QUARTERLY FUND REVIEW AS OF SEPTEMBER 30, 2017 Fidelity Capital Appreciation Fund Investment Approach Fidelity Capital Appreciation Fund is a diversified domestic equity strategy focused on capital appreciation. We employ a flexible, "go-anywhere" investment approach that seeks investment opportunities across different market capitalizations and investment styles. The fund does not have an overriding style bias to either growth stocks or value stocks. The prevailing market environment and opportunities determine the style and positioning of the fund. We emphasize fundamental, bottom-up research, technical analytics and frequent company contact when evaluating investment opportunities and tend to favor companies with solid earnings growth and reasonable valuations, while a minority portion of the fund may focus on shorter-term, opportunistic trading. PERFORMANCE SUMMARY Cumulative 3 Month YTD 1 Year Annualized 3 Year 5 Year 10 Year/ LOF 1 Fidelity Capital Appreciation Fund Gross Expense Ratio: 0.61% 2 6.83% 17.08% 18.86% 8.29% 13.42% 7.16% S&P 500 Index 4.48% 14.24% 18.61% 10.81% 14.22% 7.44% Morningstar Fund Large Growth 5.29% 19.85% 19.75% 10.36% 13.70% 7.55% % Rank in Morningstar Category (1% = Best) -- -- 60% 82% 58% 61% # of Funds in Morningstar Category -- -- 1,398 1,259 1,125 800 FUND INFORMATION Manager(s): Fergus Shiel Trading Symbol: FDCAX Start Date: November 26, 1986 Size (in millions): $7,254.12 Morningstar Category: Fund Large Growth Stock markets, especially foreign markets, are volatile and can decline significantly in response to adverse issuer, political, regulatory, market, or economic developments. Foreign securities are subject to interest rate, currency exchange rate, economic, and political risks. 1 Life of Fund (LOF) if performance is less than 10 years. Fund inception date: 11/26/1986. 2 This expense ratio is from the most recent prospectus and generally is based on amounts incurred during the most recent fiscal year. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate; therefore, you may have a gain or loss when you sell your shares. Current performance may be higher or lower than the performance stated. Performance shown is that of the fund's Retail Class shares (if multiclass). You may own another share class of the fund with a different expense structure and, thus, have different returns. To learn more or to obtain the most recent month-end or other share-class performance, visit fidelity.com/performance, institutional.fidelity.com, or 401k.com. Total returns are historical and include change in share value and reinvestment of dividends and capital gains, if any. Cumulative total returns are reported as of the period indicated. For definitions and other important information, please see the Definitions and Important Information section of this Fund Review. Not FDIC Insured May Lose Value No Bank Guarantee
Performance Review For the three months ending September 30, 2017, the fund's Retail Class shares classes gained 6.83%, well ahead of the 4.48% return of the benchmark S&P 500 index. Stock selection, especially in the materials, industrials and health care sectors, drove the fund's excess return over the benchmark this quarter. Underweighting consumer staples, the benchmark's weakest-performing sector for the three months, also helped. Overall, we added value in eight of 11 market sectors. Air Canada proved the fund's top relative contributor. This out-ofbenchmark position returned 57% for the quarter, aided by record EBITDAR (earnings before interest, taxes, depreciation, amortization and aircraft rent) for the second quarter of 2017. Additionally, strength in the Canadian dollar reduced the firm's maintenance, fuel and depreciation costs, which are primarily priced in U.S. currency. Vertex Pharmaceuticals, where the fund had a sizable overweighting, rewarded us with an 18% gain this quarter. The company is a large-cap biotech focused on developing drugs for treating previously incurable cystic fibrosis. In mid-july, management announced that three of four next-generation treatments for the condition had positive phase 1 and phase 2 data. A highlight of the report was the efficacy and safety shown by the three regimens. The data showed consistency across many regimens and patient populations, and was viewed as a gamechanger for the disease. Shares of online payment processor PayPal s, a stock we overweighted, rose about 19% for the third quarter, fueled by the company's strong second-quarter earnings. The continued trend of e-commerce and mobile payments supported the stock the past three months. Strategic partnerships with various businesses also were favorable, specifically the firm's partnership with Baidu, which serves Chinese consumers making transactions outside of LARGEST CONTRIBUTORS VS. BENCHMARK Average Contribution (basis points)* Air Canada Industrials 0.88% 36 Vertex Pharmaceuticals, Inc. Health Care 2.58% 33 FMC Corp. Materials 1.93% 31 PayPal s, Inc. Sociedad Quimica y Minera de Chile SA (PN- B) sponsored ADR * 1 basis point = 0.01%. Information Technology 1.40% 19 Materials 0.35% 19 China. In July, PayPal raised its fiscal-year guidance, as the number of active customer accounts increased 12% year over year, further helping the stock's price. Conversely, positioning in the consumer discretionary sector was the biggest drag on relative performance, with our cash holdings which averaged about 4% of the fund's net assets this period detracting to a lesser extent. At the stock level, a sizable out-of-benchmark position in Netherlands-based telecommunications company Altice was the fund's largest detractor. Following its June 2016 acquisition of Cablevision Systems, the company formed a new telecommunications giant in the U.S. under the name of Altice USA; its stock began trading in June 2017. During