboratories International, Inc. (a) | 223,034 | 14,822,840 | |
ICON PLC sponsored ADR (a) | 152,990 | 12,291,217 | |
PAREXEL International Corp. (a) | 578,300 | 16,903,709 | |
Pharmaceutical Product Development, Inc. | 250,900 | 9,569,326 | |
Common Stocks - continued | |||
Shares | Value | ||
HEALTH CARE - continued | |||
Life Sciences Tools & Services - continued | |||
QIAGEN NV (a) | 470,000 | $ 8,831,300 | |
Varian, Inc. (a) | 287,400 | 14,197,560 | |
| 76,615,952 | ||
Pharmaceuticals - 1.0% | |||
Perrigo Co. | 386,800 | 13,626,964 | |
TOTAL HEALTH CARE | 265,901,240 | ||
INDUSTRIALS - 18.8% | |||
Aerospace & Defense - 1.5% | |||
Curtiss-Wright Corp. | 160,000 | 8,422,400 | |
Hexcel Corp. (a) | 591,000 | 11,217,180 | |
| 19,639,580 | ||
Commercial Services & Supplies - 6.7% | |||
CDI Corp. | 570,700 | 11,745,006 | |
Clean Harbors, Inc. (a) | 52,500 | 4,097,100 | |
Corrections Corp. of America (a) | 602,200 | 16,879,666 | |
CoStar Group, Inc. (a)(d) | 190,736 | 9,515,819 | |
Huron Consulting Group, Inc. (a)(d) | 351,400 | 18,329,024 | |
InnerWorkings, Inc. (a)(d) | 949,900 | 11,075,834 | |
Navigant Consulting, Inc. (a) | 578,800 | 10,696,224 | |
The Brink's Co. | 99,200 | 6,840,832 | |
| 89,179,505 | ||
Construction & Engineering - 3.1% | |||
Chicago Bridge & Iron Co. NV (NY Shares) | 504,100 | 16,519,357 | |
KBR, Inc. | 345,900 | 9,858,150 | |
Outotec Oyj | 274,700 | 13,990,961 | |
| 40,368,468 | ||
Electrical Equipment - 3.0% | |||
EnerSys (a) | 394,600 | 12,737,688 | |
JA Solar Holdings Co. Ltd. ADR (a)(d) | 991,300 | 15,038,021 | |
SMA Solar Technology AG | 137,000 | 11,588,016 | |
| 39,363,725 | ||
Industrial Conglomerates - 1.0% | |||
Raven Industries, Inc. (d) | 348,600 | 13,264,230 | |
Machinery - 1.6% | |||
Colfax Corp. | 413,000 | 11,270,770 | |
Sulzer AG (Reg.) | 86,130 | 10,326,497 | |
| 21,597,267 | ||
Common Stocks - continued | |||
Shares | Value | ||
INDUSTRIALS - continued | |||
Road & Rail - 1.9% | |||
Con-way, Inc. | 271,000 | $ 13,701,760 | |
Knight Transportation, Inc. (d) | 634,300 | 12,000,956 | |
| 25,702,716 | ||
TOTAL INDUSTRIALS | 249,115,491 | ||
INFORMATION TECHNOLOGY - 18.5% | |||
Communications Equipment - 2.3% | |||
Harris Corp. | 398,700 | 19,197,403 | |
Polycom, Inc. (a)(d) | 478,500 | 11,292,600 | |
| 30,490,003 | ||
Computers & Peripherals - 0.6% | |||
Wincor Nixdorf AG | 108,400 | 8,093,777 | |
Electronic Equipment & Instruments - 1.5% | |||
Cogent, Inc. (a)(d) | 887,400 | 8,998,236 | |
Trimble Navigation Ltd. (a) | 344,600 | 11,440,720 | |
| 20,438,956 | ||
Internet Software & Services - 3.9% | |||
Art Technology Group, Inc. (a) | 1,790,000 | 6,569,300 | |
Equinix, Inc. (a)(d) | 176,600 | 14,368,176 | |
j2 Global Communications, Inc. (a) | 792,500 | 18,996,225 | |
Telecity Group PLC | 2,558,100 | 12,004,378 | |
| 51,938,079 | ||
IT Services - 4.7% | |||
Alliance Data Systems Corp. (a) | 218,000 | 13,984,700 | |
CACI International, Inc. Class A (a) | 295,400 | 13,281,184 | |
CyberSource Corp. (a) | 653,466 | 11,599,022 | |
Datacash Group PLC | 1,661,200 | 9,013,749 | |
Satyam Computer Services Ltd. sponsored ADR (d) | 386,300 | 8,243,642 | |
WNS Holdings Ltd. ADR (a) | 334,500 | 5,686,500 | |
| 61,808,797 | ||
Semiconductors & Semiconductor Equipment - 3.3% | |||
Hittite Microwave Corp. (a) | 512,821 | 16,369,246 | |
Lam Research Corp. (a) | 290,000 | 9,538,100 | |
Microsemi Corp. (a)(d) | 280,700 | 7,286,972 | |
Varian Semiconductor Equipment Associates, Inc. (a) | 350,490 | 10,241,318 | |
| 43,435,636 | ||
Software - 2.2% | |||
Ansys, Inc. (a) | 169,500 | 7,776,660 | |
Common Stocks - continued | |||
Shares | Value | ||
INFORMATION TECHNOLOGY - continued | |||
Software - continued | |||
Blackbaud, Inc. | 806,059 | $ 14,396,214 | |
Taleo Corp. Class A (a) | 141,439 | 2,650,567 | |
Ultimate Software Group, Inc. (a) | 158,000 | 4,144,340 | |
| 28,967,781 | ||
TOTAL INFORMATION TECHNOLOGY | 245,173,029 | ||
MATERIALS - 6.4% | |||
Chemicals - 1.0% | |||
Terra Industries, Inc. (d) | 250,000 | 13,500,000 | |
Containers & Packaging - 0.3% | |||
Myers Industries, Inc. | 360,000 | 4,032,000 | |
Metals & Mining - 5.1% | |||
Carpenter Technology Corp. | 176,100 | 6,815,070 | |
Compass Minerals International, Inc. | 100,000 | 7,560,000 | |
IAMGOLD Corp. | 1,449,700 | 9,670,802 | |
International Ferro Metals (a) | 2,075,000 | 3,220,821 | |
Randgold Resources Ltd. sponsored ADR | 128,000 | 6,551,040 | |
Red Back Mining, Inc. (a) | 1,053,000 | 8,937,413 | |
Reliance Steel & Aluminum Co. | 172,500 | 10,895,100 | |
Steel Dynamics, Inc. | 453,900 | 14,379,552 | |
| 68,029,798 | ||
TOTAL MATERIALS | 85,561,798 | ||
UTILITIES - 0.8% | |||
Multi-Utilities - 0.8% | |||
CMS Energy Corp. (d) | 823,200 | 11,113,200 | |
TOTAL COMMON STOCKS (Cost $1,270,614,591) | 1,270,387,545 | ||
Money Market Funds - 14.7% | |||
Shares | Value | ||
Fidelity Cash Central Fund, 2.35% (b) | 56,597,666 | $ 56,597,666 | |
Fidelity Securities Lending Cash Central Fund, 2.37% (b)(c) | 138,167,794 | 138,167,794 | |
TOTAL MONEY MARKET FUNDS (Cost $194,765,460) | 194,765,460 | ||
TOTAL INVESTMENT PORTFOLIO - 110.5% (Cost $1,465,380,051) | 1,465,153,005 | ||
NET OTHER ASSETS - (10.5)% | (139,785,194) | ||
NET ASSETS - 100% | $ 1,325,367,811 |
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
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 | $ 1,820,442 |
Fidelity Securities Lending Cash Central Fund | 732,714 |
Total | $ 2,553,156 |
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 | Dividend Income | Value, |
Physicians Formula Holdings, Inc. | $ 5,827,585 | $ 3,948,990 | $ 2,083,245 | $ - | $ - |
Quixote Corp. | 8,618,526 | 150,375 | 6,248,265 | 75,980 | - |
Total | $ 14,446,111 | $ 4,099,365 | $ 8,331,510 | $ 75,980 | $ - |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 86.6% |
United Kingdom | 2.5% |
Netherlands | 2.0% |
Germany | 1.5% |
Canada | 1.4% |
Cayman Islands | 1.1% |
Finland | 1.1% |
Others (individually less than 1%) | 3.8% |
| 100.0% |
Income Tax Information |
The fund intends to elect to defer to its fiscal year ending July 31, 2009 approximately $101,242,350 of losses recognized during the period November 1, 2007 to July 31, 2008. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements
Statement of Assets and Liabilities
| July 31, 2008 | |
Assets | ||
Investment in securities, at value (including securities loaned of $131,418,460) - See accompanying schedule: Unaffiliated issuers (cost $1,270,614,591) | $ 1,270,387,545 |
|
Fidelity Central Funds (cost $194,765,460) | 194,765,460 |
|
Total Investments (cost $1,465,380,051) |
| $ 1,465,153,005 |
Cash | 29 | |
Receivable for investments sold | 46,620,442 | |
Receivable for fund shares sold | 1,370,340 | |
Dividends receivable | 110,652 | |
Distributions receivable from Fidelity Central Funds | 186,218 | |
Prepaid expenses | 1,556 | |
Other receivables | 22,988 | |
Total assets | 1,513,465,230 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 47,843,463 | |
Payable for fund shares redeemed | 865,758 | |
Accrued management fee | 777,626 | |
Distribution fees payable | 36,066 | |
Other affiliated payables | 350,881 | |
Other payables and accrued expenses | 55,831 | |
Collateral on securities loaned, at value | 138,167,794 | |
Total liabilities | 188,097,419 | |
|
|
|
Net Assets | $ 1,325,367,811 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,431,164,163 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (105,567,096) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (229,256) | |
Net Assets | $ 1,325,367,811 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements - continued
Statement of Assets and Liabilities - continued
| July 31, 2008 | |
Calculation of Maximum Offering Price Class A: | $ 13.20 | |
|
|
|
Maximum offering price per share (100/94.25 of $13.20) | $ 14.01 | |
Class T: | $ 13.17 | |
|
|
|
Maximum offering price per share (100/96.50 of $13.17) | $ 13.65 | |
Class B: | $ 13.03 | |
|
|
|
Class C: | $ 13.00 | |
|
|
|
|
|
|
Small Cap Growth: | $ 13.29 | |
|
|
|
Institutional Class: | $ 13.30 |
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
| Year ended July 31, 2008 | |
Investment Income |
|
|
Dividends (including $75,980 earned from other affiliated issuers) |
| $ 6,201,842 |
Interest |
| 2,990 |
Income from Fidelity Central Funds (including $732,714 from security lending) |
| 2,553,156 |
Total income |
| 8,757,988 |
|
|
|
Expenses | ||
Management fee | $ 9,449,883 | |
Performance adjustment | 1,059,130 | |
Transfer agent fees | 3,613,151 | |
Distribution fees | 499,117 | |
Accounting and security lending fees | 449,905 | |
Custodian fees and expenses | 36,783 | |
Independent trustees' compensation | 5,530 | |
Registration fees | 121,158 | |
Audit | 56,803 | |
Legal | 5,485 | |
Miscellaneous | 83,752 | |
Total expenses before reductions | 15,380,697 | |
Expense reductions | (98,390) | 15,282,307 |
Net investment income (loss) | (6,524,319) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | (99,142,662) | |
Other affiliated issuers | (4,601,658) |
|
Foreign currency transactions | (12,025) | |
Total net realized gain (loss) |
| (103,756,345) |
Change in net unrealized appreciation (depreciation) on: Investment securities | (72,234,294) | |
Assets and liabilities in foreign currencies | (1,961) | |
Total change in net unrealized appreciation (depreciation) |
| (72,236,255) |
Net gain (loss) | (175,992,600) | |
Net increase (decrease) in net assets resulting from operations | $ (182,516,919) |
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) | $ (6,524,319) | $ (4,437,632) |
Net realized gain (loss) | (103,756,345) | 87,862,892 |
Change in net unrealized appreciation (depreciation) | (72,236,255) | 65,702,764 |
Net increase (decrease) in net assets resulting | (182,516,919) | 149,128,024 |
Distributions to shareholders from net realized gain | (81,199,740) | (3,591,980) |
Share transactions - net increase (decrease) | 331,568,501 | 637,612,035 |
Redemption fees | 439,174 | 160,118 |
Total increase (decrease) in net assets | 68,291,016 | 783,308,197 |
|
|
|
Net Assets | ||
Beginning of period | 1,257,076,795 | 473,768,598 |
End of period | $ 1,325,367,811 | $ 1,257,076,795 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended July 31, | 2008 | 2007 | 2006 | 2005 J |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 16.06 | $ 12.88 | $ 12.95 | $ 10.00 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss)E | (.11) | (.12)H | (.10)I | (.07) |
Net realized and unrealized gain (loss) | (1.73) | 3.39 | .18 | 3.01 |
Total from investment operations | (1.84) | 3.27 | .08 | 2.94 |
Distributions from net realized gain | (1.02) | (.09) | (.16) | - |
Redemption fees added to paid in capitalE | -L | -L | .01 | .01 |
Net asset value, end of period | $ 13.20 | $ 16.06 | $ 12.88 | $ 12.95 |
Total ReturnB, C, D | (12.26)% | 25.52% | .70% | 29.50% |
Ratios to Average Net AssetsF, K |
|
|
|
|
Expenses before reductions | 1.40% | 1.44% | 1.53% | 1.55%A |
Expenses net of fee waivers, if any | 1.40% | 1.40% | 1.40% | 1.45%A |
Expenses net of all reductions | 1.39% | 1.39% | 1.35% | 1.36%A |
Net investment income (loss) | (.74)% | (.80)%H | (.79)%I | (.78)%A |
Supplemental Data |
|
|
|
|
Net assets, end of period (000 omitted) | $ 42,187 | $ 33,588 | $ 18,104 | $ 4,719 |
Portfolio turnover rateG | 113% | 91% | 129% | 93%A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
H Investment income per share reflects a special dividend which amounted to $.01 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.84)%.
I Investment income per share reflects a special dividend which amounted to $.01 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.85)%.
J For the period November 3, 2004 (commencement of operations) to July 31, 2005.
K Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
L Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class T
Years ended July 31, | 2008 | 2007 | 2006 | 2005 J |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 16.01 | $ 12.86 | $ 12.93 | $ 10.00 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss) E | (.15) | (.16)H | (.14)I | (.09) |
Net realized and unrealized gain (loss) | (1.73) | 3.38 | .19 | 3.01 |
Total from investment operations | (1.88) | 3.22 | .05 | 2.92 |
Distributions from net realized gain | (.96) | (.07) | (.13) | - |
Redemption fees added to paid in capital E | - L | -L | .01 | .01 |
Net asset value, end of period | $ 13.17 | $ 16.01 | $ 12.86 | $ 12.93 |
Total ReturnB, C, D | (12.50)% | 25.18% | .48% | 29.30% |
Ratios to Average Net AssetsF, K |
|
|
|
|
Expenses before reductions | 1.65% | 1.67% | 1.73% | 1.79%A |
Expenses net of fee waivers, if any | 1.65% | 1.65% | 1.65% | 1.70%A |
Expenses net of all reductions | 1.65% | 1.65% | 1.60% | 1.61%A |
Net investment income (loss) | (.99)% | (1.05)%H | (1.04)%I | (1.03)%A |
Supplemental Data |
|
|
|
|
Net assets, end of period (000 omitted) | $ 21,754 | $ 26,419 | $ 19,205 | $ 5,240 |
Portfolio turnover rateG | 113% | 91% | 129% | 93%A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
H Investment income per share reflects a special dividend which amounted to $.01 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (1.09)%.
I Investment income per share reflects a special dividend which amounted to $.01 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (1.10)%.
J For the period November 3, 2004 (commencement of operations) to July 31, 2005.
K Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
L Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class B
Years ended July 31, | 2008 | 2007 | 2006 | 2005J |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 15.85 | $ 12.78 | $ 12.87 | $ 10.00 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss)E | (.22) | (.23)H | (.20)I | (.13) |
Net realized and unrealized gain (loss) | (1.71) | 3.36 | .19 | 2.99 |
Total from investment operations | (1.93) | 3.13 | (.01) | 2.86 |
Distributions from net realized gain | (.89) | (.06) | (.09) | - |
Redemption fees added to paid in capitalE | -L | -L | .01 | .01 |
Net asset value, end of period | $ 13.03 | $ 15.85 | $ 12.78 | $ 12.87 |
Total ReturnB, C, D | (12.92)% | 24.57% | (.03)% | 28.70% |
Ratios to Average Net AssetsF, K |
|
|
|
|
Expenses before reductions | 2.15% | 2.20% | 2.28% | 2.33%A |
Expenses net of fee waivers, if any | 2.15% | 2.15% | 2.15% | 2.20%A |
Expenses net of all reductions | 2.15% | 2.15% | 2.10% | 2.11%A |
Net investment income (loss) | (1.49)% | (1.55)%H | (1.54)%I | (1.53)%A |
Supplemental Data |
|
|
|
|
Net assets, end of period (000 omitted) | $ 5,517 | $ 6,242 | $ 5,191 | $ 2,055 |
Portfolio turnover rateG | 113% | 91% | 129% | 93%A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the contingent deferred sales charge.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
H Investment income per share reflects a special dividend which amounted to $.01 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (1.59)%.
I Investment income per share reflects a special dividend which amounted to $.01 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (1.60)%.
J For the period November 3, 2004 (commencement of operations) to July 31, 2005.
K Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
L Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class C
Years ended July 31, | 2008 | 2007 | 2006 | 2005J |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 15.84 | $ 12.77 | $ 12.88 | $ 10.00 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss)E | (.22) | (.23)H | (.20)I | (.13) |
Net realized and unrealized gain (loss) | (1.71) | 3.36 | .18 | 3.00 |
Total from investment operations | (1.93) | 3.13 | (.02) | 2.87 |
Distributions from net realized gain | (.91) | (.06) | (.10) | - |
Redemption fees added to paid in capitalE | -L | -L | .01 | .01 |
Net asset value, end of period | $ 13.00 | $ 15.84 | $ 12.77 | $ 12.88 |
Total ReturnB, C, D | (12.94)% | 24.59% | (.08)% | 28.80% |
Ratios to Average Net AssetsF, K |
|
|
|
|
Expenses before reductions | 2.15% | 2.20% | 2.25% | 2.24%A |
Expenses net of fee waivers, if any | 2.15% | 2.15% | 2.15% | 2.17%A |
Expenses net of all reductions | 2.14% | 2.14% | 2.10% | 2.09%A |
Net investment income (loss) | (1.49)% | (1.55)%H | (1.54)%I | (1.50)%A |
Supplemental Data |
|
|
|
|
Net assets, end of period (000 omitted) | $ 15,946 | $ 22,348 | $ 14,682 | $ 8,372 |
Portfolio turnover rateG | 113% | 91% | 129% | 93%A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the contingent deferred sales charge.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
H Investment income per share reflects a special dividend which amounted to $.01 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (1.59)%.
I Investment income per share reflects a special dividend which amounted to $.01 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (1.60)%.
J For the period November 3, 2004 (commencement of operations) to July 31, 2005.
K Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
L Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Small Cap Growth
Years ended July 31, | 2008 | 2007 | 2006 | 2005 I |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 16.15 | $ 12.93 | $ 12.98 | $ 10.00 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss)D | (.07) | (.08)G | (.07)H | (.04) |
Net realized and unrealized gain (loss) | (1.74) | 3.40 | .19 | 3.01 |
Total from investment operations | (1.81) | 3.32 | .12 | 2.97 |
Distributions from net realized gain | (1.05) | (.10) | (.18) | - |
Redemption fees added to paid in capitalD | -K | -K | .01 | .01 |
Net asset value, end of period | $ 13.29 | $ 16.15 | $ 12.93 | $ 12.98 |
Total ReturnB, C | (11.98)% | 25.84% | 1.01% | 29.80% |
Ratios to Average Net AssetsE, J |
|
|
|
|
Expenses before reductions | 1.11% | 1.10% | 1.13% | 1.16%A |
Expenses net of fee waivers, if any | 1.11% | 1.10% | 1.13% | 1.16%A |
Expenses net of all reductions | 1.10% | 1.09% | 1.08% | 1.08%A |
Net investment income (loss) | (.45)% | (.50)%G | (.52)%H | (.49)%A |
Supplemental Data |
|
|
|
|
Net assets, end of period (000 omitted) | $ 1,217,520 | $ 1,149,809 | $ 402,353 | $ 205,652 |
Portfolio turnover rateF | 113% | 91% | 129% | 93%A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
G Investment income per share reflects a special dividend which amounted to $.01 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.54)%.
H Investment income per share reflects a special dividend which amounted to $.01 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.58)%.
I For the period November 3, 2004 (commencement of operations) to July 31, 2005.
J Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
K 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 July 31, | 2008 | 2007 | 2006 | 2005I |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 16.15 | $ 12.92 | $ 12.97 | $ 10.00 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss)D | (.06) | (.07)G | (.07)H | (.04) |
Net realized and unrealized gain (loss) | (1.74) | 3.41 | .19 | 3.00 |
Total from investment operations | (1.80) | 3.34 | .12 | 2.96 |
Distributions from net realized gain | (1.05) | (.11) | (.18) | - |
Redemption fees added to paid in capitalD | -K | -K | .01 | .01 |
Net asset value, end of period | $ 13.30 | $ 16.15 | $ 12.92 | $ 12.97 |
Total ReturnB, C | (11.93)% | 25.99% | .97% | 29.70% |
Ratios to Average Net AssetsE, J |
|
|
|
|
Expenses before reductions | 1.04% | 1.05% | 1.10% | 1.20%A |
Expenses net of fee waivers, if any | 1.04% | 1.05% | 1.10% | 1.18%A |
Expenses net of all reductions | 1.03% | 1.05% | 1.05% | 1.10%A |
Net investment income (loss) | (.38)% | (.46)%G | (.49)%H | (.51)%A |
Supplemental Data |
|
|
|
|
Net assets, end of period (000 omitted) | $ 22,444 | $ 18,671 | $ 14,233 | $ 1,906 |
Portfolio turnover rateF | 113% | 91% | 129% | 93%A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
G Investment income per share reflects a special dividend which amounted to $.01 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.50)%.
H Investment income per share reflects a special dividend which amounted to $.01 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.55)%.
I For the period November 3, 2004 (commencement of operations) to July 31, 2005.
J Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
K 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 July 31, 2008
1. Organization.
Fidelity Small Cap Growth Fund (the Fund) is a fund of Fidelity Securities Fund (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 B, Class C, Small Cap Growth, and Institutional Class 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 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 also differ by class.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the SEC's web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:
Annual Report
3. Significant Accounting Policies - continued
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. Wherever possible, the Fund uses independent pricing services approved by the Board of Trustees to value its investments.
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Annual Report
Notes to Financial Statements - continued
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. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The implementation of FIN 48 did not result in any unrecognized tax benefits in the accompanying financial statements. Each of the Fund's federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles.
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 foreign currency transactions, passive foreign investment companies (PFIC), partnerships, net operating losses, losses deferred due to wash sales and excise tax regulations.
The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows:
Unrealized appreciation | $ 125,536,253 |
Unrealized depreciation | (130,088,038) |
Net unrealized appreciation (depreciation) | (4,551,785) |
Cost for federal income tax purposes | $ 1,469,704,790 |
The tax character of distributions paid was as follows:
| July 31, 2008 | July 31, 2007 |
Ordinary Income | $ 58,646,396 | $ 1,338,128 |
Long-term Capital Gains | 22,553,344 | 2,253,852 |
Total | $ 81,199,740 | $ 3,591,980 |
Short-Term Trading (Redemption) Fees. Shares held in the Fund less than 90 days are subject to a redemption fee equal to 1.50% of the proceeds of the redeemed shares. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the Fund and accounted for as an addition to paid in capital.
New Accounting Pronouncement. In September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and results in expanded disclosures about fair value measurements.
4. Operating Policies.
Repurchase Agreements. FMR has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits the Fund and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts which are then invested in repurchase agreements. The Fund may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in
Annual Report
Notes to Financial Statements - continued
4. Operating Policies - continued
Repurchase Agreements - continued
segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. The Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
5. Purchases and Sales of Investments.
Purchases and sales of securities other than short-term securities, aggregated $1,698,044,847 and $1,457,287,817, 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 .45% of the Fund's average net assets and a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. In addition, the management fee is subject to a performance adjustment (up to a maximum of ± .20% of the Fund's average net assets over a 36 month performance period). The upward or downward adjustment to the management fee is based on the relative investment performance of the retail class of the Fund, Small Cap Growth, as compared to an appropriate benchmark index. For the period, the total annual management fee rate, including the performance adjustment, was .79% of the Fund's average net assets.
Distribution and Service Plan. 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.
Annual Report
6. Fees and Other Transactions with Affiliates - continued
Distribution and Service Plan - continued
For the period, the Distribution and Service Fee rates and the total amounts paid to and retained by FDC were as follows:
| Distribution | Service | Paid to | Retained |
Class A | 0% | .25% | $ 98,491 | $ 12,415 |
Class T | .25% | .25% | 121,790 | 227 |
Class B | .75% | .25% | 61,874 | 46,406 |
Class C | .75% | .25% | 216,962 | 43,665 |
|
|
| $ 499,117 | $ 102,713 |
Sales Load. FDC receives 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. FDC receives the proceeds of contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. These charges depend on the holding period. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, 1.00% to .50% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained |
Class A | $ 37,191 |
Class T | 7,936 |
Class B* | 15,537 |
Class C* | 2,479 |
| $ 63,143 |
* 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. Prior to January 1, 2008, Fidelity Service
Annual Report
Notes to Financial Statements - continued
6. Fees and Other Transactions with Affiliates - continued
Transfer Agent Fees - continued
Company, Inc. (FSC), also an affiliate of FMR, was the transfer agent for Small Cap Growth shares. For the period, each class paid the following transfer agent fees:
| Amount | % of |
Class A | $ 119,848 | .30 |
Class T | 75,753 | .31 |
Class B | 18,899 | .31 |
Class C | 65,826 | .30 |
Small Cap Growth | 3,292,023 | .27 |
Institutional Class | 40,802 | .19 |
| $ 3,613,151 |
|
Accounting and Security Lending Fees. FSC, an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $27,116 for the period.
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $4.2 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro rata portion of the line of credit, which amounted to $2,996 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
8. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned
Annual Report
8. Security Lending - continued
securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds.
9. Expense Reductions.
FMR voluntarily agreed to reimburse each class to the extent annual operating expenses exceeded certain levels of average net assets as noted in the table below. Some expenses, for example interest expense, including commitment fees, are excluded from this reimbursement.
The following classes were in reimbursement during the period:
| Expense | Reimbursement |
Class T | 1.65% | $ 688 |
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 $37,290 for the period. In addition, through arrangements with the Fund's custodian and each class' transfer agent, credits realized as a result of uninvested cash balances were used to reduce the Fund's expenses. During the period, these credits reduced the Fund's custody expenses by $5,794. During the period, credits reduced each class' transfer agent expense as noted in the table below.
| Transfer Agent |
Small Cap Growth | $ 54,607 |
Institutional Class | 11 |
| $ 54,618 |
Annual Report
Notes to Financial Statements - continued
10. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
11. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended July 31, | 2008 | 2007 |
From net realized gain |
|
|
Class A | $ 2,216,913 | $ 130,212 |
Class T | 1,570,296 | 118,024 |
Class B | 348,424 | 24,691 |
Class C | 1,307,950 | 74,047 |
Small Cap Growth | 74,608,644 | 3,129,487 |
Institutional Class | 1,147,513 | 115,519 |
Total | $ 81,199,740 | $ 3,591,980 |
12. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
Years ended July 31, | 2008 | 2007 | 2008 | 2007 |
Class A |
|
|
|
|
Shares sold | 1,742,262 | 1,113,110 | $ 25,505,334 | $ 17,060,734 |
Reinvestment of distributions | 126,731 | 8,925 | 1,912,181 | 119,928 |
Shares redeemed | (763,921) | (436,417) | (11,052,109) | (6,456,393) |
Net increase (decrease) | 1,105,072 | 685,618 | $ 16,365,406 | $ 10,724,269 |
Class T |
|
|
|
|
Shares sold | 487,722 | 607,092 | $ 7,048,735 | $ 8,822,874 |
Reinvestment of distributions | 99,906 | 8,530 | 1,507,341 | 115,213 |
Shares redeemed | (586,050) | (459,339) | (8,531,977) | (6,905,798) |
Net increase (decrease) | 1,578 | 156,283 | $ 24,099 | $ 2,032,289 |
Class B |
|
|
|
|
Shares sold | 132,932 | 121,826 | $ 1,958,446 | $ 1,800,582 |
Reinvestment of distributions | 22,166 | 1,705 | 332,229 | 23,112 |
Shares redeemed | (125,460) | (135,943) | (1,804,323) | (1,994,978) |
Net increase (decrease) | 29,638 | (12,412) | $ 486,352 | $ (171,284) |
Annual Report
12. Share Transactions - continued
| Shares | Dollars | ||
Years ended July 31, | 2008 | 2007 | 2008 | 2007 |
Class C |
|
|
|
|
Shares sold | 436,957 | 546,198 | $ 6,320,995 | $ 8,014,853 |
Reinvestment of distributions | 82,544 | 5,178 | 1,234,732 | 70,286 |
Shares redeemed | (703,886) | (290,387) | (9,901,355) | (4,244,042) |
Net increase (decrease) | (184,385) | 260,989 | $ (2,345,628) | $ 3,841,097 |
Small Cap Growth |
|
|
|
|
Shares sold | 38,610,197 | 47,884,601 | $ 574,316,675 | $ 736,795,086 |
Reinvestment of distributions | 4,701,343 | 213,315 | 71,216,320 | 2,867,099 |
Shares redeemed | (22,858,332) | (8,042,099) | (336,543,207) | (119,410,062) |
Net increase (decrease) | 20,453,208 | 40,055,817 | $ 308,989,788 | $620,252,123 |
Institutional Class |
|
|
|
|
Shares sold | 788,829 | 404,996 | $ 11,907,085 | $ 6,086,460 |
Reinvestment of distributions | 66,279 | 7,296 | 1,004,006 | 97,691 |
Shares redeemed | (323,911) | (357,460) | (4,862,607) | (5,250,610) |
Net increase (decrease) | 531,197 | 54,832 | $ 8,048,484 | $ 933,541 |
Annual Report
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Securities Fund and the Shareholders of Fidelity Small Cap Growth 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 Small Cap Growth Fund (a fund of Fidelity Securities Fund) at July 31, 2008, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and 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 Small Cap Growth 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 July 31, 2008 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
September 22, 2008
Annual Report
Trustees and Officers
The Trustees, Member of the Advisory Board, and executive officers of the trust and fund, as applicable, are listed below. The Board of Trustees governs the fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee the fund's activities, review contractual arrangements with companies that provide services to the fund, and review the fund's performance. Except for Edward C. Johnson 3d and James C. Curvey, each of the Trustees oversees 218 funds advised by FMR or an affiliate. Messrs. Johnson and Curvey oversee 377 funds advised by FMR or an affiliate.
The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust. Each Trustee who is not an interested person (as defined in the 1940 Act) (Independent Trustee), shall retire not later than the last day of the calendar year in which his or her 72nd birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board Member hold office without limit in time, except that any officer and Advisory Board Member may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years.
The fund's Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-800-544-8544.
Interested Trustees*:
Correspondence intended for each Trustee who is an interested person may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Edward C. Johnson 3d (78) | |
| Year of Election or Appointment: 1984 Mr. Johnson is Chairman of the Board of Trustees. Mr. Johnson serves as Chief Executive Officer, Chairman, and a Director of FMR LLC; Chairman and a Director of FMR; Chairman and a Director of Fidelity Research & Analysis Company (FRAC); Chairman and a Director of Fidelity Investments Money Management, Inc.; and Chairman and a Director of FMR Co., Inc. In addition, Mr. Johnson serves as Chairman and Director of FIL Limited. Previously, Mr. Johnson served as President of FMR LLC (2006-2007). |
James C. Curvey (73) | |
| Year of Election or Appointment: 2007 Mr. Curvey also serves as Trustee (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2006- |
* Trustees have been determined to be "Interested Trustees" by virtue of, among other things, their affiliation with the trust or various entities under common control with FMR. FMR Corp. merged with and into FMR LLC on October 1, 2007. Any references to FMR LLC for prior periods are deemed to be references to the prior entity.
Independent Trustees:
Correspondence intended for each Independent Trustee (that is, the Trustees other than the Interested Trustees) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.
Name, Age; Principal Occupation | |
Dennis J. Dirks (60) | |
| Year of Election or Appointment: 2005 Prior to his retirement in May 2003, Mr. Dirks was Chief Operating Officer and a member of the Board of The Depository Trust & Clearing Corporation (DTCC) (1999-2003). He also served as President, Chief Operating Officer, and Board member of The Depository Trust Company (DTC) (1999-2003) and President and Board member of the National Securities Clearing Corporation (NSCC) (1999-2003). In addition, Mr. Dirks served as a Trustee and a member of the Finance Committee of Manhattan College (2005-2008), and as Chief Executive Officer and Board member of the Government Securities Clearing Corporation (2001-2003) and Chief Executive Officer and Board member of the Mortgage-Backed Securities Clearing Corporation (2001-2003). Mr. Dirks also serves as a Trustee and a member of the Finance Committee of AHRC of Nassau County (2006-present). |
Alan J. Lacy (54) | |
| Year of Election or Appointment: 2008 Mr. Lacy serves as Senior Adviser (2007-present) of Oak Hill Capital Partners, L.P. (a private equity firm). Mr. Lacy also served as Chief Executive Officer (2000-2005) and Vice Chairman (2005-2006) of Sears Holdings Corporation and Sears, Roebuck and Co. (retail). In addition, Mr. Lacy serves as a member of the Board of Directors of The Western Union Company (global money transfer, 2006-present) and Bristol-Myers Squibb (global pharmaceuticals, 2007-present). Mr. Lacy is a Trustee of the National Parks Conservation Association and The Field Museum of Natural History. |
Ned C. Lautenbach (64) | |
| Year of Election or Appointment: 2000 Mr. Lautenbach is Chairman of the Independent Trustees (2006-present). Mr. Lautenbach is an Advisory Partner of Clayton, Dubilier & Rice, Inc. (private equity investment firm). Previously, Mr. Lautenbach was with the International Business Machines Corporation (IBM) from 1968 until his retirement in 1998. Mr. Lautenbach serves as a Director of Eaton Corporation (diversified industrial) as well as the Philharmonic Center for the Arts in Naples, Florida. He also is a member of the Board of Trustees of Fairfield University (2005-present), as well as a member of the Council on Foreign Relations. Previously, Mr. Lautenbach served as a Director of Sony Corporation (2006-2007). |
Joseph Mauriello (63) | |
| 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 firm, 1965-2005). Mr. Mauriello currently serves as a member of the Board of Directors of XL Capital Ltd. (global insurance and re-insurance company, 2006-present) and of Arcadia Resources Inc. (health care services and products, 2007-present). He also served as a Director of the Hamilton Funds of the Bank of New York (2006-2007). |
Cornelia M. Small (64) | |
| Year of Election or Appointment: 2005 Ms. Small is a member of the Investment Committee, and Chair (2008-present) and a member of the Board of Trustees of Smith College. Ms. Small also serves on the Investment Committee of the Berkshire Taconic Community Foundation (2008-present). Previously, Ms. Small served as Chairperson of the Investment Committee (2002-2008) of Smith College and as Co-Chair (2000-2003) of the Annual Fund for the Fletcher School of Law and Diplomacy. In addition, she served as Chief Investment Officer, Director of Global Equity Investments, and a member of the Board of Directors of Scudder, Stevens & Clark and Scudder Kemper Investments. |
William S. Stavropoulos (69) | |
| Year of Election or Appointment: 2002 Mr. Stavropoulos is Chairman Emeritus of the Board of Directors of The Dow Chemical Company, where he previously served in numerous senior management positions, including President (1993-2000; 2002-2003), CEO (1995-2000; 2002-2004), Chairman of the Executive Committee (2000-2006), and as a member of the Board of Directors (1990-2006). Currently, he is a Director of Teradata Corporation (data warehousing and technology solutions, 2008-present), Chemical Financial Corporation, Maersk Inc. (industrial conglomerate), Tyco International, Inc. (multinational manufacturing and services, 2007-present), and a member of the Advisory Board for Metalmark Capital (private equity investment firm, 2005-present). He is a special advisor to Clayton, Dubilier & Rice, Inc. (private equity investment). In addition, Mr. Stavropoulos is a member of the University of Notre Dame Advisory Council for the College of Science. |
David M. Thomas (59) | |
| Year of Election or Appointment: 2008 Previously, Mr. Thomas served as Executive Chairman (2005-2006) and Chairman and Chief Executive Officer (2000-2005) of IMS Health, Inc. (pharmaceutical and healthcare information solutions). In addition, Mr. Thomas serves as a member of the Board of Directors of Fortune Brands, Inc. (consumer products holding company), and Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (57) | |
| Year of Election or Appointment: 2008 Mr. Wiley also serves as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-present). He serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005- |
Advisory Board Member and Executive Officers**:
Correspondence intended for each executive officer and Mr. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Peter S. Lynch (64) | |
| Year of Election or Appointment: 2003 Member of the Advisory Board of Fidelity Securities Fund. Mr. Lynch is Vice Chairman and a Director of FMR, and Vice Chairman (2001- |
Kenneth B. Robins (38) | |
| Year of Election or Appointment: 2008 President and Treasurer of Small Cap Growth. Mr. Robins also serves as President and Treasurer of Fidelity's Equity and High Income Funds (2008-present) and is an employee of FMR (2004-present). Before joining Fidelity Investments, Mr. Robins worked at KPMG LLP, where he was a partner in KPMG's department of professional practice (2002-2004). |
Walter C. Donovan (46) | |
| Year of Election or Appointment: 2007 Vice President of Small Cap Growth. Mr. Donovan also serves as Vice President of Fidelity's Equity Funds, President of FMR and FMR Co., Inc., and Executive Vice President of Fidelity Investments Money Management, Inc. (2007-present). Previously, Mr. Donovan served as Executive Vice President of FMR and FMR Co., Inc. (2005-2007) and Senior Vice President of FMR (2003-2005) and FMR Co., Inc. (2004-2005). |
Thomas C. Hense (44) | |
| Year of Election or Appointment: 2008 Vice President of Small Cap Growth. Mr. Hense also serves as Vice President of Fidelity's High Income and Small Cap Funds (2008-present). Previously, Mr. Hense served as a portfolio manager for Fidelity's Institutional Money Management Group (Pyramis) (2003-2008). |
Scott C. Goebel (40) | |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of Small Cap Growth. Mr. Goebel also serves as Secretary and CLO of other Fidelity funds (2008-present); General Counsel, Secretary, and Senior Vice President of FMR (2008-present); and Deputy General Counsel of FMR LLC. Previously, Mr. Goebel served as Assistant Secretary of the Funds (2007-2008) and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007). |
John B. McGinty, Jr. (45) | |
| Year of Election or Appointment: 2008 Assistant Secretary of Small Cap Growth. Mr. McGinty also serves as Assistant Secretary of Fidelity's other Equity and High Income Funds (2008-present) and is an employee of FMR LLC (2004-present). Mr. McGinty also serves as Senior Vice President, Secretary, and Chief Legal Officer of FDC (2007-present). Before joining Fidelity Investments, Mr. McGinty practiced law at Ropes & Gray, LLP. |
Holly C. Laurent (54) | |
| Year of Election or Appointment: 2008 Anti-Money Laundering (AML) officer of Small Cap Growth. Ms. Laurent also serves as AML officer of other Fidelity funds (2008-present) and is an employee of FMR LLC. Previously, Ms. Laurent was Senior Vice President and Head of Legal for Fidelity Business Services India Pvt. Ltd. (2006-2008), Senior Vice President, Deputy General Counsel and Group Head for FMR LLC (2005-2006). |
Christine Reynolds (49) | |
| Year of Election or Appointment: 2008 Chief Financial Officer of Small Cap Growth. Ms. Reynolds also serves as Chief Financial Officer of other Fidelity funds (2008-present). Ms. Reynolds became President of Fidelity Pricing and Cash Management Services (FPCMS) in August 2008. She served as Chief Operating Officer of FPCMS from 2007 through July 2008. Previously, Ms. Reynolds served as President, Treasurer, and Anti-Money Laundering officer of the Fidelity funds (2004-2007). Before joining Fidelity Investments, Ms. Reynolds worked at PricewaterhouseCoopers LLP (PwC) (1980-2002), where she was an audit partner with PwC's investment management practice. |
Kenneth A. Rathgeber (61) | |
| Year of Election or Appointment: 2004 Chief Compliance Officer of Small Cap Growth. Mr. Rathgeber also serves as Chief Compliance Officer of Fidelity's Equity and High Income Funds (2004-present). He is Chief Compliance Officer of FMR (2005- |
Bryan A. Mehrmann (47) | |
| Year of Election or Appointment: 2005 Deputy Treasurer of Small Cap Growth. Mr. Mehrmann also serves as Deputy Treasurer of other Fidelity funds (2005-present) and is an employee of FMR. Previously, Mr. Mehrmann served as Vice President of Fidelity Investments Institutional Services Group (FIIS)/Fidelity Investments Institutional Operations Corporation, Inc. (FIIOC) Client Services (1998-2004). |
Adrien E. Deberghes (40) | |
| Year of Election or Appointment: 2008 Deputy Treasurer of Small Cap Growth. Mr. Deberghes also serves as Deputy Treasurer of Fidelity's Equity and High Income Funds (2008- |
Robert G. Byrnes (41) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of Small Cap Growth. Mr. Byrnes also serves as Assistant Treasurer of other Fidelity funds (2005-present) and is an employee of FMR (2005-present). Previously, Mr. Byrnes served as Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (2003-2005). Before joining Fidelity Investments, Mr. Byrnes worked at Deutsche Asset Management where he served as Vice President of the Investment Operations Group (2000-2003). |
Peter L. Lydecker (54) | |
| Year of Election or Appointment: 2004 Assistant Treasurer of Small Cap Growth. Mr. Lydecker also serves as Assistant Treasurer of other Fidelity funds (2004-present) and is an employee of FMR. |
Paul M. Murphy (61) | |
| Year of Election or Appointment: 2007 Assistant Treasurer of Small Cap Growth. Mr. Murphy also serves as Assistant Treasurer of other Fidelity funds (2007-present) and is an employee of FMR (2007-present). Previously, Mr. Murphy served as Chief Financial Officer of the Fidelity Funds (2005-2006), Vice President and Associate General Counsel of FMR (2007), and Senior Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (1994-2007). |
Gary W. Ryan (49) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of Small Cap Growth. Mr. Ryan also serves as Assistant Treasurer of other Fidelity funds (2005-present) and is an employee of FMR (2005-present). Previously, Mr. Ryan served as Vice President of Fund Reporting in Fidelity Pricing and Cash Management Services (FPCMS) (1999-2005). |
** FMR Corp. merged with and into FMR LLC on October 1, 2007. Any references to FMR LLC for prior periods are deemed to be references to the prior entity.
Annual Report
Distributions (Unaudited)
The fund hereby designates as a capital gain dividend with respect to the taxable year ended July 31, 2008, $784,798, or, if subsequently determined to be different, the net capital gain of such year.
The fund designates 5% of the dividend distributed in September 2007 as qualifying for the dividends-received deduction for corporate shareholders.
The fund designates 6% of the dividend distributed in September 2007 as amounts which may be taken into account as a dividend for the purposes of the maximum rate under section 1(h)(11) of the Internal Revenue Code.
The fund will notify shareholders in January 2009 of amounts for use in preparing 2008 income tax returns.
Annual Report
Proxy Voting Results
A special meeting of the fund's shareholders was held on May 14, 2008. The results of votes taken among shareholders on the proposals before them are reported below. Each vote reported represents one dollar of net asset value held on the record date for the meeting.
PROPOSAL 1 | ||
To elect a Board of Trustees.A | ||
| # of | % of |
James C. Curvey | ||
Affirmative | 30,242,569,269.49 | 94.915 |
Withheld | 1,620,182,942.38 | 5.085 |
TOTAL | 31,862,752,211.87 | 100.000 |
Dennis J. Dirks | ||
Affirmative | 30,356,248,026.80 | 95.272 |
Withheld | 1,506,504,185.07 | 4.728 |
TOTAL | 31,862,752,211.87 | 100.000 |
Edward C. Johnson 3d | ||
Affirmative | 30,163,300,902.81 | 94.666 |
Withheld | 1,699,451,309.06 | 5.334 |
TOTAL | 31,862,752,211.87 | 100.000 |
Alan J. Lacy | ||
Affirmative | 30,334,439,999.59 | 95.203 |
Withheld | 1,528,312,212.28 | 4.797 |
TOTAL | 31,862,752,211.87 | 100.000 |
Ned C. Lautenbach | ||
Affirmative | 30,317,381,535.59 | 95.150 |
Withheld | 1,545,370,676.28 | 4.850 |
TOTAL | 31,862,752,211.87 | 100.000 |
Joseph Mauriello | ||
Affirmative | 30,340,553,696.88 | 95.223 |
Withheld | 1,522,198,514.99 | 4.777 |
TOTAL | 31,862,752,211.87 | 100.000 |
Cornelia M. Small | ||
Affirmative | 30,337,552,071.15 | 95.213 |
Withheld | 1,525,200,140.72 | 4.787 |
TOTAL | 31,862,752,211.87 | 100.000 |
William S. Stavropoulos | ||
Affirmative | 30,240,356,579.51 | 94.908 |
Withheld | 1,622,395,632.36 | 5.092 |
TOTAL | 31,862,752,211.87 | 100.000 |
| # of | % of |
David M. Thomas | ||
Affirmative | 30,352,029,125.67 | 95.259 |
Withheld | 1,510,723,086.20 | 4.741 |
TOTAL | 31,862,752,211.87 | 100.000 |
Michael E. Wiley | ||
Affirmative | 30,333,540,290.12 | 95.201 |
Withheld | 1,529,211,921.75 | 4.799 |
TOTAL | 31,862,752,211.87 | 100.000 |
PROPOSAL 2 | ||
To amend the Declaration of Trust to reduce the required quorum for future shareholder meetings.A | ||
| # of | % of |
Affirmative | 23,747,670,372.95 | 74.531 |
Against | 5,357,217,831.03 | 16.814 |
Abstain | 1,587,233,084.08 | 4.981 |
Broker | 1,170,630,923.81 | 3.674 |
TOTAL | 31,862,752,211.87 | 100.000 |
A Denotes trust-wide proposal and voting results. |
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees
Fidelity Small Cap Growth Fund
Each year, typically in July, the Board of Trustees, including the Independent Trustees (together, the Board), votes on the renewal of the management contract and sub-advisory agreements (together, the Advisory Contracts) for the fund. The Board, assisted by the advice of fund counsel and Independent Trustees' counsel, requests and considers a broad range of information throughout the year.
The Board meets regularly and, acting directly and through its separate committees, requests and receives information concerning, and considers at each of its meetings factors that are relevant to, its annual consideration of the renewal of the fund's Advisory Contracts, including the services and support provided to the fund and its shareholders. At the time of the renewal, the Board had 12 standing committees, each composed of Independent Trustees with varying backgrounds, to which the Board has assigned specific subject matter responsibilities in order to enhance effective decision-making by the Board. Each committee has a written charter outlining the structure and purposes of the committee. The Board also meets as needed to consider matters specifically related to the Board's annual consideration of the renewal of Advisory Contracts.
At its July 2008 meeting, the Board of Trustees, including the Independent Trustees, unanimously determined to renew the fund's Advisory Contracts. In reaching its determination, the Board considered all factors it believed relevant, including (i) the nature, extent, and quality of the services to be provided to the fund and its shareholders (including the investment performance of the fund); (ii) the competitiveness of the fund's management fee and total expenses; (iii) the total costs of the services to be provided by and the profits to be realized by Fidelity from its relationship with the fund; (iv) the extent to which economies of scale would be realized as the fund grows; and (v) whether fee levels reflect these economies of scale, if any, for the benefit of fund shareholders. The Board also approved agreements with foreign sub-advisers Fidelity Management & Research (Japan) Inc. and Fidelity Management & Research (Hong Kong) Limited, as well as amendments to the fund's agreement with Fidelity Management & Research (U.K.) Inc.
In considering whether to renew the Advisory Contracts for the fund, the Board ultimately reached a determination, with the assistance of fund counsel and Independent Trustees' counsel and through the exercise of its business judgment, that the renewal of the Advisory Contracts and the compensation to be received by Fidelity under the management contract is consistent with Fidelity's fiduciary duty under applicable law. The Board's decision to renew the Advisory Contracts was not based on any single factor noted above, but rather was based on a comprehensive consideration of all the information provided to the Board at its meetings throughout the year. The Board, in reaching its determination to renew the Advisory Contracts, is aware that shareholders in the fund have a broad range of investment choices available to them, including a wide choice among mutual funds offered by competitors to Fidelity, and that the fund's shareholders, with the opportunity to review and weigh the disclosure provided by the fund in its prospectus and other public disclosures, have chosen to invest in this fund, managed by Fidelity.
Annual Report
Nature, Extent, and Quality of Services Provided. The Board considered staffing within the investment adviser, FMR, and the sub-advisers (together, the Investment Advisers), including the backgrounds of the fund's investment personnel and the fund's investment objective and discipline. The Independent Trustees also had discussions with senior management of Fidelity's investment operations and investment groups. The Board considered the structure of the portfolio manager compensation program and whether this structure provides appropriate incentives.
Resources Dedicated to Investment Management and Support Services. The Board reviewed the size, education, and experience of the Investment Advisers' investment staff, their use of technology, and the Investment Advisers' approach to recruiting, training, and retaining portfolio managers and other research, advisory, and management personnel. The Board noted that Fidelity's analysts have access to a variety of technological tools that enable them to perform both fundamental and quantitative analysis and to specialize in various disciplines. The Board considered Fidelity's extensive global research capabilities that enable the Investment Advisers to aggregate data from various sources in an effort to produce positive investment results. The Board also considered that Fidelity's portfolio managers and analysts have access to daily portfolio attribution that allows for monitoring of a fund's portfolio, as well as an electronic communication system that provides immediate real-time access to research concerning issuers and credit enhancers.
Shareholder and Administrative Services. The Board considered (i) the nature, extent, quality, and cost of advisory, administrative, distribution, and shareholder services performed by the Investment Advisers and their affiliates under the Advisory Contracts and under separate agreements covering transfer agency, pricing and bookkeeping, and securities lending services for the fund; (ii) the nature and extent of the Investment Advisers' supervision of third party service providers, principally custodians and subcustodians; and (iii) the resources devoted to, and the record of compliance with, the fund's compliance policies and procedures. The Board also reviewed the allocation of fund brokerage, including allocations to brokers affiliated with the Investment Advisers, the use of brokerage commissions to pay fund expenses, and the use of "soft" commission dollars to pay for research services. The Board further considered that Fidelity voluntarily pays for market data out of its own resources.
The Board noted that the growth of fund assets across the complex allows Fidelity to reinvest in the development of services designed to enhance the value or convenience of the Fidelity funds as investment vehicles. These services include 24-hour access to account information and market information through phone representatives and over the Internet, and investor education materials and asset allocation tools.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
Investment in a Large Fund Family. The Board considered the benefits to shareholders of investing in a Fidelity fund, including the benefits of investing in a fund that is part of a large family of funds offering a variety of investment disciplines and providing for a large variety of mutual fund investor services. For example, fund shareholders are offered the privilege of exchanging shares of the fund for shares of other Fidelity funds, as set forth in the fund's prospectus, without paying a sales charge. The Board noted that Fidelity has taken a number of actions over the previous year that benefited particular funds, including (i) dedicating additional resources to investment research and to restructure the investment research teams; (ii) contractually agreeing to reduce the management fees on Fidelity's Institutional Money Market Funds and launching Class IV and Institutional Class of certain of these funds; (iii) reducing the transfer agent fees for the Fidelity Select Portfolios and Investor Class of the VIP funds; and (iv) launching Class K of 29 equity funds as a lower-fee class available to certain employer-sponsored retirement plans.
Investment Performance. The Board considered whether the fund has operated within its investment objective, as well as its record of compliance with its investment restrictions. It also reviewed the fund's absolute investment performance for each class, as well as the fund's relative investment performance for each class measured against (i) a broad-based securities market index, and (ii) a peer group of mutual funds deemed appropriate by the Board over multiple periods. Because the fund had been in existence less than five calendar years, the following charts considered by the Board show, over the one- and three-year periods ended December 31, 2007, the cumulative total returns of Institutional Class (Class I) 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 Institutional Class (Class I) and Class B 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 (bottom of box) and the 75th percentile return (top of box) of the peer group. Returns shown above the box are in the first quartile and returns shown below the box are in the fourth quartile.
Annual Report
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.
Fidelity Small Cap Growth Fund
The Board reviewed the fund's relative investment performance against its peer group and stated that the performance of Institutional Class (Class I) of the fund was in the first quartile for all the periods shown. The Board also stated that the investment performance of Institutional Class (Class I) of the fund compared favorably to 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 also considered that the fund's management fee is subject to upward or downward adjustment depending upon whether, and to what extent, the fund's investment performance for the performance period exceeds, or is exceeded by, the record (over the same period) of a Board-approved performance adjustment index. The Board realizes that the performance adjustment provides FMR with a strong economic incentive to seek to achieve superior performance for the fund's shareholders and helps to more closely align the interests of FMR and the fund's shareholders.
The Board considered that FMR has taken steps to refocus and strengthen equity research, equity portfolio management, and compliance.
Based on its review, and giving particular weight to the nature and quality of the resources dedicated by the Investment Advisers to maintain and improve relative performance, the Board concluded that the nature, extent, and quality of the services provided to the fund will benefit the fund's shareholders, particularly in light of the Board's view that the fund's shareholders benefit from investing in a fund that is part of a large family of funds offering a variety of investment disciplines and services.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
Competitiveness of Management Fee and Total Fund Expenses. The Board considered the fund's management fee and total expenses compared to "mapped groups" of competitive funds and classes. Fidelity creates "mapped groups" by combining similar Lipper investment objective categories that have comparable management fee characteristics. Combining Lipper investment objective categories aids the Board's management fee and total expense comparisons by broadening the competitive group used for comparison and by reducing the number of universes to which various Fidelity funds are compared. The Board also considered supplemental information about how the fund's management fee and total expenses ranked relative to groups based on Lipper classifications, which take into account a fund's market capitalization and style.
The Board considered two proprietary management fee comparisons for the 12-month (or shorter) 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 12% means that 88% 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 Small Cap Growth 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 2007. The Board also noted the effect of the fund's positive performance adjustment on the fund's management fee ranking. The Board noted that the performance adjustment for each year represents calculations for performance periods that differ from the period shown in the performance chart above.
Based on its review, the Board concluded that the fund's management fee was fair and reasonable in light of the services that the fund receives and the other factors considered.
In its review of each class's total expenses, 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 current and historical total expenses 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 expenses of each of Class A, Class B, Institutional Class, and Fidelity Small Cap Growth (retail class) ranked below its competitive median for 2007, and the total expenses of each of Class T and Class C ranked above its competitive median for 2007. The Board considered that the total expenses of Class C were above the median because of its higher transfer agent fee due to small average account size. The Board also considered that the total expenses of Class T were above the median primarily because its 12b-1 fee is higher than the typical front-end load class. 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 expenses 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
In its review of total expenses, the Board also considered Fidelity fee structures and other information on clients that FMR and its affiliates service in other competitive markets, such as other mutual funds advised or subadvised by FMR or its affiliates, pension plan clients, and other institutional clients.
Based on its review, the Board concluded that the total expenses of each class of the fund were reasonable, although in some cases 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 audited books and records of Fidelity. The Audit Committee of the Board reviews any significant changes from the prior year's methodologies.
PricewaterhouseCoopers LLP (PwC), independent registered public accounting firm and auditor to Fidelity and certain Fidelity funds, has been engaged annually by the Board as part of the Board's assessment of the results of Fidelity's profitability analysis. PwC's engagement includes the review and assessment of Fidelity's methodologies used in determining the revenues and expenses attributable to Fidelity's mutual fund business, and completion of agreed-upon procedures surrounding the mathematical accuracy of fund profitability and its conformity to allocation methodologies. After considering PwC's reports issued under the engagement and information provided by Fidelity, the Board believes that while other allocation methods may also be reasonable, Fidelity's profitability methodologies are reasonable in all material respects.
Annual Report
The Board has also reviewed Fidelity's non-fund businesses and any fall-out benefits related to the mutual fund business as well as cases where Fidelity's affiliates may benefit from or be related to the fund's business.
The Board considered the costs of the services provided by and the profits realized by Fidelity in connection with the operation of the fund and determined that the amount of profit is a fair entrepreneurial profit for the management of the fund.
Economies of Scale. The Board considered whether there have been economies of scale in respect of the management of the Fidelity funds, whether the Fidelity funds (including the fund) have appropriately benefited from any such economies of scale, and whether there is potential for realization of any further economies of scale. The Board considered the extent to which the fund will benefit from economies of scale through increased services to the fund, through waivers or reimbursements, or through fee or expense reductions.
The Board recognized that the fund's management contract incorporates a "group fee" structure, which provides for lower group fee rates as total fund assets under FMR's management increase, and for higher group fee rates as total fund assets under FMR's management decrease. FMR determines the group fee rates based on a tiered asset "breakpoint" schedule. The Board considered that the group fee is designed to deliver the benefits of economies of scale to fund shareholders when total fund assets increase, even if assets of any particular fund are unchanged or have declined, because some portion of Fidelity's costs are attributable to services provided to all Fidelity funds, and all funds benefit if those costs can be allocated among more assets. The Board concluded that, given the group fee structure, fund shareholders will achieve a certain level of economies of scale as assets under FMR's management increase at the fund complex level, regardless of whether Fidelity achieves any such economies of scale.
The Board further concluded that any potential economies of scale are being shared between fund shareholders and Fidelity in an appropriate manner.
Additional Information Requested by the Board. In order to develop fully the factual basis for consideration of the Fidelity funds' Advisory Contracts, the Board requested and received additional information on certain topics, including (i) fund performance trends and actions to be taken by FMR to improve certain funds' overall performance; (ii) portfolio manager changes that have occurred during the past year; (iii) Fidelity's fund profitability methodology, the profitability of certain fund service providers, and profitability trends for certain funds; (iv) Fidelity's compensation structure for portfolio managers and key personnel, including its effects on fund profitability and the extent to which portfolio manager compensation is linked to fund performance; (v) Fidelity's fee structures and rationale for recommending different fees among categories of funds; and (vi) Fidelity's rationale for recommending which funds should have a performance adjustment component as part of their management fees.
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 material factors, the Board ultimately concluded that the advisory fee structures are fair and reasonable, and that the fund's Advisory Contracts should be renewed.
Annual Report
Managing Your Investments
Fidelity offers several ways to conveniently manage your personal investments via your telephone or PC. You can access your account information, conduct trades and research your investments 24 hours a day.
By Phone
Fidelity Automated Service Telephone provides a single toll-free number to access account balances, positions, quotes and trading. It's easy to navigate the service, and on your first call, the system will help you create a personal identification number (PIN) for security.
(phone_graphic)
Fidelity Automated
Service Telephone (FAST®)
1-800-544-5555
Press
For mutual fund and brokerage trading.
For quotes.*
For account balances and holdings.
To review orders and mutual
fund activity.
To change your PIN.
To speak to a Fidelity representative.
By PC
Fidelity's web site on the Internet provides a wide range of information, including daily financial news, fund performance, interactive planning tools and news about Fidelity products and services.
(computer_graphic)
Fidelity's Web Site
www.fidelity.com
* When you call the quotes line, please remember that a fund's yield and return will vary and, except for money market funds, share price will also vary. This means that you may have a gain or loss when you sell your shares. There is no assurance that money market funds will be able to maintain a stable $1 share price; an investment in a money market fund is not insured or guaranteed by the U.S. government. Total returns are historical and include changes in share price, reinvestment of dividends and capital gains, and the effects of any sales charges.
Annual Report
To Write Fidelity
We'll give your correspondence immediate attention and send you written confirmation upon completion of your request.
(letter_graphic)
Making Changes
To Your Account
(such as changing name, address, bank, etc.)
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0002
(letter_graphic)
For Non-Retirement
Accounts
Buying shares
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
Overnight Express
Fidelity Investments
Attn: Distribution Services
100 Crosby Parkway - KC1H
Covington, KY 41015
Selling shares
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0035
Overnight Express
Fidelity Investments
Attn: Distribution Services
100 Crosby Parkway - KC1H
Covington, KY 41015
General Correspondence
Fidelity Investments
P.O. Box 500
Merrimack, NH 03054-0500
(letter_graphic)
For Retirement
Accounts
Buying shares
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
Selling shares
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0035
Overnight Express
Fidelity Investments
Attn: Distribution Services
100 Crosby Parkway - KC1H
Covington, KY 41015
General Correspondence
Fidelity Investments
P.O. Box 500
Merrimack, NH 03054-0500
Annual Report
To Visit Fidelity
For directions and hours,
please call 1-800-544-9797.
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Annual Report
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Fidelity Brokerage Services, Inc., 100 Summer St., Boston, MA 02110 Member NYSE/SIPC
Annual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Fidelity Research & Analysis Company
Fidelity Management & Research
(U.K.) Inc.
Fidelity Investments Japan Limited
Fidelity International Investment
Advisors
Fidelity International Investment
Advisors (U.K.) Limited
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Service Agents
Fidelity Investments Institutional
Operating Company, Inc.
Boston, MA
Fidelity Service Company, Inc.
Boston, MA
Custodian
Citibank, N.A.
New York, NY
The Fidelity Telephone Connection
Mutual Fund 24-Hour Service
Exchanges/Redemptions
and Account Assistance 1-800-544-6666
Product Information 1-800-544-6666
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(8 a.m. - 9 p.m.)
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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
SCP-UANN-0908 1.803694.103
(Fidelity Investment logo)(registered trademark)
Fidelity Advisor
Small Cap Growth
Fund - Class A, Class T,
Class B and Class C
Annual Report
July 31, 2008
Class A, Class T, Class B,
and Class C are classes
of Fidelity® Small Cap
Growth Fund
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message | Ned Johnson's message to shareholders. | |
Performance | How the fund has done over time. | |
Management's Discussion | The manager's review of fund performance, strategy and outlook. | |
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 |
| |
Proxy Voting Results |
| |
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 (search for "proxy voting guidelines") or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-877-208-0098 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company.
Annual Report
This report and the financial statements contained herein are submitted for the general information of the shareholders of the fund. This report is not authorized for distribution to prospective investors in the fund unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com or http://www.advisor.fidelity.com, as applicable.
NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE
Neither the fund nor Fidelity Distributors Corporation is a bank.
Annual Report
Chairman's Message
(photo_of_Edward_C_Johnson_3d)
Dear Shareholder:
Domestic and international securities markets have struggled thus far in 2008. High-grade fixed-income investments produced modestly positive results, but many stock benchmarks suffered double-digit losses through the first half of this year. Financial markets are always unpredictable, but there are a number of time-tested principles that can put the historical odds in your favor.
One of the basic tenets is to invest for the long term. Over time, riding out the markets' inevitable ups and downs has proven much more effective than selling into panic or chasing the hottest trend. Even missing only a few of the markets' best days can significantly diminish investor returns. Patience also affords the benefits of compounding - of earning interest on additional income or reinvested dividends and capital gains. There are tax advantages and cost benefits to consider as well. The more you sell, the more taxes you pay, and the more you trade, the higher the costs. While staying the course doesn't eliminate risk, it can considerably lessen the effect of short-term declines.
You can further manage your investing risk through diversification. And today, more than ever, geographic diversification should be taken into account. Studies indicate that asset allocation is the single most important determinant of a portfolio's long-term success. The right mix of stocks, bonds and cash - aligned to your particular risk tolerance and investment objective - is very important. Age-appropriate rebalancing is also an essential aspect of asset allocation. For younger investors, an emphasis on equities - which historically have been the best-performing asset class over time - is encouraged. As investors near their specific goal, such as retirement or sending a child to college, consideration may be given to replacing volatile assets (e.g. common stocks) with more-stable fixed investments (bonds or savings plans).
A third investment principle - investing regularly - can help lower the average cost of your purchases. Investing a certain amount of money each month or quarter helps ensure you won't pay for all your shares at market highs. This strategy - known as dollar cost averaging - also reduces unconstructive "emotion" from investing, helping shareholders avoid selling weak performers just prior to an upswing, or chasing a hot performer just before a correction.
We invite you to contact us via the Internet, through our Investor Centers or over the phone. It is our privilege to provide you the information you need to make the investments that are right for you.
Sincerely,
/s/Edward C. Johnson 3d
Edward C. Johnson 3d
Annual Report
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' 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 July 31, 2008 | Past 1 | Life of |
Class A (incl. 5.75% sales charge) | -17.30% | 8.43% |
Class T (incl. 3.50% sales charge) | -15.56% | 8.85% |
Class B (incl. contingent deferred sales charge) B | -17.03% | 8.69% |
Class C (incl. contingent deferred sales charge) C | -13.76% | 9.32% |
A From November 3, 2004.
B Class B shares' contingent deferred sales charges included in the past one year and life of fund total return figures are 5% and 3%, respectively.
