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  • Annual Management Report of Fund Performance November 30, 2019

    Fidelity Global Natural Resources Class of the Fidelity Capital Structure Corp.

  • Caution Regarding Forward-looking Statements

    Certain portions of this report, including, but not limited to, “Results of Operations” and “Recent Developments”, may contain forward-looking statements about the Fund, including its strategy, risks, expected performance and condition. Forward-looking statements include statements that are predictive in nature, that depend upon or refer to future events or conditions, or that include words such as “expects”, “anticipates”, “intends”, “plans”, “believes”, “estimates” and similar forward-looking expressions or negative versions thereof.

    In addition, any statement that may be made concerning future performance, strategies or prospects, and possible future Fund action, is also a forward-looking statement. Forward-looking statements are based on current expectations and projections about future events and are inherently subject to, among other things, risks, uncertainties and assumptions about the Fund and economic factors. Accordingly, assumptions concerning future economic and other factors may prove to be incorrect at a future date.

    Forward-looking statements are not guarantees of future performance, and actual events and results could differ materially from those expressed or implied in any forward-looking state- ments made by the Fund. Any number of important factors could contribute to these digressions, including, but not limited to, general economic, political and market factors in North America and internationally, interest and foreign exchange rates, global equity and capital markets, business competition, technological change, changes in government regulations, unexpected judicial or regulatory proceedings, and catastrophic events.

    It should be stressed that the above-mentioned list of important factors is not exhaustive. You are encouraged to consider these and other factors carefully before making any investment decisions and you are urged to avoid placing undue reliance on forward-looking statements. Further, you should be aware of the fact that the Fund has no specific intention of updating any forward-looking statements whether as a result of new information, future events or otherwise, prior to the release of the next Management Report of Fund Performance.

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    Annual Management Report of Fund Performance as at November 30, 2019 Fidelity Global Natural Resources Class of the Fidelity Capital Structure Corp. This annual management report of fund performance contains financial highlights but does not contain the complete annual financial statements for the investment fund. You can get a copy of the annual financial statements at your request, and at no cost, by calling 1-800-263-4077, by writing to us at Fidelity Investments, 483 Bay St. Suite 300, Toronto ON M5G 2N7 or by visiting our website at www.fidelity.ca or SEDAR at www.sedar.com.

    Securityholders may also contact us using one of these methods to request a copy of the investment fund’s proxy voting policies and procedures, proxy voting disclosure record or quarterly portfolio disclosure relating to the investment fund.

    Management Discussion of Fund Performance Investment Objective and Strategies Investment Objective: Fidelity Global Natural Resources Class (Fund) aims to achieve long-term capital growth by seeking a return similar to that of Fidelity Global Natural Resources Fund (Underlying Fund), by investing substantially all of its assets in securities of the Underlying Fund. The Underlying Fund, which is also managed by Fidelity, aims to achieve long-term capital growth by investing primarily in equity securities of companies anywhere in the world that own or develop natural resources or supply goods and services to those companies.

    Strategies: When buying and selling securities for the Underlying Fund, the portfolio managers examine each company’s potential for success in light of its current financial condition, its industry position and economic and market conditions. The portfolio managers consider factors like growth potential, earnings estimates and quality of management. The Underlying Fund may shift its emphasis from one natural resource industry to another. It may hold cash, invest in fixed-income securities and invest in small, medium and large companies.

    Risk The risks associated with investing in this Fund are the same as for the Underlying Fund and remain as discussed in the prospectus. Any changes to the Underlying Fund over the period have not affected the overall level of risk of the Fund. The Fund is suitable for long-term investors who want to gain exposure to natural resource companies located anywhere in the world, can handle the volatility of returns generally associated with equity investments and are willing to accept a medium to high level of risk. The suitability of the investment has not changed from what has been disclosed in the prospectus.

    Results of Operations: Fidelity Global Natural Resources Class, Series B, returned 3.1%, after fees and expenses, for the one-year period ending November 30, 2019. The net returns of the other series of this Fund are similar to those of Series B, except for differences attributable to expense structures. Global equities, as measured by the MSCI World Index, returned 14.5%, in Canadian dollar terms, for the review period.

    Market overview:

    Monetary policy easing and sustained growth, particularly in the U.S., supported global equity markets. Lower interest rates and falling bond yields (interest income from bonds at a given price) resulted in a general preference for higher-quality companies, with sustainability of earnings and attractive dividend yields among the key drivers of gains. Furthermore, the falling cost of capital generally supported a sharp rise in share buybacks and lifted earnings per share (as fewer shares remain in issue for the same amount of earnings). However, escalating trade tensions between the U.S. and its leading trade partners, which triggered fears of a global recession, limited gains in global equities. Additionally, concerns that growth in the U.S. economy could be peaking after a ten-year-long expansion weakened investor sentiment. Investors also navigated several geopolitical risk events, such as rising tensions in the Middle East and developments related to Brexit. From a regional perspective, Asia-Pacific (ex-Japan) and emerging markets equities advanced, in part due to easing trade tensions and as a sharp drop in valuations attracted investor interest. European and U.S. equities advanced, led by a supportive monetary and fiscal policy framework.

    Factors affecting performance:

    The Fund’s benchmark index returned 3.7% for the period under review. The Fund’s benchmark is the MSCI AC World Natural Resources Index. The Fund underperformed its benchmark after fees and expenses but outperformed before fees and expenses.

    This outperformance was primarily due to the Underlying Fund’s exposure to certain stocks in the chemicals and construction materials industries. In the chemicals industry, investments in U.S.-based industrial chemicals producer Air Products and Chemicals, paint solutions provider Sherwin-Williams and agricultural products company FMC contributed to relative performance. In the construction materials industry, holdings in U.S.-based building materials suppliers Martin Marietta and Vulcan Materials contributed to relative returns. Among other industries, Canada- based fuel retailing company Parkland Fuel and Canada-based copper mining company Ero Copper contributed to relative returns.

    In contrast, the Underlying Fund’s investments in paper and forest products companies, such as leading diversified woods products company West Fraser Timber and leading North American producer of industrial pressure-treated wood products Stella Jones, detracted from relative performance. In other industries, holdings in Canada-based methanol supplier and distributor Methanex, Ireland-based industrial gas supplier Linde and U.S.-based oil and gas company Concho Resources detracted from relative returns.

    Portfolio changes:

    During the review period, the Underlying Fund’s exposures to the chemicals and construction materials industries were increased. In the chemicals industry, the allocations to Air Products & Chemicals and paints and coating solutions company Sherwin-Williams were increased; the portfolio managers believe that the companies are attractively valued and have strong balance sheets. In the construction materials sector, the position in Vulcan Materials was increased on the belief that it offers attractive earnings growth prospects. An investment was also made in Canada-based renewable power platform operator Brookfield Renewable Partners, given its strong cash flow and dividend yield.

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    Fidelity Global Natural Resources Class of the Fidelity Capital Structure Corp.

    Management Discussion of Fund Performance – continued

    While the Underlying Fund retains its largest exposure to the oil, gas and consumable fuels industry, the position was trimmed by exiting positions in Enbridge, Occidental Petroleum and Concho Resources, and reducing the allocations to Exxon Mobil and Total SA; the managers believed there were more attractive opportunities elsewhere. Some of the proceeds were used to initiate a larger-than-benchmark position in oil and gas production and exploration company BP, and to increase the position in Canada-based fuel retailing company Parkland Fuel.

    As at November 30, 2019, the Under

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