Fidelity Advisor Stock Selector Small Cap Fund
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PORTFOLIO MANAGER Q&A | AS OF APRIL 30, 2021
Fidelity Advisor® Stock Selector
Small Cap Fund
Key Takeaways MARKET RECAP
• For the semiannual reporting period ending April 30, 2021, the fund's The S&P 500® index gained 28.85% for
Class I shares gained 46.47%, underperforming the 48.06% advance of the six months ending April 30, 2021,
the benchmark, the Russell 2000® Index. with U.S. equities rising on the prospect
of a surge in economic growth amid
widespread COVID-19 vaccinations, fiscal
• Small-cap equities rose dramatically the past six months, driven by the stimulus that included a third round of
early-November announcement of an effective COVID-19 vaccine in relief payments and fresh spending
the U.S. and optimism for a full economic reopening. programs. In November, stocks shrugged
off a two-month retreat by gaining 11%,
• Lead Portfolio Manager Morgen Peck emphasized buying shares of as investors digested results of the U.S.
higher-quality companies at reasonable valuations, which held back elections. The momentum continued in
the fund's performance versus the benchmark in a market advance December, with the approval of two
dominated by lower-quality cyclical stocks. breakthrough COVID-19 vaccines and
prospects for additional government
• Stock selection in the consumer discretionary sector detracted the stimulus. As the calendar turned,
most. On an individual basis, not owning high-flying benchmark investors saw reasons to be hopeful. The
component GameStop hindered the fund's relative return. rollout of two COVID-19 vaccines was
underway, the U.S. Federal Reserve
pledged to hold interest rates near zero
• A cash position of about 2% of fund assets, on average, also weighed
until the economy recovered, and the
on the fund's relative result.
federal government would deploy
trillions of dollars in aid to boost
• Conversely, stock selection in financials added value, including a consumers and the economy. This
non-benchmark stake in New York-based Signature Bank. backdrop fueled a powerful market
rotation, with small-cap value stocks
• Overweighting building materials and safety product manufacturer usurping long-standing leadership from
and distributor Atkore International added more value than any other large growth shares. As part of the
fund position. "reopening" trade, investors moved out
of tech-driven mega-caps that had
thrived due to the work-from-home trend
• As of April 30, Morgen and the fund's management team remained
in favor of cheap smaller companies they
focused on bottom-up stock picking and on identifying companies
believed stood to benefit from a broad
that could benefit from a return to "normal," in which consumers once
cyclical recovery. Reflecting this shift, the
again take vacations and employees return to the office. energy sector gained 76% for the six
months, boosted by a sharp rally in the
price of oil. Financials (+54%) rode
strength among banks (+69%).
Conversely, notable "laggards" included
the defensive utilities (+9%) and
consumer staples (+13%) sectors.
Not FDIC Insured • May Lose Value • No Bank Guarantee
PORTFOLIO MANAGER Q&A | AS OF APRIL 30, 2021
Q&A
An interview with Lead Portfolio
Manager Morgen Peck, with additional
comments from Co-Manager Eirene
Morgen Peck Eirene Kontopoulos
Lead Manager Co-Manager Kontopoulos
Fund Facts Q: Morgen, how did the fund perform for
Trading Symbol: FCDIX
the six months ending April 30, 2021
The fund's Class I shares rose 46.47%, underperforming the
Start Date: June 28, 1993 48.06% gain of the benchmark, the Russell 2000® Index. The
fund lagged its peer group average by a wider margin.
Size (in millions): $2,120.44
Looking slightly longer term, the fund advanced 74.05% for
the trailing 12 months, roughly in line with the benchmark
and outpacing the peer group average.
Investment Approach
Q: Would you describe the market environment
• Fidelity Advisor® Stock Selector Small Cap Fund is a for small-cap equities the past six months
core U.S. small-cap equity strategy that seeks to
exploit the inefficiencies among small-cap companies Small-cap equities, as measured by the Russell 2000® Index,
through a fundamentally driven approach with a more rose dramatically, driven by the early-November
modest active risk profile. announcement of an effective COVID-19 vaccine and
optimism for a full economic reopening in the U.S.
