Fidelity Canadian Disciplined Equity Fund Annual Report June 30, 2017
Fidelity Canadian Disciplined Equity Fund Schedule of Investments June 30, 2017 Showing Percentage of Net Assets Attributable to Securityholders (Net Assets) Equities 94.9% Shares / Units Cost (000s) Market Value (000s) Bailiwick of Jersey 0.9% MATERIALS 0.9% Randgold Resources Ltd. sponsored ADR 205,500 $ 19,177 $ 23,574 Bermuda 1.8% REAL ESTATE 1.8% Brookfield Property Partners LP 1,461,300 32,184 44,833 Canada 85.8% CONSUMER DISCRETIONARY 5.6% Canada Goose Holdings, Inc. 400,000 8,730 10,248 Quebecor, Inc. Class B (sub. vtg.) 802,800 17,183 34,456 Restaurant Brands International LP 4,359 180 355 Restaurant Brands International, Inc. 1,108,421 49,433 89,937 Spin Master Corp. 194,586 7,394 7,530 TOTAL CONSUMER DISCRETIONARY 82,920 142,526 CONSUMER STAPLES 4.5% Alimentation Couche Tard, Inc. Class B (sub. vtg.) 1,078,200 12,383 67,021 Loblaw Companies Ltd. 629,000 36,604 45,376 TOTAL CONSUMER STAPLES 48,987 112,397 ENERGY 19.4% ARC Resources Ltd. 1,219,800 29,783 20,688 Canadian Energy Services & Technology Corp. 3,252,200 25,777 18,798 Canadian Natural Resources Ltd. 1,717,900 60,086 64,284 Enbridge, Inc. 2,600,500 116,098 134,342 Peyto Exploration & Development Corp. 742,400 22,465 17,461 PrairieSky Royalty Ltd. 531,526 14,448 15,696 Raging River Exploration, Inc. 1,796,600 13,614 14,534 Suncor Energy, Inc. 2,962,956 104,022 112,266 TransCanada Corp. 1,463,300 69,303 90,461 TOTAL ENERGY 455,596 488,530 FINANCIALS 28.2% Brookfield Asset Management, Inc. Class A 1,815,475 46,411 92,390 CI Financial Corp. 782,300 22,407 21,623 Great West Lifeco, Inc. 707,400 23,901 24,865 Home Capital Group, Inc. 80,500 2,337 1,368 IGM Financial, Inc. 163,200 6,583 6,564 Intact Financial Corp. 314,300 22,917 30,789 Royal Bank of Canada 2,039,900 124,192 192,077 Sun Life Financial, Inc. 1,368,300 58,135 63,434 The Toronto Dominion Bank 2,880,100 108,490 188,215 Thomson Reuters Corp. 774,600 45,850 46,507 TMX Group Ltd. 417,800 25,332 29,480 Shares / Units Cost (000s) Market Value (000s) Trisura Group Ltd. 11,044 $ 265 $ 240 Uranium Participation Corp. 3,422,500 18,008 13,348 TOTAL FINANCIALS 504,828 710,900 INDUSTRIALS 7.2% ATS Automation Tooling System, Inc. 1,285,400 14,597 17,083 Badger Daylighting Ltd. 773,000 17,527 20,577 Canadian National Railway Co. 966,800 77,377 101,727 Canadian Pacific Railway Ltd. 103,900 17,413 21,679 Stantec, Inc. 638,000 19,352 20,831 TOTAL INDUSTRIALS 146,266 181,897 INFORMATION TECHNOLOGY 3.8% CGI Group, Inc. Class A (sub. vtg.) 574,500 18,893 38,066 Constellation Software, Inc. 37,900 20,520 25,712 Kinaxis, Inc. 222,100 3,010 17,932 Shopify, Inc. Class A 135,100 13,775 15,212 TOTAL INFORMATION TECHNOLOGY 56,198 96,922 MATERIALS 8.7% Agnico Eagle Mines Ltd. (Canada) 629,400 36,872 36,807 Agrium, Inc. 279,300 32,432 32,826 CCL Industries, Inc. Class B 170,000 11,061 11,154 Detour Gold Corp. 936,100 14,569 14,210 Eldorado Gold Corp. 4,447,300 37,414 15,299 First Quantum Minerals Ltd. 1,851,200 30,475 20,308 Goldcorp, Inc. 11,900 250 199 Intertape Polymer Group, Inc. 204,900 2,649 5,059 Ivanhoe Mines Ltd. 276,600 1,112 1,153 Methanex Corp. 70,000 4,029 4,008 Norbord, Inc. 589,600 20,218 23,802 Royal Canadian Mint 246,835 4,661 4,243 Stella Jones, Inc. 58,800 1,995 2,602 Tahoe Resources, Inc. 991,100 14,764 11,080 Wheaton Precious Metals Corp. 1,393,600 32,287 35,899 TOTAL MATERIALS 244,788 218,649 REAL ESTATE 1.3% Boardwalk (REIT) 100 5 5 Canadian Apartment Properties (REIT) unit 986,300 28,326 33,110 TOTAL REAL ESTATE 28,331 33,115 TELECOMMUNICATION SERVICES 4.7% Rogers Communications, Inc. Class B (non vtg.) 1,488,400 59,218 91,165 TELUS Corp. 584,300 22,743 26,159 TOTAL TELECOMMUNICATION SERVICES 81,961 117,324 See accompanying notes which are an integral part of the financial statements. Annual Reportport 2
Equities continued Shares / Units Cost (000s) Market Value (000s) Canada continued UTILITIES 2.4% Emera, Inc. 544,600 $ 23,909 $ 26,255 Fortis, Inc. 759,300 29,095 34,609 TOTAL UTILITIES 53,004 60,864 Presentation Notes Cost amount includes broker commissions and other trading expenses, if any. Principal Amount is stated in Canadian dollars unless otherwise noted. TOTAL CANADA 1,702,879 2,163,124 Sweden 0.8% INDUSTRIALS 0.8% Loomis AB (B Shares) 408,000 14,757 18,966 United States of America 5.6% CONSUMER STAPLES 0.4% Molson Coors Brewing Co. Class B 95,000 13,323 10,637 ENERGY 0.6% EOG Resources, Inc. 137,900 17,877 16,188 FINANCIALS 2.1% Moody s Corp. 160,300 20,769 25,294 S&P Global, Inc. 139,800 20,273 26,467 TOTAL FINANCIALS 41,042 51,761 INFORMATION TECHNOLOGY 0.3% 2U, Inc. 130,000 7,967 7,910 INVESTMENT COMPANIES 0.2% SPDR Gold Trust ETF 27,600 4,540 4,224 REAL ESTATE 2.0% General Growth Properties, Inc. 1,667,100 56,200 50,934 TOTAL UNITED STATES OF AMERICA 140,949 141,654 TOTAL EQUITIES 1,909,946 2,392,151 Short-Term Investments 3.6% Principal Amount (000s) Canada 3.6% Investments in reverse repurchase agreements in a joint trading account at 0.47%, dated 6/30/17 due 7/4/17 (Collateralized by Canadian Government Obligations) # $ 91,849 91,849 91,849 TOTAL INVESTMENT PORTFOLIO 98.5% $2,001,795 2,484,000 NET OTHER ASSETS (LIABILITIES) 1.5% 37,056 NET ASSETS 100% $ 2,521,056 See accompanying notes which are an integral part of the financial statements. 3 Annual Report
Fidelity Canadian Disciplined Equity Fund Schedule of Investments continued Investment Valuation The following is a summary of the inputs used, as of June 30, 2017 and June 30, 2016, involving the Fund s assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the tables below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements. Valuation Inputs at June 30, 2017: Description Total Level 1 Level 2 Level 3 (Amounts in thousands) Investments in Securities: Equities: Consumer Discretionary $ 142,526 $ 142,526 $ $ Consumer Staples 123,034 123,034 Energy 504,718 504,718 Financials 762,661 762,661 Industrials 200,863 200,863 Information Technology 104,832 104,832 Investment Companies 4,224 4,224 Materials 242,223 242,223 Real Estate 128,882 128,882 Telecommunication Services 117,324 117,324 Utilities 60,864 60,864 Short-Term Investments 91,849 91,849 Total Investments in Securities: $2,484,000 $2,392,151 $91,849 $ Valuation Inputs at June 30, 2016: Description Total Level 1 Level 2 Level 3 (Amounts in thousands) Investments in Securities: Equities: Consumer Discretionary $ 161,491 $ 161,491 $ $ Consumer Staples 103,620 103,620 Energy 506,009 506,009 Financials 820,926 820,926 Industrials 173,391 173,391 Information Technology 86,296 86,296 Investment Companies 4,511 4,511 Materials 294,274 294,274 Telecommunication Services 136,595 136,595 Utilities 63,580 63,580 Short-Term Investments 60,772 60,772 Total Investments in Securities: $2,411,465 $2,350,693 $60,772 $ Other Information # Additional information on each counterparty to the reverse repurchase agreement is as follows: Reverse Repurchase Agreement / Counterparty Value (000 s) $91,849,000 due 7/04/17 at 0.47% Bank of Montreal $ 9,397 CIBC World Markets, Inc. 10,964 Royal Bank of Canada 21,927 Scotia Capital, Inc. 39,156 The Toronto-Dominion Bank 10,405 $ 91,849 See accompanying notes which are an integral part of the financial statements. Annual Reportport 4
Financial Statements Statements of Financial Position Amounts in thousands of Canadian Dollars (except per security amounts) As at June 30, 2017 June 30, 2016 Current assets (Note 3) Investments at fair value through profit or loss (Note 8) $ 2,484,000 $ 2,411,465 Cash 536 Receivable for investments sold 57,417 3,962 Other receivables 109 8 Accrued interest and dividends receivable 4,355 4,052 Subscriptions receivable 4,687 2,041 2,550,568 2,422,064 Current liabilities (Note 3) Payable for investments purchased 22,785 936 Redemptions payable 4,685 10,488 Distributions payable (Note 5) 173 134 Management and advisory fees payable (Note 4) 1,531 1,549 Other payables to affiliates (Note 4) 180 191 Other payables and accrued expenses (Notes 4 and 5) 158 153 29,512 13,451 Net assets attributable to securityholders (Notes 3 and 6) $ 2,521,056 $ 2,408,613 Net assets attributable to securityholders per Series and per security (Note 6) Series A: ($84,900 and $117,414, respectively) $ 38.17 $ 35.91 Series B: ($713,387 and $792,734, respectively) $ 38.87 $ 36.49 Series F: ($81,385 and $62,085, respectively) $ 43.20 $ 40.56 Series F5: ($893 and $707, respectively) $ 24.38 $ 24.07 Series F8: ($838 and $622, respectively) $ 22.40 $ 22.47 Series O: ($1,480,254 and $1,352,406, respectively) $ 46.22 $ 43.41 Series T5: ($357 and $470, respectively) $ 15.28 $ 15.13 Series T8: ($7,720 and $5,537, respectively) $ 15.33 $ 15.62 Series S5: ($2,755 and $3,248, respectively) $ 15.67 $ 15.49 Series S8: ($21,781 and $18,703, respectively) $ 15.62 $ 15.88 Series E1: ($86,930 and $40,253, respectively) $ 11.61 $ 10.90 Series E1T5: ($1,021 and $476, respectively) $ 21.55 $ 21.30 Series E2: ($11,272 and $4,321, respectively) $ 11.61 $ 10.90 Series E2T5: ($1 and $1, respectively) $ 21.56 $ 21.32 Series E3: ($2,052 and $1,487, respectively) $ 11.61 $ 10.90 Series E4: ($3,245 and $2,975, respectively) $ 11.62 $ 10.91 Series E5: ($1 and $1, respectively) $ 11.61 $ 10.90 Series P1: ($13,418 and $4,605, respectively) $ 10.86 $ 10.20 Series P1T5: ($196 and $134, respectively) $ 20.04 $ 19.78 Series P2: ($1,321 and $260, respectively) $ 10.86 $ 10.20 Series P2T5: ($331 and $-, respectively) $ 19.31 $ Series P3: ($305 and $174, respectively) $ 10.86 $ 10.21 Series P3T5: ($1 and $-, respectively) $ 19.34 $ Series P4: ($24 and $-, respectively) $ 9.92 $ Series P5: ($6,668 and $-, respectively) $ 9.92 $ See accompanying notes which are an integral part of the financial statements. 5 Annual Report