the third quarter, the stock returned -13%. Some of the decline came after reports that the company, which already carried considerable debt from previous deals, was thinking about buying Charter Communications, the second-largest U.S. cable company. J.C. Penney was another noteworthy detractor. Shares of the retailer returned -18% this quarter, with most of the damage occurring after news in August that the company recorded its fifth straight quarter of weaker sales. Penney also missed estimates with a larger loss of 9 cents a share on an adjusted basis, versus expectations of 5 cents per share. Retailers like J.C. Penney have struggled to stem declining store traffic as consumers shift more of their spending online. Yet, we viewed this company as a turnaround story that was making reasonable progress and was relatively inexpensive. Las Vegas Sands also detracted. The stock didn't perform all that badly: our non-benchmark position here returned about 2% for the quarter; however, Sands was the fund's second-largest position, which magnified the effect of its lagging result. LARGEST DETRACTORS VS. BENCHMARK Altice NV Class A Interpublic Group of Companies, Inc. JC Penney Corp., Inc. Average Contribution (basis points)* 2.29% -39 1.12% -25 0.81% -20 Hologic, Inc. Health Care 0.55% -17 Las Vegas Sands Corp. * 1 basis point = 0.01%. 3.58% -11 2 For definitions and other important information, please see Definitions and Important Information section of this Fund Review.
Outlook and Positioning We continue to position the fund based on the assumption of a moderately expanding U.S. economy. The biggest change in the fund's positioning was a reduction in its weighting in the consumer discretionary sector. For the most part, this decrease resulted from lowering our exposure to the media and retailing categories, where we thought the fundamental backdrop had deteriorated in several cases. That said, consumer discretionary was still the fund's secondlargest overweighting at quarter end, and within that category was Las Vegas Sands, the fund's largest non-benchmark position. We continue to like this company for its Las Vegas operations, its casino property in Macau and the growing likelihood of getting approval to open a facility in Japan. Our largest sector overweighting at the end of September was materials. We added to the fund's allocation to this sector and a number of others with the capital freed up by sales in consumer discretionary. Our holdings in materials were represented by several industries, including metals and mining, chemicals and construction materials. Our largest holding in this sector was FMC, a supplier of agricultural chemicals. In March, the company agreed to buy a portion of DuPont's crop-protection business in exchange for FMC's health & nutrition operations, $425 million in working capital and $1.2 billion in cash. We considered this transaction an upgrade for FMC. We carried a modest overweighting in health care at quarter end, with much of this exposure tilted toward biotechnology, which we continue to like for its growth potential in a slow-growth world. Here, Amgen was the fund's fourth-largest individual overweighting, while Vertex Pharmaceuticals was fifth-largest. By far, the fund's biggest sector underweighting was consumer staples. We viewed this sector as expensive, given the generally mediocre growth prospects we found there. Thus, we avoided index stocks such as Procter & Gamble and Coca-Cola. In financials, we had a modest overweighting at the end of September. However, the fund's industry weightings within this sector were quite different from the benchmark's. We maintained a sizable underweighting in banks. Although we've seen some tangible benefits for banks since the U.S. presidential election in the form of higher interest rates and easing restrictions on their ability to return capital to shareholders, we thought a lot of these positives were already reflected in share prices, and we weren't confident that rates would continue to move up. Most of our financials exposure was to asset managers, brokers and other firms in the diversified financials category, which we believe should continue to benefit if capital flows into the financial markets remain healthy. The energy sector remained the fund's second-largest underweighting on September 30. Oil has been choppy lately, and with inventories at healthy levels, it's difficult to know where the price of oil is headed in the short term. The fund's largest individual underweighting at quarter end was e-commerce titan Amazon.com, which we avoided for valuation reasons. MARKET-SEGMENT DIVERSIFICATION Portfolio Index Change From Prior Quarter Information Technology 25.18% 23.23% 1.95% -0.29% 16.14% 11.85% 4.29% -6.09% Financials 15.81% 14.61% 1.20% 2.19% Health Care 15.05% 14.51% 0.54% 2.20% Industrials 8.67% 10.23% -1.56% 0.74% Materials 7.73% 2.98% 4.75% 1.17% Energy 3.12% 6.09% -2.97% 0.71% Telecommunication Services 1.66% 2.17% -0.51% 0.09% Staples 1.56% 8.23% -6.67% 1.15% Utilities 0.54% 3.12% -2.58% 0.58% Real Estate 0.37% 2.99% -2.62% 0.01% Other 0.00% 0.00% 0.00% 0.00% CHARACTERISTICS Valuation Portfolio Index Price/Earnings Trailing 24.3x 21.6x Price/Earnings (IBES 1-Year Forecast) 19.7x 18.0x Price/Book 3.8x 3.2x Price/Cash Flow 15.8x 14.3x Return on Equity (5-Year Trailing) 17.0% 14.6% Growth Sales/Share Growth 1-Year (Trailing) 9.5% 6.1% Earnings/Share Growth 1-Year (Trailing) 6.9% 7.3% Earnings/Share Growth 1-Year (IBES Forecast) 28.9% 22.4% Earnings/Share Growth 5-Year (Trailing) 15.9% 11.1% Size ed Average Market Cap ($ Billions) 129.5 177.9 ed Median Market Cap ($ Billions) 46.0 92.7 Median Market Cap ($ Billions) 22.7 21.0 3 For definitions and other important information, please see Definitions and Important Information section of this Fund Review.
