UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-03114
Fidelity Select Portfolios
(Exact name of registrant as specified in charter)
245 Summer St., Boston, Massachusetts 02210
(Address of principal executive offices) (Zip code)
Cynthia Lo Bessette, Secretary
245 Summer St.
Boston, Massachusetts 02210
(Name and address of agent for service)
Registrant's telephone number, including area code:
617-563-7000
Date of fiscal year end: | February 29 |
Date of reporting period: | February 29, 2020 |
Item 1.
Reports to Stockholders
Fidelity® Select Portfolios®
Consumer Discretionary Sector
Automotive Portfolio
Communication Services Portfolio
Construction and Housing Portfolio
Consumer Discretionary Portfolio
Leisure Portfolio
Retailing Portfolio
February 29, 2020
Includes Fidelity and Fidelity Advisor share classes
See the inside front cover for important information about access to your fund’s shareholder reports.
Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of a fund’s shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports from the fund or from your financial intermediary, such as a financial advisor, broker-dealer or bank. Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from a fund electronically, by contacting your financial intermediary. For Fidelity customers, visit Fidelity's web site or call Fidelity using the contact information listed below.
You may elect to receive all future reports in paper free of charge. If you wish to continue receiving paper copies of your shareholder reports, you may contact your financial intermediary or, if you are a Fidelity customer, visit Fidelity’s website, or call Fidelity at the applicable toll-free number listed below. Your election to receive reports in paper will apply to all funds held with the fund complex/your financial intermediary.
| Account Type | Website | Phone Number |
| Brokerage, Mutual Fund, or Annuity Contracts: | fidelity.com/mailpreferences | 1-800-343-3548 |
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Contents
|
Automotive Portfolio | |
|
Communication Services Portfolio | |
|
Construction and Housing Portfolio | |
|
Consumer Discretionary Portfolio | |
|
Leisure Portfolio | |
|
Retailing Portfolio | |
|
Board Approval of Investment Advisory Contracts and Management Fees | |
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov.
You may also call 1-800-544-8544 if you’re an individual investing directly with Fidelity, call 1-800-835-5092 if you’re a plan sponsor or participant with Fidelity as your recordkeeper or call 1-877-208-0098 on institutional accounts or if you’re an advisor or invest through one to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third-party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company. © 2020 FMR LLC. All rights reserved.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the Funds. This report is not authorized for distribution to prospective investors in the Funds unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-PORT. Forms N-PORT are available on the SEC’s web site at http://www.sec.gov. A fund's Forms N-PORT may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330.
For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com, http://www.institutional.fidelity.com, or http://www.401k.com, as applicable.
NOT FDIC INSURED •MAY LOSE VALUE •NO BANK GUARANTEE
Neither the Funds nor Fidelity Distributors Corporation is a bank.
Note to shareholders:
(No Action is Required by You)
As part of a regular review of its organizational structure, Fidelity has decided to merge certain entities to streamline operations, increase efficiency, simplify reporting, and reduce legal, compliance, and accounting complexity and costs. In separate events, Fidelity has merged four of its investment advisers and two of its broker-dealers.
Effective on or about January 1, 2020, following any required regulatory notices and approvals:
Investment advisers Fidelity Investments Money Management, Inc., FMR Co., Inc., and Fidelity SelectCo, LLC, merged with and into Fidelity Management & Research Company. In connection with the merger transactions, the resulting, merged investment adviser was then redomiciled from Massachusetts to Delaware, changed its corporate structure from a corporation to a limited liability company, and changed its name to “Fidelity Management & Research Company LLC”.
Broker-dealer Fidelity Distributors Corporation merged with and into Fidelity Investments Institutional Services Company, Inc. (“FIISC”). FIISC was then redomiciled from Massachusetts to Delaware, changed its corporate structure from a corporation to a limited liability company, and changed its name to “Fidelity Distributors Company LLC”.
These mergers are not expected to affect fund shareholders or Fidelity clients, nor are they expected to result in any changes to the day-to-day management of Fidelity’s brokerage services, the Fidelity funds, their investment policies and practices, their portfolio management teams, or the funds’ expenses.
Early in 2020, the outbreak and spread of a new coronavirus emerged as a public health emergency that had a major influence on financial markets, primarily based on its impact on the global economy and corporate earnings. The virus causes a respiratory disease known as COVID-19. On March 11, the World Health Organization declared the COVID-19 outbreak a pandemic, citing sustained risk of further global spread.
In the weeks following the end of this reporting period, as the crisis worsened, we witnessed an escalating human tragedy with wide-scale social and economic consequences from coronavirus-containment measures. The outbreak of COVID-19 prompted a number of measures to limit the spread, including travel and border restrictions, quarantines, and restrictions on large gatherings. In turn, these resulted in lower consumer activity, diminished demand for a wide range of products and services, disruption in manufacturing and supply chains, and – given the wide variability in outcomes regarding the outbreak – significant market uncertainty and volatility. Amid the turmoil, the U.S. government took unprecedented action – in concert with the U.S. Federal Reserve and central banks around the world – to help support consumers, businesses, and the broader economy, and to limit disruption to the financial system.
The situation continues to unfold, and the extent and duration of its impact on financial markets and the economy remain highly uncertain. Extreme events such as the coronavirus crisis are “exogenous shocks” that can have significant adverse effects on mutual funds and their investments. Although multiple asset classes may be affected by market disruption, the duration and impact may not be the same for all types of assets.
Fidelity is committed to helping you stay informed amid news about COVID-19 and during increased market volatility, and we’re taking extra steps to be responsive to customer needs. We encourage you to visit our websites, where we offer ongoing updates, commentary, and analysis on the markets and our funds.
Automotive Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The hypothetical investment and the average annual total returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund’s total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
| For the periods ended February 29, 2020 | Past 1 year | Past 5 years | Past 10 years |
| Automotive Portfolio | 9.14% | 2.98% | 9.66% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Automotive Portfolio on February 28, 2010.
The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
| Period Ending Values | ||
|
| $25,144 | Automotive Portfolio |
|
| $32,918 | S&P 500® Index |
Automotive Portfolio
Management's Discussion of Fund Performance
Market Recap: U.S. stocks stalled to begin the new year and declined in late February, as the outbreak and spread of the new coronavirus threatened to hamper global economic growth and corporate earnings. For the 12 months ending February 29, 2020, the U.S. equity bellwether S&P 500® index gained 8.19%. The period began with equities rising amid upbeat company earnings and signs the U.S. Federal Reserve may pause on rates. The uptrend extended until May, when the index dipped as trade talks between the U.S. and China broke down. The bull market roared back to record a series of highs in July, when the Fed cut interest rates for the first time since 2008. Volatility intensified in August, as the Treasury yield curve inverted, which some investors viewed as a sign the U.S. economy could be heading for recession. But the market proved resilient, hitting a new high on October 30, when the Fed lowered rates for the third time in 2019, and moving higher through December 31. Following a roughly flat January, stocks sank in late February, after a surge in coronavirus cases outside China created considerable uncertainty and pushed investors to safer asset classes. By sector, information technology (+27%) led the way by a wide margin, followed by utilities and communication services (+13% each). In contrast, energy (-25%) was by far the weakest category, struggling due to sluggish oil prices. Other notable laggards included materials and industrials (-2% each). Comments from Portfolio Manager Elliot Mattingly: For the fiscal year, the fund gained 9.14%, outpacing the 6.04% advance of the FactSet Automotive Linked Index, as well as the broad-based S&P 500® index. The fund’s outperformance of the FactSet industry index was due to favorable positioning within the top-performing diversified support services group. Strong stock picks among automobile manufacturers, as well as auto parts & equipment companies, also helped. Specifically, the leading individual relative contributor was an overweight stake in electric vehicle maker Tesla (+108%), the portfolio’s largest holding at period end. Further bolstering relative performance was the fund’s timely positioning in KAR Auction Services (+24%). In June, the firm’s salvage auction business was spun-off, creating a new, publicly traded company formally named IAA that continued to be held in the portfolio as of February 29. What remained of Kar Auction Services was its less-attractive wholesale auction segment of the company, which was sold prior to period end. An overweighting in salvage auction company Copart (+43%) also added value the past 12 months and was a top-10 holding at the conclusion of the period. In contrast, lackluster investment choices within the construction machinery & heavy trucks industry group outweighed the impact of a beneficial overweighting in this strong-performing category. A larger-than-index position in shares of Lear (-25%), a maker of automotive seats and wiring harnesses, was the biggest stock-specific detractor. The fund’s overweighting in auto manufacturer General Motors (-20%) and an out-of-index stake in Allison Transmission Holdings (-17%) also weighed on the portfolio’s relative result. Lear, General Motors and Allison all continued to be held in portfolio fund at the end of the fiscal year.The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Automotive Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 29, 2020
| % of fund's net assets | |
| Tesla, Inc. | 10.7 |
| General Motors Co. | 10.4 |
| Toyota Motor Corp. sponsored ADR | 9.9 |
| Honda Motor Co. Ltd. sponsored ADR | 8.3 |
| Aptiv PLC | 5.4 |
| Copart, Inc. | 5.2 |
| Ford Motor Co. | 4.9 |
| O'Reilly Automotive, Inc. | 4.7 |
| AutoZone, Inc. | 4.4 |
| Ferrari NV | 3.4 |
| 67.3 |
Top Industries (% of fund's net assets)
| As of February 29, 2020 | ||
| Automobiles | 51.4% | |
| Auto Components | 16.0% | |
| Specialty Retail | 15.8% | |
| Commercial Services & Supplies | 7.3% | |
| Distributors | 5.3% | |
| All Others* | 4.2% | |
* Includes short-term investments and net other assets (liabilities).