Financial Statements continued Statements of Comprehensive Income Amounts in thousands of Canadian Dollars (except per security amounts) For the periods ended June 30, (Note 1) 2017 2016 Investment income (Note 3) Interest $ 341 $ 682 Dividends 63,902 60,280 Security lending 762 81 Net gain (loss) on investments Net realized gain (loss) on investments 96,816 148,177 Change in net unrealized appreciation (depreciation) on investments 54,855 (157,409) 151,671 (9,232) Net gain (loss) on foreign currencies Net realized gain (loss) on foreign currency transactions (102) (20) Change in net unrealized appreciation (depreciation) on other net assets in foreign currencies (13) (10) (115) (30) Total investment income (loss) 216,561 51,781 Operating expenses (Note 4) Management and advisory fees 19,390 19,554 Administration fees 2,318 2,423 Independent Review Committee fees 2 2 Commissions and other portfolio costs 1,089 1,036 Foreign taxes withheld (Note 5) 437 170 Sales tax 2,269 2,312 Total operating expenses 25,505 25,497 Expenses waived (Note 4) (349) (362) Net operating expenses 25,156 25,135 Net increase (decrease) in net assets attributable to securityholders from operations $ 191,405 $ 26,646 Increase (decrease) in net assets attributable to securityholders from operations per Series (Note 3) Series A $ 7,524 $ (3,305) Series B $ 50,866 $ (9,753) Series F $ 4,742 $ 802 Series F5 $ 62 $ 4 Series F8 $ 39 $ 9 Series O $ 121,017 $ 34,731 Series T5 $ 27 $ (22) Series T8 $ 517 $ (189) Series S5 $ 215 $ (93) Series S8 $ 1,327 $ (101) Series E1 $ 3,452 $ 3,362 Series E1T5 $ 31 $ 50 Series E2 $ 465 $ 341 Series E2T5 $ $ Series E3 $ 94 $ 278 Series E4 $ 205 $ 147 Series E5 $ $ Series P1 $ 524 $ 277 Series P1T5 $ 27 $ 82 Series P2 $ 30 $ 8 Series P2T5 $ (3) $ Series P3 $ 309 $ 18 Series P3T5 $ $ See accompanying notes which are an integral part of the financial statements. Annual Reportport 6
Statements of Comprehensive Income continued Amounts in thousands of Canadian Dollars (except per security amounts) For the periods ended June 30, (Note 1) 2017 2016 Series P4 $ (1) $ Series P5 $ (64) $ Increase (decrease) in net assets attributable to securityholders from operations per Series per security (Notes 3 and 6) Series A $ 2.70 $ (.81) Series B $ 2.56 $ (.41) Series F $ 2.82 $.56 Series F5 $ 1.73 $.14 Series F8 $ 1.29 $.36 Series O $ 3.86 $ 1.16 Series T5 $ 1.00 $ (.43) Series T8 $.87 $ (.44) Series S5 $ 1.10 $ (.41) Series S8 $.95 $ (.09) Series E1 $.55 $ 1.08 Series E1T5 $.89 $ 2.35 Series E2 $.55 $ 1.03 Series E2T5 $ 1.38 $ 1.80 Series E3 $.63 $ 1.10 Series E4 $.75 $ 1.19 Series E5 $.76 $.90 Series P1 $.57 $.76 Series P1T5 $ 1.70 $ 2.49 Series P2 $.39 $.69 Series P2T5 $ (.23) $ Series P3 $ 1.68 $ 1.64 Series P3T5 $ (.16) $ Series P4 $ (.49) $ Series P5 $ (.10) $ See accompanying notes which are an integral part of the financial statements. 7 Annual Report
Financial Statements continued Statements of Changes in Net Assets Attributable to Securityholders Amounts in thousands of Canadian Dollars For the period ended June 30, 2017 (Note 1) Total Series A Series B Series F Series F5 Series F8 Net assets attributable to securityholders, beginning of period $ 2,408,613 $ 117,414 $ 792,734 $ 62,085 $ 707 $ 622 Increase (decrease) in net assets attributable to securityholders from operations 191,405 7,524 50,866 4,742 62 39 Distributions to securityholders (Note 5) From net investment income (34,616) (804) (11) (7) Management fee reduction (68) (1) (57) (9) Return of capital (2,946) (44) (47) (37,630) (1) (57) (813) (55) (54) Security transactions (Note 6) Proceeds from sale of securities 496,085 9,939 68,396 50,107 788 531 Reinvestment of distributions 35,052 1 57 599 18 12 Amounts paid upon redemption of securities (572,469) (49,977) (198,609) (35,335) (627) (312) (41,332) (40,037) (130,156) 15,371 179 231 Net assets attributable to securityholders, end of period $ 2,521,056 $ 84,900 $ 713,387 $ 81,385 $ 893 $ 838 For the period ended June 30, 2017 (Note 1) Series O Series T5 Series T8 Series S5 Series S8 Net assets attributable to securityholders, beginning of period $ 1,352,406 $ 470 $ 5,537 $ 3,248 $ 18,703 Increase (decrease) in net assets attributable to securityholders from operations 121,017 27 517 215 1,327 Distributions to securityholders (Note 5) From net investment income (33,458) Management fee reduction (1) Return of capital (22) (772) (160) (1,836) (33,458) (22) (772) (160) (1,837) Security transactions (Note 6) Proceeds from sale of securities 257,278 214 6,160 542 6,356 Reinvestment of distributions 33,458 9 121 60 486 Amounts paid upon redemption of securities (250,447) (341) (3,843) (1,150) (3,254) 40,289 (118) 2,438 (548) 3,588 Net assets attributable to securityholders, end of period $ 1,480,254 $ 357 $ 7,720 $ 2,755 $ 21,781 For the period ended June 30, 2017 (Note 1) Series E1 Series E1T5 Series E2 Series E2T5 Series E3 Net assets attributable to securityholders, beginning of period $ 40,253 $ 476 $ 4,321 $ 1 $ 1,487 Increase (decrease) in net assets attributable to securityholders from operations 3,452 31 465 94 Distributions to securityholders (Note 5) From net investment income (70) (20) (5) Management fee reduction Return of capital (41) (70) (41) (20) (5) Security transactions (Note 6) Proceeds from sale of securities 58,403 526 10,076 525 Reinvestment of distributions 65 34 17 5 Amounts paid upon redemption of securities (15,173) (5) (3,587) (54) 43,295 555 6,506 476 Net assets attributable to securityholders, end of period $ 86,930 $ 1,021 $ 11,272 $ 1 $ 2,052 See accompanying notes which are an integral part of the financial statements. Annual Reportport 8
Statements of Changes in Net Assets Attributable to Securityholders continued For the period ended June 30, 2017 (Note 1) Series E4 Series E5 Series P1 Series P1T5 Series P2 Net assets attributable to securityholders, beginning of period $ 2,975 $ 1 $ 4,605 $ 134 $ 260 Increase (decrease) in net assets attributable to securityholders from operations 205 524 27 30 Distributions to securityholders (Note 5) From net investment income (11) (127) (6) (8) Management fee reduction Return of capital (16) (11) (127) (22) (8) Security transactions (Note 6) Proceeds from sale of securities 66 10,932 400 1,156 Reinvestment of distributions 11 80 7 8 Amounts paid upon redemption of securities (1) (2,596) (350) (125) 76 8,416 57 1,039 Net assets attributable to securityholders, end of period $ 3,245 $ 1 $ 13,418 $ 196 $ 1,321 For the period ended June 30, 2017 (Note 1) Series P2T5 Series P3 Series P3T5 Series P4 Series P5 Net assets attributable to securityholders, beginning of period $ $ 174 $ $ $ Increase (decrease) in net assets attributable to securityholders from operations (3) 309 (1) (64) Distributions to securityholders (Note 5) From net investment income (89) Management fee reduction Return of capital (8) (8) (89) Security transactions (Note 6) Proceeds from sale of securities 342 6,231 1 25 7,091 Reinvestment of distributions 4 Amounts paid upon redemption of securities (6,324) (359) 342 (89) 1 25 6,732 Net assets attributable to securityholders, end of period $ 331 $ 305 $ 1 $ 24 $ 6,668 For the period ended June 30, 2016 (Note 1) Total Series A Series B Series F Series F5 Series F8 Net assets attributable to securityholders, beginning of period $ 2,366,056 $ 179,570 $ 929,873 $ 53,096 $ 482 $ 541 Increase (decrease) in net assets attributable to securityholders from operations 26,646 (3,305) (9,753) 802 4 9 Distributions to securityholders (Note 5) From net investment income (16,334) (483) (3,273) (341) (4) (4) From net realized gain (49,655) (1,468) (9,951) (1,035) (11) (11) Management fee reduction (68) (2) (58) (7) Return of capital (2,377) (34) (40) (68,434) (1,953) (13,282) (1,383) (49) (55) Security transactions (Note 6) Proceeds from sale of securities 623,363 10,842 72,654 29,283 1,692 274 Reinvestment of distributions 66,092 1,907 12,993 1,054 21 17 Amounts paid upon redemption of securities (605,110) (69,647) (199,751) (20,767) (1,443) (164) 84,345 (56,898) (114,104) 9,570 270 127 Net assets attributable to securityholders, end of period $ 2,408,613 $ 117,414 $ 792,734 $ 62,085 $ 707 $ 622 See accompanying notes which are an integral part of the financial statements. 9 Annual Report