LARGEST OVERWEIGHTS BY HOLDING Las Vegas Sands Corp. 3.54% CME Group, Inc. Financials 2.67% Adobe Systems, Inc. Information Technology 2.64% Amgen, Inc. Health Care 2.52% Vertex Pharmaceuticals, Inc. Health Care 2.26% LARGEST UNDERWEIGHTS BY HOLDING Amazon.com, Inc. -1.78% Berkshire Hathaway, Inc. Class B Financials -1.63% Johnson & Johnson Health Care -1.62% Exxon Mobil Corp. Energy -1.61% JPMorgan Chase & Co. Financials -1.56% 10 LARGEST HOLDINGS Apple, Inc. Las Vegas Sands Corp. Amgen, Inc. Alphabet, Inc. Class C Adobe Systems, Inc. CME Group, Inc. Goldman Sachs Group, Inc. Vertex Pharmaceuticals, Inc. Morgan Stanley FMC Corp. 10 Largest s as a % of Net Assets Information Technology Health Care Information Technology Information Technology Financials Financials Health Care Financials Materials 29.56% Total Number of s 134 The 10 largest holdings are as of the end of the reporting period, and may not be representative of the fund's current or future investments. s do not include money market investments. ASSET ALLOCATION Asset Class Portfolio Index Change From Prior Quarter Domestic Equities 84.19% 99.11% -14.92% 2.69% International Equities 11.65% 0.89% 10.76% -0.23% Developed Markets 8.62% 0.67% 7.95% -2.13% Emerging Markets 3.03% 0.22% 2.81% 1.90% Tax-Advantaged Domiciles 0.00% 0.00% 0.00% 0.00% Bonds 0.00% 0.00% 0.00% 0.00% Cash & Net Other Assets 4.16% 0.00% 4.16% -2.46% Net Other Assets can include fund receivables, fund payables, and offsets to other derivative positions, as well as certain assets that do not fall into any of the portfolio composition categories. Depending on the extent to which the fund invests in derivatives and the number of positions that are held for future settlement, Net Other Assets can be a negative number. "Tax-Advantaged Domiciles" represent countries whose tax policies may be favorable for company incorporation. 3-YEAR RISK/RETURN STATISTICS Portfolio Index Beta 1.07 1.00 Standard Deviation 11.87% 10.07% Sharpe Ratio 0.67 1.05 Tracking Error 5.13% -- Information Ratio -0.49 -- R-Squared 0.82 -- 4 For definitions and other important information, please see Definitions and Important Information section of this Fund Review.