• The fund attempts to deliver an attractive risk-
adjusted return profile for shareholders over a market Cyclical sectors, including energy, consumer discretionary
cycle by employing a team of portfolio managers and materials, led the market advance, whereas more-
focused on stock selection within a disciplined defensive sectors, such as utilities, health care and consumer
portfolio-construction framework. staples, lagged the index.
• The portfolio managers are overseen by a lead Lower-quality cyclical stocks led the way for much of the
manager, who is responsible for portfolio
period, especially in January, when a group of highly shorted
construction and risk oversight.
stocks gained materially. We maintained our focus on higher-
• We focus our efforts on higher-quality companies with quality stocks, which we think gives the fund the best chance
established and durable competitive "moats" that can to outperform over the longer term, even though this
compound and become larger, more-profitable approach detracted for the six months.
businesses over time.
Q: Please remind us how the fund is managed.
Beginning in June 2018, we divided the fund's assets into
two separate subportfolios, diversified across 10 market
sectors – excluding health care – and we moved away from
sector-neutrality, based on the opportunities we identified. In
addition to serving as lead manager of the fund, I manage
one of these diversified subportfolios, while Co-Manager
Shadman Riaz manages the other. Two co-managers focus
on health care, given the complexity of this sector: Eirene
Kontopoulos and Patrick Venanzi.
We are now approaching three years under this new
structure, and we remain pleased with how the team is
2 | For definitions, fund risks and other important information, please see the Definitions and Important Information section of this Q&A.PORTFOLIO MANAGER Q&A | AS OF APRIL 30, 2021
working. We're also encouraged by the fund's performance transactions, as well as interest on Bitcoin deposits. We
amid challenging market dynamics. trimmed our position in Signature Bank by period end.
I'll also mention Atkore International (+280%), a
Q: What specific factors detracted versus manufacturer and distributor of building materials and safety
the benchmark this period products, which added more value than any other fund
position. It gained as market participants became bullish on
Stock selection in consumer discretionary hurt most. We the outlook for the commercial real estate market and on the
underweighted many low-quality specialty retail and company's strong quarterly earnings. We trimmed the fund's
restaurant stocks in this sector that performed very well on position in Atkore International as of April 30.
hopes that the distribution of COVID-19 vaccines would
result in improved consumer traffic. This positioning aligned
with our long-held view that the structural shift to e-
Q: Any final thoughts for shareholders
commerce and the excess supply of casual-dining As of April 30, we remain focused on bottom-up stock
restaurants serve as long-term headwinds that are likely to picking with an orientation toward higher-quality companies
hamper any chance of sustained outperformance. trading at attractive valuations. From our standpoint,
On an individual basis, the fund did not own benchmark focusing on these types of stocks will result in
component GameStop, which hurt more than any other stock outperformance over time.
decision. GameStop became the posterchild for a group of We are acutely aware of the numerous market crosscurrents
"meme" stocks that gained due to massive retail investor at play, including the direction of interest rates, the risk of
interest spurred on social media. Many retail investors rising inflation, the health of the U.S. consumer and the path
believed the narrative that GameStop could become the of many end-markets as the U.S. reopens in the coming
Netflix of the video-gaming world. Yet we saw little evidence months. These crosscurrents are providing us with an
of GameStop's ability to transform from a failing mall-based opportunity to find companies across the small-cap universe
retailer into a Netflix-like juggernaut. We avoided it due to its that fit our investment framework.
very high stock multiple.
We are envisioning what the investment landscape will look
Elsewhere, choices in health care detracted, including the like as the COVID-19 vaccines become even more widely
fund's non-benchmark stake in Sarepta Therapeutics (-48%). distributed globally, and we are working to identify
This stock fell in January after the company's management companies we think will benefit from a return to "normal,"
team announced Sarepta's gene-therapy treatment for such as when consumers once again take vacations and
Duchenne muscular dystrophy, a rare genetic disorder that employees return to the office. ■
progressively weakens the muscles of children, failed to
show a statistical improvement in patients compared with a
placebo. We still held Sarepta at period end and looked
forward to this drug's next clinical trial.