Financial Statements continued Statements of Changes in Net Assets Attributable to Securityholders continued For the period ended June 30, 2016 (Note 1) Series O Series T5 Series T8 Series S5 Series S8 Net assets attributable to securityholders, beginning of period $ 1,168,431 $ 1,240 $ 10,330 $ 3,721 $ 18,772 Increase (decrease) in net assets attributable to securityholders from operations 34,731 (22) (189) (93) (101) Distributions to securityholders (Note 5) From net investment income (12,091) (3) (22) (14) (73) From net realized gain (36,763) (9) (67) (41) (220) Management fee reduction (1) Return of capital (41) (548) (185) (1,498) (48,854) (53) (637) (240) (1,792) Security transactions (Note 6) Proceeds from sale of securities 445,065 68 253 1,046 4,186 Reinvestment of distributions 48,854 27 243 145 747 Amounts paid upon redemption of securities (295,821) (790) (4,463) (1,331) (3,109) 198,098 (695) (3,967) (140) 1,824 Net assets attributable to securityholders, end of period $ 1,352,406 $ 470 $ 5,537 $ 3,248 $ 18,703 For the period ended June 30, 2016 (Note 1) Series E1 Series E1T5 Series E2 Series E2T5 Series E3 Net assets attributable to securityholders, beginning of period $ $ $ $ $ Increase (decrease) in net assets attributable to securityholders from operations 3,362 50 341 278 Distributions to securityholders (Note 5) From net investment income From net realized gain Management fee reduction Return of capital (11) (11) Security transactions (Note 6) Proceeds from sale of securities 40,268 443 4,137 1 2,970 Reinvestment of distributions 10 Amounts paid upon redemption of securities (3,377) (16) (157) (1,761) 36,891 437 3,980 1 1,209 Net assets attributable to securityholders, end of period $ 40,253 $ 476 $ 4,321 $ 1 $ 1,487 For the period ended June 30, 2016 (Note 1) Series E4 Series E5 Series P1 Series P1T5 Series P2 Net assets attributable to securityholders, beginning of period $ $ $ $ $ Increase (decrease) in net assets attributable to securityholders from operations 147 277 82 8 Distributions to securityholders (Note 5) From net investment income (25) (1) From net realized gain (75) (1) (3) Management fee reduction Return of capital (20) (100) (21) (4) Security transactions (Note 6) Proceeds from sale of securities 2,828 1 5,659 1,125 412 Reinvestment of distributions 68 2 4 Amounts paid upon redemption of securities (1,299) (1,054) (160) 2,828 1 4,428 73 256 Net assets attributable to securityholders, end of period $ 2,975 $ 1 $ 4,605 $ 134 $ 260 See accompanying notes which are an integral part of the financial statements. Annual Reportport 10
Statements of Changes in Net Assets Attributable to Securityholders continued For the period ended June 30, 2016 (Note 1) Series P2T5 Series P3 Series P3T5 Series P4 Series P5 Net assets attributable to securityholders, beginning of period $ $ $ $ $ Increase (decrease) in net assets attributable to securityholders from operations 18 Distributions to securityholders (Note 5) From net investment income From net realized gain Management fee reduction Return of capital Security transactions (Note 6) Proceeds from sale of securities 156 Reinvestment of distributions Amounts paid upon redemption of securities 156 Net assets attributable to securityholders, end of period $ $ 174 $ $ $ See accompanying notes which are an integral part of the financial statements. 11 Annual Report
Financial Statements continued Statements of Cash Flows Amounts in thousands of Canadian Dollars For the periods ended June 30, (Note 1) 2017 2016 Cash flows from (used in) operating activities: Purchases of investments $ (648,675) $ (914,680) Proceeds from sale and maturity of investments 695,984 856,366 Cash receipts from dividend income 62,942 58,979 Cash receipts from interest income 561 685 Cash receipts from other investment income 762 81 Cash paid for operating expenses (24,740) (25,352) Net cash from (used in) operating activities 86,834 (23,921) Cash flows from (used in) financing activities: Distributions to securityholders net of reinvestments (2,539) (2,348) Proceeds from sales of securities 333,232 624,426 Amounts paid upon redemption of securities (418,065) (597,621) Net cash from (used in) financing activities (87,372) 24,457 Net change in cash (538) 536 Foreign exchange gain (loss) on cash 2 Cash, beginning of period 536 Cash, end of period $ $ 536 See accompanying notes which are an integral part of the financial statements. Annual Reportport 12
Notes to Financial Statements For the periods ended June 30, 2017 and 2016 (Amounts in thousands of Canadian dollars/thousands of securities (except per security amounts)) 1. Formation of the Fund Fidelity Canadian Disciplined Equity Fund (Fund) is an open end mutual fund trust formed under the laws of Ontario and governed by a Master Declaration of Trust dated September 18, 1998 (Inception Date), as amended thereafter from time to time. The Fund is authorized to issue an unlimited number of securities. Fidelity Investments Canada ULC (Fidelity), as manager and trustee of the Fund, is responsible for the dayto-day operations and provides all general management and administrative services. The investment advisor is responsible for the investment management of the Fund s portfolio. On December 31, 2015, the investment advisor changed from FIAM LLC (formerly Pyramis Global Advisors, LLC) to Fidelity. The registered office of the Fund is located at 483 Bay Street, Suite 300, Toronto, Ontario, M5G 2N7. Currently, Fidelity mutual funds are offered in the following Series: Series A, Series C, Series T5 and Series T8 securities are available to all investors in a deferred sales charge (DSC) option. Series A, Series T5 and Series T8 securities will be converted to lower management and advisory fee Series B, Series S5 and Series S8 securities, respectively, one year after completion of their redemption schedule. Series B, Series D, Series S5 and Series S8 securities are available to all investors in an initial sales charge (ISC) option. Series C and Series D securities are available to investors who have enrolled in the rebalancing service. Series F, Series F5 and Series F8 securities are usually only available to investors who have fee based accounts with dealers who have signed an eligibility agreement with Fidelity. Series E1, Series E1T5, Series E2, Series E2T5, Series E3, Series E3T5, Series E4, Series E4T5, Series E5 and Series E5T5 securities are available only to investors who initially hold Series B and/or Series S5 securities and then become eligible to hold certain Series E securities. Series P1, Series P1T5, Series P2, Series P2T5, Series P3, Series P3T5, Series P4, Series P4T5, Series P5 and Series P5T5 securities are available only to investors who initially hold Series F and/or Series F5 securities and then become eligible to hold certain Series P securities. Series O securities are only available to selected investors who have been approved by Fidelity and have entered into a Series O Account Agreement with Fidelity. Series I, Series I5 and Series I8 securities are available to all investors who have entered into a Series I Agreement with Fidelity and are available to all investors in an initial sales charge (ISC) option. In addition, Series F5, Series F8, Series I5, Series I8, Series T5, Series T8, Series S5, Series S8, Series E1T5, Series E2T5, Series E3T5, Series E4T5, Series E5T5, Series P1T5, Series P2T5, Series P3T5, Series P4T5 and Series P5T5 securities distribute an amount comprised of net income and/or return of capital monthly, if available. The Fund commenced the offering of Series P1, Series P1T5, Series P2 and Series P3 securities on December 4, 2015, commenced the offering of Series E1, Series E1T5, Series E2, Series E2T5, Series E3, Series E4 and Series E5 securities on February 5, 2016, commenced the offering of Series P2T5 securities on January 6, 2017 and commenced the offering of Series P3T5, Series P4 and Series P5 securities on January 26, 2017. The Fund meets the definition of an investment entity and its purpose is to provide investment management services to its securityholders by investing its net assets for capital growth and/or investment income and by measuring its investment performance on a fair value basis. Refer to the Financial Instruments Risk note below for the Fund s investment objective. 