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  • Annual Management Report of Fund Performance November 30, 2020

    Fidelity Canadian Growth Company 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, 2020 Fidelity Canadian Growth Company 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 Canadian Growth Company Class (Fund) aims to achieve long-term capital growth and seeks a return similar to Fidelity Canadian Growth Company Fund (Underlying Fund) by investing substantially all of its assets in units of the Underlying Fund. The Underlying Fund, which is also managed by Fidelity, aims to achieve long-term capital growth by investing primarily in Canadian equity securities.

    Strategies: When buying and selling securities for the Underlying Fund, the portfolio manager examines each company’s potential for success in light of its current financial condition, its industry position and economic and market conditions. The portfolio manager considers factors like growth potential, earnings estimates and quality of management. The Underlying Fund may invest in small, medium and large companies, but tends to focus on medium to large companies. It may invest up to approximately 49% of its assets in foreign securities and may hold cash and invest in fixed-income securities.

    Risk The risks associated with investing in the 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 medium- to long-term investors who want to gain Canadian and foreign equity exposure, can handle the volatility of returns generally associated with equity investments and are willing to accept a medium level of risk. The suitability of the investment has not changed from what has been disclosed in the prospectus.

    Results of Operations: Fidelity Canadian Growth Company Class, Series B, returned 38.9%, after fees and expenses, for the one-year period ended November 30, 2020. The net returns of the other series of this Fund are similar to those of Series B, except for differences attributable to expense structures. During the review period, Canadian equities, as represented by the S&P/TSX Composite Index, returned 4.3% (in Canadian dollar terms).

    Market overview:

    Canadian markets gained over the review period. A combination of central bank and government stimulus measures, advances in potential treatments for COVID-19 and optimism about global economic recovery boosted investor sentiment. In an effort to support the Canadian economy during the COVID-19 pandemic, the Bank of Canada (BoC) reduced interest rates to levels last seen during the global financial crisis in 2008–2009. In March, the BoC reduced its overnight rate to 0.25% from 1.75%, where it sat at the end of 2019, and unveiled a large- scale quantitative easing program. On the economic front, GDP growth recovered sharply in the third quarter of 2020, reflecting the reopening of the economy. The unemployment rate rose to a record high of 13.7% in May, but improved to 8.9% in October as economy activity picked up.

    Factors affecting performance:

    The Fund’s benchmark returned 7.5% for the review period. The Fund’s benchmark is a blend of the S&P/TSX Capped Composite Index (70.0%) and the S&P 500 Index (30.0%).

    The Fund outperformed its benchmark, primarily due to the Underlying Fund’s exposure to certain stocks in the information technology sector, such as e-commerce company Shopify and U.S.-based communications technology company Zoom Video Communications. Exposure to certain stocks in the consumer discretionary sector, such as U.S.-based e-commerce website Etsy and U.S.-based interactive fitness platform operator and exercise equipment company Peloton Interactive, also contributed to relative returns.

    In contrast, investments in certain stocks in the energy sector, such as integrated energy company Suncor Energy and oil and gas producer Canadian Natural Resources, detracted from rela- tive returns. In the financials sector, an investment in insurance firm Manulife Financial and a lower-than-benchmark exposure to banking firm Royal Bank of Canada detracted from relative returns. Among other sectors, an investment in pharmaceutical company Bausch Health detracted from relative performance.

    At the end of review period, the Underlying Fund had no exposure to Zoom Video Communications, Peloton Interactive or Bausch Health.

    Portfolio changes:

    During the review period, the Underlying Fund’s exposure to the industrials and energy sectors was increased. In the industrials sector, the portfolio manager initiated a position in U.S.-based solar panel and battery storage company Sunrun. The portfolio manager believes that the company has a favourable market position, and that investors’ increasing awareness of environ- mental, social and governance issues will be positive for demand. In the energy sector, a position was initiated in integrated energy company Suncor Energy, which the portfolio manager believes to be attractively valued.

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    Fidelity Canadian Growth Company Class of the Fidelity Capital Structure Corp.

    Management Discussion of Fund Performance – continued

    In contrast, exposure to the financials and information technology sectors was decreased. In the financials sector, the portfolio manager reduced exposure to banking firms Royal Bank of Canada and Toronto-Dominion Bank, preferring to invest in other opportunities with more attractive risk/reward potentials in the portfolio manager’s view. In the information technology sector, exposure was reduced to U.S.-based software company Elastic NV, and a position in U.S.-based communications technology company Zoom Communications was exited, after the portfolio manager opted to realize profits after share prices rallied during the review period.

    At the end of the review period, the Underlying Fund had its largest absolute exposure to the industrials sector, followed by the information technology sector. The Underlying Fund diverged the most from the benchmark sector weightings by having more exposure to the industrials sector and less exposure to the financials sector.

    Recent Developments As the trajectory of global rates of COVID-19 infection remains uncertain, and the timeframe and speed of governmental easing of social distancing measures and travel restrictions unclear, it is not possible to predict the further impact of the COVID-19 pandemic on global capital markets. The prospectus has been updated to in