Automotive Portfolio
Schedule of Investments February 29, 2020
Showing Percentage of Net Assets
| Common Stocks - 99.4% | |||
| Shares | Value | ||
| Auto Components - 16.0% | |||
| Auto Parts & Equipment - 15.7% | |||
| Aptiv PLC | 25,059 | $1,957,358 | |
| Autoliv, Inc. | 3,815 | 254,575 | |
| BorgWarner, Inc. | 21,615 | 683,034 | |
| Gentex Corp. | 28,067 | 749,389 | |
| Lear Corp. | 8,202 | 912,062 | |
| Magna International, Inc. Class A (sub. vtg.) | 25,367 | 1,154,532 | |
| 5,710,950 | |||
| Tires & Rubber - 0.3% | |||
| The Goodyear Tire & Rubber Co. | 11,242 | 108,879 | |
| TOTAL AUTO COMPONENTS | 5,819,829 | ||
| Automobiles - 51.0% | |||
| Automobile Manufacturers - 51.0% | |||
| Ferrari NV | 7,808 | 1,231,712 | |
| Fiat Chrysler Automobiles NV | 45,726 | 568,831 | |
| Ford Motor Co. | 255,604 | 1,779,004 | |
| General Motors Co. | 124,388 | 3,793,834 | |
| Honda Motor Co. Ltd. sponsored ADR | 117,807 | 3,022,928 | |
| Subaru Corp. | 10,471 | 254,300 | |
| Tata Motors Ltd. sponsored ADR (a) | 49,000 | 448,840 | |
| Tesla, Inc. (a) | 5,848 | 3,906,403 | |
| Toyota Motor Corp. sponsored ADR | 27,626 | 3,612,100 | |
| 18,617,952 | |||
| Commercial Services & Supplies - 7.3% | |||
| Diversified Support Services - 7.3% | |||
| Copart, Inc. (a) | 22,599 | 1,909,164 | |
| IAA Spinco, Inc. (a) | 17,607 | 752,171 | |
| 2,661,335 | |||
| Distributors - 5.3% | |||
| Distributors - 5.3% | |||
| Genuine Parts Co. | 9,276 | 809,238 | |
| LKQ Corp. (a) | 38,605 | 1,141,936 | |
| 1,951,174 | |||
| Machinery - 1.3% | |||
| Construction Machinery & Heavy Trucks - 1.3% | |||
| Allison Transmission Holdings, Inc. | 11,987 | 486,672 | |
| Road & Rail - 2.7% | |||
| Trucking - 2.7% | |||
| Lyft, Inc. | 12,372 | 471,621 | |
| Uber Technologies, Inc. | 15,044 | 509,540 | |
| 981,161 | |||
| Specialty Retail - 15.8% | |||
| Automotive Retail - 15.8% | |||
| Advance Auto Parts, Inc. | 4,052 | 538,835 | |
| AutoZone, Inc. (a) | 1,560 | 1,610,716 | |
| CarMax, Inc. (a) | 10,463 | 913,525 | |
| Carvana Co. Class A (a)(b) | 6,157 | 510,477 | |
| Lithia Motors, Inc. Class A (sub. vtg.) | 3,817 | 454,834 | |
| O'Reilly Automotive, Inc. (a) | 4,662 | 1,718,973 | |
| 5,747,360 | |||
| TOTAL COMMON STOCKS | |||
| (Cost $27,261,726) | 36,265,483 | ||
| Nonconvertible Preferred Stocks - 0.4% | |||
| Automobiles - 0.4% | |||
| Automobile Manufacturers - 0.4% | |||
| Volkswagen AG | |||
| (Cost $120,359) | 875 | 145,256 | |
| Money Market Funds - 1.6% | |||
| Fidelity Cash Central Fund 1.60% (c) | 48,965 | 48,975 | |
| Fidelity Securities Lending Cash Central Fund 1.60% (c)(d) | 535,891 | 535,945 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $584,920) | 584,920 | ||
| TOTAL INVESTMENT IN SECURITIES - 101.4% | |||
| (Cost $27,967,005) | 36,995,659 | ||
| NET OTHER ASSETS (LIABILITIES) - (1.4)% | (515,879) | ||
| NET ASSETS - 100% | $36,479,780 |
Legend
(a) Non-income producing
(b) Security or a portion of the security is on loan at period end.
(c) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request.
(d) Investment made with cash collateral received from securities on loan.
Affiliated Central Funds
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:
| Fund | Income earned |
| Fidelity Cash Central Fund | $5,291 |
| Fidelity Securities Lending Cash Central Fund | 18,520 |
| Total | $23,811 |
Amounts in the income column in the above table include any capital gain distributions from underlying funds, which are presented in the corresponding line-item in the Statement of Operations, if applicable. Amount for Fidelity Securities Lending Cash Central Fund represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities.
Investment Valuation
The following is a summary of the inputs used, as of February 29, 2020, 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 below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.
| Valuation Inputs at Reporting Date: | ||||
| Description | Total | Level 1 | Level 2 | Level 3 |
| Investments in Securities: | ||||
| Common Stocks | $36,265,483 | $36,265,483 | $-- | $-- |
| Nonconvertible Preferred Stocks | 145,256 | -- | 145,256 | -- |
| Money Market Funds | 584,920 | 584,920 | -- | -- |
| Total Investments in Securities: | $36,995,659 | $36,850,403 | $145,256 | $-- |
Other Information
Distribution of investments by country or territory of incorporation, as a percentage of Total Net Assets, is as follows (Unaudited):
| United States of America | 66.0% |
| Japan | 18.9% |
| Bailiwick of Jersey | 5.4% |
| Netherlands | 4.9% |
| Canada | 3.2% |
| India | 1.2% |
| Others (Individually Less Than 1%) | 0.4% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Automotive Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2020 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $489,169) — See accompanying schedule: Unaffiliated issuers (cost $27,382,085) | $36,410,739 | |
| Fidelity Central Funds (cost $584,920) | 584,920 | |
| Total Investment in Securities (cost $27,967,005) | $36,995,659 | |
| Receivable for investments sold | 3,015,267 | |
| Receivable for fund shares sold | 32,277 | |
| Dividends receivable | 70,564 | |
| Distributions receivable from Fidelity Central Funds | 695 | |
| Prepaid expenses | 383 | |
| Other receivables | 2,768 | |
| Total assets | 40,117,613 | |
| Liabilities | ||
| Payable for investments purchased | $2,841,100 | |
| Payable for fund shares redeemed | 199,467 | |
| Accrued management fee | 17,884 | |
| Other affiliated payables | 8,200 | |
| Other payables and accrued expenses | 35,757 | |
| Collateral on securities loaned | 535,425 | |
| Total liabilities | 3,637,833 | |
| Net Assets | $36,479,780 | |
| Net Assets consist of: | ||
| Paid in capital | $24,895,564 | |
| Total accumulated earnings (loss) | 11,584,216 | |
| Net Assets | $36,479,780 | |
| Net Asset Value, offering price and redemption price per share ($36,479,780 ÷ 1,045,014 shares) | $34.91 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 29, 2020 | ||
| Investment Income | ||
| Dividends | $743,154 | |
| Special dividends | 95,800 | |
| Income from Fidelity Central Funds (including $18,520 from security lending) | 23,811 | |
| Total income | 862,765 | |
| Expenses | ||
| Management fee | $199,273 | |
| Transfer agent fees | 85,553 | |
| Accounting and security lending fees | 14,643 | |
| Custodian fees and expenses | 7,398 | |
| Independent trustees' fees and expenses | 202 | |
| Registration fees | 24,031 | |
| Audit | 39,143 | |
| Legal | 650 | |
| Miscellaneous | 381 | |
| Total expenses before reductions | 371,274 | |
| Expense reductions | (2,054) | |
| Total expenses after reductions | 369,220 | |
| Net investment income (loss) | 493,545 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 4,079,996 | |
| Fidelity Central Funds | 260 | |
| Foreign currency transactions | (56) | |
| Total net realized gain (loss) | 4,080,200 | |
| Change in net unrealized appreciation (depreciation) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | (1,479,720) | |
| Assets and liabilities in foreign currencies | (100) | |
| Total change in net unrealized appreciation (depreciation) | (1,479,820) | |
| Net gain (loss) | 2,600,380 | |
| Net increase (decrease) in net assets resulting from operations | $3,093,925 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 29, 2020 | Year ended February 28, 2019 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $493,545 | $448,747 |
| Net realized gain (loss) | 4,080,200 | 1,271,345 |
| Change in net unrealized appreciation (depreciation) | (1,479,820) | (3,853,613) |
| Net increase (decrease) in net assets resulting from operations | 3,093,925 | (2,133,521) |
| Distributions to shareholders | (1,655,954) | (3,068,342) |
| Share transactions | ||
| Proceeds from sales of shares | 14,390,055 | 11,884,432 |
| Reinvestment of distributions | 1,571,589 | 2,935,846 |
| Cost of shares redeemed | (21,701,036) | (24,976,652) |
| Net increase (decrease) in net assets resulting from share transactions | (5,739,392) | (10,156,374) |
| Total increase (decrease) in net assets | (4,301,421) | (15,358,237) |
| Net Assets | ||
| Beginning of period | 40,781,201 | 56,139,438 |
| End of period | $36,479,780 | $40,781,201 |
| Other Information | ||
| Shares | ||
| Sold | 396,128 | 351,778 |
| Issued in reinvestment of distributions | 42,404 | 87,676 |
| Redeemed | (618,672) | (710,478) |
| Net increase (decrease) | (180,140) | (271,024) |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights
Automotive Portfolio
| Years ended February 28, | 2020 A | 2019 | 2018 | 2017 | 2016 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $33.29 | $37.52 | $36.78 | $33.72 | $48.82 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .46C | .36 | .39D | .33 | .65 |
| Net realized and unrealized gain (loss) | 2.67E | (2.15) | 6.11 | 5.22 | (9.37) |
| Total from investment operations | 3.13 | (1.79) | 6.50 | 5.55 | (8.72) |
| Distributions from net investment income | (.49)F | (.38) | (.20) | (.52) | (.45) |
| Distributions from net realized gain | (1.02)F | (2.06) | (5.56) | (1.98) | (5.93) |
| Total distributions | (1.51) | (2.44) | (5.76) | (2.49)G | (6.38) |
| Redemption fees added to paid in capitalB | – | – | –H | –H | –H |
| Net asset value, end of period | $34.91 | $33.29 | $37.52 | $36.78 | $33.72 |
| Total ReturnI | 9.14%E | (4.66)% | 19.08% | 16.80% | (20.00)% |
| Ratios to Average Net AssetsJ,K | |||||
| Expenses before reductions | 1.00% | .97% | .97% | .96% | .87% |
| Expenses net of fee waivers, if any | 1.00% | .97% | .96% | .96% | .87% |
| Expenses net of all reductions | .99% | .97% | .96% | .95% | .86% |
| Net investment income (loss) | 1.33%C | 1.04% | 1.04%D | .92% | 1.49% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $36,480 | $40,781 | $56,139 | $54,069 | $65,745 |
| Portfolio turnover rateL | 45% | 31% | 117% | 83% | 80% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Net investment income per share reflects a large, non-recurring dividend which amounted to $.09 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been 1.07%.
D Net investment income per share reflects a large, non-recurring dividend which amounted to $.08 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .83%.
E Net realized and unrealized gain (loss) per share reflects proceeds received from litigation which amounted to $.19 per share. Excluding these litigation proceeds, the total return would have been 8.58%.
F The amounts shown reflect certain reclassifications related to book to tax differences that were made in the year shown.
G Total distributions of $2.49 per share is comprised of distributions from net investment income of $.515 and distributions from net realized gain of $1.975 per share.
H Amount represents less than $.005 per share.
I Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
J Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
K Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
L Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the financial statements.