2. Basis of Preparation Statement of Compliance These financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as published by the International Accounting Standards Board (IASB). The accounting policies set out below have been applied consistently unless otherwise stated. The financial statements were authorized for issue by Fidelity s board of directors on September 7, 2017. Functional and Presentation Currency These financial statements are presented in Canadian dollars, which is the Fund s functional currency. Comparative Figures - Per security comparative figures have been conformed to the current rounding presentation of two decimal places. 3. Summary of Significant Accounting Policies Basis of Measurement These financial statements have been prepared on the historical cost basis except for investments which are measured at fair value in the Statements of Financial Position. Use of Estimates and Judgments Under IFRS, management is required to make certain estimates and judgments at the date of the financial statements. The principal financial statement components subject to significant accounting estimates and judgments include: Fair value measurements The Fund may invest in financial instruments that are not quoted in an active market. Where applicable, these instruments are categorized in Level 2 and Level 3 of the fair value hierarchy explained below. When current market prices or quotations are not readily available or reliable, valuation techniques will be applied in good faith and in accordance with procedures adopted by the manager. Factors used in determining fair value may include, but are not limited to, broker quotes from reputable pricing sources, market or security specific events, changes in interest rates and credit quality. Fair value models use observable data, to the extent practical; however, the manager is required from time to time to make estimates and assumptions that are based on the best information available at that particular time. Changes in these estimates could impact the fair values of the financial instruments, and the impact could be material. The aggregate fair 13 Annual Report
Notes to Financial Statements continued (Amounts in thousands of Canadian dollars/thousands of securities (except per security amounts)) value of investments measured by valuation techniques as at June 30, 2017 and June 30, 2016, is included at the end of the Fund s Schedule of Investments. Classification and measurement of financial instruments The Fund has made significant judgments when determining the classification and measurement of its financial instruments under IAS 39, Financial Instruments Recognition and Measurement (IAS 39). These judgments centre upon the determination that certain investments are held-for-trading and that the fair value measurement option can be applied to those that are not due to factors including performance evaluation and management of the Fund on a fair value basis. Presentation of financial instruments The Fund has made significant judgments when determining the classification of its redeemable securities as financial liabilities in accordance with IAS 32 Financial Instruments Presentation (IAS 32). These judgments centre upon the determination that the Fund s redeemable securities do not have identical features and their entitlements include a contractual obligation to distribute any net income and net realized capital gains at least annually in cash (at the request of the securityholder). Therefore, the ongoing redemption feature is not the securities only contractual obligation. Investment Valuation Investments are designated at their fair value through profit or loss in accordance with IAS 39 and are carried at their fair value. The Fund categorizes the inputs to valuation techniques used to fair value its investments into a disclosure hierarchy consisting of three levels as shown below: Level 1 quoted prices in active markets for identical investments Level 2 other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.) Level 3 unobservable inputs (including the Fund s own assumptions based on the best information available) Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. There were no significant transfers between Level 1 and Level 2 during the periods. The aggregate value of investments by input level, as at June 30, 2017 and June 30, 2016, as well as a roll forward of Level 3 securities, where applicable, is included at the end of the Fund s Schedule of Investments. Valuation techniques used to value the Fund s investments by major category are as follows: Equity securities, including restricted equity securities and Exchange-traded funds (ETFs) for which market quotations are readily available, are valued at the last sales price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event that the last sales price or official closing price is not readily available, or is outside the bid-ask spread, the point within the bid ask spread that is most representative of fair value based on specific facts and circumstances will be used. For foreign equity securities, when significant market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, ETFs and certain indexes as well as quoted prices for similar securities are used and are categorized as Level 2 in the hierarchy in these circumstances. Utilizing these techniques may result in transfers between Level 1 and Level 2. For equity securities, including restricted equity securities, where observable inputs are limited, assumptions about market activity and risk are used and these securities may be categorized as Level 3 in the hierarchy. Short-term securities for which quotations are not readily available are valued at amortized cost, which approximates fair value and are categorized as Level 2 in the hierarchy. Cash Cash is comprised of cash on deposit and may include cash equivalents which are short-term debt instruments with terms to maturity of less than 90 days at acquisition which are held for the purpose of meeting short-term cash commitments. Foreign currencies are comprised of cash amounts denominated in currencies other than Canadian dollars, which are on deposit with the custodian to facilitate the settlement of foreign denominated security transactions. Cash is carried at amortized cost which approximates its fair value. The Fund did not hold any cash equivalents as at June 30, 2017 and June 30, 2016. Impairment of Financial Assets At each reporting date, the Fund assesses whether there is objective evidence that a financial asset carried at amortized cost is impaired. If such impairment exists, the Fund recognizes the difference between the amortized cost of the financial assets and the present value of the estimated future cash flows, discounted using the instrument s original effective interest rate as an impairment loss on the Statements of Comprehensive Income. Such impairment losses are reversed in subsequent periods in the Statements of Comprehensive Income if the conditions that lead to the initial recognition of the loss diminish or cease to exist. Other Assets and Liabilities Other assets and liabilities may include amounts due to or from the custodian, affiliates or other counterparties for accrued income, investment transactions, Fund s security transactions, accrued expenses and other unsettled transactions at period end. These amounts are classified as loans and receivables or financial liabilities and are carried at amortized cost, which approximates fair value due to their short-term nature. Classification of redeemable securities issued by the Fund In accordance with IAS 32, the Fund s redeemable securities entitlements include a contractual obligation to distribute any net income and net realized capital gains at least annually in cash (at the request of the securityholder) and, therefore, the ongoing redemption feature is not the securities only contractual obligation. In addition, each series of redeemable Annual Reportport 14