Lastly, I'd like to mention the fund's cash position of about
2% of total assets, on average. As the market surged in late
2020 and into 2021, this positioning dragged on its relative
result. By period end, we reduced the fund's cash holdings
to 1% of assets.
Q: What added value
Stock selection in financials contributed on a relative basis,
especially banking stocks, which gained on economic
optimism and a growing belief that interest rates could rise
going forward. Rising rates tend to help bank margins.
A non-benchmark stake in New York-based Signature Bank
(+212%) added particular value. We added this stock to the
fund in the depths of the COVID-induced sell-off in early
2020 when its valuation became extremely attractive. The
stock rose as management's outlook on potential bad loans
improved dramatically. Also, the market began to recognize
the value of the company's Signet division, which benefits
from the increased size and volume of cryptocurrency
3 | For definitions, fund risks and other important information, please see the Definitions and Important Information section of this Q&A.PORTFOLIO MANAGER Q&A | AS OF APRIL 30, 2021
Co-Manager Eirene Kontopoulos on
managing the fund's health care
investments amid COVID-19:
"Our goal remains to do the comprehensive
fundamental research that should guide us to which
stocks we should own, and then to hold these stocks
through whatever market volatility comes our way,
knowing that, over time, we are likely to be
rewarded if our research is accurate.
"Recently, interest in COVID-19 vaccines and
therapeutics continued to fuel the market for
biotechnology IPOs (initial public offerings), private
placements and secondary stock offerings. This
market has grown even more frothy than it was at
this time a year ago. Given this dynamic, we are
increasingly turning to private placements of
companies that are on the verge of going public,
where we see better valuations.
"In health care, we continue to lean into high-quality
small- and mid-cap stocks at period end. We are
scrutinizing the fund's small-cap holdings to assess
whether they have sufficiently strong fundamentals
to take them to the next level of development.
"In all cases, our focus remains on identifying
companies that are building what we consider
innovative therapies that offer benefits to society
that far outweigh the cost to the health care system.
Companies providing these therapies, we believe,
are where the best investment opportunities are
likely to be found.
"Examples of fund holdings that fit this framework
as of April 30 include Zentalis Pharmaceuticals, a
clinical-stage oncology company, and TG
Therapeutics, which is developing a potentially best-
in-class multiple sclerosis therapy. We added to the
fund's stakes in each by period end."
4 | For definitions, fund risks and other important information, please see the Definitions and Important Information section of this Q&A.PORTFOLIO MANAGER Q&A | AS OF APRIL 30, 2021
ASSET ALLOCATION
Relative Change
From Six Months
Asset Class Portfolio Weight Index Weight Relative Weight Ago
Domestic Equities 94.86% 99.01% -4.15% 1.69%
International Equities 3.97% 0.99% 2.98% -1.17%
Developed Markets 3.25% 0.84% 2.41% -1.01%
Emerging Markets 0.72% 0.08% 0.64% -0.16%
Tax-Advantaged Domiciles 0.00% 0.07% -0.07% 0.00%
Bonds 0.00% 0.00% 0.00% 0.00%
Cash & Net Other Assets 1.17% 0.00% 1.17% -0.52%
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.