C Class C shares' contingent deferred sales charges included in the past one year and life of fund total return figures are 1% and 0%, respectively.
Annual Report
$10,000 Over Life of Fund
Let's say hypothetically that $10,000 was invested in Fidelity Advisor Small Cap Growth Fund - Class A on November 3, 2004, when the fund started, 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® Growth Index performed over the same period.
In prior years, the performance from year to year was represented by the performance of Class T. Going forward, the fund's performance will be represented by Class A for consistency with other fund materials.
Annual Report
Management's Discussion of Fund Performance
Comments from Lionel Harris, Portfolio Manager of Fidelity Advisor Small Cap Growth Fund
Grim news about the U.S. economy forced most domestic equity benchmarks into negative territory for the 12 months ending July 31, 2008. Oil prices north of $140 per barrel, gasoline prices in excess of $4 per gallon and soaring food costs drove inflation and consumer prices higher. In response, consumer discretionary spending trended lower as Main Street tightened its purse strings. Wall Street, meanwhile, struggled under the weight of massive write-downs in the financials sector, an ongoing credit crisis and bleak housing data. In an effort to staunch the bleeding, the Federal Reserve Board cut interest rates on seven occasions during the past year. Nevertheless, investors fled the equity markets, and both the Dow Jones Industrial AverageSM and the Standard & Poor's 500SM Index fell to a threshold that many believe marks the official start of a "bear market." For the 12 months overall, the Dow slid 11.71%, the S&P 500® dropped 11.09% and the technology-heavy NASDAQ Composite® Index dipped 7.98%.
During the past year, the fund's Class A, Class T, Class B and Class C shares lost 12.26%, 12.50%, 12.92% and 12.94%, respectively (excluding sales charges), significantly lagging the the Russell 2000® Growth Index, which declined 3.76%. Although the fund benefited from an overweighting in energy stocks, poor security selection - being too heavily exposed to refining companies and not owning enough coal stocks, especially - was a big negative. Among refineries, I owned two out-of-benchmark stocks - Western Refining and Tesoro - that lagged, while the fund lacked positions in strong-performing coal producers Alpha Natural Resources and Walter Industries, both of which were benchmark components. I was also significantly underweighted in consumer-related names, which helped, but, unfortunately, not enough to make up for weak stock selection in the group. An underweighting in pharmaceutical-related companies within health care also detracted. In industrials, however, stock selection in capital goods was a plus, while a small cash position in a weak market helped as well. Despite our relative underweighting in the coal industry, the portfolio did include a helpful out-of-benchmark position in coal producer Massey Energy, while Flowserve, an out-of-benchmark maker of pumps, valves and seals used in infrastructure projects, was a significant positive. As global demand for Flowserve's products increased, investors became quite optimistic about the company's potential earnings power. At period end, Western Refining, Massey and Flowserve were no longer in the portfolio.
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 (February 1, 2008 to July 31, 2008).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Annual Report
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Beginning | Ending | Expenses Paid |
Class A |
|
|
|
Actual | $ 1,000.00 | $ 919.86 | $ 6.64 |
HypotheticalA | $ 1,000.00 | $ 1,017.95 | $ 6.97 |
Class T |
|
|
|
Actual | $ 1,000.00 | $ 918.41 | $ 7.87 |
HypotheticalA | $ 1,000.00 | $ 1,016.66 | $ 8.27 |
Class B |
|
|
|
Actual | $ 1,000.00 | $ 916.32 | $ 10.24 |
HypotheticalA | $ 1,000.00 | $ 1,014.17 | $ 10.77 |
Class C |
|
|
|
Actual | $ 1,000.00 | $ 916.14 | $ 10.20 |
HypotheticalA | $ 1,000.00 | $ 1,014.22 | $ 10.72 |
Small Cap Growth |
|
|
|
Actual | $ 1,000.00 | $ 921.00 | $ 5.30 |
HypotheticalA | $ 1,000.00 | $ 1,019.34 | $ 5.57 |
Institutional Class |
|
|
|
Actual | $ 1,000.00 | $ 921.69 | $ 4.97 |
HypotheticalA | $ 1,000.00 | $ 1,019.69 | $ 5.22 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
| Annualized |
Class A | 1.39% |
Class T | 1.65% |
Class B | 2.15% |
Class C | 2.14% |
Small Cap Growth | 1.11% |
Institutional Class | 1.04% |
Annual Report
Investment Changes (Unaudited)
Top Ten Stocks as of July 31, 2008 | ||
| % of fund's | % of fund's net assets |
Harris Corp. | 1.4 | 1.4 |
j2 Global Communications, Inc. | 1.4 | 1.3 |
Foundation Coal Holdings, Inc. | 1.4 | 0.0 |
Hercules Offshore, Inc. | 1.4 | 0.0 |
Huron Consulting Group, Inc. | 1.4 | 1.3 |
Concho Resources, Inc. | 1.4 | 0.0 |
Corn Products International, Inc. | 1.4 | 0.5 |
EXCO Resources, Inc. | 1.3 | 0.6 |
Superior Energy Services, Inc. | 1.3 | 1.5 |
Atwood Oceanics, Inc. | 1.3 | 1.2 |
| 13.7 | |
Top Five Market Sectors as of July 31, 2008 | ||
| % of fund's | % of fund's net assets |
Health Care | 20.1 | 19.4 |
Industrials | 18.8 | 18.0 |
Information Technology | 18.5 | 22.0 |
Energy | 12.4 | 13.3 |
Consumer Discretionary | 9.4 | 8.2 |
Asset Allocation (% of fund's net assets) | |||||||
As of July 31, 2008 * | As of January 31, 2008 ** | ||||||
Stocks 95.8% |
| Stocks 97.4% |
| ||||
Short-Term |
| Short-Term |
| ||||
* Foreign investments | 13.4% |
| ** Foreign investments | 13.9% |
|
Annual Report
Investments July 31, 2008
Showing Percentage of Net Assets
Common Stocks - 95.8% | |||
Shares | Value | ||
CONSUMER DISCRETIONARY - 9.4% | |||
Distributors - 1.0% | |||
LKQ Corp. (a) | 629,900 | $ 12,912,950 | |
Diversified Consumer Services - 1.8% | |||
Apollo Group, Inc. Class A (non-vtg.) (a) | 215,200 | 13,404,808 | |
Hillenbrand, Inc. | 443,800 | 10,273,970 | |
| 23,678,778 | ||
Hotels, Restaurants & Leisure - 1.5% | |||
Bally Technologies, Inc. (a) | 434,600 | 13,815,934 | |
Penn National Gaming, Inc. (a) | 230,000 | 6,561,900 | |
| 20,377,834 | ||
Household Durables - 0.9% | |||
Ryland Group, Inc. | 131,500 | 2,707,585 | |
Whirlpool Corp. | 121,000 | 9,159,700 | |
| 11,867,285 | ||
Internet & Catalog Retail - 0.6% | |||
Priceline.com, Inc. (a)(d) | 74,000 | 8,506,300 | |
Media - 0.3% | |||
Virgin Media, Inc. | 405,000 | 4,544,100 | |
Specialty Retail - 1.8% | |||
Advance Auto Parts, Inc. | 164,900 | 6,775,741 | |
Citi Trends, Inc. (a)(d) | 292,985 | 6,776,743 | |
The Men's Wearhouse, Inc. | 269,900 | 5,373,709 | |
Tween Brands, Inc. (a) | 315,000 | 4,337,550 | |
| 23,263,743 | ||
Textiles, Apparel & Luxury Goods - 1.5% | |||
Deckers Outdoor Corp. (a) | 93,500 | 10,566,435 | |
Iconix Brand Group, Inc. (a) | 748,600 | 8,983,200 | |
| 19,549,635 | ||
TOTAL CONSUMER DISCRETIONARY | 124,700,625 | ||
CONSUMER STAPLES - 4.8% | |||
Food Products - 2.3% | |||
Corn Products International, Inc. (d) | 381,900 | 17,762,169 | |
Dean Foods Co. (a) | 583,400 | 12,426,420 | |
| 30,188,589 | ||
Household Products - 0.6% | |||
Energizer Holdings, Inc. (a) | 122,000 | 8,703,480 | |
Common Stocks - continued | |||
Shares | Value | ||
CONSUMER STAPLES - continued | |||
Personal Products - 1.9% | |||
Bare Escentuals, Inc. (a)(d) | 329,500 | $ 3,802,430 | |
Chattem, Inc. (a)(d) | 248,300 | 16,007,901 | |
Physicians Formula Holdings, Inc. (a) | 518,005 | 4,832,987 | |
| 24,643,318 | ||
TOTAL CONSUMER STAPLES | 63,535,387 | ||
ENERGY - 12.4% | |||
Energy Equipment & Services - 5.4% | |||
Atwood Oceanics, Inc. (a) | 375,800 | 17,252,978 | |
Complete Production Services, Inc. (a) | 246,100 | 7,835,824 | |
Hercules Offshore, Inc. (a) | 737,219 | 18,408,358 | |
Hornbeck Offshore Services, Inc. (a)(d) | 248,900 | 11,095,962 | |
Superior Energy Services, Inc. (a) | 364,400 | 17,283,492 | |
| 71,876,614 | ||
Oil, Gas & Consumable Fuels - 7.0% | |||
Cabot Oil & Gas Corp. | 185,100 | 8,146,251 | |
Concho Resources, Inc. | 544,800 | 17,842,200 | |
EXCO Resources, Inc. (a) | 666,400 | 17,359,720 | |
Foundation Coal Holdings, Inc. | 316,000 | 18,770,400 | |
Holly Corp. | 110,000 | 3,143,800 | |
Petrohawk Energy Corp. (a)(d) | 265,200 | 8,836,464 | |
Range Resources Corp. | 177,850 | 8,636,396 | |
Tesoro Corp. | 639,700 | 9,876,968 | |
| 92,612,199 | ||
TOTAL ENERGY | 164,488,813 | ||
FINANCIALS - 4.6% | |||
Capital Markets - 1.2% | |||
FCStone Group, Inc. (a) | 258,000 | 4,969,080 | |
Janus Capital Group, Inc. | 342,800 | 10,400,552 | |
| 15,369,632 | ||
Insurance - 1.1% | |||
Aspen Insurance Holdings Ltd. | 336,100 | 8,533,579 | |
StanCorp Financial Group, Inc. | 137,982 | 6,814,931 | |
| 15,348,510 | ||
Real Estate Investment Trusts - 0.7% | |||
American Campus Communities, Inc. | 319,200 | 9,346,176 | |
Common Stocks - continued | |||
Shares | Value | ||
FINANCIALS - continued | |||
Real Estate Management & Development - 1.2% | |||
CB Richard Ellis Group, Inc. Class A (a) | 253,100 | $ 3,556,055 | |
Jones Lang LaSalle, Inc. (d) | 249,000 | 11,862,360 | |
| 15,418,415 | ||
Thrifts & Mortgage Finance - 0.4% | |||
Washington Federal, Inc. | 285,765 | 5,315,229 | |
TOTAL FINANCIALS | 60,797,962 | ||
HEALTH CARE - 20.1% | |||
Biotechnology - 2.3% | |||
BioMarin Pharmaceutical, Inc. (a) | 247,000 | 8,039,850 | |
Cephalon, Inc. (a) | 170,800 | 12,495,728 | |
Grifols SA | 326,802 | 9,775,458 | |
| 30,311,036 | ||
Health Care Equipment & Supplies - 5.8% | |||
Abaxis, Inc. (a)(d) | 403,300 | 8,021,637 | |
American Medical Systems Holdings, Inc. (a)(d) | 1,016,400 | 16,740,108 | |
Hill-Rom Holdings, Inc. (d) | 465,500 | 13,075,895 | |
Immucor, Inc. (a) | 473,900 | 14,278,607 | |
Integra LifeSciences Holdings Corp. (a)(d) | 320,200 | 14,620,332 | |
Meridian Bioscience, Inc. | 372,000 | 9,675,720 | |
| 76,412,299 | ||
Health Care Providers & Services - 5.2% | |||
Air Methods Corp. (a) | 181,000 | 5,189,270 | |
Brookdale Senior Living, Inc. | 22,000 | 335,720 | |
Henry Schein, Inc. (a) | 102,900 | 5,511,324 | |
Patterson Companies, Inc. (a) | 406,000 | 12,679,380 | |
Pediatrix Medical Group, Inc. (a) | 268,900 | 13,081,985 | |
PSS World Medical, Inc. (a) | 922,499 | 15,461,083 | |
Sun Healthcare Group, Inc. (a) | 678,800 | 9,700,052 | |
Universal American Financial Corp. (a) | 665,031 | 6,976,175 | |
| 68,934,989 | ||
Life Sciences Tools & Services - 5.8% | |||
Charles River Laboratories International, Inc. (a) | 223,034 | 14,822,840 | |
ICON PLC sponsored ADR (a) | 152,990 | 12,291,217 | |
PAREXEL International Corp. (a) | 578,300 | 16,903,709 | |
Pharmaceutical Product Development, Inc. | 250,900 | 9,569,326 | |
Common Stocks - continued | |||
Shares | Value | ||
HEALTH CARE - continued | |||
Life Sciences Tools & Services - continued | |||
QIAGEN NV (a) | 470,000 | $ 8,831,300 | |
Varian, Inc. (a) | 287,400 | 14,197,560 | |
| 76,615,952 | ||
Pharmaceuticals - 1.0% | |||
Perrigo Co. | 386,800 | 13,626,964 | |
TOTAL HEALTH CARE | 265,901,240 | ||
INDUSTRIALS - 18.8% | |||
Aerospace & Defense - 1.5% | |||
Curtiss-Wright Corp. | 160,000 | 8,422,400 | |
Hexcel Corp. (a) | 591,000 | 11,217,180 | |
| 19,639,580 | ||
Commercial Services & Supplies - 6.7% | |||
CDI Corp. | 570,700 | 11,745,006 | |
Clean Harbors, Inc. (a) | 52,500 | 4,097,100 | |
Corrections Corp. of America (a) | 602,200 | 16,879,666 | |
CoStar Group, Inc. (a)(d) | 190,736 | 9,515,819 | |
Huron Consulting Group, Inc. (a)(d) | 351,400 | 18,329,024 | |
InnerWorkings, Inc. (a)(d) | 949,900 | 11,075,834 | |
Navigant Consulting, Inc. (a) | 578,800 | 10,696,224 | |
The Brink's Co. | 99,200 | 6,840,832 | |
| 89,179,505 | ||
Construction & Engineering - 3.1% | |||
Chicago Bridge & Iron Co. NV (NY Shares) | 504,100 | 16,519,357 | |
KBR, Inc. | 345,900 | 9,858,150 | |
Outotec Oyj | 274,700 | 13,990,961 | |
| 40,368,468 | ||
Electrical Equipment - 3.0% | |||
EnerSys (a) | 394,600 | 12,737,688 | |
JA Solar Holdings Co. Ltd. ADR (a)(d) | 991,300 | 15,038,021 | |
SMA Solar Technology AG | 137,000 | 11,588,016 | |
| 39,363,725 | ||
Industrial Conglomerates - 1.0% | |||
Raven Industries, Inc. (d) | 348,600 | 13,264,230 | |
Machinery - 1.6% | |||
Colfax Corp. | 413,000 | 11,270,770 | |
Sulzer AG (Reg.) | 86,130 | 10,326,497 | |
| 21,597,267 | ||
Common Stocks - continued | |||
Shares | Value | ||
INDUSTRIALS - continued | |||
Road & Rail - 1.9% | |||
Con-way, Inc. | 271,000 | $ 13,701,760 | |
Knight Transportation, Inc. (d) | 634,300 | 12,000,956 | |
| 25,702,716 | ||
TOTAL INDUSTRIALS | 249,115,491 | ||
INFORMATION TECHNOLOGY - 18.5% | |||
Communications Equipment - 2.3% | |||
Harris Corp. | 398,700 | 19,197,403 | |
Polycom, Inc. (a)(d) | 478,500 | 11,292,600 | |
| 30,490,003 | ||
Computers & Peripherals - 0.6% | |||
Wincor Nixdorf AG | 108,400 | 8,093,777 | |
Electronic Equipment & Instruments - 1.5% | |||
Cogent, Inc. (a)(d) | 887,400 | 8,998,236 | |
Trimble Navigation Ltd. (a) | 344,600 | 11,440,720 | |
| 20,438,956 | ||
Internet Software & Services - 3.9% | |||
Art Technology Group, Inc. (a) | 1,790,000 | 6,569,300 | |
Equinix, Inc. (a)(d) | 176,600 | 14,368,176 | |
j2 Global Communications, Inc. (a) | 792,500 | 18,996,225 | |
Telecity Group PLC | 2,558,100 | 12,004,378 | |
| 51,938,079 | ||
IT Services - 4.7% | |||
Alliance Data Systems Corp. (a) | 218,000 | 13,984,700 | |
CACI International, Inc. Class A (a) | 295,400 | 13,281,184 | |
CyberSource Corp. (a) | 653,466 | 11,599,022 | |
Datacash Group PLC | 1,661,200 | 9,013,749 | |
Satyam Computer Services Ltd. sponsored ADR (d) | 386,300 | 8,243,642 | |
WNS Holdings Ltd. ADR (a) | 334,500 | 5,686,500 | |
| 61,808,797 | ||
Semiconductors & Semiconductor Equipment - 3.3% | |||
Hittite Microwave Corp. (a) | 512,821 | 16,369,246 | |
Lam Research Corp. (a) | 290,000 | 9,538,100 | |
Microsemi Corp. (a)(d) | 280,700 | 7,286,972 | |
Varian Semiconductor Equipment Associates, Inc. (a) | 350,490 | 10,241,318 | |
| 43,435,636 | ||
Software - 2.2% | |||
Ansys, Inc. (a) | 169,500 | 7,776,660 | |
Common Stocks - continued | |||
Shares | Value | ||
INFORMATION TECHNOLOGY - continued | |||
Software - continued | |||
Blackbaud, Inc. | 806,059 | $ 14,396,214 | |
Taleo Corp. Class A (a) | 141,439 | 2,650,567 | |
Ultimate Software Group, Inc. (a) | 158,000 | 4,144,340 | |
| 28,967,781 | ||
TOTAL INFORMATION TECHNOLOGY | 245,173,029 | ||
MATERIALS - 6.4% | |||
Chemicals - 1.0% | |||
Terra Industries, Inc. (d) | 250,000 | 13,500,000 | |
Containers & Packaging - 0.3% | |||
Myers Industries, Inc. | 360,000 | 4,032,000 | |
Metals & Mining - 5.1% | |||
Carpenter Technology Corp. | 176,100 | 6,815,070 | |
Compass Minerals International, Inc. | 100,000 | 7,560,000 | |
IAMGOLD Corp. | 1,449,700 | 9,670,802 | |
International Ferro Metals (a) | 2,075,000 | 3,220,821 | |
Randgold Resources Ltd. sponsored ADR | 128,000 | 6,551,040 | |
Red Back Mining, Inc. (a) | 1,053,000 | 8,937,413 | |
Reliance Steel & Aluminum Co. | 172,500 | 10,895,100 | |
Steel Dynamics, Inc. | 453,900 | 14,379,552 | |
| 68,029,798 | ||
TOTAL MATERIALS | 85,561,798 | ||
UTILITIES - 0.8% | |||
Multi-Utilities - 0.8% | |||
CMS Energy Corp. (d) | 823,200 | 11,113,200 | |
TOTAL COMMON STOCKS (Cost $1,270,614,591) | 1,270,387,545 | ||
Money Market Funds - 14.7% | |||
Shares | Value | ||
Fidelity Cash Central Fund, 2.35% (b) | 56,597,666 | $ 56,597,666 | |
Fidelity Securities Lending Cash Central Fund, 2.37% (b)(c) | 138,167,794 | 138,167,794 | |
TOTAL MONEY MARKET FUNDS (Cost $194,765,460) | 194,765,460 | ||
TOTAL INVESTMENT PORTFOLIO - 110.5% (Cost $1,465,380,051) | 1,465,153,005 | ||
NET OTHER ASSETS - (10.5)% | (139,785,194) | ||
NET ASSETS - 100% | $ 1,325,367,811 |
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
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 | $ 1,820,442 |
Fidelity Securities Lending Cash Central Fund | 732,714 |
Total | $ 2,553,156 |
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 | Dividend Income | Value, |
Physicians Formula Holdings, Inc. | $ 5,827,585 | $ 3,948,990 | $ 2,083,245 | $ - | $ - |
Quixote Corp. | 8,618,526 | 150,375 | 6,248,265 | 75,980 | - |
Total | $ 14,446,111 | $ 4,099,365 | $ 8,331,510 | $ 75,980 | $ - |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 86.6% |
United Kingdom | 2.5% |
Netherlands | 2.0% |
Germany | 1.5% |
Canada | 1.4% |
Cayman Islands | 1.1% |
Finland | 1.1% |
Others (individually less than 1%) | 3.8% |
| 100.0% |
Income Tax Information |
The fund intends to elect to defer to its fiscal year ending July 31, 2009 approximately $101,242,350 of losses recognized during the period November 1, 2007 to July 31, 2008. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements
Statement of Assets and Liabilities
| July 31, 2008 | |
Assets | ||
Investment in securities, at value (including securities loaned of $131,418,460) - See accompanying schedule: Unaffiliated issuers (cost $1,270,614,591) | $ 1,270,387,545 |
|
Fidelity Central Funds (cost $194,765,460) | 194,765,460 |
|
Total Investments (cost $1,465,380,051) |
| $ 1,465,153,005 |
Cash | 29 | |
Receivable for investments sold | 46,620,442 | |
Receivable for fund shares sold | 1,370,340 | |
Dividends receivable | 110,652 | |
Distributions receivable from Fidelity Central Funds | 186,218 | |
Prepaid expenses | 1,556 | |
Other receivables | 22,988 | |
Total assets | 1,513,465,230 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 47,843,463 | |
Payable for fund shares redeemed | 865,758 | |
Accrued management fee | 777,626 | |
Distribution fees payable | 36,066 | |
Other affiliated payables | 350,881 | |
Other payables and accrued expenses | 55,831 | |
Collateral on securities loaned, at value | 138,167,794 | |
Total liabilities | 188,097,419 | |
|
|
|
Net Assets | $ 1,325,367,811 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,431,164,163 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (105,567,096) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (229,256) | |
Net Assets | $ 1,325,367,811 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements - continued
Statement of Assets and Liabilities - continued
| July 31, 2008 | |
Calculation of Maximum Offering Price Class A: | $ 13.20 | |
|
|
|
Maximum offering price per share (100/94.25 of $13.20) | $ 14.01 | |
Class T: | $ 13.17 | |
|
|
|
Maximum offering price per share (100/96.50 of $13.17) | $ 13.65 | |
Class B: | $ 13.03 | |
|
|
|
Class C: | $ 13.00 | |
|
|
|
|
|
|
Small Cap Growth: | $ 13.29 | |
|
|
|
Institutional Class: | $ 13.30 |
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
| Year ended July 31, 2008 | |
Investment Income |
|
|
Dividends (including $75,980 earned from other affiliated issuers) |
| $ 6,201,842 |
Interest |
| 2,990 |
Income from Fidelity Central Funds (including $732,714 from security lending) |
| 2,553,156 |
Total income |
| 8,757,988 |
|
|
|
Expenses | ||
Management fee | $ 9,449,883 | |
Performance adjustment | 1,059,130 | |
Transfer agent fees | 3,613,151 | |
Distribution fees | 499,117 | |
Accounting and security lending fees | 449,905 | |
Custodian fees and expenses | 36,783 | |
Independent trustees' compensation | 5,530 | |
Registration fees | 121,158 | |
Audit | 56,803 | |
Legal | 5,485 | |
Miscellaneous | 83,752 | |
Total expenses before reductions | 15,380,697 | |
Expense reductions | (98,390) | 15,282,307 |
Net investment income (loss) | (6,524,319) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | (99,142,662) | |
Other affiliated issuers | (4,601,658) |
|
Foreign currency transactions | (12,025) | |
Total net realized gain (loss) |
| (103,756,345) |
Change in net unrealized appreciation (depreciation) on: Investment securities | (72,234,294) | |
Assets and liabilities in foreign currencies | (1,961) | |
Total change in net unrealized appreciation (depreciation) |
| (72,236,255) |
Net gain (loss) | (175,992,600) | |
Net increase (decrease) in net assets resulting from operations | $ (182,516,919) |
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) | $ (6,524,319) | $ (4,437,632) |
Net realized gain (loss) | (103,756,345) | 87,862,892 |
Change in net unrealized appreciation (depreciation) | (72,236,255) | 65,702,764 |
Net increase (decrease) in net assets resulting | (182,516,919) | 149,128,024 |
Distributions to shareholders from net realized gain | (81,199,740) | (3,591,980) |
Share transactions - net increase (decrease) | 331,568,501 | 637,612,035 |
Redemption fees | 439,174 | 160,118 |
Total increase (decrease) in net assets | 68,291,016 | 783,308,197 |
|
|
|
Net Assets | ||
Beginning of period | 1,257,076,795 | 473,768,598 |
End of period | $ 1,325,367,811 | $ 1,257,076,795 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended July 31, | 2008 | 2007 | 2006 | 2005 J |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 16.06 | $ 12.88 | $ 12.95 | $ 10.00 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss)E | (.11) | (.12)H | (.10)I | (.07) |
Net realized and unrealized gain (loss) | (1.73) | 3.39 | .18 | 3.01 |
Total from investment operations | (1.84) | 3.27 | .08 | 2.94 |
Distributions from net realized gain | (1.02) | (.09) | (.16) | - |
Redemption fees added to paid in capitalE | -L | -L | .01 | .01 |
Net asset value, end of period | $ 13.20 | $ 16.06 | $ 12.88 | $ 12.95 |
Total ReturnB, C, D | (12.26)% | 25.52% | .70% | 29.50% |
Ratios to Average Net AssetsF, K |
|
|
|
|
Expenses before reductions | 1.40% | 1.44% | 1.53% | 1.55%A |
Expenses net of fee waivers, if any | 1.40% | 1.40% | 1.40% | 1.45%A |
Expenses net of all reductions | 1.39% | 1.39% | 1.35% | 1.36%A |
Net investment income (loss) | (.74)% | (.80)%H | (.79)%I | (.78)%A |
Supplemental Data |
|
|
|
|
Net assets, end of period (000 omitted) | $ 42,187 | $ 33,588 | $ 18,104 | $ 4,719 |
Portfolio turnover rateG | 113% | 91% | 129% | 93%A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
H Investment income per share reflects a special dividend which amounted to $.01 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.84)%.
I Investment income per share reflects a special dividend which amounted to $.01 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.85)%.
J For the period November 3, 2004 (commencement of operations) to July 31, 2005.
K Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
L Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class T
Years ended July 31, | 2008 | 2007 | 2006 | 2005 J |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 16.01 | $ 12.86 | $ 12.93 | $ 10.00 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss) E | (.15) | (.16)H | (.14)I | (.09) |
Net realized and unrealized gain (loss) | (1.73) | 3.38 | .19 | 3.01 |
Total from investment operations | (1.88) | 3.22 | .05 | 2.92 |
Distributions from net realized gain | (.96) | (.07) | (.13) | - |
Redemption fees added to paid in capital E | - L | -L | .01 | .01 |
Net asset value, end of period | $ 13.17 | $ 16.01 | $ 12.86 | $ 12.93 |
Total ReturnB, C, D | (12.50)% | 25.18% | .48% | 29.30% |
Ratios to Average Net AssetsF, K |
|
|
|
|
Expenses before reductions | 1.65% | 1.67% | 1.73% | 1.79%A |
Expenses net of fee waivers, if any | 1.65% | 1.65% | 1.65% | 1.70%A |
Expenses net of all reductions | 1.65% | 1.65% | 1.60% | 1.61%A |
Net investment income (loss) | (.99)% | (1.05)%H | (1.04)%I | (1.03)%A |
Supplemental Data |
|
|
|
|
Net assets, end of period (000 omitted) | $ 21,754 | $ 26,419 | $ 19,205 | $ 5,240 |
Portfolio turnover rateG | 113% | 91% | 129% | 93%A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
H Investment income per share reflects a special dividend which amounted to $.01 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (1.09)%.
I Investment income per share reflects a special dividend which amounted to $.01 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (1.10)%.
J For the period November 3, 2004 (commencement of operations) to July 31, 2005.
K Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
L Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class B
Years ended July 31, | 2008 | 2007 | 2006 | 2005J |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 15.85 | $ 12.78 | $ 12.87 | $ 10.00 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss)E | (.22) | (.23)H | (.20)I | (.13) |
Net realized and unrealized gain (loss) | (1.71) | 3.36 | .19 | 2.99 |
Total from investment operations | (1.93) | 3.13 | (.01) | 2.86 |
Distributions from net realized gain | (.89) | (.06) | (.09) | - |
Redemption fees added to paid in capitalE | -L | -L | .01 | .01 |
Net asset value, end of period | $ 13.03 | $ 15.85 | $ 12.78 | $ 12.87 |
Total ReturnB, C, D | (12.92)% | 24.57% | (.03)% | 28.70% |
Ratios to Average Net AssetsF, K |
|
|
|
|
Expenses before reductions | 2.15% | 2.20% | 2.28% | 2.33%A |
Expenses net of fee waivers, if any | 2.15% | 2.15% | 2.15% | 2.20%A |
Expenses net of all reductions | 2.15% | 2.15% | 2.10% | 2.11%A |
Net investment income (loss) | (1.49)% | (1.55)%H | (1.54)%I | (1.53)%A |
Supplemental Data |
|
|
|
|
Net assets, end of period (000 omitted) | $ 5,517 | $ 6,242 | $ 5,191 | $ 2,055 |
Portfolio turnover rateG | 113% | 91% | 129% | 93%A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the contingent deferred sales charge.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
H Investment income per share reflects a special dividend which amounted to $.01 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (1.59)%.
I Investment income per share reflects a special dividend which amounted to $.01 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (1.60)%.
J For the period November 3, 2004 (commencement of operations) to July 31, 2005.
K Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
L Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class C
Years ended July 31, | 2008 | 2007 | 2006 | 2005J |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 15.84 | $ 12.77 | $ 12.88 | $ 10.00 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss)E | (.22) | (.23)H | (.20)I | (.13) |
Net realized and unrealized gain (loss) | (1.71) | 3.36 | .18 | 3.00 |
Total from investment operations | (1.93) | 3.13 | (.02) | 2.87 |
Distributions from net realized gain | (.91) | (.06) | (.10) | - |
Redemption fees added to paid in capitalE | -L | -L | .01 | .01 |
Net asset value, end of period | $ 13.00 | $ 15.84 | $ 12.77 | $ 12.88 |
Total ReturnB, C, D | (12.94)% | 24.59% | (.08)% | 28.80% |
Ratios to Average Net AssetsF, K |
|
|
|
|
Expenses before reductions | 2.15% | 2.20% | 2.25% | 2.24%A |
Expenses net of fee waivers, if any | 2.15% | 2.15% | 2.15% | 2.17%A |
Expenses net of all reductions | 2.14% | 2.14% | 2.10% | 2.09%A |
Net investment income (loss) | (1.49)% | (1.55)%H | (1.54)%I | (1.50)%A |
Supplemental Data |
|
|
|
|
Net assets, end of period (000 omitted) | $ 15,946 | $ 22,348 | $ 14,682 | $ 8,372 |
Portfolio turnover rateG | 113% | 91% | 129% | 93%A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the contingent deferred sales charge.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
H Investment income per share reflects a special dividend which amounted to $.01 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (1.59)%.
I Investment income per share reflects a special dividend which amounted to $.01 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (1.60)%.
J For the period November 3, 2004 (commencement of operations) to July 31, 2005.
K Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
L Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Small Cap Growth
Years ended July 31, | 2008 | 2007 | 2006 | 2005 I |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 16.15 | $ 12.93 | $ 12.98 | $ 10.00 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss)D | (.07) | (.08)G | (.07)H | (.04) |
Net realized and unrealized gain (loss) | (1.74) | 3.40 | .19 | 3.01 |
Total from investment operations | (1.81) | 3.32 | .12 | 2.97 |
Distributions from net realized gain | (1.05) | (.10) | (.18) | - |
Redemption fees added to paid in capitalD | -K | -K | .01 | .01 |
Net asset value, end of period | $ 13.29 | $ 16.15 | $ 12.93 | $ 12.98 |
Total ReturnB, C | (11.98)% | 25.84% | 1.01% | 29.80% |
Ratios to Average Net AssetsE, J |
|
|
|
|
Expenses before reductions | 1.11% | 1.10% | 1.13% | 1.16%A |
Expenses net of fee waivers, if any | 1.11% | 1.10% | 1.13% | 1.16%A |
Expenses net of all reductions | 1.10% | 1.09% | 1.08% | 1.08%A |
Net investment income (loss) | (.45)% | (.50)%G | (.52)%H | (.49)%A |
Supplemental Data |
|
|
|
|
Net assets, end of period (000 omitted) | $ 1,217,520 | $ 1,149,809 | $ 402,353 | $ 205,652 |
Portfolio turnover rateF | 113% | 91% | 129% | 93%A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
G Investment income per share reflects a special dividend which amounted to $.01 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.54)%.
H Investment income per share reflects a special dividend which amounted to $.01 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.58)%.
I For the period November 3, 2004 (commencement of operations) to July 31, 2005.
J Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
K 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 July 31, | 2008 | 2007 | 2006 | 2005I |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 16.15 | $ 12.92 | $ 12.97 | $ 10.00 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss)D | (.06) | (.07)G | (.07)H | (.04) |
Net realized and unrealized gain (loss) | (1.74) | 3.41 | .19 | 3.00 |
Total from investment operations | (1.80) | 3.34 | .12 | 2.96 |
Distributions from net realized gain | (1.05) | (.11) | (.18) | - |
Redemption fees added to paid in capitalD | -K | -K | .01 | .01 |
Net asset value, end of period | $ 13.30 | $ 16.15 | $ 12.92 | $ 12.97 |
Total ReturnB, C | (11.93)% | 25.99% | .97% | 29.70% |
Ratios to Average Net AssetsE, J |
|
|
|
|
Expenses before reductions | 1.04% | 1.05% | 1.10% | 1.20%A |
Expenses net of fee waivers, if any | 1.04% | 1.05% | 1.10% | 1.18%A |
Expenses net of all reductions | 1.03% | 1.05% | 1.05% | 1.10%A |
Net investment income (loss) | (.38)% | (.46)%G | (.49)%H | (.51)%A |
Supplemental Data |
|
|
|
|
Net assets, end of period (000 omitted) | $ 22,444 | $ 18,671 | $ 14,233 | $ 1,906 |
Portfolio turnover rateF | 113% | 91% | 129% | 93%A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
G Investment income per share reflects a special dividend which amounted to $.01 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.50)%.
H Investment income per share reflects a special dividend which amounted to $.01 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.55)%.
I For the period November 3, 2004 (commencement of operations) to July 31, 2005.
J Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
K 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 July 31, 2008
1. Organization.
Fidelity Small Cap Growth Fund (the Fund) is a fund of Fidelity Securities Fund (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 B, Class C, Small Cap Growth, and Institutional Class 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 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 also differ by class.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the SEC's web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:
Annual Report
3. Significant Accounting Policies - continued
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. Wherever possible, the Fund uses independent pricing services approved by the Board of Trustees to value its investments.
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Annual Report
Notes to Financial Statements - continued
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. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The implementation of FIN 48 did not result in any unrecognized tax benefits in the accompanying financial statements. Each of the Fund's federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles.
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 foreign currency transactions, passive foreign investment companies (PFIC), partnerships, net operating losses, losses deferred due to wash sales and excise tax regulations.
The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows:
Unrealized appreciation | $ 125,536,253 |
Unrealized depreciation | (130,088,038) |
Net unrealized appreciation (depreciation) | (4,551,785) |
Cost for federal income tax purposes | $ 1,469,704,790 |
The tax character of distributions paid was as follows:
| July 31, 2008 | July 31, 2007 |
Ordinary Income | $ 58,646,396 | $ 1,338,128 |
Long-term Capital Gains | 22,553,344 | 2,253,852 |
Total | $ 81,199,740 | $ 3,591,980 |
Short-Term Trading (Redemption) Fees. Shares held in the Fund less than 90 days are subject to a redemption fee equal to 1.50% of the proceeds of the redeemed shares. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the Fund and accounted for as an addition to paid in capital.
New Accounting Pronouncement. In September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and results in expanded disclosures about fair value measurements.
4. Operating Policies.
Repurchase Agreements. FMR has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits the Fund and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts which are then invested in repurchase agreements. The Fund may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in
Annual Report
Notes to Financial Statements - continued
4. Operating Policies - continued
Repurchase Agreements - continued
segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. The Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
5. Purchases and Sales of Investments.
Purchases and sales of securities other than short-term securities, aggregated $1,698,044,847 and $1,457,287,817, 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 .45% of the Fund's average net assets and a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. In addition, the management fee is subject to a performance adjustment (up to a maximum of ± .20% of the Fund's average net assets over a 36 month performance period). The upward or downward adjustment to the management fee is based on the relative investment performance of the retail class of the Fund, Small Cap Growth, as compared to an appropriate benchmark index. For the period, the total annual management fee rate, including the performance adjustment, was .79% of the Fund's average net assets.
Distribution and Service Plan. 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.
Annual Report
6. Fees and Other Transactions with Affiliates - continued
Distribution and Service Plan - continued
For the period, the Distribution and Service Fee rates and the total amounts paid to and retained by FDC were as follows:
| Distribution | Service | Paid to | Retained |
Class A | 0% | .25% | $ 98,491 | $ 12,415 |
Class T | .25% | .25% | 121,790 | 227 |
Class B | .75% | .25% | 61,874 | 46,406 |
Class C | .75% | .25% | 216,962 | 43,665 |
|
|
| $ 499,117 | $ 102,713 |
Sales Load. FDC receives 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. FDC receives the proceeds of contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. These charges depend on the holding period. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, 1.00% to .50% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained |
Class A | $ 37,191 |
Class T | 7,936 |
Class B* | 15,537 |
Class C* | 2,479 |
| $ 63,143 |
* 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. Prior to January 1, 2008, Fidelity Service
Annual Report
Notes to Financial Statements - continued
6. Fees and Other Transactions with Affiliates - continued
Transfer Agent Fees - continued
Company, Inc. (FSC), also an affiliate of FMR, was the transfer agent for Small Cap Growth shares. For the period, each class paid the following transfer agent fees:
| Amount | % of |
Class A | $ 119,848 | .30 |
Class T | 75,753 | .31 |
Class B | 18,899 | .31 |
Class C | 65,826 | .30 |
Small Cap Growth | 3,292,023 | .27 |
Institutional Class | 40,802 | .19 |
| $ 3,613,151 |
|
Accounting and Security Lending Fees. FSC, an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $27,116 for the period.
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $4.2 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro rata portion of the line of credit, which amounted to $2,996 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
8. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned
Annual Report
8. Security Lending - continued
securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds.
9. Expense Reductions.
FMR voluntarily agreed to reimburse each class to the extent annual operating expenses exceeded certain levels of average net assets as noted in the table below. Some expenses, for example interest expense, including commitment fees, are excluded from this reimbursement.
The following classes were in reimbursement during the period:
| Expense | Reimbursement |
Class T | 1.65% | $ 688 |
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 $37,290 for the period. In addition, through arrangements with the Fund's custodian and each class' transfer agent, credits realized as a result of uninvested cash balances were used to reduce the Fund's expenses. During the period, these credits reduced the Fund's custody expenses by $5,794. During the period, credits reduced each class' transfer agent expense as noted in the table below.
| Transfer Agent |
Small Cap Growth | $ 54,607 |
Institutional Class | 11 |
| $ 54,618 |
Annual Report
Notes to Financial Statements - continued
10. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
11. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended July 31, | 2008 | 2007 |
From net realized gain |
|
|
Class A | $ 2,216,913 | $ 130,212 |
Class T | 1,570,296 | 118,024 |
Class B | 348,424 | 24,691 |
Class C | 1,307,950 | 74,047 |
Small Cap Growth | 74,608,644 | 3,129,487 |
Institutional Class | 1,147,513 | 115,519 |
Total | $ 81,199,740 | $ 3,591,980 |
12. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
Years ended July 31, | 2008 | 2007 | 2008 | 2007 |
Class A |
|
|
|
|
Shares sold | 1,742,262 | 1,113,110 | $ 25,505,334 | $ 17,060,734 |
Reinvestment of distributions | 126,731 | 8,925 | 1,912,181 | 119,928 |
Shares redeemed | (763,921) | (436,417) | (11,052,109) | (6,456,393) |
Net increase (decrease) | 1,105,072 | 685,618 | $ 16,365,406 | $ 10,724,269 |
Class T |
|
|
|
|
Shares sold | 487,722 | 607,092 | $ 7,048,735 | $ 8,822,874 |
Reinvestment of distributions | 99,906 | 8,530 | 1,507,341 | 115,213 |
Shares redeemed | (586,050) | (459,339) | (8,531,977) | (6,905,798) |
Net increase (decrease) | 1,578 | 156,283 | $ 24,099 | $ 2,032,289 |
Class B |
|
|
|
|
Shares sold | 132,932 | 121,826 | $ 1,958,446 | $ 1,800,582 |
Reinvestment of distributions | 22,166 | 1,705 | 332,229 | 23,112 |
Shares redeemed | (125,460) | (135,943) | (1,804,323) | (1,994,978) |
Net increase (decrease) | 29,638 | (12,412) | $ 486,352 | $ (171,284) |
Annual Report
12. Share Transactions - continued
| Shares | Dollars | ||
Years ended July 31, | 2008 | 2007 | 2008 | 2007 |
Class C |
|
|
|
|
Shares sold | 436,957 | 546,198 | $ 6,320,995 | $ 8,014,853 |
Reinvestment of distributions | 82,544 | 5,178 | 1,234,732 | 70,286 |
Shares redeemed | (703,886) | (290,387) | (9,901,355) | (4,244,042) |
Net increase (decrease) | (184,385) | 260,989 | $ (2,345,628) | $ 3,841,097 |
Small Cap Growth |
|
|
|
|
Shares sold | 38,610,197 | 47,884,601 | $ 574,316,675 | $ 736,795,086 |
Reinvestment of distributions | 4,701,343 | 213,315 | 71,216,320 | 2,867,099 |
Shares redeemed | (22,858,332) | (8,042,099) | (336,543,207) | (119,410,062) |
Net increase (decrease) | 20,453,208 | 40,055,817 | $ 308,989,788 | $620,252,123 |
Institutional Class |
|
|
|
|
Shares sold | 788,829 | 404,996 | $ 11,907,085 | $ 6,086,460 |
Reinvestment of distributions | 66,279 | 7,296 | 1,004,006 | 97,691 |
Shares redeemed | (323,911) | (357,460) | (4,862,607) | (5,250,610) |
Net increase (decrease) | 531,197 | 54,832 | $ 8,048,484 | $ 933,541 |
Annual Report
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Securities Fund and the Shareholders of Fidelity Small Cap Growth 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 Small Cap Growth Fund (a fund of Fidelity Securities Fund) at July 31, 2008, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and 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 Small Cap Growth 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 July 31, 2008 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
September 22, 2008
Annual Report
Trustees and Officers
The Trustees, Member of the Advisory Board, and executive officers of the trust and fund, as applicable, are listed below. The Board of Trustees governs the fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee the fund's activities, review contractual arrangements with companies that provide services to the fund, and review the fund's performance. Except for Edward C. Johnson 3d and James C. Curvey, each of the Trustees oversees 218 funds advised by FMR or an affiliate. Messrs. Johnson and Curvey oversee 377 funds advised by FMR or an affiliate.
The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust. Each Trustee who is not an interested person (as defined in the 1940 Act) (Independent Trustee), shall retire not later than the last day of the calendar year in which his or her 72nd birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board Member hold office without limit in time, except that any officer and Advisory Board Member may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years.
The fund's Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-877-208-0098.
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 Occupation | |
Edward C. Johnson 3d (78) | |
| Year of Election or Appointment: 1984 Mr. Johnson is Chairman of the Board of Trustees. Mr. Johnson serves as Chief Executive Officer, Chairman, and a Director of FMR LLC; Chairman and a Director of FMR; Chairman and a Director of Fidelity Research & Analysis Company (FRAC); Chairman and a Director of Fidelity Investments Money Management, Inc.; and Chairman and a Director of FMR Co., Inc. In addition, Mr. Johnson serves as Chairman and Director of FIL Limited. Previously, Mr. Johnson served as President of FMR LLC (2006-2007). |
James C. Curvey (73) | |
| Year of Election or Appointment: 2007 Mr. Curvey also serves as Trustee (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2006- |
* Trustees have been determined to be "Interested Trustees" by virtue of, among other things, their affiliation with the trust or various entities under common control with FMR. FMR Corp. merged with and into FMR LLC on October 1, 2007. Any references to FMR LLC for prior periods are deemed to be references to the prior entity.
Independent Trustees:
Correspondence intended for each Independent Trustee (that is, the Trustees other than the Interested Trustees) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.
Name, Age; Principal Occupation | |
Dennis J. Dirks (60) | |
| Year of Election or Appointment: 2005 Prior to his retirement in May 2003, Mr. Dirks was Chief Operating Officer and a member of the Board of The Depository Trust & Clearing Corporation (DTCC) (1999-2003). He also served as President, Chief Operating Officer, and Board member of The Depository Trust Company (DTC) (1999-2003) and President and Board member of the National Securities Clearing Corporation (NSCC) (1999-2003). In addition, Mr. Dirks served as a Trustee and a member of the Finance Committee of Manhattan College (2005-2008), and as Chief Executive Officer and Board member of the Government Securities Clearing Corporation (2001-2003) and Chief Executive Officer and Board member of the Mortgage-Backed Securities Clearing Corporation (2001-2003). Mr. Dirks also serves as a Trustee and a member of the Finance Committee of AHRC of Nassau County (2006-present). |
Alan J. Lacy (54) | |
| Year of Election or Appointment: 2008 Mr. Lacy serves as Senior Adviser (2007-present) of Oak Hill Capital Partners, L.P. (a private equity firm). Mr. Lacy also served as Chief Executive Officer (2000-2005) and Vice Chairman (2005-2006) of Sears Holdings Corporation and Sears, Roebuck and Co. (retail). In addition, Mr. Lacy serves as a member of the Board of Directors of The Western Union Company (global money transfer, 2006-present) and Bristol-Myers Squibb (global pharmaceuticals, 2007-present). Mr. Lacy is a Trustee of the National Parks Conservation Association and The Field Museum of Natural History. |
Ned C. Lautenbach (64) | |
| Year of Election or Appointment: 2000 Mr. Lautenbach is Chairman of the Independent Trustees (2006-present). Mr. Lautenbach is an Advisory Partner of Clayton, Dubilier & Rice, Inc. (private equity investment firm). Previously, Mr. Lautenbach was with the International Business Machines Corporation (IBM) from 1968 until his retirement in 1998. Mr. Lautenbach serves as a Director of Eaton Corporation (diversified industrial) as well as the Philharmonic Center for the Arts in Naples, Florida. He also is a member of the Board of Trustees of Fairfield University (2005-present), as well as a member of the Council on Foreign Relations. Previously, Mr. Lautenbach served as a Director of Sony Corporation (2006-2007). |
Joseph Mauriello (63) | |
| 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 firm, 1965-2005). Mr. Mauriello currently serves as a member of the Board of Directors of XL Capital Ltd. (global insurance and re-insurance company, 2006- |
Cornelia M. Small (64) | |
| Year of Election or Appointment: 2005 Ms. Small is a member of the Investment Committee, and Chair (2008-present) and a member of the Board of Trustees of Smith College. Ms. Small also serves on the Investment Committee of the Berkshire Taconic Community Foundation (2008-present). Previously, Ms. Small served as Chairperson of the Investment Committee (2002-2008) of Smith College and as Co-Chair (2000-2003) of the Annual Fund for the Fletcher School of Law and Diplomacy. In addition, she served as Chief Investment Officer, Director of Global Equity Investments, and a member of the Board of Directors of Scudder, Stevens & Clark and Scudder Kemper Investments. |
William S. Stavropoulos (69) | |
| Year of Election or Appointment: 2002 Mr. Stavropoulos is Chairman Emeritus of the Board of Directors of The Dow Chemical Company, where he previously served in numerous senior management positions, including President (1993-2000; 2002-2003), CEO (1995-2000; 2002-2004), Chairman of the Executive Committee (2000-2006), and as a member of the Board of Directors (1990-2006). Currently, he is a Director of Teradata Corporation (data warehousing and technology solutions, 2008-present), Chemical Financial Corporation, Maersk Inc. (industrial conglomerate), Tyco International, Inc. (multinational manufacturing and services, 2007-present), and a member of the Advisory Board for Metalmark Capital (private equity investment firm, 2005-present). He is a special advisor to Clayton, Dubilier & Rice, Inc. (private equity investment). In addition, Mr. Stavropoulos is a member of the University of Notre Dame Advisory Council for the College of Science. |
David M. Thomas (59) | |
| Year of Election or Appointment: 2008 Previously, Mr. Thomas served as Executive Chairman (2005-2006) and Chairman and Chief Executive Officer (2000-2005) of IMS Health, Inc. (pharmaceutical and healthcare information solutions). In addition, Mr. Thomas serves as a member of the Board of Directors of Fortune Brands, Inc. (consumer products holding company), and Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (57) | |
| Year of Election or Appointment: 2008 Mr. Wiley also serves as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-present). He serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), and a Director of Bill Barrett Corporation (exploration and production company, 2005-present). In addition, he also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a Sr. Energy Advisor of Katzenbach Partners, LLC (consulting firm, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment firm), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services company, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production company, 2001-2005). |
Advisory Board Member and Executive Officers**:
Correspondence intended for each executive officer and Mr. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Peter S. Lynch (64) | |
| Year of Election or Appointment: 2003 Member of the Advisory Board of Fidelity Securities Fund. Mr. Lynch is Vice Chairman and a Director of FMR, and Vice Chairman (2001- |
Kenneth B. Robins (38) | |
| Year of Election or Appointment: 2008 President and Treasurer of the fund. Mr. Robins also serves as President and Treasurer of Fidelity's Equity and High Income Funds (2008-present) and is an employee of FMR (2004-present). Before joining Fidelity Investments, Mr. Robins worked at KPMG LLP, where he was a partner in KPMG's department of professional practice (2002-2004). |
Walter C. Donovan (46) | |
| Year of Election or Appointment: 2007 Vice President of the fund. Mr. Donovan also serves as Vice President of Fidelity's Equity Funds, President of FMR and FMR Co., Inc., and Executive Vice President of Fidelity Investments Money Management, Inc. (2007-present). Previously, Mr. Donovan served as Executive Vice President of FMR and FMR Co., Inc. (2005-2007) and Senior Vice President of FMR (2003-2005) and FMR Co., Inc. (2004-2005). |
Thomas C. Hense (44) | |
| Year of Election or Appointment: 2008 Vice President of the fund. Mr. Hense also serves as Vice President of Fidelity's High Income and Small Cap Funds (2008-present). Previously, Mr. Hense served as a portfolio manager for Fidelity's Institutional Money Management Group (Pyramis) (2003-2008). |
Scott C. Goebel (40) | |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of the fund. Mr. Goebel also serves as Secretary and CLO of other Fidelity funds (2008-present); General Counsel, Secretary, and Senior Vice President of FMR (2008-present); and Deputy General Counsel of FMR LLC. Previously, Mr. Goebel served as Assistant Secretary of the Funds (2007-2008) and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007). |
John B. McGinty, Jr. (45) | |
| Year of Election or Appointment: 2008 Assistant Secretary of the fund. Mr. McGinty also serves as Assistant Secretary of Fidelity's other Equity and High Income Funds (2008- |
Holly C. Laurent (54) | |
| Year of Election or Appointment: 2008 Anti-Money Laundering (AML) officer of the fund. Ms. Laurent also serves as AML officer of other Fidelity funds (2008-present) and is an employee of FMR LLC. Previously, Ms. Laurent was Senior Vice President and Head of Legal for Fidelity Business Services India Pvt. Ltd. (2006-2008), Senior Vice President, Deputy General Counsel and Group Head for FMR LLC (2005-2006). |
Christine Reynolds (49) | |
| Year of Election or Appointment: 2008 Chief Financial Officer of the fund. Ms. Reynolds also serves as Chief Financial Officer of other Fidelity funds (2008-present). Ms. Reynolds became President of Fidelity Pricing and Cash Management Services (FPCMS) in August 2008. She served as Chief Operating Officer of FPCMS from 2007 through July 2008. Previously, Ms. Reynolds served as President, Treasurer, and Anti-Money Laundering officer of the Fidelity funds (2004-2007). Before joining Fidelity Investments, Ms. Reynolds worked at PricewaterhouseCoopers LLP (PwC) (1980-2002), where she was an audit partner with PwC's investment management practice. |
Kenneth A. Rathgeber (61) | |
| Year of Election or Appointment: 2004 Chief Compliance Officer of the fund. Mr. Rathgeber also serves as Chief Compliance Officer of Fidelity's Equity and High Income Funds (2004-present). He is Chief Compliance Officer of FMR (2005-present), FMR Co., Inc. (2005-present), Fidelity Management & Research (U.K.) Inc. (2005-present), Fidelity Research & Analysis Company (2005- |
Bryan A. Mehrmann (47) | |
| Year of Election or Appointment: 2005 Deputy Treasurer of the fund. Mr. Mehrmann also serves as Deputy Treasurer of other Fidelity funds (2005-present) and is an employee of FMR. Previously, Mr. Mehrmann served as Vice President of Fidelity Investments Institutional Services Group (FIIS)/Fidelity Investments Institutional Operations Corporation, Inc. (FIIOC) Client Services (1998-2004). |
Adrien E. Deberghes (40) | |
| Year of Election or Appointment: 2008 Deputy Treasurer of the fund. Mr. Deberghes also serves as Deputy Treasurer of Fidelity's Equity and High Income Funds (2008-present) and is an employee of FMR (2008-present). Previously, Mr. Deberghes served as Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005). |
Robert G. Byrnes (41) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of the fund. Mr. Byrnes also serves as Assistant Treasurer of other Fidelity funds (2005-present) and is an employee of FMR (2005-present). Previously, Mr. Byrnes served as Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (2003-2005). Before joining Fidelity Investments, Mr. Byrnes worked at Deutsche Asset Management where he served as Vice President of the Investment Operations Group (2000-2003). |
Peter L. Lydecker (54) | |
| Year of Election or Appointment: 2004 Assistant Treasurer of the fund. Mr. Lydecker also serves as Assistant Treasurer of other Fidelity funds (2004-present) and is an employee of FMR. |
Paul M. Murphy (61) | |
| Year of Election or Appointment: 2007 Assistant Treasurer of the fund. Mr. Murphy also serves as Assistant Treasurer of other Fidelity funds (2007-present) and is an employee of FMR (2007-present). Previously, Mr. Murphy served as Chief Financial Officer of the Fidelity Funds (2005-2006), Vice President and Associate General Counsel of FMR (2007), and Senior Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (1994-2007). |
Gary W. Ryan (49) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of the fund. Mr. Ryan also serves as Assistant Treasurer of other Fidelity funds (2005-present) and is an employee of FMR (2005-present). Previously, Mr. Ryan served as Vice President of Fund Reporting in Fidelity Pricing and Cash Management Services (FPCMS) (1999-2005). |
** FMR Corp. merged with and into FMR LLC on October 1, 2007. Any references to FMR LLC for prior periods are deemed to be references to the prior entity.
Annual Report
Distributions (Unaudited)
The fund hereby designates as a capital gain dividend with respect to the taxable year ended July 31, 2008, $784,798, or, if subsequently determined to be different, the net capital gain of such year.
Class A designates 5%, Class T designates 6%, Class B designates 6% and Class C designates 6%, of the dividends distributed in September 2007 as qualifying for the dividends-received deduction for corporate shareholders.
Class A designates 6%, Class T designates 7%, Class B designates 8% and Class C designates 7%, of the dividends distributed in September 2007 as amounts which may be taken into account as a dividend for purposes of the maximum rate under section 1(h)(11) of the Internal Revenue Code.
The fund will notify shareholders in January 2009 of amounts for use in preparing 2008 income tax returns.
Annual Report
Proxy Voting Results
A special meeting of the fund's shareholders was held on May 14, 2008. The results of votes taken among shareholders on the proposals before them are reported below. Each vote reported represents one dollar of net asset value held on the record date for the meeting.
PROPOSAL 1 | ||
To elect a Board of Trustees.A | ||
| # of | % of |
James C. Curvey | ||
Affirmative | 30,242,569,269.49 | 94.915 |
Withheld | 1,620,182,942.38 | 5.085 |
TOTAL | 31,862,752,211.87 | 100.000 |
Dennis J. Dirks | ||
Affirmative | 30,356,248,026.80 | 95.272 |
Withheld | 1,506,504,185.07 | 4.728 |
TOTAL | 31,862,752,211.87 | 100.000 |
Edward C. Johnson 3d | ||
Affirmative | 30,163,300,902.81 | 94.666 |
Withheld | 1,699,451,309.06 | 5.334 |
TOTAL | 31,862,752,211.87 | 100.000 |
Alan J. Lacy | ||
Affirmative | 30,334,439,999.59 | 95.203 |
Withheld | 1,528,312,212.28 | 4.797 |
TOTAL | 31,862,752,211.87 | 100.000 |
Ned C. Lautenbach | ||
Affirmative | 30,317,381,535.59 | 95.150 |
Withheld | 1,545,370,676.28 | 4.850 |
TOTAL | 31,862,752,211.87 | 100.000 |
Joseph Mauriello | ||
Affirmative | 30,340,553,696.88 | 95.223 |
Withheld | 1,522,198,514.99 | 4.777 |
TOTAL | 31,862,752,211.87 | 100.000 |
Cornelia M. Small | ||
Affirmative | 30,337,552,071.15 | 95.213 |
Withheld | 1,525,200,140.72 | 4.787 |
TOTAL | 31,862,752,211.87 | 100.000 |
William S. Stavropoulos | ||
Affirmative | 30,240,356,579.51 | 94.908 |
Withheld | 1,622,395,632.36 | 5.092 |
TOTAL | 31,862,752,211.87 | 100.000 |
| # of | % of |
David M. Thomas | ||
Affirmative | 30,352,029,125.67 | 95.259 |
Withheld | 1,510,723,086.20 | 4.741 |
TOTAL | 31,862,752,211.87 | 100.000 |
Michael E. Wiley | ||
Affirmative | 30,333,540,290.12 | 95.201 |
Withheld | 1,529,211,921.75 | 4.799 |
TOTAL | 31,862,752,211.87 | 100.000 |
PROPOSAL 2 | ||
To amend the Declaration of Trust to reduce the required quorum for future shareholder meetings.A | ||
Affirmative | 23,747,670,372.95 | 74.531 |
Against | 5,357,217,831.03 | 16.814 |
Abstain | 1,587,233,084.08 | 4.981 |
Broker | 1,170,630,923.81 | 3.674 |
TOTAL | 31,862,752,211.87 | 100.000 |
A Denotes trust-wide proposal and voting results. |
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees
Fidelity Small Cap Growth Fund
Each year, typically in July, the Board of Trustees, including the Independent Trustees (together, the Board), votes on the renewal of the management contract and sub-advisory agreements (together, the Advisory Contracts) for the fund. The Board, assisted by the advice of fund counsel and Independent Trustees' counsel, requests and considers a broad range of information throughout the year.
The Board meets regularly and, acting directly and through its separate committees, requests and receives information concerning, and considers at each of its meetings factors that are relevant to, its annual consideration of the renewal of the fund's Advisory Contracts, including the services and support provided to the fund and its shareholders. At the time of the renewal, the Board had 12 standing committees, each composed of Independent Trustees with varying backgrounds, to which the Board has assigned specific subject matter responsibilities in order to enhance effective decision-making by the Board. Each committee has a written charter outlining the structure and purposes of the committee. The Board also meets as needed to consider matters specifically related to the Board's annual consideration of the renewal of Advisory Contracts.
At its July 2008 meeting, the Board of Trustees, including the Independent Trustees, unanimously determined to renew the fund's Advisory Contracts. In reaching its determination, the Board considered all factors it believed relevant, including (i) the nature, extent, and quality of the services to be provided to the fund and its shareholders (including the investment performance of the fund); (ii) the competitiveness of the fund's management fee and total expenses; (iii) the total costs of the services to be provided by and the profits to be realized by Fidelity from its relationship with the fund; (iv) the extent to which economies of scale would be realized as the fund grows; and (v) whether fee levels reflect these economies of scale, if any, for the benefit of fund shareholders. The Board also approved agreements with foreign sub-advisers Fidelity Management & Research (Japan) Inc. and Fidelity Management & Research (Hong Kong) Limited, as well as amendments to the fund's agreement with Fidelity Management & Research (U.K.) Inc.
In considering whether to renew the Advisory Contracts for the fund, the Board ultimately reached a determination, with the assistance of fund counsel and Independent Trustees' counsel and through the exercise of its business judgment, that the renewal of the Advisory Contracts and the compensation to be received by Fidelity under the management contract is consistent with Fidelity's fiduciary duty under applicable law. The Board's decision to renew the Advisory Contracts was not based on any single factor noted above, but rather was based on a comprehensive consideration of all the information provided to the Board at its meetings throughout the year. The Board, in reaching its determination to renew the Advisory Contracts, is aware that shareholders in the fund have a broad range of investment choices available to them, including a wide choice among mutual funds offered by competitors to Fidelity, and that the fund's shareholders, with the opportunity to review and weigh the disclosure provided by the fund in its prospectus and other public disclosures, have chosen to invest in this fund, managed by Fidelity.
Annual Report
Nature, Extent, and Quality of Services Provided. The Board considered staffing within the investment adviser, FMR, and the sub-advisers (together, the Investment Advisers), including the backgrounds of the fund's investment personnel and the fund's investment objective and discipline. The Independent Trustees also had discussions with senior management of Fidelity's investment operations and investment groups. The Board considered the structure of the portfolio manager compensation program and whether this structure provides appropriate incentives.
Resources Dedicated to Investment Management and Support Services. The Board reviewed the size, education, and experience of the Investment Advisers' investment staff, their use of technology, and the Investment Advisers' approach to recruiting, training, and retaining portfolio managers and other research, advisory, and management personnel. The Board noted that Fidelity's analysts have access to a variety of technological tools that enable them to perform both fundamental and quantitative analysis and to specialize in various disciplines. The Board considered Fidelity's extensive global research capabilities that enable the Investment Advisers to aggregate data from various sources in an effort to produce positive investment results. The Board also considered that Fidelity's portfolio managers and analysts have access to daily portfolio attribution that allows for monitoring of a fund's portfolio, as well as an electronic communication system that provides immediate real-time access to research concerning issuers and credit enhancers.
Shareholder and Administrative Services. The Board considered (i) the nature, extent, quality, and cost of advisory, administrative, distribution, and shareholder services performed by the Investment Advisers and their affiliates under the Advisory Contracts and under separate agreements covering transfer agency, pricing and bookkeeping, and securities lending services for the fund; (ii) the nature and extent of the Investment Advisers' supervision of third party service providers, principally custodians and subcustodians; and (iii) the resources devoted to, and the record of compliance with, the fund's compliance policies and procedures. The Board also reviewed the allocation of fund brokerage, including allocations to brokers affiliated with the Investment Advisers, the use of brokerage commissions to pay fund expenses, and the use of "soft" commission dollars to pay for research services. The Board further considered that Fidelity voluntarily pays for market data out of its own resources.
The Board noted that the growth of fund assets across the complex allows Fidelity to reinvest in the development of services designed to enhance the value or convenience of the Fidelity funds as investment vehicles. These services include 24-hour access to account information and market information through phone representatives and over the Internet, and investor education materials and asset allocation tools.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
Investment in a Large Fund Family. The Board considered the benefits to shareholders of investing in a Fidelity fund, including the benefits of investing in a fund that is part of a large family of funds offering a variety of investment disciplines and providing for a large variety of mutual fund investor services. For example, fund shareholders are offered the privilege of exchanging shares of the fund for shares of other Fidelity funds, as set forth in the fund's prospectus, without paying a sales charge. The Board noted that Fidelity has taken a number of actions over the previous year that benefited particular funds, including (i) dedicating additional resources to investment research and to restructure the investment research teams; (ii) contractually agreeing to reduce the management fees on Fidelity's Institutional Money Market Funds and launching Class IV and Institutional Class of certain of these funds; (iii) reducing the transfer agent fees for the Fidelity Select Portfolios and Investor Class of the VIP funds; and (iv) launching Class K of 29 equity funds as a lower-fee class available to certain employer-sponsored retirement plans.
Investment Performance. The Board considered whether the fund has operated within its investment objective, as well as its record of compliance with its investment restrictions. It also reviewed the fund's absolute investment performance for each class, as well as the fund's relative investment performance for each class measured against (i) a broad-based securities market index, and (ii) a peer group of mutual funds deemed appropriate by the Board over multiple periods. Because the fund had been in existence less than five calendar years, the following charts considered by the Board show, over the one- and three-year periods ended December 31, 2007, the cumulative total returns of Institutional Class (Class I) 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 Institutional Class (Class I) and Class B 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 (bottom of box) and the 75th percentile return (top of box) of the peer group. Returns shown above the box are in the first quartile and returns shown below the box are in the fourth quartile.