securities are equally subordinated to each other, but have differing features as outlined in the notes below. Therefore, the Fund s redeemable securities do not meet the criteria for classification as equity and have been classified as financial liabilities on the Statements of Financial Position. The Fund s obligation for net assets attributable to securityholders is recorded at the redemption amount. As at June 30, 2017 and June 30, 2016, the Fund s net asset value per Series per security may differ by less than $0.01 from its net assets attributable to securityholders per Series per securities calculated in accordance with IFRS as a result of normal reporting period end procedures to close off the books and records. Investment Transactions, Income Recognition and Transaction Costs - Regular way purchases and sales of financial assets are recognized at their trade date. The cost of investments is determined on an average cost basis, excluding commissions and other portfolio transaction costs. Net realized gains and losses from the sale of investments (which may include proceeds received from litigation) and change in net unrealized appreciation (depreciation) on investments are calculated with reference to average cost of the related investment securities. Interest income is accrued as earned. Dividend income is recognized 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. Distributions received from investment trusts are recorded as income, capital gains or a return of capital based on the best information available. Due to the nature of these investments, actual allocations could vary from this information. Distributions from investment trusts treated as a return of capital reduce the average cost of the underlying investment trust. Transaction costs, such as brokerage commissions, incurred in the purchase and sale of investment securities by the Fund are recognized as Commissions and other portfolio costs in the Statements of Comprehensive Income. Foreign Currency Translation Securities and other assets and liabilities denominated in a foreign currency are translated into Canadian dollars at the period-end exchange rates. Purchases and sales of securities, income and expenses denominated in foreign currencies are translated into Canadian dollars at the exchange rate on the date of the respective transaction. The effects of exchange rate fluctuations on investments are included in the Net realized gain (loss) and change in net unrealized appreciation (depreciation) on investments and exchange rate fluctuations on other foreign currency transactions are included in the Net realized gain (loss) on foreign currency transactions and Change in net unrealized appreciation (depreciation) on other net assets in foreign currencies in the Statements of Comprehensive Income. Reverse Repurchase Agreements Uninvested cash balances may be transferred into one or more joint trading accounts where these balances are invested in reverse repurchase transactions. In reverse repurchase transactions, U.S. or Canadian Government securities are purchased from a counterparty who agrees to repurchase the securities at a higher price at a specified future date. The difference in price is reported as interest income. Credit risk arises from the potential for a counterparty to default on its obligation to repurchase the security. The risk is managed by the use of counterparties acceptable to Fidelity and by the receipt of the securities as collateral. The value of the collateral must be at least 102% of the daily fair value of the cash invested. Any reverse repurchase agreements open at period end are included in the Schedule of Investments. The following tables summarize the securities pledged to the Fund as collateral: June 30, 2017 Collateral Description Interest Rate (%) Maturity Date % of Collateral Collateral Value as a % of CAD Cash Invested Canada Housing Trust 2.05 6/15/2018 8.5 Canadian Treasury Bonds 0.75 4.25 6/1/2019 12/1/2044 81.3 Canadian Treasury Bill n/a 3/8/2018 4/5/2018 10.2 100.0 103.8 June 30, 2016 Collateral Description Interest Rate (%) Maturity Date % of Collateral Collateral Value as a % of CAD Cash Invested Canadian Treasury Bonds 0.25 5.75 5/1/2017 12/1/2031 94.6 Canadian Treasury Bill n/a 12/29/2016 5.4 100.0 102.4 Securities Lending The Fund lends portfolio securities from time to time in order to earn additional income. The Fund has entered into a securities lending program with its custodian, State Street Trust Company of Canada (SSB). The aggregate market value of all securities loaned under securities lending transactions or sold in repurchase transactions cannot exceed 50% of the net asset value of the Fund. SSB is entitled to receive payments out of the gross amount generated from the securities lending transactions of the Fund and bear all operational costs directly related to securities lending as well as the cost of borrower default indemnification. The following tables reconcile the gross amount of income generated from the Fund s securities lending transactions to what is retained by the Fund and reported under Security lending in the Statements of Comprehensive Income. 15 Annual Report
Notes to Financial Statements continued (Amounts in thousands of Canadian dollars/thousands of securities (except per security amounts)) Total Income Earned ($) Fund Income Earned ($) SSB Income Earned ($) Fund % of Total Income Earned SSB % of Total Income Earned Period ended June 30, 2017 896 762 134 85 15 June 30, 2016 95 81 14 85 15 The Fund receives collateral (in the form of obligations of, or guaranteed by, the Government of Canada, or a province thereof, or by the United States government or its agencies) against the loaned securities and maintains collateral in an amount of at least 105% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined daily at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. As at June 30, 2017 and June 30, 2016 the Fund s aggregate values of the securities loaned and the collateral received were as follows: Fair value of securities on loan ($) Fair value of Collateral ($) June 30, 2017 125,372 131,973 June 30, 2016 63,096 66,195 Valuation of Series Separate net assets attributable to securityholders is calculated for each Series of securities of the Fund. The net assets attributable to securityholders of a Series is computed by calculating the Series proportionate share of the assets and liabilities of the Fund common to all Series, adjusted for the assets and liabilities of the Fund attributable only to that Series. Expenses directly attributable to a Series are charged to that Series. Investment income and operating expenses are allocated proportionately to each Series based upon the relative net assets attributable to securityholders of each Series, except for items that can be specifically attributed to one or more Series. Per Security from Operations - The increase (decrease) in net assets attributable to securityholders resulting from operations per security in the Statements of Comprehensive Income represent the operational increase (decrease) for each Series of the Fund, divided by the relevant weighted average securities outstanding during the period. Refer to the Security Transactions Note for the Fund s weighted average securities outstanding. Statements of Cash Flows When preparing the Statements of Cash Flows, the Fund nets the rollover activity of its short-term investments, and includes only the net cash flow impact in Purchases of investments or Proceeds from sale and maturity of investments, as applicable. Additionally, in accordance with IFRS, the Fund s Statements of Cash Flows excludes non-cash transactions from its operating and financing activities. Recent Accounting Pronouncements The final version of IFRS 9, Financial Instruments, was issued by the IASB in July 2014 and will replace IAS 39 Financial Instruments: Recognition and Measurement. IFRS 9 introduces a model for classification and measurement, a single, forward-looking expected loss impairment model and a substantially reformed approach to hedge accounting. The new single, principle based approach for determining the classification of financial assets is driven by cash flow characteristics and the business model in which an asset is held. The new model also results in a single impairment model being applied to all financial instruments, which will require more timely recognition of expected credit losses. It also includes changes in respect of an entity s own credit risk in measuring liabilities elected to be measured at fair value, so that gains caused by the deterioration of an entity s own credit risk on such liabilities are no longer recognised in profit or loss. IFRS 9 is effective for annual periods beginning on or after January 1, 2018, however is available for early adoption. In addition, the entity s own credit risk changes can be early applied in isolation without otherwise changing the accounting for financial instruments. The Fund is in the process of assessing the impact of IFRS 9 and does not plan to adopt the new standard early. 4. Expenses and Other Related Party Transactions Management and Advisory Fees - Fidelity serves as the manager and investment advisor of the Fund. Fidelity is part of a broader group of companies collectively known as Fidelity Investments. Fidelity has entered into sub-advisory agreements with a number of entities including Fidelity (Canada) Asset Management ULC, to provide investment advice with respect to all or a portion of the investments of the Fund. The subadvisors arrange for acquisition and disposition of portfolio investments, including all necessary brokerage arrangements. The Fund pays Fidelity a monthly management and advisory fee for their services and the provision of key management personnel to the Fund, based on the net asset value of each Series, calculated daily and payable monthly. Fidelity may reduce the management and advisory fee or fund expenses for certain investors by reducing the management and advisory fee it charges to the Fund or reducing the amount charged to the Fund for certain expenses and having the Fund pay out the amount of the reduction to the investors as a distribution. These distributions are disclosed as Management fee reduction in the Statements of Changes in Net Assets Attributable to Securityholders. No management and advisory fees are charged with respect to the Series O securities, but investors will be charged a negotiated management fee. The annual management and advisory fee rates for each Series were as follows: Annual Reportport 16