Communication Services Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The hypothetical investment and the average annual total returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund’s total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
| For the periods ended February 29, 2020 | Past 1 year | Past 5 years | Past 10 years |
| Class A (incl. 5.75% sales charge) | 5.47% | 6.06% | 14.01% |
| Class M (incl. 3.50% sales charge) | 7.67% | 6.48% | 14.23% |
| Class C (incl. contingent deferred sales charge) | 10.20% | 7.11% | 14.57% |
| Communication Services Portfolio | 12.22% | 7.40% | 14.72% |
| Class I | 12.22% | 7.40% | 14.72% |
| Class Z | 12.38% | 7.43% | 14.74% |
Class C shares' contingent deferred sales charges included in the past one year, past five years and past ten years total return figures are 1%, 0% and 0%, respectively.
The initial offering of Class Z shares took place on November 30, 2018. Returns prior to November 30, 2018, are those of Class I.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Communication Services Portfolio, a class of the fund, on February 28, 2010.
The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
| Period Ending Values | ||
|
| $39,488 | Communication Services Portfolio |
|
| $32,918 | S&P 500® Index |
Communication Services Portfolio
Management's Discussion of Fund Performance
Market Recap: U.S. stocks stalled to begin the new year and declined in late February, as the outbreak and spread of the new coronavirus threatened to hamper global economic growth and corporate earnings. For the 12 months ending February 29, 2020, the U.S. equity bellwether S&P 500® index gained 8.19%. The period began with equities rising amid upbeat company earnings and signs the U.S. Federal Reserve may pause on rates. The uptrend extended until May, when the index dipped as trade talks between the U.S. and China broke down. The bull market roared back to record a series of highs in July, when the Fed cut interest rates for the first time since 2008. Volatility intensified in August, as the Treasury yield curve inverted, which some investors viewed as a sign the U.S. economy could be heading for recession. But the market proved resilient, hitting a new high on October 30, when the Fed lowered rates for the third time in 2019, and moving higher through December 31. Following a roughly flat January, stocks sank in late February, after a surge in coronavirus cases outside China created considerable uncertainty and pushed investors to safer asset classes. By sector, information technology (+27%) led the way by a wide margin, followed by utilities and communication services (+13% each). In contrast, energy (-25%) was by far the weakest category, struggling due to sluggish oil prices. Other notable laggards included materials and industrials (-2% each). Comments from Portfolio Manager Matthew Drukker: For the fiscal year, the fund's share classes gained roughly 12%, notably outpacing the 9.62% result of the sector benchmark, the MSCI U.S. IMI Communication Services 25/50 Index, and the S&P 500®. Communication services stocks benefited from their relatively limited exposure to global trade uncertainty this year. Many also capitalized on digital growth trends that drove strong business fundamentals the past 12 months. Versus the sector benchmark, both stock and market selection added value. Stock picking in the interactive home entertainment segment contributed more than any other group. Within this segment, an outsized stake in video game developer Activision Blizzard (+39%) benefited from the success of its franchise games, as well as developments in its free-to-play and mobile business lines. Additionally, non-index shares of Beijing-based Meituan Dianping (+40%), a holding company that owns mobile-centric dining services akin to those offered by U.S.-based OpenTable, GrubHub and Yelp, also gained strongly. I sold Meituan Dianping by period end to take profits. Conversely, untimely ownership of Sinclair Broadcast Group, which owns local television networks, dragged on the fund's relative return, as did a larger-than-index stake in World Wrestling Entertainment.The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Communication Services Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 29, 2020
| % of fund's net assets | |
| Alphabet, Inc. Class A | 24.2 |
| Facebook, Inc. Class A | 17.3 |
| Activision Blizzard, Inc. | 7.8 |
| The Walt Disney Co. | 4.8 |
| Netflix, Inc. | 4.7 |
| Liberty Broadband Corp. Class A | 4.7 |
| Verizon Communications, Inc. | 4.4 |
| Liberty Global PLC Class C | 3.9 |
| Lyft, Inc. | 3.1 |
| T-Mobile U.S., Inc. | 2.6 |
| 77.5 |
Top Industries (% of fund's net assets)
| As of February 29, 2020 | ||
| Interactive Media & Services | 44.3% | |
| Entertainment | 24.0% | |
| Media | 17.8% | |
| Diversified Telecommunication Services | 5.1% | |
| Wireless Telecommunication Services | 4.1% | |
| All Others* | 4.7% | |
* Includes short-term investments and net other assets (liabilities).
Communication Services Portfolio
Schedule of Investments February 29, 2020
Showing Percentage of Net Assets
| Common Stocks - 99.4% | |||
| Shares | Value | ||
| Communications Equipment - 1.0% | |||
| Communications Equipment - 1.0% | |||
| EchoStar Holding Corp. Class A (a) | 169,200 | $5,908,464 | |
| Diversified Telecommunication Services - 5.1% | |||
| Alternative Carriers - 0.7% | |||
| GCI Liberty, Inc. (a) | 28,132 | 1,944,203 | |
| Vonage Holdings Corp. (a) | 275,500 | 2,468,480 | |
| 4,412,683 | |||
| Integrated Telecommunication Services - 4.4% | |||
| Verizon Communications, Inc. | 482,400 | 26,126,784 | |
| TOTAL DIVERSIFIED TELECOMMUNICATION SERVICES | 30,539,467 | ||
| Entertainment - 24.0% | |||
| Interactive Home Entertainment - 12.9% | |||
| Activision Blizzard, Inc. | 799,100 | 46,451,683 | |
| DouYu International Holdings Ltd. ADR | 579,465 | 4,502,443 | |
| Electronic Arts, Inc. (a) | 132,500 | 13,431,525 | |
| Take-Two Interactive Software, Inc. (a) | 89,300 | 9,597,964 | |
| Zynga, Inc. (a) | 430,400 | 2,887,984 | |
| 76,871,599 | |||
| Movies & Entertainment - 11.1% | |||
| Lions Gate Entertainment Corp.: | |||
| Class A (a) | 34,500 | 274,275 | |
| Class B (a) | 282,834 | 2,092,972 | |
| Netflix, Inc. (a) | 75,800 | 27,972,474 | |
| Spotify Technology SA (a) | 33,800 | 4,634,656 | |
| The Walt Disney Co. | 243,871 | 28,691,423 | |
| World Wrestling Entertainment, Inc. Class A | 58,600 | 2,740,722 | |
| 66,406,522 | |||
| TOTAL ENTERTAINMENT | 143,278,121 | ||
| Interactive Media & Services - 44.3% | |||
| Interactive Media & Services - 44.3% | |||
| Alphabet, Inc. Class A (a) | 107,600 | 144,103,300 | |
| ANGI Homeservices, Inc. Class A (a)(b) | 1,091,300 | 7,780,969 | |
| Facebook, Inc. Class A (a) | 534,200 | 102,817,474 | |
| Match Group, Inc. (a)(b) | 18,200 | 1,183,000 | |
| Twitter, Inc. (a) | 151,400 | 5,026,480 | |
| Zillow Group, Inc. Class A (a) | 51,100 | 2,844,737 | |
| 263,755,960 | |||
| Media - 17.8% | |||
| Broadcasting - 4.9% | |||
| CBS Corp. Class B | 380,800 | 9,371,488 | |
| Liberty Media Corp.: | |||
| Liberty Media Class A (a) | 250,962 | 9,408,565 | |
| Liberty SiriusXM Series A (a) | 129,700 | 5,793,699 | |
| Sinclair Broadcast Group, Inc. Class A | 200,200 | 4,646,642 | |
| 29,220,394 | |||
| Cable & Satellite - 12.9% | |||
| Altice U.S.A., Inc. Class A (a) | 120,500 | 3,116,130 | |
| Comcast Corp. Class A | 367,200 | 14,845,896 | |
| DISH Network Corp. Class A (a) | 105,639 | 3,541,019 | |
| Liberty Broadband Corp. Class A (a) | 223,523 | 27,645,325 | |
| Liberty Global PLC Class C (a) | 1,253,400 | 23,300,706 | |
| Liberty Latin America Ltd. Class C (a) | 190,800 | 2,898,252 | |
| SES SA (France) (depositary receipt) | 105,700 | 1,211,995 | |
| 76,559,323 | |||
| TOTAL MEDIA | 105,779,717 | ||
| Road & Rail - 3.1% | |||
| Trucking - 3.1% | |||
| Lyft, Inc. | 483,300 | 18,423,396 | |
| Wireless Telecommunication Services - 4.1% | |||
| Wireless Telecommunication Services - 4.1% | |||
| Millicom International Cellular SA | 37,600 | 1,711,176 | |
| Sprint Corp. (a) | 771,211 | 7,087,429 | |
| T-Mobile U.S., Inc. (a) | 174,600 | 15,741,936 | |
| 24,540,541 | |||
| TOTAL COMMON STOCKS | |||
| (Cost $482,443,505) | 592,225,666 | ||
| Money Market Funds - 1.6% | |||
| Fidelity Securities Lending Cash Central Fund 1.60% (c)(d) | |||
| (Cost $9,111,739) | 9,110,828 | 9,111,739 | |
| TOTAL INVESTMENT IN SECURITIES - 101.0% | |||
| (Cost $491,555,244) | 601,337,405 | ||
| NET OTHER ASSETS (LIABILITIES) - (1.0)% | (5,662,157) | ||
| NET ASSETS - 100% | $595,675,248 |
Legend
(a) Non-income producing
(b) Security or a portion of the security is on loan at period end.
(c) Investment made with cash collateral received from securities on loan.
(d) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request.
Affiliated Central Funds
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:
| Fund | Income earned |
| Fidelity Cash Central Fund | $112,503 |
| Fidelity Securities Lending Cash Central Fund | 116,550 |
| Total | $229,053 |
Amounts in the income column in the above table include any capital gain distributions from underlying funds, which are presented in the corresponding line-item in the Statement of Operations, if applicable. Amount for Fidelity Securities Lending Cash Central Fund represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities.
Investment Valuation
The following is a summary of the inputs used, as of February 29, 2020, 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 below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.
| Valuation Inputs at Reporting Date: | ||||
| Description | Total | Level 1 | Level 2 | Level 3 |
| Investments in Securities: | ||||
| Common Stocks | $592,225,666 | $591,013,671 | $1,211,995 | $-- |
| Money Market Funds | 9,111,739 | 9,111,739 | -- | -- |
| Total Investments in Securities: | $601,337,405 | $600,125,410 | $1,211,995 | $-- |
See accompanying notes which are an integral part of the financial statements.