Annual Report
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.
Fidelity Small Cap Growth Fund
The Board reviewed the fund's relative investment performance against its peer group and stated that the performance of Institutional Class (Class I) of the fund was in the first quartile for all the periods shown. The Board also stated that the investment performance of Institutional Class (Class I) of the fund compared favorably to 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 also considered that the fund's management fee is subject to upward or downward adjustment depending upon whether, and to what extent, the fund's investment performance for the performance period exceeds, or is exceeded by, the record (over the same period) of a Board-approved performance adjustment index. The Board realizes that the performance adjustment provides FMR with a strong economic incentive to seek to achieve superior performance for the fund's shareholders and helps to more closely align the interests of FMR and the fund's shareholders.
The Board considered that FMR has taken steps to refocus and strengthen equity research, equity portfolio management, and compliance.
Based on its review, and giving particular weight to the nature and quality of the resources dedicated by the Investment Advisers to maintain and improve relative performance, the Board concluded that the nature, extent, and quality of the services provided to the fund will benefit the fund's shareholders, particularly in light of the Board's view that the fund's shareholders benefit from investing in a fund that is part of a large family of funds offering a variety of investment disciplines and services.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
Competitiveness of Management Fee and Total Fund Expenses. The Board considered the fund's management fee and total expenses compared to "mapped groups" of competitive funds and classes. Fidelity creates "mapped groups" by combining similar Lipper investment objective categories that have comparable management fee characteristics. Combining Lipper investment objective categories aids the Board's management fee and total expense comparisons by broadening the competitive group used for comparison and by reducing the number of universes to which various Fidelity funds are compared. The Board also considered supplemental information about how the fund's management fee and total expenses ranked relative to groups based on Lipper classifications, which take into account a fund's market capitalization and style.
The Board considered two proprietary management fee comparisons for the 12-month (or shorter) 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 12% means that 88% 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 Small Cap Growth 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 2007. The Board also noted the effect of the fund's positive performance adjustment on the fund's management fee ranking. The Board noted that the performance adjustment for each year represents calculations for performance periods that differ from the period shown in the performance chart above.
Based on its review, the Board concluded that the fund's management fee was fair and reasonable in light of the services that the fund receives and the other factors considered.
In its review of each class's total expenses, 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 current and historical total expenses 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 expenses of each of Class A, Class B, Institutional Class, and Fidelity Small Cap Growth (retail class) ranked below its competitive median for 2007, and the total expenses of each of Class T and Class C ranked above its competitive median for 2007. The Board considered that the total expenses of Class C were above the median because of its higher transfer agent fee due to small average account size. The Board also considered that the total expenses of Class T were above the median primarily because its 12b-1 fee is higher than the typical front-end load class. 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 expenses 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
In its review of total expenses, the Board also considered Fidelity fee structures and other information on clients that FMR and its affiliates service in other competitive markets, such as other mutual funds advised or subadvised by FMR or its affiliates, pension plan clients, and other institutional clients.
Based on its review, the Board concluded that the total expenses of each class of the fund were reasonable, although in some cases 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 audited books and records of Fidelity. The Audit Committee of the Board reviews any significant changes from the prior year's methodologies.
PricewaterhouseCoopers LLP (PwC), independent registered public accounting firm and auditor to Fidelity and certain Fidelity funds, has been engaged annually by the Board as part of the Board's assessment of the results of Fidelity's profitability analysis. PwC's engagement includes the review and assessment of Fidelity's methodologies used in determining the revenues and expenses attributable to Fidelity's mutual fund business, and completion of agreed-upon procedures surrounding the mathematical accuracy of fund profitability and its conformity to allocation methodologies. After considering PwC's reports issued under the engagement and information provided by Fidelity, the Board believes that while other allocation methods may also be reasonable, Fidelity's profitability methodologies are reasonable in all material respects.
Annual Report
The Board has also reviewed Fidelity's non-fund businesses and any fall-out benefits related to the mutual fund business as well as cases where Fidelity's affiliates may benefit from or be related to the fund's business.
The Board considered the costs of the services provided by and the profits realized by Fidelity in connection with the operation of the fund and determined that the amount of profit is a fair entrepreneurial profit for the management of the fund.
Economies of Scale. The Board considered whether there have been economies of scale in respect of the management of the Fidelity funds, whether the Fidelity funds (including the fund) have appropriately benefited from any such economies of scale, and whether there is potential for realization of any further economies of scale. The Board considered the extent to which the fund will benefit from economies of scale through increased services to the fund, through waivers or reimbursements, or through fee or expense reductions.
The Board recognized that the fund's management contract incorporates a "group fee" structure, which provides for lower group fee rates as total fund assets under FMR's management increase, and for higher group fee rates as total fund assets under FMR's management decrease. FMR determines the group fee rates based on a tiered asset "breakpoint" schedule. The Board considered that the group fee is designed to deliver the benefits of economies of scale to fund shareholders when total fund assets increase, even if assets of any particular fund are unchanged or have declined, because some portion of Fidelity's costs are attributable to services provided to all Fidelity funds, and all funds benefit if those costs can be allocated among more assets. The Board concluded that, given the group fee structure, fund shareholders will achieve a certain level of economies of scale as assets under FMR's management increase at the fund complex level, regardless of whether Fidelity achieves any such economies of scale.
The Board further concluded that any potential economies of scale are being shared between fund shareholders and Fidelity in an appropriate manner.
Additional Information Requested by the Board. In order to develop fully the factual basis for consideration of the Fidelity funds' Advisory Contracts, the Board requested and received additional information on certain topics, including (i) fund performance trends and actions to be taken by FMR to improve certain funds' overall performance; (ii) portfolio manager changes that have occurred during the past year; (iii) Fidelity's fund profitability methodology, the profitability of certain fund service providers, and profitability trends for certain funds; (iv) Fidelity's compensation structure for portfolio managers and key personnel, including its effects on fund profitability and the extent to which portfolio manager compensation is linked to fund performance; (v) Fidelity's fee structures and rationale for recommending different fees among categories of funds; and (vi) Fidelity's rationale for recommending which funds should have a performance adjustment component as part of their management fees.
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 material factors, the Board ultimately concluded that the advisory fee structures are fair and reasonable, and that the fund's Advisory Contracts should be renewed.
Annual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Fidelity Management & Research
(U.K.) Inc.
Fidelity Research & Analysis Company
Fidelity International Investment Advisors
Fidelity Investments Japan Limited
Fidelity International Investment Advisors (U.K.) Limited
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Service Agents
Fidelity Investments Institutional
Operations Company, Inc.
Boston, MA
Fidelity Service Company, Inc.
Boston, MA
Custodian
Citibank, N.A.
New York, NY
ASCP-UANN-0908 1.803713.103
(Fidelity Investment logo)(registered trademark)
Fidelity Advisor
Small Cap Growth
Fund - Institutional Class
Annual Report
July 31, 2008
Institutional Class
is a class of Fidelity®
Small Cap Growth
Fund
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message | 4 | Ned Johnson's message to shareholders. |
Performance | 5 | How the fund has done over time. |
Management's Discussion | 6 | The manager's review of fund performance, strategy and outlook. |
Shareholder Expense Example | 7 | An example of shareholder expenses. |
Investment Changes | 9 | A summary of major shifts in the fund's investments over the past six months. |
Investments | 10 | A complete list of the fund's investments with their market values. |
Financial Statements | 18 | Statements of assets and liabilities, operations, and changes in net assets, |
Notes | 28 | Notes to the financial statements. |
Report of Independent Registered Public Accounting Firm | 38 |
|
Trustees and Officers | 39 |
|
Distributions | 47 |
|
Proxy Voting Results | 48 |
|
Board Approval of Investment Advisory Contracts and Management Fees | 49 |
|
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com (search for "proxy voting guidelines") or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-877-208-0098 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company.
Annual Report
This report and the financial statements contained herein are submitted for the general information of the shareholders of the fund. This report is not authorized for distribution to prospective investors in the fund unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com or http://www.advisor.fidelity.com, as applicable.
NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE
Neither the fund nor Fidelity Distributors Corporation is a bank.
Annual Report
Chairman's Message
(photo_of_Edward_C_Johnson_3d)
Dear Shareholder:
Domestic and international securities markets have struggled thus far in 2008. High-grade fixed-income investments produced modestly positive results, but many stock benchmarks suffered double-digit losses through the first half of this year. Financial markets are always unpredictable, but there are a number of time-tested principles that can put the historical odds in your favor.
One of the basic tenets is to invest for the long term. Over time, riding out the markets' inevitable ups and downs has proven much more effective than selling into panic or chasing the hottest trend. Even missing only a few of the markets' best days can significantly diminish investor returns. Patience also affords the benefits of compounding - of earning interest on additional income or reinvested dividends and capital gains. There are tax advantages and cost benefits to consider as well. The more you sell, the more taxes you pay, and the more you trade, the higher the costs. While staying the course doesn't eliminate risk, it can considerably lessen the effect of short-term declines.
You can further manage your investing risk through diversification. And today, more than ever, geographic diversification should be taken into account. Studies indicate that asset allocation is the single most important determinant of a portfolio's long-term success. The right mix of stocks, bonds and cash - aligned to your particular risk tolerance and investment objective - is very important. Age-appropriate rebalancing is also an essential aspect of asset allocation. For younger investors, an emphasis on equities - which historically have been the best-performing asset class over time - is encouraged. As investors near their specific goal, such as retirement or sending a child to college, consideration may be given to replacing volatile assets (e.g. common stocks) with more-stable fixed investments (bonds or savings plans).
A third investment principle - investing regularly - can help lower the average cost of your purchases. Investing a certain amount of money each month or quarter helps ensure you won't pay for all your shares at market highs. This strategy - known as dollar cost averaging - also reduces unconstructive "emotion" from investing, helping shareholders avoid selling weak performers just prior to an upswing, or chasing a hot performer just before a correction.
We invite you to contact us via the Internet, through our Investor Centers or over the phone. It is our privilege to provide you the information you need to make the investments that are right for you.
Sincerely,
/s/Edward C. Johnson 3d
Edward C. Johnson 3d
Annual Report
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' 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 July 31, 2008 | Past 1 | Life of |
Institutional Class | -11.93% | 10.50% |
A From November 3, 2004.
$10,000 Over Life of Fund
Let's say hypothetically that $10,000 was invested in Fidelity Advisor Small Cap Growth Fund - Institutional Class on November 3, 2004, when the fund started. The chart shows how the value of your investment would have changed, and also shows how the Russell 2000® Growth Index performed over the same period.
Annual Report
Management's Discussion of Fund Performance
Comments from Lionel Harris, Portfolio Manager of Fidelity Advisor Small Cap Growth Fund
Grim news about the U.S. economy forced most domestic equity benchmarks into negative territory for the 12 months ending July 31, 2008. Oil prices north of $140 per barrel, gasoline prices in excess of $4 per gallon and soaring food costs drove inflation and consumer prices higher. In response, consumer discretionary spending trended lower as Main Street tightened its purse strings. Wall Street, meanwhile, struggled under the weight of massive write-downs in the financials sector, an ongoing credit crisis and bleak housing data. In an effort to staunch the bleeding, the Federal Reserve Board cut interest rates on seven occasions during the past year. Nevertheless, investors fled the equity markets, and both the Dow Jones Industrial AverageSM and the Standard & Poor's 500SM Index fell to a threshold that many believe marks the official start of a "bear market." For the 12 months overall, the Dow slid 11.71%, the S&P 500® dropped 11.09% and the technology-heavy NASDAQ Composite® Index dipped 7.98%.
During the past year, the fund's Institutional Class shares lost 11.93%, significantly lagging the Russell 2000® Growth Index, which declined 3.76%. Although the fund benefited from an overweighting in energy stocks, poor security selection - being too heavily exposed to refining companies and not owning enough coal stocks, especially - was a big negative. Among refineries, I owned two out-of-benchmark stocks - Western Refining and Tesoro - - that lagged, while the fund lacked positions in strong-performing coal producers Alpha Natural Resources and Walter Industries, both of which were benchmark components. I was also significantly underweighted in consumer-related names, which helped, but, unfortunately, not enough to make up for weak stock selection in the group. An underweighting in pharmaceutical-related companies within health care also detracted. In industrials, however, stock selection in capital goods was a plus, while a small cash position in a weak market helped as well. Despite our relative underweighting in the coal industry, the portfolio did include a helpful out-of-benchmark position in coal producer Massey Energy, while Flowserve, an out-of-benchmark maker of pumps, valves and seals used in infrastructure projects, was a significant positive. As global demand for Flowserve's products increased, investors became quite optimistic about the company's potential earnings power. At period end, Western Refining, Massey and Flowserve were no longer in the portfolio.
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 (February 1, 2008 to July 31, 2008).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Annual Report
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Beginning | Ending | Expenses Paid |
Class A |
|
|
|
Actual | $ 1,000.00 | $ 919.86 | $ 6.64 |
HypotheticalA | $ 1,000.00 | $ 1,017.95 | $ 6.97 |
Class T |
|
|
|
Actual | $ 1,000.00 | $ 918.41 | $ 7.87 |
HypotheticalA | $ 1,000.00 | $ 1,016.66 | $ 8.27 |
Class B |
|
|
|
Actual | $ 1,000.00 | $ 916.32 | $ 10.24 |
HypotheticalA | $ 1,000.00 | $ 1,014.17 | $ 10.77 |
Class C |
|
|
|
Actual | $ 1,000.00 | $ 916.14 | $ 10.20 |
HypotheticalA | $ 1,000.00 | $ 1,014.22 | $ 10.72 |
Small Cap Growth |
|
|
|
Actual | $ 1,000.00 | $ 921.00 | $ 5.30 |
HypotheticalA | $ 1,000.00 | $ 1,019.34 | $ 5.57 |
Institutional Class |
|
|
|
Actual | $ 1,000.00 | $ 921.69 | $ 4.97 |
HypotheticalA | $ 1,000.00 | $ 1,019.69 | $ 5.22 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
| Annualized |
Class A | 1.39% |
Class T | 1.65% |
Class B | 2.15% |
Class C | 2.14% |
Small Cap Growth | 1.11% |
Institutional Class | 1.04% |
Annual Report
Investment Changes (Unaudited)
Top Ten Stocks as of July 31, 2008 | ||
| % of fund's | % of fund's net assets |
Harris Corp. | 1.4 | 1.4 |
j2 Global Communications, Inc. | 1.4 | 1.3 |
Foundation Coal Holdings, Inc. | 1.4 | 0.0 |
Hercules Offshore, Inc. | 1.4 | 0.0 |
Huron Consulting Group, Inc. | 1.4 | 1.3 |
Concho Resources, Inc. | 1.4 | 0.0 |
Corn Products International, Inc. | 1.4 | 0.5 |
EXCO Resources, Inc. | 1.3 | 0.6 |
Superior Energy Services, Inc. | 1.3 | 1.5 |
Atwood Oceanics, Inc. | 1.3 | 1.2 |
| 13.7 | |
Top Five Market Sectors as of July 31, 2008 | ||
| % of fund's | % of fund's net assets |
Health Care | 20.1 | 19.4 |
Industrials | 18.8 | 18.0 |
Information Technology | 18.5 | 22.0 |
Energy | 12.4 | 13.3 |
Consumer Discretionary | 9.4 | 8.2 |
Asset Allocation (% of fund's net assets) | |||||||
As of July 31, 2008 * | As of January 31, 2008 ** | ||||||
Stocks 95.8% |
| Stocks 97.4% |
| ||||
Short-Term |
| Short-Term |
| ||||
* Foreign investments | 13.4% |
| ** Foreign investments | 13.9% |
|
Annual Report
Investments July 31, 2008
Showing Percentage of Net Assets
Common Stocks - 95.8% | |||
Shares | Value | ||
CONSUMER DISCRETIONARY - 9.4% | |||
Distributors - 1.0% | |||
LKQ Corp. (a) | 629,900 | $ 12,912,950 | |
Diversified Consumer Services - 1.8% | |||
Apollo Group, Inc. Class A (non-vtg.) (a) | 215,200 | 13,404,808 | |
Hillenbrand, Inc. | 443,800 | 10,273,970 | |
| 23,678,778 | ||
Hotels, Restaurants & Leisure - 1.5% | |||
Bally Technologies, Inc. (a) | 434,600 | 13,815,934 | |
Penn National Gaming, Inc. (a) | 230,000 | 6,561,900 | |
| 20,377,834 | ||
Household Durables - 0.9% | |||
Ryland Group, Inc. | 131,500 | 2,707,585 | |
Whirlpool Corp. | 121,000 | 9,159,700 | |
| 11,867,285 | ||
Internet & Catalog Retail - 0.6% | |||
Priceline.com, Inc. (a)(d) | 74,000 | 8,506,300 | |
Media - 0.3% | |||
Virgin Media, Inc. | 405,000 | 4,544,100 | |
Specialty Retail - 1.8% | |||
Advance Auto Parts, Inc. | 164,900 | 6,775,741 | |
Citi Trends, Inc. (a)(d) | 292,985 | 6,776,743 | |
The Men's Wearhouse, Inc. | 269,900 | 5,373,709 | |
Tween Brands, Inc. (a) | 315,000 | 4,337,550 | |
| 23,263,743 | ||
Textiles, Apparel & Luxury Goods - 1.5% | |||
Deckers Outdoor Corp. (a) | 93,500 | 10,566,435 | |
Iconix Brand Group, Inc. (a) | 748,600 | 8,983,200 | |
| 19,549,635 | ||
TOTAL CONSUMER DISCRETIONARY | 124,700,625 | ||
CONSUMER STAPLES - 4.8% | |||
Food Products - 2.3% | |||
Corn Products International, Inc. (d) | 381,900 | 17,762,169 | |
Dean Foods Co. (a) | 583,400 | 12,426,420 | |
| 30,188,589 | ||
Household Products - 0.6% | |||
Energizer Holdings, Inc. (a) | 122,000 | 8,703,480 | |
Common Stocks - continued | |||
Shares | Value | ||
CONSUMER STAPLES - continued | |||
Personal Products - 1.9% | |||
Bare Escentuals, Inc. (a)(d) | 329,500 | $ 3,802,430 | |
Chattem, Inc. (a)(d) | 248,300 | 16,007,901 | |
Physicians Formula Holdings, Inc. (a) | 518,005 | 4,832,987 | |
| 24,643,318 | ||
TOTAL CONSUMER STAPLES | 63,535,387 | ||
ENERGY - 12.4% | |||
Energy Equipment & Services - 5.4% | |||
Atwood Oceanics, Inc. (a) | 375,800 | 17,252,978 | |
Complete Production Services, Inc. (a) | 246,100 | 7,835,824 | |
Hercules Offshore, Inc. (a) | 737,219 | 18,408,358 | |
Hornbeck Offshore Services, Inc. (a)(d) | 248,900 | 11,095,962 | |
Superior Energy Services, Inc. (a) | 364,400 | 17,283,492 | |
| 71,876,614 | ||
Oil, Gas & Consumable Fuels - 7.0% | |||
Cabot Oil & Gas Corp. | 185,100 | 8,146,251 | |
Concho Resources, Inc. | 544,800 | 17,842,200 | |
EXCO Resources, Inc. (a) | 666,400 | 17,359,720 | |
Foundation Coal Holdings, Inc. | 316,000 | 18,770,400 | |
Holly Corp. | 110,000 | 3,143,800 | |
Petrohawk Energy Corp. (a)(d) | 265,200 | 8,836,464 | |
Range Resources Corp. | 177,850 | 8,636,396 | |
Tesoro Corp. | 639,700 | 9,876,968 | |
| 92,612,199 | ||
TOTAL ENERGY | 164,488,813 | ||
FINANCIALS - 4.6% | |||
Capital Markets - 1.2% | |||
FCStone Group, Inc. (a) | 258,000 | 4,969,080 | |
Janus Capital Group, Inc. | 342,800 | 10,400,552 | |
| 15,369,632 | ||
Insurance - 1.1% | |||
Aspen Insurance Holdings Ltd. | 336,100 | 8,533,579 | |
StanCorp Financial Group, Inc. | 137,982 | 6,814,931 | |
| 15,348,510 | ||
Real Estate Investment Trusts - 0.7% | |||
American Campus Communities, Inc. | 319,200 | 9,346,176 | |
Common Stocks - continued | |||
Shares | Value | ||
FINANCIALS - continued | |||
Real Estate Management & Development - 1.2% | |||
CB Richard Ellis Group, Inc. Class A (a) | 253,100 | $ 3,556,055 | |
Jones Lang LaSalle, Inc. (d) | 249,000 | 11,862,360 | |
| 15,418,415 | ||
Thrifts & Mortgage Finance - 0.4% | |||
Washington Federal, Inc. | 285,765 | 5,315,229 | |
TOTAL FINANCIALS | 60,797,962 | ||
HEALTH CARE - 20.1% | |||
Biotechnology - 2.3% | |||
BioMarin Pharmaceutical, Inc. (a) | 247,000 | 8,039,850 | |
Cephalon, Inc. (a) | 170,800 | 12,495,728 | |
Grifols SA | 326,802 | 9,775,458 | |
| 30,311,036 | ||
Health Care Equipment & Supplies - 5.8% | |||
Abaxis, Inc. (a)(d) | 403,300 | 8,021,637 | |
American Medical Systems Holdings, Inc. (a)(d) | 1,016,400 | 16,740,108 | |
Hill-Rom Holdings, Inc. (d) | 465,500 | 13,075,895 | |
Immucor, Inc. (a) | 473,900 | 14,278,607 | |
Integra LifeSciences Holdings Corp. (a)(d) | 320,200 | 14,620,332 | |
Meridian Bioscience, Inc. | 372,000 | 9,675,720 | |
| 76,412,299 | ||
Health Care Providers & Services - 5.2% | |||
Air Methods Corp. (a) | 181,000 | 5,189,270 | |
Brookdale Senior Living, Inc. | 22,000 | 335,720 | |
Henry Schein, Inc. (a) | 102,900 | 5,511,324 | |
Patterson Companies, Inc. (a) | 406,000 | 12,679,380 | |
Pediatrix Medical Group, Inc. (a) | 268,900 | 13,081,985 | |
PSS World Medical, Inc. (a) | 922,499 | 15,461,083 | |
Sun Healthcare Group, Inc. (a) | 678,800 | 9,700,052 | |
Universal American Financial Corp. (a) | 665,031 | 6,976,175 | |
| 68,934,989 | ||
Life Sciences Tools & Services - 5.8% | |||
Charles River Laboratories International, Inc. (a) | 223,034 | 14,822,840 | |
ICON PLC sponsored ADR (a) | 152,990 | 12,291,217 | |
PAREXEL International Corp. (a) | 578,300 | 16,903,709 | |
Pharmaceutical Product Development, Inc. | 250,900 | 9,569,326 | |
Common Stocks - continued | |||
Shares | Value | ||
HEALTH CARE - continued | |||
Life Sciences Tools & Services - continued | |||
QIAGEN NV (a) | 470,000 | $ 8,831,300 | |
Varian, Inc. (a) | 287,400 | 14,197,560 | |
| 76,615,952 | ||
Pharmaceuticals - 1.0% | |||
Perrigo Co. | 386,800 | 13,626,964 | |
TOTAL HEALTH CARE | 265,901,240 | ||
INDUSTRIALS - 18.8% | |||
Aerospace & Defense - 1.5% | |||
Curtiss-Wright Corp. | 160,000 | 8,422,400 | |
Hexcel Corp. (a) | 591,000 | 11,217,180 | |
| 19,639,580 | ||
Commercial Services & Supplies - 6.7% | |||
CDI Corp. | 570,700 | 11,745,006 | |
Clean Harbors, Inc. (a) | 52,500 | 4,097,100 | |
Corrections Corp. of America (a) | 602,200 | 16,879,666 | |
CoStar Group, Inc. (a)(d) | 190,736 | 9,515,819 | |
Huron Consulting Group, Inc. (a)(d) | 351,400 | 18,329,024 | |
InnerWorkings, Inc. (a)(d) | 949,900 | 11,075,834 | |
Navigant Consulting, Inc. (a) | 578,800 | 10,696,224 | |
The Brink's Co. | 99,200 | 6,840,832 | |
| 89,179,505 | ||
Construction & Engineering - 3.1% | |||
Chicago Bridge & Iron Co. NV (NY Shares) | 504,100 | 16,519,357 | |
KBR, Inc. | 345,900 | 9,858,150 | |
Outotec Oyj | 274,700 | 13,990,961 | |
| 40,368,468 | ||
Electrical Equipment - 3.0% | |||
EnerSys (a) | 394,600 | 12,737,688 | |
JA Solar Holdings Co. Ltd. ADR (a)(d) | 991,300 | 15,038,021 | |
SMA Solar Technology AG | 137,000 | 11,588,016 | |
| 39,363,725 | ||
Industrial Conglomerates - 1.0% | |||
Raven Industries, Inc. (d) | 348,600 | 13,264,230 | |
Machinery - 1.6% | |||
Colfax Corp. | 413,000 | 11,270,770 | |
Sulzer AG (Reg.) | 86,130 | 10,326,497 | |
| 21,597,267 | ||
Common Stocks - continued | |||
Shares | Value | ||
INDUSTRIALS - continued | |||
Road & Rail - 1.9% | |||
Con-way, Inc. | 271,000 | $ 13,701,760 | |
Knight Transportation, Inc. (d) | 634,300 | 12,000,956 | |
| 25,702,716 | ||
TOTAL INDUSTRIALS | 249,115,491 | ||
INFORMATION TECHNOLOGY - 18.5% | |||
Communications Equipment - 2.3% | |||
Harris Corp. | 398,700 | 19,197,403 | |
Polycom, Inc. (a)(d) | 478,500 | 11,292,600 | |
| 30,490,003 | ||
Computers & Peripherals - 0.6% | |||
Wincor Nixdorf AG | 108,400 | 8,093,777 | |
Electronic Equipment & Instruments - 1.5% | |||
Cogent, Inc. (a)(d) | 887,400 | 8,998,236 | |
Trimble Navigation Ltd. (a) | 344,600 | 11,440,720 | |
| 20,438,956 | ||
Internet Software & Services - 3.9% | |||
Art Technology Group, Inc. (a) | 1,790,000 | 6,569,300 | |
Equinix, Inc. (a)(d) | 176,600 | 14,368,176 | |
j2 Global Communications, Inc. (a) | 792,500 | 18,996,225 | |
Telecity Group PLC | 2,558,100 | 12,004,378 | |
| 51,938,079 | ||
IT Services - 4.7% | |||
Alliance Data Systems Corp. (a) | 218,000 | 13,984,700 | |
CACI International, Inc. Class A (a) | 295,400 | 13,281,184 | |
CyberSource Corp. (a) | 653,466 | 11,599,022 | |
Datacash Group PLC | 1,661,200 | 9,013,749 | |
Satyam Computer Services Ltd. sponsored ADR (d) | 386,300 | 8,243,642 | |
WNS Holdings Ltd. ADR (a) | 334,500 | 5,686,500 | |
| 61,808,797 | ||
Semiconductors & Semiconductor Equipment - 3.3% | |||
Hittite Microwave Corp. (a) | 512,821 | 16,369,246 | |
Lam Research Corp. (a) | 290,000 | 9,538,100 | |
Microsemi Corp. (a)(d) | 280,700 | 7,286,972 | |
Varian Semiconductor Equipment Associates, Inc. (a) | 350,490 | 10,241,318 | |
| 43,435,636 | ||
Software - 2.2% | |||
Ansys, Inc. (a) | 169,500 | 7,776,660 | |
Common Stocks - continued | |||
Shares | Value | ||
INFORMATION TECHNOLOGY - continued | |||
Software - continued | |||
Blackbaud, Inc. | 806,059 | $ 14,396,214 | |
Taleo Corp. Class A (a) | 141,439 | 2,650,567 | |
Ultimate Software Group, Inc. (a) | 158,000 | 4,144,340 | |
| 28,967,781 | ||
TOTAL INFORMATION TECHNOLOGY | 245,173,029 | ||
MATERIALS - 6.4% | |||
Chemicals - 1.0% | |||
Terra Industries, Inc. (d) | 250,000 | 13,500,000 | |
Containers & Packaging - 0.3% | |||
Myers Industries, Inc. | 360,000 | 4,032,000 | |
Metals & Mining - 5.1% | |||
Carpenter Technology Corp. | 176,100 | 6,815,070 | |
Compass Minerals International, Inc. | 100,000 | 7,560,000 | |
IAMGOLD Corp. | 1,449,700 | 9,670,802 | |
International Ferro Metals (a) | 2,075,000 | 3,220,821 | |
Randgold Resources Ltd. sponsored ADR | 128,000 | 6,551,040 | |
Red Back Mining, Inc. (a) | 1,053,000 | 8,937,413 | |
Reliance Steel & Aluminum Co. | 172,500 | 10,895,100 | |
Steel Dynamics, Inc. | 453,900 | 14,379,552 | |
| 68,029,798 | ||
TOTAL MATERIALS | 85,561,798 | ||
UTILITIES - 0.8% | |||
Multi-Utilities - 0.8% | |||
CMS Energy Corp. (d) | 823,200 | 11,113,200 | |
TOTAL COMMON STOCKS (Cost $1,270,614,591) | 1,270,387,545 | ||
Money Market Funds - 14.7% | |||
Shares | Value | ||
Fidelity Cash Central Fund, 2.35% (b) | 56,597,666 | $ 56,597,666 | |
Fidelity Securities Lending Cash Central Fund, 2.37% (b)(c) | 138,167,794 | 138,167,794 | |
TOTAL MONEY MARKET FUNDS (Cost $194,765,460) | 194,765,460 | ||
TOTAL INVESTMENT PORTFOLIO - 110.5% (Cost $1,465,380,051) | 1,465,153,005 | ||
NET OTHER ASSETS - (10.5)% | (139,785,194) | ||
NET ASSETS - 100% | $ 1,325,367,811 |
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
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 | $ 1,820,442 |
Fidelity Securities Lending Cash Central Fund | 732,714 |
Total | $ 2,553,156 |
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 | Dividend Income | Value, |
Physicians Formula Holdings, Inc. | $ 5,827,585 | $ 3,948,990 | $ 2,083,245 | $ - | $ - |
Quixote Corp. | 8,618,526 | 150,375 | 6,248,265 | 75,980 | - |
Total | $ 14,446,111 | $ 4,099,365 | $ 8,331,510 | $ 75,980 | $ - |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 86.6% |
United Kingdom | 2.5% |
Netherlands | 2.0% |
Germany | 1.5% |
Canada | 1.4% |
Cayman Islands | 1.1% |
Finland | 1.1% |
Others (individually less than 1%) | 3.8% |
| 100.0% |
Income Tax Information |
The fund intends to elect to defer to its fiscal year ending July 31, 2009 approximately $101,242,350 of losses recognized during the period November 1, 2007 to July 31, 2008. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements
Statement of Assets and Liabilities
| July 31, 2008 | |
Assets | ||
Investment in securities, at value (including securities loaned of $131,418,460) - See accompanying schedule: Unaffiliated issuers (cost $1,270,614,591) | $ 1,270,387,545 |
|
Fidelity Central Funds (cost $194,765,460) | 194,765,460 |
|
Total Investments (cost $1,465,380,051) |
| $ 1,465,153,005 |
Cash | 29 | |
Receivable for investments sold | 46,620,442 | |
Receivable for fund shares sold | 1,370,340 | |
Dividends receivable | 110,652 | |
Distributions receivable from Fidelity Central Funds | 186,218 | |
Prepaid expenses | 1,556 | |
Other receivables | 22,988 | |
Total assets | 1,513,465,230 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 47,843,463 | |
Payable for fund shares redeemed | 865,758 | |
Accrued management fee | 777,626 | |
Distribution fees payable | 36,066 | |
Other affiliated payables | 350,881 | |
Other payables and accrued expenses | 55,831 | |
Collateral on securities loaned, at value | 138,167,794 | |
Total liabilities | 188,097,419 | |
|
|
|
Net Assets | $ 1,325,367,811 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,431,164,163 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (105,567,096) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (229,256) | |
Net Assets | $ 1,325,367,811 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements - continued
Statement of Assets and Liabilities - continued
| July 31, 2008 | |
Calculation of Maximum Offering Price Class A: | $ 13.20 | |
|
|
|
Maximum offering price per share (100/94.25 of $13.20) | $ 14.01 | |
Class T: | $ 13.17 | |
|
|
|
Maximum offering price per share (100/96.50 of $13.17) | $ 13.65 | |
Class B: | $ 13.03 | |
|
|
|
Class C: | $ 13.00 | |
|
|
|
|
|
|
Small Cap Growth: | $ 13.29 | |
|
|
|
Institutional Class: | $ 13.30 |
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
| Year ended July 31, 2008 | |
Investment Income |
|
|
Dividends (including $75,980 earned from other affiliated issuers) |
| $ 6,201,842 |
Interest |
| 2,990 |
Income from Fidelity Central Funds (including $732,714 from security lending) |
| 2,553,156 |
Total income |
| 8,757,988 |
|
|
|
Expenses | ||
Management fee | $ 9,449,883 | |
Performance adjustment | 1,059,130 | |
Transfer agent fees | 3,613,151 | |
Distribution fees | 499,117 | |
Accounting and security lending fees | 449,905 | |
Custodian fees and expenses | 36,783 | |
Independent trustees' compensation | 5,530 | |
Registration fees | 121,158 | |
Audit | 56,803 | |
Legal | 5,485 | |
Miscellaneous | 83,752 | |
Total expenses before reductions | 15,380,697 | |
Expense reductions | (98,390) | 15,282,307 |
Net investment income (loss) | (6,524,319) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | (99,142,662) | |
Other affiliated issuers | (4,601,658) |
|
Foreign currency transactions | (12,025) | |
Total net realized gain (loss) |
| (103,756,345) |
Change in net unrealized appreciation (depreciation) on: Investment securities | (72,234,294) | |
Assets and liabilities in foreign currencies | (1,961) | |
Total change in net unrealized appreciation (depreciation) |
| (72,236,255) |
Net gain (loss) | (175,992,600) | |
Net increase (decrease) in net assets resulting from operations | $ (182,516,919) |
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) | $ (6,524,319) | $ (4,437,632) |
Net realized gain (loss) | (103,756,345) | 87,862,892 |
Change in net unrealized appreciation (depreciation) | (72,236,255) | 65,702,764 |
Net increase (decrease) in net assets resulting | (182,516,919) | 149,128,024 |
Distributions to shareholders from net realized gain | (81,199,740) | (3,591,980) |
Share transactions - net increase (decrease) | 331,568,501 | 637,612,035 |
Redemption fees | 439,174 | 160,118 |
Total increase (decrease) in net assets | 68,291,016 | 783,308,197 |
|
|
|
Net Assets | ||
Beginning of period | 1,257,076,795 | 473,768,598 |
End of period | $ 1,325,367,811 | $ 1,257,076,795 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended July 31, | 2008 | 2007 | 2006 | 2005 J |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 16.06 | $ 12.88 | $ 12.95 | $ 10.00 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss)E | (.11) | (.12)H | (.10)I | (.07) |
Net realized and unrealized gain (loss) | (1.73) | 3.39 | .18 | 3.01 |
Total from investment operations | (1.84) | 3.27 | .08 | 2.94 |
Distributions from net realized gain | (1.02) | (.09) | (.16) | - |
Redemption fees added to paid in capitalE | -L | -L | .01 | .01 |
Net asset value, end of period | $ 13.20 | $ 16.06 | $ 12.88 | $ 12.95 |
Total ReturnB, C, D | (12.26)% | 25.52% | .70% | 29.50% |
Ratios to Average Net AssetsF, K |
|
|
|
|
Expenses before reductions | 1.40% | 1.44% | 1.53% | 1.55%A |
Expenses net of fee waivers, if any | 1.40% | 1.40% | 1.40% | 1.45%A |
Expenses net of all reductions | 1.39% | 1.39% | 1.35% | 1.36%A |
Net investment income (loss) | (.74)% | (.80)%H | (.79)%I | (.78)%A |
Supplemental Data |
|
|
|
|
Net assets, end of period (000 omitted) | $ 42,187 | $ 33,588 | $ 18,104 | $ 4,719 |
Portfolio turnover rateG | 113% | 91% | 129% | 93%A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
H Investment income per share reflects a special dividend which amounted to $.01 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.84)%.
I Investment income per share reflects a special dividend which amounted to $.01 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.85)%.
J For the period November 3, 2004 (commencement of operations) to July 31, 2005.
K Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
L Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class T
Years ended July 31, | 2008 | 2007 | 2006 | 2005 J |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 16.01 | $ 12.86 | $ 12.93 | $ 10.00 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss) E | (.15) | (.16)H | (.14)I | (.09) |
Net realized and unrealized gain (loss) | (1.73) | 3.38 | .19 | 3.01 |
Total from investment operations | (1.88) | 3.22 | .05 | 2.92 |
Distributions from net realized gain | (.96) | (.07) | (.13) | - |
Redemption fees added to paid in capital E | - L | -L | .01 | .01 |
Net asset value, end of period | $ 13.17 | $ 16.01 | $ 12.86 | $ 12.93 |
Total ReturnB, C, D | (12.50)% | 25.18% | .48% | 29.30% |
Ratios to Average Net AssetsF, K |
|
|
|
|
Expenses before reductions | 1.65% | 1.67% | 1.73% | 1.79%A |
Expenses net of fee waivers, if any | 1.65% | 1.65% | 1.65% | 1.70%A |
Expenses net of all reductions | 1.65% | 1.65% | 1.60% | 1.61%A |
Net investment income (loss) | (.99)% | (1.05)%H | (1.04)%I | (1.03)%A |
Supplemental Data |
|
|
|
|
Net assets, end of period (000 omitted) | $ 21,754 | $ 26,419 | $ 19,205 | $ 5,240 |
Portfolio turnover rateG | 113% | 91% | 129% | 93%A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
H Investment income per share reflects a special dividend which amounted to $.01 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (1.09)%.
I Investment income per share reflects a special dividend which amounted to $.01 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (1.10)%.
J For the period November 3, 2004 (commencement of operations) to July 31, 2005.
K Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
L Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class B
Years ended July 31, | 2008 | 2007 | 2006 | 2005J |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 15.85 | $ 12.78 | $ 12.87 | $ 10.00 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss)E | (.22) | (.23)H | (.20)I | (.13) |
Net realized and unrealized gain (loss) | (1.71) | 3.36 | .19 | 2.99 |
Total from investment operations | (1.93) | 3.13 | (.01) | 2.86 |
Distributions from net realized gain | (.89) | (.06) | (.09) | - |
Redemption fees added to paid in capitalE | -L | -L | .01 | .01 |
Net asset value, end of period | $ 13.03 | $ 15.85 | $ 12.78 | $ 12.87 |
Total ReturnB, C, D | (12.92)% | 24.57% | (.03)% | 28.70% |
Ratios to Average Net AssetsF, K |
|
|
|
|
Expenses before reductions | 2.15% | 2.20% | 2.28% | 2.33%A |
Expenses net of fee waivers, if any | 2.15% | 2.15% | 2.15% | 2.20%A |
Expenses net of all reductions | 2.15% | 2.15% | 2.10% | 2.11%A |
Net investment income (loss) | (1.49)% | (1.55)%H | (1.54)%I | (1.53)%A |
Supplemental Data |
|
|
|
|
Net assets, end of period (000 omitted) | $ 5,517 | $ 6,242 | $ 5,191 | $ 2,055 |
Portfolio turnover rateG | 113% | 91% | 129% | 93%A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the contingent deferred sales charge.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
H Investment income per share reflects a special dividend which amounted to $.01 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (1.59)%.
I Investment income per share reflects a special dividend which amounted to $.01 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (1.60)%.
J For the period November 3, 2004 (commencement of operations) to July 31, 2005.
K Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
L Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class C
Years ended July 31, | 2008 | 2007 | 2006 | 2005J |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 15.84 | $ 12.77 | $ 12.88 | $ 10.00 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss)E | (.22) | (.23)H | (.20)I | (.13) |
Net realized and unrealized gain (loss) | (1.71) | 3.36 | .18 | 3.00 |
Total from investment operations | (1.93) | 3.13 | (.02) | 2.87 |
Distributions from net realized gain | (.91) | (.06) | (.10) | - |
Redemption fees added to paid in capitalE | -L | -L | .01 | .01 |
Net asset value, end of period | $ 13.00 | $ 15.84 | $ 12.77 | $ 12.88 |
Total ReturnB, C, D | (12.94)% | 24.59% | (.08)% | 28.80% |
Ratios to Average Net AssetsF, K |
|
|
|
|
Expenses before reductions | 2.15% | 2.20% | 2.25% | 2.24%A |
Expenses net of fee waivers, if any | 2.15% | 2.15% | 2.15% | 2.17%A |
Expenses net of all reductions | 2.14% | 2.14% | 2.10% | 2.09%A |
Net investment income (loss) | (1.49)% | (1.55)%H | (1.54)%I | (1.50)%A |
Supplemental Data |
|
|
|
|
Net assets, end of period (000 omitted) | $ 15,946 | $ 22,348 | $ 14,682 | $ 8,372 |
Portfolio turnover rateG | 113% | 91% | 129% | 93%A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the contingent deferred sales charge.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
H Investment income per share reflects a special dividend which amounted to $.01 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (1.59)%.
I Investment income per share reflects a special dividend which amounted to $.01 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (1.60)%.
J For the period November 3, 2004 (commencement of operations) to July 31, 2005.
K Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
L Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Small Cap Growth
Years ended July 31, | 2008 | 2007 | 2006 | 2005 I |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 16.15 | $ 12.93 | $ 12.98 | $ 10.00 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss)D | (.07) | (.08)G | (.07)H | (.04) |
Net realized and unrealized gain (loss) | (1.74) | 3.40 | .19 | 3.01 |
Total from investment operations | (1.81) | 3.32 | .12 | 2.97 |
Distributions from net realized gain | (1.05) | (.10) | (.18) | - |
Redemption fees added to paid in capitalD | -K | -K | .01 | .01 |
Net asset value, end of period | $ 13.29 | $ 16.15 | $ 12.93 | $ 12.98 |
Total ReturnB, C | (11.98)% | 25.84% | 1.01% | 29.80% |
Ratios to Average Net AssetsE, J |
|
|
|
|
Expenses before reductions | 1.11% | 1.10% | 1.13% | 1.16%A |
Expenses net of fee waivers, if any | 1.11% | 1.10% | 1.13% | 1.16%A |
Expenses net of all reductions | 1.10% | 1.09% | 1.08% | 1.08%A |
Net investment income (loss) | (.45)% | (.50)%G | (.52)%H | (.49)%A |
Supplemental Data |
|
|
|
|
Net assets, end of period (000 omitted) | $ 1,217,520 | $ 1,149,809 | $ 402,353 | $ 205,652 |
Portfolio turnover rateF | 113% | 91% | 129% | 93%A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
G Investment income per share reflects a special dividend which amounted to $.01 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.54)%.
H Investment income per share reflects a special dividend which amounted to $.01 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.58)%.
I For the period November 3, 2004 (commencement of operations) to July 31, 2005.
J Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
K 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 July 31, | 2008 | 2007 | 2006 | 2005I |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 16.15 | $ 12.92 | $ 12.97 | $ 10.00 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss)D | (.06) | (.07)G | (.07)H | (.04) |
Net realized and unrealized gain (loss) | (1.74) | 3.41 | .19 | 3.00 |
Total from investment operations | (1.80) | 3.34 | .12 | 2.96 |
Distributions from net realized gain | (1.05) | (.11) | (.18) | - |
Redemption fees added to paid in capitalD | -K | -K | .01 | .01 |
Net asset value, end of period | $ 13.30 | $ 16.15 | $ 12.92 | $ 12.97 |
Total ReturnB, C | (11.93)% | 25.99% | .97% | 29.70% |
Ratios to Average Net AssetsE, J |
|
|
|
|
Expenses before reductions | 1.04% | 1.05% | 1.10% | 1.20%A |
Expenses net of fee waivers, if any | 1.04% | 1.05% | 1.10% | 1.18%A |
Expenses net of all reductions | 1.03% | 1.05% | 1.05% | 1.10%A |
Net investment income (loss) | (.38)% | (.46)%G | (.49)%H | (.51)%A |
Supplemental Data |
|
|
|
|
Net assets, end of period (000 omitted) | $ 22,444 | $ 18,671 | $ 14,233 | $ 1,906 |
Portfolio turnover rateF | 113% | 91% | 129% | 93%A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
G Investment income per share reflects a special dividend which amounted to $.01 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.50)%.
H Investment income per share reflects a special dividend which amounted to $.01 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.55)%.
I For the period November 3, 2004 (commencement of operations) to July 31, 2005.
J Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
K 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 July 31, 2008
1. Organization.
Fidelity Small Cap Growth Fund (the Fund) is a fund of Fidelity Securities Fund (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 B, Class C, Small Cap Growth, and Institutional Class 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 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 also differ by class.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the SEC's web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:
Annual Report
3. Significant Accounting Policies - continued
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. Wherever possible, the Fund uses independent pricing services approved by the Board of Trustees to value its investments.
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Annual Report
Notes to Financial Statements - continued
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. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The implementation of FIN 48 did not result in any unrecognized tax benefits in the accompanying financial statements. Each of the Fund's federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles.
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 foreign currency transactions, passive foreign investment companies (PFIC), partnerships, net operating losses, losses deferred due to wash sales and excise tax regulations.
The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows:
Unrealized appreciation | $ 125,536,253 |
Unrealized depreciation | (130,088,038) |
Net unrealized appreciation (depreciation) | (4,551,785) |
Cost for federal income tax purposes | $ 1,469,704,790 |
The tax character of distributions paid was as follows:
| July 31, 2008 | July 31, 2007 |
Ordinary Income | $ 58,646,396 | $ 1,338,128 |
Long-term Capital Gains | 22,553,344 | 2,253,852 |
Total | $ 81,199,740 | $ 3,591,980 |
Short-Term Trading (Redemption) Fees. Shares held in the Fund less than 90 days are subject to a redemption fee equal to 1.50% of the proceeds of the redeemed shares. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the Fund and accounted for as an addition to paid in capital.
New Accounting Pronouncement. In September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and results in expanded disclosures about fair value measurements.
4. Operating Policies.
Repurchase Agreements. FMR has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits the Fund and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts which are then invested in repurchase agreements. The Fund may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in
Annual Report
Notes to Financial Statements - continued
4. Operating Policies - continued
Repurchase Agreements - continued
segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. The Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
5. Purchases and Sales of Investments.
Purchases and sales of securities other than short-term securities, aggregated $1,698,044,847 and $1,457,287,817, 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 .45% of the Fund's average net assets and a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. In addition, the management fee is subject to a performance adjustment (up to a maximum of ± .20% of the Fund's average net assets over a 36 month performance period). The upward or downward adjustment to the management fee is based on the relative investment performance of the retail class of the Fund, Small Cap Growth, as compared to an appropriate benchmark index. For the period, the total annual management fee rate, including the performance adjustment, was .79% of the Fund's average net assets.
Distribution and Service Plan. 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.
Annual Report
6. Fees and Other Transactions with Affiliates - continued
Distribution and Service Plan - continued
For the period, the Distribution and Service Fee rates and the total amounts paid to and retained by FDC were as follows:
| Distribution | Service | Paid to | Retained |
Class A | 0% | .25% | $ 98,491 | $ 12,415 |
Class T | .25% | .25% | 121,790 | 227 |
Class B | .75% | .25% | 61,874 | 46,406 |
Class C | .75% | .25% | 216,962 | 43,665 |
|
|
| $ 499,117 | $ 102,713 |
Sales Load. FDC receives 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. FDC receives the proceeds of contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. These charges depend on the holding period. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, 1.00% to .50% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained |
Class A | $ 37,191 |
Class T | 7,936 |
Class B* | 15,537 |
Class C* | 2,479 |
| $ 63,143 |
* 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. Prior to January 1, 2008, Fidelity Service
Annual Report
Notes to Financial Statements - continued
6. Fees and Other Transactions with Affiliates - continued
Transfer Agent Fees - continued
Company, Inc. (FSC), also an affiliate of FMR, was the transfer agent for Small Cap Growth shares. For the period, each class paid the following transfer agent fees:
| Amount | % of |
Class A | $ 119,848 | .30 |
Class T | 75,753 | .31 |
Class B | 18,899 | .31 |
Class C | 65,826 | .30 |
Small Cap Growth | 3,292,023 | .27 |
Institutional Class | 40,802 | .19 |
| $ 3,613,151 |
|
Accounting and Security Lending Fees. FSC, an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $27,116 for the period.
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $4.2 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro rata portion of the line of credit, which amounted to $2,996 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
8. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned
Annual Report
8. Security Lending - continued
securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds.
9. Expense Reductions.
FMR voluntarily agreed to reimburse each class to the extent annual operating expenses exceeded certain levels of average net assets as noted in the table below. Some expenses, for example interest expense, including commitment fees, are excluded from this reimbursement.
The following classes were in reimbursement during the period:
| Expense | Reimbursement |
Class T | 1.65% | $ 688 |
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 $37,290 for the period. In addition, through arrangements with the Fund's custodian and each class' transfer agent, credits realized as a result of uninvested cash balances were used to reduce the Fund's expenses. During the period, these credits reduced the Fund's custody expenses by $5,794. During the period, credits reduced each class' transfer agent expense as noted in the table below.
| Transfer Agent |
Small Cap Growth | $ 54,607 |
Institutional Class | 11 |
| $ 54,618 |
Annual Report
Notes to Financial Statements - continued
10. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
11. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended July 31, | 2008 | 2007 |
From net realized gain |
|
|
Class A | $ 2,216,913 | $ 130,212 |
Class T | 1,570,296 | 118,024 |
Class B | 348,424 | 24,691 |
Class C | 1,307,950 | 74,047 |
Small Cap Growth | 74,608,644 | 3,129,487 |
Institutional Class | 1,147,513 | 115,519 |
Total | $ 81,199,740 | $ 3,591,980 |
12. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
Years ended July 31, | 2008 | 2007 | 2008 | 2007 |
Class A |
|
|
|
|
Shares sold | 1,742,262 | 1,113,110 | $ 25,505,334 | $ 17,060,734 |
Reinvestment of distributions | 126,731 | 8,925 | 1,912,181 | 119,928 |
Shares redeemed | (763,921) | (436,417) | (11,052,109) | (6,456,393) |
Net increase (decrease) | 1,105,072 | 685,618 | $ 16,365,406 | $ 10,724,269 |
Class T |
|
|
|
|
Shares sold | 487,722 | 607,092 | $ 7,048,735 | $ 8,822,874 |
Reinvestment of distributions | 99,906 | 8,530 | 1,507,341 | 115,213 |
Shares redeemed | (586,050) | (459,339) | (8,531,977) | (6,905,798) |
Net increase (decrease) | 1,578 | 156,283 | $ 24,099 | $ 2,032,289 |
Class B |
|
|
|
|
Shares sold | 132,932 | 121,826 | $ 1,958,446 | $ 1,800,582 |
Reinvestment of distributions | 22,166 | 1,705 | 332,229 | 23,112 |
Shares redeemed | (125,460) | (135,943) | (1,804,323) | (1,994,978) |
Net increase (decrease) | 29,638 | (12,412) | $ 486,352 | $ (171,284) |
Annual Report
12. Share Transactions - continued
| Shares | Dollars | ||
Years ended July 31, | 2008 | 2007 | 2008 | 2007 |
Class C |
|
|
|
|
Shares sold | 436,957 | 546,198 | $ 6,320,995 | $ 8,014,853 |
Reinvestment of distributions | 82,544 | 5,178 | 1,234,732 | 70,286 |
Shares redeemed | (703,886) | (290,387) | (9,901,355) | (4,244,042) |
Net increase (decrease) | (184,385) | 260,989 | $ (2,345,628) | $ 3,841,097 |
Small Cap Growth |
|
|
|
|
Shares sold | 38,610,197 | 47,884,601 | $ 574,316,675 | $ 736,795,086 |
Reinvestment of distributions | 4,701,343 | 213,315 | 71,216,320 | 2,867,099 |
Shares redeemed | (22,858,332) | (8,042,099) | (336,543,207) | (119,410,062) |
Net increase (decrease) | 20,453,208 | 40,055,817 | $ 308,989,788 | $620,252,123 |
Institutional Class |
|
|
|
|
Shares sold | 788,829 | 404,996 | $ 11,907,085 | $ 6,086,460 |
Reinvestment of distributions | 66,279 | 7,296 | 1,004,006 | 97,691 |
Shares redeemed | (323,911) | (357,460) | (4,862,607) | (5,250,610) |
Net increase (decrease) | 531,197 | 54,832 | $ 8,048,484 | $ 933,541 |
Annual Report
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Securities Fund and the Shareholders of Fidelity Small Cap Growth 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 Small Cap Growth Fund (a fund of Fidelity Securities Fund) at July 31, 2008, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and 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 Small Cap Growth 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 July 31, 2008 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
September 22, 2008
Annual Report
Trustees and Officers
The Trustees, Member of the Advisory Board, and executive officers of the trust and fund, as applicable, are listed below. The Board of Trustees governs the fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee the fund's activities, review contractual arrangements with companies that provide services to the fund, and review the fund's performance. Except for Edward C. Johnson 3d and James C. Curvey, each of the Trustees oversees 218 funds advised by FMR or an affiliate. Messrs. Johnson and Curvey oversee 377 funds advised by FMR or an affiliate.
The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust. Each Trustee who is not an interested person (as defined in the 1940 Act) (Independent Trustee), shall retire not later than the last day of the calendar year in which his or her 72nd birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board Member hold office without limit in time, except that any officer and Advisory Board Member may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years.
The fund's Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-877-208-0098.
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 Occupation | |
Edward C. Johnson 3d (78) | |
| Year of Election or Appointment: 1984 Mr. Johnson is Chairman of the Board of Trustees. Mr. Johnson serves as Chief Executive Officer, Chairman, and a Director of FMR LLC; Chairman and a Director of FMR; Chairman and a Director of Fidelity Research & Analysis Company (FRAC); Chairman and a Director of Fidelity Investments Money Management, Inc.; and Chairman and a Director of FMR Co., Inc. In addition, Mr. Johnson serves as Chairman and Director of FIL Limited. Previously, Mr. Johnson served as President of FMR LLC (2006-2007). |
James C. Curvey (73) | |
| Year of Election or Appointment: 2007 Mr. Curvey also serves as Trustee (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2006- |
* Trustees have been determined to be "Interested Trustees" by virtue of, among other things, their affiliation with the trust or various entities under common control with FMR. FMR Corp. merged with and into FMR LLC on October 1, 2007. Any references to FMR LLC for prior periods are deemed to be references to the prior entity.
Independent Trustees:
Correspondence intended for each Independent Trustee (that is, the Trustees other than the Interested Trustees) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.
Name, Age; Principal Occupation | |
Dennis J. Dirks (60) | |
| Year of Election or Appointment: 2005 Prior to his retirement in May 2003, Mr. Dirks was Chief Operating Officer and a member of the Board of The Depository Trust & Clearing Corporation (DTCC) (1999-2003). He also served as President, Chief Operating Officer, and Board member of The Depository Trust Company (DTC) (1999-2003) and President and Board member of the National Securities Clearing Corporation (NSCC) (1999-2003). In addition, Mr. Dirks served as a Trustee and a member of the Finance Committee of Manhattan College (2005-2008), and as Chief Executive Officer and Board member of the Government Securities Clearing Corporation (2001-2003) and Chief Executive Officer and Board member of the Mortgage-Backed Securities Clearing Corporation (2001-2003). Mr. Dirks also serves as a Trustee and a member of the Finance Committee of AHRC of Nassau County (2006-present). |
Alan J. Lacy (54) | |
| Year of Election or Appointment: 2008 Mr. Lacy serves as Senior Adviser (2007-present) of Oak Hill Capital Partners, L.P. (a private equity firm). Mr. Lacy also served as Chief Executive Officer (2000-2005) and Vice Chairman (2005-2006) of Sears Holdings Corporation and Sears, Roebuck and Co. (retail). In addition, Mr. Lacy serves as a member of the Board of Directors of The Western Union Company (global money transfer, 2006-present) and Bristol-Myers Squibb (global pharmaceuticals, 2007-present). Mr. Lacy is a Trustee of the National Parks Conservation Association and The Field Museum of Natural History. |
Ned C. Lautenbach (64) | |
| Year of Election or Appointment: 2000 Mr. Lautenbach is Chairman of the Independent Trustees (2006-present). Mr. Lautenbach is an Advisory Partner of Clayton, Dubilier & Rice, Inc. (private equity investment firm). Previously, Mr. Lautenbach was with the International Business Machines Corporation (IBM) from 1968 until his retirement in 1998. Mr. Lautenbach serves as a Director of Eaton Corporation (diversified industrial) as well as the Philharmonic Center for the Arts in Naples, Florida. He also is a member of the Board of Trustees of Fairfield University (2005-present), as well as a member of the Council on Foreign Relations. Previously, Mr. Lautenbach served as a Director of Sony Corporation (2006-2007). |
Joseph Mauriello (63) | |
| 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 firm, 1965-2005). Mr. Mauriello currently serves as a member of the Board of Directors of XL Capital Ltd. (global insurance and re-insurance company, 2006- |
Cornelia M. Small (64) | |
| Year of Election or Appointment: 2005 Ms. Small is a member of the Investment Committee, and Chair (2008-present) and a member of the Board of Trustees of Smith College. Ms. Small also serves on the Investment Committee of the Berkshire Taconic Community Foundation (2008-present). Previously, Ms. Small served as Chairperson of the Investment Committee (2002-2008) of Smith College and as Co-Chair (2000-2003) of the Annual Fund for the Fletcher School of Law and Diplomacy. In addition, she served as Chief Investment Officer, Director of Global Equity Investments, and a member of the Board of Directors of Scudder, Stevens & Clark and Scudder Kemper Investments. |
William S. Stavropoulos (69) | |
| Year of Election or Appointment: 2002 Mr. Stavropoulos is Chairman Emeritus of the Board of Directors of The Dow Chemical Company, where he previously served in numerous senior management positions, including President (1993-2000; 2002-2003), CEO (1995-2000; 2002-2004), Chairman of the Executive Committee (2000-2006), and as a member of the Board of Directors (1990-2006). Currently, he is a Director of Teradata Corporation (data warehousing and technology solutions, 2008-present), Chemical Financial Corporation, Maersk Inc. (industrial conglomerate), Tyco International, Inc. (multinational manufacturing and services, 2007-present), and a member of the Advisory Board for Metalmark Capital (private equity investment firm, 2005-present). He is a special advisor to Clayton, Dubilier & Rice, Inc. (private equity investment). In addition, Mr. Stavropoulos is a member of the University of Notre Dame Advisory Council for the College of Science. |
David M. Thomas (59) | |
| Year of Election or Appointment: 2008 Previously, Mr. Thomas served as Executive Chairman (2005-2006) and Chairman and Chief Executive Officer (2000-2005) of IMS Health, Inc. (pharmaceutical and healthcare information solutions). In addition, Mr. Thomas serves as a member of the Board of Directors of Fortune Brands, Inc. (consumer products holding company), and Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (57) | |
| Year of Election or Appointment: 2008 Mr. Wiley also serves as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-present). He serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), and a Director of Bill Barrett Corporation (exploration and production company, 2005-present). In addition, he also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a Sr. Energy Advisor of Katzenbach Partners, LLC (consulting firm, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment firm), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services company, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production company, 2001-2005). |
Advisory Board Member and Executive Officers**:
Correspondence intended for each executive officer and Mr. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Peter S. Lynch (64) | |
| Year of Election or Appointment: 2003 Member of the Advisory Board of Fidelity Securities Fund. Mr. Lynch is Vice Chairman and a Director of FMR, and Vice Chairman (2001- |
Kenneth B. Robins (38) | |
| Year of Election or Appointment: 2008 President and Treasurer of the fund. Mr. Robins also serves as President and Treasurer of Fidelity's Equity and High Income Funds (2008-present) and is an employee of FMR (2004-present). Before joining Fidelity Investments, Mr. Robins worked at KPMG LLP, where he was a partner in KPMG's department of professional practice (2002-2004). |
Walter C. Donovan (46) | |
| Year of Election or Appointment: 2007 Vice President of the fund. Mr. Donovan also serves as Vice President of Fidelity's Equity Funds, President of FMR and FMR Co., Inc., and Executive Vice President of Fidelity Investments Money Management, Inc. (2007-present). Previously, Mr. Donovan served as Executive Vice President of FMR and FMR Co., Inc. (2005-2007) and Senior Vice President of FMR (2003-2005) and FMR Co., Inc. (2004-2005). |
Thomas C. Hense (44) | |
| Year of Election or Appointment: 2008 Vice President of the fund. Mr. Hense also serves as Vice President of Fidelity's High Income and Small Cap Funds (2008-present). Previously, Mr. Hense served as a portfolio manager for Fidelity's Institutional Money Management Group (Pyramis) (2003-2008). |
Scott C. Goebel (40) | |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of the fund. Mr. Goebel also serves as Secretary and CLO of other Fidelity funds (2008-present); General Counsel, Secretary, and Senior Vice President of FMR (2008-present); and Deputy General Counsel of FMR LLC. Previously, Mr. Goebel served as Assistant Secretary of the Funds (2007-2008) and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007). |
John B. McGinty, Jr. (45) | |
| Year of Election or Appointment: 2008 Assistant Secretary of the fund. Mr. McGinty also serves as Assistant Secretary of Fidelity's other Equity and High Income Funds (2008- |
Holly C. Laurent (54) | |
| Year of Election or Appointment: 2008 Anti-Money Laundering (AML) officer of the fund. Ms. Laurent also serves as AML officer of other Fidelity funds (2008-present) and is an employee of FMR LLC. Previously, Ms. Laurent was Senior Vice President and Head of Legal for Fidelity Business Services India Pvt. Ltd. (2006-2008), Senior Vice President, Deputy General Counsel and Group Head for FMR LLC (2005-2006). |
Christine Reynolds (49) | |
| Year of Election or Appointment: 2008 Chief Financial Officer of the fund. Ms. Reynolds also serves as Chief Financial Officer of other Fidelity funds (2008-present). Ms. Reynolds became President of Fidelity Pricing and Cash Management Services (FPCMS) in August 2008. She served as Chief Operating Officer of FPCMS from 2007 through July 2008. Previously, Ms. Reynolds served as President, Treasurer, and Anti-Money Laundering officer of the Fidelity funds (2004-2007). Before joining Fidelity Investments, Ms. Reynolds worked at PricewaterhouseCoopers LLP (PwC) (1980-2002), where she was an audit partner with PwC's investment management practice. |
Kenneth A. Rathgeber (61) | |
| Year of Election or Appointment: 2004 Chief Compliance Officer of the fund. Mr. Rathgeber also serves as Chief Compliance Officer of Fidelity's Equity and High Income Funds (2004-present). He is Chief Compliance Officer of FMR (2005-present), FMR Co., Inc. (2005-present), Fidelity Management & Research (U.K.) Inc. (2005-present), Fidelity Research & Analysis Company (2005- |
Bryan A. Mehrmann (47) | |
| Year of Election or Appointment: 2005 Deputy Treasurer of the fund. Mr. Mehrmann also serves as Deputy Treasurer of other Fidelity funds (2005-present) and is an employee of FMR. Previously, Mr. Mehrmann served as Vice President of Fidelity Investments Institutional Services Group (FIIS)/Fidelity Investments Institutional Operations Corporation, Inc. (FIIOC) Client Services (1998-2004). |
Adrien E. Deberghes (40) | |
| Year of Election or Appointment: 2008 Deputy Treasurer of the fund. Mr. Deberghes also serves as Deputy Treasurer of Fidelity's Equity and High Income Funds (2008-present) and is an employee of FMR (2008-present). Previously, Mr. Deberghes served as Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005). |
Robert G. Byrnes (41) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of the fund. Mr. Byrnes also serves as Assistant Treasurer of other Fidelity funds (2005-present) and is an employee of FMR (2005-present). Previously, Mr. Byrnes served as Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (2003-2005). Before joining Fidelity Investments, Mr. Byrnes worked at Deutsche Asset Management where he served as Vice President of the Investment Operations Group (2000-2003). |
Peter L. Lydecker (54) | |
| Year of Election or Appointment: 2004 Assistant Treasurer of the fund. Mr. Lydecker also serves as Assistant Treasurer of other Fidelity funds (2004-present) and is an employee of FMR. |
Paul M. Murphy (61) | |
| Year of Election or Appointment: 2007 Assistant Treasurer of the fund. Mr. Murphy also serves as Assistant Treasurer of other Fidelity funds (2007-present) and is an employee of FMR (2007-present). Previously, Mr. Murphy served as Chief Financial Officer of the Fidelity Funds (2005-2006), Vice President and Associate General Counsel of FMR (2007), and Senior Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (1994-2007). |
Gary W. Ryan (49) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of the fund. Mr. Ryan also serves as Assistant Treasurer of other Fidelity funds (2005-present) and is an employee of FMR (2005-present). Previously, Mr. Ryan served as Vice President of Fund Reporting in Fidelity Pricing and Cash Management Services (FPCMS) (1999-2005). |
** FMR Corp. merged with and into FMR LLC on October 1, 2007. Any references to FMR LLC for prior periods are deemed to be references to the prior entity.
Annual Report
Distributions (Unaudited)
The fund hereby designates as a capital gain dividend with respect to the taxable year ended July 31, 2008, $784,798, or, if subsequently determined to be different, the net capital gain of such year.