Annual Management and Advisory Fee Rate (%) Series A 2.000 Series B 1.850 Series F.850 Series F5.850 Series F8.850 Series T5 2.000 Series T8 2.000 Series S5 1.850 Series S8 1.850 Series E1 1.825 Series E1T5 1.825 Series E2 1.800 Series E2T5 1.800 Series E3 1.775 Series E4 1.725 Series E5 1.700 Series P1.825 Series P1T5.825 Series P2.800 Series P2T5.800 Series P3.775 Series P3T5.775 Series P4.725 Series P5.700 Administration Fee Fidelity charges the Fund a fixed administration fee in place of certain variable and administrative expenses, including the provision of key administrative personnel to the Fund. Fidelity, in turn, pays all of the operating expenses of the Fund, other than certain specified fund costs, including the fees and expenses of the Independent Review Committee, taxes, brokerage commissions and interest charges. The administration fee is in addition to the management and advisory fee. No administration fees are charged with respect to the Series O securities. The annual rate of the administration fee will fall under one of three tiers, depending on the net asset value of the Fund: Under $100 Million (Tier 1), $100 Million to $1 Billion (Tier 2) and Over $1 Billion (Tier 3). The administration fee is calculated as a fixed annual percentage, accrued daily and payable monthly, of the net asset value of each Series as follows: 17 Annual Report
Notes to Financial Statements continued (Amounts in thousands of Canadian dollars/thousands of securities (except per security amounts)) Tier 1 (%) Tier 2 (%) Tier 3 (%) Series A 0.280 0.270 0.260 Series B 0.230 0.220 0.210 Series F 0.190 0.180 0.170 Series F5 0.190 0.180 0.170 Series F8 0.190 0.180 0.170 Series T5 0.280 0.270 0.260 Series T8 0.280 0.270 0.260 Series S5 0.230 0.220 0.210 Series S8 0.230 0.220 0.210 Series E1 0.205 0.195 0.185 Series E1T5 0.205 0.195 0.185 Series E2 0.180 0.170 0.160 Series E2T5 0.180 0.170 0.160 Series E3 0.155 0.145 0.135 Series E4 0.155 0.145 0.135 Series E5 0.130 0.120 0.110 Series P1 0.165 0.155 0.145 Series P1T5 0.165 0.155 0.145 Series P2 0.140 0.130 0.120 Series P2T5 0.140 0.130 0.120 Series P3 0.115 0.105 0.095 Series P3T5 0.115 0.105 0.095 Series P4 0.115 0.105 0.095 Series P5 0.090 0.080 0.070 Prior to October 28, 2016, the administration fee was calculated as a fixed annual percentage of the net asset value of each Series as follows (some or all Series administration fees may not have changed): Tier 1 (%) Tier 2 (%) Tier 3 (%) Series A 0.290 0.280 0.270 Series B 0.240 0.230 0.220 Series F 0.194 0.184 0.174 Series F5 0.194 0.184 0.174 Series F8 0.194 0.184 0.174 Series T5 0.290 0.280 0.270 Series T8 0.290 0.280 0.270 Series S5 0.240 0.230 0.220 Series S8 0.240 0.230 0.220 Series E1 0.215 0.205 0.195 Series E1T5 0.215 0.205 0.195 Series E2 0.190 0.180 0.170 Series E2T5 0.190 0.180 0.170 Series E3 0.165 0.155 0.145 Series E4 0.165 0.155 0.145 Series E5 0.140 0.130 0.120 Series P1 0.169 0.159 0.149 Series P1T5 0.169 0.159 0.149 Series P2 0.144 0.134 0.124 Series P3 0.119 0.109 0.099 Prior to October 29, 2015, the administration fee was calculated as a fixed annual percentage of the net asset value of each Series as follows (some or all Series administration fees may not have changed): Annual Reportport 18
Tier 1 (%) Tier 2 (%) Tier 3 (%) Series A 0.290 0.280 0.270 Series B 0.240 0.230 0.220 Series F 0.194 0.184 0.174 Series F5 0.194 0.184 0.174 Series F8 0.194 0.184 0.174 Series T5 0.290 0.280 0.270 Series T8 0.290 0.280 0.270 Series S5 0.240 0.230 0.220 Series S8 0.240 0.230 0.220 Independent Review Committee Fees - The Independent Review Committee (IRC), as required under National Instrument 81-107, reviews conflict of interest matters referred to it by the manager and provides recommendations or approves actions, as appropriate, that are in the best interest of the funds. There are currently four members of the IRC who are independent of Fidelity and its affiliates. IRC members are compensated by way of an annual retainer fee and a per meeting attendance fee, as well as reimbursed for expenses associated with IRC duties. These costs are allocated among the individual funds proportionately by assets. No IRC fees are charged with respect to the Series O securities. Sales Tax - Certain provinces have harmonized their Provincial Sales Tax (PST) with the federal Goods and Services Tax (GST). The Harmonized Sales Tax (HST) combines the GST rate of 5% with the PST rate of certain provinces. The Provincial GST/HST liability or refund is calculated using the residency of securityholders and the value of their interests in the Fund as at specific times, rather than the physical location of the Fund. The effective GST/HST rate charged to each Series of the Fund is based on the securityholders proportionate investments by province, using each province s HST rate or GST rate in the case of non-participating provinces. All amounts are included in the Statements of Comprehensive Income as Sales tax. Expenses Waived - Fidelity may absorb or waive certain expenses at its sole discretion and can terminate the absorption or waiver at any time. Fidelity waived a portion of its administration fee which is disclosed as Expenses waived in the Statements of Comprehensive Income. Commissions and Other Portfolio Costs - Commissions and other portfolio costs paid for security transactions during the period were $1,089 (June 30, 2016: $1,036), of which $2 (June 30, 2016: $-) were paid to brokerage firms that are affiliates of Fidelity Investments. The Fund may execute certain portfolio trades with brokers who reimbursed a portion of their commissions to the Fund. Reimbursement estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known. Commissions reimbursed under this arrangement were $86 (June 30, 2016: $77) and are included in Commissions and other portfolio costs in the Statements of Comprehensive Income. In addition, a portion of commissions may be paid for research. The total of such payments was $279 (June 30, 2016: $247). Amounts paid for research provided to the Fund by executing brokers are estimates made by Fidelity. Fidelity has established procedures to assist them in making a good faith determination that the Fund received a reasonable benefit considering the value of research goods and services and the amount of brokerage commissions paid. 5. Taxation and Distributions The Fund qualifies as a mutual fund trust under the provisions of the Income Tax Act (Canada). For tax purposes, the Fund has a December year end. In each tax year, the Fund declares and credits as due and payable sufficient net investment income and net realized capital gains to securityholders such that the Fund will not be subject to income taxes. As a result, the Fund does not record income taxes under IAS 12 Income Taxes (IAS 12) and accordingly does not recognize the deferred tax benefit associated with tax loss carry forwards and other taxable temporary differences. Foreign withholding taxes are imposed by certain countries on investment income and are estimated based on the tax rules and actual rates that exist in the foreign markets. Investment income is recorded gross of foreign taxes withheld. Foreign withholding taxes are accrued for in conjunction with the accrual for the related investment income and are included in Foreign taxes withheld on the Statements of Comprehensive Income and Other payables and accrued expenses on the Statements of Financial Position. Distributions are taxable in securityholders hands. At the end of each tax year, the character of the distributions is determined for tax purposes. Under the terms of the Declaration of Trust, the trustee may capitalize any distribution amount without any increase in the number of securities outstanding. Distributions, if any, are declared separately for each Series. Capital losses may be carried forward indefinitely to reduce future realized capital gains. As at the last taxation year-end, the Fund had no capital losses available to be carried forward. Non capital losses may be carried forward for up to 20 tax years to reduce future taxable income, but expire in December of the year noted. As at the last taxation year-end, the Fund had no non capital losses available to be carried forward. 19 Annual Report