Communication Services Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2020 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $8,956,756) — See accompanying schedule: Unaffiliated issuers (cost $482,443,505) | $592,225,666 | |
| Fidelity Central Funds (cost $9,111,739) | 9,111,739 | |
| Total Investment in Securities (cost $491,555,244) | $601,337,405 | |
| Receivable for investments sold | 11,742,384 | |
| Receivable for fund shares sold | 1,060,106 | |
| Distributions receivable from Fidelity Central Funds | 24,584 | |
| Prepaid expenses | 3,734 | |
| Other receivables | 5,272 | |
| Total assets | 614,173,485 | |
| Liabilities | ||
| Payable to custodian bank | $1,041,427 | |
| Payable for investments purchased | 3,391,393 | |
| Payable for fund shares redeemed | 4,500,980 | |
| Accrued management fee | 292,177 | |
| Distribution and service plan fees payable | 5,118 | |
| Other affiliated payables | 113,113 | |
| Other payables and accrued expenses | 43,704 | |
| Collateral on securities loaned | 9,110,325 | |
| Total liabilities | 18,498,237 | |
| Net Assets | $595,675,248 | |
| Net Assets consist of: | ||
| Paid in capital | $475,585,897 | |
| Total accumulated earnings (loss) | 120,089,351 | |
| Net Assets | $595,675,248 | |
| Net Asset Value and Maximum Offering Price | ||
| Class A: | ||
| Net Asset Value and redemption price per share ($9,947,014 ÷ 164,073 shares)(a) | $60.63 | |
| Maximum offering price per share (100/94.25 of $60.63) | $64.33 | |
| Class M: | ||
| Net Asset Value and redemption price per share ($2,263,711 ÷ 37,402 shares)(a) | $60.52 | |
| Maximum offering price per share (100/96.50 of $60.52) | $62.72 | |
| Class C: | ||
| Net Asset Value and offering price per share ($1,982,191 ÷ 32,928 shares)(a) | $60.20 | |
| Communication Services: | ||
| Net Asset Value, offering price and redemption price per share ($577,156,767 ÷ 9,489,834 shares) | $60.82 | |
| Class I: | ||
| Net Asset Value, offering price and redemption price per share ($2,492,813 ÷ 40,998 shares) | $60.80 | |
| Class Z: | ||
| Net Asset Value, offering price and redemption price per share ($1,832,752 ÷ 30,120 shares) | $60.85 |
(a) Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 29, 2020 | ||
| Investment Income | ||
| Dividends | $3,451,624 | |
| Income from Fidelity Central Funds (including $116,550 from security lending) | 229,053 | |
| Total income | 3,680,677 | |
| Expenses | ||
| Management fee | $3,337,779 | |
| Transfer agent fees | 1,120,685 | |
| Distribution and service plan fees | 29,135 | |
| Accounting and security lending fees | 228,790 | |
| Custodian fees and expenses | 15,609 | |
| Independent trustees' fees and expenses | 3,324 | |
| Registration fees | 109,915 | |
| Audit | 45,346 | |
| Legal | 1,654 | |
| Interest | 2,721 | |
| Miscellaneous | 4,313 | |
| Total expenses before reductions | 4,899,271 | |
| Expense reductions | (60,581) | |
| Total expenses after reductions | 4,838,690 | |
| Net investment income (loss) | (1,158,013) | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 57,250,691 | |
| Fidelity Central Funds | 1,478 | |
| Foreign currency transactions | 2,429 | |
| Total net realized gain (loss) | 57,254,598 | |
| Change in net unrealized appreciation (depreciation) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 13,008,696 | |
| Fidelity Central Funds | (65) | |
| Total change in net unrealized appreciation (depreciation) | 13,008,631 | |
| Net gain (loss) | 70,263,229 | |
| Net increase (decrease) in net assets resulting from operations | $69,105,216 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 29, 2020 | Year ended February 28, 2019 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $(1,158,013) | $844,441 |
| Net realized gain (loss) | 57,254,598 | 199,087,558 |
| Change in net unrealized appreciation (depreciation) | 13,008,631 | (164,960,880) |
| Net increase (decrease) in net assets resulting from operations | 69,105,216 | 34,971,119 |
| Distributions to shareholders | (180,128,842) | (67,435,980) |
| Share transactions - net increase (decrease) | 141,718,647 | 88,069,949 |
| Total increase (decrease) in net assets | 30,695,021 | 55,605,088 |
| Net Assets | ||
| Beginning of period | 564,980,227 | 509,375,139 |
| End of period | $595,675,248 | $564,980,227 |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights
Communication Services Portfolio Class A
| Years ended February 28, | 2020 A | 2019 B |
| Selected Per–Share Data | ||
| Net asset value, beginning of period | $74.84 | $78.20 |
| Income from Investment Operations | ||
| Net investment income (loss)C | (.30) | (.12) |
| Net realized and unrealized gain (loss) | 8.78 | 2.68 |
| Total from investment operations | 8.48 | 2.56 |
| Distributions from net investment income | – | (.14) |
| Distributions from net realized gain | (22.69) | (5.77) |
| Total distributions | (22.69) | (5.91) |
| Net asset value, end of period | $60.63 | $74.85 |
| Total ReturnD,E,F | 11.90% | 3.83% |
| Ratios to Average Net AssetsG,H | ||
| Expenses before reductions | 1.07% | 1.13%I |
| Expenses net of fee waivers, if any | 1.07% | 1.12%I |
| Expenses net of all reductions | 1.06% | 1.11%I |
| Net investment income (loss) | (.47)% | (.68)%I |
| Supplemental Data | ||
| Net assets, end of period (000 omitted) | $9,947 | $715 |
| Portfolio turnover rateJ | 73% | 107% |
A For the year ended February 29.
B For the period November 30, 2018 (commencement of sale of shares) to February 28, 2019.
C Calculated based on average shares outstanding during the period.
D Total returns for periods of less than one year are not annualized.
E Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
F Total returns do not include the effect of the sales charges.
G Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
I Annualized
J Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the financial statements.
Communication Services Portfolio Class M
| Years ended February 28, | 2020 A | 2019 B |
| Selected Per–Share Data | ||
| Net asset value, beginning of period | $74.82 | $78.20 |
| Income from Investment Operations | ||
| Net investment income (loss)C | (.48) | (.16) |
| Net realized and unrealized gain (loss) | 8.75 | 2.67 |
| Total from investment operations | 8.27 | 2.51 |
| Distributions from net investment income | – | (.12) |
| Distributions from net realized gain | (22.57) | (5.77) |
| Total distributions | (22.57) | (5.89) |
| Net asset value, end of period | $60.52 | $74.82 |
| Total ReturnD,E,F | 11.58% | 3.76% |
| Ratios to Average Net AssetsG,H | ||
| Expenses before reductions | 1.35% | 1.36%I |
| Expenses net of fee waivers, if any | 1.35% | 1.35%I |
| Expenses net of all reductions | 1.34% | 1.34%I |
| Net investment income (loss) | (.75)% | (.90)%I |
| Supplemental Data | ||
| Net assets, end of period (000 omitted) | $2,264 | $485 |
| Portfolio turnover rateJ | 73% | 107% |
A For the year ended February 29.
B For the period November 30, 2018 (commencement of sale of shares) to February 28, 2019.
C Calculated based on average shares outstanding during the period.
D Total returns for periods of less than one year are not annualized.
E Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
F Total returns do not include the effect of the sales charges.
G Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
I Annualized
J Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the financial statements.
Communication Services Portfolio Class C
| Years ended February 28, | 2020 A | 2019 B |
| Selected Per–Share Data | ||
| Net asset value, beginning of period | $74.76 | $78.20 |
| Income from Investment Operations | ||
| Net investment income (loss)C | (.81) | (.25) |
| Net realized and unrealized gain (loss) | 8.74 | 2.67 |
| Total from investment operations | 7.93 | 2.42 |
| Distributions from net investment income | – | (.09) |
| Distributions from net realized gain | (22.49) | (5.77) |
| Total distributions | (22.49) | (5.86) |
| Net asset value, end of period | $60.20 | $74.76 |
| Total ReturnD,E,F | 11.01% | 3.63% |
| Ratios to Average Net AssetsG,H | ||
| Expenses before reductions | 1.86% | 1.87%I |
| Expenses net of fee waivers, if any | 1.86% | 1.85%I |
| Expenses net of all reductions | 1.85% | 1.84%I |
| Net investment income (loss) | (1.26)% | (1.37)%I |
| Supplemental Data | ||
| Net assets, end of period (000 omitted) | $1,982 | $377 |
| Portfolio turnover rateJ | 73% | 107% |
A For the year ended February 29.
B For the period November 30, 2018 (commencement of sale of shares) to February 28, 2019.
C Calculated based on average shares outstanding during the period.
D Total returns for periods of less than one year are not annualized.
E Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
F Total returns do not include the effect of the contingent deferred sales charge.
G Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
I Annualized
J Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the financial statements.
Communication Services Portfolio
| Years ended February 28, | 2020 A | 2019 | 2018 | 2017 | 2016 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $74.88 | $79.70 | $80.75 | $68.59 | $82.48 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | (.12) | .13 | .21 | .22 | .27 |
| Net realized and unrealized gain (loss) | 8.79 | 5.31 | 3.14 | 17.53 | (8.82) |
| Total from investment operations | 8.67 | 5.44 | 3.35 | 17.75 | (8.55) |
| Distributions from net investment income | – | (.20) | (.16) | (.33) | (.23) |
| Distributions from net realized gain | (22.73) | (10.06) | (4.23) | (5.26) | (5.12) |
| Total distributions | (22.73) | (10.26) | (4.40)C | (5.59) | (5.34)D |
| Redemption fees added to paid in capitalB | – | – | –E | –E | –E |
| Net asset value, end of period | $60.82 | $74.88 | $79.70 | $80.75 | $68.59 |
| Total ReturnF | 12.22% | 8.12% | 4.16% | 26.85% | (10.88)% |
| Ratios to Average Net AssetsG,H | |||||
| Expenses before reductions | .78% | .82% | .80% | .82% | .81% |
| Expenses net of fee waivers, if any | .78% | .81% | .80% | .82% | .81% |
| Expenses net of all reductions | .77% | .80% | .79% | .82% | .80% |
| Net investment income (loss) | (.18)% | .17% | .26% | .30% | .34% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $577,157 | $562,422 | $509,375 | $680,392 | $576,118 |
| Portfolio turnover rateI | 73% | 107% | 22% | 33% | 42% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Total distributions of $4.40 per share is comprised of distributions from net investment income of $.163 and distributions from net realized gain of $4.233 per share.
D Total distributions of $5.34 per share is comprised of distributions from net investment income of $.227 and distributions from net realized gain of $5.115 per share.
E Amount represents less than $.005 per share.
F Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
G Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
I Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the financial statements.
Communication Services Portfolio Class I
| Years ended February 28, | 2020 A | 2019 B |
| Selected Per–Share Data | ||
| Net asset value, beginning of period | $74.88 | $78.20 |
| Income from Investment Operations | ||
| Net investment income (loss)C | (.11) | (.06) |
| Net realized and unrealized gain (loss) | 8.79 | 2.67 |
| Total from investment operations | 8.68 | 2.61 |
| Distributions from net investment income | – | (.15) |
| Distributions from net realized gain | (22.76) | (5.77) |
| Total distributions | (22.76) | (5.92) |
| Net asset value, end of period | $60.80 | $74.89 |
| Total ReturnD,E | 12.22% | 3.91% |
| Ratios to Average Net AssetsF,G | ||
| Expenses before reductions | .77% | .70%H |
| Expenses net of fee waivers, if any | .77% | .69%H |
| Expenses net of all reductions | .76% | .68%H |
| Net investment income (loss) | (.17)% | (.30)%H |
| Supplemental Data | ||
| Net assets, end of period (000 omitted) | $2,493 | $452 |
| Portfolio turnover rateI | 73% | 107% |
A For the year ended February 29.