The fund designates 5% of the dividend distributed in September 2007 as qualifying for the dividends-received deduction for corporate shareholders.
The fund designates 6% of the dividend distributed in September 2007 as amounts which may be taken into account as a dividend for the purposes of the maximum rate under section 1(h)(11) of the Internal Revenue Code.
The fund will notify shareholders in January 2009 of amounts for use in preparing 2008 income tax returns.
Annual Report
Proxy Voting Results
A special meeting of the fund's shareholders was held on May 14, 2008. The results of votes taken among shareholders on the proposals before them are reported below. Each vote reported represents one dollar of net asset value held on the record date for the meeting.
PROPOSAL 1 | ||
To elect a Board of Trustees.A | ||
| # of | % of |
James C. Curvey | ||
Affirmative | 30,242,569,269.49 | 94.915 |
Withheld | 1,620,182,942.38 | 5.085 |
TOTAL | 31,862,752,211.87 | 100.000 |
Dennis J. Dirks | ||
Affirmative | 30,356,248,026.80 | 95.272 |
Withheld | 1,506,504,185.07 | 4.728 |
TOTAL | 31,862,752,211.87 | 100.000 |
Edward C. Johnson 3d | ||
Affirmative | 30,163,300,902.81 | 94.666 |
Withheld | 1,699,451,309.06 | 5.334 |
TOTAL | 31,862,752,211.87 | 100.000 |
Alan J. Lacy | ||
Affirmative | 30,334,439,999.59 | 95.203 |
Withheld | 1,528,312,212.28 | 4.797 |
TOTAL | 31,862,752,211.87 | 100.000 |
Ned C. Lautenbach | ||
Affirmative | 30,317,381,535.59 | 95.150 |
Withheld | 1,545,370,676.28 | 4.850 |
TOTAL | 31,862,752,211.87 | 100.000 |
Joseph Mauriello | ||
Affirmative | 30,340,553,696.88 | 95.223 |
Withheld | 1,522,198,514.99 | 4.777 |
TOTAL | 31,862,752,211.87 | 100.000 |
Cornelia M. Small | ||
Affirmative | 30,337,552,071.15 | 95.213 |
Withheld | 1,525,200,140.72 | 4.787 |
TOTAL | 31,862,752,211.87 | 100.000 |
William S. Stavropoulos | ||
Affirmative | 30,240,356,579.51 | 94.908 |
Withheld | 1,622,395,632.36 | 5.092 |
TOTAL | 31,862,752,211.87 | 100.000 |
| # of | % of |
David M. Thomas | ||
Affirmative | 30,352,029,125.67 | 95.259 |
Withheld | 1,510,723,086.20 | 4.741 |
TOTAL | 31,862,752,211.87 | 100.000 |
Michael E. Wiley | ||
Affirmative | 30,333,540,290.12 | 95.201 |
Withheld | 1,529,211,921.75 | 4.799 |
TOTAL | 31,862,752,211.87 | 100.000 |
PROPOSAL 2 | ||
To amend the Declaration of Trust to reduce the required quorum for future shareholder meetings.A | ||
Affirmative | 23,747,670,372.95 | 74.531 |
Against | 5,357,217,831.03 | 16.814 |
Abstain | 1,587,233,084.08 | 4.981 |
Broker | 1,170,630,923.81 | 3.674 |
TOTAL | 31,862,752,211.87 | 100.000 |
A Denotes trust-wide proposal and voting results. |
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees
Fidelity Small Cap Growth Fund
Each year, typically in July, the Board of Trustees, including the Independent Trustees (together, the Board), votes on the renewal of the management contract and sub-advisory agreements (together, the Advisory Contracts) for the fund. The Board, assisted by the advice of fund counsel and Independent Trustees' counsel, requests and considers a broad range of information throughout the year.
The Board meets regularly and, acting directly and through its separate committees, requests and receives information concerning, and considers at each of its meetings factors that are relevant to, its annual consideration of the renewal of the fund's Advisory Contracts, including the services and support provided to the fund and its shareholders. At the time of the renewal, the Board had 12 standing committees, each composed of Independent Trustees with varying backgrounds, to which the Board has assigned specific subject matter responsibilities in order to enhance effective decision-making by the Board. Each committee has a written charter outlining the structure and purposes of the committee. The Board also meets as needed to consider matters specifically related to the Board's annual consideration of the renewal of Advisory Contracts.
At its July 2008 meeting, the Board of Trustees, including the Independent Trustees, unanimously determined to renew the fund's Advisory Contracts. In reaching its determination, the Board considered all factors it believed relevant, including (i) the nature, extent, and quality of the services to be provided to the fund and its shareholders (including the investment performance of the fund); (ii) the competitiveness of the fund's management fee and total expenses; (iii) the total costs of the services to be provided by and the profits to be realized by Fidelity from its relationship with the fund; (iv) the extent to which economies of scale would be realized as the fund grows; and (v) whether fee levels reflect these economies of scale, if any, for the benefit of fund shareholders. The Board also approved agreements with foreign sub-advisers Fidelity Management & Research (Japan) Inc. and Fidelity Management & Research (Hong Kong) Limited, as well as amendments to the fund's agreement with Fidelity Management & Research (U.K.) Inc.
In considering whether to renew the Advisory Contracts for the fund, the Board ultimately reached a determination, with the assistance of fund counsel and Independent Trustees' counsel and through the exercise of its business judgment, that the renewal of the Advisory Contracts and the compensation to be received by Fidelity under the management contract is consistent with Fidelity's fiduciary duty under applicable law. The Board's decision to renew the Advisory Contracts was not based on any single factor noted above, but rather was based on a comprehensive consideration of all the information provided to the Board at its meetings throughout the year. The Board, in reaching its determination to renew the Advisory Contracts, is aware that shareholders in the fund have a broad range of investment choices available to them, including a wide choice among mutual funds offered by competitors to Fidelity, and that the fund's shareholders, with the opportunity to review and weigh the disclosure provided by the fund in its prospectus and other public disclosures, have chosen to invest in this fund, managed by Fidelity.
Annual Report
Nature, Extent, and Quality of Services Provided. The Board considered staffing within the investment adviser, FMR, and the sub-advisers (together, the Investment Advisers), including the backgrounds of the fund's investment personnel and the fund's investment objective and discipline. The Independent Trustees also had discussions with senior management of Fidelity's investment operations and investment groups. The Board considered the structure of the portfolio manager compensation program and whether this structure provides appropriate incentives.
Resources Dedicated to Investment Management and Support Services. The Board reviewed the size, education, and experience of the Investment Advisers' investment staff, their use of technology, and the Investment Advisers' approach to recruiting, training, and retaining portfolio managers and other research, advisory, and management personnel. The Board noted that Fidelity's analysts have access to a variety of technological tools that enable them to perform both fundamental and quantitative analysis and to specialize in various disciplines. The Board considered Fidelity's extensive global research capabilities that enable the Investment Advisers to aggregate data from various sources in an effort to produce positive investment results. The Board also considered that Fidelity's portfolio managers and analysts have access to daily portfolio attribution that allows for monitoring of a fund's portfolio, as well as an electronic communication system that provides immediate real-time access to research concerning issuers and credit enhancers.
Shareholder and Administrative Services. The Board considered (i) the nature, extent, quality, and cost of advisory, administrative, distribution, and shareholder services performed by the Investment Advisers and their affiliates under the Advisory Contracts and under separate agreements covering transfer agency, pricing and bookkeeping, and securities lending services for the fund; (ii) the nature and extent of the Investment Advisers' supervision of third party service providers, principally custodians and subcustodians; and (iii) the resources devoted to, and the record of compliance with, the fund's compliance policies and procedures. The Board also reviewed the allocation of fund brokerage, including allocations to brokers affiliated with the Investment Advisers, the use of brokerage commissions to pay fund expenses, and the use of "soft" commission dollars to pay for research services. The Board further considered that Fidelity voluntarily pays for market data out of its own resources.
The Board noted that the growth of fund assets across the complex allows Fidelity to reinvest in the development of services designed to enhance the value or convenience of the Fidelity funds as investment vehicles. These services include 24-hour access to account information and market information through phone representatives and over the Internet, and investor education materials and asset allocation tools.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
Investment in a Large Fund Family. The Board considered the benefits to shareholders of investing in a Fidelity fund, including the benefits of investing in a fund that is part of a large family of funds offering a variety of investment disciplines and providing for a large variety of mutual fund investor services. For example, fund shareholders are offered the privilege of exchanging shares of the fund for shares of other Fidelity funds, as set forth in the fund's prospectus, without paying a sales charge. The Board noted that Fidelity has taken a number of actions over the previous year that benefited particular funds, including (i) dedicating additional resources to investment research and to restructure the investment research teams; (ii) contractually agreeing to reduce the management fees on Fidelity's Institutional Money Market Funds and launching Class IV and Institutional Class of certain of these funds; (iii) reducing the transfer agent fees for the Fidelity Select Portfolios and Investor Class of the VIP funds; and (iv) launching Class K of 29 equity funds as a lower-fee class available to certain employer-sponsored retirement plans.
Investment Performance. The Board considered whether the fund has operated within its investment objective, as well as its record of compliance with its investment restrictions. It also reviewed the fund's absolute investment performance for each class, as well as the fund's relative investment performance for each class measured against (i) a broad-based securities market index, and (ii) a peer group of mutual funds deemed appropriate by the Board over multiple periods. Because the fund had been in existence less than five calendar years, the following charts considered by the Board show, over the one- and three-year periods ended December 31, 2007, the cumulative total returns of Institutional Class (Class I) 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 Institutional Class (Class I) and Class B 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 (bottom of box) and the 75th percentile return (top of box) of the peer group. Returns shown above the box are in the first quartile and returns shown below the box are in the fourth quartile.
Annual Report
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.
Fidelity Small Cap Growth Fund
The Board reviewed the fund's relative investment performance against its peer group and stated that the performance of Institutional Class (Class I) of the fund was in the first quartile for all the periods shown. The Board also stated that the investment performance of Institutional Class (Class I) of the fund compared favorably to 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 also considered that the fund's management fee is subject to upward or downward adjustment depending upon whether, and to what extent, the fund's investment performance for the performance period exceeds, or is exceeded by, the record (over the same period) of a Board-approved performance adjustment index. The Board realizes that the performance adjustment provides FMR with a strong economic incentive to seek to achieve superior performance for the fund's shareholders and helps to more closely align the interests of FMR and the fund's shareholders.
The Board considered that FMR has taken steps to refocus and strengthen equity research, equity portfolio management, and compliance.
Based on its review, and giving particular weight to the nature and quality of the resources dedicated by the Investment Advisers to maintain and improve relative performance, the Board concluded that the nature, extent, and quality of the services provided to the fund will benefit the fund's shareholders, particularly in light of the Board's view that the fund's shareholders benefit from investing in a fund that is part of a large family of funds offering a variety of investment disciplines and services.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
Competitiveness of Management Fee and Total Fund Expenses. The Board considered the fund's management fee and total expenses compared to "mapped groups" of competitive funds and classes. Fidelity creates "mapped groups" by combining similar Lipper investment objective categories that have comparable management fee characteristics. Combining Lipper investment objective categories aids the Board's management fee and total expense comparisons by broadening the competitive group used for comparison and by reducing the number of universes to which various Fidelity funds are compared. The Board also considered supplemental information about how the fund's management fee and total expenses ranked relative to groups based on Lipper classifications, which take into account a fund's market capitalization and style.
The Board considered two proprietary management fee comparisons for the 12-month (or shorter) 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 12% means that 88% 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 Small Cap Growth 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 2007. The Board also noted the effect of the fund's positive performance adjustment on the fund's management fee ranking. The Board noted that the performance adjustment for each year represents calculations for performance periods that differ from the period shown in the performance chart above.
Based on its review, the Board concluded that the fund's management fee was fair and reasonable in light of the services that the fund receives and the other factors considered.
In its review of each class's total expenses, 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 current and historical total expenses 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 expenses of each of Class A, Class B, Institutional Class, and Fidelity Small Cap Growth (retail class) ranked below its competitive median for 2007, and the total expenses of each of Class T and Class C ranked above its competitive median for 2007. The Board considered that the total expenses of Class C were above the median because of its higher transfer agent fee due to small average account size. The Board also considered that the total expenses of Class T were above the median primarily because its 12b-1 fee is higher than the typical front-end load class. 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 expenses 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
In its review of total expenses, the Board also considered Fidelity fee structures and other information on clients that FMR and its affiliates service in other competitive markets, such as other mutual funds advised or subadvised by FMR or its affiliates, pension plan clients, and other institutional clients.
Based on its review, the Board concluded that the total expenses of each class of the fund were reasonable, although in some cases 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 audited books and records of Fidelity. The Audit Committee of the Board reviews any significant changes from the prior year's methodologies.
PricewaterhouseCoopers LLP (PwC), independent registered public accounting firm and auditor to Fidelity and certain Fidelity funds, has been engaged annually by the Board as part of the Board's assessment of the results of Fidelity's profitability analysis. PwC's engagement includes the review and assessment of Fidelity's methodologies used in determining the revenues and expenses attributable to Fidelity's mutual fund business, and completion of agreed-upon procedures surrounding the mathematical accuracy of fund profitability and its conformity to allocation methodologies. After considering PwC's reports issued under the engagement and information provided by Fidelity, the Board believes that while other allocation methods may also be reasonable, Fidelity's profitability methodologies are reasonable in all material respects.
Annual Report
The Board has also reviewed Fidelity's non-fund businesses and any fall-out benefits related to the mutual fund business as well as cases where Fidelity's affiliates may benefit from or be related to the fund's business.
The Board considered the costs of the services provided by and the profits realized by Fidelity in connection with the operation of the fund and determined that the amount of profit is a fair entrepreneurial profit for the management of the fund.
Economies of Scale. The Board considered whether there have been economies of scale in respect of the management of the Fidelity funds, whether the Fidelity funds (including the fund) have appropriately benefited from any such economies of scale, and whether there is potential for realization of any further economies of scale. The Board considered the extent to which the fund will benefit from economies of scale through increased services to the fund, through waivers or reimbursements, or through fee or expense reductions.
The Board recognized that the fund's management contract incorporates a "group fee" structure, which provides for lower group fee rates as total fund assets under FMR's management increase, and for higher group fee rates as total fund assets under FMR's management decrease. FMR determines the group fee rates based on a tiered asset "breakpoint" schedule. The Board considered that the group fee is designed to deliver the benefits of economies of scale to fund shareholders when total fund assets increase, even if assets of any particular fund are unchanged or have declined, because some portion of Fidelity's costs are attributable to services provided to all Fidelity funds, and all funds benefit if those costs can be allocated among more assets. The Board concluded that, given the group fee structure, fund shareholders will achieve a certain level of economies of scale as assets under FMR's management increase at the fund complex level, regardless of whether Fidelity achieves any such economies of scale.
The Board further concluded that any potential economies of scale are being shared between fund shareholders and Fidelity in an appropriate manner.
Additional Information Requested by the Board. In order to develop fully the factual basis for consideration of the Fidelity funds' Advisory Contracts, the Board requested and received additional information on certain topics, including (i) fund performance trends and actions to be taken by FMR to improve certain funds' overall performance; (ii) portfolio manager changes that have occurred during the past year; (iii) Fidelity's fund profitability methodology, the profitability of certain fund service providers, and profitability trends for certain funds; (iv) Fidelity's compensation structure for portfolio managers and key personnel, including its effects on fund profitability and the extent to which portfolio manager compensation is linked to fund performance; (v) Fidelity's fee structures and rationale for recommending different fees among categories of funds; and (vi) Fidelity's rationale for recommending which funds should have a performance adjustment component as part of their management fees.
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 material factors, the Board ultimately concluded that the advisory fee structures are fair and reasonable, and that the fund's Advisory Contracts should be renewed.
Annual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Fidelity Management & Research
(U.K.) Inc.
Fidelity Research & Analysis Company
Fidelity International Investment Advisors
Fidelity Investments Japan Limited
Fidelity International Investment Advisors (U.K.) Limited
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Service Agents
Fidelity Investments Institutional
Operations Company, Inc.
Boston, MA
Fidelity Service Company, Inc.
Boston, MA
Custodian
Citibank, N.A.
New York, NY
ASCPI-UANN-0908 1.803721.103
Fidelity®
Small Cap Opportunities
Fund
Annual Report
July 31, 2008
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message | Ned Johnson's message to shareholders. | |
Performance | How the fund has done over time. | |
Management's Discussion of | The manager's review of fund performance, strategy and outlook. | |
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 |
| |
Proxy Voting Results |
| |
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 (search for "proxy voting guidelines") or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-800-544-8544 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company.
Annual Report
This report and the financial statements contained herein are submitted for the general information of the shareholders of the fund. This report is not authorized for distribution to prospective investors in the fund unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com or http://www.advisor.fidelity.com, as applicable.
NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE
Neither the fund nor Fidelity Distributors Corporation is a bank.
Annual Report
Chairman's Message
(photo_of_Edward_C_Johnson_3d)
Dear Shareholder:
Domestic and international securities markets have struggled thus far in 2008. High-grade fixed-income investments produced modestly positive results, but many stock benchmarks suffered double-digit losses through the first half of this year. Financial markets are always unpredictable, but there are a number of time-tested principles that can put the historical odds in your favor.
One of the basic tenets is to invest for the long term. Over time, riding out the markets' inevitable ups and downs has proven much more effective than selling into panic or chasing the hottest trend. Even missing only a few of the markets' best days can significantly diminish investor returns. Patience also affords the benefits of compounding - of earning interest on additional income or reinvested dividends and capital gains. There are tax advantages and cost benefits to consider as well. The more you sell, the more taxes you pay, and the more you trade, the higher the costs. While staying the course doesn't eliminate risk, it can considerably lessen the effect of short-term declines.
You can further manage your investing risk through diversification. And today, more than ever, geographic diversification should be taken into account. Studies indicate that asset allocation is the single most important determinant of a portfolio's long-term success. The right mix of stocks, bonds and cash - aligned to your particular risk tolerance and investment objective - is very important. Age-appropriate rebalancing is also an essential aspect of asset allocation. For younger investors, an emphasis on equities - which historically have been the best-performing asset class over time - is encouraged. As investors near their specific goal, such as retirement or sending a child to college, consideration may be given to replacing volatile assets (e.g. common stocks) with more-stable fixed investments (bonds or savings plans).
A third investment principle - investing regularly - can help lower the average cost of your purchases. Investing a certain amount of money each month or quarter helps ensure you won't pay for all your shares at market highs. This strategy - known as dollar cost averaging - also reduces unconstructive "emotion" from investing, helping shareholders avoid selling weak performers just prior to an upswing, or chasing a hot performer just before a correction.
We invite you to contact us via the Internet, through our Investor Centers or over the phone. It is our privilege to provide you the information you need to make the investments that are right for you.
Sincerely,
/s/Edward C. Johnson 3d
Edward C. Johnson 3d
Annual Report
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended July 31, 2008 | Past 1 | Life of |
Fidelity ® Small Cap Opportunities | -17.10% | -15.11% |
A From March 22, 2007.
$10,000 Over Life of Fund
Let's say hypothetically that $10,000 was invested in Fidelity ® Small Cap Opportunities Fund on March 22, 2007, when the fund started. 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
Comments from Lionel Harris, Portfolio Manager of Fidelity® Small Cap Opportunities Fund
Grim news about the U.S. economy forced most domestic equity benchmarks into negative territory for the 12 months ending July 31, 2008. Oil prices north of $140 per barrel, gasoline prices in excess of $4 per gallon and soaring food costs drove inflation and consumer prices higher. In response, consumer discretionary spending trended lower as Main Street tightened its purse strings. Wall Street, meanwhile, struggled under the weight of massive write-downs in the financials sector, an ongoing credit crisis and bleak housing data. In an effort to staunch the bleeding, the Federal Reserve Board cut interest rates on seven occasions during the past year. Nevertheless, investors fled the equity markets, and both the Dow Jones Industrial Average SM and the Standard & Poor's 500 SM Index fell to a threshold that many believe marks the official start of a "bear market." For the 12 months overall, the Dow slid 11.71%, the S&P 500® dropped 11.09% and the technology-heavy NASDAQ Composite® Index dipped 7.98%.
For the year ending July 31, 2008, the fund lost 17.10%, well below the 6.71% decline of the Russell 2000® Index. Weak stock selection detracted the most from the fund's return, while unfavorable sector weightings had a lesser negative impact. Specifically, stock selection in consumer discretionary - - especially in consumer durables/apparel and retailing - and in technology hardware/equipment and software/services within the technology group hampered performance the most. A combination of poor stock picks and industry allocation within health care also weighed on performance. Conversely, owning the right names in materials was helpful. A modest cash weighting contributed as well. On an individual basis, Force Protection, a maker of military vehicles no longer in the portfolio at period end, declined sharply. The company's shares fell late in 2007 on worries about falling demand for its mine-resistant vehicles. Another negative was footwear maker Crocs, which saw its sales momentum slow dramatically in the United States. The stock was sold from the fund. An out-of-benchmark position in eTelecare Global Solutions - a Philippines-based provider of business process outsourcing services - also detracted, as did investments in clothing retailers American Apparel and Men's Wearhouse. On the positive side, energy stocks such as EXCO Resources continued to benefit from a favorable business environment, as did fertilizer maker Compass Minerals. South Africa's Rangold Resources, a gold-mining company not held in the benchmark, also added to results.
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 redemption fees, 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 (February 1, 2008 to July 31, 2008).
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.
Annual Report
Shareholder Expense Example - continued
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Beginning | Ending | Expenses Paid |
Actual | $ 1,000.00 | $ 933.30 | $ 4.23 |
Hypothetical (5% return per year before expenses) | $ 1,000.00 | $ 1,020.49 | $ 4.42 |
* Expenses are equal to the Fund's annualized expense ratio of .88%; multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
Annual Report
Investment Changes (Unaudited)
Top Ten Stocks as of July 31, 2008 | ||
| % of fund's | % of fund's net assets |
Alliance Data Systems Corp. | 2.2 | 0.0 |
Huron Consulting Group, Inc. | 1.1 | 0.9 |
Air Methods Corp. | 0.9 | 1.0 |
Digital Realty Trust, Inc. | 0.8 | 0.5 |
FGX International Ltd. | 0.8 | 0.4 |
Polycom, Inc. | 0.8 | 0.7 |
Itron, Inc. | 0.8 | 0.0 |
Life Time Fitness, Inc. | 0.7 | 0.9 |
Iconix Brand Group, Inc. | 0.7 | 0.6 |
Sybase, Inc. | 0.7 | 0.0 |
| 9.5 | |
Top Five Market Sectors as of July 31, 2008 | ||
| % of fund's | % of fund's net assets |
Financials | 18.3 | 16.8 |
Information Technology | 18.1 | 18.9 |
Industrials | 14.3 | 12.2 |
Health Care | 12.9 | 13.8 |
Consumer Discretionary | 11.7 | 14.4 |
Asset Allocation (% of fund's net assets) | |||||||
As of July 31, 2008 * | As of January 31, 2008 ** | ||||||
Stocks, Investment Companies and |
| Stocks and |
| ||||
Other Investments 0.1% |
| Other Investments 0.0% |
| ||||
Short-Term |
| Short-Term |
| ||||
*Foreign investments | 7.8% |
| ** Foreign investments | 11.1% |
|
Annual Report
Investments July 31, 2008
Showing Percentage of Net Assets
Common Stocks - 95.4% | |||
Shares | Value | ||
CONSUMER DISCRETIONARY - 11.7% | |||
Auto Components - 0.7% | |||
Amerigon, Inc. (a) | 577,885 | $ 3,825,599 | |
ATC Technology Corp. (a) | 227,300 | 5,709,776 | |
| 9,535,375 | ||
Diversified Consumer Services - 0.9% | |||
Hillenbrand, Inc. | 218,000 | 5,046,700 | |
Regis Corp. | 232,500 | 6,507,675 | |
| 11,554,375 | ||
Hotels, Restaurants & Leisure - 2.6% | |||
AFC Enterprises, Inc. (a) | 530,800 | 4,065,928 | |
Bally Technologies, Inc. (a) | 67,900 | 2,158,541 | |
Burger King Holdings, Inc. | 172,000 | 4,614,760 | |
Denny's Corp. (a) | 2,261,582 | 5,834,882 | |
Jack in the Box, Inc. (a) | 101,700 | 2,194,686 | |
Life Time Fitness, Inc. (a)(d) | 343,100 | 10,220,949 | |
Starwood Hotels & Resorts Worldwide, Inc. | 25,100 | 860,679 | |
Town Sports International Holdings, Inc. (a) | 571,200 | 5,706,288 | |
| 35,656,713 | ||
Household Durables - 1.6% | |||
Helen of Troy Ltd. (a) | 277,400 | 5,703,344 | |
Jarden Corp. (a)(d) | 395,600 | 9,506,268 | |
Universal Electronics, Inc. (a) | 272,800 | 6,198,016 | |
| 21,407,628 | ||
Internet & Catalog Retail - 0.1% | |||
Gaiam, Inc. Class A (a) | 74,078 | 1,085,983 | |
Leisure Equipment & Products - 0.8% | |||
JAKKS Pacific, Inc. (a) | 203,900 | 4,481,722 | |
RC2 Corp. (a) | 135,800 | 3,117,968 | |
Summer Infant, Inc. (a)(e) | 794,794 | 3,322,239 | |
| 10,921,929 | ||
Media - 0.3% | |||
Sinclair Broadcast Group, Inc. Class A | 496,800 | 3,790,584 | |
Specialty Retail - 1.7% | |||
Casual Male Retail Group, Inc. (a) | 659,800 | 2,678,788 | |
Charlotte Russe Holding, Inc. (a) | 119,000 | 1,542,240 | |
Collective Brands, Inc. (a)(d) | 204,900 | 2,639,112 | |
Jos. A. Bank Clothiers, Inc. (a)(d) | 107,600 | 2,410,240 | |
Mothers Work, Inc. (a) | 33,924 | 496,308 | |
Shoe Carnival, Inc. (a) | 239,377 | 3,662,468 | |
Common Stocks - continued | |||
Shares | Value | ||
CONSUMER DISCRETIONARY - continued | |||
Specialty Retail - continued | |||
Stein Mart, Inc. | 205,800 | $ 919,926 | |
The Men's Wearhouse, Inc. | 453,100 | 9,021,221 | |
| 23,370,303 | ||
Textiles, Apparel & Luxury Goods - 3.0% | |||
American Apparel, Inc. (a) | 1,513,500 | 8,899,380 | |
FGX International Ltd. | 952,064 | 11,043,942 | |
Heelys, Inc. (a)(d) | 395,494 | 1,787,633 | |
Iconix Brand Group, Inc. (a)(d) | 824,700 | 9,896,400 | |
Maidenform Brands, Inc. (a) | 215,170 | 3,294,253 | |
True Religion Apparel, Inc. (a)(d) | 217,400 | 5,617,616 | |
| 40,539,224 | ||
TOTAL CONSUMER DISCRETIONARY | 157,862,114 | ||
CONSUMER STAPLES - 3.2% | |||
Food & Staples Retailing - 1.3% | |||
Ingles Markets, Inc. Class A | 332,100 | 8,076,672 | |
Ruddick Corp. | 58,000 | 1,795,680 | |
The Great Atlantic & Pacific Tea Co. (a)(d) | 506,400 | 8,056,824 | |
| 17,929,176 | ||
Food Products - 0.8% | |||
Corn Products International, Inc. | 114,400 | 5,320,744 | |
Green Mountain Coffee Roasters, Inc. (a)(d) | 133,000 | 4,834,550 | |
| 10,155,294 | ||
Personal Products - 1.1% | |||
Bare Escentuals, Inc. (a)(d) | 378,500 | 4,367,890 | |
Chattem, Inc. (a) | 121,190 | 7,813,119 | |
Physicians Formula Holdings, Inc. (a) | 354,104 | 3,303,790 | |
| 15,484,799 | ||
TOTAL CONSUMER STAPLES | 43,569,269 | ||
ENERGY - 7.9% | |||
Energy Equipment & Services - 3.5% | |||
Atwood Oceanics, Inc. (a) | 54,100 | 2,483,731 | |
Bristow Group, Inc. (a) | 60,300 | 2,712,897 | |
Complete Production Services, Inc. (a) | 77,700 | 2,473,968 | |
Dril-Quip, Inc. (a) | 103,200 | 5,587,248 | |
ENGlobal Corp. (a) | 115,000 | 1,419,100 | |
Common Stocks - continued | |||
Shares | Value | ||
ENERGY - continued | |||
Energy Equipment & Services - continued | |||
Exterran Holdings, Inc. (a) | 81,352 | $ 4,591,507 | |
Hornbeck Offshore Services, Inc. (a) | 135,100 | 6,022,758 | |
IHS, Inc. Class A (a) | 65,000 | 4,044,950 | |
NATCO Group, Inc. Class A (a) | 119,900 | 5,713,235 | |
Oceaneering International, Inc. (a) | 14,800 | 897,472 | |
Patterson-UTI Energy, Inc. | 124,800 | 3,546,816 | |
Superior Energy Services, Inc. (a) | 121,250 | 5,750,888 | |
T-3 Energy Services, Inc. (a) | 17,700 | 1,213,689 | |
| 46,458,259 | ||
Oil, Gas & Consumable Fuels - 4.4% | |||
Alpha Natural Resources, Inc. (a) | 39,300 | 3,888,735 | |
Banpu PCL unit | 190,200 | 2,359,070 | |
Berry Petroleum Co. Class A | 48,200 | 2,074,528 | |
Concho Resources, Inc. | 218,400 | 7,152,600 | |
Encore Acquisition Co. (a) | 97,500 | 6,032,325 | |
Energy Transfer Equity LP | 70,200 | 2,086,344 | |
EXCO Resources, Inc. (a) | 273,848 | 7,133,740 | |
Foundation Coal Holdings, Inc. | 19,100 | 1,134,540 | |
Frontier Oil Corp. | 119,900 | 2,188,175 | |
GMX Resources, Inc. (a)(d) | 69,600 | 4,085,520 | |
Goodrich Petroleum Corp. (a)(d) | 79,800 | 3,658,830 | |
Kodiak Oil & Gas Corp. (a) | 785,700 | 2,624,238 | |
Mariner Energy, Inc. (a) | 238,500 | 6,310,710 | |
Petrohawk Energy Corp. (a)(d) | 169,340 | 5,642,409 | |
Petroleum Development Corp. (a) | 16,700 | 923,677 | |
Quicksilver Gas Services LP | 113,000 | 2,376,390 | |
| 59,671,831 | ||
TOTAL ENERGY | 106,130,090 | ||
FINANCIALS - 18.2% | |||
Capital Markets - 1.8% | |||
ABG Sundal Collier ASA | 427,000 | 515,872 | |
Altamir Amboise | 32,600 | 328,818 | |
Bank of New York Mellon Corp. | 198,100 | 7,032,550 | |
Evercore Partners, Inc. Class A | 329,464 | 4,302,800 | |
FCStone Group, Inc. (a) | 321,000 | 6,182,460 | |
Franklin Resources, Inc. | 11,500 | 1,157,015 | |
KBW, Inc. (a)(d) | 25,400 | 671,068 | |
Common Stocks - continued | |||
Shares | Value | ||
FINANCIALS - continued | |||
Capital Markets - continued | |||
T. Rowe Price Group, Inc. | 24,400 | $ 1,460,340 | |
Waddell & Reed Financial, Inc. Class A | 84,600 | 2,825,640 | |
| 24,476,563 | ||
Commercial Banks - 5.1% | |||
1st Source Corp. | 66,700 | 1,556,778 | |
BancFirst Corp. | 54,400 | 2,570,400 | |
Banco Latin Americano de Exporaciones SA (BLADEX) Series E | 108,800 | 1,995,392 | |
Banif SGPS SA | 210,766 | 583,439 | |
Bank of Cyprus Public Co. Ltd. | 47,200 | 625,259 | |
Boston Private Financial Holdings, Inc. | 503,500 | 3,942,405 | |
Cathay General Bancorp | 100,400 | 1,600,376 | |
Center Financial Corp., California | 481,400 | 5,295,400 | |
City Holding Co. | 33,600 | 1,494,528 | |
City National Corp. | 52,200 | 2,564,586 | |
Community Bank System, Inc. | 81,800 | 1,930,480 | |
CVB Financial Corp. (d) | 116,500 | 1,318,780 | |
East West Bancorp, Inc. (d) | 53,900 | 641,949 | |
Fifth Third Bancorp (d) | 176,650 | 2,467,801 | |
First Financial Bankshares, Inc. (d) | 42,700 | 1,959,503 | |
First Financial Corp., Indiana | 62,757 | 2,344,602 | |
Hiroshima Bank Ltd. | 157,000 | 646,103 | |
Huntington Bancshares, Inc. | 206,300 | 1,448,226 | |
Intervest Bancshares Corp. Class A (e) | 385,240 | 2,981,758 | |
MainSource Financial Group, Inc. | 76,300 | 1,361,955 | |
MB Financial, Inc. | 46,000 | 1,137,580 | |
Mitsubishi UFJ Financial Group, Inc. | 72,000 | 635,750 | |
Oriental Financial Group, Inc. | 70,900 | 1,231,533 | |
Pacific Premier Bancorp, Inc. (a) | 88,400 | 368,628 | |
PacWest Bancorp (d) | 133,200 | 2,480,184 | |
Peoples Bancorp, Inc. | 53,700 | 977,340 | |
Prosperity Bancshares, Inc. (d) | 41,400 | 1,328,940 | |
Simmons First National Corp. Class A | 41,800 | 1,243,550 | |
South Indian Bank Ltd. | 252,016 | 618,124 | |
Sterling Bancorp, New York | 87,800 | 1,232,712 | |
Suffolk Bancorp | 36,700 | 1,176,235 | |
SVB Financial Group (a) | 69,700 | 4,014,023 | |
Tompkins Financial Corp. | 41,900 | 1,789,549 | |
UCBH Holdings, Inc. (d) | 439,016 | 1,979,962 | |
UnionBanCal Corp. | 27,700 | 1,488,044 | |
Common Stocks - continued | |||
Shares | Value | ||
FINANCIALS - continued | |||
Commercial Banks - continued | |||
Wilshire Bancorp, Inc. | 542,273 | $ 6,680,803 | |
Zions Bancorp (d) | 20,500 | 600,035 | |
| 68,312,712 | ||
Consumer Finance - 0.4% | |||
Dollar Financial Corp. (a) | 251,140 | 4,857,048 | |
Diversified Financial Services - 0.9% | |||
JSE Ltd. | 143,400 | 913,799 | |
KKR Financial Holdings LLC | 886,100 | 9,100,247 | |
RHJ International (a) | 201,100 | 2,241,680 | |
| 12,255,726 | ||
Insurance - 2.8% | |||
Affirmative Insurance Holdings, Inc. | 60,969 | 409,102 | |
Aioi Insurance Co. Ltd. | 109,000 | 585,967 | |
Allied World Assurance Co. Holdings Ltd. | 27,200 | 1,131,792 | |
American Safety Insurance Group Ltd. (a) | 503,200 | 7,447,360 | |
April Group | 6,100 | 304,076 | |
Assurant, Inc. | 81,000 | 4,869,720 | |
Axis Capital Holdings Ltd. | 81,000 | 2,566,080 | |
IPC Holdings Ltd. | 254,200 | 8,159,820 | |
Max Capital Group Ltd. | 117,700 | 2,762,419 | |
Mercury General Corp. | 52,300 | 2,641,673 | |
Nipponkoa Insurance Co. Ltd. | 65,000 | 525,350 | |
Nissay Dowa General Insurance Co. Ltd. (d) | 109,000 | 595,060 | |
Philadelphia Consolidated Holdings Corp. (a) | 72,100 | 4,214,245 | |
Tokio Marine Holdings, Inc. (a) | 15,100 | 556,435 | |
United America Indemnity Ltd. Class A (a) | 110,022 | 1,433,587 | |
| 38,202,686 | ||
Real Estate Investment Trusts - 5.9% | |||
Alexandria Real Estate Equities, Inc. | 78,700 | 8,126,562 | |
AMB Property Corp. (SBI) | 106,100 | 5,194,656 | |
American Campus Communities, Inc. | 43,200 | 1,264,896 | |
Apartment Investment & Management Co. Class A | 175,300 | 5,990,001 | |
CapitalSource, Inc. (d) | 455,400 | 5,291,748 | |
Chimera Investment Corp. (d) | 898,700 | 6,911,003 | |
Developers Diversified Realty Corp. | 30,700 | 981,172 | |
Digital Realty Trust, Inc. (d) | 262,500 | 11,263,875 | |
Duke Realty LP | 11,100 | 274,503 | |
General Growth Properties, Inc. | 201,100 | 5,512,151 | |
Glimcher Realty Trust (d) | 128,100 | 1,192,611 | |
HCP, Inc. | 29,000 | 1,046,030 | |
Common Stocks - continued | |||
Shares | Value | ||
FINANCIALS - continued | |||
Real Estate Investment Trusts - continued | |||
Highwoods Properties, Inc. (SBI) | 60,300 | $ 2,200,950 | |
National Retail Properties, Inc. | 423,700 | 8,957,018 | |
ProLogis Trust | 62,500 | 3,055,000 | |
Public Storage | 39,500 | 3,234,655 | |
SL Green Realty Corp. | 34,400 | 2,866,896 | |
U-Store-It Trust | 215,000 | 2,504,750 | |
Vornado Realty Trust | 39,700 | 3,774,279 | |
| 79,642,756 | ||
Thrifts & Mortgage Finance - 1.3% | |||
Beacon Federal Bancorp, Inc. | 34,455 | 341,105 | |
BofI Holding, Inc. (a) | 105,837 | 744,034 | |
Danvers Bancorp, Inc. (a)(d) | 53,200 | 627,228 | |
Encore Bancshares, Inc. | 129,551 | 2,202,367 | |
First Financial Northwest, Inc. (d) | 61,400 | 607,860 | |
Imperial Capital Bancorp, Inc. | 160,100 | 1,171,932 | |
Kearny Financial Corp. | 64,234 | 825,407 | |
Trustco Bank Corp., New York | 276,250 | 2,411,663 | |
United Financial Bancorp, Inc. | 52,700 | 631,873 | |
Washington Federal, Inc. | 292,800 | 5,446,080 | |
Westfield Financial, Inc. | 269,716 | 2,656,703 | |
| 17,666,252 | ||
TOTAL FINANCIALS | 245,413,743 | ||
HEALTH CARE - 12.9% | |||
Biotechnology - 3.2% | |||
Acorda Therapeutics, Inc. (a) | 15,400 | 505,274 | |
Alkermes, Inc. (a) | 313,100 | 4,931,325 | |
Amylin Pharmaceuticals, Inc. (a) | 63,100 | 1,990,805 | |
BioMarin Pharmaceutical, Inc. (a) | 124,900 | 4,065,495 | |
Dynavax Technologies Corp. (a) | 246,213 | 401,327 | |
Human Genome Sciences, Inc. (a) | 680,100 | 4,509,063 | |
Medarex, Inc. (a) | 526,000 | 5,196,880 | |
ONYX Pharmaceuticals, Inc. (a) | 122,300 | 4,953,150 | |
Regeneron Pharmaceuticals, Inc. (a) | 243,800 | 5,336,782 | |
Savient Pharmaceuticals, Inc. (a)(d) | 85,400 | 2,269,932 | |
Theravance, Inc. (a)(d) | 291,600 | 4,659,768 | |
United Therapeutics Corp. (a) | 38,200 | 4,331,498 | |
| 43,151,299 | ||
Common Stocks - continued | |||
Shares | Value | ||
HEALTH CARE - continued | |||
Health Care Equipment & Supplies - 2.9% | |||
Haemonetics Corp. (a) | 123,900 | $ 7,193,634 | |
Masimo Corp. | 162,200 | 6,126,294 | |
Meridian Bioscience, Inc. | 254,300 | 6,614,343 | |
Orthofix International NV (a) | 180,700 | 4,298,853 | |
Quidel Corp. (a) | 336,583 | 6,819,172 | |
Zoll Medical Corp. (a) | 256,940 | 8,093,610 | |
| 39,145,906 | ||
Health Care Providers & Services - 3.9% | |||
Air Methods Corp. (a) | 413,825 | 11,864,363 | |
Amedisys, Inc. (a) | 45,400 | 2,911,048 | |
Brookdale Senior Living, Inc. (d) | 156,700 | 2,391,242 | |
Emergency Medical Services Corp. Class A (a)(d) | 350 | 9,457 | |
Emeritus Corp. (a) | 112,300 | 1,892,255 | |
Genoptix, Inc. | 107,200 | 3,124,880 | |
Pediatrix Medical Group, Inc. (a) | 177,100 | 8,615,915 | |
PSS World Medical, Inc. (a) | 546,500 | 9,159,340 | |
Psychiatric Solutions, Inc. (a)(d) | 233,700 | 8,184,174 | |
ResCare, Inc. (a) | 238,500 | 4,378,860 | |
| 52,531,534 | ||
Life Sciences Tools & Services - 1.3% | |||
Medtox Scientific, Inc. (a) | 116,500 | 1,682,260 | |
PAREXEL International Corp. (a) | 177,900 | 5,200,017 | |
Pharmaceutical Product Development, Inc. | 147,800 | 5,637,092 | |
QIAGEN NV (a) | 232,400 | 4,366,796 | |
| 16,886,165 | ||
Pharmaceuticals - 1.6% | |||
Perrigo Co. | 246,700 | 8,691,241 | |
Questcor Pharmaceuticals, Inc. (a)(d) | 1,147,900 | 5,739,500 | |
Sepracor, Inc. (a) | 129,300 | 2,260,164 | |
XenoPort, Inc. (a) | 108,600 | 4,976,052 | |
| 21,666,957 | ||
TOTAL HEALTH CARE | 173,381,861 | ||
INDUSTRIALS - 14.3% | |||
Aerospace & Defense - 1.1% | |||
BE Aerospace, Inc. (a) | 132,400 | 3,400,032 | |
Curtiss-Wright Corp. | 71,900 | 3,784,816 | |
LMI Aerospace, Inc. (a) | 89 | 1,644 | |
Common Stocks - continued | |||
Shares | Value | ||
INDUSTRIALS - continued | |||
Aerospace & Defense - continued | |||
Spirit AeroSystems Holdings, Inc. Class A (a) | 119,200 | $ 2,581,872 | |
Triumph Group, Inc. | 86,900 | 4,602,224 | |
| 14,370,588 | ||
Air Freight & Logistics - 0.6% | |||
Forward Air Corp. | 145,300 | 5,316,527 | |
UTI Worldwide, Inc. | 178,100 | 3,239,639 | |
| 8,556,166 | ||
Airlines - 0.4% | |||
Delta Air Lines, Inc. (a) | 362,000 | 2,729,480 | |
JetBlue Airways Corp. (a) | 554,300 | 2,921,161 | |
| 5,650,641 | ||
Commercial Services & Supplies - 5.7% | |||
A.T. Cross Co. Class A (a) | 200,762 | 1,606,096 | |
Copart, Inc. (a) | 63,000 | 2,763,180 | |
Diamond Management & Technology Consultants, Inc. | 1,241,822 | 6,569,238 | |
First Advantage Corp. Class A (a) | 303,703 | 4,604,137 | |
FTI Consulting, Inc. (a) | 31,300 | 2,227,308 | |
GeoEye, Inc. (a) | 219,100 | 4,743,515 | |
Huron Consulting Group, Inc. (a) | 273,150 | 14,247,504 | |
InnerWorkings, Inc. (a)(d) | 610,100 | 7,113,766 | |
Interface, Inc. Class A | 142,800 | 1,692,180 | |
Manpower, Inc. | 30,800 | 1,478,400 | |
Navigant Consulting, Inc. (a) | 136,400 | 2,520,672 | |
On Assignment, Inc. (a) | 605,100 | 5,161,503 | |
Team, Inc. (a) | 185,100 | 6,758,001 | |
The Geo Group, Inc. (a) | 264,000 | 6,346,560 | |
Waste Connections, Inc. (a) | 131,900 | 4,799,841 | |
Watson Wyatt Worldwide, Inc. Class A | 63,400 | 3,673,396 | |
| 76,305,297 | ||
Construction & Engineering - 0.6% | |||
Orion Marine Group, Inc. (a) | 197,400 | 2,733,990 | |
URS Corp. (a) | 121,400 | 5,089,088 | |
| 7,823,078 | ||
Electrical Equipment - 1.0% | |||
Acuity Brands, Inc. | 58,400 | 2,386,224 | |
American Superconductor Corp. (a) | 70,000 | 2,764,300 | |
AMETEK, Inc. | 61,800 | 2,957,748 | |
Common Stocks - continued | |||
Shares | Value | ||
INDUSTRIALS - continued | |||
Electrical Equipment - continued | |||
JA Solar Holdings Co. Ltd. ADR (a)(d) | 300,100 | $ 4,552,517 | |
Saft Groupe SA | 26,200 | 1,031,105 | |
| 13,691,894 | ||
Industrial Conglomerates - 0.6% | |||
Walter Industries, Inc. | 82,500 | 8,651,775 | |
Machinery - 2.4% | |||
Actuant Corp. Class A | 89,300 | 2,720,078 | |
Colfax Corp. | 85,300 | 2,327,837 | |
Commercial Vehicle Group, Inc. (a) | 223,800 | 2,164,146 | |
Flow International Corp. (a) | 529,400 | 3,525,804 | |
Flowserve Corp. | 25,100 | 3,346,834 | |
Nordson Corp. | 63,300 | 4,472,778 | |
RBC Bearings, Inc. (a) | 93,200 | 3,100,764 | |
The Weir Group PLC | 121,400 | 2,136,399 | |
Titan Machinery, Inc. (d) | 190,300 | 5,218,026 | |
TurboChef Technologies, Inc. (a)(d) | 599,884 | 3,149,391 | |
| 32,162,057 | ||
Marine - 0.0% | |||
Shun Tak Holdings Ltd. | 262,000 | 206,199 | |
Road & Rail - 1.3% | |||
Con-way, Inc. | 65,900 | 3,331,904 | |
Genesee & Wyoming, Inc. Class A (a) | 82,900 | 3,354,963 | |
J.B. Hunt Transport Services, Inc. (d) | 77,800 | 2,877,044 | |
Kansas City Southern (a) | 24,800 | 1,364,000 | |
Knight Transportation, Inc. | 324,000 | 6,130,080 | |
| 17,057,991 | ||
Trading Companies & Distributors - 0.6% | |||
DXP Enterprises, Inc. (a) | 25,240 | 1,207,482 | |
Kaman Corp. | 160,800 | 4,032,864 | |
Rush Enterprises, Inc. Class A (a) | 247,500 | 2,794,275 | |
| 8,034,621 | ||
TOTAL INDUSTRIALS | 192,510,307 | ||
INFORMATION TECHNOLOGY - 18.1% | |||
Communications Equipment - 1.4% | |||
ORBCOMM, Inc. (a)(d) | 308,760 | 2,053,254 | |
Common Stocks - continued | |||
Shares | Value | ||
INFORMATION TECHNOLOGY - continued | |||
Communications Equipment - continued | |||
Polycom, Inc. (a) | 443,900 | $ 10,476,040 | |
ViaSat, Inc. (a) | 255,000 | 5,872,650 | |
| 18,401,944 | ||
Computers & Peripherals - 0.5% | |||
Logitech International SA (a) | 283,900 | 7,446,697 | |
Electronic Equipment & Instruments - 2.1% | |||
Amphenol Corp. Class A | 100,000 | 4,767,000 | |
Gerber Scientific, Inc. (a) | 590,000 | 7,003,300 | |
Itron, Inc. (a)(d) | 111,400 | 10,285,562 | |
Trimble Navigation Ltd. (a) | 172,300 | 5,720,360 | |
| 27,776,222 | ||
Internet Software & Services - 2.1% | |||
Art Technology Group, Inc. (a) | 994,344 | 3,649,242 | |
Bankrate, Inc. (a)(d) | 64,100 | 2,015,945 | |
DealerTrack Holdings, Inc. (a) | 359,913 | 5,607,445 | |
Equinix, Inc. (a) | 108,170 | 8,800,711 | |
j2 Global Communications, Inc. (a) | 308,630 | 7,397,861 | |
Omniture, Inc. (a) | 75,000 | 1,301,250 | |
| 28,772,454 | ||
IT Services - 5.5% | |||
Alliance Data Systems Corp. (a) | 472,200 | 30,291,626 | |
CACI International, Inc. Class A (a) | 172,300 | 7,746,608 | |
eTelecare Global Solutions, Inc. sponsored ADR (a) | 1,348,572 | 7,363,203 | |
Lender Processing Services, Inc. (a) | 107,000 | 3,568,450 | |
ManTech International Corp. Class A (a) | 85,000 | 4,746,400 | |
NCI, Inc. Class A (a) | 250,000 | 5,967,500 | |
Perot Systems Corp. Class A (a) | 524,900 | 8,776,328 | |
Syntel, Inc. | 195,600 | 6,445,020 | |
| 74,905,135 | ||
Semiconductors & Semiconductor Equipment - 3.2% | |||
Advanced Energy Industries, Inc. (a) | 86,200 | 1,191,284 | |
Credence Systems Corp. (a) | 2,911,826 | 3,727,137 | |
Diodes, Inc. (a) | 125,000 | 3,246,250 | |
FormFactor, Inc. (a) | 80,020 | 1,392,348 | |
Hittite Microwave Corp. (a) | 125,000 | 3,990,000 | |
Intersil Corp. Class A | 100,000 | 2,413,000 | |
LDK Solar Co. Ltd. sponsored ADR (a)(d) | 26,800 | 902,356 | |
LTX Corp. (a) | 606,929 | 1,323,105 | |
MIPS Technologies, Inc. (a) | 763,020 | 2,899,476 | |
Common Stocks - continued | |||
Shares | Value | ||
INFORMATION TECHNOLOGY - continued | |||
Semiconductors & Semiconductor Equipment - continued | |||
Monolithic Power Systems, Inc. (a) | 106,400 | $ 2,314,200 | |
Novellus Systems, Inc. (a) | 114,400 | 2,330,328 | |
Pericom Semiconductor Corp. (a) | 287,000 | 4,092,620 | |
Power Integrations, Inc. (a) | 165,400 | 4,518,728 | |
Rudolph Technologies, Inc. (a) | 284,900 | 2,487,177 | |
Teradyne, Inc. (a) | 103,900 | 973,543 | |
Varian Semiconductor Equipment Associates, Inc. (a) | 118,800 | 3,471,336 | |
Verigy Ltd. (a) | 100,000 | 2,223,000 | |
| 43,495,888 | ||
Software - 3.3% | |||
Amdocs Ltd. (a) | 100,000 | 3,041,000 | |
CommVault Systems, Inc. (a) | 418,300 | 6,370,709 | |
Jack Henry & Associates, Inc. | 63,800 | 1,377,442 | |
Quest Software, Inc. (a) | 251,200 | 3,795,632 | |
Sybase, Inc. (a) | 291,500 | 9,797,315 | |
Synchronoss Technologies, Inc. (a)(d) | 300,000 | 3,516,000 | |
Taleo Corp. Class A (a) | 149,600 | 2,803,504 | |
THQ, Inc. (a)(d) | 250,400 | 3,801,072 | |
Tyler Technologies, Inc. (a) | 95,133 | 1,520,225 | |
Ubisoft Entertainment SA (a) | 73,300 | 7,214,096 | |
Ultimate Software Group, Inc. (a) | 30,000 | 786,900 | |
| 44,023,895 | ||
TOTAL INFORMATION TECHNOLOGY | 244,822,235 | ||
MATERIALS - 4.4% | |||
Chemicals - 1.5% | |||
Airgas, Inc. | 133,700 | 7,658,336 | |
Hercules, Inc. | 155,100 | 3,109,755 | |
Rockwood Holdings, Inc. (a) | 251,200 | 9,583,280 | |
| 20,351,371 | ||
Containers & Packaging - 0.9% | |||
Pactiv Corp. (a) | 147,100 | 3,546,581 | |
Temple-Inland, Inc. (d) | 559,700 | 9,095,125 | |
| 12,641,706 | ||
Metals & Mining - 1.8% | |||
Carpenter Technology Corp. | 70,940 | 2,745,378 | |
Century Aluminum Co. (a) | 91,500 | 5,436,930 | |
Compass Minerals International, Inc. | 109,000 | 8,240,400 | |
Common Stocks - continued | |||
Shares | Value | ||
MATERIALS - continued | |||
Metals & Mining - continued | |||
Randgold Resources Ltd. sponsored ADR | 117,500 | $ 6,013,650 | |
Sims Group Ltd. | 76,605 | 2,394,885 | |
| 24,831,243 | ||
Paper & Forest Products - 0.2% | |||
Schweitzer-Mauduit International, Inc. | 122,400 | 2,277,864 | |
TOTAL MATERIALS | 60,102,184 | ||
TELECOMMUNICATION SERVICES - 1.8% | |||
Diversified Telecommunication Services - 1.2% | |||
Cincinnati Bell, Inc. (a) | 765,310 | 2,984,709 | |
Iowa Telecommunication Services, Inc. | 157,570 | 2,921,348 | |
Premiere Global Services, Inc. (a) | 507,600 | 7,669,836 | |
tw telecom, inc. (a) | 174,500 | 2,788,510 | |
| 16,364,403 | ||
Wireless Telecommunication Services - 0.6% | |||
SBA Communications Corp. Class A (a) | 196,730 | 7,454,100 | |
TOTAL TELECOMMUNICATION SERVICES | 23,818,503 | ||
UTILITIES - 2.9% | |||
Electric Utilities - 1.1% | |||
Allete, Inc. | 119,600 | 5,090,176 | |
Empire District Electric Co. | 178,125 | 3,635,531 | |
Westar Energy, Inc. | 300,300 | 6,630,624 | |
| 15,356,331 | ||
Gas Utilities - 0.4% | |||
Southwest Gas Corp. | 179,200 | 5,178,880 | |
Independent Power Producers & Energy Traders - 0.4% | |||
Constellation Energy Group, Inc. | 28,000 | 2,328,480 | |
Nevada Geothermal Power, Inc. (a) | 1,340,000 | 1,439,664 | |
Ormat Technologies, Inc. | 23,900 | 1,147,678 | |
| 4,915,822 | ||
Multi-Utilities - 1.0% | |||
CMS Energy Corp. | 451,100 | 6,089,850 | |
Common Stocks - continued | |||
Shares | Value | ||
UTILITIES - continued | |||
Multi-Utilities - continued | |||
OGE Energy Corp. | 194,100 | $ 6,350,952 | |
Puget Energy, Inc. | 40,800 | 1,123,632 | |
| 13,564,434 | ||
TOTAL UTILITIES | 39,015,467 | ||
TOTAL COMMON STOCKS (Cost $1,328,097,412) | 1,286,625,773 | ||
Investment Companies - 0.4% | |||
|
|
|
|
Ares Capital Corp. | 451,300 | 5,158,359 |
U.S. Treasury Obligations - 0.1% | ||||
| Principal Amount |
| ||
U.S. Treasury Bills, yield at date of purchase 1.8% to 1.83% 9/4/08 (f) | $ 1,080,000 | 1,078,392 | ||
Floating Rate Loans - 0.1% | ||||
| ||||
FINANCIALS - 0.1% | ||||
Consumer Finance - 0.1% | ||||
DaimlerChrysler Financial Services Tranche 2LN, term loan 9.28% 8/3/13 (g) (Cost $2,392,722) | 3,000,000 | 1,800,000 |
Money Market Funds - 12.1% | |||
Shares |
| ||
Fidelity Cash Central Fund, 2.35% (b) | 56,820,357 | 56,820,357 | |
Fidelity Securities Lending Cash Central Fund, 2.37% (b)(c) | 105,571,770 | 105,571,770 | |
TOTAL MONEY MARKET FUNDS (Cost $162,392,127) | 162,392,127 | ||
Cash Equivalents - 0.0% | |||
Maturity Amount | Value | ||
Investments in repurchase agreements in a joint trading account at 2.07%, dated 7/31/08 due 8/1/08 (Collateralized by U.S. Government Obligations) # | 70,004 | $ 70,000 | |
TOTAL INVESTMENT PORTFOLIO - 108.1% (Cost $1,499,583,611) | 1,457,124,651 | ||
NET OTHER ASSETS - (8.1)% | (108,866,404) | ||
NET ASSETS - 100% | $ 1,348,258,247 |
Futures Contracts | |||||
Expiration Date | Underlying Face Amount at Value | Unrealized Appreciation/ | |||
Purchased | |||||
Equity Index Contracts | |||||
195 CME E-mini Russell 2000 Index Contracts | Sept. 2008 | $ 13,952,250 | $ (163,854) |
|
The face value of futures purchased as a percentage of net assets - 1.0% |
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
(e) 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 $1,078,392. |
(g) The coupon rate shown on floating or adjustable rate securities represents the rate at period end. |
# Additional Information on each counterparty to the repurchase agreement is as follows: |
Repurchase Agreement / Counterparty | Value |
$70,000 due 8/01/08 at 2.07% | |
BNP Paribas Securities Corp. | $ 24,215 |
Banc of America Securities LLC | 3,794 |
Barclays Capital, Inc. | 41,991 |
| $ 70,000 |
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 | $ 1,708,354 |
Fidelity Securities Lending Cash Central Fund | 1,197,584 |
Total | $ 2,905,938 |
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, |
California Micro Devices Corp. | $ 5,410,465 | $ 555,266 | $ 4,254,415 | $ - | $ - |
Goldleaf Financial Solutions, Inc. | 4,599,644 | - | 1,466,930 | - | - |
Intervest Bancshares Corp. Class A | 6,298,944 | 2,766,977 | 29,083 | 96,585 | 2,981,758 |
Summer Infant, Inc. | - | 3,837,118 | - | - | 3,322,239 |
Total | $ 16,309,053 | $ 7,159,361 | $ 5,750,428 | $ 96,585 | $ 6,303,997 |
Income Tax Information |
At July 31, 2008, the fund had a capital loss carryforward of approximately $23,527,827 of which $3,862,752 and $19,665,075 will expire on July 31, 2015 and 2016, respectively. |
The fund intends to elect to defer to its fiscal year ending July 31, 2009 approximately $222,965,245 of losses recognized during the period November 1, 2007 to July 31, 2008. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements
Statement of Assets and Liabilities
| July 31, 2008 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $100,519,066 and repurchase agreements of $70,000) - See accompanying schedule: Unaffiliated issuers (cost $1,323,972,505) | $ 1,288,428,527 |
|
Fidelity Central Funds (cost $162,392,127) | 162,392,127 |
|
Other affiliated issuers (cost $13,218,979) | 6,303,997 |
|
Total Investments (cost $1,499,583,611) |
| $ 1,457,124,651 |
Cash | 345,868 | |
Receivable for investments sold | 11,987,527 | |
Receivable for fund shares sold | 90,720 | |
Dividends receivable | 867,954 | |
Interest receivable | 29,387 | |
Distributions receivable from Fidelity Central Funds | 229,496 | |
Prepaid expenses | 1,333 | |
Other receivables | 25,539 | |
Total assets | 1,470,702,475 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 15,018,494 | |
Payable for fund shares redeemed | 797,066 | |
Accrued management fee | 593,147 | |
Payable for daily variation on futures contracts | 44,850 | |
Other affiliated payables | 298,657 | |
Other payables and accrued expenses | 120,244 | |
Collateral on securities loaned, at value | 105,571,770 | |
Total liabilities | 122,444,228 | |
|
|
|
Net Assets | $ 1,348,258,247 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,647,665,955 | |
Undistributed net investment income | 184,561 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (256,969,948) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (42,622,321) | |
Net Assets, for 169,236,601 shares outstanding | $ 1,348,258,247 | |
Net Asset Value, offering price and redemption price per share ($1,348,258,247 ÷ 169,236,601 shares) | $ 7.97 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Operations
| Year ended July 31, 2008 | |
|
|
|
Investment Income |
|
|
Dividends (including $96,585 earned from other affiliated issuers) |
| $ 10,705,034 |
Interest |
| 115,889 |
Income from Fidelity Central Funds (including $1,197,584 from security lending) |
| 2,905,938 |
Total income |
| 13,726,861 |
|
|
|
Expenses | ||
Management fee | $ 8,675,759 | |
Performance adjustment | (723,221) | |
Transfer agent fees | 2,838,198 | |
Accounting and security lending fees | 408,665 | |
Custodian fees and expenses | 77,179 | |
Independent trustees' compensation | 4,961 | |
Audit | 55,905 | |
Legal | 4,568 | |
Miscellaneous | 65,512 | |
Total expenses before reductions | 11,407,526 | |
Expense reductions | (144,044) | 11,263,482 |
Net investment income (loss) | 2,463,379 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | (240,522,661) | |
Other affiliated issuers | (6,347,101) |
|
Investments not meeting investment restrictions | (1,436) |
|
Foreign currency transactions | (15,170) | |
Futures contracts | (5,983,342) | |
Payment from investment advisor for loss on investment not meeting investment restrictions | 1,436 | |
Total net realized gain (loss) |
| (252,868,274) |
Change in net unrealized appreciation (depreciation) on: Investment securities | 20,977,293 | |
Assets and liabilities in foreign currencies | 502 | |
Futures contracts | 458,543 | |
Total change in net unrealized appreciation (depreciation) |
| 21,436,338 |
Net gain (loss) | (231,431,936) | |
Net increase (decrease) in net assets resulting from operations | $ (228,968,557) |
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 | For the period March 22, 2007 (commencement of operations) to |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 2,463,379 | $ 472,408 |
Net realized gain (loss) | (252,868,274) | (2,785,788) |
Change in net unrealized appreciation (depreciation) | 21,436,338 | (64,058,659) |
Net increase (decrease) in net assets resulting | (228,968,557) | (66,372,039) |
Distributions to shareholders from net investment income | (1,830,941) | - |
Distributions to shareholders from net realized gain | (2,229,984) | - |
Total distributions | (4,060,925) | - |
Share transactions | 653,632,580 | 1,051,452,555 |
Reinvestment of distributions | 4,060,925 | - |
Cost of shares redeemed | (60,893,940) | (614,291) |
Net increase (decrease) in net assets resulting from share transactions | 596,799,565 | 1,050,838,264 |
Redemption fees | 17,795 | 4,144 |
Total increase (decrease) in net assets | 363,787,878 | 984,470,369 |
|
|
|
Net Assets | ||
Beginning of period | 984,470,369 | - |
End of period (including undistributed net investment income of $184,561 and undistributed net investment income of $406,930, respectively) | $ 1,348,258,247 | $ 984,470,369 |
Other Information Shares | ||
Sold | 73,476,787 | 102,120,347 |
Issued in reinvestment of distributions | 436,164 | - |
Redeemed | (6,737,185) | (59,512) |
Net increase (decrease) | 67,175,766 | 102,060,835 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights
Years ended July 31, | 2008 | 2007 G |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 9.65 | $ 10.00 |
Income from Investment Operations |
|
|
Net investment income (loss) D | .02 | .01 |
Net realized and unrealized gain (loss) | (1.66) | (.36) |
Total from investment operations | (1.64) | (.35) |
Distributions from net investment income | (.02) | - |
Distributions from net realized gain | (.02) | - |
Total distributions | (.04) | - |
Redemption fees added to paid in capital D | - I | - I |
Net asset value, end of period | $ 7.97 | $ 9.65 |
Total Return B, C | (17.10)% | (3.50)% |
Ratios to Average Net AssetsE, H |
|
|
Expenses before reductions | .93% | 1.00% A |
Expenses net of fee waivers, if any | .93% | 1.00% A |
Expenses net of all reductions | .92% | .98% A |
Net investment income (loss) | .20% | .20% A |
Supplemental Data |
|
|
Net assets, end of period (000 omitted) | $ 1,348,258 | $ 984,470 |
Portfolio turnover rate F | 179% | 176% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
G For the period March 22, 2007 (commencement of operations) to July 31, 2007.
H 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 other expense offset arrangements and do not represent the amount paid by the Fund 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 Fund.
I 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 July 31, 2008
1. Organization.
Fidelity Small Cap Opportunities Fund (the Fund) is a fund of Fidelity Securities Fund (the trust) and is authorized to issue an unlimited number of shares. Shares of the Fund are only available for purchase by authorized intermediaries and mutual funds for which Fidelity Management and Research Company (FMR) or an affiliate serves as an investment manager and FMR investment professionals. 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 may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the SEC's web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. Wherever possible, the Fund uses independent pricing services approved by the Board of Trustees to value its investments.
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Security Valuation - continued
traded. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Futures contracts are valued at the settlement price established each day by the board of trade or exchange on which they are traded. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 pm 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. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend may have passed, which are recorded as soon
Annual Report
3. Significant Accounting Policies - continued
Investment Transactions and Income - continued
as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The implementation of FIN 48 did not result in any unrecognized tax benefits in the accompanying financial statements. Each of the Fund's federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. Certain adjustments have been made to the accounts relating to prior periods. Collectively, these adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
Book-tax differences are primarily due to futures transactions, foreign currency transactions, passive foreign investment companies (PFIC), market discount, partnerships, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows:
Unrealized appreciation | $ 97,700,819 |
Unrealized depreciation | (150,791,121) |
Net unrealized appreciation (depreciation) | (53,090,302) |
Undistributed ordinary income | 175,187 |
Capital loss carryforward | (23,527,827) |
Cost for federal income tax purposes | $ 1,510,214,953 |
The tax character of distributions paid was as follows:
| July 31, 2008 | July 31, 2007 |
Ordinary Income | $ 4,060,925 | $ - |
Short-Term Trading (Redemption) Fees. Shares held in the Fund less than 90 days are subject to a redemption fee equal to 1.50% of the proceeds of the redeemed shares. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the Fund and accounted for as an addition to paid in capital.