MARKET-SEGMENT DIVERSIFICATION
Relative Change
From Six Months
Market Segment Portfolio Weight Index Weight Relative Weight Ago
Health Care 17.99% 19.27% -1.28% -0.08%
Consumer Discretionary 17.34% 14.89% 2.45% 0.14%
Financials 15.79% 15.96% -0.17% 2.78%
Industrials 15.32% 15.94% -0.62% -3.48%
Information Technology 14.03% 12.44% 1.59% -1.42%
Materials 4.65% 4.46% 0.19% 0.70%
Consumer Staples 4.40% 3.24% 1.16% -0.33%
Real Estate 3.22% 6.16% -2.94% -0.74%
Energy 2.63% 2.50% 0.13% 1.77%
Communication Services 1.78% 2.39% -0.61% 0.55%
Multi Sector 1.40% -- 1.40% 0.13%
Utilities 0.28% 2.74% -2.46% 0.50%
Other 0.00% 0.00% 0.00% 0.00%
5 | For definitions, fund risks and other important information, please see the Definitions and Important Information section of this Q&A.PORTFOLIO MANAGER Q&A | AS OF APRIL 30, 2021
10 LARGEST HOLDINGS
Portfolio Weight
Market Segment Portfolio Weight
Holding Six Months Ago
Crocs, Inc. Consumer Discretionary 1.15% 1.19%
Western Alliance Bancorp. Financials 1.10% 0.50%
Novavax, Inc. Health Care 1.05% 0.34%
Atkore, Inc. Industrials 1.02% 0.61%
Synovus Financial Corp. Financials 0.97% 0.97%
Sterling Bancorp Financials 0.95% --
EMCOR Group, Inc. Industrials 0.94% 0.89%
Essent Group Ltd. Financials 0.93% 0.76%
Darling Ingredients, Inc. Consumer Staples 0.92% 0.76%
ASGN, Inc. Industrials 0.91% 0.72%
10 Largest Holdings as a % of Net Assets 9.94% 10.82%
Total Number of Holdings 227 225
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. Holdings
do not include money market investments.
FISCAL PERFORMANCE SUMMARY: Cumulative Annualized
Periods ending April 30, 2021 6 1 3 5 10 Year/
Month YTD Year Year Year LOF1
Fidelity Advisor Stock Selector Small Cap Fund - Class I
46.47% 16.93% 74.05% 18.74% 17.07% 11.57%
Gross Expense Ratio: 1.01%2
Russell 2000 Index 48.06% 15.07% 74.91% 15.23% 16.48% 11.63%
Morningstar Fund Small Blend 49.00% 18.70% 72.03% 12.97% 13.91% 10.64%
% Rank in Morningstar Category (1% = Best) -- -- 47% 2% 6% 26%
# of Funds in Morningstar Category -- -- 650 605 507 357
1 Lifeof Fund (LOF) if performance is less than 10 years. Fund inception date: 06/28/1993.
2 This expense ratio is from the prospectus in effect as of the date shown above and generally is based on amounts incurred during that fiscal year. It
does not include any fee waivers or reimbursements, which would be reflected in the fund's net expense ratio.
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 Class I shares. Class I shares are sold to eligible investors without a sales charge or 12b-1 fee as defined in the fund's Class I prospectus.
Other share classes with these fees would have had lower performance. To learn more or to obtain the most recent month-end or other share-class
performance, visit 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. Please see the last page(s) of this document for most-recent
calendar-quarter performance.
6 | For definitions, fund risks and other important information, please see the Definitions and Important Information section of this Q&A.PORTFOLIO MANAGER Q&A | AS OF APRIL 30, 2021
Definitions and Important Information applicable loads, fees and expenses.
% Rank in Morningstar Category is the fund's total-return
Information provided in this document is for informational and percentile rank relative to all funds that have the same Morningstar
educational purposes only. To the extent any investment information Category. The highest (or most favorable) percentile rank is 1 and
in this material is deemed to be a recommendation, it is not meant to the lowest (or least favorable) percentile rank is 100. The top-
be impartial investment advice or advice in a fiduciary capacity and is performing fund in a category will always receive a rank of 1%. %
not intended to be used as a primary basis for you or your client's Rank in Morningstar Category is based on total returns which
investment decisions. Fidelity, and its representatives may have a include reinvested dividends and capital gains, if any, and exclude
conflict of interest in the products or services mentioned in this sales charges. Multiple share classes of a fund have a common
material because they have a financial interest in, and receive portfolio but impose different expense structures.
compensation, directly or indirectly, in connection with the
management, distribution and/or servicing of these products or
services including Fidelity funds, certain third-party funds and RELATIVE WEIGHTS
products, and certain investment services. Relative weights represents the % of fund assets in a particular
market segment, asset class or credit quality relative to the
FUND RISKS benchmark. A positive number represents an overweight, and a
Stock markets, especially foreign markets, are volatile and can negative number is an underweight. The fund's benchmark is listed
decline significantly in response to adverse issuer, political, immediately under the fund name in the Performance Summary.
regulatory, market, or economic developments. The securities of
smaller, less well-known companies can be more volatile than those
of larger companies. Foreign securities are subject to interest rate,
currency exchange rate, economic, and political risks.