B For the period November 30, 2018 (commencement of sale of shares) to February 28, 2019.
C Calculated based on average shares outstanding during the period.
D Total returns for periods of less than one year are not annualized.
E Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
H Annualized
I Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the financial statements.
Communication Services Portfolio Class Z
| Years ended February 28, | 2020 A | 2019 B |
| Selected Per–Share Data | ||
| Net asset value, beginning of period | $74.89 | $78.20 |
| Income from Investment Operations | ||
| Net investment income (loss)C | (.03) | (.03) |
| Net realized and unrealized gain (loss) | 8.80 | 2.65 |
| Total from investment operations | 8.77 | 2.62 |
| Distributions from net investment income | – | (.16) |
| Distributions from net realized gain | (22.81) | (5.77) |
| Total distributions | (22.81) | (5.93) |
| Net asset value, end of period | $60.85 | $74.89 |
| Total ReturnD,E | 12.38% | 3.92% |
| Ratios to Average Net AssetsF,G | ||
| Expenses before reductions | .65% | .64%H |
| Expenses net of fee waivers, if any | .65% | .62%H |
| Expenses net of all reductions | .64% | .61%H |
| Net investment income (loss) | (.05)% | (.16)%H |
| Supplemental Data | ||
| Net assets, end of period (000 omitted) | $1,833 | $529 |
| Portfolio turnover rateI | 73% | 107% |
A For the year ended February 29.
B For the period November 30, 2018 (commencement of sale of shares) to February 28, 2019.
C Calculated based on average shares outstanding during the period.
D Total returns for periods of less than one year are not annualized.
E Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
H Annualized
I Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the financial statements.
Construction and Housing Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The hypothetical investment and the average annual total returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund’s total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
| For the periods ended February 29, 2020 | Past 1 year | Past 5 years | Past 10 years |
| Construction and Housing Portfolio | 17.10% | 8.37% | 14.14% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Construction and Housing Portfolio on February 28, 2010.
The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
| Period Ending Values | ||
|
| $37,538 | Construction and Housing Portfolio |
|
| $32,918 | S&P 500® Index |
Construction and Housing Portfolio
Management's Discussion of Fund Performance
Market Recap: U.S. stocks stalled to begin the new year and declined in late February, as the outbreak and spread of the new coronavirus threatened to hamper global economic growth and corporate earnings. For the 12 months ending February 29, 2020, the U.S. equity bellwether S&P 500® index gained 8.19%. The period began with equities rising amid upbeat company earnings and signs the U.S. Federal Reserve may pause on rates. The uptrend extended until May, when the index dipped as trade talks between the U.S. and China broke down. The bull market roared back to record a series of highs in July, when the Fed cut interest rates for the first time since 2008. Volatility intensified in August, as the Treasury yield curve inverted, which some investors viewed as a sign the U.S. economy could be heading for recession. But the market proved resilient, hitting a new high on October 30, when the Fed lowered rates for the third time in 2019, and moving higher through December 31. Following a roughly flat January, stocks sank in late February, after a surge in coronavirus cases outside China created considerable uncertainty and pushed investors to safer asset classes. By sector, information technology (+27%) led the way by a wide margin, followed by utilities and communication services (+13% each). In contrast, energy (-25%) was by far the weakest category, struggling due to sluggish oil prices. Other notable laggards included materials and industrials (-2% each). Comments from Portfolio Manager Neil Nabar: For the fiscal year ending February 29, 2020, the fund gained 17.10%, besting the 14.17% advance of the MSCI U.S. IMI Construction & Housing 25/50 Index and well ahead of the S&P 500®. Construction and housing stocks performed well over the period, benefiting from declining interest rates and strong employment data. Within the MSCI industry index, the biggest subindustry winner was homebuilding (+35%), a group closely tied to interest rates. Stock picks in the homebuilding and construction & engineering segments provided the biggest boost to the fund’s relative performance, with added gains from investment choices in the residential REITS (real estate investment trusts) and building products groups. Versus the index, the fund’s top individual contributors were construction & engineering company Williams Scotsman (+72%), which benefited from price increases, and affordable, entry-level homebuilders Skyline Champion (+26%) and D.R. Horton (+38%), which target an underserved end of the market. Conversely, security selection in the home improvement retail group detracted from the fund’s relative performance, mainly due to an overweighting in Lowe’s Companies (+3%). The stock was hindered by choppy execution by management, resulting in a longer-than-expected turnaround. All the stocks mentioned here were overweightings, and Lowe’s and D.R. Horton were top-10 fund positions at period end.The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Construction and Housing Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 29, 2020
| % of fund's net assets | |
| The Home Depot, Inc. | 16.9 |
| Lowe's Companies, Inc. | 16.5 |
| Essex Property Trust, Inc. | 8.6 |
| Johnson Controls International PLC | 5.6 |
| Camden Property Trust (SBI) | 4.8 |
| Digital Realty Trust, Inc. | 4.2 |
| D.R. Horton, Inc. | 3.9 |
| Vulcan Materials Co. | 3.6 |
| American Homes 4 Rent Class A | 2.9 |
| Fortune Brands Home & Security, Inc. | 2.3 |
| 69.3 |
Top Industries (% of fund's net assets)
| As of February 29, 2020 | ||
| Specialty Retail | 33.4% | |
| Equity Real Estate Investment Trusts (Reits) | 22.6% | |
| Building Products | 12.4% | |
| Household Durables | 11.9% | |
| Construction & Engineering | 6.8% | |
| All Others* | 12.9% | |
* Includes short-term investments and net other assets (liabilities).
Construction and Housing Portfolio
Schedule of Investments February 29, 2020
Showing Percentage of Net Assets
| Common Stocks - 99.5% | |||
| Shares | Value | ||
| Building Products - 12.4% | |||
| Building Products - 12.4% | |||
| A.O. Smith Corp. | 97,100 | $3,840,305 | |
| Allegion PLC | 16,800 | 1,931,832 | |
| Fortune Brands Home & Security, Inc. | 122,000 | 7,533,500 | |
| Johnson Controls International PLC | 488,334 | 17,858,374 | |
| Patrick Industries, Inc. | 54,200 | 2,863,386 | |
| Simpson Manufacturing Co. Ltd. | 27,216 | 2,161,767 | |
| Universal Forest Products, Inc. | 74,895 | 3,509,580 | |
| 39,698,744 | |||
| Commercial Services & Supplies - 1.1% | |||
| Environmental & Facility Services - 1.1% | |||
| ABM Industries, Inc. | 105,432 | 3,470,821 | |
| Construction & Engineering - 6.8% | |||
| Construction & Engineering - 6.8% | |||
| AECOM (a) | 88,476 | 3,976,111 | |
| Comfort Systems U.S.A., Inc. | 56,600 | 2,389,652 | |
| Construction Partners, Inc. Class A (a)(b) | 165,500 | 2,815,155 | |
| Dycom Industries, Inc. (a)(b) | 55,800 | 1,649,448 | |
| Granite Construction, Inc. | 84,400 | 1,715,008 | |
| Jacobs Engineering Group, Inc. | 12,002 | 1,108,265 | |
| Quanta Services, Inc. | 132,700 | 5,059,851 | |
| Williams Scotsman Corp. (a)(b) | 178,067 | 3,123,295 | |
| 21,836,785 | |||
| Construction Materials - 5.1% | |||
| Construction Materials - 5.1% | |||
| Forterra, Inc. (a) | 112,500 | 1,523,250 | |
| Summit Materials, Inc. (a) | 159,000 | 3,106,860 | |
| Vulcan Materials Co. | 96,331 | 11,584,766 | |
| 16,214,876 | |||
| Electrical Equipment - 1.0% | |||
| Electrical Components & Equipment - 1.0% | |||
| Atkore International Group, Inc. (a) | 82,500 | 3,045,075 | |
| Equity Real Estate Investment Trusts (REITs) - 22.6% | |||
| Residential REITs - 18.4% | |||
| American Homes 4 Rent Class A | 362,200 | 9,377,358 | |
| Camden Property Trust (SBI) | 143,200 | 15,176,336 | |
| Equity Lifestyle Properties, Inc. | 99,974 | 6,831,223 | |
| Essex Property Trust, Inc. | 96,800 | 27,429,248 | |
| 58,814,165 | |||
| Specialized REITs - 4.2% | |||
| Digital Realty Trust, Inc. | 111,700 | 13,416,287 | |
| TOTAL EQUITY REAL ESTATE INVESTMENT TRUSTS (REITS) | 72,230,452 | ||
| Household Durables - 11.9% | |||
| Homebuilding - 11.9% | |||
| Blu Homes, Inc. (a)(c)(d) | 11,990,913 | 20,739 | |
| D.R. Horton, Inc. | 230,000 | 12,252,100 | |
| M.D.C. Holdings, Inc. | 103,400 | 4,067,756 | |
| NVR, Inc. (a) | 2,013 | 7,382,033 | |
| PulteGroup, Inc. | 166,500 | 6,693,300 | |
| Skyline Champion Corp. (a) | 129,090 | 3,289,213 | |
| TopBuild Corp. (a) | 42,300 | 4,272,300 | |
| 37,977,441 | |||
| Mortgage Real Estate Investment Trusts - 1.6% | |||
| Mortgage REITs - 1.6% | |||
| MFA Financial, Inc. | 701,800 | 5,074,014 | |
| Paper & Forest Products - 1.1% | |||
| Forest Products - 1.1% | |||
| Louisiana-Pacific Corp. | 117,800 | 3,351,410 | |
| Real Estate Management & Development - 1.7% | |||
| Diversified Real Estate Activities - 0.7% | |||
| The RMR Group, Inc. | 61,300 | 2,284,038 | |
| Real Estate Services - 1.0% | |||
| Jones Lang LaSalle, Inc. | 20,600 | 3,044,062 | |
| TOTAL REAL ESTATE MANAGEMENT & DEVELOPMENT | 5,328,100 | ||
| Specialty Retail - 33.4% | |||
| Home Improvement Retail - 33.4% | |||
| Lowe's Companies, Inc. | 492,470 | 52,482,528 | |
| The Home Depot, Inc. | 248,131 | 54,052,859 | |
| 106,535,387 | |||
| Trading Companies & Distributors - 0.8% | |||
| Trading Companies & Distributors - 0.8% | |||
| Beacon Roofing Supply, Inc. (a) | 88,300 | 2,622,510 | |
| TOTAL COMMON STOCKS | |||
| (Cost $245,870,305) | 317,385,615 | ||
| Money Market Funds - 1.2% | |||
| Fidelity Securities Lending Cash Central Fund 1.60% (e)(f) | |||
| (Cost $3,874,950) | 3,874,563 | 3,874,950 | |
| TOTAL INVESTMENT IN SECURITIES - 100.7% | |||
| (Cost $249,745,255) | 321,260,565 | ||
| NET OTHER ASSETS (LIABILITIES) - (0.7)% | (2,355,194) | ||
| NET ASSETS - 100% | $318,905,371 |
Legend
(a) Non-income producing
(b) Security or a portion of the security is on loan at period end.