Notes to Financial Statements continued (Amounts in thousands of Canadian dollars/thousands of securities (except per security amounts)) 6. Capital Risk Management Securities issued and outstanding are considered to be the capital of the Fund. The capital of each series of the Fund is divided into an unlimited number of securities of equal value, with no par value. All securities in a series of the Fund rank equally with respect to distributions. A securityholder of the Fund is entitled to one vote for each one dollar in value of securities owned. Fractional securities are proportionately entitled to these rights. The Fund generally has no restrictions or specific capital requirements on the subscriptions and redemptions of securities other than minimum subscription requirements; although, on rare occasions, Fidelity may temporarily suspend securityholders right to redeem securities and postpone paying sale proceeds. The relevant movements attributable to securityholders are shown in the Statements of Changes in Net Assets Attributable to Securityholders. In accordance with the objectives and the risk management policies outlined in the Financial Instruments Risk notes, the Fund endeavors to invest the subscriptions received in appropriate investments while maintaining sufficient liquidity to meet redemptions. Such liquidity is managed by investing the majority of assets in investments that can be readily disposed and via the Fund s ability to borrow up to 5% of its net asset value. Security Transactions - Security transactions and weighted average securities for each Series were as follows: Annual Reportport 20
Securities Outstanding, Beginning of Period Issued Reinvested Redeemed Securities Outstanding, End of Period Weighted Average Securities Period ended June 30, 2017 Series A 3,270 260 (1,306) 2,224 2,786 Series B 21,726 1,757 1 (5,131) 18,353 19,902 Series F 1,531 1,161 14 (822) 1,884 1,684 Series F5 29 32 1 (25) 37 36 Series F8 28 22 1 (14) 37 31 Series O 31,153 5,567 732 (5,426) 32,026 31,329 Series T5 31 13 1 (22) 23 28 Series T8 354 382 8 (240) 504 594 Series S5 210 33 4 (71) 176 196 Series S8 1,178 388 30 (201) 1,395 1,403 Series E1 3,694 5,096 6 (1,305) 7,491 6,311 Series E1T5 22 23 2 47 35 Series E2 397 880 1 (307) 971 839 Series E2T5 Series E3 136 46 (5) 177 150 Series E4 273 5 1 279 275 Series E5 Series P1 452 1,014 7 (238) 1,235 914 Series P1T5 7 20 (17) 10 15 Series P2 25 108 1 (12) 122 75 Series P2T5 17 17 15 Series P3 17 588 (577) 28 184 Series P3T5 Series P4 2 2 1 Series P5 707 (35) 672 652 Period ended June 30, 2016 Series A 4,911 312 56 (2,009) 3,270 4,069 Series B 25,030 2,064 376 (5,744) 21,726 23,510 Series F 1,285 751 28 (533) 1,531 1,423 Series F5 19 73 1 (64) 29 26 Series F8 22 12 1 (7) 28 25 Series O 26,417 10,693 1,202 (7,159) 31,153 29,978 Series T5 76 5 2 (52) 31 53 Series T8 599 15 15 (275) 354 436 Series S5 224 66 9 (89) 210 224 Series S8 1,070 254 47 (193) 1,178 1,140 Series E1 4,015 (321) 3,694 3,110 Series E1T5 23 (1) 22 21 Series E2 411 (14) 397 331 Series E2T5 Series E3 300 (164) 136 253 Series E4 273 273 124 Series E5 Series P1 581 7 (136) 452 365 Series P1T5 61 (54) 7 33 Series P2 43 (18) 25 12 Series P3 17 17 11 Affiliated Ownership - As at June 30, 2017, Fidelity and its affiliates held approximately 37% of the Fund. As at June 30, 2016, Fidelity and its affiliates held 41% of the Fund. 7. Financial Instruments Risk The Fund s activities expose it to a variety of financial instruments risks: credit risk, liquidity risk, other price risk, interest rate risk and currency risk. Fidelity seeks to minimize potential adverse effects of these performance risks by employing professional, experienced portfolio advisors, by 21 Annual Report
Notes to Financial Statements continued (Amounts in thousands of Canadian dollars/thousands of securities (except per security amounts)) daily monitoring of positions and market events, and by diversifying the investment portfolio within the constraints of the investment mandate. Derivative financial instruments may be used to moderate certain risk exposures. Risk, as defined by Fidelity, is the mismatch of certain risk factors, such as the market capitalization, beta, common factors such as size, priceearnings ratio, price-to-book ratio and industry exposures, between a portfolio and its benchmark. Such mismatches may result in divergence of returns relative to the benchmark. Beta is a measure of the volatility, or systematic risk, of a security or a portfolio in comparison to the market as a whole. A beta of 1 indicates that the security s price will move with the market. A beta of less than 1 means that the security will be less volatile than the market. A beta of greater than 1 indicates that the security s price will be more volatile than the market. For example, if a stock s beta is 1.2, it s theoretically 20% more volatile than the market. Fidelity s objective is to provide consistent value-added return over the benchmark. Unsystematic risk is mitigated primarily through investments in a diverse portfolio of securities across many sectors, styles or regions of the market. Fidelity s qualitative fundamental security selection is also well diversified across many analysts. Rather than relying on a single valuation process or quantitative model that implicitly assumes that past value-added returns of some sectors or styles will persist into the future, Fidelity s analysts select securities based on their own unique valuation processes. The Fund aims to achieve long-term capital growth. It invests primarily in equity securities of Canadian companies. The Fund s benchmark is the S&P/TSX Capped Composite Index. Portfolio risk is monitored daily and reviewed monthly by an investment compliance group. In addition, there is a formal quarterly review of each fund. The investment compliance group, portfolio managers and the senior analysts attend a quarterly portfolio review. Portfolios within each strategy are reviewed relative to each other and to their benchmark. Active industry and security allocations are analyzed. Credit Risk - Credit risk is the risk that a counterparty to a financial instrument will fail to discharge an obligation or commitment that it has entered into with the Fund. The Fund s own credit risk in the case of financial liabilities and a counterparty s credit risk, both indirect and direct, are considered, where applicable, in determining the fair value of financial assets and financial liabilities. In addition, as part of its cash management, the Fund limits its direct exposure to credit loss by placing its cash with high credit quality financial institutions. The carrying amount of investments and other assets represents the maximum credit risk exposure as at June 30, 2017 and June 30, 2016. Collateralized reverse repurchase agreements may result in credit exposure in the event that the counterparty to the transaction is unable to fulfill its contractual obligations. The risk is managed by the receipt of the underlying securities as collateral and use of counterparties whose credit worthiness is considered sufficient based on Fidelity s independent review. Other than outlined above, there were no significant concentrations of credit risk to counterparties as at June 30, 2017 and June 30, 2016. Concentration Risk - The Fund may be exposed to risk based on the concentration levels of its financial instruments in various sectors, geographic regions, asset weightings and market capitalization, as applicable. Fidelity analyzes and monitors these concentration risks regularly. Refer to the Sector Mix tables in the Summary of Investment Portfolio of the Fund s Annual Management Report of Fund Performance as at June 30, 2017, which summarize the investment concentration risks that are relevant for the Fund. Liquidity Risk - Liquidity risk is defined as the risk that the Fund may not be able to settle or meet its obligations on time or at a reasonable price. The Fund is exposed to daily cash redemptions of its redeemable securities. Redeemable securities are redeemed on demand at the securityholder s option based on the Fund s net asset value per security (NAVPS) at the time of redemption. The Fund may be exposed to indirect liquidity risk through its