New Accounting Pronouncements. In September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and results in expanded disclosures about fair value measurements.
In addition, in March 2008, Statement of Financial Accounting Standards No. 161, Disclosures about Derivative Instruments and Hedging Activities (SFAS 161), was issued and is effective for fiscal years beginning after November 15, 2008. SFAS 161 requires enhanced disclosures to provide information about the reasons the Fund invest in derivative instruments, the accounting treatment and the effect derivatives have on financial performance. Management is currently evaluating the impact the adoption of SFAS 161 will have on the Fund's financial statement disclosures.
Annual Report
4. Operating Policies.
Repurchase Agreements. FMR has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits the Fund and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts which are then invested in repurchase agreements. The Fund may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. The Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
Futures Contracts. The Fund may use futures contracts to manage its exposure to the stock market. Buying futures tends to increase a fund's exposure to the underlying instrument, while selling futures tends to decrease a fund's exposure to the underlying instrument or hedge other fund investments. Upon entering into a futures contract, a fund is required to deposit with a clearing broker, no later than the following business day, an amount ("initial margin") equal to a certain percentage of the face value of the contract. The initial margin may be in the form of cash or securities and is transferred to a segregated account on settlement date. Subsequent payments ("variation margin") are made or received by a fund depending on the daily fluctuations in the value of the futures contract and are accounted for as unrealized gains or losses. Realized gains (losses) are recorded upon the expiration or closing of the futures contract. Securities deposited to meet margin requirements are identified in the Schedule of Investments. Futures contracts involve, to varying degrees, risk of loss in excess of any futures variation margin reflected in the Statement of Assets and Liabilities. The underlying face amount at value of any open futures contracts at period end is shown in the Schedule of Investments under the caption "Futures Contracts." This amount reflects each contract's exposure to the underlying instrument at period end. Losses may arise from changes in the value of the underlying instruments or if the counterparties do not perform under the contract's terms.
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $2,704,912,334 and $2,113,343,740, respectively. The Fund realized a loss on the sale of an investment not meeting the investment restrictions of the Fund. The loss was fully reimbursed by the Fund's investment advisor.
Annual Report
Notes to Financial Statements - continued
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 .45% of the Fund's average net assets and a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. In addition, the management fee is subject to a performance adjustment (up to a maximum of ± .20% of the Fund's average net assets over a 36 month performance period). The upward or downward adjustment to the management fee is based on the Fund's relative investment performance as compared to an appropriate benchmark index. The Fund's performance adjustment took effect in March 2008. Subsequent months will be added until the performance period includes 36 months. For the period, the total annual management fee rate, including the performance adjustment, was .65% of the Fund's average net assets.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the Fund's transfer, dividend disbursing and shareholder servicing agent. FIIOC receives account fees and asset-based fees that vary according to account size and type of account. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. Prior to January 1, 2008, Fidelity Service Company, Inc. (FSC), also an affiliate of FMR, was the Fund's transfer agent. For the period the transfer agent fees were equivalent to an annual rate of .23% of average net assets.
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
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 $87,206 for the period.
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $4.2 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro rata portion of the line of credit, which amounted to $947 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
Annual Report
8. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds.
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 $34,888 for the period. In addition, through arrangements with the Fund's custodian and transfer agent, credits realized as a result of uninvested cash balances were used to reduce the Fund's expenses. During the period, these credits reduced the Fund's custody and transfer agent expenses by $15,551 and $93,605, respectively.
10. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
At the end of the period, mutual funds managed by FMR or an affiliate were the owners of record of substantially all of the outstanding shares of the Fund.
Annual Report
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Securities Fund and Shareholders of Fidelity Small Cap Opportunities Fund:
We have audited the accompanying statement of assets and liabilities of Fidelity Small Cap Opportunities Fund (the Fund), a fund of Fidelity Securities Fund, including the schedule of investments, as of July 31, 2008, and the related statement of operations for the year then ended, the statements of changes in net assets and the financial highlights for the year ended July 31, 2008 and for the period from March 22, 2007 (commencement of operations) to July 31, 2007. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of July 31, 2008, by correspondence with the custodians and brokers. 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 Small Cap Opportunities Fund as of July 31, 2008, the results of its operations for the year then ended, the changes in its net assets and the financial highlights for the year ended July 31, 2008 and for the period from March 22, 2007 (commencement of operations) to July 31, 2007, in conformity with accounting principles generally accepted in the United States of America.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Boston, Massachusetts
September 22, 2008
Annual Report
Trustees and Officers
The Trustees, Member of the Advisory Board, and executive officers of the trust and fund, as applicable, are listed below. The Board of Trustees governs the fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee the fund's activities, review contractual arrangements with companies that provide services to the fund, and review the fund's performance. Except for Edward C. Johnson 3d and James C. Curvey, each of the Trustees oversees 218 funds advised by FMR or an affiliate. Messrs. Johnson and Curvey oversee 377 funds advised by FMR or an affiliate.
The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust. Each Trustee who is not an interested person (as defined in the 1940 Act) (Independent Trustee), shall retire not later than the last day of the calendar year in which his or her 72nd birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board Member hold office without limit in time, except that any officer and Advisory Board Member may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years.
The fund's Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-800-544-8544.
Interested Trustees*:
Correspondence intended for each Trustee who is an interested person may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Edward C. Johnson 3d (78) | |
| Year of Election or Appointment: 1984 Mr. Johnson is Chairman of the Board of Trustees. Mr. Johnson serves as Chief Executive Officer, Chairman, and a Director of FMR LLC; Chairman and a Director of FMR; Chairman and a Director of Fidelity Research & Analysis Company (FRAC); Chairman and a Director of Fidelity Investments Money Management, Inc.; and Chairman and a Director of FMR Co., Inc. In addition, Mr. Johnson serves as Chairman and Director of FIL Limited. Previously, Mr. Johnson served as President of FMR LLC (2006-2007). |
James C. Curvey (73) | |
| Year of Election or Appointment: 2007 Mr. Curvey also serves as Trustee (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2006-present) and Director of FMR LLC. In addition, Mr. Curvey serves as an Overseer for the Boston Symphony Orchestra and a member of the Trustees of Villanova University. |
* Trustees have been determined to be "Interested Trustees" by virtue of, among other things, their affiliation with the trust or various entities under common control with FMR. FMR Corp. merged with and into FMR LLC on October 1, 2007. Any references to FMR LLC for prior periods are deemed to be references to the prior entity.
Independent Trustees:
Correspondence intended for each Independent Trustee (that is, the Trustees other than the Interested Trustees) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.
Name, Age; Principal Occupation | |
Dennis J. Dirks (60) | |
| Year of Election or Appointment: 2005 Prior to his retirement in May 2003, Mr. Dirks was Chief Operating Officer and a member of the Board of The Depository Trust & Clearing Corporation (DTCC) (1999-2003). He also served as President, Chief Operating Officer, and Board member of The Depository Trust Company (DTC) (1999-2003) and President and Board member of the National Securities Clearing Corporation (NSCC) (1999-2003). In addition, Mr. Dirks served as a Trustee and a member of the Finance Committee of Manhattan College (2005-2008), and as Chief Executive Officer and Board member of the Government Securities Clearing Corporation (2001-2003) and Chief Executive Officer and Board member of the Mortgage-Backed Securities Clearing Corporation (2001-2003). Mr. Dirks also serves as a Trustee and a member of the Finance Committee of AHRC of Nassau County (2006-present). |
Alan J. Lacy (54) | |
| Year of Election or Appointment: 2008 Mr. Lacy serves as Senior Adviser (2007-present) of Oak Hill Capital Partners, L.P. (a private equity firm). Mr. Lacy also served as Chief Executive Officer (2000-2005) and Vice Chairman (2005-2006) of Sears Holdings Corporation and Sears, Roebuck and Co. (retail). In addition, Mr. Lacy serves as a member of the Board of Directors of The Western Union Company (global money transfer, 2006-present) and Bristol-Myers Squibb (global pharmaceuticals, 2007-present). Mr. Lacy is a Trustee of the National Parks Conservation Association and The Field Museum of Natural History. |
Ned C. Lautenbach (64) | |
| Year of Election or Appointment: 2000 Mr. Lautenbach is Chairman of the Independent Trustees (2006-present). Mr. Lautenbach is an Advisory Partner of Clayton, Dubilier & Rice, Inc. (private equity investment firm). Previously, Mr. Lautenbach was with the International Business Machines Corporation (IBM) from 1968 until his retirement in 1998. Mr. Lautenbach serves as a Director of Eaton Corporation (diversified industrial) as well as the Philharmonic Center for the Arts in Naples, Florida. He also is a member of the Board of Trustees of Fairfield University (2005-present), as well as a member of the Council on Foreign Relations. Previously, Mr. Lautenbach served as a Director of Sony Corporation (2006-2007). |
Joseph Mauriello (63) | |
| 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 firm, 1965-2005). Mr. Mauriello currently serves as a member of the Board of Directors of XL Capital Ltd. (global insurance and re-insurance company, 2006-present) and of Arcadia Resources Inc. (health care services and products, 2007-present). He also served as a Director of the Hamilton Funds of the Bank of New York (2006-2007). |
Cornelia M. Small (64) | |
| Year of Election or Appointment: 2005 Ms. Small is a member of the Investment Committee, and Chair (2008-present) and a member of the Board of Trustees of Smith College. Ms. Small also serves on the Investment Committee of the Berkshire Taconic Community Foundation (2008-present). Previously, Ms. Small served as Chairperson of the Investment Committee (2002-2008) of Smith College and as Co-Chair (2000-2003) of the Annual Fund for the Fletcher School of Law and Diplomacy. In addition, she served as Chief Investment Officer, Director of Global Equity Investments, and a member of the Board of Directors of Scudder, Stevens & Clark and Scudder Kemper Investments. |
William S. Stavropoulos (69) | |
| Year of Election or Appointment: 2002 Mr. Stavropoulos is Chairman Emeritus of the Board of Directors of The Dow Chemical Company, where he previously served in numerous senior management positions, including President (1993-2000; 2002-2003), CEO (1995-2000; 2002-2004), Chairman of the Executive Committee (2000-2006), and as a member of the Board of Directors (1990-2006). Currently, he is a Director of Teradata Corporation (data warehousing and technology solutions, 2008-present), Chemical Financial Corporation, Maersk Inc. (industrial conglomerate), Tyco International, Inc. (multinational manufacturing and services, 2007-present), and a member of the Advisory Board for Metalmark Capital (private equity investment firm, 2005-present). He is a special advisor to Clayton, Dubilier & Rice, Inc. (private equity investment). In addition, Mr. Stavropoulos is a member of the University of Notre Dame Advisory Council for the College of Science. |
David M. Thomas (59) | |
| Year of Election or Appointment: 2008 Previously, Mr. Thomas served as Executive Chairman (2005-2006) and Chairman and Chief Executive Officer (2000-2005) of IMS Health, Inc. (pharmaceutical and healthcare information solutions). In addition, Mr. Thomas serves as a member of the Board of Directors of Fortune Brands, Inc. (consumer products holding company), and Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (57) | |
| Year of Election or Appointment: 2008 Mr. Wiley also serves as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-present). He serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), and a Director of Bill Barrett Corporation (exploration and production company, 2005-present). In addition, he also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a Sr. Energy Advisor of Katzenbach Partners, LLC (consulting firm, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment firm), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services company, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production company, 2001-2005). |
Advisory Board Member and Executive Officers**:
Correspondence intended for each executive officer and Mr. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Peter S. Lynch (64) | |
| Year of Election or Appointment: 2003 Member of the Advisory Board of Fidelity Securities Fund. Mr. Lynch is Vice Chairman and a Director of FMR, and Vice Chairman (2001-present) and a Director of FMR Co., Inc. Previously, Mr. Lynch served as a Trustee of the Fidelity funds (1990-2003). In addition, he serves as a Trustee of Boston College and as the Chairman of the Inner-City Scholarship Fund. |
Kenneth B. Robins (38) | |
| Year of Election or Appointment: 2008 President and Treasurer of Small Cap Opportunities. Mr. Robins also serves as President and Treasurer of Fidelity's Equity and High Income Funds (2008-present) and is an employee of FMR (2004-present). Before joining Fidelity Investments, Mr. Robins worked at KPMG LLP, where he was a partner in KPMG's department of professional practice (2002-2004). |
Walter C. Donovan (46) | |
| Year of Election or Appointment: 2007 Vice President of Small Cap Opportunities. Mr. Donovan also serves as Vice President of Fidelity's Equity Funds, President of FMR and FMR Co., Inc., and Executive Vice President of Fidelity Investments Money Management, Inc. (2007-present). Previously, Mr. Donovan served as Executive Vice President of FMR and FMR Co., Inc. (2005-2007) and Senior Vice President of FMR (2003-2005) and FMR Co., Inc. (2004-2005). |
Thomas C. Hense (44) | |
| Year of Election or Appointment: 2008 Vice President of Small Cap Opportunities. Mr. Hense also serves as Vice President of Fidelity's High Income and Small Cap Funds (2008-present). Previously, Mr. Hense served as a portfolio manager for Fidelity's Institutional Money Management Group (Pyramis) (2003-2008). |
Scott C. Goebel (40) | |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of Small Cap Opportunities. Mr. Goebel also serves as Secretary and CLO of other Fidelity funds (2008-present); General Counsel, Secretary, and Senior Vice President of FMR (2008-present); and Deputy General Counsel of FMR LLC. Previously, Mr. Goebel served as Assistant Secretary of the Funds (2007-2008) and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007). |
John B. McGinty, Jr. (45) | |
| Year of Election or Appointment: 2008 Assistant Secretary of Small Cap Opportunities. Mr. McGinty also serves as Assistant Secretary of Fidelity's other Equity and High Income Funds (2008-present) and is an employee of FMR LLC (2004-present). Mr. McGinty also serves as Senior Vice President, Secretary, and Chief Legal Officer of FDC (2007-present). Before joining Fidelity Investments, Mr. McGinty practiced law at Ropes & Gray, LLP. |
Holly C. Laurent (54) | |
| Year of Election or Appointment: 2008 Anti-Money Laundering (AML) Officer of Small Cap Opportunities. Ms. Laurent also serves as AML Officer of other Fidelity funds (2008-present) and is an employee of FMR LLC. Previously, Ms. Laurent was Senior Vice President and Head of Legal for Fidelity Business Services India Pvt. Ltd. (2006-2008), Senior Vice President, Deputy General Counsel and Group Head for FMR LLC (2005-2006). |
Christine Reynolds (49) | |
| Year of Election or Appointment: 2008 Chief Financial Officer of Small Cap Opportunities. Ms. Reynolds also serves as Chief Financial Officer of other Fidelity funds (2008-present). Ms. Reynolds became President of Fidelity Pricing and Cash Management Services (FPCMS) in August 2008. She served as Chief Operating Officer of FPCMS from 2007 through July 2008. Previously, Ms. Reynolds served as President, Treasurer, and Anti-Money Laundering officer of the Fidelity funds (2004-2007). Before joining Fidelity Investments, Ms. Reynolds worked at PricewaterhouseCoopers LLP (PwC) (1980-2002), where she was an audit partner with PwC's investment management practice. |
Kenneth A. Rathgeber (61) | |
| Year of Election or Appointment: 2007 Chief Compliance Officer of Small Cap Opportunities. Mr. Rathgeber also serves as Chief Compliance Officer of Fidelity's Equity and High Income Funds (2004-present). He is Chief Compliance Officer of FMR (2005-present), FMR Co., Inc. (2005-present), Fidelity Management & Research (U.K.) Inc. (2005-present), Fidelity Research & Analysis Company (2005-present), Fidelity Investments Money Management, Inc. (2005-present), and Strategic Advisers, Inc. (2005-present). |
Bryan A. Mehrmann (47) | |
| Year of Election or Appointment: 2007 Deputy Treasurer of Small Cap Opportunities. Mr. Mehrmann also serves as Deputy Treasurer of other Fidelity funds (2005-present) and is an employee of FMR. Previously, Mr. Mehrmann served as Vice President of Fidelity Investments Institutional Services Group (FIIS)/Fidelity Investments Institutional Operations Corporation, Inc. (FIIOC) Client Services (1998-2004). |
Adrien E. Deberghes (40) | |
| Year of Election or Appointment: 2008 Deputy Treasurer of Small Cap Opportunities. Mr. Deberghes also serves as Deputy Treasurer of Fidelity's Equity and High Income Funds (2008-present) and is an employee of FMR (2008-present). Previously, Mr. Deberghes served as Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005). |
Robert G. Byrnes (41) | |
| Year of Election or Appointment: 2007 Assistant Treasurer of Small Cap Opportunities. Mr. Byrnes also serves as Assistant Treasurer of other Fidelity funds (2005-present) and is an employee of FMR (2005-present). Previously, Mr. Byrnes served as Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (2003-2005). Before joining Fidelity Investments, Mr. Byrnes worked at Deutsche Asset Management where he served as Vice President of the Investment Operations Group (2000-2003). |
Peter L. Lydecker (54) | |
| Year of Election or Appointment: 2007 Assistant Treasurer of Small Cap Opportunities. Mr. Lydecker also serves as Assistant Treasurer of other Fidelity funds (2004-present) and is an employee of FMR. |
Paul M. Murphy (61) | |
| Year of Election or Appointment: 2007 Assistant Treasurer of Small Cap Opportunities. Mr. Murphy also serves as Assistant Treasurer of other Fidelity funds (2007-present) and is an employee of FMR (2007-present). Previously, Mr. Murphy served as Chief Financial Officer of the Fidelity Funds (2005-2006), Vice President and Associate General Counsel of FMR (2007), and Senior Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (1994-2007). |
Gary W. Ryan (49) | |
| Year of Election or Appointment: 2007 Assistant Treasurer of Small Cap Opportunities. Mr. Ryan also serves as Assistant Treasurer of other Fidelity funds (2005-present) and is an employee of FMR (2005-present). Previously, Mr. Ryan served as Vice President of Fund Reporting in Fidelity Pricing and Cash Management Services (FPCMS) (1999-2005). |
** FMR Corp. merged with and into FMR LLC on October 1, 2007. Any references to FMR LLC for prior periods are deemed to be references to the prior entity.
Annual Report
Distributions (Unaudited)
The fund designates 20% and 100% of the dividends distributed in September and December, respectively during the fiscal year as qualifying for the dividends-received deduction for corporate shareholders.
The fund designates 48% and 100% of the dividends distributed in September and December, respectively during the fiscal year as amounts which may be taken into account as a dividend for the purposes of the maximum rate under section 1(h)(11) of the Internal Revenue Code.
The fund will notify shareholders in January 2009 of amounts for use in preparing 2008 income tax returns.
Annual Report
Proxy Voting Results
A special meeting of the fund's shareholders was held on May 14, 2008. The results of votes taken among shareholders on the proposals before them are reported below. Each vote reported represents one dollar of net asset value held on the record date for the meeting.
PROPOSAL 1 | ||
To elect a Board of Trustees.A | ||
| # of | % of |
James C. Curvey | ||
Affirmative | 30,242,569,269.49 | 94.915 |
Withheld | 1,620,182,942.38 | 5.085 |
TOTAL | 31,862,752,211.87 | 100.000 |
Dennis J. Dirks | ||
Affirmative | 30,356,248,026.80 | 95.272 |
Withheld | 1,506,504,185.07 | 4.728 |
TOTAL | 31,862,752,211.87 | 100.000 |
Edward C. Johnson 3d | ||
Affirmative | 30,163,300,902.81 | 94.666 |
Withheld | 1,699,451,309.06 | 5.334 |
TOTAL | 31,862,752,211.87 | 100.000 |
Alan J. Lacy | ||
Affirmative | 30,334,439,999.59 | 95.203 |
Withheld | 1,528,312,212.28 | 4.797 |
TOTAL | 31,862,752,211.87 | 100.000 |
Ned C. Lautenbach | ||
Affirmative | 30,317,381,535.59 | 95.150 |
Withheld | 1,545,370,676.28 | 4.850 |
TOTAL | 31,862,752,211.87 | 100.000 |
Joseph Mauriello | ||
Affirmative | 30,340,553,696.88 | 95.223 |
Withheld | 1,522,198,514.99 | 4.777 |
TOTAL | 31,862,752,211.87 | 100.000 |
Cornelia M. Small | ||
Affirmative | 30,337,552,071.15 | 95.213 |
Withheld | 1,525,200,140.72 | 4.787 |
TOTAL | 31,862,752,211.87 | 100.000 |
William S. Stavropoulos | ||
Affirmative | 30,240,356,579.51 | 94.908 |
Withheld | 1,622,395,632.36 | 5.092 |
TOTAL | 31,862,752,211.87 | 100.000 |
| # of | % of |
David M. Thomas | ||
Affirmative | 30,352,029,125.67 | 95.259 |
Withheld | 1,510,723,086.20 | 4.741 |
TOTAL | 31,862,752,211.87 | 100.000 |
Michael E. Wiley | ||
Affirmative | 30,333,540,290.12 | 95.201 |
Withheld | 1,529,211,921.75 | 4.799 |
TOTAL | 31,862,752,211.87 | 100.000 |
PROPOSAL 2 | ||
To amend the Declaration of Trust to reduce the required quorum for future shareholder meetings.A | ||
| # of | % of |
Affirmative | 23,747,670,372.95 | 74.531 |
Against | 5,357,217,831.03 | 16.814 |
Abstain | 1,587,233,084.08 | 4.981 |
Broker | 1,170,630,923.81 | 3.674 |
TOTAL | 31,862,752,211.87 | 100.000 |
A Denotes trust-wide proposal and voting results. |
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees
Fidelity Small Cap Opportunities Fund
Each year, typically in July, the Board of Trustees, including the Independent Trustees (together, the Board), votes on the renewal of the management contract and sub-
advisory agreements (together, the Advisory Contracts) for the fund. The Board, assisted by the advice of fund counsel and Independent Trustees' counsel, requests and considers a broad range of information throughout the year.
The Board meets regularly and, acting directly and through its separate committees, requests and receives information concerning, and considers at each of its meetings factors that are relevant to, its annual consideration of the renewal of the fund's Advisory Contracts, including the services and support provided to the fund and its shareholders. At the time of the renewal, the Board had 12 standing committees, each composed of Independent Trustees with varying backgrounds, to which the Board has assigned specific subject matter responsibilities in order to enhance effective decision-making by the Board. Each committee has a written charter outlining the structure and purposes of the committee. The Board also meets as needed to consider matters specifically related to the Board's annual consideration of the renewal of Advisory Contracts.
At its July 2008 meeting, the Board of Trustees, including the Independent Trustees, unanimously determined to renew the fund's Advisory Contracts. In reaching its determination, the Board considered all factors it believed relevant, including (i) the nature, extent, and quality of the services to be provided to the fund and its shareholders (including the investment performance of the fund); (ii) the competitiveness of the fund's management fee and total expenses; (iii) the total costs of the services to be provided by and the profits to be realized by Fidelity from its relationship with the fund; (iv) the extent to which economies of scale would be realized as the fund grows; and (v) whether fee levels reflect these economies of scale, if any, for the benefit of fund shareholders. The Board also approved amendments to the fund's agreements with foreign sub-advisers to clarify that each sub-adviser provides services as an independent contractor, as well as additional amendments to the fund's agreement with Fidelity Management & Research (U.K.) Inc. The Board further approved agreements with foreign sub-advisers Fidelity Management & Research (Japan) Inc., and Fidelity Management & Research (Hong Kong) Limited.
In considering whether to renew the Advisory Contracts for the fund, the Board ultimately reached a determination, with the assistance of fund counsel and Independent Trustees' counsel and through the exercise of its business judgment, that the renewal of the Advisory Contracts and the compensation to be received by Fidelity under the management contract is consistent with Fidelity's fiduciary duty under applicable law. The Board's decision to renew the Advisory Contracts was not based on any single factor noted above, but rather was based on a comprehensive consideration of all the information provided to the Board at its meetings throughout the year. In addition to evaluating the specific factors noted above, the Board, in reaching its determination, is aware that shareholders in the fund have a broad range of investment choices available to them, including a wide choice among mutual funds offered by competitors to Fidelity, and that the fund's shareholders, with the opportunity to review and weigh the disclosure provided by the fund in its prospectus and other public disclosures, have chosen to invest in this fund, managed by Fidelity.
Annual Report
Nature, Extent, and Quality of Services Provided. The Board considered staffing within the investment adviser, FMR, and the sub-advisers (together, the Investment Advisers), including the backgrounds of the fund's investment personnel and the fund's investment objective and discipline. The Independent Trustees also had discussions with senior management of Fidelity's investment operations and investment groups. The Board considered the structure of the portfolio manager compensation program and whether this structure provides appropriate incentives.
Resources Dedicated to Investment Management and Support Services. The Board reviewed the size, education, and experience of the Investment Advisers' investment staff, their use of technology, and the Investment Advisers' approach to recruiting, training, and retaining portfolio managers and other research, advisory, and management personnel. The Board noted that Fidelity's analysts have access to a variety of technological tools that enable them to perform both fundamental and quantitative analysis and to specialize in various disciplines. The Board considered Fidelity's extensive global research capabilities that enable the Investment Advisers to aggregate data from various sources in an effort to produce positive investment results. The Board also considered that Fidelity's portfolio managers and analysts have access to daily portfolio attribution that allows for monitoring of a fund's portfolio, as well as an electronic communication system that provides immediate real-time access to research concerning issuers and credit enhancers.
Shareholder and Administrative Services. The Board considered (i) the nature, extent, quality, and cost of advisory, administrative, distribution, and shareholder services performed by the Investment Advisers and their affiliates under the Advisory Contracts and under separate agreements covering transfer agency, pricing and bookkeeping, and securities lending services for the fund; (ii) the nature and extent of the Investment Advisers' supervision of third party service providers, principally custodians and subcustodians; and (iii) the resources devoted to, and the record of compliance with, the fund's compliance policies and procedures. The Board also reviewed the allocation of fund brokerage, including allocations to brokers affiliated with the Investment Advisers, the use of brokerage commissions to pay fund expenses, and the use of "soft" commission dollars to pay for research services. The Board further considered that Fidelity voluntarily pays for market data out of its own resources.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
The Board noted that the growth of fund assets across the complex allows Fidelity to reinvest in the development of services designed to enhance the value or convenience of the Fidelity funds as investment vehicles. These services include 24-hour access to account information and market information through phone representatives and over the Internet, and investor education materials and asset allocation tools.
Investment in a Large Fund Family. The Board considered the benefits to shareholders of investing in a Fidelity fund, including the benefits of investing in a fund that is part of a large family of funds offering a variety of investment disciplines and providing for a large variety of mutual fund investor services. For example, fund shareholders are offered the privilege of exchanging shares of the fund for shares of other Fidelity funds, as set forth in the fund's prospectus, without paying a sales charge. The Board noted that Fidelity has taken a number of actions over the previous year that benefited particular funds, including (i) dedicating additional resources to investment research and to restructure the investment research teams; (ii) contractually agreeing to reduce the management fees on Fidelity's Institutional Money Market Funds and launching Class IV and Institutional Class of certain of these funds; (iii) reducing the transfer agent fees for the Fidelity Select Portfolios and Investor Class of the VIP funds; and (iv) launching Class K of 29 equity funds as a lower-fee class available to certain employer-sponsored retirement plans.
Investment Performance. The Board considered whether the fund has operated within its investment objective, as well as its record of compliance with its investment restrictions. The Board noted that it is not possible to evaluate performance in any comprehensive fashion because the fund had been in operation for less than one calendar year. Once the fund has been in operation for at least one calendar year, the Board will review the fund's absolute investment performance, as well as the fund's relative investment performance measured against a broad-based securities market index and a peer group of mutual funds.
The Board considered that FMR has taken steps to refocus and strengthen equity research, equity portfolio management, and compliance.
Based on its review, and giving particular weight to the nature and quality of the resources dedicated by the Investment Advisers to maintain and improve relative performance, the Board concluded that the nature, extent, and quality of the services provided to the fund will benefit the fund's shareholders, particularly in light of the Board's view that the fund's shareholders benefit from investing in a fund that is part of a large family of funds offering a variety of investment disciplines and services.
Competitiveness of Management Fee and Total Fund Expenses. The Board considered the fund's management fee and total expenses compared to "mapped groups" of competitive funds and classes. Fidelity creates "mapped groups" by combining similar Lipper investment objective categories that have comparable management fee characteristics. Combining Lipper investment objective categories aids the Board's management fee and total expense comparisons by broadening the competitive group used for comparison and by reducing the number of universes to which various Fidelity funds are compared. The Board also considered supplemental information about how the fund's management fee and total expenses ranked relative to groups based on Lipper classifications, which take into account a fund's market capitalization and style.
Annual Report
The Board considered two proprietary management fee comparisons for the period of the fund's operations 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. "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 12% means that 88% 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, is also included in the chart and considered by the Board.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
Fidelity Small Cap Opportunities 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 the period.
Furthermore, the Board considered that the fund's management fee includes a performance adjustment component (that is, the fund's management fee will be 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 performance adjustment took effect on March 1, 2008, after the period shown in the chart above.
Based on its review, the Board concluded that the fund's management fee was fair and reasonable in light of the services that the fund receives and the other factors considered.
In its review of the fund's total expenses, the Board considered the fund's management fee as well as other fund expenses, such as transfer agent fees, pricing and bookkeeping fees, and custodial, legal, and audit fees. The Board also noted the effects of any waivers and reimbursements on fees and expenses. As part of its review, the Board also considered current and historical total expenses of the fund compared to competitive fund median expenses. The fund is compared to those funds and classes in the Total Mapped Group (used by the Board for management fee comparisons) that have a similar sales load structure.
Annual Report
The Board noted that the fund's total expenses ranked below its competitive median for the period.
In its review of total expenses, the Board also considered Fidelity fee structures and other information on clients that FMR and its affiliates service in other competitive markets, such as other mutual funds advised or subadvised by FMR or its affiliates, pension plan clients, and other institutional clients.
Based on its review, the Board concluded that the fund's total expenses were reasonable, in light of the services that the fund and its shareholders receive and the other factors considered.
Costs of the Services and Profitability. The Board considered the revenues earned and the expenses incurred by Fidelity in conducting the business of developing, marketing, distributing, managing, administering and servicing the fund and its shareholders. The Board also considered the level of Fidelity's profits in respect of all the Fidelity funds.
On an annual basis, FMR presents to the Board Fidelity's profitability for the fund. Fidelity calculates the profitability for each fund, as well as aggregate profitability for groups of Fidelity funds and all Fidelity funds, using a series of detailed revenue and cost allocation methodologies which originate with the audited books and records of Fidelity. The Audit Committee of the Board reviews any significant changes from the prior year's methodologies.
PricewaterhouseCoopers LLP (PwC), independent registered public accounting firm and auditor to Fidelity and certain Fidelity funds, has been engaged annually by the Board as part of the Board's assessment of the results of Fidelity's profitability analysis. PwC's engagement includes the review and assessment of Fidelity's methodologies used in determining the revenues and expenses attributable to Fidelity's mutual fund business, and completion of agreed-upon procedures surrounding the mathematical accuracy of fund profitability and its conformity to allocation methodologies. After considering PwC's reports issued under the engagement and information provided by Fidelity, the Board believes that while other allocation methods may also be reasonable, Fidelity's profitability methodologies are reasonable in all material respects.
The Board has also reviewed Fidelity's non-fund businesses and any fall-out benefits related to the mutual fund business as well as cases where Fidelity's affiliates may benefit from or be related to the fund's business.
The Board considered the costs of the services provided by and the profits realized by Fidelity in connection with the operation of the fund and determined that the amount of profit is a fair entrepreneurial profit for the management of the fund.
Annual Report
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 recognized that the fund's management contract incorporates a "group fee" structure, which provides for lower group fee rates as total fund assets under FMR's management increase, and for higher group fee rates as total fund assets under FMR's management decrease. FMR determines the group fee rates based on a tiered asset "breakpoint" schedule. The Board considered that the group fee is designed to deliver the benefits of economies of scale to fund shareholders when total fund assets increase, even if assets of any particular fund are unchanged or have declined, because some portion of Fidelity's costs are attributable to services provided to all Fidelity funds, and all funds benefit if those costs can be allocated among more assets. The Board also considered that although the fund is offered only to other funds advised by FMR or an affiliate, it continues to incur management expenses. The Board further noted that the fund may continue to realize benefits from the group fee structure, even though assets may not be expected to grow significantly at the fund level. The Board concluded that, given the group fee structure, fund shareholders will achieve a certain level of economies of scale as assets under FMR's management increase at the fund complex level, regardless of whether Fidelity achieves any such economies of scale.
The Board further concluded that any potential economies of scale are being shared between fund shareholders and Fidelity in an appropriate manner.
Additional Information Requested by the Board. In order to develop fully the factual basis for consideration of the Fidelity funds' Advisory Contracts, the Board requested and received additional information on certain topics, including (i) fund performance trends and actions to be taken by FMR to improve certain funds' overall performance; (ii) portfolio manager changes that have occurred during the past year; (iii) Fidelity's fund profitability methodology, the profitability of certain fund service providers, and profitability trends for certain funds; (iv) Fidelity's compensation structure for portfolio managers and key personnel, including its effects on fund profitability and the extent to which portfolio manager compensation is linked to fund performance; (v) Fidelity's fee structures and rationale for recommending different fees among categories of funds; and (vi) Fidelity's rationale for recommending which funds should have a performance adjustment component as part of their management fees.
Based on its evaluation of all of the conclusions noted above, and after considering all material factors, the Board ultimately concluded that the advisory fee structures are fair and reasonable, and that the fund's Advisory Contracts should be renewed.
Annual Report
Managing Your Investments
Fidelity offers several ways to conveniently manage your personal investments via your telephone or PC. You can access your account information, conduct trades and research your investments 24 hours a day.
By Phone
Fidelity Automated Service Telephone provides a single toll-free number to access account balances, positions, quotes and trading. It's easy to navigate the service, and on your first call, the system will help you create a personal identification number (PIN) for security.
(phone_graphic)
Fidelity Automated
Service Telephone (FAST®)
1-800-544-5555
Press
For mutual fund and brokerage trading.
For quotes.*
For account balances and holdings.
To review orders and mutual
fund activity.
To change your PIN.
To speak to a Fidelity representative.
By PC
Fidelity's web site on the Internet provides a wide range of information, including daily financial news, fund performance, interactive planning tools and news about Fidelity products and services.
(computer_graphic)
Fidelity's Web Site
www.fidelity.com
* When you call the quotes line, please remember that a fund's yield and return will vary and, except for money market funds, share price will also vary. This means that you may have a gain or loss when you sell your shares. There is no assurance that money market funds will be able to maintain a stable $1 share price; an investment in a money market fund is not insured or guaranteed by the U.S. government. Total returns are historical and include changes in share price, reinvestment of dividends and capital gains, and the effects of any sales charges.
Annual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Fidelity Management & Research (U.K.) Inc.
Fidelity Research & Analysis Company
Fidelity Investments Japan Limited
Fidelity International Investment Advisors
Fidelity International Investment Advisors (U.K.) Limited
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Service Agents
Fidelity Investments Institutional Operations Company, Inc.
Boston, MA
Fidelity Service Company, Inc.
Boston, MA
Custodian
Citibank, N.A.
New York, NY
The Fidelity Telephone Connection
Mutual Fund 24-Hour Service
Exchanges/Redemptions
and Account Assistance 1-800-544-6666
Product Information 1-800-544-6666
Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
Fidelity Automated Service
Telephone (FAST®) 1-800-544-5555
Automated line for quickest service
SMO-ANN-0908 1.839807.101
Fidelity®
Small Cap Value
Fund
Annual Report
July 31, 2008
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message | Ned Johnson's message to shareholders. | |
Performance | How the fund has done over time. | |
Management's Discussion | The manager's review of fund performance, strategy and outlook. | |
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 |
| |
Proxy Voting Results |
| |
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 (search for "proxy voting results") or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-800-544-8544 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company.
Annual Report
This report and the financial statements contained herein are submitted for the general information of the shareholders of the fund. This report is not authorized for distribution to prospective investors in the fund unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com or http://www.advisor.fidelity.com, as applicable.
NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE
Neither the fund nor Fidelity Distributors Corporation is a bank.
Annual Report
Chairman's Message
(photo_of_Edward_C_Johnson_3d)
Dear Shareholder:
Domestic and international securities markets have struggled thus far in 2008. High-grade fixed-income investments produced modestly positive results, but many stock benchmarks suffered double-digit losses through the first half of this year. Financial markets are always unpredictable, but there are a number of time-tested principles that can put the historical odds in your favor.
One of the basic tenets is to invest for the long term. Over time, riding out the markets' inevitable ups and downs has proven much more effective than selling into panic or chasing the hottest trend. Even missing only a few of the markets' best days can significantly diminish investor returns. Patience also affords the benefits of compounding - of earning interest on additional income or reinvested dividends and capital gains. There are tax advantages and cost benefits to consider as well. The more you sell, the more taxes you pay, and the more you trade, the higher the costs. While staying the course doesn't eliminate risk, it can considerably lessen the effect of short-term declines.
You can further manage your investing risk through diversification. And today, more than ever, geographic diversification should be taken into account. Studies indicate that asset allocation is the single most important determinant of a portfolio's long-term success. The right mix of stocks, bonds and cash - aligned to your particular risk tolerance and investment objective - is very important. Age-appropriate rebalancing is also an essential aspect of asset allocation. For younger investors, an emphasis on equities - which historically have been the best-performing asset class over time - is encouraged. As investors near their specific goal, such as retirement or sending a child to college, consideration may be given to replacing volatile assets (e.g. common stocks) with more-stable fixed investments (bonds or savings plans).
A third investment principle - investing regularly - can help lower the average cost of your purchases. Investing a certain amount of money each month or quarter helps ensure you won't pay for all your shares at market highs. This strategy - known as dollar cost averaging - also reduces unconstructive "emotion" from investing, helping shareholders avoid selling weak performers just prior to an upswing, or chasing a hot performer just before a correction.
We invite you to contact us via the Internet, through our Investor Centers or over the phone. It is our privilege to provide you the information you need to make the investments that are right for you.
Sincerely,
/s/Edward C. Johnson 3d
Edward C. Johnson 3d
Annual Report
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of Small Cap Value's dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended July 31, 2008 | Past 1 | Life of |
Small Cap Value | -14.10% | 8.23% |
A From November 3, 2004.
$10,000 Over Life of Fund
Let's say hypothetically that $10,000 was invested in Small Cap Value on November 3, 2004, when the fund started. The chart shows how the value of your investment would have changed, and also shows how the Russell 2000® Value Index performed over the same period.
Annual Report
Management's Discussion of Fund Performance
Comments from Charles Myers, who became Portfolio Manager of Fidelity® Small Cap Value Fund on May 9, 2008.
Grim news about the U.S. economy forced most domestic equity benchmarks into negative territory for the 12 months ending July 31, 2008. Oil prices north of $140 per barrel, gasoline prices in excess of $4 per gallon and soaring food costs drove inflation and consumer prices higher. In response, consumer discretionary spending trended lower as Main Street tightened its purse strings. Wall Street, meanwhile, struggled under the weight of massive write-downs in the financials sector, an ongoing credit crisis and bleak housing data. In an effort to staunch the bleeding, the Federal Reserve Board cut interest rates on seven occasions during the past year. Nevertheless, investors fled the equity markets, and both the Dow Jones Industrial Average SM and the Standard & Poor's 500 SM Index fell to a threshold that many believe marks the official start of a "bear market." For the 12 months overall, the Dow slid 11.71%, the S&P 500® dropped 11.09% and the technology-heavy NASDAQ Composite® Index dipped 7.98%.
For the 12 months ending July 31, 2008, Small Cap Value fell 14.10%, compared with a decline of 9.95% for the Russell 2000® Value Index. Favorable sector weightings helped performance, but that positive impact was overshadowed by poor security selection. For example, the fund on average was overweighted in the strong-performing energy sector and underweighted in the weak consumer discretionary sector. Being underweighted in financials helped as well, although I added to the position during the period. However, disappointing security selection within financials, as well as in information technology and consumer discretionary, detracted notably. The fund's biggest individual underperformer was oil refiner Tesoro, which I sold before period end. Rising oil prices created a difficult situation for Tesoro and other refineries. In financials, Associated Banc-Corp. was a disappointment. Although Associated historically has maintained relatively high underwriting standards, it wasn't immune from the global credit crunch. Financial advisory firm National Financial Partners underperformed, as did technology stock Arris Group, and both were sold from the portfolio. On the positive side, oil and gas exploration/production company Southwestern Energy was helped greatly by high energy prices, as was another out-of-benchmark holding, Cabot Oil & Gas. In materials, Compass Minerals did well. All three of these outperformers were sold during the period.
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 (February 1, 2008 to July 31, 2008).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Annual Report
Shareholder Expense Example - continued
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Beginning | Ending | Expenses Paid |
Class A |
|
|
|
Actual | $ 1,000.00 | $ 935.10 | $ 6.74 |
Hypothetical A | $ 1,000.00 | $ 1,017.90 | $ 7.02 |
Class T |
|
|
|
Actual | $ 1,000.00 | $ 934.00 | $ 7.93 |
Hypothetical A | $ 1,000.00 | $ 1,016.66 | $ 8.27 |
Class B |
|
|
|
Actual | $ 1,000.00 | $ 931.70 | $ 10.33 |
Hypothetical A | $ 1,000.00 | $ 1,014.17 | $ 10.77 |
Class C |
|
|
|
Actual | $ 1,000.00 | $ 931.70 | $ 10.33 |
Hypothetical A | $ 1,000.00 | $ 1,014.17 | $ 10.77 |
Small Cap Value |
|
|
|
Actual | $ 1,000.00 | $ 937.10 | $ 5.39 |
Hypothetical A | $ 1,000.00 | $ 1,019.29 | $ 5.62 |
Institutional Class |
|
|
|
Actual | $ 1,000.00 | $ 937.10 | $ 5.35 |
Hypothetical A | $ 1,000.00 | $ 1,019.34 | $ 5.57 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
| Annualized |
Class A | 1.40% |
Class T | 1.65% |
Class B | 2.15% |
Class C | 2.15% |
Small Cap Value | 1.12% |
Institutional Class | 1.11% |
Annual Report
Investment Changes (Unaudited)
Top Ten Stocks as of July 31, 2008 | ||
| % of fund's | % of fund's net assets |
HNI Corp. | 2.8 | 0.0 |
Aspen Insurance Holdings Ltd. | 2.6 | 0.8 |
City National Corp. | 2.6 | 0.0 |
United Stationers, Inc. | 2.4 | 0.0 |
Pediatrix Medical Group, Inc. | 2.4 | 0.6 |
IPC Holdings Ltd. | 2.3 | 1.2 |
Ingram Micro, Inc. Class A | 2.2 | 1.1 |
Astoria Financial Corp. | 2.2 | 0.0 |
Highwoods Properties, Inc. (SBI) | 2.2 | 0.0 |
CapitalSource, Inc. | 2.1 | 0.0 |
| 23.8 | |
Top Five Market Sectors as of July 31, 2008 | ||
| % of fund's | % of fund's net assets |
Financials | 32.7 | 23.6 |
Consumer Discretionary | 14.0 | 11.3 |
Industrials | 12.0 | 14.0 |
Information Technology | 11.8 | 13.5 |
Materials | 7.4 | 7.7 |
Asset Allocation (% of fund's net assets) | |||||||
As of July 31, 2008 * | As of January 31, 2008 ** | ||||||
Stocks 98.0% |
| Stocks 95.7% |
| ||||
Short-Term |
| Short-Term |
| ||||
* Foreign investments | 10.9% |
| ** Foreign investments | 8.1% |
|
Annual Report
Investments July 31, 2008
Showing Percentage of Net Assets
Common Stocks - 97.5% | |||
Shares | Value | ||
CONSUMER DISCRETIONARY - 13.5% | |||
Diversified Consumer Services - 1.0% | |||
Regis Corp. | 462,340 | $ 12,940,897 | |
Household Durables - 5.2% | |||
Centex Corp. | 658,940 | 9,673,239 | |
Ethan Allen Interiors, Inc. (d) | 328,713 | 8,250,696 | |
M.D.C. Holdings, Inc. | 225,000 | 9,342,000 | |
M/I Homes, Inc. (d) | 219,273 | 4,155,223 | |
Meritage Homes Corp. (a)(d) | 1,408,400 | 25,421,620 | |
Ryland Group, Inc. (d) | 427,900 | 8,810,461 | |
| 65,653,239 | ||
Leisure Equipment & Products - 1.1% | |||
RC2 Corp. (a) | 598,229 | 13,735,338 | |
Specialty Retail - 5.2% | |||
Asbury Automotive Group, Inc. | 991,261 | 9,823,397 | |
bebe Stores, Inc. (d) | 1,250,000 | 12,962,500 | |
Collective Brands, Inc. (a)(d) | 657,900 | 8,473,752 | |
The Men's Wearhouse, Inc. (d) | 1,069,641 | 21,296,552 | |
Tsutsumi Jewelry Co. Ltd. | 497,600 | 9,962,147 | |
USS Co. Ltd. | 46,410 | 3,110,059 | |
| 65,628,407 | ||
Textiles, Apparel & Luxury Goods - 1.0% | |||
Iconix Brand Group, Inc. (a)(d) | 1,038,800 | 12,465,600 | |
TOTAL CONSUMER DISCRETIONARY | 170,423,481 | ||
CONSUMER STAPLES - 6.6% | |||
Food & Staples Retailing - 4.0% | |||
Casey's General Stores, Inc. | 800,000 | 19,680,000 | |
Ingles Markets, Inc. Class A | 502,875 | 12,229,920 | |
The Pantry, Inc. (a)(d)(e) | 1,174,724 | 18,783,837 | |
| 50,693,757 | ||
Food Products - 1.2% | |||
Marine Harvest ASA (a)(d) | 21,755,000 | 15,412,708 | |
Personal Products - 1.4% | |||
Chattem, Inc. (a)(d) | 263,161 | 16,965,990 | |
TOTAL CONSUMER STAPLES | 83,072,455 | ||
ENERGY - 2.6% | |||
Energy Equipment & Services - 1.1% | |||
Superior Energy Services, Inc. (a) | 295,000 | 13,991,850 | |
Common Stocks - continued | |||
Shares | Value | ||
ENERGY - continued | |||
Oil, Gas & Consumable Fuels - 1.5% | |||
Encore Acquisition Co. (a) | 160,000 | $ 9,899,200 | |
Mariner Energy, Inc. (a) | 325,000 | 8,599,500 | |
| 18,498,700 | ||
TOTAL ENERGY | 32,490,550 | ||
FINANCIALS - 32.7% | |||
Capital Markets - 1.7% | |||
TradeStation Group, Inc. (a) | 1,992,291 | 21,476,897 | |
Commercial Banks - 6.9% | |||
Associated Banc-Corp. (d) | 1,573,683 | 26,264,769 | |
Banner Corp. (d) | 128,475 | 1,224,367 | |
Boston Private Financial Holdings, Inc. (d) | 1,491,671 | 11,679,784 | |
City National Corp. | 655,000 | 32,180,150 | |
Renasant Corp. | 343,388 | 6,081,401 | |
Sandy Spring Bancorp, Inc. (d) | 544,942 | 9,051,487 | |
| 86,481,958 | ||
Diversified Financial Services - 2.0% | |||
KKR Financial Holdings LLC | 2,460,000 | 25,264,200 | |
Insurance - 6.9% | |||
Aspen Insurance Holdings Ltd. | 1,300,200 | 33,012,078 | |
IPC Holdings Ltd. | 898,740 | 28,849,554 | |
Max Capital Group Ltd. | 1,090,000 | 25,582,300 | |
| 87,443,932 | ||
Real Estate Investment Trusts - 10.2% | |||
CapitalSource, Inc. (d) | 2,300,000 | 26,726,000 | |
Chimera Investment Corp. (d) | 1,529,063 | 11,758,494 | |
Franklin Street Properties Corp. | 1,464,411 | 17,968,323 | |
Highwoods Properties, Inc. (SBI) | 741,230 | 27,054,895 | |
National Retail Properties, Inc. | 1,200,000 | 25,368,000 | |
U-Store-It Trust | 1,628,262 | 18,969,252 | |
| 127,844,964 | ||
Thrifts & Mortgage Finance - 5.0% | |||
Astoria Financial Corp. | 1,219,521 | 27,280,685 | |
Farmer Mac Class C (non-vtg.) (d) | 230,945 | 6,618,884 | |
Common Stocks - continued | |||
Shares | Value | ||
FINANCIALS - continued | |||
Thrifts & Mortgage Finance - continued | |||
People's United Financial, Inc. | 755,000 | $ 12,819,900 | |
Washington Federal, Inc. (d) | 879,800 | 16,364,280 | |
| 63,083,749 | ||
TOTAL FINANCIALS | 411,595,700 | ||
HEALTH CARE - 5.3% | |||
Health Care Providers & Services - 3.9% | |||
AMERIGROUP Corp. (a) | 316,839 | 8,047,711 | |
Pediatrix Medical Group, Inc. (a) | 614,200 | 29,880,830 | |
PSS World Medical, Inc. (a) | 688,000 | 11,530,880 | |
| 49,459,421 | ||
Pharmaceuticals - 1.4% | |||
Perrigo Co. (d) | 486,200 | 17,128,826 | |
TOTAL HEALTH CARE | 66,588,247 | ||
INDUSTRIALS - 12.0% | |||
Building Products - 2.6% | |||
NCI Building Systems, Inc. (a)(d) | 502,014 | 18,805,444 | |
Simpson Manufacturing Co. Ltd. (d) | 575,000 | 13,805,750 | |
| 32,611,194 | ||
Commercial Services & Supplies - 7.5% | |||
ACCO Brands Corp. (a) | 1,249,573 | 10,708,841 | |
HNI Corp. (d) | 1,622,121 | 35,118,917 | |
Knoll, Inc. | 1,180,251 | 18,223,075 | |
United Stationers, Inc. (a) | 800,000 | 30,664,000 | |
| 94,714,833 | ||
Construction & Engineering - 1.7% | |||
URS Corp. (a) | 500,676 | 20,988,338 | |
Machinery - 0.2% | |||
Accuride Corp. (a) | 1,034,000 | 2,843,500 | |
Road & Rail - 0.0% | |||
Quality Distribution, Inc. (a) | 59,900 | 182,695 | |
TOTAL INDUSTRIALS | 151,340,560 | ||
Common Stocks - continued | |||
Shares | Value | ||
INFORMATION TECHNOLOGY - 11.8% | |||
Communications Equipment - 0.7% | |||
ViaSat, Inc. (a) | 403,688 | $ 9,296,935 | |
Electronic Equipment & Instruments - 3.5% | |||
Ingram Micro, Inc. Class A (a) | 1,503,100 | 27,702,133 | |
Ryoyo Electro Corp. (d) | 872,700 | 9,132,249 | |
SYNNEX Corp. (a)(d) | 298,366 | 6,969,830 | |
| 43,804,212 | ||
Internet Software & Services - 3.3% | |||
DealerTrack Holdings, Inc. (a)(d) | 967,234 | 15,069,506 | |
j2 Global Communications, Inc. (a) | 563,149 | 13,498,682 | |
LoopNet, Inc. (a)(d) | 1,094,182 | 12,429,908 | |
| 40,998,096 | ||
IT Services - 1.1% | |||
Telvent GIT SA | 591,673 | 14,200,152 | |
Semiconductors & Semiconductor Equipment - 3.2% | |||
FormFactor, Inc. (a) | 764,157 | 13,296,332 | |
Skyworks Solutions, Inc. (a) | 1,464,200 | 13,851,332 | |
Zoran Corp. (a) | 1,613,644 | 13,344,836 | |
| 40,492,500 | ||
TOTAL INFORMATION TECHNOLOGY | 148,791,895 | ||
MATERIALS - 7.4% | |||
Chemicals - 2.8% | |||
Spartech Corp. | 1,108,102 | 11,202,911 | |
Valspar Corp. | 1,110,000 | 24,053,700 | |
| 35,256,611 | ||
Containers & Packaging - 4.6% | |||
Bemis Co., Inc. | 550,000 | 15,488,000 | |
Pactiv Corp. (a)(d) | 870,000 | 20,975,700 | |
Silgan Holdings, Inc. | 399,017 | 21,076,078 | |
| 57,539,778 | ||
TOTAL MATERIALS | 92,796,389 | ||
UTILITIES - 5.6% | |||
Electric Utilities - 3.5% | |||
Allete, Inc. | 474,753 | 20,205,488 | |
Westar Energy, Inc. (d) | 1,100,000 | 24,288,000 | |
| 44,493,488 | ||
Common Stocks - continued | |||
Shares | Value | ||
UTILITIES - continued | |||
Gas Utilities - 2.1% | |||
Southwest Gas Corp. | 910,989 | $ 26,327,582 | |
TOTAL UTILITIES | 70,821,070 | ||
TOTAL COMMON STOCKS (Cost $1,319,880,857) | 1,227,920,347 | ||
Nonconvertible Preferred Stocks - 0.5% | |||
|
|
|
|
CONSUMER DISCRETIONARY - 0.5% | |||
Household Durables - 0.5% | |||
M/I Homes, Inc. Series A, 9.75% | 382,500 | 5,928,750 | |
TOTAL NONCONVERTIBLE PREFERRED STOCKS (Cost $6,778,025) | 5,928,750 | ||
Money Market Funds - 18.2% | |||
|
|
|
|
Fidelity Cash Central Fund, 2.35% (b) | 22,064,532 | 22,064,532 | |
Fidelity Securities Lending Cash Central Fund, 2.37% (b)(c) | 206,551,232 | 206,551,232 | |
TOTAL MONEY MARKET FUNDS (Cost $228,615,764) | 228,615,764 | ||
TOTAL INVESTMENT PORTFOLIO - 116.2% (Cost $1,555,274,646) | 1,462,464,861 | ||
NET OTHER ASSETS - (16.2)% | (203,673,814) | ||
NET ASSETS - 100% | $ 1,258,791,047 |
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
(e) Affiliated company |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 1,929,213 |
Fidelity Securities Lending Cash Central Fund | 1,218,551 |
Total | $ 3,147,764 |
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 | Dividend Income | Value, |
The Pantry, Inc. | $ 15,712,840 | $ 17,933,722 | $ 12,017,520 | $ - | $ 18,783,837 |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 89.1% |
Bermuda | 6.9% |
Japan | 1.7% |
Norway | 1.2% |
Spain | 1.1% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements
Statement of Assets and Liabilities
| July 31, 2008 | |
Assets | ||
Investment in securities, at value (including securities loaned of $202,856,468) - See accompanying schedule: Unaffiliated issuers (cost $1,312,257,226) | $ 1,215,065,260 |
|
Fidelity Central Funds (cost $228,615,764) | 228,615,764 |
|
Other affiliated issuers (cost $14,401,656) | 18,783,837 |
|
Total Investments (cost $1,555,274,646) |
| $ 1,462,464,861 |
Receivable for investments sold | 5,664,742 | |
Receivable for fund shares sold | 1,351,718 | |
Dividends receivable | 1,381,376 | |
Distributions receivable from Fidelity Central Funds | 259,985 | |
Prepaid expenses | 1,596 | |
Other receivables | 11,489 | |
Total assets | 1,471,135,767 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 3,306,601 | |
Payable for fund shares redeemed | 1,349,433 | |
Accrued management fee | 714,775 | |
Distribution fees payable | 46,242 | |
Other affiliated payables | 313,009 | |
Other payables and accrued expenses | 63,428 | |
Collateral on securities loaned, at value | 206,551,232 | |
Total liabilities | 212,344,720 | |
|
|
|
Net Assets | $ 1,258,791,047 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,338,391,884 | |
Undistributed net investment income | 1,269,467 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 11,939,467 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (92,809,771) | |
Net Assets | $ 1,258,791,047 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Assets and Liabilities - continued
| July 31, 2008 | |
|
|
|
Calculation of Maximum Offering Price | $ 11.82 | |
|
|
|
Maximum offering price per share (100/94.25 of $11.82) | $ 12.54 | |
Class T: | $ 11.74 | |
|
|
|
Maximum offering price per share (100/96.50 of $11.74) | $ 12.17 | |
Class B: | $ 11.60 | |
|
|
|
Class C: | $ 11.60 | |
|
|
|
Small Cap Value: | $ 11.91 | |
|
|
|
Institutional Class: | $ 11.91 |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements - continued
Statement of Operations
| Year ended July 31, 2008 | |
Investment Income |
|
|
Dividends |
| $ 14,496,636 |
Interest |
| 28,789 |
Income from Fidelity Central Funds (including $1,218,551 from security lending) |
| 3,147,764 |
Total income |
| 17,673,189 |
|
|
|
Expenses | ||
Management fee | $ 9,233,898 | |
Performance adjustment | 1,555,458 | |
Transfer agent fees | 3,428,688 | |
Distribution fees | 728,002 | |
Accounting and security lending fees | 434,313 | |
Custodian fees and expenses | 46,444 | |
Independent trustees' compensation | 5,581 | |
Registration fees | 88,102 | |
Audit | 58,174 | |
Legal | 6,008 | |
Miscellaneous | 87,836 | |
Total expenses before reductions | 15,672,504 | |
Expense reductions | (118,215) | 15,554,289 |
Net investment income (loss) | 2,118,900 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 37,518,952 | |
Other affiliated issuers | (13,526,494) |
|
Foreign currency transactions | 62,571 | |
Futures contracts | 2,569,906 | |
Total net realized gain (loss) |
| 26,624,935 |
Change in net unrealized appreciation (depreciation) on: Investment securities | (226,824,068) | |
Assets and liabilities in foreign currencies | 14 | |
Total change in net unrealized appreciation (depreciation) |
| (226,824,054) |
Net gain (loss) | (200,199,119) | |
Net increase (decrease) in net assets resulting from operations | $ (198,080,219) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 2,118,900 | $ (2,821,365) |
Net realized gain (loss) | 26,624,935 | 58,301,578 |
Change in net unrealized appreciation (depreciation) | (226,824,054) | 108,216,572 |
Net increase (decrease) in net assets resulting | (198,080,219) | 163,696,785 |
Distributions to shareholders from net realized gain | (53,456,977) | (55,419,267) |
Share transactions - net increase (decrease) | 105,675,336 | 206,517,786 |
Redemption fees | 144,871 | 174,668 |
Total increase (decrease) in net assets | (145,716,989) | 314,969,972 |
|
|
|
Net Assets | ||
Beginning of period | 1,404,508,036 | 1,089,538,064 |
End of period (including undistributed net investment income of $1,269,467 and $0, respectively) | $ 1,258,791,047 | $ 1,404,508,036 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended July 31, | 2008 | 2007 | 2006 | 2005 H |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 14.34 | $ 13.17 | $ 12.80 | $ 10.00 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss) E | (.01) | (.06) | (.03) | (.04) |
Net realized and unrealized gain (loss) | (1.98) | 1.90 | .74 | 2.84 |
Total from investment operations | (1.99) | 1.84 | .71 | 2.80 |
Distributions from net investment income | - | - | - | (.01) |
Distributions from net realized gain | (.53) | (.67) | (.35) | - |
Total distributions | (.53) | (.67) | (.35) | (.01) |
Redemption fees added to paid in capital E | - J | - J | .01 | .01 |
Net asset value, end of period | $ 11.82 | $ 14.34 | $ 13.17 | $ 12.80 |
Total Return B, C, D | (14.35)% | 14.59% | 5.72% | 28.06% |
Ratios to Average Net Assets F, I |
|
|
|
|
Expenses before reductions | 1.43% | 1.45% | 1.51% | 1.46% A |
Expenses net of fee waivers, if any | 1.40% | 1.40% | 1.40% | 1.44% A |
Expenses net of all reductions | 1.40% | 1.40% | 1.36% | 1.38% A |
Net investment income (loss) | (.05)% | (.44)% | (.24)% | (.46)% A |
Supplemental Data |
|
|
|
|
Net assets, end of period (000 omitted) | $ 52,446 | $ 61,357 | $ 39,931 | $ 9,390 |
Portfolio turnover rate G | 149% | 67% | 93% | 60% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
H For the period November 3, 2004 (commencement of operations) to July 31, 2005.
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 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.
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 July 31, | 2008 | 2007 | 2006 | 2005 H |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 14.28 | $ 13.13 | $ 12.78 | $ 10.00 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss) E | (.04) | (.10) | (.07) | (.06) |
Net realized and unrealized gain (loss) | (1.97) | 1.90 | .74 | 2.83 |
Total from investment operations | (2.01) | 1.80 | .67 | 2.77 |
Distributions from net realized gain | (.53) | (.65) | (.33) | - |
Redemption fees added to paid in capital E | - J | - J | .01 | .01 |
Net asset value, end of period | $ 11.74 | $ 14.28 | $ 13.13 | $ 12.78 |
Total Return B, C, D | (14.58)% | 14.34% | 5.47% | 27.80% |
Ratios to Average Net Assets F, I |
|
|
|
|
Expenses before reductions | 1.68% | 1.66% | 1.67% | 1.72% A |
Expenses net of fee waivers, if any | 1.65% | 1.65% | 1.65% | 1.68% A |
Expenses net of all reductions | 1.65% | 1.65% | 1.61% | 1.62% A |
Net investment income (loss) | (.30)% | (.69)% | (.49)% | (.70)% A |
Supplemental Data |
|
|
|
|
Net assets, end of period (000 omitted) | $ 32,091 | $ 51,518 | $ 45,460 | $ 12,725 |
Portfolio turnover rate G | 149% | 67% | 93% | 60% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
H For the period November 3, 2004 (commencement of operations) to July 31, 2005.
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 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.
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 B
Years ended July 31, | 2008 | 2007 | 2006 | 2005 H |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 14.19 | $ 13.07 | $ 12.73 | $ 10.00 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss) E | (.10) | (.17) | (.13) | (.10) |
Net realized and unrealized gain (loss) | (1.96) | 1.90 | .74 | 2.82 |
Total from investment operations | (2.06) | 1.73 | .61 | 2.72 |
Distributions from net realized gain | (.53) | (.61) | (.28) | - |
Redemption fees added to paid in capital E | - J | - J | .01 | .01 |
Net asset value, end of period | $ 11.60 | $ 14.19 | $ 13.07 | $ 12.73 |
Total Return B, C, D | (15.04)% | 13.78% | 4.97% | 27.30% |
Ratios to Average Net Assets F, I |
|
|
|
|
Expenses before reductions | 2.18% | 2.20% | 2.26% | 2.24% A |
Expenses net of fee waivers, if any | 2.15% | 2.15% | 2.15% | 2.19% A |
Expenses net of all reductions | 2.15% | 2.15% | 2.11% | 2.13% A |
Net investment income (loss) | (.80)% | (1.19)% | (.99)% | (1.21)% A |
Supplemental Data |
|
|
|
|
Net assets, end of period (000 omitted) | $ 7,886 | $ 12,075 | $ 10,214 | $ 3,931 |
Portfolio turnover rate G | 149% | 67% | 93% | 60% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the contingent deferred sales charge.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
H For the period November 3, 2004 (commencement of operations) to July 31, 2005.
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 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.
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 C
Years ended July 31, | 2008 | 2007 | 2006 | 2005 H |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 14.19 | $ 13.07 | $ 12.74 | $ 10.00 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss) E | (.10) | (.17) | (.13) | (.10) |
Net realized and unrealized gain (loss) | (1.96) | 1.90 | .74 | 2.83 |
Total from investment operations | (2.06) | 1.73 | .61 | 2.73 |
Distributions from net realized gain | (.53) | (.61) | (.29) | - |
Redemption fees added to paid in capital E | - J | - J | .01 | .01 |
Net asset value, end of period | $ 11.60 | $ 14.19 | $ 13.07 | $ 12.74 |
Total Return B, C, D | (15.04)% | 13.77% | 4.92% | 27.40% |
Ratios to Average Net Assets F, I |
|
|
|
|
Expenses before reductions | 2.18% | 2.20% | 2.22% | 2.17% A |
Expenses net of fee waivers, if any | 2.15% | 2.15% | 2.15% | 2.17% A |
Expenses net of all reductions | 2.15% | 2.15% | 2.11% | 2.11% A |
Net investment income (loss) | (.80)% | (1.19)% | (.99)% | (1.19)% A |
Supplemental Data |
|
|
|
|
Net assets, end of period (000 omitted) | $ 20,924 | $ 34,155 | $ 26,791 | $ 11,732 |
Portfolio turnover rate G | 149% | 67% | 93% | 60% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the contingent deferred sales charge.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
H For the period November 3, 2004 (commencement of operations) to July 31, 2005.
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 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.
J Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Small Cap Value
Years ended July 31, | 2008 | 2007 | 2006 | 2005 G |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 14.43 | $ 13.22 | $ 12.83 | $ 10.00 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss) D | .03 | (.02) | .01 | (.01) |
Net realized and unrealized gain (loss) | (1.99) | 1.91 | .74 | 2.84 |
Total from investment operations | (1.96) | 1.89 | .75 | 2.83 |
Distributions from net investment income | - | - | (.01) | (.01) |
Distributions from net realized gain | (.56) | (.68) | (.36) | - |
Total distributions | (.56) | (.68) | (.37) | (.01) |
Redemption fees added to paid in capital D | - I | - I | .01 | .01 |
Net asset value, end of period | $ 11.91 | $ 14.43 | $ 13.22 | $ 12.83 |
Total Return B, C | (14.10)% | 14.96% | 6.07% | 28.36% |
Ratios to Average Net Assets E, H |
|
|
|
|
Expenses before reductions | 1.14% | 1.11% | 1.09% | 1.05% A |
Expenses net of fee waivers, if any | 1.14% | 1.11% | 1.09% | 1.05% A |
Expenses net of all reductions | 1.13% | 1.11% | 1.06% | .99% A |
Net investment income (loss) | .22% | (.15)% | .06% | (.08)% A |
Supplemental Data |
|
|
|
|
Net assets, end of period (000 omitted) | $ 1,136,860 | $ 1,233,808 | $ 957,720 | $ 582,689 |
Portfolio turnover rate F | 149% | 67% | 93% | 60% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
G For the period November 3, 2004 (commencement of operations) to July 31, 2005.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
I Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Institutional Class
Years ended July 31, | 2008 | 2007 | 2006 | 2005 G |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 14.43 | $ 13.22 | $ 12.83 | $ 10.00 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss) D | .03 | (.02) | .01 | (.01) |
Net realized and unrealized gain (loss) | (1.99) | 1.91 | .74 | 2.84 |
Total from investment operations | (1.96) | 1.89 | .75 | 2.83 |
Distributions from net investment income | - | - | (.01) | (.01) |
Distributions from net realized gain | (.56) | (.68) | (.36) | - |
Total distributions | (.56) | (.68) | (.37) | (.01) |
Redemption fees added to paid in capital D | - I | - I | .01 | .01 |
Net asset value, end of period | $ 11.91 | $ 14.43 | $ 13.22 | $ 12.83 |
Total Return B, C | (14.10)% | 14.99% | 6.08% | 28.36% |
Ratios to Average Net Assets E, H |
|
|
|
|
Expenses before reductions | 1.13% | 1.10% | 1.08% | 1.07% A |
Expenses net of fee waivers, if any | 1.13% | 1.10% | 1.08% | 1.07% A |
Expenses net of all reductions | 1.13% | 1.10% | 1.05% | 1.01% A |
Net investment income (loss) | .22% | (.13)% | .08% | (.10)% A |
Supplemental Data |
|
|
|
|
Net assets, end of period (000 omitted) | $ 8,584 | $ 11,594 | $ 9,422 | $ 3,761 |
Portfolio turnover rate F | 149% | 67% | 93% | 60% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
G For the period November 3, 2004 (commencement of operations) to July 31, 2005.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
I 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 July 31, 2008
1. Organization.
Fidelity Small Cap Value Fund (the Fund) is a fund of Fidelity Securities Fund (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 B, Class C, Small Cap Value, and Institutional Class 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 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 also differ by class.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the SEC's web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. Wherever possible, the Fund uses independent pricing services approved by the Board of Trustees to value its investments.
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally
Annual Report
3. Significant Accounting Policies - continued
Investment Transactions and Income - continued
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. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The implementation of FIN 48 did not result in any unrecognized tax benefits in the accompanying financial statements. Each of the Fund's federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. In addition, the Fund will claim a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Annual Report
Notes to Financial Statements - continued
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 foreign currency transactions, partnerships, and losses deferred due to wash sales.
The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows:
Unrealized appreciation | $ 60,995,126 |
Unrealized depreciation | (156,636,018) |
Net unrealized appreciation (depreciation) | (95,640,892) |
Undistributed ordinary income | 993,181 |
Undistributed long-term capital gain | 11,553,572 |
|
|
Cost for federal income tax purposes | $ 1,558,105,753 |
The tax character of distributions paid was as follows:
| July 31, 2008 | July 31, 2007 |
Ordinary Income | $ 2,392,014 | $ 15,936,394 |
Long-term Capital Gains | 51,064,963 | 39,482,873 |
Total | $ 53,456,977 | $ 55,419,267 |
Short-Term Trading (Redemption) Fees. Shares held in the Fund less than 90 days are subject to a redemption fee equal to 1.50% of the proceeds of the redeemed shares. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the Fund and accounted for as an addition to paid in capital.
New Accounting Pronouncements. In September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and results in expanded disclosures about fair value measurements.
In addition, in March 2008, Statement of Financial Accounting Standards No. 161, Disclosures about Derivative Instruments and Hedging Activities (SFAS 161), was issued and is effective for fiscal years beginning after November 15, 2008. SFAS 161 requires enhanced disclosures to provide information about the reasons the Fund invests in derivative instruments, the accounting treatment and the effect derivatives have on
Annual Report
3. Significant Accounting Policies - continued
New Accounting Pronouncements - continued
financial performance. Management is currently evaluating the impact the adoption of SFAS 161 will have on the Fund's financial statement disclosures.
4. Operating Policies.
Repurchase Agreements. FMR has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits the Fund and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts which are then invested in repurchase agreements. The Fund may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. The Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
Futures Contracts. The Fund may use futures contracts to manage its exposure to the stock market. Buying futures tends to increase a fund's exposure to the underlying instrument, while selling futures tends to decrease a fund's exposure to the underlying instrument or hedge other fund investments. Upon entering into a futures contract, a fund is required to deposit with a clearing broker, no later than the following business day, an amount ("initial margin") equal to a certain percentage of the face value of the contract. The initial margin may be in the form of cash or securities and is transferred to a segregated account on settlement date. Subsequent payments ("variation margin") are made or received by a fund depending on the daily fluctuations in the value of the futures contract and are accounted for as unrealized gains or losses. Realized gains (losses) are recorded upon the expiration or closing of the futures contract. Losses may arise from changes in the value of the underlying instruments or if the counterparties do not perform under the contract's terms.
5. Purchases and Sales of Investments.
Purchases and sales of securities other than short-term securities, aggregated $1,960,180,295 and $1,899,076,674, respectively.
Annual Report
Notes to Financial Statements - continued
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 .45% of the Fund's average net assets and a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. In addition, the management fee is subject to a performance adjustment (up to a maximum of ± .20% of the Fund's average net assets over a 36 month performance period). The upward or downward adjustment to the management fee is based on the relative investment performance of the retail class of the Fund, Small Cap Value, as compared to an appropriate benchmark index. For the period, the total annual management fee rate, including the performance adjustment, was .83% of the Fund's average net assets.
Distribution and Service Plan. 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 and the total amounts paid to and retained by FDC were as follows:
| Distribution | Service | Paid to | Retained |
Class A | 0% | .25% | $ 145,377 | $ 16,596 |
Class T | .25% | .25% | 200,976 | - |
Class B | .75% | .25% | 100,604 | 75,549 |
Class C | .75% | .25% | 281,045 | 58,239 |
|
|
| $ 728,002 | $ 150,384 |
Sales Load. FDC receives 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. FDC receives the proceeds of contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. These charges depend on the holding period. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, 1.00% to .50% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
Annual Report
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 | $ 48,477 |
Class T | 9,117 |
Class B* | 20,133 |
Class C* | 2,688 |
| $ 80,415 |
* 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. Prior to January 1, 2008, Fidelity Service Company, Inc. (FSC), also an affiliate of FMR, was the transfer agent for Small Cap Value shares. For the period, each class paid the following transfer agent fees:
| Amount | % of |
Class A | $ 175,851 | .30 |
Class T | 121,857 | .30 |
Class B | 30,655 | .30 |
Class C | 85,123 | .30 |
Small Cap Value | 2,988,753 | .26 |
Institutional Class | 26,449 | .25 |
| $ 3,428,688 |
|
Accounting and Security Lending Fees. FSC, an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $70,936 for the period.
Annual Report
Notes to Financial Statements - continued
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $4.2 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro rata portion of the line of credit, which amounted to $3,170 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
8. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds.
9. Expense Reductions.
FMR voluntarily agreed to reimburse each class to the extent annual operating expenses exceeded certain levels of average net assets as noted in the table below. Some expenses, for example interest expense, including commitment fees, are excluded from this reimbursement.
The following classes were in reimbursement during the period:
| Expense | Reimbursement |
|
|
|
Class A | 1.40% | $ 18,972 |
Class T | 1.65% | 13,639 |
Class B | 2.15% | 3,588 |
Class C | 2.15% | 9,599 |
|
| $ 45,798 |
Annual Report
9. Expense Reductions - continued
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 $12,006 for the period. In addition, through arrangements with each class' transfer agent, credits realized as a result of uninvested cash balances were used to reduce the Fund's expenses. During the period, credits reduced each class' transfer agent expense as noted in the table below.
| Transfer Agent |
Class A | $ 591 |
Small Cap Value | 59,561 |
Institutional Class | 259 |
| $ 60,411 |
10. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
11. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended July 31, | 2008 | 2007 |
From net realized gain |
|
|
Class A | $ 2,334,219 | $ 2,137,128 |
Class T | 1,800,459 | 2,317,701 |
Class B | 442,697 | 493,632 |
Class C | 1,258,270 | 1,276,323 |
Small Cap Value | 47,176,109 | 48,691,674 |
Institutional Class | 445,223 | 502,809 |
Total | $ 53,456,977 | $ 55,419,267 |
Annual Report
Notes to Financial Statements - continued
12. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
Years ended July 31, | 2008 | 2007 | 2008 | 2007 |
Class A |
|
|
|
|
Shares sold | 1,801,333 | 2,083,427 | $ 23,728,165 | $ 29,477,855 |
Reinvestment of distributions | 158,451 | 153,067 | 2,181,126 | 1,967,811 |
Shares redeemed | (1,800,932) | (990,255) | (23,386,603) | (13,986,913) |
Net increase (decrease) | 158,852 | 1,246,239 | $ 2,522,688 | $ 17,458,753 |
Class T |
|
|
|
|
Shares sold | 618,951 | 1,416,878 | $ 8,024,654 | $ 19,764,686 |
Reinvestment of distributions | 127,052 | 158,416 | 1,740,319 | 2,031,495 |
Shares redeemed | (1,620,468) | (1,429,554) | (21,259,209) | (20,059,646) |
Net increase (decrease) | (874,465) | 145,740 | $ (11,494,236) | $ 1,736,535 |
Class B |
|
|
|
|
Shares sold | 128,063 | 297,938 | $ 1,643,352 | $ 4,153,087 |
Reinvestment of distributions | 29,083 | 34,686 | 395,378 | 444,445 |
Shares redeemed | (328,632) | (263,033) | (4,160,797) | (3,714,165) |
Net increase (decrease) | (171,486) | 69,591 | $ (2,122,067) | $ 883,367 |
Class C |
|
|
|
|
Shares sold | 565,275 | 834,910 | $ 7,245,287 | $ 11,698,988 |
Reinvestment of distributions | 82,093 | 84,926 | 1,115,865 | 1,089,287 |
Shares redeemed | (1,251,391) | (562,438) | (15,942,770) | (7,834,552) |
Net increase (decrease) | (604,023) | 357,398 | $ (7,581,618) | $ 4,953,723 |
Small Cap Value |
|
|
|
|
Shares sold | 33,217,718 | 42,235,359 | $ 432,952,106 | $ 595,504,607 |
Reinvestment of distributions | 3,344,768 | 3,617,365 | 46,241,130 | 46,609,140 |
Shares redeemed | (26,584,070) | (32,779,622) | (353,880,106) | (461,808,869) |
Net increase (decrease) | 9,978,416 | 13,073,102 | $ 125,313,130 | $ 180,304,878 |
Institutional Class |
|
|
|
|
Shares sold | 353,080 | 309,983 | $ 4,711,093 | $ 4,413,286 |
Reinvestment of distributions | 21,635 | 23,286 | 299,115 | 300,279 |
Shares redeemed | (457,781) | (242,217) | (5,972,769) | (3,533,035) |
Net increase (decrease) | (83,066) | 91,052 | $ (962,561) | $ 1,180,530 |
Annual Report
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Securities Fund and the Shareholders of Fidelity Small Cap 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 Small Cap Value Fund (a fund of Fidelity Securities Fund) at July 31, 2008, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and 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 Small Cap 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 July 31, 2008 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
September 22, 2008
Annual Report
Trustees and Officers
The Trustees, Member of the Advisory Board, and executive officers of the trust and fund, as applicable, are listed below. The Board of Trustees governs the fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee the fund's activities, review contractual arrangements with companies that provide services to the fund, and review the fund's performance. Except for Edward C. Johnson 3d and James C. Curvey, each of the Trustees oversees 218 funds advised by FMR or an affiliate. Messrs. Johnson and Curvey oversee 377 funds advised by FMR or an affiliate.
The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust. Each Trustee who is not an interested person (as defined in the 1940 Act) (Independent Trustee), shall retire not later than the last day of the calendar year in which his or her 72nd birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board Member hold office without limit in time, except that any officer and Advisory Board Member may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years.
The fund's Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-800-544-8544.
Interested Trustees*:
Correspondence intended for each Trustee who is an interested person may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Edward C. Johnson 3d (78) | |
| Year of Election or Appointment: 1994 Mr. Johnson is Chairman of the Board of Trustees. Mr. Johnson serves as Chief Executive Officer, Chairman, and a Director of FMR LLC; Chairman and a Director of FMR; Chairman and a Director of Fidelity Research & Analysis Company (FRAC); Chairman and a Director of Fidelity Investments Money Management, Inc.; and Chairman and a Director of FMR Co., Inc. In addition, Mr. Johnson serves as Chairman and Director of FIL Limited. Previously, Mr. Johnson served as President of FMR LLC (2006-2007). |
James C. Curvey (73) | |
| Year of Election or Appointment: 2007 Mr. Curvey also serves as Trustee (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2006- |
* Trustees have been determined to be "Interested Trustees" by virtue of, among other things, their affiliation with the trust or various entities under common control with FMR. FMR Corp. merged with and into FMR LLC on October 1, 2007. Any references to FMR LLC for prior periods are deemed to be references to the prior entity.
Independent Trustees:
Correspondence intended for each Independent Trustee (that is, the Trustees other than the Interested Trustees) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.
Name, Age; Principal Occupation | |
Dennis J. Dirks (60) | |
| Year of Election or Appointment: 2005 Prior to his retirement in May 2003, Mr. Dirks was Chief Operating Officer and a member of the Board of The Depository Trust & Clearing Corporation (DTCC) (1999-2003). He also served as President, Chief Operating Officer, and Board member of The Depository Trust Company (DTC) (1999-2003) and President and Board member of the National Securities Clearing Corporation (NSCC) (1999-2003). In addition, Mr. Dirks served as a Trustee and a member of the Finance Committee of Manhattan College (2005-2008), and as Chief Executive Officer and Board member of the Government Securities Clearing Corporation (2001-2003) and Chief Executive Officer and Board member of the Mortgage-Backed Securities Clearing Corporation (2001-2003). Mr. Dirks also serves as a Trustee and a member of the Finance Committee of AHRC of Nassau County (2006-present). |
Alan J. Lacy (54) | |
| Year of Election or Appointment: 2008 Mr. Lacy serves as Senior Adviser (2007-present) of Oak Hill Capital Partners, L.P. (a private equity firm). Mr. Lacy also served as Chief Executive Officer (2000-2005) and Vice Chairman (2005-2006) of Sears Holdings Corporation and Sears, Roebuck and Co. (retail). In addition, Mr. Lacy serves as a member of the Board of Directors of The Western Union Company (global money transfer, 2006-present) and Bristol-Myers Squibb (global pharmaceuticals, 2007-present). Mr. Lacy is a Trustee of the National Parks Conservation Association and The Field Museum of Natural History. |
Ned C. Lautenbach (64) | |
| Year of Election or Appointment: 2000 Mr. Lautenbach is Chairman of the Independent Trustees (2006- |
Joseph Mauriello (63) | |
| 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 firm, 1965- |
Cornelia M. Small (64) | |
| Year of Election or Appointment: 2005 Ms. Small is a member of the Investment Committee, and Chair (2008-present) and a member of the Board of Trustees of Smith College. Ms. Small also serves on the Investment Committee of the Berkshire Taconic Community Foundation (2008-present). Previously, Ms. Small served as Chairperson of the Investment Committee (2002-2008) of Smith College and as Co-Chair (2000-2003) of the Annual Fund for the Fletcher School of Law and Diplomacy. In addition, she served as Chief Investment Officer, Director of Global Equity Investments, and a member of the Board of Directors of Scudder, Stevens & Clark and Scudder Kemper Investments. |
William S. Stavropoulos (69) | |
| Year of Election or Appointment: 2002 Mr. Stavropoulos is Chairman Emeritus of the Board of Directors of The Dow Chemical Company, where he previously served in numerous senior management positions, including President (1993-2000; 2002- |
David M. Thomas (59) | |
| Year of Election or Appointment: 2008 Previously, Mr. Thomas served as Executive Chairman (2005-2006) and Chairman and Chief Executive Officer (2000-2005) of IMS Health, Inc. (pharmaceutical and healthcare information solutions). In addition, Mr. Thomas serves as a member of the Board of Directors of Fortune Brands, Inc. (consumer products holding company), and Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (57) | |
| Year of Election or Appointment: 2008 Mr. Wiley also serves as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-present). He serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005- |
Advisory Board Member and Executive Officers**:
Correspondence intended for each executive officer and Mr. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Peter S. Lynch (64) | |
| Year of Election or Appointment: 2003 Member of the Advisory Board of Fidelity Securities Fund. Mr. Lynch is Vice Chairman and a Director of FMR, and Vice Chairman (2001- |
Kenneth B. Robins (38) | |
| Year of Election or Appointment: 2008 President and Treasurer of Small Cap Value. Mr. Robins also serves as President and Treasurer of Fidelity's Equity and High Income Funds (2008-present) and is an employee of FMR (2004-present). Before joining Fidelity Investments, Mr. Robins worked at KPMG LLP, where he was a partner in KPMG's department of professional practice (2002-2004). |
Walter C. Donovan (46) | |
| Year of Election or Appointment: 2007 Vice President of Small Cap Value. Mr. Donovan also serves as Vice President of Fidelity's Equity Funds, President of FMR and FMR Co., Inc., and Executive Vice President of Fidelity Investments Money Management, Inc. (2007-present). Previously, Mr. Donovan served as Executive Vice President of FMR and FMR Co., Inc. (2005-2007) and Senior Vice President of FMR (2003-2005) and FMR Co., Inc. (2004-2005). |
Thomas C. Hense (44) | |
| Year of Election or Appointment: 2008 Vice President of Small Cap Value. Mr. Hense also serves as Vice President of Fidelity's High Income and Small Cap Funds (2008-present). Previously, Mr. Hense served as a portfolio manager for Fidelity's Institutional Money Management Group (Pyramis) (2003-2008). |
Scott C. Goebel (40) | |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of Small Cap Value. Mr. Goebel also serves as Secretary and CLO of other Fidelity funds (2008-present); General Counsel, Secretary, and Senior Vice President of FMR (2008-present); and Deputy General Counsel of FMR LLC. Previously, Mr. Goebel served as Assistant Secretary of the Funds (2007- |
John B. McGinty, Jr. (45) | |
| Year of Election or Appointment: 2008 Assistant Secretary of Small Cap Value. Mr. McGinty also serves as Assistant Secretary of Fidelity's other Equity and High Income Funds (2008-present) and is an employee of FMR LLC (2004-present). Mr. McGinty also serves as Senior Vice President, Secretary, and Chief Legal Officer of FDC (2007-present). Before joining Fidelity Investments, Mr. McGinty practiced law at Ropes & Gray, LLP. |
Holly C. Laurent (54) | |
| Year of Election or Appointment: 2008 Anti-Money Laundering (AML) officer of Small Cap Value. Ms. Laurent also serves as AML officer of other Fidelity funds (2008-present) and is an employee of FMR LLC. Previously, Ms. Laurent was Senior Vice President and Head of Legal for Fidelity Business Services India Pvt. Ltd. (2006-2008), Senior Vice President, Deputy General Counsel and Group Head for FMR LLC (2005-2006). |
Christine Reynolds (49) | |
| Year of Election or Appointment: 2008 Chief Financial Officer of Small Cap Value. Ms. Reynolds also serves as Chief Financial Officer of other Fidelity funds (2008-present). Ms. Reynolds became President of Fidelity Pricing and Cash Management Services (FPCMS) in August 2008. She served as Chief Operating Officer of FPCMS from 2007 through July 2008. Previously, Ms. Reynolds served as President, Treasurer, and Anti-Money Laundering officer of the Fidelity funds (2004-2007). Before joining Fidelity Investments, Ms. Reynolds worked at PricewaterhouseCoopers LLP (PwC) (1980-2002), where she was an audit partner with PwC's investment management practice. |
Kenneth A. Rathgeber (61) | |
| Year of Election or Appointment: 2004 Chief Compliance Officer of Small Cap Value. Mr. Rathgeber also serves as Chief Compliance Officer of Fidelity's Equity and High Income Funds (2004-present). He is Chief Compliance Officer of FMR (2005- |
Bryan A. Mehrmann (47) | |
| Year of Election or Appointment: 2005 Deputy Treasurer of Small Cap Value. Mr. Mehrmann also serves as Deputy Treasurer of other Fidelity funds (2005-present) and is an employee of FMR. Previously, Mr. Mehrmann served as Vice President of Fidelity Investments Institutional Services Group (FIIS)/Fidelity Investments Institutional Operations Corporation, Inc. (FIIOC) Client Services (1998-2004). |
Adrien E. Deberghes (40) | |
| Year of Election or Appointment: 2008 Deputy Treasurer of Small Cap Value. Mr. Deberghes also serves as Deputy Treasurer of Fidelity's Equity and High Income Funds (2008- |
Robert G. Byrnes (41) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of Small Cap Value. Mr. Byrnes also serves as Assistant Treasurer of other Fidelity funds (2005-present) and is an employee of FMR (2005-present). Previously, Mr. Byrnes served as Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (2003- |
Peter L. Lydecker (54) | |
| Year of Election or Appointment: 2004 Assistant Treasurer of Small Cap Value. Mr. Lydecker also serves as Assistant Treasurer of other Fidelity funds (2004-present) and is an employee of FMR. |
Paul M. Murphy (61) | |
| Year of Election or Appointment: 2007 Assistant Treasurer of Small Cap Value. Mr. Murphy also serves as Assistant Treasurer of other Fidelity funds (2007-present) and is an employee of FMR (2007-present). Previously, Mr. Murphy served as Chief Financial Officer of the Fidelity Funds (2005-2006), Vice President and Associate General Counsel of FMR (2007), and Senior Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (1994-2007). |
Gary W. Ryan (49) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of Small Cap Value. Mr. Ryan also serves as Assistant Treasurer of other Fidelity funds (2005-present) and is an employee of FMR (2005-present). Previously, Mr. Ryan served as Vice President of Fund Reporting in Fidelity Pricing and Cash Management Services (FPCMS) (1999-2005). |
** FMR Corp. merged with and into FMR LLC on October 1, 2007. Any references to FMR LLC for prior periods are deemed to be references to the prior entity.
Annual Report
Distributions (Unaudited)
The Board of Trustees of Small Cap Value Fund voted to pay on September 15, 2008, to shareholders of record at the opening of business on September 12, 2008, a distribution of $0.11 per share derived from capital gains realized from sales of portfolio securities and a dividend of $0.007 per share from net investment income.
The fund hereby designates as a capital gain dividend with respect to the taxable year ended July 31, 2008 $30,077,945, 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 2009 of amounts for use in preparing 2008 income tax returns.
Annual Report
Proxy Voting Results
A special meeting of the fund's shareholders was held on May 14, 2008. The results of votes taken among shareholders on the proposals before them are reported below. Each vote reported represents one dollar of net asset value held on the record date for the meeting.
PROPOSAL 1 | ||
To elect a Board of Trustees.A | ||
| # of | % of |
James C. Curvey | ||
Affirmative | 30,242,569,269.49 | 94.915 |
Withheld | 1,620,182,942.38 | 5.085 |
TOTAL | 31,862,752,211.87 | 100.000 |
Dennis J. Dirks | ||
Affirmative | 30,356,248,026.80 | 95.272 |
Withheld | 1,506,504,185.07 | 4.728 |
TOTAL | 31,862,752,211.87 | 100.000 |
Edward C. Johnson 3d | ||
Affirmative | 30,163,300,902.81 | 94.666 |
Withheld | 1,699,451,309.06 | 5.334 |
TOTAL | 31,862,752,211.87 | 100.000 |
Alan J. Lacy | ||
Affirmative | 30,334,439,999.59 | 95.203 |
Withheld | 1,528,312,212.28 | 4.797 |
TOTAL | 31,862,752,211.87 | 100.000 |
Ned C. Lautenbach | ||
Affirmative | 30,317,381,535.59 | 95.150 |
Withheld | 1,545,370,676.28 | 4.850 |
TOTAL | 31,862,752,211.87 | 100.000 |
Joseph Mauriello | ||
Affirmative | 30,340,553,696.88 | 95.223 |
Withheld | 1,522,198,514.99 | 4.777 |
TOTAL | 31,862,752,211.87 | 100.000 |
Cornelia M. Small | ||
Affirmative | 30,337,552,071.15 | 95.213 |
Withheld | 1,525,200,140.72 | 4.787 |
TOTAL | 31,862,752,211.87 | 100.000 |
William S. Stavropoulos | ||
Affirmative | 30,240,356,579.51 | 94.908 |
Withheld | 1,622,395,632.36 | 5.092 |
TOTAL | 31,862,752,211.87 | 100.000 |
| # of | % of |
David M. Thomas | ||
Affirmative | 30,352,029,125.67 | 95.259 |
Withheld | 1,510,723,086.20 | 4.741 |
TOTAL | 31,862,752,211.87 | 100.000 |
Michael E. Wiley | ||
Affirmative | 30,333,540,290.12 | 95.201 |
Withheld | 1,529,211,921.75 | 4.799 |
TOTAL | 31,862,752,211.87 | 100.000 |
PROPOSAL 2 | ||
To amend the Declaration of Trust to reduce the required quorum for future shareholder meetings. A | ||
| # of | % of |
Affirmative | 23,747,670,372.95 | 74.531 |
Against | 5,357,217,831.03 | 16.814 |
Abstain | 1,587,233,084.08 | 4.981 |
Broker | 1,170,630,923.81 | 3.674 |
TOTAL | 31,862,752,211.87 | 100.000 |
A Denotes trust-wide proposal and voting results. |
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees
Fidelity Small Cap Value Fund
Each year, typically in July, the Board of Trustees, including the Independent Trustees (together, the Board), votes on the renewal of the management contract and sub-advisory agreements (together, the Advisory Contracts) for the fund. The Board, assisted by the advice of fund counsel and Independent Trustees' counsel, requests and considers a broad range of information throughout the year.
The Board meets regularly and, acting directly and through its separate committees, requests and receives information concerning, and considers at each of its meetings factors that are relevant to, its annual consideration of the renewal of the fund's Advisory Contracts, including the services and support provided to the fund and its shareholders. At the time of the renewal, the Board had 12 standing committees, each composed of Independent Trustees with varying backgrounds, to which the Board has assigned specific subject matter responsibilities in order to enhance effective decision-making by the Board. Each committee has a written charter outlining the structure and purposes of the committee. The Board also meets as needed to consider matters specifically related to the Board's annual consideration of the renewal of Advisory Contracts.
At its July 2008 meeting, the Board of Trustees, including the Independent Trustees, unanimously determined to renew the fund's Advisory Contracts. In reaching its determination, the Board considered all factors it believed relevant, including (i) the nature, extent, and quality of the services to be provided to the fund and its shareholders (including the investment performance of the fund); (ii) the competitiveness of the fund's management fee and total expenses; (iii) the total costs of the services to be provided by and the profits to be realized by Fidelity from its relationship with the fund; (iv) the extent to which economies of scale would be realized as the fund grows; and (v) whether fee levels reflect these economies of scale, if any, for the benefit of fund shareholders. The Board also approved agreements with foreign sub-advisers Fidelity Management & Research (Japan) Inc. and Fidelity Management & Research (Hong Kong) Limited, as well as amendments to the fund's agreement with Fidelity Management & Research (U.K.) Inc.
In considering whether to renew the Advisory Contracts for the fund, the Board ultimately reached a determination, with the assistance of fund counsel and Independent Trustees' counsel and through the exercise of its business judgment, that the renewal of the Advisory Contracts and the compensation to be received by Fidelity under the management contract is consistent with Fidelity's fiduciary duty under applicable law. The Board's decision to renew the Advisory Contracts was not based on any single factor noted above, but rather was based on a comprehensive consideration of all the information provided to the Board at its meetings throughout the year. The Board, in reaching its determination to renew the Advisory Contracts, is aware that shareholders in the fund have a broad range of investment choices available to them, including a wide choice among mutual funds offered by competitors to Fidelity, and that the fund's shareholders, with the opportunity to review and weigh the disclosure provided by the fund in its prospectus and other public disclosures, have chosen to invest in this fund, managed by Fidelity.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
Nature, Extent, and Quality of Services Provided. The Board considered staffing within the investment adviser, FMR, and the sub-advisers (together, the Investment Advisers), including the backgrounds of the fund's investment personnel and the fund's investment objective and discipline. The Independent Trustees also had discussions with senior management of Fidelity's investment operations and investment groups. The Board considered the structure of the portfolio manager compensation program and whether this structure provides appropriate incentives.
Resources Dedicated to Investment Management and Support Services. The Board reviewed the size, education, and experience of the Investment Advisers' investment staff, their use of technology, and the Investment Advisers' approach to recruiting, training, and retaining portfolio managers and other research, advisory, and management personnel. The Board noted that Fidelity's analysts have access to a variety of technological tools that enable them to perform both fundamental and quantitative analysis and to specialize in various disciplines. The Board considered Fidelity's extensive global research capabilities that enable the Investment Advisers to aggregate data from various sources in an effort to produce positive investment results. The Board also considered that Fidelity's portfolio managers and analysts have access to daily portfolio attribution that allows for monitoring of a fund's portfolio, as well as an electronic communication system that provides immediate real-time access to research concerning issuers and credit enhancers.
Shareholder and Administrative Services. The Board considered (i) the nature, extent, quality, and cost of advisory, administrative, distribution, and shareholder services performed by the Investment Advisers and their affiliates under the Advisory Contracts and under separate agreements covering transfer agency, pricing and bookkeeping, and securities lending services for the fund; (ii) the nature and extent of the Investment Advisers' supervision of third party service providers, principally custodians and subcustodians; and (iii) the resources devoted to, and the record of compliance with, the fund's compliance policies and procedures. The Board also reviewed the allocation of fund brokerage, including allocations to brokers affiliated with the Investment Advisers, the use of brokerage commissions to pay fund expenses, and the use of "soft" commission dollars to pay for research services. The Board further considered that Fidelity voluntarily pays for market data out of its own resources.
The Board noted that the growth of fund assets across the complex allows Fidelity to reinvest in the development of services designed to enhance the value or convenience of the Fidelity funds as investment vehicles. These services include 24-hour access to account information and market information through phone representatives and over the Internet, and investor education materials and asset allocation tools.
Annual Report
Investment in a Large Fund Family. The Board considered the benefits to shareholders of investing in a Fidelity fund, including the benefits of investing in a fund that is part of a large family of funds offering a variety of investment disciplines and providing for a large variety of mutual fund investor services. For example, fund shareholders are offered the privilege of exchanging shares of the fund for shares of other Fidelity funds, as set forth in the fund's prospectus, without paying a sales charge. The Board noted that Fidelity has taken a number of actions over the previous year that benefited particular funds, including (i) dedicating additional resources to investment research and to restructure the investment research teams; (ii) contractually agreeing to reduce the management fees on Fidelity's Institutional Money Market Funds and launching Class IV and Institutional Class of certain of these funds; (iii) reducing the transfer agent fees for the Fidelity Select Portfolios and Investor Class of the VIP funds; and (iv) launching Class K of 29 equity funds as a lower-fee class available to certain employer-sponsored retirement plans.
Investment Performance. The Board considered whether the fund has operated within its investment objective, as well as its record of compliance with its investment restrictions. It also reviewed the fund's absolute investment performance for each class, as well as the fund's relative investment performance for each class measured against (i) a broad-based securities market index, and (ii) a peer group of mutual funds deemed appropriate by the Board over multiple periods. Because the fund had been in existence less than five calendar years, the following charts considered by the Board show, over the one- and three-year periods ended December 31, 2007, the cumulative total returns of Fidelity Small Cap Value (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 Fidelity Small Cap Value (retail class) and Class B 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 (bottom of box) and the 75th percentile return (top of box) of the peer group. Returns shown above the box are in the first quartile and returns shown below the box are in the fourth quartile. The percentage beaten numbers noted below each chart correspond to the percentile box and represent the percentage of funds in the peer group whose performance was equal to or lower than that of the class indicated.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
Fidelity Small Cap Value Fund
The Board reviewed the fund's relative investment performance against its peer group and stated that the performance of Fidelity Small Cap Value (retail class) of the fund was in the first quartile for all the periods shown. The Board also stated that the investment performance of Fidelity Small Cap Value (retail class) of the fund compared favorably to 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 also considered that the fund's management fee is subject to upward or downward adjustment depending upon whether, and to what extent, the fund's investment performance for the performance period exceeds, or is exceeded by, the record (over the same period) of a Board-approved performance adjustment index. The Board realizes that the performance adjustment provides FMR with a strong economic incentive to seek to achieve superior performance for the fund's shareholders and helps to more closely align the interests of FMR and the fund's shareholders.
The Board considered that FMR has taken steps to refocus and strengthen equity research, equity portfolio management, and compliance.
Based on its review, and giving particular weight to the nature and quality of the resources dedicated by the Investment Advisers to maintain and improve relative performance, the Board concluded that the nature, extent, and quality of the services provided to the fund will benefit the fund's shareholders, particularly in light of the Board's view that the fund's shareholders benefit from investing in a fund that is part of a large family of funds offering a variety of investment disciplines and services.
Annual Report
Competitiveness of Management Fee and Total Fund Expenses. The Board considered the fund's management fee and total expenses compared to "mapped groups" of competitive funds and classes. Fidelity creates "mapped groups" by combining similar Lipper investment objective categories that have comparable management fee characteristics. Combining Lipper investment objective categories aids the Board's management fee and total expense comparisons by broadening the competitive group used for comparison and by reducing the number of universes to which various Fidelity funds are compared. The Board also considered supplemental information about how the fund's management fee and total expenses ranked relative to groups based on Lipper classifications, which take into account a fund's market capitalization and style.
The Board considered two proprietary management fee comparisons for the 12-month (or shorter) 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 12% means that 88% 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 Small Cap 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 2007. The Board also noted the effect of the fund's positive performance adjustment on the fund's management fee ranking. The Board noted that the performance adjustment for each year represents calculations for performance periods that differ from the periods shown in the performance charts above.
Based on its review, the Board concluded that the fund's management fee was fair and reasonable in light of the services that the fund receives and the other factors considered.
In its review of each class's total expenses, 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 current and historical total expenses 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 expenses of each of Class A, Institutional Class, and Fidelity Small Cap Value (retail class) ranked below its competitive median for 2007, the total expenses of Class B ranked equal to its competitive median for 2007, and the total expenses of each of Class T and Class C ranked above its competitive median for 2007. The Board considered that the total expenses of Class C were above the median because of its higher transfer agent fee due to small average account size. The Board considered that total expenses for Class T were above the median primarily because its 12b-1 fee is higher than the typical front-end load class. 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 expenses 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
In its review of total expenses, the Board also considered Fidelity fee structures and other information on clients that FMR and its affiliates service in other competitive markets, such as other mutual funds advised or subadvised by FMR or its affiliates, pension plan clients, and other institutional clients.
Based on its review, the Board concluded that the total expenses of each class of the fund were reasonable, although in some cases 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 audited books and records of Fidelity. The Audit Committee of the Board reviews any significant changes from the prior year's methodologies.
PricewaterhouseCoopers LLP (PwC), independent registered public accounting firm and auditor to Fidelity and certain Fidelity funds, has been engaged annually by the Board as part of the Board's assessment of the results of Fidelity's profitability analysis. PwC's engagement includes the review and assessment of Fidelity's methodologies used in determining the revenues and expenses attributable to Fidelity's mutual fund business, and completion of agreed-upon procedures surrounding the mathematical accuracy of fund profitability and its conformity to allocation methodologies. After considering PwC's reports issued under the engagement and information provided by Fidelity, the Board believes that while other allocation methods may also be reasonable, Fidelity's profitability methodologies are reasonable in all material respects.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
The Board has also reviewed Fidelity's non-fund businesses and any fall-out benefits related to the mutual fund business as well as cases where Fidelity's affiliates may benefit from or be related to the fund's business.
The Board considered the costs of the services provided by and the profits realized by Fidelity in connection with the operation of the fund and determined that the amount of profit is a fair entrepreneurial profit for the management of the fund.
Economies of Scale. The Board considered whether there have been economies of scale in respect of the management of the Fidelity funds, whether the Fidelity funds (including the fund) have appropriately benefited from any such economies of scale, and whether there is potential for realization of any further economies of scale. The Board considered the extent to which the fund will benefit from economies of scale through increased services to the fund, through waivers or reimbursements, or through fee or expense reductions.
The Board recognized that the fund's management contract incorporates a "group fee" structure, which provides for lower group fee rates as total fund assets under FMR's management increase, and for higher group fee rates as total fund assets under FMR's management decrease. FMR determines the group fee rates based on a tiered asset "breakpoint" schedule. The Board considered that the group fee is designed to deliver the benefits of economies of scale to fund shareholders when total fund assets increase, even if assets of any particular fund are unchanged or have declined, because some portion of Fidelity's costs are attributable to services provided to all Fidelity funds, and all funds benefit if those costs can be allocated among more assets. The Board concluded that, given the group fee structure, fund shareholders will achieve a certain level of economies of scale as assets under FMR's management increase at the fund complex level, regardless of whether Fidelity achieves any such economies of scale.
The Board further concluded that any potential economies of scale are being shared between fund shareholders and Fidelity in an appropriate manner.
Additional Information Requested by the Board. In order to develop fully the factual basis for consideration of the Fidelity funds' Advisory Contracts, the Board requested and received additional information on certain topics, including (i) fund performance trends and actions to be taken by FMR to improve certain funds' overall performance; (ii) portfolio manager changes that have occurred during the past year; (iii) Fidelity's fund profitability methodology, the profitability of certain fund service providers, and profitability trends for certain funds; (iv) Fidelity's compensation structure for portfolio managers and key personnel, including its effects on fund profitability and the extent to which portfolio manager compensation is linked to fund performance; (v) Fidelity's fee structures and rationale for recommending different fees among categories of funds; and (vi) Fidelity's rationale for recommending which funds should have a performance adjustment component as part of their management fees.
Annual Report
Based on its evaluation of all of the conclusions noted above, and after considering all material factors, the Board ultimately concluded that the advisory fee structures are fair and reasonable, and that the fund's Advisory Contracts should be renewed.
Annual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Fidelity Research & Analysis Company
Fidelity Management & Research
(U.K.) Inc.
Fidelity Investments Japan Limited
Fidelity International Investment
Advisors
Fidelity International Investment
Advisors (U.K.) Limited
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Service Agents
Fidelity Investments Institutional
Operations Company, Inc.
Boston, MA
Fidelity Service Company, Inc.
Boston, MA
Custodian
Citibank, N.A.
New York, NY
The Fidelity Telephone Connection
Mutual Fund 24-Hour Service
Exchanges/Redemptions
and Account Assistance 1-800-544-6666
Product Information 1-800-544-6666
Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
Fidelity Automated Service
Telephone (FAST®) 1-800-544-5555
Automated line for quickest service
SCV-UANN-0908 1.803705.103
(Fidelity Investment logo)(registered trademark)
Fidelity Advisor
Small Cap Value
Fund - Class A, Class T,
Class B and Class C
Annual Report
July 31, 2008
Class A, Class T, Class B
and Class C are classes of
Fidelity® Small Cap Value Fund
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message | Ned Johnson's message to shareholders. | |
Performance | How the fund has done over time. | |
Management's Discussion | The manager's review of fund performance, strategy and outlook. | |
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 |
| |
Proxy Voting Results |
| |
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 (search for "proxy voting guidelines") or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-877-208-0098 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company.
Annual Report
This report and the financial statements contained herein are submitted for the general information of the shareholders of the fund. This report is not authorized for distribution to prospective investors in the fund unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com or http://www.advisor.fidelity.com, as applicable.
NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE
Neither the fund nor Fidelity Distributors Corporation is a bank.
Annual Report
Chairman's Message
(photo_of_Edward_C_Johnson_3d)
Dear Shareholder:
Domestic and international securities markets have struggled thus far in 2008. High-grade fixed-income investments produced modestly positive results, but many stock benchmarks suffered double-digit losses through the first half of this year. Financial markets are always unpredictable, but there are a number of time-tested principles that can put the historical odds in your favor.
One of the basic tenets is to invest for the long term. Over time, riding out the markets' inevitable ups and downs has proven much more effective than selling into panic or chasing the hottest trend. Even missing only a few of the markets' best days can significantly diminish investor returns. Patience also affords the benefits of compounding - of earning interest on additional income or reinvested dividends and capital gains. There are tax advantages and cost benefits to consider as well. The more you sell, the more taxes you pay, and the more you trade, the higher the costs. While staying the course doesn't eliminate risk, it can considerably lessen the effect of short-term declines.
You can further manage your investing risk through diversification. And today, more than ever, geographic diversification should be taken into account. Studies indicate that asset allocation is the single most important determinant of a portfolio's long-term success. The right mix of stocks, bonds and cash - aligned to your particular risk tolerance and investment objective - is very important. Age-appropriate rebalancing is also an essential aspect of asset allocation. For younger investors, an emphasis on equities - which historically have been the best-performing asset class over time - is encouraged. As investors near their specific goal, such as retirement or sending a child to college, consideration may be given to replacing volatile assets (e.g. common stocks) with more-stable fixed investments (bonds or savings plans).
A third investment principle - investing regularly - can help lower the average cost of your purchases. Investing a certain amount of money each month or quarter helps ensure you won't pay for all your shares at market highs. This strategy - known as dollar cost averaging - also reduces unconstructive "emotion" from investing, helping shareholders avoid selling weak performers just prior to an upswing, or chasing a hot performer just before a correction.
We invite you to contact us via the Internet, through our Investor Centers or over the phone. It is our privilege to provide you the information you need to make the investments that are right for you.
Sincerely,
/s/Edward C. Johnson 3d
Edward C. Johnson 3d
Annual Report
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' 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 July 31, 2008 | Past 1 | Life of |
Class A (incl. 5.75% sales charge) | -19.27% | 6.20% |
Class T (incl. 3.50% sales charge) | -17.57% | 6.60% |
Class B (incl. contingent deferred sales charge) B | -19.13% | 6.41% |
Class C (incl. contingent deferred sales charge) C | -15.86% | 7.09% |
A From November 3, 2004.
B Class B shares' contingent deferred sales charges included in the past one year and life of fund total return figures are 5% and 3%, respectively.
C Class C shares' contingent deferred sales charges included in the past one year and life of fund total return figures are 1% and 0%, respectively.
Annual Report
$10,000 Over Life of Fund
Let's say hypothetically that $10,000 was invested in Fidelity Advisor Small Cap Value Fund - Class A on November 3, 2004, when the fund started, 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® Value Index performed over the same period.
In prior years, the performance from year to year was represented by the performance of Class T. Going forward, the fund's performance will be represented by Class A for consistency with other fund materials.
Annual Report
Management's Discussion of Fund Performance
Comments from Charles Myers, who became Portfolio Manager of Fidelity Advisor Small Cap Value Fund on May 9, 2008.
Grim news about the U.S. economy forced most domestic equity benchmarks into negative territory for the 12 months ending July 31, 2008. Oil prices north of $140 per barrel, gasoline prices in excess of $4 per gallon and soaring food costs drove inflation and consumer prices higher. In response, consumer discretionary spending trended lower as Main Street tightened its purse strings. Wall Street, meanwhile, struggled under the weight of massive write-downs in the financials sector, an ongoing credit crisis and bleak housing data. In an effort to staunch the bleeding, the Federal Reserve Board cut interest rates on seven occasions during the past year. Nevertheless, investors fled the equity markets, and both the Dow Jones Industrial AverageSM and the Standard & Poor's 500SM Index fell to a threshold that many believe marks the official start of a "bear market." For the 12 months overall, the Dow slid 11.71%, the S&P 500® dropped 11.09% and the technology-heavy NASDAQ Composite® Index dipped 7.98%.
For the 12 months ending July 31, 2008, the fund's Class A, Class T, Class B and Class C shares fell 14.35%, 14.58%, 15.04% and 15.04%, respectively (excluding sales charges), compared with a decline of 9.95% for the Russell 2000® Value Index. Favorable sector weightings helped performance, but that positive impact was overshadowed by poor security selection. For example, the fund on average was overweighted in the strong-
performing energy sector and underweighted in the weak consumer discretionary sector. Being underweighted in financials helped as well, although I added to the position during the period. However, disappointing security selection within financials, as well as in information technology and consumer discretionary, detracted notably. The fund's biggest individual underperformer was oil refiner Tesoro, which I sold before period end. Rising oil prices created a difficult situation for Tesoro and other refineries. In financials, Associated Banc-Corp. was a disappointment. Although Associated historically has maintained relatively high underwriting standards, it wasn't immune from the global credit crunch. Financial advisory firm National Financial Partners underperformed, as did technology stock Arris Group, and both were sold from the portfolio. On the positive side, oil and gas exploration/production company Southwestern Energy was helped greatly by high energy prices, as was another out-of-benchmark holding, Cabot Oil & Gas. In materials, Compass Minerals did well. All three of these outperformers were sold during the period.
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 (February 1, 2008 to July 31, 2008).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Annual Report
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Beginning | Ending | Expenses Paid |
Class A |
|
|
|
Actual | $ 1,000.00 | $ 935.10 | $ 6.74 |
Hypothetical A | $ 1,000.00 | $ 1,017.90 | $ 7.02 |
Class T |
|
|
|
Actual | $ 1,000.00 | $ 934.00 | $ 7.93 |
Hypothetical A | $ 1,000.00 | $ 1,016.66 | $ 8.27 |
Class B |
|
|
|
Actual | $ 1,000.00 | $ 931.70 | $ 10.33 |
Hypothetical A | $ 1,000.00 | $ 1,014.17 | $ 10.77 |
Class C |
|
|
|
Actual | $ 1,000.00 | $ 931.70 | $ 10.33 |
Hypothetical A | $ 1,000.00 | $ 1,014.17 | $ 10.77 |
Small Cap Value |
|
|
|
Actual | $ 1,000.00 | $ 937.10 | $ 5.39 |
Hypothetical A | $ 1,000.00 | $ 1,019.29 | $ 5.62 |
Institutional Class |
|
|
|
Actual | $ 1,000.00 | $ 937.10 | $ 5.35 |
Hypothetical A | $ 1,000.00 | $ 1,019.34 | $ 5.57 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
| Annualized |
Class A | 1.40% |
Class T | 1.65% |
Class B | 2.15% |
Class C | 2.15% |
Small Cap Value | 1.12% |
Institutional Class | 1.11% |
Annual Report
Investment Changes (Unaudited)
Top Ten Stocks as of July 31, 2008 | ||
| % of fund's | % of fund's net assets |
HNI Corp. | 2.8 | 0.0 |
Aspen Insurance Holdings Ltd. | 2.6 | 0.8 |
City National Corp. | 2.6 | 0.0 |
United Stationers, Inc. | 2.4 | 0.0 |
Pediatrix Medical Group, Inc. | 2.4 | 0.6 |
IPC Holdings Ltd. | 2.3 | 1.2 |
Ingram Micro, Inc. Class A | 2.2 | 1.1 |
Astoria Financial Corp. | 2.2 | 0.0 |
Highwoods Properties, Inc. (SBI) | 2.2 | 0.0 |
CapitalSource, Inc. | 2.1 | 0.0 |
| 23.8 | |
Top Five Market Sectors as of July 31, 2008 | ||
| % of fund's | % of fund's net assets |
Financials | 32.7 | 23.6 |
Consumer Discretionary | 14.0 | 11.3 |
Industrials | 12.0 | 14.0 |
Information Technology | 11.8 | 13.5 |
Materials | 7.4 | 7.7 |
Asset Allocation (% of fund's net assets) | |||||||
As of July 31, 2008 * | As of January 31, 2008 ** | ||||||
Stocks 98.0% |
| Stocks 95.7% |
| ||||
Short-Term |
| Short-Term |
| ||||
* Foreign investments | 10.9% |
| ** Foreign investments | 8.1% |
|
Annual Report
Investments July 31, 2008
Showing Percentage of Net Assets
Common Stocks - 97.5% | |||
Shares | Value | ||
CONSUMER DISCRETIONARY - 13.5% | |||
Diversified Consumer Services - 1.0% | |||
Regis Corp. | 462,340 | $ 12,940,897 | |
Household Durables - 5.2% | |||
Centex Corp. | 658,940 | 9,673,239 | |
Ethan Allen Interiors, Inc. (d) | 328,713 | 8,250,696 | |
M.D.C. Holdings, Inc. | 225,000 | 9,342,000 | |
M/I Homes, Inc. (d) | 219,273 | 4,155,223 | |
Meritage Homes Corp. (a)(d) | 1,408,400 | 25,421,620 | |
Ryland Group, Inc. (d) | 427,900 | 8,810,461 | |
| 65,653,239 | ||
Leisure Equipment & Products - 1.1% | |||
RC2 Corp. (a) | 598,229 | 13,735,338 | |
Specialty Retail - 5.2% | |||
Asbury Automotive Group, Inc. | 991,261 | 9,823,397 | |
bebe Stores, Inc. (d) | 1,250,000 | 12,962,500 | |
Collective Brands, Inc. (a)(d) | 657,900 | 8,473,752 | |
The Men's Wearhouse, Inc. (d) | 1,069,641 | 21,296,552 | |
Tsutsumi Jewelry Co. Ltd. | 497,600 | 9,962,147 | |
USS Co. Ltd. | 46,410 | 3,110,059 | |
| 65,628,407 | ||
Textiles, Apparel & Luxury Goods - 1.0% | |||
Iconix Brand Group, Inc. (a)(d) | 1,038,800 | 12,465,600 | |
TOTAL CONSUMER DISCRETIONARY | 170,423,481 | ||
CONSUMER STAPLES - 6.6% | |||
Food & Staples Retailing - 4.0% | |||
Casey's General Stores, Inc. | 800,000 | 19,680,000 | |
Ingles Markets, Inc. Class A | 502,875 | 12,229,920 | |
The Pantry, Inc. (a)(d)(e) | 1,174,724 | 18,783,837 | |
| 50,693,757 | ||
Food Products - 1.2% | |||
Marine Harvest ASA (a)(d) | 21,755,000 | 15,412,708 | |
Personal Products - 1.4% | |||
Chattem, Inc. (a)(d) | 263,161 | 16,965,990 | |
TOTAL CONSUMER STAPLES | 83,072,455 | ||
ENERGY - 2.6% | |||
Energy Equipment & Services - 1.1% | |||
Superior Energy Services, Inc. (a) | 295,000 | 13,991,850 | |
Common Stocks - continued | |||
Shares | Value | ||
ENERGY - continued | |||
Oil, Gas & Consumable Fuels - 1.5% | |||
Encore Acquisition Co. (a) | 160,000 | $ 9,899,200 | |
Mariner Energy, Inc. (a) | 325,000 | 8,599,500 | |
| 18,498,700 | ||
TOTAL ENERGY | 32,490,550 | ||
FINANCIALS - 32.7% | |||
Capital Markets - 1.7% | |||
TradeStation Group, Inc. (a) | 1,992,291 | 21,476,897 | |
Commercial Banks - 6.9% | |||
Associated Banc-Corp. (d) | 1,573,683 | 26,264,769 | |
Banner Corp. (d) | 128,475 | 1,224,367 | |
Boston Private Financial Holdings, Inc. (d) | 1,491,671 | 11,679,784 | |
City National Corp. | 655,000 | 32,180,150 | |
Renasant Corp. | 343,388 | 6,081,401 | |
Sandy Spring Bancorp, Inc. (d) | 544,942 | 9,051,487 | |
| 86,481,958 | ||
Diversified Financial Services - 2.0% | |||
KKR Financial Holdings LLC | 2,460,000 | 25,264,200 | |
Insurance - 6.9% | |||
Aspen Insurance Holdings Ltd. | 1,300,200 | 33,012,078 | |
IPC Holdings Ltd. | 898,740 | 28,849,554 | |
Max Capital Group Ltd. | 1,090,000 | 25,582,300 | |
| 87,443,932 | ||
Real Estate Investment Trusts - 10.2% | |||
CapitalSource, Inc. (d) | 2,300,000 | 26,726,000 | |
Chimera Investment Corp. (d) | 1,529,063 | 11,758,494 | |
Franklin Street Properties Corp. | 1,464,411 | 17,968,323 | |
Highwoods Properties, Inc. (SBI) | 741,230 | 27,054,895 | |
National Retail Properties, Inc. | 1,200,000 | 25,368,000 | |
U-Store-It Trust | 1,628,262 | 18,969,252 | |
| 127,844,964 | ||
Thrifts & Mortgage Finance - 5.0% | |||
Astoria Financial Corp. | 1,219,521 | 27,280,685 | |
Farmer Mac Class C (non-vtg.) (d) | 230,945 | 6,618,884 | |
Common Stocks - continued | |||
Shares | Value | ||
FINANCIALS - continued | |||
Thrifts & Mortgage Finance - continued | |||
People's United Financial, Inc. | 755,000 | $ 12,819,900 | |
Washington Federal, Inc. (d) | 879,800 | 16,364,280 | |
| 63,083,749 | ||
TOTAL FINANCIALS | 411,595,700 | ||
HEALTH CARE - 5.3% | |||
Health Care Providers & Services - 3.9% | |||
AMERIGROUP Corp. (a) | 316,839 | 8,047,711 | |
Pediatrix Medical Group, Inc. (a) | 614,200 | 29,880,830 | |
PSS World Medical, Inc. (a) | 688,000 | 11,530,880 | |
| 49,459,421 | ||
Pharmaceuticals - 1.4% | |||
Perrigo Co. (d) | 486,200 | 17,128,826 | |
TOTAL HEALTH CARE | 66,588,247 | ||
INDUSTRIALS - 12.0% | |||
Building Products - 2.6% | |||
NCI Building Systems, Inc. (a)(d) | 502,014 | 18,805,444 | |
Simpson Manufacturing Co. Ltd. (d) | 575,000 | 13,805,750 | |
| 32,611,194 | ||
Commercial Services & Supplies - 7.5% | |||
ACCO Brands Corp. (a) | 1,249,573 | 10,708,841 | |
HNI Corp. (d) | 1,622,121 | 35,118,917 | |
Knoll, Inc. | 1,180,251 | 18,223,075 | |
United Stationers, Inc. (a) | 800,000 | 30,664,000 | |
| 94,714,833 | ||
Construction & Engineering - 1.7% | |||
URS Corp. (a) | 500,676 | 20,988,338 | |
Machinery - 0.2% | |||
Accuride Corp. (a) | 1,034,000 | 2,843,500 | |
Road & Rail - 0.0% | |||
Quality Distribution, Inc. (a) | 59,900 | 182,695 | |
TOTAL INDUSTRIALS | 151,340,560 | ||
Common Stocks - continued | |||
Shares | Value | ||
INFORMATION TECHNOLOGY - 11.8% | |||
Communications Equipment - 0.7% | |||
ViaSat, Inc. (a) | 403,688 | $ 9,296,935 | |
Electronic Equipment & Instruments - 3.5% | |||
Ingram Micro, Inc. Class A (a) | 1,503,100 | 27,702,133 | |
Ryoyo Electro Corp. (d) | 872,700 | 9,132,249 | |
SYNNEX Corp. (a)(d) | 298,366 | 6,969,830 | |
| 43,804,212 | ||
Internet Software & Services - 3.3% | |||
DealerTrack Holdings, Inc. (a)(d) | 967,234 | 15,069,506 | |
j2 Global Communications, Inc. (a) | 563,149 | 13,498,682 | |
LoopNet, Inc. (a)(d) | 1,094,182 | 12,429,908 | |
| 40,998,096 | ||
IT Services - 1.1% | |||
Telvent GIT SA | 591,673 | 14,200,152 | |
Semiconductors & Semiconductor Equipment - 3.2% | |||
FormFactor, Inc. (a) | 764,157 | 13,296,332 | |
Skyworks Solutions, Inc. (a) | 1,464,200 | 13,851,332 | |
Zoran Corp. (a) | 1,613,644 | 13,344,836 | |
| 40,492,500 | ||
TOTAL INFORMATION TECHNOLOGY | 148,791,895 | ||
MATERIALS - 7.4% | |||
Chemicals - 2.8% | |||
Spartech Corp. | 1,108,102 | 11,202,911 | |
Valspar Corp. | 1,110,000 | 24,053,700 | |
| 35,256,611 | ||
Containers & Packaging - 4.6% | |||
Bemis Co., Inc. | 550,000 | 15,488,000 | |
Pactiv Corp. (a)(d) | 870,000 | 20,975,700 | |
Silgan Holdings, Inc. | 399,017 | 21,076,078 | |
| 57,539,778 | ||
TOTAL MATERIALS | 92,796,389 | ||
UTILITIES - 5.6% | |||
Electric Utilities - 3.5% | |||
Allete, Inc. | 474,753 | 20,205,488 | |
Westar Energy, Inc. (d) | 1,100,000 | 24,288,000 | |
| 44,493,488 | ||
Common Stocks - continued | |||
Shares | Value | ||
UTILITIES - continued | |||
Gas Utilities - 2.1% | |||
Southwest Gas Corp. | 910,989 | $ 26,327,582 | |
TOTAL UTILITIES | 70,821,070 | ||
TOTAL COMMON STOCKS (Cost $1,319,880,857) | 1,227,920,347 | ||
Nonconvertible Preferred Stocks - 0.5% | |||
|
|
|
|
CONSUMER DISCRETIONARY - 0.5% | |||
Household Durables - 0.5% | |||
M/I Homes, Inc. Series A, 9.75% | 382,500 | 5,928,750 | |
TOTAL NONCONVERTIBLE PREFERRED STOCKS (Cost $6,778,025) | 5,928,750 | ||
Money Market Funds - 18.2% | |||
|
|
|
|
Fidelity Cash Central Fund, 2.35% (b) | 22,064,532 | 22,064,532 | |
Fidelity Securities Lending Cash Central Fund, 2.37% (b)(c) | 206,551,232 | 206,551,232 | |
TOTAL MONEY MARKET FUNDS (Cost $228,615,764) | 228,615,764 | ||
TOTAL INVESTMENT PORTFOLIO - 116.2% (Cost $1,555,274,646) | 1,462,464,861 | ||
NET OTHER ASSETS - (16.2)% | (203,673,814) | ||
NET ASSETS - 100% | $ 1,258,791,047 |
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
(e) Affiliated company |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 1,929,213 |
Fidelity Securities Lending Cash Central Fund | 1,218,551 |
Total | $ 3,147,764 |
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 | Dividend Income | Value, |
The Pantry, Inc. | $ 15,712,840 | $ 17,933,722 | $ 12,017,520 | $ - | $ 18,783,837 |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 89.1% |
Bermuda | 6.9% |
Japan | 1.7% |
Norway | 1.2% |
Spain | 1.1% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements
Statement of Assets and Liabilities
| July 31, 2008 | |
Assets | ||
Investment in securities, at value (including securities loaned of $202,856,468) - See accompanying schedule: Unaffiliated issuers (cost $1,312,257,226) | $ 1,215,065,260 |
|
Fidelity Central Funds (cost $228,615,764) | 228,615,764 |
|
Other affiliated issuers (cost $14,401,656) | 18,783,837 |
|
Total Investments (cost $1,555,274,646) |
| $ 1,462,464,861 |
Receivable for investments sold | 5,664,742 | |
Receivable for fund shares sold | 1,351,718 | |
Dividends receivable | 1,381,376 | |
Distributions receivable from Fidelity Central Funds | 259,985 | |
Prepaid expenses | 1,596 | |
Other receivables | 11,489 | |
Total assets | 1,471,135,767 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 3,306,601 | |
Payable for fund shares redeemed | 1,349,433 | |
Accrued management fee | 714,775 | |
Distribution fees payable | 46,242 | |
Other affiliated payables | 313,009 | |
Other payables and accrued expenses | 63,428 | |
Collateral on securities loaned, at value | 206,551,232 | |
Total liabilities | 212,344,720 | |
|
|
|
Net Assets | $ 1,258,791,047 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,338,391,884 | |
Undistributed net investment income | 1,269,467 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 11,939,467 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (92,809,771) | |
Net Assets | $ 1,258,791,047 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements - continued
Statement of Assets and Liabilities - continued
| July 31, 2008 | |
|
|
|
Calculation of Maximum Offering Price | $ 11.82 | |
|
|
|
Maximum offering price per share (100/94.25 of $11.82) | $ 12.54 | |
Class T: | $ 11.74 | |
|
|
|
Maximum offering price per share (100/96.50 of $11.74) | $ 12.17 | |
Class B: | $ 11.60 | |
|
|
|
Class C: | $ 11.60 | |
|
|
|
Small Cap Value: | $ 11.91 | |
|
|
|
Institutional Class: | $ 11.91 |
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
| Year ended July 31, 2008 | |
Investment Income |
|
|
Dividends |
| $ 14,496,636 |
Interest |
| 28,789 |
Income from Fidelity Central Funds (including $1,218,551 from security lending) |
| 3,147,764 |
Total income |
| 17,673,189 |
|
|
|
Expenses | ||
Management fee | $ 9,233,898 | |
Performance adjustment | 1,555,458 | |
Transfer agent fees | 3,428,688 | |
Distribution fees | 728,002 | |
Accounting and security lending fees | 434,313 | |
Custodian fees and expenses | 46,444 | |
Independent trustees' compensation | 5,581 | |
Registration fees | 88,102 | |
Audit | 58,174 | |
Legal | 6,008 | |
Miscellaneous | 87,836 | |
Total expenses before reductions | 15,672,504 | |
Expense reductions | (118,215) | 15,554,289 |
Net investment income (loss) | 2,118,900 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 37,518,952 | |
Other affiliated issuers | (13,526,494) |
|
Foreign currency transactions | 62,571 | |
Futures contracts | 2,569,906 | |
Total net realized gain (loss) |
| 26,624,935 |
Change in net unrealized appreciation (depreciation) on: Investment securities | (226,824,068) | |
Assets and liabilities in foreign currencies | 14 | |
Total change in net unrealized appreciation (depreciation) |
| (226,824,054) |
Net gain (loss) | (200,199,119) | |
Net increase (decrease) in net assets resulting from operations | $ (198,080,219) |
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) | $ 2,118,900 | $ (2,821,365) |
Net realized gain (loss) | 26,624,935 | 58,301,578 |
Change in net unrealized appreciation (depreciation) | (226,824,054) | 108,216,572 |
Net increase (decrease) in net assets resulting | (198,080,219) | 163,696,785 |
Distributions to shareholders from net realized gain | (53,456,977) | (55,419,267) |
Share transactions - net increase (decrease) | 105,675,336 | 206,517,786 |
Redemption fees | 144,871 | 174,668 |
Total increase (decrease) in net assets | (145,716,989) | 314,969,972 |
|
|
|
Net Assets | ||
Beginning of period | 1,404,508,036 | 1,089,538,064 |
End of period (including undistributed net investment income of $1,269,467 and $0, respectively) | $ 1,258,791,047 | $ 1,404,508,036 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended July 31, | 2008 | 2007 | 2006 | 2005 H |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 14.34 | $ 13.17 | $ 12.80 | $ 10.00 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss) E | (.01) | (.06) | (.03) | (.04) |
Net realized and unrealized gain (loss) | (1.98) | 1.90 | .74 | 2.84 |
Total from investment operations | (1.99) | 1.84 | .71 | 2.80 |
Distributions from net investment income | - | - | - | (.01) |
Distributions from net realized gain | (.53) | (.67) | (.35) | - |
Total distributions | (.53) | (.67) | (.35) | (.01) |
Redemption fees added to paid in capital E | - J | - J | .01 | .01 |
Net asset value, end of period | $ 11.82 | $ 14.34 | $ 13.17 | $ 12.80 |
Total Return B, C, D | (14.35)% | 14.59% | 5.72% | 28.06% |
Ratios to Average Net Assets F, I |
|
|
|
|
Expenses before reductions | 1.43% | 1.45% | 1.51% | 1.46% A |
Expenses net of fee waivers, if any | 1.40% | 1.40% | 1.40% | 1.44% A |
Expenses net of all reductions | 1.40% | 1.40% | 1.36% | 1.38% A |
Net investment income (loss) | (.05)% | (.44)% | (.24)% | (.46)% A |
Supplemental Data |
|
|
|
|
Net assets, end of period (000 omitted) | $ 52,446 | $ 61,357 | $ 39,931 | $ 9,390 |
Portfolio turnover rate G | 149% | 67% | 93% | 60% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
H For the period November 3, 2004 (commencement of operations) to July 31, 2005.
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 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.