(c) Restricted securities (including private placements) - Investment in securities not registered under the Securities Act of 1933 (excluding 144A issues). At the end of the period, the value of restricted securities (excluding 144A issues) amounted to $20,739 or 0.0% of net assets.
(d) Level 3 security
(e) Investment made with cash collateral received from securities on loan.
(f) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request.
Additional information on each restricted holding is as follows:
| Security | Acquisition Date | Acquisition Cost |
| Blu Homes, Inc. | 6/10/13 | $4,000,001 |
Affiliated Central Funds
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:
| Fund | Income earned |
| Fidelity Cash Central Fund | $55,378 |
| Fidelity Securities Lending Cash Central Fund | 469 |
| Total | $55,847 |
Amounts in the income column in the above table include any capital gain distributions from underlying funds, which are presented in the corresponding line-item in the Statement of Operations, if applicable. Amount for Fidelity Securities Lending Cash Central Fund represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities.
Investment Valuation
The following is a summary of the inputs used, as of February 29, 2020, 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 below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.
| Valuation Inputs at Reporting Date: | ||||
| Description | Total | Level 1 | Level 2 | Level 3 |
| Investments in Securities: | ||||
| Common Stocks | $317,385,615 | $317,364,876 | $-- | $20,739 |
| Money Market Funds | 3,874,950 | 3,874,950 | -- | -- |
| Total Investments in Securities: | $321,260,565 | $321,239,826 | $-- | $20,739 |
See accompanying notes which are an integral part of the financial statements.
Construction and Housing Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2020 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $3,670,675) — See accompanying schedule: Unaffiliated issuers (cost $245,870,305) | $317,385,615 | |
| Fidelity Central Funds (cost $3,874,950) | 3,874,950 | |
| Total Investment in Securities (cost $249,745,255) | $321,260,565 | |
| Receivable for investments sold | 13,933,037 | |
| Receivable for fund shares sold | 716,379 | |
| Dividends receivable | 106,820 | |
| Distributions receivable from Fidelity Central Funds | 2,949 | |
| Prepaid expenses | 2,292 | |
| Other receivables | 4,056 | |
| Total assets | 336,026,098 | |
| Liabilities | ||
| Payable to custodian bank | $3,092,379 | |
| Payable for investments purchased | 2,655,455 | |
| Payable for fund shares redeemed | 7,228,181 | |
| Accrued management fee | 165,187 | |
| Other affiliated payables | 63,971 | |
| Other payables and accrued expenses | 40,604 | |
| Collateral on securities loaned | 3,874,950 | |
| Total liabilities | 17,120,727 | |
| Net Assets | $318,905,371 | |
| Net Assets consist of: | ||
| Paid in capital | $236,181,267 | |
| Total accumulated earnings (loss) | 82,724,104 | |
| Net Assets | $318,905,371 | |
| Net Asset Value, offering price and redemption price per share ($318,905,371 ÷ 5,445,538 shares) | $58.56 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 29, 2020 | ||
| Investment Income | ||
| Dividends | $5,089,708 | |
| Income from Fidelity Central Funds (including $469 from security lending) | 55,847 | |
| Total income | 5,145,555 | |
| Expenses | ||
| Management fee | $1,659,273 | |
| Transfer agent fees | 554,584 | |
| Accounting and security lending fees | 120,755 | |
| Custodian fees and expenses | 17,653 | |
| Independent trustees' fees and expenses | 1,567 | |
| Registration fees | 56,957 | |
| Audit | 38,611 | |
| Legal | 2,785 | |
| Interest | 3,234 | |
| Miscellaneous | 2,079 | |
| Total expenses before reductions | 2,457,498 | |
| Expense reductions | (25,915) | |
| Total expenses after reductions | 2,431,583 | |
| Net investment income (loss) | 2,713,972 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 32,794,214 | |
| Total net realized gain (loss) | 32,794,214 | |
| Change in net unrealized appreciation (depreciation) on investment securities | 3,334,280 | |
| Net gain (loss) | 36,128,494 | |
| Net increase (decrease) in net assets resulting from operations | $38,842,466 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 29, 2020 | Year ended February 28, 2019 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $2,713,972 | $2,254,551 |
| Net realized gain (loss) | 32,794,214 | 29,972,866 |
| Change in net unrealized appreciation (depreciation) | 3,334,280 | (23,163,019) |
| Net increase (decrease) in net assets resulting from operations | 38,842,466 | 9,064,398 |
| Distributions to shareholders | (24,490,216) | (33,784,910) |
| Share transactions | ||
| Proceeds from sales of shares | 299,727,079 | 27,995,296 |
| Reinvestment of distributions | 22,923,116 | 32,148,706 |
| Cost of shares redeemed | (243,352,371) | (141,586,264) |
| Net increase (decrease) in net assets resulting from share transactions | 79,297,824 | (81,442,262) |
| Total increase (decrease) in net assets | 93,650,074 | (106,162,774) |
| Net Assets | ||
| Beginning of period | 225,255,297 | 331,418,071 |
| End of period | $318,905,371 | $225,255,297 |
| Other Information | ||
| Shares | ||
| Sold | 4,813,223 | 490,715 |
| Issued in reinvestment of distributions | 383,278 | 612,966 |
| Redeemed | (3,905,073) | (2,484,098) |
| Net increase (decrease) | 1,291,428 | (1,380,417) |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights
Construction and Housing Portfolio
| Years ended February 28, | 2020 A | 2019 | 2018 | 2017 | 2016 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $54.22 | $59.88 | $61.70 | $53.16 | $59.74 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .53 | .49 | .44 | .37 | .33 |
| Net realized and unrealized gain (loss) | 8.71 | 1.32 | 6.58 | 10.29 | (5.02) |
| Total from investment operations | 9.24 | 1.81 | 7.02 | 10.66 | (4.69) |
| Distributions from net investment income | (.60) | (.55) | (.30) | (.45) | (.23) |
| Distributions from net realized gain | (4.31) | (6.92) | (8.53) | (1.67) | (1.66) |
| Total distributions | (4.90)C | (7.47) | (8.84)D | (2.12) | (1.89) |
| Redemption fees added to paid in capitalB | – | – | –E | –E | –E |
| Net asset value, end of period | $58.56 | $54.22 | $59.88 | $61.70 | $53.16 |
| Total ReturnF | 17.10% | 4.03% | 11.07% | 20.23% | (8.11)% |
| Ratios to Average Net AssetsG,H | |||||
| Expenses before reductions | .79% | .80% | .80% | .80% | .81% |
| Expenses net of fee waivers, if any | .79% | .80% | .80% | .80% | .80% |
| Expenses net of all reductions | .79% | .79% | .79% | .79% | .80% |
| Net investment income (loss) | .88% | .86% | .69% | .62% | .57% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $318,905 | $225,255 | $331,418 | $404,526 | $449,303 |
| Portfolio turnover rateI | 161% | 90% | 56% | 87% | 80% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Total distributions of $4.90 per share is comprised of distributions from net investment income of $.598 and distributions from net realized gain of $4.306 per share.
D Total distributions of $8.84 per share is comprised of distributions from net investment income of $.303 and distributions from net realized gain of $8.534 per share.
E Amount represents less than $.005 per share.
F Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
G Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
H Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
I Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the financial statements.
Consumer Discretionary Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The hypothetical investment and the average annual total returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund’s total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
| For the periods ended February 29, 2020 | Past 1 year | Past 5 years | Past 10 years |
| Consumer Discretionary Portfolio | 5.30% | 8.31% | 13.91% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Consumer Discretionary Portfolio on February 28, 2010.
The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
| Period Ending Values | ||
|
| $36,785 | Consumer Discretionary Portfolio |
|
| $32,918 | S&P 500® Index |
Consumer Discretionary Portfolio
Management's Discussion of Fund Performance
Market Recap: U.S. stocks stalled to begin the new year and declined in late February, as the outbreak and spread of the new coronavirus threatened to hamper global economic growth and corporate earnings. For the 12 months ending February 29, 2020, the U.S. equity bellwether S&P 500® index gained 8.19%. The period began with equities rising amid upbeat company earnings and signs the U.S. Federal Reserve may pause on rates. The uptrend extended until May, when the index dipped as trade talks between the U.S. and China broke down. The bull market roared back to record a series of highs in July, when the Fed cut interest rates for the first time since 2008. Volatility intensified in August, as the Treasury yield curve inverted, which some investors viewed as a sign the U.S. economy could be heading for recession. But the market proved resilient, hitting a new high on October 30, when the Fed lowered rates for the third time in 2019, and moving higher through December 31. Following a roughly flat January, stocks sank in late February, after a surge in coronavirus cases outside China created considerable uncertainty and pushed investors to safer asset classes. By sector, information technology (+27%) led the way by a wide margin, followed by utilities and communication services (+13% each). In contrast, energy (-25%) was by far the weakest category, struggling due to sluggish oil prices. Other notable laggards included materials and industrials (-2% each). Comments from Portfolio Manager Katherine Shaw: For the fiscal year, the fund gained 5.30%, trailing the 6.56% advance of the benchmark MSCI U.S. IMI Consumer Discretionary 25/50 Index and the broad-market S&P 500® index. Consumer discretionary stocks benefited from the overall strength of U.S. consumers during the past 12 months, with lower interest rates, near-historically low unemployment and slightly rising wages all supporting factors. However, the sector fell short of the broad U.S. equity market, due in part to growing anxiety related to the new coronavirus outbreak and its impact on consumer spending and the global economy. Versus the sector index, largely avoiding electric vehicle maker Tesla weighed on the fund’s relative performance the most. We exited the fund’s position in Tesla by February 29. This hurt because shares of Tesla gained 109% this period, notably rising higher in January and February on better-than-expected fourth-quarter financial results and optimism about the company’s future growth potential. The fund’s overweighting in Royal Caribbean Cruises (-29%) also hurt. The stock fell sharply late in the period as investors became increasingly concerned about how coronavirus will affect the cruise industry’s business in 2020. Conversely, Burlington Stores (+27%), a sizable fund holding, was the fund’s top individual contributor versus the sector benchmark. The stock rose on consecutive quarters of better-than-expected financial results. Not owning automaker and index component General Motors (-20%) also boosted the fund’s relative performance.The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Consumer Discretionary Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 29, 2020
| % of fund's net assets | |
| Amazon.com, Inc. | 25.1 |
| The Home Depot, Inc. | 8.3 |
| McDonald's Corp. | 5.0 |
| Starbucks Corp. | 4.2 |
| Lowe's Companies, Inc. | 4.0 |
| Burlington Stores, Inc. | 3.9 |
| NIKE, Inc. Class B | 3.6 |
| The Booking Holdings, Inc. | 3.4 |
| TJX Companies, Inc. | 3.3 |
| Dollar Tree, Inc. | 2.7 |
| 63.5 |
Top Industries (% of fund's net assets)
| As of February 29, 2020 | ||
| Internet & Direct Marketing Retail | 28.7% | |
| Specialty Retail | 27.4% | |
| Hotels, Restaurants & Leisure | 20.2% | |
| Textiles, Apparel & Luxury Goods | 9.5% | |
| Multiline Retail | 6.8% | |
| All Others* | 7.4% | |
* Includes short-term investments and net other assets (liabilities).