Definitions and Important Information Unless otherwise disclosed to you, in providing this information, Fidelity is not undertaking to provide impartial investment advice, act as an impartial adviser, or to give advice in a fiduciary capacity. CHARACTERISTICS Earnings-Per-Share Growth measures the growth in reported earnings per share over the specified past time period. Median Market Cap identifies the median market capitalization of the portfolio or benchmark as determined by the underlying security market caps. Price-to-Book (P/B) Ratio is the ratio of a company's current share price to reported accumulated profits and capital. Price/Cash Flow is the ratio of a company's current share price to its trailing 12-months cash flow per share. Price-to-Earnings (P/E) Ratio (IBES 1-Year Forecast) is the ratio of a company's current share price to Wall Street analysts' estimates of earnings. Price-to-Earnings (P/E) Ratio Trailing is the ratio of a company's current share price to its trailing 12-months earnings per share. Return on Equity (ROE) 5-Year Trailing is the ratio of a company's last five years historical profitability to its shareholders' equity. Preferred stock is included as part of each company's net worth. Sales-Per-Share Growth measures the growth in reported sales over the specified past time period. ed Average Market Cap identifies the market capitalization of the average equity holding as determined by the dollars invested in the portfolio or benchmark. ed Median Market Cap identifies the market capitalization of the median equity holding as determined by the dollars invested in the portfolio or benchmark. 2017 Morningstar, Inc. All rights reserved. The Morningstar information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or redistributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Fidelity does not review the Morningstar data and, for mutual fund performance, you should check the fund's current prospectus for the most up-to-date information concerning applicable loads, fees and expenses. % Rank in Morningstar Category is the fund's total-return percentile rank relative to all funds that have the same Morningstar Category. The highest (or most favorable) percentile rank is 1 and the lowest (or least favorable) percentile rank is 100. The top-performing fund in a category will always receive a rank of 1%. % Rank in Morningstar Category is based on total returns which include reinvested dividends and capital gains, if any, and exclude sales charges. Multiple share classes of a fund have a common portfolio but impose different expense structures. RELATIVE WEIGHTS weights represents the % of fund assets in a particular market segment, asset class or credit quality relative to the benchmark. A positive number represents an overweight, and a negative number is an underweight. The fund's benchmark is listed immediately under the fund name in the Performance Summary. IMPORTANT FUND INFORMATION positioning data presented in this commentary is based on the fund's primary benchmark (index) unless a secondary benchmark is provided to assess performance. INDICES It is not possible to invest directly in an index. All indices represented are unmanaged. All indices include reinvestment of dividends and interest income unless otherwise noted. S&P 500 is a market-capitalization-weighted index of 500 common stocks chosen for market size, liquidity, and industry group representation to represent U.S. equity performance. MARKET-SEGMENT WEIGHTS Market-segment weights illustrate examples of sectors or industries in which the fund may invest, and may not be representative of the fund's current or future investments. Should not be construed or used as a recommendation for any sector or industry. RANKING INFORMATION 5
3-YEAR RISK/RETURN STATISTICS Beta is a measure of the volatility of a fund relative to its benchmark index. A beta greater (less) than 1 is more (less) volatile than the index. Information Ratio measures a fund's active return (fund's average monthly return minus the benchmark's average monthly return) in relation to the volatility of its active returns. R-Squared measures how a fund's performance correlates with a benchmark index's performance and shows what portion of it can be explained by the performance of the overall market/index. R- Squared ranges from 0, meaning no correlation, to 1, meaning perfect correlation. An R-Squared value of less than 0.5 indicates that annualized alpha and beta are not reliable performance statistics. Sharpe Ratio is a measure of historical risk-adjusted performance. It is calculated by dividing the fund's excess returns (the fund's average annual return for the period minus the 3-month "risk free" return rate) and dividing it by the standard deviation of the fund's returns. The higher the ratio, the better the fund's return per unit of risk. The three month "risk free" rate used is the 90-day Treasury Bill rate. Standard Deviation is a statistical measurement of the dispersion of a fund's return over a specified time period. Fidelity calculates standard deviations by comparing a fund's monthly returns to its average monthly return over a 36-month period, and then annualizes the number. Investors may examine historical standard deviation in conjunction with historical returns to decide whether a fund's volatility would have been acceptable given the returns it would have produced. A higher standard deviation indicates a wider dispersion of past returns and thus greater historical volatility. Standard deviation does not indicate how the fund actually performed, but merely indicates the volatility of its returns over time. Tracking Error is the divergence between the price behavior of a position or a portfolio and the price behavior of a benchmark, creating an unexpected profit or loss. Before investing in any mutual fund, please carefully consider the investment objectives, risks, charges, and expenses. For this and other information, call or write Fidelity for a free prospectus or, if available, a summary prospectus. Read it carefully before you invest. Past performance is no guarantee of future results. Views expressed are through the end of the period stated and do not necessarily represent the views of Fidelity. 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. The securities mentioned are not necessarily holdings invested in by the portfolio manager(s) or FMR LLC. References to specific company securities should not be construed as recommendations or investment advice. Diversification does not ensure a profit or guarantee against a loss. S&P 500 is a registered service mark of Standard & Poor's Financial Services LLC. 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. Fidelity Brokerage Services LLC, Member NYSE, SIPC., 900 Salem Street, Smithfield, RI 02917. Fidelity Investments Institutional Services Company, Inc., 500 Salem Street, Smithfield, RI 02917. 2017 FMR LLC. All rights reserved. Not NCUA or NCUSIF insured. May lose value. No credit union guarantee. 657092.18.0