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 July 31, | 2008 | 2007 | 2006 | 2005 H |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 14.28 | $ 13.13 | $ 12.78 | $ 10.00 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss) E | (.04) | (.10) | (.07) | (.06) |
Net realized and unrealized gain (loss) | (1.97) | 1.90 | .74 | 2.83 |
Total from investment operations | (2.01) | 1.80 | .67 | 2.77 |
Distributions from net realized gain | (.53) | (.65) | (.33) | - |
Redemption fees added to paid in capital E | - J | - J | .01 | .01 |
Net asset value, end of period | $ 11.74 | $ 14.28 | $ 13.13 | $ 12.78 |
Total Return B, C, D | (14.58)% | 14.34% | 5.47% | 27.80% |
Ratios to Average Net Assets F, I |
|
|
|
|
Expenses before reductions | 1.68% | 1.66% | 1.67% | 1.72% A |
Expenses net of fee waivers, if any | 1.65% | 1.65% | 1.65% | 1.68% A |
Expenses net of all reductions | 1.65% | 1.65% | 1.61% | 1.62% A |
Net investment income (loss) | (.30)% | (.69)% | (.49)% | (.70)% A |
Supplemental Data |
|
|
|
|
Net assets, end of period (000 omitted) | $ 32,091 | $ 51,518 | $ 45,460 | $ 12,725 |
Portfolio turnover rate G | 149% | 67% | 93% | 60% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
H For the period November 3, 2004 (commencement of operations) to July 31, 2005.
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 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.
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 B
Years ended July 31, | 2008 | 2007 | 2006 | 2005 H |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 14.19 | $ 13.07 | $ 12.73 | $ 10.00 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss) E | (.10) | (.17) | (.13) | (.10) |
Net realized and unrealized gain (loss) | (1.96) | 1.90 | .74 | 2.82 |
Total from investment operations | (2.06) | 1.73 | .61 | 2.72 |
Distributions from net realized gain | (.53) | (.61) | (.28) | - |
Redemption fees added to paid in capital E | - J | - J | .01 | .01 |
Net asset value, end of period | $ 11.60 | $ 14.19 | $ 13.07 | $ 12.73 |
Total Return B, C, D | (15.04)% | 13.78% | 4.97% | 27.30% |
Ratios to Average Net Assets F, I |
|
|
|
|
Expenses before reductions | 2.18% | 2.20% | 2.26% | 2.24% A |
Expenses net of fee waivers, if any | 2.15% | 2.15% | 2.15% | 2.19% A |
Expenses net of all reductions | 2.15% | 2.15% | 2.11% | 2.13% A |
Net investment income (loss) | (.80)% | (1.19)% | (.99)% | (1.21)% A |
Supplemental Data |
|
|
|
|
Net assets, end of period (000 omitted) | $ 7,886 | $ 12,075 | $ 10,214 | $ 3,931 |
Portfolio turnover rate G | 149% | 67% | 93% | 60% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the contingent deferred sales charge.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
H For the period November 3, 2004 (commencement of operations) to July 31, 2005.
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 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.
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 C
Years ended July 31, | 2008 | 2007 | 2006 | 2005 H |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 14.19 | $ 13.07 | $ 12.74 | $ 10.00 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss) E | (.10) | (.17) | (.13) | (.10) |
Net realized and unrealized gain (loss) | (1.96) | 1.90 | .74 | 2.83 |
Total from investment operations | (2.06) | 1.73 | .61 | 2.73 |
Distributions from net realized gain | (.53) | (.61) | (.29) | - |
Redemption fees added to paid in capital E | - J | - J | .01 | .01 |
Net asset value, end of period | $ 11.60 | $ 14.19 | $ 13.07 | $ 12.74 |
Total Return B, C, D | (15.04)% | 13.77% | 4.92% | 27.40% |
Ratios to Average Net Assets F, I |
|
|
|
|
Expenses before reductions | 2.18% | 2.20% | 2.22% | 2.17% A |
Expenses net of fee waivers, if any | 2.15% | 2.15% | 2.15% | 2.17% A |
Expenses net of all reductions | 2.15% | 2.15% | 2.11% | 2.11% A |
Net investment income (loss) | (.80)% | (1.19)% | (.99)% | (1.19)% A |
Supplemental Data |
|
|
|
|
Net assets, end of period (000 omitted) | $ 20,924 | $ 34,155 | $ 26,791 | $ 11,732 |
Portfolio turnover rate G | 149% | 67% | 93% | 60% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the contingent deferred sales charge.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
H For the period November 3, 2004 (commencement of operations) to July 31, 2005.
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 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.
J Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Small Cap Value
Years ended July 31, | 2008 | 2007 | 2006 | 2005 G |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 14.43 | $ 13.22 | $ 12.83 | $ 10.00 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss) D | .03 | (.02) | .01 | (.01) |
Net realized and unrealized gain (loss) | (1.99) | 1.91 | .74 | 2.84 |
Total from investment operations | (1.96) | 1.89 | .75 | 2.83 |
Distributions from net investment income | - | - | (.01) | (.01) |
Distributions from net realized gain | (.56) | (.68) | (.36) | - |
Total distributions | (.56) | (.68) | (.37) | (.01) |
Redemption fees added to paid in capital D | - I | - I | .01 | .01 |
Net asset value, end of period | $ 11.91 | $ 14.43 | $ 13.22 | $ 12.83 |
Total Return B, C | (14.10)% | 14.96% | 6.07% | 28.36% |
Ratios to Average Net Assets E, H |
|
|
|
|
Expenses before reductions | 1.14% | 1.11% | 1.09% | 1.05% A |
Expenses net of fee waivers, if any | 1.14% | 1.11% | 1.09% | 1.05% A |
Expenses net of all reductions | 1.13% | 1.11% | 1.06% | .99% A |
Net investment income (loss) | .22% | (.15)% | .06% | (.08)% A |
Supplemental Data |
|
|
|
|
Net assets, end of period (000 omitted) | $ 1,136,860 | $ 1,233,808 | $ 957,720 | $ 582,689 |
Portfolio turnover rate F | 149% | 67% | 93% | 60% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
G For the period November 3, 2004 (commencement of operations) to July 31, 2005.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
I Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Institutional Class
Years ended July 31, | 2008 | 2007 | 2006 | 2005 G |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 14.43 | $ 13.22 | $ 12.83 | $ 10.00 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss) D | .03 | (.02) | .01 | (.01) |
Net realized and unrealized gain (loss) | (1.99) | 1.91 | .74 | 2.84 |
Total from investment operations | (1.96) | 1.89 | .75 | 2.83 |
Distributions from net investment income | - | - | (.01) | (.01) |
Distributions from net realized gain | (.56) | (.68) | (.36) | - |
Total distributions | (.56) | (.68) | (.37) | (.01) |
Redemption fees added to paid in capital D | - I | - I | .01 | .01 |
Net asset value, end of period | $ 11.91 | $ 14.43 | $ 13.22 | $ 12.83 |
Total Return B, C | (14.10)% | 14.99% | 6.08% | 28.36% |
Ratios to Average Net Assets E, H |
|
|
|
|
Expenses before reductions | 1.13% | 1.10% | 1.08% | 1.07% A |
Expenses net of fee waivers, if any | 1.13% | 1.10% | 1.08% | 1.07% A |
Expenses net of all reductions | 1.13% | 1.10% | 1.05% | 1.01% A |
Net investment income (loss) | .22% | (.13)% | .08% | (.10)% A |
Supplemental Data |
|
|
|
|
Net assets, end of period (000 omitted) | $ 8,584 | $ 11,594 | $ 9,422 | $ 3,761 |
Portfolio turnover rate F | 149% | 67% | 93% | 60% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
G For the period November 3, 2004 (commencement of operations) to July 31, 2005.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
I 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 July 31, 2008
1. Organization.
Fidelity Small Cap Value Fund (the Fund) is a fund of Fidelity Securities Fund (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 B, Class C, Small Cap Value, and Institutional Class 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 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 also differ by class.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the SEC's web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. Wherever possible, the Fund uses independent pricing services approved by the Board of Trustees to value its investments.
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally
Annual Report
3. Significant Accounting Policies - continued
Investment Transactions and Income - continued
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. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The implementation of FIN 48 did not result in any unrecognized tax benefits in the accompanying financial statements. Each of the Fund's federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. In addition, the Fund will claim a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Annual Report
Notes to Financial Statements - continued
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 foreign currency transactions, partnerships, and losses deferred due to wash sales.
The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows:
Unrealized appreciation | $ 60,995,126 |
Unrealized depreciation | (156,636,018) |
Net unrealized appreciation (depreciation) | (95,640,892) |
Undistributed ordinary income | 993,181 |
Undistributed long-term capital gain | 11,553,572 |
|
|
Cost for federal income tax purposes | $ 1,558,105,753 |
The tax character of distributions paid was as follows:
| July 31, 2008 | July 31, 2007 |
Ordinary Income | $ 2,392,014 | $ 15,936,394 |
Long-term Capital Gains | 51,064,963 | 39,482,873 |
Total | $ 53,456,977 | $ 55,419,267 |
Short-Term Trading (Redemption) Fees. Shares held in the Fund less than 90 days are subject to a redemption fee equal to 1.50% of the proceeds of the redeemed shares. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the Fund and accounted for as an addition to paid in capital.
New Accounting Pronouncements. In September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and results in expanded disclosures about fair value measurements.
In addition, in March 2008, Statement of Financial Accounting Standards No. 161, Disclosures about Derivative Instruments and Hedging Activities (SFAS 161), was issued and is effective for fiscal years beginning after November 15, 2008. SFAS 161 requires enhanced disclosures to provide information about the reasons the Fund invests in derivative instruments, the accounting treatment and the effect derivatives have on
Annual Report
3. Significant Accounting Policies - continued
New Accounting Pronouncements - continued
financial performance. Management is currently evaluating the impact the adoption of SFAS 161 will have on the Fund's financial statement disclosures.
4. Operating Policies.
Repurchase Agreements. FMR has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits the Fund and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts which are then invested in repurchase agreements. The Fund may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. The Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
Futures Contracts. The Fund may use futures contracts to manage its exposure to the stock market. Buying futures tends to increase a fund's exposure to the underlying instrument, while selling futures tends to decrease a fund's exposure to the underlying instrument or hedge other fund investments. Upon entering into a futures contract, a fund is required to deposit with a clearing broker, no later than the following business day, an amount ("initial margin") equal to a certain percentage of the face value of the contract. The initial margin may be in the form of cash or securities and is transferred to a segregated account on settlement date. Subsequent payments ("variation margin") are made or received by a fund depending on the daily fluctuations in the value of the futures contract and are accounted for as unrealized gains or losses. Realized gains (losses) are recorded upon the expiration or closing of the futures contract. Losses may arise from changes in the value of the underlying instruments or if the counterparties do not perform under the contract's terms.
5. Purchases and Sales of Investments.
Purchases and sales of securities other than short-term securities, aggregated $1,960,180,295 and $1,899,076,674, respectively.
Annual Report
Notes to Financial Statements - continued
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 .45% of the Fund's average net assets and a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. In addition, the management fee is subject to a performance adjustment (up to a maximum of ± .20% of the Fund's average net assets over a 36 month performance period). The upward or downward adjustment to the management fee is based on the relative investment performance of the retail class of the Fund, Small Cap Value, as compared to an appropriate benchmark index. For the period, the total annual management fee rate, including the performance adjustment, was .83% of the Fund's average net assets.
Distribution and Service Plan. 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 and the total amounts paid to and retained by FDC were as follows:
| Distribution | Service | Paid to | Retained |
Class A | 0% | .25% | $ 145,377 | $ 16,596 |
Class T | .25% | .25% | 200,976 | - |
Class B | .75% | .25% | 100,604 | 75,549 |
Class C | .75% | .25% | 281,045 | 58,239 |
|
|
| $ 728,002 | $ 150,384 |
Sales Load. FDC receives 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. FDC receives the proceeds of contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. These charges depend on the holding period. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, 1.00% to .50% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
Annual Report
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 | $ 48,477 |
Class T | 9,117 |
Class B* | 20,133 |
Class C* | 2,688 |
| $ 80,415 |
* 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. Prior to January 1, 2008, Fidelity Service Company, Inc. (FSC), also an affiliate of FMR, was the transfer agent for Small Cap Value shares. For the period, each class paid the following transfer agent fees:
| Amount | % of |
Class A | $ 175,851 | .30 |
Class T | 121,857 | .30 |
Class B | 30,655 | .30 |
Class C | 85,123 | .30 |
Small Cap Value | 2,988,753 | .26 |
Institutional Class | 26,449 | .25 |
| $ 3,428,688 |
|
Accounting and Security Lending Fees. FSC, an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $70,936 for the period.
Annual Report
Notes to Financial Statements - continued
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $4.2 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro rata portion of the line of credit, which amounted to $3,170 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
8. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds.
9. Expense Reductions.
FMR voluntarily agreed to reimburse each class to the extent annual operating expenses exceeded certain levels of average net assets as noted in the table below. Some expenses, for example interest expense, including commitment fees, are excluded from this reimbursement.
The following classes were in reimbursement during the period:
| Expense | Reimbursement |
|
|
|
Class A | 1.40% | $ 18,972 |
Class T | 1.65% | 13,639 |
Class B | 2.15% | 3,588 |
Class C | 2.15% | 9,599 |
|
| $ 45,798 |
Annual Report
9. Expense Reductions - continued
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 $12,006 for the period. In addition, through arrangements with each class' transfer agent, credits realized as a result of uninvested cash balances were used to reduce the Fund's expenses. During the period, credits reduced each class' transfer agent expense as noted in the table below.
| Transfer Agent |
Class A | $ 591 |
Small Cap Value | 59,561 |
Institutional Class | 259 |
| $ 60,411 |
10. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
11. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended July 31, | 2008 | 2007 |
From net realized gain |
|
|
Class A | $ 2,334,219 | $ 2,137,128 |
Class T | 1,800,459 | 2,317,701 |
Class B | 442,697 | 493,632 |
Class C | 1,258,270 | 1,276,323 |
Small Cap Value | 47,176,109 | 48,691,674 |
Institutional Class | 445,223 | 502,809 |
Total | $ 53,456,977 | $ 55,419,267 |
Annual Report
Notes to Financial Statements - continued
12. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
Years ended July 31, | 2008 | 2007 | 2008 | 2007 |
Class A |
|
|
|
|
Shares sold | 1,801,333 | 2,083,427 | $ 23,728,165 | $ 29,477,855 |
Reinvestment of distributions | 158,451 | 153,067 | 2,181,126 | 1,967,811 |
Shares redeemed | (1,800,932) | (990,255) | (23,386,603) | (13,986,913) |
Net increase (decrease) | 158,852 | 1,246,239 | $ 2,522,688 | $ 17,458,753 |
Class T |
|
|
|
|
Shares sold | 618,951 | 1,416,878 | $ 8,024,654 | $ 19,764,686 |
Reinvestment of distributions | 127,052 | 158,416 | 1,740,319 | 2,031,495 |
Shares redeemed | (1,620,468) | (1,429,554) | (21,259,209) | (20,059,646) |
Net increase (decrease) | (874,465) | 145,740 | $ (11,494,236) | $ 1,736,535 |
Class B |
|
|
|
|
Shares sold | 128,063 | 297,938 | $ 1,643,352 | $ 4,153,087 |
Reinvestment of distributions | 29,083 | 34,686 | 395,378 | 444,445 |
Shares redeemed | (328,632) | (263,033) | (4,160,797) | (3,714,165) |
Net increase (decrease) | (171,486) | 69,591 | $ (2,122,067) | $ 883,367 |
Class C |
|
|
|
|
Shares sold | 565,275 | 834,910 | $ 7,245,287 | $ 11,698,988 |
Reinvestment of distributions | 82,093 | 84,926 | 1,115,865 | 1,089,287 |
Shares redeemed | (1,251,391) | (562,438) | (15,942,770) | (7,834,552) |
Net increase (decrease) | (604,023) | 357,398 | $ (7,581,618) | $ 4,953,723 |
Small Cap Value |
|
|
|
|
Shares sold | 33,217,718 | 42,235,359 | $ 432,952,106 | $ 595,504,607 |
Reinvestment of distributions | 3,344,768 | 3,617,365 | 46,241,130 | 46,609,140 |
Shares redeemed | (26,584,070) | (32,779,622) | (353,880,106) | (461,808,869) |
Net increase (decrease) | 9,978,416 | 13,073,102 | $ 125,313,130 | $ 180,304,878 |
Institutional Class |
|
|
|
|
Shares sold | 353,080 | 309,983 | $ 4,711,093 | $ 4,413,286 |
Reinvestment of distributions | 21,635 | 23,286 | 299,115 | 300,279 |
Shares redeemed | (457,781) | (242,217) | (5,972,769) | (3,533,035) |
Net increase (decrease) | (83,066) | 91,052 | $ (962,561) | $ 1,180,530 |
Annual Report
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Securities Fund and the Shareholders of Fidelity Small Cap 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 Small Cap Value Fund (a fund of Fidelity Securities Fund) at July 31, 2008, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and 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 Small Cap 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 July 31, 2008 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
September 22, 2008
Annual Report
Trustees and Officers
The Trustees, Member of the Advisory Board, and executive officers of the trust and fund, as applicable, are listed below. The Board of Trustees governs the fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee the fund's activities, review contractual arrangements with companies that provide services to the fund, and review the fund's performance. Except for Edward C. Johnson 3d and James C. Curvey, each of the Trustees oversees 218 funds advised by FMR or an affiliate. Messrs. Johnson and Curvey oversee 377 funds advised by FMR or an affiliate.
The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust. Each Trustee who is not an interested person (as defined in the 1940 Act) (Independent Trustee), shall retire not later than the last day of the calendar year in which his or her 72nd birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board Member hold office without limit in time, except that any officer and Advisory Board Member may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years.
The fund's Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-877-208-0098.
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 Occupation | |
Edward C. Johnson 3d (78) | |
| Year of Election or Appointment: 1984 Mr. Johnson is Chairman of the Board of Trustees. Mr. Johnson serves as Chief Executive Officer, Chairman, and a Director of FMR LLC; Chairman and a Director of FMR; Chairman and a Director of Fidelity Research & Analysis Company (FRAC); Chairman and a Director of Fidelity Investments Money Management, Inc.; and Chairman and a Director of FMR Co., Inc. In addition, Mr. Johnson serves as Chairman and Director of FIL Limited. Previously, Mr. Johnson served as President of FMR LLC (2006-2007). |
James C. Curvey (73) | |
| Year of Election or Appointment: 2007 Mr. Curvey also serves as Trustee (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2006- |
* Trustees have been determined to be "Interested Trustees" by virtue of, among other things, their affiliation with the trust or various entities under common control with FMR. FMR Corp. merged with and into FMR LLC on October 1, 2007. Any references to FMR LLC for prior periods are deemed to be references to the prior entity.
Independent Trustees:
Correspondence intended for each Independent Trustee (that is, the Trustees other than the Interested Trustees) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.
Name, Age; Principal Occupation | |
Dennis J. Dirks (60) | |
| Year of Election or Appointment: 2005 Prior to his retirement in May 2003, Mr. Dirks was Chief Operating Officer and a member of the Board of The Depository Trust & Clearing Corporation (DTCC) (1999-2003). He also served as President, Chief Operating Officer, and Board member of The Depository Trust Company (DTC) (1999-2003) and President and Board member of the National Securities Clearing Corporation (NSCC) (1999-2003). In addition, Mr. Dirks served as a Trustee and a member of the Finance Committee of Manhattan College (2005-2008), and as Chief Executive Officer and Board member of the Government Securities Clearing Corporation (2001-2003) and Chief Executive Officer and Board member of the Mortgage-Backed Securities Clearing Corporation (2001-2003). Mr. Dirks also serves as a Trustee and a member of the Finance Committee of AHRC of Nassau County (2006-present). |
Alan J. Lacy (54) | |
| Year of Election or Appointment: 2008 Mr. Lacy serves as Senior Adviser (2007-present) of Oak Hill Capital Partners, L.P. (a private equity firm). Mr. Lacy also served as Chief Executive Officer (2000-2005) and Vice Chairman (2005-2006) of Sears Holdings Corporation and Sears, Roebuck and Co. (retail). In addition, Mr. Lacy serves as a member of the Board of Directors of The Western Union Company (global money transfer, 2006-present) and Bristol-Myers Squibb (global pharmaceuticals, 2007-present). Mr. Lacy is a Trustee of the National Parks Conservation Association and The Field Museum of Natural History. |
Ned C. Lautenbach (64) | |
| Year of Election or Appointment: 2000 Mr. Lautenbach is Chairman of the Independent Trustees (2006-present). Mr. Lautenbach is an Advisory Partner of Clayton, Dubilier & Rice, Inc. (private equity investment firm). Previously, Mr. Lautenbach was with the International Business Machines Corporation (IBM) from 1968 until his retirement in 1998. Mr. Lautenbach serves as a Director of Eaton Corporation (diversified industrial) as well as the Philharmonic Center for the Arts in Naples, Florida. He also is a member of the Board of Trustees of Fairfield University (2005-present), as well as a member of the Council on Foreign Relations. Previously, Mr. Lautenbach served as a Director of Sony Corporation (2006-2007). |
Joseph Mauriello (63) | |
| 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 firm, 1965-2005). Mr. Mauriello currently serves as a member of the Board of Directors of XL Capital Ltd. (global insurance and re-insurance company, 2006-present) and of Arcadia Resources Inc. (health care services and products, 2007-present). He also served as a Director of the Hamilton Funds of the Bank of New York (2006-2007). |
Cornelia M. Small (64) | |
| Year of Election or Appointment: 2005 Ms. Small is a member of the Investment Committee, and Chair (2008-present) and a member of the Board of Trustees of Smith College. Ms. Small also serves on the Investment Committee of the Berkshire Taconic Community Foundation (2008-present). Previously, Ms. Small served as Chairperson of the Investment Committee (2002-2008) of Smith College and as Co-Chair (2000-2003) of the Annual Fund for the Fletcher School of Law and Diplomacy. In addition, she served as Chief Investment Officer, Director of Global Equity Investments, and a member of the Board of Directors of Scudder, Stevens & Clark and Scudder Kemper Investments. |
William S. Stavropoulos (69) | |
| Year of Election or Appointment: 2002 Mr. Stavropoulos is Chairman Emeritus of the Board of Directors of The Dow Chemical Company, where he previously served in numerous senior management positions, including President (1993-2000; 2002-2003), CEO (1995-2000; 2002-2004), Chairman of the Executive Committee (2000-2006), and as a member of the Board of Directors (1990-2006). Currently, he is a Director of Teradata Corporation (data warehousing and technology solutions, 2008-present), Chemical Financial Corporation, Maersk Inc. (industrial conglomerate), Tyco International, Inc. (multinational manufacturing and services, 2007-present), and a member of the Advisory Board for Metalmark Capital (private equity investment firm, 2005-present). He is a special advisor to Clayton, Dubilier & Rice, Inc. (private equity investment). In addition, Mr. Stavropoulos is a member of the University of Notre Dame Advisory Council for the College of Science. |
David M. Thomas (59) | |
| Year of Election or Appointment: 2008 Previously, Mr. Thomas served as Executive Chairman (2005-2006) and Chairman and Chief Executive Officer (2000-2005) of IMS Health, Inc. (pharmaceutical and healthcare information solutions). In addition, Mr. Thomas serves as a member of the Board of Directors of Fortune Brands, Inc. (consumer products holding company), and Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (57) | |
| Year of Election or Appointment: 2008 Mr. Wiley also serves as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-present). He serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005- |
Advisory Board Member and Executive Officers**:
Correspondence intended for each executive officer and Mr. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Peter S. Lynch (64) | |
| Year of Election or Appointment: 2003 Member of the Advisory Board of Fidelity Securities Fund. Mr. Lynch is Vice Chairman and a Director of FMR, and Vice Chairman (2001- |
Kenneth B. Robins (38) | |
| Year of Election or Appointment: 2008 President and Treasurer of the fund. Mr. Robins also serves as President and Treasurer of Fidelity's Equity and High Income Funds (2008-present) and is an employee of FMR (2004-present). Before joining Fidelity Investments, Mr. Robins worked at KPMG LLP, where he was a partner in KPMG's department of professional practice (2002-2004). |
Walter C. Donovan (46) | |
| Year of Election or Appointment: 2007 Vice President of the fund. Mr. Donovan also serves as Vice President of Fidelity's Equity Funds, President of FMR and FMR Co., Inc., and Executive Vice President of Fidelity Investments Money Management, Inc. (2007-present). Previously, Mr. Donovan served as Executive Vice President of FMR and FMR Co., Inc. (2005-2007) and Senior Vice President of FMR (2003-2005) and FMR Co., Inc. (2004-2005). |
Thomas C. Hense (44) | |
| Year of Election or Appointment: 2008 Vice President of the fund. Mr. Hense also serves as Vice President of Fidelity's High Income and Small Cap Funds (2008-present). Previously, Mr. Hense served as a portfolio manager for Fidelity's Institutional Money Management Group (Pyramis) (2003-2008). |
Scott C. Goebel (40) | |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of the fund. Mr. Goebel also serves as Secretary and CLO of other Fidelity funds (2008-present); General Counsel, Secretary, and Senior Vice President of FMR (2008- |
John B. McGinty, Jr. (45) | |
| Year of Election or Appointment: 2008 Assistant Secretary of the fund. Mr. McGinty also serves as Assistant Secretary of Fidelity's other Equity and High Income Funds (2008-present) and is an employee of FMR LLC (2004-present). Mr. McGinty also serves as Senior Vice President, Secretary, and Chief Legal Officer of FDC (2007-present). Before joining Fidelity Investments, Mr. McGinty practiced law at Ropes & Gray, LLP. |
Holly C. Laurent (54) | |
| Year of Election or Appointment: 2008 Anti-Money Laundering (AML) officer of the fund. Ms. Laurent also serves as AML officer of other Fidelity funds (2008-present) and is an employee of FMR LLC. Previously, Ms. Laurent was Senior Vice President and Head of Legal for Fidelity Business Services India Pvt. Ltd. (2006-2008), Senior Vice President, Deputy General Counsel and Group Head for FMR LLC (2005-2006). |
Christine Reynolds (49) | |
| Year of Election or Appointment: 2008 Chief Financial Officer of the fund. Ms. Reynolds also serves as Chief Financial Officer of other Fidelity funds (2008-present). Ms. Reynolds became President of Fidelity Pricing and Cash Management Services (FPCMS) in August 2008. She served as Chief Operating Officer of FPCMS from 2007 through July 2008. Previously, Ms. Reynolds served as President, Treasurer, and Anti-Money Laundering officer of the Fidelity funds (2004-2007). Before joining Fidelity Investments, Ms. Reynolds worked at PricewaterhouseCoopers LLP (PwC) (1980-2002), where she was an audit partner with PwC's investment management practice. |
Kenneth A. Rathgeber (61) | |
| Year of Election or Appointment: 2004 Chief Compliance Officer of the fund. Mr. Rathgeber also serves as Chief Compliance Officer of Fidelity's Equity and High Income Funds (2004-present). He is Chief Compliance Officer of FMR (2005-present), FMR Co., Inc. (2005-present), Fidelity Management & Research (U.K.) Inc. (2005-present), Fidelity Research & Analysis Company (2005-present), Fidelity Investments Money Management, Inc. (2005-present), and Strategic Advisers, Inc. (2005-present). |
Bryan A. Mehrmann (47) | |
| Year of Election or Appointment: 2005 Deputy Treasurer of the fund. Mr. Mehrmann also serves as Deputy Treasurer of other Fidelity funds (2005-present) and is an employee of FMR. Previously, Mr. Mehrmann served as Vice President of Fidelity Investments Institutional Services Group (FIIS)/Fidelity Investments Institutional Operations Corporation, Inc. (FIIOC) Client Services (1998-2004). |
Adrien E. Deberghes (40) | |
| Year of Election or Appointment: 2008 Deputy Treasurer of the fund. Mr. Deberghes also serves as Deputy Treasurer of Fidelity's Equity and High Income Funds (2008-present) and is an employee of FMR (2008-present). Previously, Mr. Deberghes served as Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005). |
Robert G. Byrnes (41) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of the fund. Mr. Byrnes also serves as Assistant Treasurer of other Fidelity funds (2005-present) and is an employee of FMR (2005-present). Previously, Mr. Byrnes served as Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (2003-2005). Before joining Fidelity Investments, Mr. Byrnes worked at Deutsche Asset Management where he served as Vice President of the Investment Operations Group (2000-2003). |
Peter L. Lydecker (54) | |
| Year of Election or Appointment: 2004 Assistant Treasurer of the fund. Mr. Lydecker also serves as Assistant Treasurer of other Fidelity funds (2004-present) and is an employee of FMR. |
Paul M. Murphy (61) | |
| Year of Election or Appointment: 2007 Assistant Treasurer of the fund. Mr. Murphy also serves as Assistant Treasurer of other Fidelity funds (2007-present) and is an employee of FMR (2007-present). Previously, Mr. Murphy served as Chief Financial Officer of the Fidelity Funds (2005-2006), Vice President and Associate General Counsel of FMR (2007), and Senior Vice President of Fidelity Pricing and Cash Management Services Group (1994-2007). |
Gary W. Ryan (49) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of the fund. Mr. Ryan also serves as Assistant Treasurer of other Fidelity funds (2005-present) and is an employee of FMR (2005-present). Previously, Mr. Ryan served as Vice President of Fund Reporting in Fidelity Pricing and Cash Management Services (FPCMS) (1999-2005). |
** FMR Corp. merged with and into FMR LLC on October 1, 2007. Any references to FMR LLC for prior periods are deemed to be references to the prior entity.
Annual Report
Distributions (Unaudited)
The Board of Trustees of Advisor Small Cap Value Fund voted to pay to shareholders of record at the opening of business, the following distributions per share derived from capital gains realized from sales of portfolio securities:
| Pay Date | Record Date | Capital Gains |
Class A | 09/15/08 | 09/12/08 | $0.11 |
Class T | 09/15/08 | 09/12/08 | $0.11 |
Class B | 09/15/08 | 09/12/08 | $0.11 |
Class C | 09/15/08 | 09/12/08 | $0.11 |
The fund hereby designates as a capital gain dividend with respect to the taxable year ended July 31, 2008 $30,077,945, or, if subsequently determined to be different, the net capital gain of such year.
Class A designates 100% of the dividends distributed during the fiscal year as qualifying for the dividends-received deduction for corporate shareholders.
Class A designates 100% of the dividends distributed during the fiscal year as amounts which may be taken into account as a dividend for purposes of the maximum rate under section 1(h)(11) of the Internal Revenue Code.
The fund will notify shareholders in January 2009 of amounts for use in preparing 2008 income tax returns.
Annual Report
Proxy Voting Results
A special meeting of the fund's shareholders was held on May 14, 2008. The results of votes taken among shareholders on the proposals before them are reported below. Each vote reported represents one dollar of net asset value held on the record date for the meeting.
PROPOSAL 1 | ||
To elect a Board of Trustees.A | ||
| # of | % of |
James C. Curvey | ||
Affirmative | 30,242,569,269.49 | 94.915 |
Withheld | 1,620,182,942.38 | 5.085 |
TOTAL | 31,862,752,211.87 | 100.000 |
Dennis J. Dirks | ||
Affirmative | 30,356,248,026.80 | 95.272 |
Withheld | 1,506,504,185.07 | 4.728 |
TOTAL | 31,862,752,211.87 | 100.000 |
Edward C. Johnson 3d | ||
Affirmative | 30,163,300,902.81 | 94.666 |
Withheld | 1,699,451,309.06 | 5.334 |
TOTAL | 31,862,752,211.87 | 100.000 |
Alan J. Lacy | ||
Affirmative | 30,334,439,999.59 | 95.203 |
Withheld | 1,528,312,212.28 | 4.797 |
TOTAL | 31,862,752,211.87 | 100.000 |
Ned C. Lautenbach | ||
Affirmative | 30,317,381,535.59 | 95.150 |
Withheld | 1,545,370,676.28 | 4.850 |
TOTAL | 31,862,752,211.87 | 100.000 |
Joseph Mauriello | ||
Affirmative | 30,340,553,696.88 | 95.223 |
Withheld | 1,522,198,514.99 | 4.777 |
TOTAL | 31,862,752,211.87 | 100.000 |
Cornelia M. Small | ||
Affirmative | 30,337,552,071.15 | 95.213 |
Withheld | 1,525,200,140.72 | 4.787 |
TOTAL | 31,862,752,211.87 | 100.000 |
William S. Stavropoulos | ||
Affirmative | 30,240,356,579.51 | 94.908 |
Withheld | 1,622,395,632.36 | 5.092 |
TOTAL | 31,862,752,211.87 | 100.000 |
| # of | % of |
David M. Thomas | ||
Affirmative | 30,352,029,125.67 | 95.259 |
Withheld | 1,510,723,086.20 | 4.741 |
TOTAL | 31,862,752,211.87 | 100.000 |
Michael E. Wiley | ||
Affirmative | 30,333,540,290.12 | 95.201 |
Withheld | 1,529,211,921.75 | 4.799 |
TOTAL | 31,862,752,211.87 | 100.000 |
PROPOSAL 2 | ||
To amend the Declaration of Trust to reduce the required quorum for future shareholder meetings.A | ||
| # of | % of |
Affirmative | 23,747,670,372.95 | 74.531 |
Against | 5,357,217,831.03 | 16.814 |
Abstain | 1,587,233,084.08 | 4.981 |
Broker | 1,170,630,923.81 | 3.674 |
TOTAL | 31,862,752,211.87 | 100.000 |
A Denotes trust-wide proposal and voting results. |
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees
Fidelity Small Cap Value Fund
Each year, typically in July, the Board of Trustees, including the Independent Trustees (together, the Board), votes on the renewal of the management contract and sub-advisory agreements (together, the Advisory Contracts) for the fund. The Board, assisted by the advice of fund counsel and Independent Trustees' counsel, requests and considers a broad range of information throughout the year.
The Board meets regularly and, acting directly and through its separate committees, requests and receives information concerning, and considers at each of its meetings factors that are relevant to, its annual consideration of the renewal of the fund's Advisory Contracts, including the services and support provided to the fund and its shareholders. At the time of the renewal, the Board had 12 standing committees, each composed of Independent Trustees with varying backgrounds, to which the Board has assigned specific subject matter responsibilities in order to enhance effective decision-making by the Board. Each committee has a written charter outlining the structure and purposes of the committee. The Board also meets as needed to consider matters specifically related to the Board's annual consideration of the renewal of Advisory Contracts.
At its July 2008 meeting, the Board of Trustees, including the Independent Trustees, unanimously determined to renew the fund's Advisory Contracts. In reaching its determination, the Board considered all factors it believed relevant, including (i) the nature, extent, and quality of the services to be provided to the fund and its shareholders (including the investment performance of the fund); (ii) the competitiveness of the fund's management fee and total expenses; (iii) the total costs of the services to be provided by and the profits to be realized by Fidelity from its relationship with the fund; (iv) the extent to which economies of scale would be realized as the fund grows; and (v) whether fee levels reflect these economies of scale, if any, for the benefit of fund shareholders. The Board also approved agreements with foreign sub-advisers Fidelity Management & Research (Japan) Inc. and Fidelity Management & Research (Hong Kong) Limited, as well as amendments to the fund's agreement with Fidelity Management & Research (U.K.) Inc.
In considering whether to renew the Advisory Contracts for the fund, the Board ultimately reached a determination, with the assistance of fund counsel and Independent Trustees' counsel and through the exercise of its business judgment, that the renewal of the Advisory Contracts and the compensation to be received by Fidelity under the management contract is consistent with Fidelity's fiduciary duty under applicable law. The Board's decision to renew the Advisory Contracts was not based on any single factor noted above, but rather was based on a comprehensive consideration of all the information provided to the Board at its meetings throughout the year. The Board, in reaching its determination to renew the Advisory Contracts, is aware that shareholders in the fund have a broad range of investment choices available to them, including a wide choice among mutual funds offered by competitors to Fidelity, and that the fund's shareholders, with the opportunity to review and weigh the disclosure provided by the fund in its prospectus and other public disclosures, have chosen to invest in this fund, managed by Fidelity.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
Nature, Extent, and Quality of Services Provided. The Board considered staffing within the investment adviser, FMR, and the sub-advisers (together, the Investment Advisers), including the backgrounds of the fund's investment personnel and the fund's investment objective and discipline. The Independent Trustees also had discussions with senior management of Fidelity's investment operations and investment groups. The Board considered the structure of the portfolio manager compensation program and whether this structure provides appropriate incentives.
Resources Dedicated to Investment Management and Support Services. The Board reviewed the size, education, and experience of the Investment Advisers' investment staff, their use of technology, and the Investment Advisers' approach to recruiting, training, and retaining portfolio managers and other research, advisory, and management personnel. The Board noted that Fidelity's analysts have access to a variety of technological tools that enable them to perform both fundamental and quantitative analysis and to specialize in various disciplines. The Board considered Fidelity's extensive global research capabilities that enable the Investment Advisers to aggregate data from various sources in an effort to produce positive investment results. The Board also considered that Fidelity's portfolio managers and analysts have access to daily portfolio attribution that allows for monitoring of a fund's portfolio, as well as an electronic communication system that provides immediate real-time access to research concerning issuers and credit enhancers.
Shareholder and Administrative Services. The Board considered (i) the nature, extent, quality, and cost of advisory, administrative, distribution, and shareholder services performed by the Investment Advisers and their affiliates under the Advisory Contracts and under separate agreements covering transfer agency, pricing and bookkeeping, and securities lending services for the fund; (ii) the nature and extent of the Investment Advisers' supervision of third party service providers, principally custodians and subcustodians; and (iii) the resources devoted to, and the record of compliance with, the fund's compliance policies and procedures. The Board also reviewed the allocation of fund brokerage, including allocations to brokers affiliated with the Investment Advisers, the use of brokerage commissions to pay fund expenses, and the use of "soft" commission dollars to pay for research services. The Board further considered that Fidelity voluntarily pays for market data out of its own resources.
The Board noted that the growth of fund assets across the complex allows Fidelity to reinvest in the development of services designed to enhance the value or convenience of the Fidelity funds as investment vehicles. These services include 24-hour access to account information and market information through phone representatives and over the Internet, and investor education materials and asset allocation tools.
Annual Report
Investment in a Large Fund Family. The Board considered the benefits to shareholders of investing in a Fidelity fund, including the benefits of investing in a fund that is part of a large family of funds offering a variety of investment disciplines and providing for a large variety of mutual fund investor services. For example, fund shareholders are offered the privilege of exchanging shares of the fund for shares of other Fidelity funds, as set forth in the fund's prospectus, without paying a sales charge. The Board noted that Fidelity has taken a number of actions over the previous year that benefited particular funds, including (i) dedicating additional resources to investment research and to restructure the investment research teams; (ii) contractually agreeing to reduce the management fees on Fidelity's Institutional Money Market Funds and launching Class IV and Institutional Class of certain of these funds; (iii) reducing the transfer agent fees for the Fidelity Select Portfolios and Investor Class of the VIP funds; and (iv) launching Class K of 29 equity funds as a lower-fee class available to certain employer-sponsored retirement plans.
Investment Performance. The Board considered whether the fund has operated within its investment objective, as well as its record of compliance with its investment restrictions. It also reviewed the fund's absolute investment performance for each class, as well as the fund's relative investment performance for each class measured against (i) a broad-based securities market index, and (ii) a peer group of mutual funds deemed appropriate by the Board over multiple periods. Because the fund had been in existence less than five calendar years, the following charts considered by the Board show, over the one- and three-year periods ended December 31, 2007, the cumulative total returns of Fidelity Small Cap Value (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 Fidelity Small Cap Value (retail class) and Class B 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 (bottom of box) and the 75th percentile return (top of box) of the peer group. Returns shown above the box are in the first quartile and returns shown below the box are in the fourth quartile. The percentage beaten numbers noted below each chart correspond to the percentile box and represent the percentage of funds in the peer group whose performance was equal to or lower than that of the class indicated.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
Fidelity Small Cap Value Fund
The Board reviewed the fund's relative investment performance against its peer group and stated that the performance of Fidelity Small Cap Value (retail class) of the fund was in the first quartile for all the periods shown. The Board also stated that the investment performance of Fidelity Small Cap Value (retail class) of the fund compared favorably to 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 also considered that the fund's management fee is subject to upward or downward adjustment depending upon whether, and to what extent, the fund's investment performance for the performance period exceeds, or is exceeded by, the record (over the same period) of a Board-approved performance adjustment index. The Board realizes that the performance adjustment provides FMR with a strong economic incentive to seek to achieve superior performance for the fund's shareholders and helps to more closely align the interests of FMR and the fund's shareholders.
The Board considered that FMR has taken steps to refocus and strengthen equity research, equity portfolio management, and compliance.
Based on its review, and giving particular weight to the nature and quality of the resources dedicated by the Investment Advisers to maintain and improve relative performance, the Board concluded that the nature, extent, and quality of the services provided to the fund will benefit the fund's shareholders, particularly in light of the Board's view that the fund's shareholders benefit from investing in a fund that is part of a large family of funds offering a variety of investment disciplines and services.
Annual Report
Competitiveness of Management Fee and Total Fund Expenses. The Board considered the fund's management fee and total expenses compared to "mapped groups" of competitive funds and classes. Fidelity creates "mapped groups" by combining similar Lipper investment objective categories that have comparable management fee characteristics. Combining Lipper investment objective categories aids the Board's management fee and total expense comparisons by broadening the competitive group used for comparison and by reducing the number of universes to which various Fidelity funds are compared. The Board also considered supplemental information about how the fund's management fee and total expenses ranked relative to groups based on Lipper classifications, which take into account a fund's market capitalization and style.
The Board considered two proprietary management fee comparisons for the 12-month (or shorter) 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 12% means that 88% 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 Small Cap 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 2007. The Board also noted the effect of the fund's positive performance adjustment on the fund's management fee ranking. The Board noted that the performance adjustment for each year represents calculations for performance periods that differ from the periods shown in the performance charts above.
Based on its review, the Board concluded that the fund's management fee was fair and reasonable in light of the services that the fund receives and the other factors considered.
In its review of each class's total expenses, 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 current and historical total expenses 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 expenses of each of Class A, Institutional Class, and Fidelity Small Cap Value (retail class) ranked below its competitive median for 2007, the total expenses of Class B ranked equal to its competitive median for 2007, and the total expenses of each of Class T and Class C ranked above its competitive median for 2007. The Board considered that the total expenses of Class C were above the median because of its higher transfer agent fee due to small average account size. The Board considered that total expenses for Class T were above the median primarily because its 12b-1 fee is higher than the typical front-end load class. 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 expenses 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
In its review of total expenses, the Board also considered Fidelity fee structures and other information on clients that FMR and its affiliates service in other competitive markets, such as other mutual funds advised or subadvised by FMR or its affiliates, pension plan clients, and other institutional clients.
Based on its review, the Board concluded that the total expenses of each class of the fund were reasonable, although in some cases 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 audited books and records of Fidelity. The Audit Committee of the Board reviews any significant changes from the prior year's methodologies.
PricewaterhouseCoopers LLP (PwC), independent registered public accounting firm and auditor to Fidelity and certain Fidelity funds, has been engaged annually by the Board as part of the Board's assessment of the results of Fidelity's profitability analysis. PwC's engagement includes the review and assessment of Fidelity's methodologies used in determining the revenues and expenses attributable to Fidelity's mutual fund business, and completion of agreed-upon procedures surrounding the mathematical accuracy of fund profitability and its conformity to allocation methodologies. After considering PwC's reports issued under the engagement and information provided by Fidelity, the Board believes that while other allocation methods may also be reasonable, Fidelity's profitability methodologies are reasonable in all material respects.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
The Board has also reviewed Fidelity's non-fund businesses and any fall-out benefits related to the mutual fund business as well as cases where Fidelity's affiliates may benefit from or be related to the fund's business.
The Board considered the costs of the services provided by and the profits realized by Fidelity in connection with the operation of the fund and determined that the amount of profit is a fair entrepreneurial profit for the management of the fund.
Economies of Scale. The Board considered whether there have been economies of scale in respect of the management of the Fidelity funds, whether the Fidelity funds (including the fund) have appropriately benefited from any such economies of scale, and whether there is potential for realization of any further economies of scale. The Board considered the extent to which the fund will benefit from economies of scale through increased services to the fund, through waivers or reimbursements, or through fee or expense reductions.
The Board recognized that the fund's management contract incorporates a "group fee" structure, which provides for lower group fee rates as total fund assets under FMR's management increase, and for higher group fee rates as total fund assets under FMR's management decrease. FMR determines the group fee rates based on a tiered asset "breakpoint" schedule. The Board considered that the group fee is designed to deliver the benefits of economies of scale to fund shareholders when total fund assets increase, even if assets of any particular fund are unchanged or have declined, because some portion of Fidelity's costs are attributable to services provided to all Fidelity funds, and all funds benefit if those costs can be allocated among more assets. The Board concluded that, given the group fee structure, fund shareholders will achieve a certain level of economies of scale as assets under FMR's management increase at the fund complex level, regardless of whether Fidelity achieves any such economies of scale.
The Board further concluded that any potential economies of scale are being shared between fund shareholders and Fidelity in an appropriate manner.
Additional Information Requested by the Board. In order to develop fully the factual basis for consideration of the Fidelity funds' Advisory Contracts, the Board requested and received additional information on certain topics, including (i) fund performance trends and actions to be taken by FMR to improve certain funds' overall performance; (ii) portfolio manager changes that have occurred during the past year; (iii) Fidelity's fund profitability methodology, the profitability of certain fund service providers, and profitability trends for certain funds; (iv) Fidelity's compensation structure for portfolio managers and key personnel, including its effects on fund profitability and the extent to which portfolio manager compensation is linked to fund performance; (v) Fidelity's fee structures and rationale for recommending different fees among categories of funds; and (vi) Fidelity's rationale for recommending which funds should have a performance adjustment component as part of their management fees.
Annual Report
Based on its evaluation of all of the conclusions noted above, and after considering all material factors, the Board ultimately concluded that the advisory fee structures are fair and reasonable, and that the fund's Advisory Contracts should be renewed.
Annual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Fidelity Management & Research
(U.K.) Inc.
Fidelity Research & Analysis Company
Fidelity International Investment Advisors
Fidelity Investments Japan Limited
Fidelity International Investment Advisors (U.K.) Limited
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Service Agents
Fidelity Investments Institutional
Operations Company, Inc.
Boston, MA
Fidelity Service Company, Inc.
Boston, MA
Custodian
Citibank, N.A.
New York, NY
ASCV-UANN-0908 1.803731.103
(Fidelity Investment logo)(registered trademark)
Fidelity Advisor
Small Cap Value
Fund - Institutional Class
Annual Report
July 31, 2008
Institutional Class
is a class of Fidelity®
Small Cap Value Fund
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message | 4 | Ned Johnson's message to shareholders. |
Performance | 5 | How the fund has done over time. |
Management's Discussion | 6 | The manager's review of fund performance, strategy and outlook. |
Shareholder Expense Example | 7 | An example of shareholder expenses. |
Investment Changes | 9 | A summary of major shifts in the fund's investments over the past six months. |
Investments | 10 | A complete list of the fund's investments with their market values. |
Financial Statements | 16 | Statements of assets and liabilities, operations, and changes in net assets, |
Notes | 26 | Notes to the financial statements. |
Report of Independent Registered Public Accounting Firm | 36 |
|
Trustees and Officers | 37 |
|
Distributions | 45 |
|
Proxy Voting Results | 46 |
|
Board Approval of Investment Advisory Contracts and Management Fees | 47 |
|
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com (search for "proxy voting guidelines") or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-877-208-0098 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company.
Annual Report
This report and the financial statements contained herein are submitted for the general information of the shareholders of the fund. This report is not authorized for distribution to prospective investors in the fund unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com or http://www.advisor.fidelity.com, as applicable.
NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE
Neither the fund nor Fidelity Distributors Corporation is a bank.
Annual Report
Chairman's Message
(photo_of_Edward_C_Johnson_3d)
Dear Shareholder:
Domestic and international securities markets have struggled thus far in 2008. High-grade fixed-income investments produced modestly positive results, but many stock benchmarks suffered double-digit losses through the first half of this year. Financial markets are always unpredictable, but there are a number of time-tested principles that can put the historical odds in your favor.
One of the basic tenets is to invest for the long term. Over time, riding out the markets' inevitable ups and downs has proven much more effective than selling into panic or chasing the hottest trend. Even missing only a few of the markets' best days can significantly diminish investor returns. Patience also affords the benefits of compounding - of earning interest on additional income or reinvested dividends and capital gains. There are tax advantages and cost benefits to consider as well. The more you sell, the more taxes you pay, and the more you trade, the higher the costs. While staying the course doesn't eliminate risk, it can considerably lessen the effect of short-term declines.
You can further manage your investing risk through diversification. And today, more than ever, geographic diversification should be taken into account. Studies indicate that asset allocation is the single most important determinant of a portfolio's long-term success. The right mix of stocks, bonds and cash - aligned to your particular risk tolerance and investment objective - is very important. Age-appropriate rebalancing is also an essential aspect of asset allocation. For younger investors, an emphasis on equities - which historically have been the best-performing asset class over time - is encouraged. As investors near their specific goal, such as retirement or sending a child to college, consideration may be given to replacing volatile assets (e.g. common stocks) with more-stable fixed investments (bonds or savings plans).
A third investment principle - investing regularly - can help lower the average cost of your purchases. Investing a certain amount of money each month or quarter helps ensure you won't pay for all your shares at market highs. This strategy - known as dollar cost averaging - also reduces unconstructive "emotion" from investing, helping shareholders avoid selling weak performers just prior to an upswing, or chasing a hot performer just before a correction.
We invite you to contact us via the Internet, through our Investor Centers or over the phone. It is our privilege to provide you the information you need to make the investments that are right for you.
Sincerely,
/s/Edward C. Johnson 3d
Edward C. Johnson 3d
Annual Report
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' 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 July 31, 2008 | Past 1 | Life of |
Institutional Class | -14.10% | 8.24% |
A From November 3, 2004.
$10,000 Over Life of Fund
Let's say hypothetically that $10,000 was invested in Fidelity Advisor Small Cap Value Fund - Institutional Class on November 3, 2004, when the fund started. The chart shows how the value of your investment would have changed, and also shows how the Russell 2000® Value Index performed over the same period.
Annual Report
Management's Discussion of Fund Performance
Comments from Charles Myers, who became Portfolio Manager of Fidelity Advisor Small Cap Value Fund on May 9, 2008.
Grim news about the U.S. economy forced most domestic equity benchmarks into negative territory for the 12 months ending July 31, 2008. Oil prices north of $140 per barrel, gasoline prices in excess of $4 per gallon and soaring food costs drove inflation and consumer prices higher. In response, consumer discretionary spending trended lower as Main Street tightened its purse strings. Wall Street, meanwhile, struggled under the weight of massive write-downs in the financials sector, an ongoing credit crisis and bleak housing data. In an effort to staunch the bleeding, the Federal Reserve Board cut interest rates on seven occasions during the past year. Nevertheless, investors fled the equity markets, and both the Dow Jones Industrial AverageSM and the Standard & Poor's 500SM Index fell to a threshold that many believe marks the official start of a "bear market." For the 12 months overall, the Dow slid 11.71%, the S&P 500® dropped 11.09% and the technology-heavy NASDAQ Composite® Index dipped 7.98%.
For the 12 months ending July 31, 2008, the fund's Institutional Class shares fell 14.10%, compared with a decline of 9.95% for the Russell 2000® Value Index. Favorable sector weightings helped performance, but that positive impact was overshadowed by poor security selection. For example, the fund on average was overweighted in the strong-
performing energy sector and underweighted in the weak consumer discretionary sector. Being underweighted in financials helped as well, although I added to the position during the period. However, disappointing security selection within financials, as well as in information technology and consumer discretionary, detracted notably. The fund's biggest individual underperformer was oil refiner Tesoro, which I sold before period end. Rising oil prices created a difficult situation for Tesoro and other refineries. In financials, Associated Banc-Corp. was a disappointment. Although Associated historically has maintained relatively high underwriting standards, it wasn't immune from the global credit crunch. Financial advisory firm National Financial Partners underperformed, as did technology stock Arris Group, and both were sold from the portfolio. On the positive side, oil and gas exploration/production company Southwestern Energy was helped greatly by high energy prices, as was another out-of-benchmark holding, Cabot Oil & Gas. In materials, Compass Minerals did well. All three of these outperformers were sold during the period.
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 (February 1, 2008 to July 31, 2008).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Annual Report
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Beginning | Ending | Expenses Paid |
Class A |
|
|
|
Actual | $ 1,000.00 | $ 935.10 | $ 6.74 |
Hypothetical A | $ 1,000.00 | $ 1,017.90 | $ 7.02 |
Class T |
|
|
|
Actual | $ 1,000.00 | $ 934.00 | $ 7.93 |
Hypothetical A | $ 1,000.00 | $ 1,016.66 | $ 8.27 |
Class B |
|
|
|
Actual | $ 1,000.00 | $ 931.70 | $ 10.33 |
Hypothetical A | $ 1,000.00 | $ 1,014.17 | $ 10.77 |
Class C |
|
|
|
Actual | $ 1,000.00 | $ 931.70 | $ 10.33 |
Hypothetical A | $ 1,000.00 | $ 1,014.17 | $ 10.77 |
Small Cap Value |
|
|
|
Actual | $ 1,000.00 | $ 937.10 | $ 5.39 |
Hypothetical A | $ 1,000.00 | $ 1,019.29 | $ 5.62 |
Institutional Class |
|
|
|
Actual | $ 1,000.00 | $ 937.10 | $ 5.35 |
Hypothetical A | $ 1,000.00 | $ 1,019.34 | $ 5.57 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
| Annualized |
Class A | 1.40% |
Class T | 1.65% |
Class B | 2.15% |
Class C | 2.15% |
Small Cap Value | 1.12% |
Institutional Class | 1.11% |
Annual Report
Investment Changes (Unaudited)
Top Ten Stocks as of July 31, 2008 | ||
| % of fund's | % of fund's net assets |
HNI Corp. | 2.8 | 0.0 |
Aspen Insurance Holdings Ltd. | 2.6 | 0.8 |
City National Corp. | 2.6 | 0.0 |
United Stationers, Inc. | 2.4 | 0.0 |
Pediatrix Medical Group, Inc. | 2.4 | 0.6 |
IPC Holdings Ltd. | 2.3 | 1.2 |
Ingram Micro, Inc. Class A | 2.2 | 1.1 |
Astoria Financial Corp. | 2.2 | 0.0 |
Highwoods Properties, Inc. (SBI) | 2.2 | 0.0 |
CapitalSource, Inc. | 2.1 | 0.0 |
| 23.8 | |
Top Five Market Sectors as of July 31, 2008 | ||
| % of fund's | % of fund's net assets |
Financials | 32.7 | 23.6 |
Consumer Discretionary | 14.0 | 11.3 |
Industrials | 12.0 | 14.0 |
Information Technology | 11.8 | 13.5 |
Materials | 7.4 | 7.7 |
Asset Allocation (% of fund's net assets) | |||||||
As of July 31, 2008 * | As of January 31, 2008 ** | ||||||
Stocks 98.0% |
| Stocks 95.7% |
| ||||
Short-Term |
| Short-Term |
| ||||
* Foreign investments | 10.9% |
| ** Foreign investments | 8.1% |
|
Annual Report
Investments July 31, 2008
Showing Percentage of Net Assets
Common Stocks - 97.5% | |||
Shares | Value | ||
CONSUMER DISCRETIONARY - 13.5% | |||
Diversified Consumer Services - 1.0% | |||
Regis Corp. | 462,340 | $ 12,940,897 | |
Household Durables - 5.2% | |||
Centex Corp. | 658,940 | 9,673,239 | |
Ethan Allen Interiors, Inc. (d) | 328,713 | 8,250,696 | |
M.D.C. Holdings, Inc. | 225,000 | 9,342,000 | |
M/I Homes, Inc. (d) | 219,273 | 4,155,223 | |
Meritage Homes Corp. (a)(d) | 1,408,400 | 25,421,620 | |
Ryland Group, Inc. (d) | 427,900 | 8,810,461 | |
| 65,653,239 | ||
Leisure Equipment & Products - 1.1% | |||
RC2 Corp. (a) | 598,229 | 13,735,338 | |
Specialty Retail - 5.2% | |||
Asbury Automotive Group, Inc. | 991,261 | 9,823,397 | |
bebe Stores, Inc. (d) | 1,250,000 | 12,962,500 | |
Collective Brands, Inc. (a)(d) | 657,900 | 8,473,752 | |
The Men's Wearhouse, Inc. (d) | 1,069,641 | 21,296,552 | |
Tsutsumi Jewelry Co. Ltd. | 497,600 | 9,962,147 | |
USS Co. Ltd. | 46,410 | 3,110,059 | |
| 65,628,407 | ||
Textiles, Apparel & Luxury Goods - 1.0% | |||
Iconix Brand Group, Inc. (a)(d) | 1,038,800 | 12,465,600 | |
TOTAL CONSUMER DISCRETIONARY | 170,423,481 | ||
CONSUMER STAPLES - 6.6% | |||
Food & Staples Retailing - 4.0% | |||
Casey's General Stores, Inc. | 800,000 | 19,680,000 | |
Ingles Markets, Inc. Class A | 502,875 | 12,229,920 | |
The Pantry, Inc. (a)(d)(e) | 1,174,724 | 18,783,837 | |
| 50,693,757 | ||
Food Products - 1.2% | |||
Marine Harvest ASA (a)(d) | 21,755,000 | 15,412,708 | |
Personal Products - 1.4% | |||
Chattem, Inc. (a)(d) | 263,161 | 16,965,990 | |
TOTAL CONSUMER STAPLES | 83,072,455 | ||
ENERGY - 2.6% | |||
Energy Equipment & Services - 1.1% | |||
Superior Energy Services, Inc. (a) | 295,000 | 13,991,850 | |
Common Stocks - continued | |||
Shares | Value | ||
ENERGY - continued | |||
Oil, Gas & Consumable Fuels - 1.5% | |||
Encore Acquisition Co. (a) | 160,000 | $ 9,899,200 | |
Mariner Energy, Inc. (a) | 325,000 | 8,599,500 | |
| 18,498,700 | ||
TOTAL ENERGY | 32,490,550 | ||
FINANCIALS - 32.7% | |||
Capital Markets - 1.7% | |||
TradeStation Group, Inc. (a) | 1,992,291 | 21,476,897 | |
Commercial Banks - 6.9% | |||
Associated Banc-Corp. (d) | 1,573,683 | 26,264,769 | |
Banner Corp. (d) | 128,475 | 1,224,367 | |
Boston Private Financial Holdings, Inc. (d) | 1,491,671 | 11,679,784 | |
City National Corp. | 655,000 | 32,180,150 | |
Renasant Corp. | 343,388 | 6,081,401 | |
Sandy Spring Bancorp, Inc. (d) | 544,942 | 9,051,487 | |
| 86,481,958 | ||
Diversified Financial Services - 2.0% | |||
KKR Financial Holdings LLC | 2,460,000 | 25,264,200 | |
Insurance - 6.9% | |||
Aspen Insurance Holdings Ltd. | 1,300,200 | 33,012,078 | |
IPC Holdings Ltd. | 898,740 | 28,849,554 | |
Max Capital Group Ltd. | 1,090,000 | 25,582,300 | |
| 87,443,932 | ||
Real Estate Investment Trusts - 10.2% | |||
CapitalSource, Inc. (d) | 2,300,000 | 26,726,000 | |
Chimera Investment Corp. (d) | 1,529,063 | 11,758,494 | |
Franklin Street Properties Corp. | 1,464,411 | 17,968,323 | |
Highwoods Properties, Inc. (SBI) | 741,230 | 27,054,895 | |
National Retail Properties, Inc. | 1,200,000 | 25,368,000 | |
U-Store-It Trust | 1,628,262 | 18,969,252 | |
| 127,844,964 | ||
Thrifts & Mortgage Finance - 5.0% | |||
Astoria Financial Corp. | 1,219,521 | 27,280,685 | |
Farmer Mac Class C (non-vtg.) (d) | 230,945 | 6,618,884 | |
Common Stocks - continued | |||
Shares | Value | ||
FINANCIALS - continued | |||
Thrifts & Mortgage Finance - continued | |||
People's United Financial, Inc. | 755,000 | $ 12,819,900 | |
Washington Federal, Inc. (d) | 879,800 | 16,364,280 | |
| 63,083,749 | ||
TOTAL FINANCIALS | 411,595,700 | ||
HEALTH CARE - 5.3% | |||
Health Care Providers & Services - 3.9% | |||
AMERIGROUP Corp. (a) | 316,839 | 8,047,711 | |
Pediatrix Medical Group, Inc. (a) | 614,200 | 29,880,830 | |
PSS World Medical, Inc. (a) | 688,000 | 11,530,880 | |
| 49,459,421 | ||
Pharmaceuticals - 1.4% | |||
Perrigo Co. (d) | 486,200 | 17,128,826 | |
TOTAL HEALTH CARE | 66,588,247 | ||
INDUSTRIALS - 12.0% | |||
Building Products - 2.6% | |||
NCI Building Systems, Inc. (a)(d) | 502,014 | 18,805,444 | |
Simpson Manufacturing Co. Ltd. (d) | 575,000 | 13,805,750 | |
| 32,611,194 | ||
Commercial Services & Supplies - 7.5% | |||
ACCO Brands Corp. (a) | 1,249,573 | 10,708,841 | |
HNI Corp. (d) | 1,622,121 | 35,118,917 | |
Knoll, Inc. | 1,180,251 | 18,223,075 | |
United Stationers, Inc. (a) | 800,000 | 30,664,000 | |
| 94,714,833 | ||
Construction & Engineering - 1.7% | |||
URS Corp. (a) | 500,676 | 20,988,338 | |
Machinery - 0.2% | |||
Accuride Corp. (a) | 1,034,000 | 2,843,500 | |
Road & Rail - 0.0% | |||
Quality Distribution, Inc. (a) | 59,900 | 182,695 | |
TOTAL INDUSTRIALS | 151,340,560 | ||
Common Stocks - continued | |||
Shares | Value | ||
INFORMATION TECHNOLOGY - 11.8% | |||
Communications Equipment - 0.7% | |||
ViaSat, Inc. (a) | 403,688 | $ 9,296,935 | |
Electronic Equipment & Instruments - 3.5% | |||
Ingram Micro, Inc. Class A (a) | 1,503,100 | 27,702,133 | |
Ryoyo Electro Corp. (d) | 872,700 | 9,132,249 | |
SYNNEX Corp. (a)(d) | 298,366 | 6,969,830 | |
| 43,804,212 | ||
Internet Software & Services - 3.3% | |||
DealerTrack Holdings, Inc. (a)(d) | 967,234 | 15,069,506 | |
j2 Global Communications, Inc. (a) | 563,149 | 13,498,682 | |
LoopNet, Inc. (a)(d) | 1,094,182 | 12,429,908 | |
| 40,998,096 | ||
IT Services - 1.1% | |||
Telvent GIT SA | 591,673 | 14,200,152 | |
Semiconductors & Semiconductor Equipment - 3.2% | |||
FormFactor, Inc. (a) | 764,157 | 13,296,332 | |
Skyworks Solutions, Inc. (a) | 1,464,200 | 13,851,332 | |
Zoran Corp. (a) | 1,613,644 | 13,344,836 | |
| 40,492,500 | ||
TOTAL INFORMATION TECHNOLOGY | 148,791,895 | ||
MATERIALS - 7.4% | |||
Chemicals - 2.8% | |||
Spartech Corp. | 1,108,102 | 11,202,911 | |
Valspar Corp. | 1,110,000 | 24,053,700 | |
| 35,256,611 | ||
Containers & Packaging - 4.6% | |||
Bemis Co., Inc. | 550,000 | 15,488,000 | |
Pactiv Corp. (a)(d) | 870,000 | 20,975,700 | |
Silgan Holdings, Inc. | 399,017 | 21,076,078 | |
| 57,539,778 | ||
TOTAL MATERIALS | 92,796,389 | ||
UTILITIES - 5.6% | |||
Electric Utilities - 3.5% | |||
Allete, Inc. | 474,753 | 20,205,488 | |
Westar Energy, Inc. (d) | 1,100,000 | 24,288,000 | |
| 44,493,488 | ||
Common Stocks - continued | |||
Shares | Value | ||
UTILITIES - continued | |||
Gas Utilities - 2.1% | |||
Southwest Gas Corp. | 910,989 | $ 26,327,582 | |
TOTAL UTILITIES | 70,821,070 | ||
TOTAL COMMON STOCKS (Cost $1,319,880,857) | 1,227,920,347 | ||
Nonconvertible Preferred Stocks - 0.5% | |||
|
|
|
|
CONSUMER DISCRETIONARY - 0.5% | |||
Household Durables - 0.5% | |||
M/I Homes, Inc. Series A, 9.75% | 382,500 | 5,928,750 | |
TOTAL NONCONVERTIBLE PREFERRED STOCKS (Cost $6,778,025) | 5,928,750 | ||
Money Market Funds - 18.2% | |||
|
|
|
|
Fidelity Cash Central Fund, 2.35% (b) | 22,064,532 | 22,064,532 | |
Fidelity Securities Lending Cash Central Fund, 2.37% (b)(c) | 206,551,232 | 206,551,232 | |
TOTAL MONEY MARKET FUNDS (Cost $228,615,764) | 228,615,764 | ||
TOTAL INVESTMENT PORTFOLIO - 116.2% (Cost $1,555,274,646) | 1,462,464,861 | ||
NET OTHER ASSETS - (16.2)% | (203,673,814) | ||
NET ASSETS - 100% | $ 1,258,791,047 |
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
(e) Affiliated company |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 1,929,213 |
Fidelity Securities Lending Cash Central Fund | 1,218,551 |
Total | $ 3,147,764 |
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 | Dividend Income | Value, |
The Pantry, Inc. | $ 15,712,840 | $ 17,933,722 | $ 12,017,520 | $ - | $ 18,783,837 |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 89.1% |
Bermuda | 6.9% |
Japan | 1.7% |
Norway | 1.2% |
Spain | 1.1% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements
Statement of Assets and Liabilities
| July 31, 2008 | |
Assets | ||
Investment in securities, at value (including securities loaned of $202,856,468) - See accompanying schedule: Unaffiliated issuers (cost $1,312,257,226) | $ 1,215,065,260 |
|
Fidelity Central Funds (cost $228,615,764) | 228,615,764 |
|
Other affiliated issuers (cost $14,401,656) | 18,783,837 |
|
Total Investments (cost $1,555,274,646) |
| $ 1,462,464,861 |
Receivable for investments sold | 5,664,742 | |
Receivable for fund shares sold | 1,351,718 | |
Dividends receivable | 1,381,376 | |
Distributions receivable from Fidelity Central Funds | 259,985 | |
Prepaid expenses | 1,596 | |
Other receivables | 11,489 | |
Total assets | 1,471,135,767 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 3,306,601 | |
Payable for fund shares redeemed | 1,349,433 | |
Accrued management fee | 714,775 | |
Distribution fees payable | 46,242 | |
Other affiliated payables | 313,009 | |
Other payables and accrued expenses | 63,428 | |
Collateral on securities loaned, at value | 206,551,232 | |
Total liabilities | 212,344,720 | |
|
|
|
Net Assets | $ 1,258,791,047 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,338,391,884 | |
Undistributed net investment income | 1,269,467 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 11,939,467 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (92,809,771) | |
Net Assets | $ 1,258,791,047 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements - continued
Statement of Assets and Liabilities - continued
| July 31, 2008 | |
|
|
|
Calculation of Maximum Offering Price | $ 11.82 | |
|
|
|
Maximum offering price per share (100/94.25 of $11.82) | $ 12.54 | |
Class T: | $ 11.74 | |
|
|
|
Maximum offering price per share (100/96.50 of $11.74) | $ 12.17 | |
Class B: | $ 11.60 | |
|
|
|
Class C: | $ 11.60 | |
|
|
|
Small Cap Value: | $ 11.91 | |
|
|
|
Institutional Class: | $ 11.91 |
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
| Year ended July 31, 2008 | |
Investment Income |
|
|
Dividends |
| $ 14,496,636 |
Interest |
| 28,789 |
Income from Fidelity Central Funds (including $1,218,551 from security lending) |
| 3,147,764 |
Total income |
| 17,673,189 |
|
|
|
Expenses | ||
Management fee | $ 9,233,898 | |
Performance adjustment | 1,555,458 | |
Transfer agent fees | 3,428,688 | |
Distribution fees | 728,002 | |
Accounting and security lending fees | 434,313 | |
Custodian fees and expenses | 46,444 | |
Independent trustees' compensation | 5,581 | |
Registration fees | 88,102 | |
Audit | 58,174 | |
Legal | 6,008 | |
Miscellaneous | 87,836 | |
Total expenses before reductions | 15,672,504 | |
Expense reductions | (118,215) | 15,554,289 |
Net investment income (loss) | 2,118,900 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 37,518,952 | |
Other affiliated issuers | (13,526,494) |
|
Foreign currency transactions | 62,571 | |
Futures contracts | 2,569,906 | |
Total net realized gain (loss) |
| 26,624,935 |
Change in net unrealized appreciation (depreciation) on: Investment securities | (226,824,068) | |
Assets and liabilities in foreign currencies | 14 | |
Total change in net unrealized appreciation (depreciation) |
| (226,824,054) |
Net gain (loss) | (200,199,119) | |
Net increase (decrease) in net assets resulting from operations | $ (198,080,219) |
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) | $ 2,118,900 | $ (2,821,365) |
Net realized gain (loss) | 26,624,935 | 58,301,578 |
Change in net unrealized appreciation (depreciation) | (226,824,054) | 108,216,572 |
Net increase (decrease) in net assets resulting | (198,080,219) | 163,696,785 |
Distributions to shareholders from net realized gain | (53,456,977) | (55,419,267) |
Share transactions - net increase (decrease) | 105,675,336 | 206,517,786 |
Redemption fees | 144,871 | 174,668 |
Total increase (decrease) in net assets | (145,716,989) | 314,969,972 |
|
|
|
Net Assets | ||
Beginning of period | 1,404,508,036 | 1,089,538,064 |
End of period (including undistributed net investment income of $1,269,467 and $0, respectively) | $ 1,258,791,047 | $ 1,404,508,036 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended July 31, | 2008 | 2007 | 2006 | 2005 H |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 14.34 | $ 13.17 | $ 12.80 | $ 10.00 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss) E | (.01) | (.06) | (.03) | (.04) |
Net realized and unrealized gain (loss) | (1.98) | 1.90 | .74 | 2.84 |
Total from investment operations | (1.99) | 1.84 | .71 | 2.80 |
Distributions from net investment income | - | - | - | (.01) |
Distributions from net realized gain | (.53) | (.67) | (.35) | - |
Total distributions | (.53) | (.67) | (.35) | (.01) |
Redemption fees added to paid in capital E | - J | - J | .01 | .01 |
Net asset value, end of period | $ 11.82 | $ 14.34 | $ 13.17 | $ 12.80 |
Total Return B, C, D | (14.35)% | 14.59% | 5.72% | 28.06% |
Ratios to Average Net Assets F, I |
|
|
|
|
Expenses before reductions | 1.43% | 1.45% | 1.51% | 1.46% A |
Expenses net of fee waivers, if any | 1.40% | 1.40% | 1.40% | 1.44% A |
Expenses net of all reductions | 1.40% | 1.40% | 1.36% | 1.38% A |
Net investment income (loss) | (.05)% | (.44)% | (.24)% | (.46)% A |
Supplemental Data |
|
|
|
|
Net assets, end of period (000 omitted) | $ 52,446 | $ 61,357 | $ 39,931 | $ 9,390 |
Portfolio turnover rate G | 149% | 67% | 93% | 60% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
H For the period November 3, 2004 (commencement of operations) to July 31, 2005.