Consumer Discretionary Portfolio
Schedule of Investments February 29, 2020
Showing Percentage of Net Assets
| Common Stocks - 101.3% | |||
| Shares | Value | ||
| Automobiles - 0.3% | |||
| Automobile Manufacturers - 0.3% | |||
| Ferrari NV | 8,597 | $1,356,177 | |
| Commercial Services & Supplies - 0.2% | |||
| Diversified Support Services - 0.2% | |||
| Copart, Inc. (a) | 10,058 | 849,700 | |
| Diversified Consumer Services - 1.0% | |||
| Education Services - 1.0% | |||
| Grand Canyon Education, Inc. (a) | 42,123 | 3,398,484 | |
| New Oriental Education & Technology Group, Inc. sponsored ADR (a) | 6,290 | 804,428 | |
| 4,202,912 | |||
| Entertainment - 0.5% | |||
| Movies & Entertainment - 0.5% | |||
| Live Nation Entertainment, Inc. (a) | 7,032 | 427,335 | |
| Netflix, Inc. (a) | 2,128 | 785,296 | |
| World Wrestling Entertainment, Inc. Class A | 17,093 | 799,440 | |
| 2,012,071 | |||
| Food & Staples Retailing - 1.9% | |||
| Food Distributors - 0.9% | |||
| Performance Food Group Co. (a) | 43,692 | 1,852,541 | |
| U.S. Foods Holding Corp. (a) | 55,791 | 1,876,809 | |
| 3,729,350 | |||
| Hypermarkets & Super Centers - 1.0% | |||
| BJ's Wholesale Club Holdings, Inc. (a) | 114,232 | 2,200,108 | |
| Walmart, Inc. | 14,963 | 1,611,216 | |
| 3,811,324 | |||
| TOTAL FOOD & STAPLES RETAILING | 7,540,674 | ||
| Hotels, Restaurants & Leisure - 20.2% | |||
| Casinos & Gaming - 1.6% | |||
| Churchill Downs, Inc. | 21,846 | 2,744,731 | |
| Eldorado Resorts, Inc. (a) | 71,007 | 3,563,131 | |
| 6,307,862 | |||
| Hotels, Resorts & Cruise Lines - 3.6% | |||
| Hilton Grand Vacations, Inc. (a) | 45,704 | 1,218,469 | |
| Hilton Worldwide Holdings, Inc. | 50,700 | 4,928,040 | |
| Marriott Vacations Worldwide Corp. | 31,478 | 3,046,441 | |
| Royal Caribbean Cruises Ltd. | 65,348 | 5,254,633 | |
| 14,447,583 | |||
| Leisure Facilities - 2.2% | |||
| Drive Shack, Inc. (a) | 156,600 | 447,876 | |
| Planet Fitness, Inc. (a) | 57,796 | 3,900,652 | |
| SeaWorld Entertainment, Inc. (a) | 42,680 | 1,161,323 | |
| Vail Resorts, Inc. | 16,212 | 3,446,833 | |
| 8,956,684 | |||
| Restaurants - 12.8% | |||
| ARAMARK Holdings Corp. | 73,168 | 2,541,856 | |
| Chipotle Mexican Grill, Inc. (a) | 8,072 | 6,244,338 | |
| McDonald's Corp. | 104,416 | 20,274,455 | |
| Noodles & Co. (a) | 60,100 | 488,012 | |
| Starbucks Corp. | 214,687 | 16,837,901 | |
| Yum! Brands, Inc. | 58,015 | 5,177,839 | |
| 51,564,401 | |||
| TOTAL HOTELS, RESTAURANTS & LEISURE | 81,276,530 | ||
| Household Durables - 3.7% | |||
| Homebuilding - 3.7% | |||
| D.R. Horton, Inc. | 113,281 | 6,034,479 | |
| Lennar Corp. Class A | 62,793 | 3,788,930 | |
| M/I Homes, Inc. (a) | 10,200 | 379,746 | |
| NVR, Inc. (a) | 1,257 | 4,609,645 | |
| 14,812,800 | |||
| Interactive Media & Services - 0.6% | |||
| Interactive Media & Services - 0.6% | |||
| Alphabet, Inc. Class A (a) | 1,644 | 2,201,727 | |
| Internet & Direct Marketing Retail - 28.7% | |||
| Internet & Direct Marketing Retail - 28.7% | |||
| Amazon.com, Inc. (a) | 53,678 | 101,115,931 | |
| Delivery Hero AG (a)(b) | 2,000 | 152,996 | |
| The Booking Holdings, Inc. (a) | 8,031 | 13,617,845 | |
| The RealReal, Inc. | 35,400 | 495,246 | |
| Wayfair LLC Class A (a) | 3,712 | 234,636 | |
| 115,616,654 | |||
| IT Services - 0.3% | |||
| Data Processing & Outsourced Services - 0.3% | |||
| PayPal Holdings, Inc. (a) | 9,837 | 1,062,298 | |
| Multiline Retail - 6.8% | |||
| General Merchandise Stores - 6.8% | |||
| B&M European Value Retail SA | 200,886 | 870,199 | |
| Dollar General Corp. | 71,842 | 10,797,853 | |
| Dollar Tree, Inc. (a) | 131,531 | 10,921,019 | |
| Ollie's Bargain Outlet Holdings, Inc. (a)(c) | 67,569 | 3,437,235 | |
| Target Corp. | 12,900 | 1,328,700 | |
| 27,355,006 | |||
| Road & Rail - 0.2% | |||
| Trucking - 0.2% | |||
| Lyft, Inc. | 21,600 | 823,392 | |
| Specialty Retail - 27.4% | |||
| Apparel Retail - 10.0% | |||
| Burlington Stores, Inc. (a) | 73,100 | 15,808,606 | |
| Ross Stores, Inc. | 82,927 | 9,020,799 | |
| The Children's Place Retail Stores, Inc. (c) | 36,314 | 2,091,686 | |
| TJX Companies, Inc. | 221,513 | 13,246,477 | |
| 40,167,568 | |||
| Automotive Retail - 2.6% | |||
| AutoZone, Inc. (a) | 3,893 | 4,019,561 | |
| Monro, Inc. | 19,365 | 1,086,764 | |
| O'Reilly Automotive, Inc. (a) | 15,084 | 5,561,772 | |
| 10,668,097 | |||
| Computer & Electronics Retail - 0.9% | |||
| Best Buy Co., Inc. | 45,543 | 3,445,328 | |
| Home Improvement Retail - 12.8% | |||
| Floor & Decor Holdings, Inc. Class A (a) | 42,606 | 2,175,036 | |
| Lowe's Companies, Inc. | 152,934 | 16,298,176 | |
| The Home Depot, Inc. | 152,517 | 33,224,303 | |
| 51,697,515 | |||
| Specialty Stores - 1.1% | |||
| Five Below, Inc. (a) | 22,879 | 2,218,119 | |
| National Vision Holdings, Inc. (a) | 22,553 | 785,295 | |
| Sally Beauty Holdings, Inc. (a) | 28,300 | 352,052 | |
| Ulta Beauty, Inc. (a) | 3,458 | 889,017 | |
| 4,244,483 | |||
| TOTAL SPECIALTY RETAIL | 110,222,991 | ||
| Textiles, Apparel & Luxury Goods - 9.5% | |||
| Apparel, Accessories & Luxury Goods - 5.0% | |||
| adidas AG | 10,005 | 2,816,890 | |
| Canada Goose Holdings, Inc. (a) | 20,434 | 563,277 | |
| Capri Holdings Ltd. (a) | 82,921 | 2,141,020 | |
| G-III Apparel Group Ltd. (a) | 17,297 | 386,761 | |
| Hermes International SCA | 584 | 411,952 | |
| lululemon athletica, Inc. (a) | 4,230 | 919,644 | |
| LVMH Moet Hennessy Louis Vuitton SE | 4,684 | 1,954,777 | |
| PVH Corp. | 65,506 | 4,854,650 | |
| Tapestry, Inc. | 134,482 | 3,153,603 | |
| VF Corp. | 41,766 | 3,007,152 | |
| 20,209,726 | |||
| Footwear - 4.5% | |||
| Deckers Outdoor Corp. (a) | 18,400 | 3,197,920 | |
| NIKE, Inc. Class B | 162,830 | 14,553,745 | |
| Puma AG | 5,233 | 405,727 | |
| 18,157,392 | |||
| TOTAL TEXTILES, APPAREL & LUXURY GOODS | 38,367,118 | ||
| TOTAL COMMON STOCKS | |||
| (Cost $296,023,993) | 407,700,050 | ||
| Money Market Funds - 0.8% | |||
| Fidelity Securities Lending Cash Central Fund 1.60% (d)(e) | |||
| (Cost $3,074,794) | 3,074,486 | 3,074,794 | |
| TOTAL INVESTMENT IN SECURITIES - 102.1% | |||
| (Cost $299,098,787) | 410,774,844 | ||
| NET OTHER ASSETS (LIABILITIES) - (2.1)% | (8,371,495) | ||
| NET ASSETS - 100% | $402,403,349 |
Legend
(a) Non-income producing
(b) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the end of the period, the value of these securities amounted to $152,996 or 0.0% of net assets.
(c) Security or a portion of the security is on loan at period end.
(d) Investment made with cash collateral received from securities on loan.
(e) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request.
Affiliated Central Funds
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:
| Fund | Income earned |
| Fidelity Cash Central Fund | $32,782 |
| Fidelity Securities Lending Cash Central Fund | 29,429 |
| Total | $62,211 |
Amounts in the income column in the above table include any capital gain distributions from underlying funds, which are presented in the corresponding line-item in the Statement of Operations, if applicable. Amount for Fidelity Securities Lending Cash Central Fund represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities.