IMPORTANT FUND INFORMATION
Relative 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.
Russell 2000 Index is a market-capitalization-weighted index
designed to measure the performance of the small-cap segment of
the U.S. equity market. It includes approximately 2,000 of the
smallest securities in the Russell 3000 Index.
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. They
should not be construed or used as a recommendation for any
sector or industry.
RANKING INFORMATION
© 2021 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
7 |PORTFOLIO MANAGER Q&A | AS OF APRIL 30, 2021 Manager Facts Morgen Peck is a portfolio manager in the Equity division at Fidelity Investments. Fidelity Investments is a leading provider of investment management, retirement planning, portfolio guidance, brokerage, benefits outsourcing, and other financial products and services to institutions, financial intermediaries, and individuals. In this role, Ms. Peck is responsible for the Fidelity and Fidelity Advisor Stock Selector Small Cap Fund and the Real Estate, Financials, Consumer Discretionary, Consumer Staples, Information Technology and Telecommunication Services sleeves of Fidelity Series Small Cap Opportunities Fund. She is also responsible for the All-Sector Global sleeve as well as the Information Technology and Telecommunications Services sleeves of the Fidelity Low Priced Stock Fund. Prior to assuming her current position, Ms. Peck was a domestic equity analyst at Fidelity covering small cap domestic equities. She has been in the financial industry since joining Fidelity in September 2003. Ms. Peck earned her bachelor of arts degree in economics from Harvard University. She is also a CFA® charterholder. Eirene Kontopoulos is a research analyst and portfolio manager in the Equity division at Fidelity Investments. Fidelity Investments is a leading provider of investment management, retirement planning, portfolio guidance, brokerage, benefits outsourcing, and other financial products and services to institutions, financial intermediaries, and individuals. In this role, Ms. Kontopoulos manages the Fidelity Advisor Biotechnology Fund, and co-manages the health care sub- portfolios of Fidelity Stock Selector Small Cap Fund and Fidelity Series Small Cap Opportunities Fund. Additionally, she is responsible for the coverage of biotechnology stocks within the health care sector. Ms. Kontopoulos has been in the financial industry since joining Fidelity as a research analyst in 2007. Ms. Kontopoulos earned her bachelor of science degree in biology from Haverford College, where she was the recipient of the prestigious Howard Hughes research fellowship. She also earned her PhD in neuroscience from Harvard Medical School. 8 | For definitions, fund risks and other important information, please see the Definitions and Important Information section of this Q&A.
PERFORMANCE SUMMARY: Annualized
Quarter ending June 30, 2021 1 3 5 10 Year/
Year Year Year LOF1
Fidelity Advisor Stock Selector Small Cap Fund - Class I
57.63% 16.41% 16.47% 12.03%
Gross Expense Ratio: 1.01%2
1 Lifeof Fund (LOF) if performance is less than 10 years. Fund inception date: 06/28/1993.
2 This expense ratio is from the prospectus in effect as of the date shown above and generally is based on amounts incurred during that fiscal year. It
does not include any fee waivers or reimbursements, which would be reflected in the fund's net expense ratio.
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 Class I shares. Class I shares are sold to eligible investors without a sales charge or 12b-1 fee as defined in the fund's Class I prospectus.
Other share classes with these fees would have had lower performance. To learn more or to obtain the most recent month-end or other share-class
performance, visit 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.
Before investing in any mutual fund, please carefully consider Information included on this page is as of the most recent calendar
the investment objectives, risks, charges, and expenses. For quarter.
this and other information, call or write Fidelity for a free S&P 500 is a registered service mark of Standard & Poor's Financial
prospectus or, if available, a summary prospectus. Read it Services LLC.
carefully before you invest. Other third-party marks appearing herein are the property of their
respective owners.
Past performance is no guarantee of future results.
All other marks appearing herein are registered or unregistered
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