investments. In accordance with securities regulations, investment funds must maintain at least 90% of assets in liquid investments; investments that are traded in an active market and can be readily disposed of. In addition, the Fund aims to retain sufficient cash and short-term investments to maintain liquidity, and has the ability to borrow up to 5% of its net asset value from the custodian for the purpose of funding redemptions. The liquidity position is monitored on a daily basis. As at June 30, 2017 and June 30, 2016, the Fund did not have financial liabilities with maturities greater than 3 months. Other Price Risk - Other price risk is the risk that the value of financial instruments will fluctuate as a result of changes in market prices (other than those arising from interest rate risk or currency risk on monetary instruments), whether caused by factors specific to an individual investment, its issuer, or other factors affecting all instruments traded in a market or market segment. All financial instruments present a risk of loss of capital. This risk is moderated through a careful selection of securities and other financial instruments within the parameters of the investment strategy. The maximum risk resulting from financial instruments is equivalent to their fair value except for possible losses from options written and future contracts which can be unlimited. Investments and derivatives, if applicable, are susceptible to other price risk arising from uncertainties about future prices of the instruments. If the benchmark had increased or decreased by 5% on June 30, 2017 and June 30, 2016, with all other variables held constant, the net assets attributable to securityholders of the Fund would have increased or decreased by approximately $94,392 (June 30, 2016: $98,870). This change is estimated using the Fund s beta which is calculated based on the historical correlation between the return of the Fund as compared to the return of the benchmark. In practice, the actual trading results may differ from this sensitivity analysis and the difference could be material. Annual Reportport 22
Interest Rate Risk - Interest rate risk arises on interest-bearing financial instruments held directly or indirectly in the investment portfolio such as bonds. The Fund is exposed to the risk that the fair value or the future cash flows of interest-bearing financial instruments will fluctuate due to changes in the prevailing levels of market interest rates. Any excess cash may be invested in short-term investments at market interest rates. The majority of the Fund s financial instrument exposure is non-interest bearing. As a result, the Fund is not subject to significant amounts of risk due to fluctuations in the prevailing levels of market interest rates. Currency Risk - Currency risk arises from financial instruments that are denominated in a currency other than Canadian dollar, which is the Fund s functional currency. The Fund is exposed to the risk that the value of financial instruments will fluctuate due to changes in exchange rates. Currency risk is not considered to arise from financial instruments that are non-monetary items such as equity investments, or forward foreign exchange contracts related to such non-monetary items. Foreign exchange exposure relating to non-monetary assets and liabilities is considered to be a component of other price risk, not foreign currency risk. As at June 30, 2017 and June 30, 2016, the majority of the Fund s monetary assets and liabilities are denominated in Canadian dollars. As a result, the Fund is not subject to significant amounts of risk due to fluctuations in exchange rates. 8. Investment in Structured Entities The Fund invests in ETFs which may be considered structured entities. As of June 30, 2017, the carrying value and maximum exposure to losses of such ETF holdings included in the Statements of Financial Position is $4,224 (June 30, 2016: $4,511). The change in fair value of these ETF holdings is included in the Statements of Comprehensive Income in Change in net unrealized appreciation (depreciation) on investments. The ownership percentage of any ETF was less than 1%. 23 Annual Report
Management Report and Independent Auditor s Report Management Responsibility for Financial Reporting To the Securityholders and Trustee of Fidelity Canadian Disciplined Equity Fund (Fund) The accompanying financial statements have been prepared by Fidelity Investments Canada ULC (Fidelity), as manager of the Fund. Fidelity is responsible for the information and representations contained in these financial statements. The Board of Directors of Fidelity is responsible for reviewing and approving the financial statements. Fidelity maintains appropriate processes to ensure that relevant and reliable financial information is produced. The financial statements have been prepared in accordance with International Financial Reporting Standards and include certain amounts and disclosures that are based on estimates and judgments. The significant accounting policies, which management believes are appropriate for the Fund, are described in Note 3 to the financial statements. PricewaterhouseCoopers LLP is the external auditor of the Fund. They have audited the financial statements in accordance with Canadian generally accepted auditing standards to enable them to express to the securityholders their opinion on the financial statements. Their report is set out below. Brock Dunlop Vice President and Fund Treasurer Fidelity Investments Canada ULC September 7, 2017 Independent Auditor s Report To the Securityholders and Trustee of Fidelity Canadian Disciplined Equity Fund (Fund) We have audited the accompanying financial statements of the Fund, which comprise the statements of financial position as at June 30, 2017 and 2016 and the statements of comprehensive income, changes in net assets attributable to securityholders and cash flows for the years ended June 30, 2017 and 2016, and the related notes, which comprise a summary of significant accounting policies and other explanatory information. Management s responsibility for the financial statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor s responsibility Our responsibility is to express an opinion on the financial statements based on our audits. We conducted our audits in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audits to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as at June 30, 2017 and 2016 and its financial performance and its cash flows for the years ended June 30, 2017 and 2016 in accordance with International Financial Reporting Standards. PricewaterhouseCoopers LLP Chartered Professional Accountants, Licensed Public Accountants Toronto, Ontario September 7, 2017 Annual Reportport 24
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Fidelity Investments Canada ULC 483 Bay Street, Suite 300 Toronto, Ontario M5G 2N7 Manager, Transfer Agent and Registrar Fidelity Investments Canada ULC 483 Bay Street, Suite 300 Toronto, Ontario M5G 2N7 Portfolio Adviser Fidelity Investments Canada ULC Toronto, Ontario Custodian State Street Trust Company of Canada Toronto, Ontario Auditor PricewaterhouseCoopers LLP Toronto, Ontario Visit us online at www.fidelity.ca or call Fidelity Client Services at 1-800-263-4077 Fidelity s mutual funds are sold by registered Investment Professionals. Each Fund has a simplified prospectus, which contains important information on the Fund, including its investment objective, purchase options, and applicable charges. Please obtain a copy of the prospectus, read it carefully, and consult your Investment Professional before investing. As with any investment, there are risks to investing in mutual funds. There is no assurance that any Fund will achieve its investment objective, and its net asset value, yield, and investment return will fluctuate from time to time with market conditions. Investors may experience a gain or loss when they sell their securities in any Fidelity Fund. Fidelity Global Funds may be more volatile than other Fidelity Funds as they concentrate investments in one sector and in fewer issuers; no single Fund is intended to be a complete diversified investment program. Past performance is no assurance or indicator of future returns. There is no assurance that either Fidelity Canadian Money Market Fund or Fidelity U.S. Money Market Fund will be able to maintain its net asset value at a constant amount. The breakdown of Fund investments is presented to illustrate the way in which a Fund may invest, and may not be representative of a Fund s current or future investments. A Fund s investments may change at any time. Fidelity Investments is a registered trademark of Fidelity Investments Canada ULC. 62.107435E 1.744312.117 FICL-CDE-ANN-0917