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 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.
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 July 31, | 2008 | 2007 | 2006 | 2005 H |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 14.28 | $ 13.13 | $ 12.78 | $ 10.00 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss) E | (.04) | (.10) | (.07) | (.06) |
Net realized and unrealized gain (loss) | (1.97) | 1.90 | .74 | 2.83 |
Total from investment operations | (2.01) | 1.80 | .67 | 2.77 |
Distributions from net realized gain | (.53) | (.65) | (.33) | - |
Redemption fees added to paid in capital E | - J | - J | .01 | .01 |
Net asset value, end of period | $ 11.74 | $ 14.28 | $ 13.13 | $ 12.78 |
Total Return B, C, D | (14.58)% | 14.34% | 5.47% | 27.80% |
Ratios to Average Net Assets F, I |
|
|
|
|
Expenses before reductions | 1.68% | 1.66% | 1.67% | 1.72% A |
Expenses net of fee waivers, if any | 1.65% | 1.65% | 1.65% | 1.68% A |
Expenses net of all reductions | 1.65% | 1.65% | 1.61% | 1.62% A |
Net investment income (loss) | (.30)% | (.69)% | (.49)% | (.70)% A |
Supplemental Data |
|
|
|
|
Net assets, end of period (000 omitted) | $ 32,091 | $ 51,518 | $ 45,460 | $ 12,725 |
Portfolio turnover rate G | 149% | 67% | 93% | 60% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
H For the period November 3, 2004 (commencement of operations) to July 31, 2005.
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 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.
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 B
Years ended July 31, | 2008 | 2007 | 2006 | 2005 H |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 14.19 | $ 13.07 | $ 12.73 | $ 10.00 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss) E | (.10) | (.17) | (.13) | (.10) |
Net realized and unrealized gain (loss) | (1.96) | 1.90 | .74 | 2.82 |
Total from investment operations | (2.06) | 1.73 | .61 | 2.72 |
Distributions from net realized gain | (.53) | (.61) | (.28) | - |
Redemption fees added to paid in capital E | - J | - J | .01 | .01 |
Net asset value, end of period | $ 11.60 | $ 14.19 | $ 13.07 | $ 12.73 |
Total Return B, C, D | (15.04)% | 13.78% | 4.97% | 27.30% |
Ratios to Average Net Assets F, I |
|
|
|
|
Expenses before reductions | 2.18% | 2.20% | 2.26% | 2.24% A |
Expenses net of fee waivers, if any | 2.15% | 2.15% | 2.15% | 2.19% A |
Expenses net of all reductions | 2.15% | 2.15% | 2.11% | 2.13% A |
Net investment income (loss) | (.80)% | (1.19)% | (.99)% | (1.21)% A |
Supplemental Data |
|
|
|
|
Net assets, end of period (000 omitted) | $ 7,886 | $ 12,075 | $ 10,214 | $ 3,931 |
Portfolio turnover rate G | 149% | 67% | 93% | 60% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the contingent deferred sales charge.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
H For the period November 3, 2004 (commencement of operations) to July 31, 2005.
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 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.
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 C
Years ended July 31, | 2008 | 2007 | 2006 | 2005 H |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 14.19 | $ 13.07 | $ 12.74 | $ 10.00 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss) E | (.10) | (.17) | (.13) | (.10) |
Net realized and unrealized gain (loss) | (1.96) | 1.90 | .74 | 2.83 |
Total from investment operations | (2.06) | 1.73 | .61 | 2.73 |
Distributions from net realized gain | (.53) | (.61) | (.29) | - |
Redemption fees added to paid in capital E | - J | - J | .01 | .01 |
Net asset value, end of period | $ 11.60 | $ 14.19 | $ 13.07 | $ 12.74 |
Total Return B, C, D | (15.04)% | 13.77% | 4.92% | 27.40% |
Ratios to Average Net Assets F, I |
|
|
|
|
Expenses before reductions | 2.18% | 2.20% | 2.22% | 2.17% A |
Expenses net of fee waivers, if any | 2.15% | 2.15% | 2.15% | 2.17% A |
Expenses net of all reductions | 2.15% | 2.15% | 2.11% | 2.11% A |
Net investment income (loss) | (.80)% | (1.19)% | (.99)% | (1.19)% A |
Supplemental Data |
|
|
|
|
Net assets, end of period (000 omitted) | $ 20,924 | $ 34,155 | $ 26,791 | $ 11,732 |
Portfolio turnover rate G | 149% | 67% | 93% | 60% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the contingent deferred sales charge.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
H For the period November 3, 2004 (commencement of operations) to July 31, 2005.
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 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.
J Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Small Cap Value
Years ended July 31, | 2008 | 2007 | 2006 | 2005 G |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 14.43 | $ 13.22 | $ 12.83 | $ 10.00 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss) D | .03 | (.02) | .01 | (.01) |
Net realized and unrealized gain (loss) | (1.99) | 1.91 | .74 | 2.84 |
Total from investment operations | (1.96) | 1.89 | .75 | 2.83 |
Distributions from net investment income | - | - | (.01) | (.01) |
Distributions from net realized gain | (.56) | (.68) | (.36) | - |
Total distributions | (.56) | (.68) | (.37) | (.01) |
Redemption fees added to paid in capital D | - I | - I | .01 | .01 |
Net asset value, end of period | $ 11.91 | $ 14.43 | $ 13.22 | $ 12.83 |
Total Return B, C | (14.10)% | 14.96% | 6.07% | 28.36% |
Ratios to Average Net Assets E, H |
|
|
|
|
Expenses before reductions | 1.14% | 1.11% | 1.09% | 1.05% A |
Expenses net of fee waivers, if any | 1.14% | 1.11% | 1.09% | 1.05% A |
Expenses net of all reductions | 1.13% | 1.11% | 1.06% | .99% A |
Net investment income (loss) | .22% | (.15)% | .06% | (.08)% A |
Supplemental Data |
|
|
|
|
Net assets, end of period (000 omitted) | $ 1,136,860 | $ 1,233,808 | $ 957,720 | $ 582,689 |
Portfolio turnover rate F | 149% | 67% | 93% | 60% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
G For the period November 3, 2004 (commencement of operations) to July 31, 2005.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
I Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Institutional Class
Years ended July 31, | 2008 | 2007 | 2006 | 2005 G |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 14.43 | $ 13.22 | $ 12.83 | $ 10.00 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss) D | .03 | (.02) | .01 | (.01) |
Net realized and unrealized gain (loss) | (1.99) | 1.91 | .74 | 2.84 |
Total from investment operations | (1.96) | 1.89 | .75 | 2.83 |
Distributions from net investment income | - | - | (.01) | (.01) |
Distributions from net realized gain | (.56) | (.68) | (.36) | - |
Total distributions | (.56) | (.68) | (.37) | (.01) |
Redemption fees added to paid in capital D | - I | - I | .01 | .01 |
Net asset value, end of period | $ 11.91 | $ 14.43 | $ 13.22 | $ 12.83 |
Total Return B, C | (14.10)% | 14.99% | 6.08% | 28.36% |
Ratios to Average Net Assets E, H |
|
|
|
|
Expenses before reductions | 1.13% | 1.10% | 1.08% | 1.07% A |
Expenses net of fee waivers, if any | 1.13% | 1.10% | 1.08% | 1.07% A |
Expenses net of all reductions | 1.13% | 1.10% | 1.05% | 1.01% A |
Net investment income (loss) | .22% | (.13)% | .08% | (.10)% A |
Supplemental Data |
|
|
|
|
Net assets, end of period (000 omitted) | $ 8,584 | $ 11,594 | $ 9,422 | $ 3,761 |
Portfolio turnover rate F | 149% | 67% | 93% | 60% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
G For the period November 3, 2004 (commencement of operations) to July 31, 2005.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
I 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 July 31, 2008
1. Organization.
Fidelity Small Cap Value Fund (the Fund) is a fund of Fidelity Securities Fund (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 B, Class C, Small Cap Value, and Institutional Class 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 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 also differ by class.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the SEC's web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. Wherever possible, the Fund uses independent pricing services approved by the Board of Trustees to value its investments.
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally
Annual Report
3. Significant Accounting Policies - continued
Investment Transactions and Income - continued
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. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The implementation of FIN 48 did not result in any unrecognized tax benefits in the accompanying financial statements. Each of the Fund's federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. In addition, the Fund will claim a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Annual Report
Notes to Financial Statements - continued
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 foreign currency transactions, partnerships, and losses deferred due to wash sales.
The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows:
Unrealized appreciation | $ 60,995,126 |
Unrealized depreciation | (156,636,018) |
Net unrealized appreciation (depreciation) | (95,640,892) |
Undistributed ordinary income | 993,181 |
Undistributed long-term capital gain | 11,553,572 |
|
|
Cost for federal income tax purposes | $ 1,558,105,753 |
The tax character of distributions paid was as follows:
| July 31, 2008 | July 31, 2007 |
Ordinary Income | $ 2,392,014 | $ 15,936,394 |
Long-term Capital Gains | 51,064,963 | 39,482,873 |
Total | $ 53,456,977 | $ 55,419,267 |
Short-Term Trading (Redemption) Fees. Shares held in the Fund less than 90 days are subject to a redemption fee equal to 1.50% of the proceeds of the redeemed shares. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the Fund and accounted for as an addition to paid in capital.
New Accounting Pronouncements. In September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and results in expanded disclosures about fair value measurements.
In addition, in March 2008, Statement of Financial Accounting Standards No. 161, Disclosures about Derivative Instruments and Hedging Activities (SFAS 161), was issued and is effective for fiscal years beginning after November 15, 2008. SFAS 161 requires enhanced disclosures to provide information about the reasons the Fund invests in derivative instruments, the accounting treatment and the effect derivatives have on
Annual Report
3. Significant Accounting Policies - continued
New Accounting Pronouncements - continued
financial performance. Management is currently evaluating the impact the adoption of SFAS 161 will have on the Fund's financial statement disclosures.
4. Operating Policies.
Repurchase Agreements. FMR has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits the Fund and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts which are then invested in repurchase agreements. The Fund may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. The Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
Futures Contracts. The Fund may use futures contracts to manage its exposure to the stock market. Buying futures tends to increase a fund's exposure to the underlying instrument, while selling futures tends to decrease a fund's exposure to the underlying instrument or hedge other fund investments. Upon entering into a futures contract, a fund is required to deposit with a clearing broker, no later than the following business day, an amount ("initial margin") equal to a certain percentage of the face value of the contract. The initial margin may be in the form of cash or securities and is transferred to a segregated account on settlement date. Subsequent payments ("variation margin") are made or received by a fund depending on the daily fluctuations in the value of the futures contract and are accounted for as unrealized gains or losses. Realized gains (losses) are recorded upon the expiration or closing of the futures contract. Losses may arise from changes in the value of the underlying instruments or if the counterparties do not perform under the contract's terms.
5. Purchases and Sales of Investments.
Purchases and sales of securities other than short-term securities, aggregated $1,960,180,295 and $1,899,076,674, respectively.
Annual Report
Notes to Financial Statements - continued
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 .45% of the Fund's average net assets and a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. In addition, the management fee is subject to a performance adjustment (up to a maximum of ± .20% of the Fund's average net assets over a 36 month performance period). The upward or downward adjustment to the management fee is based on the relative investment performance of the retail class of the Fund, Small Cap Value, as compared to an appropriate benchmark index. For the period, the total annual management fee rate, including the performance adjustment, was .83% of the Fund's average net assets.
Distribution and Service Plan. 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 and the total amounts paid to and retained by FDC were as follows:
| Distribution | Service | Paid to | Retained |
Class A | 0% | .25% | $ 145,377 | $ 16,596 |
Class T | .25% | .25% | 200,976 | - |
Class B | .75% | .25% | 100,604 | 75,549 |
Class C | .75% | .25% | 281,045 | 58,239 |
|
|
| $ 728,002 | $ 150,384 |
Sales Load. FDC receives 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. FDC receives the proceeds of contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. These charges depend on the holding period. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, 1.00% to .50% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
Annual Report
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 | $ 48,477 |
Class T | 9,117 |
Class B* | 20,133 |
Class C* | 2,688 |
| $ 80,415 |
* 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. Prior to January 1, 2008, Fidelity Service Company, Inc. (FSC), also an affiliate of FMR, was the transfer agent for Small Cap Value shares. For the period, each class paid the following transfer agent fees:
| Amount | % of |
Class A | $ 175,851 | .30 |
Class T | 121,857 | .30 |
Class B | 30,655 | .30 |
Class C | 85,123 | .30 |
Small Cap Value | 2,988,753 | .26 |
Institutional Class | 26,449 | .25 |
| $ 3,428,688 |
|
Accounting and Security Lending Fees. FSC, an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $70,936 for the period.
Annual Report
Notes to Financial Statements - continued
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $4.2 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro rata portion of the line of credit, which amounted to $3,170 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
8. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds.
9. Expense Reductions.
FMR voluntarily agreed to reimburse each class to the extent annual operating expenses exceeded certain levels of average net assets as noted in the table below. Some expenses, for example interest expense, including commitment fees, are excluded from this reimbursement.
The following classes were in reimbursement during the period:
| Expense | Reimbursement |
|
|
|
Class A | 1.40% | $ 18,972 |
Class T | 1.65% | 13,639 |
Class B | 2.15% | 3,588 |
Class C | 2.15% | 9,599 |
|
| $ 45,798 |
Annual Report
9. Expense Reductions - continued
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 $12,006 for the period. In addition, through arrangements with each class' transfer agent, credits realized as a result of uninvested cash balances were used to reduce the Fund's expenses. During the period, credits reduced each class' transfer agent expense as noted in the table below.
| Transfer Agent |
Class A | $ 591 |
Small Cap Value | 59,561 |
Institutional Class | 259 |
| $ 60,411 |
10. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
11. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended July 31, | 2008 | 2007 |
From net realized gain |
|
|
Class A | $ 2,334,219 | $ 2,137,128 |
Class T | 1,800,459 | 2,317,701 |
Class B | 442,697 | 493,632 |
Class C | 1,258,270 | 1,276,323 |
Small Cap Value | 47,176,109 | 48,691,674 |
Institutional Class | 445,223 | 502,809 |
Total | $ 53,456,977 | $ 55,419,267 |
Annual Report
Notes to Financial Statements - continued
12. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
Years ended July 31, | 2008 | 2007 | 2008 | 2007 |
Class A |
|
|
|
|
Shares sold | 1,801,333 | 2,083,427 | $ 23,728,165 | $ 29,477,855 |
Reinvestment of distributions | 158,451 | 153,067 | 2,181,126 | 1,967,811 |
Shares redeemed | (1,800,932) | (990,255) | (23,386,603) | (13,986,913) |
Net increase (decrease) | 158,852 | 1,246,239 | $ 2,522,688 | $ 17,458,753 |
Class T |
|
|
|
|
Shares sold | 618,951 | 1,416,878 | $ 8,024,654 | $ 19,764,686 |
Reinvestment of distributions | 127,052 | 158,416 | 1,740,319 | 2,031,495 |
Shares redeemed | (1,620,468) | (1,429,554) | (21,259,209) | (20,059,646) |
Net increase (decrease) | (874,465) | 145,740 | $ (11,494,236) | $ 1,736,535 |
Class B |
|
|
|
|
Shares sold | 128,063 | 297,938 | $ 1,643,352 | $ 4,153,087 |
Reinvestment of distributions | 29,083 | 34,686 | 395,378 | 444,445 |
Shares redeemed | (328,632) | (263,033) | (4,160,797) | (3,714,165) |
Net increase (decrease) | (171,486) | 69,591 | $ (2,122,067) | $ 883,367 |
Class C |
|
|
|
|
Shares sold | 565,275 | 834,910 | $ 7,245,287 | $ 11,698,988 |
Reinvestment of distributions | 82,093 | 84,926 | 1,115,865 | 1,089,287 |
Shares redeemed | (1,251,391) | (562,438) | (15,942,770) | (7,834,552) |
Net increase (decrease) | (604,023) | 357,398 | $ (7,581,618) | $ 4,953,723 |
Small Cap Value |
|
|
|
|
Shares sold | 33,217,718 | 42,235,359 | $ 432,952,106 | $ 595,504,607 |
Reinvestment of distributions | 3,344,768 | 3,617,365 | 46,241,130 | 46,609,140 |
Shares redeemed | (26,584,070) | (32,779,622) | (353,880,106) | (461,808,869) |
Net increase (decrease) | 9,978,416 | 13,073,102 | $ 125,313,130 | $ 180,304,878 |
Institutional Class |
|
|
|
|
Shares sold | 353,080 | 309,983 | $ 4,711,093 | $ 4,413,286 |
Reinvestment of distributions | 21,635 | 23,286 | 299,115 | 300,279 |
Shares redeemed | (457,781) | (242,217) | (5,972,769) | (3,533,035) |
Net increase (decrease) | (83,066) | 91,052 | $ (962,561) | $ 1,180,530 |
Annual Report
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Securities Fund and the Shareholders of Fidelity Small Cap 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 Small Cap Value Fund (a fund of Fidelity Securities Fund) at July 31, 2008, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and 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 Small Cap 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 July 31, 2008 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
September 22, 2008
Annual Report
Trustees and Officers
The Trustees, Member of the Advisory Board, and executive officers of the trust and fund, as applicable, are listed below. The Board of Trustees governs the fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee the fund's activities, review contractual arrangements with companies that provide services to the fund, and review the fund's performance. Except for Edward C. Johnson 3d and James C. Curvey, each of the Trustees oversees 218 funds advised by FMR or an affiliate. Messrs. Johnson and Curvey oversee 377 funds advised by FMR or an affiliate.
The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust. Each Trustee who is not an interested person (as defined in the 1940 Act) (Independent Trustee), shall retire not later than the last day of the calendar year in which his or her 72nd birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board Member hold office without limit in time, except that any officer and Advisory Board Member may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years.
The fund's Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-877-208-0098.
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 Occupation | |
Edward C. Johnson 3d (78) | |
| Year of Election or Appointment: 1984 Mr. Johnson is Chairman of the Board of Trustees. Mr. Johnson serves as Chief Executive Officer, Chairman, and a Director of FMR LLC; Chairman and a Director of FMR; Chairman and a Director of Fidelity Research & Analysis Company (FRAC); Chairman and a Director of Fidelity Investments Money Management, Inc.; and Chairman and a Director of FMR Co., Inc. In addition, Mr. Johnson serves as Chairman and Director of FIL Limited. Previously, Mr. Johnson served as President of FMR LLC (2006-2007). |
James C. Curvey (73) | |
| Year of Election or Appointment: 2007 Mr. Curvey also serves as Trustee (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2006- |
* Trustees have been determined to be "Interested Trustees" by virtue of, among other things, their affiliation with the trust or various entities under common control with FMR. FMR Corp. merged with and into FMR LLC on October 1, 2007. Any references to FMR LLC for prior periods are deemed to be references to the prior entity.
Independent Trustees:
Correspondence intended for each Independent Trustee (that is, the Trustees other than the Interested Trustees) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.
Name, Age; Principal Occupation | |
Dennis J. Dirks (60) | |
| Year of Election or Appointment: 2005 Prior to his retirement in May 2003, Mr. Dirks was Chief Operating Officer and a member of the Board of The Depository Trust & Clearing Corporation (DTCC) (1999-2003). He also served as President, Chief Operating Officer, and Board member of The Depository Trust Company (DTC) (1999-2003) and President and Board member of the National Securities Clearing Corporation (NSCC) (1999-2003). In addition, Mr. Dirks served as a Trustee and a member of the Finance Committee of Manhattan College (2005-2008), and as Chief Executive Officer and Board member of the Government Securities Clearing Corporation (2001-2003) and Chief Executive Officer and Board member of the Mortgage-Backed Securities Clearing Corporation (2001-2003). Mr. Dirks also serves as a Trustee and a member of the Finance Committee of AHRC of Nassau County (2006-present). |
Alan J. Lacy (54) | |
| Year of Election or Appointment: 2008 Mr. Lacy serves as Senior Adviser (2007-present) of Oak Hill Capital Partners, L.P. (a private equity firm). Mr. Lacy also served as Chief Executive Officer (2000-2005) and Vice Chairman (2005-2006) of Sears Holdings Corporation and Sears, Roebuck and Co. (retail). In addition, Mr. Lacy serves as a member of the Board of Directors of The Western Union Company (global money transfer, 2006-present) and Bristol-Myers Squibb (global pharmaceuticals, 2007-present). Mr. Lacy is a Trustee of the National Parks Conservation Association and The Field Museum of Natural History. |
Ned C. Lautenbach (64) | |
| Year of Election or Appointment: 2000 Mr. Lautenbach is Chairman of the Independent Trustees (2006-present). Mr. Lautenbach is an Advisory Partner of Clayton, Dubilier & Rice, Inc. (private equity investment firm). Previously, Mr. Lautenbach was with the International Business Machines Corporation (IBM) from 1968 until his retirement in 1998. Mr. Lautenbach serves as a Director of Eaton Corporation (diversified industrial) as well as the Philharmonic Center for the Arts in Naples, Florida. He also is a member of the Board of Trustees of Fairfield University (2005-present), as well as a member of the Council on Foreign Relations. Previously, Mr. Lautenbach served as a Director of Sony Corporation (2006-2007). |
Joseph Mauriello (63) | |
| 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 firm, 1965-2005). Mr. Mauriello currently serves as a member of the Board of Directors of XL Capital Ltd. (global insurance and re-insurance company, 2006-present) and of Arcadia Resources Inc. (health care services and products, 2007-present). He also served as a Director of the Hamilton Funds of the Bank of New York (2006-2007). |
Cornelia M. Small (64) | |
| Year of Election or Appointment: 2005 Ms. Small is a member of the Investment Committee, and Chair (2008-present) and a member of the Board of Trustees of Smith College. Ms. Small also serves on the Investment Committee of the Berkshire Taconic Community Foundation (2008-present). Previously, Ms. Small served as Chairperson of the Investment Committee (2002-2008) of Smith College and as Co-Chair (2000-2003) of the Annual Fund for the Fletcher School of Law and Diplomacy. In addition, she served as Chief Investment Officer, Director of Global Equity Investments, and a member of the Board of Directors of Scudder, Stevens & Clark and Scudder Kemper Investments. |
William S. Stavropoulos (69) | |
| Year of Election or Appointment: 2002 Mr. Stavropoulos is Chairman Emeritus of the Board of Directors of The Dow Chemical Company, where he previously served in numerous senior management positions, including President (1993-2000; 2002-2003), CEO (1995-2000; 2002-2004), Chairman of the Executive Committee (2000-2006), and as a member of the Board of Directors (1990-2006). Currently, he is a Director of Teradata Corporation (data warehousing and technology solutions, 2008-present), Chemical Financial Corporation, Maersk Inc. (industrial conglomerate), Tyco International, Inc. (multinational manufacturing and services, 2007-present), and a member of the Advisory Board for Metalmark Capital (private equity investment firm, 2005-present). He is a special advisor to Clayton, Dubilier & Rice, Inc. (private equity investment). In addition, Mr. Stavropoulos is a member of the University of Notre Dame Advisory Council for the College of Science. |
David M. Thomas (59) | |
| Year of Election or Appointment: 2008 Previously, Mr. Thomas served as Executive Chairman (2005-2006) and Chairman and Chief Executive Officer (2000-2005) of IMS Health, Inc. (pharmaceutical and healthcare information solutions). In addition, Mr. Thomas serves as a member of the Board of Directors of Fortune Brands, Inc. (consumer products holding company), and Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (57) | |
| Year of Election or Appointment: 2008 Mr. Wiley also serves as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-present). He serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005- |
Advisory Board Member and Executive Officers**:
Correspondence intended for each executive officer and Mr. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Peter S. Lynch (64) | |
| Year of Election or Appointment: 2003 Member of the Advisory Board of Fidelity Securities Fund. Mr. Lynch is Vice Chairman and a Director of FMR, and Vice Chairman (2001- |
Kenneth B. Robins (38) | |
| Year of Election or Appointment: 2008 President and Treasurer of the fund. Mr. Robins also serves as President and Treasurer of Fidelity's Equity and High Income Funds (2008-present) and is an employee of FMR (2004-present). Before joining Fidelity Investments, Mr. Robins worked at KPMG LLP, where he was a partner in KPMG's department of professional practice (2002-2004). |
Walter C. Donovan (46) | |
| Year of Election or Appointment: 2007 Vice President of the fund. Mr. Donovan also serves as Vice President of Fidelity's Equity Funds, President of FMR and FMR Co., Inc., and Executive Vice President of Fidelity Investments Money Management, Inc. (2007-present). Previously, Mr. Donovan served as Executive Vice President of FMR and FMR Co., Inc. (2005-2007) and Senior Vice President of FMR (2003-2005) and FMR Co., Inc. (2004-2005). |
Thomas C. Hense (44) | |
| Year of Election or Appointment: 2008 Vice President of the fund. Mr. Hense also serves as Vice President of Fidelity's High Income and Small Cap Funds (2008-present). Previously, Mr. Hense served as a portfolio manager for Fidelity's Institutional Money Management Group (Pyramis) (2003-2008). |
Scott C. Goebel (40) | |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of the fund. Mr. Goebel also serves as Secretary and CLO of other Fidelity funds (2008-present); General Counsel, Secretary, and Senior Vice President of FMR (2008- |
John B. McGinty, Jr. (45) | |
| Year of Election or Appointment: 2008 Assistant Secretary of the fund. Mr. McGinty also serves as Assistant Secretary of Fidelity's other Equity and High Income Funds (2008-present) and is an employee of FMR LLC (2004-present). Mr. McGinty also serves as Senior Vice President, Secretary, and Chief Legal Officer of FDC (2007-present). Before joining Fidelity Investments, Mr. McGinty practiced law at Ropes & Gray, LLP. |
Holly C. Laurent (54) | |
| Year of Election or Appointment: 2008 Anti-Money Laundering (AML) officer of the fund. Ms. Laurent also serves as AML officer of other Fidelity funds (2008-present) and is an employee of FMR LLC. Previously, Ms. Laurent was Senior Vice President and Head of Legal for Fidelity Business Services India Pvt. Ltd. (2006-2008), Senior Vice President, Deputy General Counsel and Group Head for FMR LLC (2005-2006). |
Christine Reynolds (49) | |
| Year of Election or Appointment: 2008 Chief Financial Officer of the fund. Ms. Reynolds also serves as Chief Financial Officer of other Fidelity funds (2008-present). Ms. Reynolds became President of Fidelity Pricing and Cash Management Services (FPCMS) in August 2008. She served as Chief Operating Officer of FPCMS from 2007 through July 2008. Previously, Ms. Reynolds served as President, Treasurer, and Anti-Money Laundering officer of the Fidelity funds (2004-2007). Before joining Fidelity Investments, Ms. Reynolds worked at PricewaterhouseCoopers LLP (PwC) (1980-2002), where she was an audit partner with PwC's investment management practice. |
Kenneth A. Rathgeber (61) | |
| Year of Election or Appointment: 2004 Chief Compliance Officer of the fund. Mr. Rathgeber also serves as Chief Compliance Officer of Fidelity's Equity and High Income Funds (2004-present). He is Chief Compliance Officer of FMR (2005-present), FMR Co., Inc. (2005-present), Fidelity Management & Research (U.K.) Inc. (2005-present), Fidelity Research & Analysis Company (2005-present), Fidelity Investments Money Management, Inc. (2005-present), and Strategic Advisers, Inc. (2005-present). |
Bryan A. Mehrmann (47) | |
| Year of Election or Appointment: 2005 Deputy Treasurer of the fund. Mr. Mehrmann also serves as Deputy Treasurer of other Fidelity funds (2005-present) and is an employee of FMR. Previously, Mr. Mehrmann served as Vice President of Fidelity Investments Institutional Services Group (FIIS)/Fidelity Investments Institutional Operations Corporation, Inc. (FIIOC) Client Services (1998-2004). |
Adrien E. Deberghes (40) | |
| Year of Election or Appointment: 2008 Deputy Treasurer of the fund. Mr. Deberghes also serves as Deputy Treasurer of Fidelity's Equity and High Income Funds (2008-present) and is an employee of FMR (2008-present). Previously, Mr. Deberghes served as Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005). |
Robert G. Byrnes (41) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of the fund. Mr. Byrnes also serves as Assistant Treasurer of other Fidelity funds (2005-present) and is an employee of FMR (2005-present). Previously, Mr. Byrnes served as Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (2003-2005). Before joining Fidelity Investments, Mr. Byrnes worked at Deutsche Asset Management where he served as Vice President of the Investment Operations Group (2000-2003). |
Peter L. Lydecker (54) | |
| Year of Election or Appointment: 2004 Assistant Treasurer of the fund. Mr. Lydecker also serves as Assistant Treasurer of other Fidelity funds (2004-present) and is an employee of FMR. |
Paul M. Murphy (61) | |
| Year of Election or Appointment: 2007 Assistant Treasurer of the fund. Mr. Murphy also serves as Assistant Treasurer of other Fidelity funds (2007-present) and is an employee of FMR (2007-present). Previously, Mr. Murphy served as Chief Financial Officer of the Fidelity Funds (2005-2006), Vice President and Associate General Counsel of FMR (2007), and Senior Vice President of Fidelity Pricing and Cash Management Services Group (1994-2007). |
Gary W. Ryan (49) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of the fund. Mr. Ryan also serves as Assistant Treasurer of other Fidelity funds (2005-present) and is an employee of FMR (2005-present). Previously, Mr. Ryan served as Vice President of Fund Reporting in Fidelity Pricing and Cash Management Services (FPCMS) (1999-2005). |
** FMR Corp. merged with and into FMR LLC on October 1, 2007. Any references to FMR LLC for prior periods are deemed to be references to the prior entity.
Annual Report
Distributions (Unaudited)
The Board of Trustees of Advisor Small Cap Value Fund voted to pay on September 15, 2008, to shareholders of record at the opening of business on September 12, 2008, a distribution of $0.11 per share derived from capital gains realized from sales of portfolio securities.
The fund hereby designates as a capital gain dividend with respect to the taxable year ended July 31, 2008 $30,077,945, 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 2009 of amounts for use in preparing 2008 income tax returns.
Annual Report
Proxy Voting Results
A special meeting of the fund's shareholders was held on May 14, 2008. The results of votes taken among shareholders on the proposals before them are reported below. Each vote reported represents one dollar of net asset value held on the record date for the meeting.
PROPOSAL 1 | ||
To elect a Board of Trustees.A | ||
| # of | % of |
James C. Curvey | ||
Affirmative | 30,242,569,269.49 | 94.915 |
Withheld | 1,620,182,942.38 | 5.085 |
TOTAL | 31,862,752,211.87 | 100.000 |
Dennis J. Dirks | ||
Affirmative | 30,356,248,026.80 | 95.272 |
Withheld | 1,506,504,185.07 | 4.728 |
TOTAL | 31,862,752,211.87 | 100.000 |
Edward C. Johnson 3d | ||
Affirmative | 30,163,300,902.81 | 94.666 |
Withheld | 1,699,451,309.06 | 5.334 |
TOTAL | 31,862,752,211.87 | 100.000 |
Alan J. Lacy | ||
Affirmative | 30,334,439,999.59 | 95.203 |
Withheld | 1,528,312,212.28 | 4.797 |
TOTAL | 31,862,752,211.87 | 100.000 |
Ned C. Lautenbach | ||
Affirmative | 30,317,381,535.59 | 95.150 |
Withheld | 1,545,370,676.28 | 4.850 |
TOTAL | 31,862,752,211.87 | 100.000 |
Joseph Mauriello | ||
Affirmative | 30,340,553,696.88 | 95.223 |
Withheld | 1,522,198,514.99 | 4.777 |
TOTAL | 31,862,752,211.87 | 100.000 |
Cornelia M. Small | ||
Affirmative | 30,337,552,071.15 | 95.213 |
Withheld | 1,525,200,140.72 | 4.787 |
TOTAL | 31,862,752,211.87 | 100.000 |
William S. Stavropoulos | ||
Affirmative | 30,240,356,579.51 | 94.908 |
Withheld | 1,622,395,632.36 | 5.092 |
TOTAL | 31,862,752,211.87 | 100.000 |
| # of | % of |
David M. Thomas | ||
Affirmative | 30,352,029,125.67 | 95.259 |
Withheld | 1,510,723,086.20 | 4.741 |
TOTAL | 31,862,752,211.87 | 100.000 |
Michael E. Wiley | ||
Affirmative | 30,333,540,290.12 | 95.201 |
Withheld | 1,529,211,921.75 | 4.799 |
TOTAL | 31,862,752,211.87 | 100.000 |
PROPOSAL 2 | ||
To amend the Declaration of Trust to reduce the required quorum for future shareholder meetings.A | ||
| # of | % of |
Affirmative | 23,747,670,372.95 | 74.531 |
Against | 5,357,217,831.03 | 16.814 |
Abstain | 1,587,233,084.08 | 4.981 |
Broker | 1,170,630,923.81 | 3.674 |
TOTAL | 31,862,752,211.87 | 100.000 |
A Denotes trust-wide proposal and voting results. |
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees
Fidelity Small Cap Value Fund
Each year, typically in July, the Board of Trustees, including the Independent Trustees (together, the Board), votes on the renewal of the management contract and sub-advisory agreements (together, the Advisory Contracts) for the fund. The Board, assisted by the advice of fund counsel and Independent Trustees' counsel, requests and considers a broad range of information throughout the year.
The Board meets regularly and, acting directly and through its separate committees, requests and receives information concerning, and considers at each of its meetings factors that are relevant to, its annual consideration of the renewal of the fund's Advisory Contracts, including the services and support provided to the fund and its shareholders. At the time of the renewal, the Board had 12 standing committees, each composed of Independent Trustees with varying backgrounds, to which the Board has assigned specific subject matter responsibilities in order to enhance effective decision-making by the Board. Each committee has a written charter outlining the structure and purposes of the committee. The Board also meets as needed to consider matters specifically related to the Board's annual consideration of the renewal of Advisory Contracts.
At its July 2008 meeting, the Board of Trustees, including the Independent Trustees, unanimously determined to renew the fund's Advisory Contracts. In reaching its determination, the Board considered all factors it believed relevant, including (i) the nature, extent, and quality of the services to be provided to the fund and its shareholders (including the investment performance of the fund); (ii) the competitiveness of the fund's management fee and total expenses; (iii) the total costs of the services to be provided by and the profits to be realized by Fidelity from its relationship with the fund; (iv) the extent to which economies of scale would be realized as the fund grows; and (v) whether fee levels reflect these economies of scale, if any, for the benefit of fund shareholders. The Board also approved agreements with foreign sub-advisers Fidelity Management & Research (Japan) Inc. and Fidelity Management & Research (Hong Kong) Limited, as well as amendments to the fund's agreement with Fidelity Management & Research (U.K.) Inc.
In considering whether to renew the Advisory Contracts for the fund, the Board ultimately reached a determination, with the assistance of fund counsel and Independent Trustees' counsel and through the exercise of its business judgment, that the renewal of the Advisory Contracts and the compensation to be received by Fidelity under the management contract is consistent with Fidelity's fiduciary duty under applicable law. The Board's decision to renew the Advisory Contracts was not based on any single factor noted above, but rather was based on a comprehensive consideration of all the information provided to the Board at its meetings throughout the year. The Board, in reaching its determination to renew the Advisory Contracts, is aware that shareholders in the fund have a broad range of investment choices available to them, including a wide choice among mutual funds offered by competitors to Fidelity, and that the fund's shareholders, with the opportunity to review and weigh the disclosure provided by the fund in its prospectus and other public disclosures, have chosen to invest in this fund, managed by Fidelity.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
Nature, Extent, and Quality of Services Provided. The Board considered staffing within the investment adviser, FMR, and the sub-advisers (together, the Investment Advisers), including the backgrounds of the fund's investment personnel and the fund's investment objective and discipline. The Independent Trustees also had discussions with senior management of Fidelity's investment operations and investment groups. The Board considered the structure of the portfolio manager compensation program and whether this structure provides appropriate incentives.
Resources Dedicated to Investment Management and Support Services. The Board reviewed the size, education, and experience of the Investment Advisers' investment staff, their use of technology, and the Investment Advisers' approach to recruiting, training, and retaining portfolio managers and other research, advisory, and management personnel. The Board noted that Fidelity's analysts have access to a variety of technological tools that enable them to perform both fundamental and quantitative analysis and to specialize in various disciplines. The Board considered Fidelity's extensive global research capabilities that enable the Investment Advisers to aggregate data from various sources in an effort to produce positive investment results. The Board also considered that Fidelity's portfolio managers and analysts have access to daily portfolio attribution that allows for monitoring of a fund's portfolio, as well as an electronic communication system that provides immediate real-time access to research concerning issuers and credit enhancers.
Shareholder and Administrative Services. The Board considered (i) the nature, extent, quality, and cost of advisory, administrative, distribution, and shareholder services performed by the Investment Advisers and their affiliates under the Advisory Contracts and under separate agreements covering transfer agency, pricing and bookkeeping, and securities lending services for the fund; (ii) the nature and extent of the Investment Advisers' supervision of third party service providers, principally custodians and subcustodians; and (iii) the resources devoted to, and the record of compliance with, the fund's compliance policies and procedures. The Board also reviewed the allocation of fund brokerage, including allocations to brokers affiliated with the Investment Advisers, the use of brokerage commissions to pay fund expenses, and the use of "soft" commission dollars to pay for research services. The Board further considered that Fidelity voluntarily pays for market data out of its own resources.
The Board noted that the growth of fund assets across the complex allows Fidelity to reinvest in the development of services designed to enhance the value or convenience of the Fidelity funds as investment vehicles. These services include 24-hour access to account information and market information through phone representatives and over the Internet, and investor education materials and asset allocation tools.
Annual Report
Investment in a Large Fund Family. The Board considered the benefits to shareholders of investing in a Fidelity fund, including the benefits of investing in a fund that is part of a large family of funds offering a variety of investment disciplines and providing for a large variety of mutual fund investor services. For example, fund shareholders are offered the privilege of exchanging shares of the fund for shares of other Fidelity funds, as set forth in the fund's prospectus, without paying a sales charge. The Board noted that Fidelity has taken a number of actions over the previous year that benefited particular funds, including (i) dedicating additional resources to investment research and to restructure the investment research teams; (ii) contractually agreeing to reduce the management fees on Fidelity's Institutional Money Market Funds and launching Class IV and Institutional Class of certain of these funds; (iii) reducing the transfer agent fees for the Fidelity Select Portfolios and Investor Class of the VIP funds; and (iv) launching Class K of 29 equity funds as a lower-fee class available to certain employer-sponsored retirement plans.
Investment Performance. The Board considered whether the fund has operated within its investment objective, as well as its record of compliance with its investment restrictions. It also reviewed the fund's absolute investment performance for each class, as well as the fund's relative investment performance for each class measured against (i) a broad-based securities market index, and (ii) a peer group of mutual funds deemed appropriate by the Board over multiple periods. Because the fund had been in existence less than five calendar years, the following charts considered by the Board show, over the one- and three-year periods ended December 31, 2007, the cumulative total returns of Fidelity Small Cap Value (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 Fidelity Small Cap Value (retail class) and Class B 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 (bottom of box) and the 75th percentile return (top of box) of the peer group. Returns shown above the box are in the first quartile and returns shown below the box are in the fourth quartile. The percentage beaten numbers noted below each chart correspond to the percentile box and represent the percentage of funds in the peer group whose performance was equal to or lower than that of the class indicated.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
Fidelity Small Cap Value Fund
The Board reviewed the fund's relative investment performance against its peer group and stated that the performance of Fidelity Small Cap Value (retail class) of the fund was in the first quartile for all the periods shown. The Board also stated that the investment performance of Fidelity Small Cap Value (retail class) of the fund compared favorably to 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 also considered that the fund's management fee is subject to upward or downward adjustment depending upon whether, and to what extent, the fund's investment performance for the performance period exceeds, or is exceeded by, the record (over the same period) of a Board-approved performance adjustment index. The Board realizes that the performance adjustment provides FMR with a strong economic incentive to seek to achieve superior performance for the fund's shareholders and helps to more closely align the interests of FMR and the fund's shareholders.
The Board considered that FMR has taken steps to refocus and strengthen equity research, equity portfolio management, and compliance.
Based on its review, and giving particular weight to the nature and quality of the resources dedicated by the Investment Advisers to maintain and improve relative performance, the Board concluded that the nature, extent, and quality of the services provided to the fund will benefit the fund's shareholders, particularly in light of the Board's view that the fund's shareholders benefit from investing in a fund that is part of a large family of funds offering a variety of investment disciplines and services.
Annual Report
Competitiveness of Management Fee and Total Fund Expenses. The Board considered the fund's management fee and total expenses compared to "mapped groups" of competitive funds and classes. Fidelity creates "mapped groups" by combining similar Lipper investment objective categories that have comparable management fee characteristics. Combining Lipper investment objective categories aids the Board's management fee and total expense comparisons by broadening the competitive group used for comparison and by reducing the number of universes to which various Fidelity funds are compared. The Board also considered supplemental information about how the fund's management fee and total expenses ranked relative to groups based on Lipper classifications, which take into account a fund's market capitalization and style.
The Board considered two proprietary management fee comparisons for the 12-month (or shorter) 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 12% means that 88% 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 Small Cap 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 2007. The Board also noted the effect of the fund's positive performance adjustment on the fund's management fee ranking. The Board noted that the performance adjustment for each year represents calculations for performance periods that differ from the periods shown in the performance charts above.
Based on its review, the Board concluded that the fund's management fee was fair and reasonable in light of the services that the fund receives and the other factors considered.
In its review of each class's total expenses, 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 current and historical total expenses 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 expenses of each of Class A, Institutional Class, and Fidelity Small Cap Value (retail class) ranked below its competitive median for 2007, the total expenses of Class B ranked equal to its competitive median for 2007, and the total expenses of each of Class T and Class C ranked above its competitive median for 2007. The Board considered that the total expenses of Class C were above the median because of its higher transfer agent fee due to small average account size. The Board considered that total expenses for Class T were above the median primarily because its 12b-1 fee is higher than the typical front-end load class. 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 expenses 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
In its review of total expenses, the Board also considered Fidelity fee structures and other information on clients that FMR and its affiliates service in other competitive markets, such as other mutual funds advised or subadvised by FMR or its affiliates, pension plan clients, and other institutional clients.
Based on its review, the Board concluded that the total expenses of each class of the fund were reasonable, although in some cases 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 audited books and records of Fidelity. The Audit Committee of the Board reviews any significant changes from the prior year's methodologies.
PricewaterhouseCoopers LLP (PwC), independent registered public accounting firm and auditor to Fidelity and certain Fidelity funds, has been engaged annually by the Board as part of the Board's assessment of the results of Fidelity's profitability analysis. PwC's engagement includes the review and assessment of Fidelity's methodologies used in determining the revenues and expenses attributable to Fidelity's mutual fund business, and completion of agreed-upon procedures surrounding the mathematical accuracy of fund profitability and its conformity to allocation methodologies. After considering PwC's reports issued under the engagement and information provided by Fidelity, the Board believes that while other allocation methods may also be reasonable, Fidelity's profitability methodologies are reasonable in all material respects.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
The Board has also reviewed Fidelity's non-fund businesses and any fall-out benefits related to the mutual fund business as well as cases where Fidelity's affiliates may benefit from or be related to the fund's business.
The Board considered the costs of the services provided by and the profits realized by Fidelity in connection with the operation of the fund and determined that the amount of profit is a fair entrepreneurial profit for the management of the fund.
Economies of Scale. The Board considered whether there have been economies of scale in respect of the management of the Fidelity funds, whether the Fidelity funds (including the fund) have appropriately benefited from any such economies of scale, and whether there is potential for realization of any further economies of scale. The Board considered the extent to which the fund will benefit from economies of scale through increased services to the fund, through waivers or reimbursements, or through fee or expense reductions.
The Board recognized that the fund's management contract incorporates a "group fee" structure, which provides for lower group fee rates as total fund assets under FMR's management increase, and for higher group fee rates as total fund assets under FMR's management decrease. FMR determines the group fee rates based on a tiered asset "breakpoint" schedule. The Board considered that the group fee is designed to deliver the benefits of economies of scale to fund shareholders when total fund assets increase, even if assets of any particular fund are unchanged or have declined, because some portion of Fidelity's costs are attributable to services provided to all Fidelity funds, and all funds benefit if those costs can be allocated among more assets. The Board concluded that, given the group fee structure, fund shareholders will achieve a certain level of economies of scale as assets under FMR's management increase at the fund complex level, regardless of whether Fidelity achieves any such economies of scale.
The Board further concluded that any potential economies of scale are being shared between fund shareholders and Fidelity in an appropriate manner.
Additional Information Requested by the Board. In order to develop fully the factual basis for consideration of the Fidelity funds' Advisory Contracts, the Board requested and received additional information on certain topics, including (i) fund performance trends and actions to be taken by FMR to improve certain funds' overall performance; (ii) portfolio manager changes that have occurred during the past year; (iii) Fidelity's fund profitability methodology, the profitability of certain fund service providers, and profitability trends for certain funds; (iv) Fidelity's compensation structure for portfolio managers and key personnel, including its effects on fund profitability and the extent to which portfolio manager compensation is linked to fund performance; (v) Fidelity's fee structures and rationale for recommending different fees among categories of funds; and (vi) Fidelity's rationale for recommending which funds should have a performance adjustment component as part of their management fees.
Annual Report
Based on its evaluation of all of the conclusions noted above, and after considering all material factors, the Board ultimately concluded that the advisory fee structures are fair and reasonable, and that the fund's Advisory Contracts should be renewed.
Annual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Fidelity Management & Research
(U.K.) Inc.
Fidelity Research & Analysis Company
Fidelity International Investment Advisors
Fidelity Investments Japan Limited
Fidelity International Investment Advisors (U.K.) Limited
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Service Agents
Fidelity Investments Institutional
Operations Company, Inc.
Boston, MA
Fidelity Service Company, Inc.
Boston, MA
Custodian
Citibank, N.A.
New York, NY
ASCVI-UANN-0908 1.803743.103
Item 2. Code of Ethics
As of the end of the period, July 31, 2008, Fidelity Securities Fund (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
(a) Audit Fees.
For the fiscal years ended July 31, 2008 and July 31, 2007, the aggregate Audit Fees billed by PricewaterhouseCoopers LLP (PwC) for professional services rendered for the audits of the financial statements, or services that are normally provided in connection with statutory and regulatory filings or engagements for those fiscal years, for Fidelity Blue Chip Value Fund, Fidelity Dividend Growth Fund, Fidelity Growth & Income Portfolio, Fidelity International Real Estate Fund, Fidelity Leveraged Company Stock Fund, Fidelity Small Cap Growth Fund and Fidelity Small Cap Value Fund (the funds) and for all funds in the Fidelity Group of Funds are shown in the table below.
Fund | 2008A | 2007A |
Fidelity Blue Chip Value Fund | $48,000 | $46,000 |
Fidelity Dividend Growth Fund | $77,000 | $98,000 |
Fidelity Growth & Income Portfolio | $111,000 | $150,000 |
Fidelity International Real Estate Fund | $56,000 | $55,000 |
Fidelity Leveraged Company Stock Fund | $57,000 | $59,000 |
Fidelity Small Cap Growth Fund | $49,000 | $46,000 |
Fidelity Small Cap Value Fund | $49,000 | $47,000 |
All funds in the Fidelity Group of Funds audited by PwC |
$14,000,000 |
$13,800,000 |
A | Aggregate amounts may reflect rounding. |
For the fiscal years ended July 31, 2008 and July 31, 2007, the aggregate Audit Fees billed by Deloitte & Touche LLP, the member firms of Deloitte Touche Tohmatsu, and their respective affiliates (collectively, "Deloitte Entities") for professional services rendered for the audits of the financial statements, or services that are normally provided in connection with statutory and regulatory filings or engagements for those fiscal years, for Fidelity Blue Chip Growth Fund, Fidelity OTC Portfolio, Fidelity Real Estate Income Fund and Fidelity Small Cap Opportunities Fund (the funds) and for all funds in the Fidelity Group of Funds are shown in the table below.
Fund | 2008A | 2007A,B |
Fidelity Blue Chip Growth Fund | $58,000 | $73,000 |
Fidelity OTC Portfolio | $47,000 | $54,000 |
Fidelity Real Estate Income Fund | $93,000 | $94,000 |
Fidelity Small Cap Opportunities Fund | $45,000 | $42,000 |
All funds in the Fidelity Group of Funds audited by Deloitte Entities |
$6,800,000 |
$7,100,000 |
A | Aggregate amounts may reflect rounding. |
B | Fidelity Small Cap Opportunities Fund commenced operations on March 22, 2007 .
|
(b) Audit-Related Fees.
In each of the fiscal years ended July 31, 2008 and July 31, 2007, the aggregate Audit-Related Fees billed by PwC for services rendered for assurance and related services to each fund that are reasonably related to the performance of the audit or review of the fund's financial statements, but not reported as Audit Fees, are shown in the table below.
Fund | 2008A | 2007 A |
Fidelity Blue Chip Value Fund | $0 | $0 |
Fidelity Dividend Growth Fund | $0 | $0 |
Fidelity Growth & Income Portfolio | $0 | $0 |
Fidelity International Real Estate Fund | $0 | $0 |
Fidelity Leveraged Company Stock Fund | $0 | $0 |
Fidelity Small Cap Growth Fund | $0 | $0 |
Fidelity Small Cap Value Fund | $0 | $0 |
A | Aggregate amounts may reflect rounding. |
In each of the fiscal years ended July 31, 2008 and July 31, 2007, the aggregate Audit-Related Fees billed by Deloitte Entities for services rendered for assurance and related services to each fund that are reasonably related to the performance of the audit or review of the fund's financial statements, but not reported as Audit Fees, are shown in the table below.
Fund | 2008A | 2007 A,B |
Fidelity Blue Chip Growth Fund | $0 | $0 |
Fidelity OTC Portfolio | $0 | $0 |
Fidelity Real Estate Income Fund | $0 | $0 |
Fidelity Small Cap Opportunities Fund | $0 | $0 |
A | Aggregate amounts may reflect rounding. |
B | Fidelity Small Cap Opportunities Fund commenced operations on March 22, 2007. |
In each of the fiscal years ended July 31, 2008 and July 31, 2007, the aggregate Audit-Related Fees that were billed by PwC and Deloitte Entities that were required to be approved by the Audit Committee for services 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") for assurance and related services that relate directly to the operations and financial reporting of each fund that are reasonably related to the performance of the audit or review of the fund's financial statements, but not reported as Audit Fees, are shown in the table below.
Billed By | 2008 A | 2007A |
PwC | $1,010,000 | $0 |
Deloitte Entities | $410,000 | $0 |
A | Aggregate amounts may reflect rounding. |
Fees included in the audit-related category comprise assurance and related services (e.g., due diligence services) that are traditionally performed by the independent registered public accounting firm. These audit-related services include due diligence related to mergers and acquisitions, accounting consultations and audits in connection with acquisitions, internal control reviews, attest services that are not required by statute or regulation and consultation concerning financial accounting and reporting standards.
(c) Tax Fees.
In each of the fiscal years ended July 31, 2008 and July 31, 2007, the aggregate Tax Fees billed by PwC for professional services rendered for tax compliance, tax advice, and tax planning for each fund is shown in the table below.
Fund | 2008A | 2007A |
Fidelity Blue Chip Value Fund | $3,800 | $2,900 |
Fidelity Dividend Growth Fund | $4,500 | $2,900 |
Fidelity Growth & Income Portfolio | $12,700 | $4,800 |
Fidelity International Real Estate Fund | $15,200 | $2,900 |
Fidelity Leveraged Company Stock Fund | $3,400 | $2,900 |
Fidelity Small Cap Growth Fund | $3,200 | $2,900 |
Fidelity Small Cap Value Fund | $3,200 | $2,900 |
A | Aggregate amounts may reflect rounding. |
In each of the fiscal years ended July 31, 2008 and July 31, 2007, the aggregate Tax Fees billed by Deloitte Entities for professional services rendered for tax compliance, tax advice, and tax planning for each fund is shown in the table below.
Fund | 2008A | 2007A,B |
Fidelity Blue Chip Growth Fund | $4,500 | $4,200 |
Fidelity OTC Portfolio | $5,600 | $5,200 |
Fidelity Real Estate Income Fund | $5,600 | $5,200 |
Fidelity Small Cap Opportunities Fund | $4,500 | $4,200 |
A | Aggregate amounts may reflect rounding. |
B | Fidelity Small Cap Opportunities Fund commenced operations on March 22, 2007. |
In each of the fiscal years ended July 31, 2008 and July 31, 2007, the aggregate Tax Fees billed by PwC and Deloitte Entities that were required to be approved by the Audit Committee for professional services rendered on behalf of the Fund Service Providers for tax compliance, tax advice, and tax planning that relate directly to the operations and financial reporting of each fund is shown in the table below.
Billed By | 2008A | 2007A |
PwC | $0 | $0 |
Deloitte Entities | $0 | $0 |
A | Aggregate amounts may reflect rounding. |
Fees included in the Tax Fees category comprise all services performed by professional staff in the independent registered public accounting firm's tax division except those services related to the audit. Typically, this category would include fees for tax compliance, tax planning, and tax advice. Tax compliance, tax advice, and tax planning services include preparation of original and amended tax returns, claims for refund and tax payment-planning services, assistance with tax audits and appeals, tax advice related to mergers and acquisitions and requests for rulings or technical advice from taxing authorities.
(d) All Other Fees.
In each of the fiscal years ended July 31, 2008 and July 31, 2007, the aggregate Other Fees billed by PwC for all other non-audit services rendered to the funds is shown in the table below.
Fund | 2008 | 2007A |
Fidelity Blue Chip Value Fund | $1,500 | $1,400 |
Fidelity Dividend Growth Fund | $9,100 | $11,800 |
Fidelity Growth & Income Portfolio | $12,300 | $19,900 |
Fidelity International Real Estate Fund | $1,600 | $1,800 |
Fidelity Leveraged Company Stock Fund | $5,800 | $4,600 |
Fidelity Small Cap Growth Fund | $2,000 | $1,600 |
Fidelity Small Cap Value Fund | $1,900 | $2,000 |
A | Aggregate amounts may reflect rounding. |
In each of the fiscal years ended July 31, 2008 and July 31, 2007, the aggregate Other Fees billed by Deloitte Entities for all other non-audit services rendered to the funds is shown in the table below.
Fund | 2008A | 2007A,B |
Fidelity Blue Chip Growth Fund | $0 | $0 |
Fidelity OTC Portfolio | $0 | $0 |
Fidelity Real Estate Income Fund | $0 | $0 |
Fidelity Small Cap Opportunities Fund | $0 | $0 |
A | Aggregate amounts may reflect rounding. |
B | Fidelity Small Cap Opportunities Fund commenced operations on March 22, 2007. |
In each of the fiscal years ended July 31, 2008 and July 31, 2007, the aggregate Other Fees billed by PwC and Deloitte Entities that were required to be approved by the Audit Committee for all other non-audit services rendered on behalf of the Fund Service Providers that relate directly to the operations and financial reporting of each fund is shown in the table below.
Billed By | 2008A | 2007A |
PwC | $235,000 | $225,000 |
Deloitte Entities | $0 | $0B |
A | Aggregate amounts may reflect rounding. |
B | Reflects current period presentation. |
Fees included in the All Other Fees category include services related to internal control reviews, strategy and other consulting, financial information systems design and implementation, consulting on other information systems, and other tax services unrelated to the fund.
(e) (1) | Audit Committee Pre-Approval Policies and Procedures: |
The trust's Audit Committee must pre-approve all audit and non-audit services provided by the independent registered public accounting firm relating to the operations or financial reporting of the funds. 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 trust's 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. Non-audit services provided by a fund audit firm for a Fund Service Provider that do not relate directly to the operations and financial reporting of a Fidelity fund (Non-Covered Service) but that are expected to exceed $50,000 are also subject to pre-approval by the Audit Committee.
All Covered Services, as well as Non-Covered Services that are expected to exceed $50,000, 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. Neither pre-approval nor advance notice of Non-Covered Service engagements for which fees are not expected to exceed $50,000 is required; such engagements are to be reported to the Audit Committee monthly.
(e) (2) | Services approved pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X:
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Audit-Related Fees:
There were no amounts that were approved by the Audit Committee pursuant to the de minimis exception for the fiscal years ended July 31, 2008 and July 31, 2007 on behalf of each fund.
There were no amounts that were required to be approved by the Audit Committee pursuant to the de minimis exception for the fiscal years ended July 31, 2008 and July 31, 2007 on behalf of the Fund Service Providers that relate directly to the operations and financial reporting of each fund.
Tax Fees:
There were no amounts that were approved by the Audit Committee pursuant to the de minimis exception for the fiscal years ended July 31, 2008 and July 31, 2007 on behalf of each fund.
There were no amounts that were required to be approved by the Audit Committee pursuant to the de minimis exception for the fiscal years ended July 31, 2008 and July 31, 2007 on behalf of the Fund Service Providers that relate directly to the operations and financial reporting of each fund.
All Other Fees:
There were no amounts that were approved by the Audit Committee pursuant to the de minimis exception for the fiscal years ended July 31, 2008 and July 31, 2007 on behalf of each fund.
There were no amounts that were required to be approved by the Audit Committee pursuant to the de minimis exception for the fiscal years ended July 31, 2008 and July 31, 2007 on behalf of the Fund Service Providers that relate directly to the operations and financial reporting of each fund.
(f) Not applicable.
(g) For the fiscal years ended July 31, 2008 and July 31, 2007, the aggregate fees billed by PwC of $2,300,000A and $1,390,000A for non-audit services rendered on behalf of 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 Fund Service Providers relating to Covered Services and Non-Covered Services are shown in the table below.
| 2008A | 2007A |
Covered Services | $1,325,000 | $290,000 |
Non-Covered Services | $975,000 | $1,100,000 |
A | Aggregate amounts may reflect rounding. |
For the fiscal years ended July 31, 2008 and July 31, 2007, the aggregate fees billed by Deloitte Entities of $1,090,000A and $575,000A for non-audit services rendered on behalf of the fund, FMR (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser) and Fund Service Providers relating to Covered Services and Non-Covered Services are shown in the table below.
| 2008A | 2007A,B |
Covered Services | $430,000 | $20,000 |
Non-Covered Services | $660,000 | $555,000 |
A | Aggregate amounts may reflect rounding. |
B | Reflects current period presentation. |
(h) The trust's Audit Committee has considered Non-Covered 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 audit of the funds, taking into account representations from PwC and Deloitte Entities, in accordance with Independence Standards Board Standard No.1, regarding their independence from the funds and their related entities.
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 Securities Fund
By: | /s/ Kenneth B. Robins |
| Kenneth B. Robins |
| President and Treasurer |
|
|
Date: | September 29, 2008 |
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: | September 29, 2008 |
By: | /s/Jeffrey Christian |
| Jeffrey Christian |
| Chief Financial Officer |
|
|
Date: | September 29, 2008 |