Investment Valuation
The following is a summary of the inputs used, as of February 29, 2020, 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 below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.
| Valuation Inputs at Reporting Date: | ||||
| Description | Total | Level 1 | Level 2 | Level 3 |
| Investments in Securities: | ||||
| Common Stocks | $407,700,050 | $401,087,509 | $6,612,541 | $-- |
| Money Market Funds | 3,074,794 | 3,074,794 | -- | -- |
| Total Investments in Securities: | $410,774,844 | $404,162,303 | $6,612,541 | $-- |
See accompanying notes which are an integral part of the financial statements.
Consumer Discretionary Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2020 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $2,985,535) — See accompanying schedule: Unaffiliated issuers (cost $296,023,993) | $407,700,050 | |
| Fidelity Central Funds (cost $3,074,794) | 3,074,794 | |
| Total Investment in Securities (cost $299,098,787) | $410,774,844 | |
| Receivable for investments sold | 3,506,395 | |
| Receivable for fund shares sold | 479,937 | |
| Dividends receivable | 285,916 | |
| Distributions receivable from Fidelity Central Funds | 1,523 | |
| Prepaid expenses | 5,509 | |
| Other receivables | 19,289 | |
| Total assets | 415,073,413 | |
| Liabilities | ||
| Payable to custodian bank | $2,654,940 | |
| Payable for investments purchased | 1,990,818 | |
| Payable for fund shares redeemed | 4,638,706 | |
| Accrued management fee | 204,086 | |
| Other affiliated payables | 73,244 | |
| Other payables and accrued expenses | 37,720 | |
| Collateral on securities loaned | 3,070,550 | |
| Total liabilities | 12,670,064 | |
| Net Assets | $402,403,349 | |
| Net Assets consist of: | ||
| Paid in capital | $294,024,715 | |
| Total accumulated earnings (loss) | 108,378,634 | |
| Net Assets | $402,403,349 | |
| Net Asset Value, offering price and redemption price per share ($402,403,349 ÷ 8,829,025 shares) | $45.58 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 29, 2020 | ||
| Investment Income | ||
| Dividends | $4,442,298 | |
| Income from Fidelity Central Funds (including $29,429 from security lending) | 62,211 | |
| Total income | 4,504,509 | |
| Expenses | ||
| Management fee | $2,434,390 | |
| Transfer agent fees | 740,728 | |
| Accounting and security lending fees | 177,166 | |
| Custodian fees and expenses | 15,352 | |
| Independent trustees' fees and expenses | 2,457 | |
| Registration fees | 41,325 | |
| Audit | 44,968 | |
| Legal | 3,864 | |
| Interest | 4,610 | |
| Miscellaneous | 4,031 | |
| Total expenses before reductions | 3,468,891 | |
| Expense reductions | (14,539) | |
| Total expenses after reductions | 3,454,352 | |
| Net investment income (loss) | 1,050,157 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 3,718,147 | |
| Redemptions in-kind with affiliated entities | 4,367,344 | |
| Fidelity Central Funds | 319 | |
| Foreign currency transactions | 3,121 | |
| Total net realized gain (loss) | 8,088,931 | |
| Change in net unrealized appreciation (depreciation) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 14,436,239 | |
| Assets and liabilities in foreign currencies | (160) | |
| Total change in net unrealized appreciation (depreciation) | 14,436,079 | |
| Net gain (loss) | 22,525,010 | |
| Net increase (decrease) in net assets resulting from operations | $23,575,167 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 29, 2020 | Year ended February 28, 2019 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $1,050,157 | $1,297,625 |
| Net realized gain (loss) | 8,088,931 | 143,683,921 |
| Change in net unrealized appreciation (depreciation) | 14,436,079 | (143,507,509) |
| Net increase (decrease) in net assets resulting from operations | 23,575,167 | 1,474,037 |
| Distributions to shareholders | (10,526,325) | (19,190,653) |
| Share transactions | ||
| Proceeds from sales of shares | 141,736,274 | 214,831,882 |
| Reinvestment of distributions | 9,985,146 | 18,576,766 |
| Cost of shares redeemed | (195,554,961) | (602,441,033) |
| Net increase (decrease) in net assets resulting from share transactions | (43,833,541) | (369,032,385) |
| Total increase (decrease) in net assets | (30,784,699) | (386,749,001) |
| Net Assets | ||
| Beginning of period | 433,188,048 | 819,937,049 |
| End of period | $402,403,349 | $433,188,048 |
| Other Information | ||
| Shares | ||
| Sold | 2,990,069 | 4,770,097 |
| Issued in reinvestment of distributions | 214,717 | 447,659 |
| Redeemed | (4,151,320) | (14,225,363) |
| Net increase (decrease) | (946,534) | (9,007,607) |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights
Consumer Discretionary Portfolio
| Years ended February 28, | 2020 A | 2019 | 2018 | 2017 | 2016 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $44.31 | $43.65 | $37.00 | $32.38 | $35.23 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .11 | .12 | .16 | .21 | .24 |
| Net realized and unrealized gain (loss) | 2.26 | 1.87 | 8.17 | 4.73 | (1.79) |
| Total from investment operations | 2.37 | 1.99 | 8.33 | 4.94 | (1.55) |
| Distributions from net investment income | (.11) | (.15) | (.14) | (.32) | (.18) |
| Distributions from net realized gain | (.99) | (1.18) | (1.54) | – | (1.13) |
| Total distributions | (1.10) | (1.33) | (1.68) | (.32) | (1.30)C |
| Redemption fees added to paid in capitalB | – | – | – | –D | –D |
| Net asset value, end of period | $45.58 | $44.31 | $43.65 | $37.00 | $32.38 |
| Total ReturnE | 5.30% | 4.81% | 22.79% | 15.29% | (4.60)% |
| Ratios to Average Net AssetsF,G | |||||
| Expenses before reductions | .76% | .78% | .78% | .76% | .77% |
| Expenses net of fee waivers, if any | .76% | .77% | .78% | .76% | .77% |
| Expenses net of all reductions | .76% | .77% | .77% | .76% | .76% |
| Net investment income (loss) | .23% | .27% | .40% | .60% | .71% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $402,403 | $433,188 | $819,937 | $828,992 | $1,119,021 |
| Portfolio turnover rateH | 41%I | 46%I | 74% | 39%I | 69% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Total distributions of $1.30 per share is comprised of distributions from net investment income of $.175 and distributions from net realized gain of $1.126 per share.
D Amount represents less than $.005 per share.
E Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
H Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
I Portfolio turnover rate excludes securities received or delivered in-kind.
See accompanying notes which are an integral part of the financial statements.
Leisure Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The hypothetical investment and the average annual total returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund’s total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
| For the periods ended February 29, 2020 | Past 1 year | Past 5 years | Past 10 years |
| Leisure Portfolio | 1.76% | 7.33% | 13.57% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Leisure Portfolio on February 28, 2010.
The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
| Period Ending Values | ||
|
| $35,701 | Leisure Portfolio |
|
| $32,918 | S&P 500® Index |
Leisure Portfolio
Management's Discussion of Fund Performance
Market Recap: U.S. stocks stalled to begin the new year and declined in late February, as the outbreak and spread of the new coronavirus threatened to hamper global economic growth and corporate earnings. For the 12 months ending February 29, 2020, the U.S. equity bellwether S&P 500® index gained 8.19%. The period began with equities rising amid upbeat company earnings and signs the U.S. Federal Reserve may pause on rates. The uptrend extended until May, when the index dipped as trade talks between the U.S. and China broke down. The bull market roared back to record a series of highs in July, when the Fed cut interest rates for the first time since 2008. Volatility intensified in August, as the Treasury yield curve inverted, which some investors viewed as a sign the U.S. economy could be heading for recession. But the market proved resilient, hitting a new high on October 30, when the Fed lowered rates for the third time in 2019, and moving higher through December 31. Following a roughly flat January, stocks sank in late February, after a surge in coronavirus cases outside China created considerable uncertainty and pushed investors to safer asset classes. By sector, information technology (+27%) led the way by a wide margin, followed by utilities and communication services (+13% each). In contrast, energy (-25%) was by far the weakest category, struggling due to sluggish oil prices. Other notable laggards included materials and industrials (-2% each). Comments from Portfolio Manager Becky Baker: The fund gained 1.76%, modestly outpacing the 1.62% advance of the MSCI U.S. IMI Consumer Services 25/50 Index, but trailing the broad-based S&P 500® index. It was a generally strong backdrop for consumer-oriented and leisure stocks for much of the past 12 months, with rising wages and low unemployment providing tailwinds. However, the industry tumbled toward the end of the reporting period, as the market started to worry about the impact the novel coronavirus outbreak would have on demand for leisure products and experiences. As a result, the fund and index trailed the broad market for the full year. Versus the MSCI industry index, an underweighting in cruise line Carnival (-39%) was by far the fund’s top relative contributor. The stock capped off a tough period with a sharp drop in February, as investors became increasingly concerned about how the coronavirus will affect the cruise industry’s business in 2020. I sold off our stake in Carnival before period end. Another meaningful contributor was Churchill Downs (+41%), a new position this period. Churchill Downs operates horse racetracks, including its namesake in Louisville, Ky., and casinos throughout the country. The stock benefited in part from the legalization of sports betting across several states. Conversely, the fund’s biggest individual detractor was online, for-profit education provider Grand Canyon Education (-30%). The stock underperformed this period on slowing enrollment growth and concerns about how the 2020 U.S. presidential election might impact the for-profit education sector. An overweight in Royal Caribbean Cruises (-30%) also detracted.The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Leisure Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 29, 2020
| % of fund's net assets | |
| McDonald's Corp. | 22.3 |
| Starbucks Corp. | 19.1 |
| Chipotle Mexican Grill, Inc. | 5.3 |
| Hilton Worldwide Holdings, Inc. | 5.0 |
| Las Vegas Sands Corp. | 4.9 |
| Vail Resorts, Inc. | 3.5 |
| Churchill Downs, Inc. | 3.2 |
| Royal Caribbean Cruises Ltd. | 3.1 |
| Yum! Brands, Inc. | 3.0 |
| The Booking Holdings, Inc. | 2.8 |
| 72.2 |
Top Industries (% of fund's net assets)
| As of February 29, 2020 | ||
| Hotels, Restaurants & Leisure | 87.4% | |
| Diversified Consumer Services | 4.2% | |
| Food & Staples Retailing | 3.4% | |
| Internet & Direct Marketing Retail | 2.8% | |
| Multiline Retail | 1.2% | |
| All Others* | 1.0% | |
* Includes short-term investments and net other assets (liabilities).
Leisure Portfolio
Schedule of Investments February 29, 2020
Showing Percentage of Net Assets
| Common Stocks - 100.2% | |||
| Shares | Value | ||
| Diversified Consumer Services - 4.2% | |||
| Education Services - 4.0% | |||
| Bright Horizons Family Solutions, Inc. (a) | 54,600 | $8,580,390 | |
| Chegg, Inc. (a)(b) | 72,300 | 2,834,883 | |
| Grand Canyon Education, Inc. (a) | 71,100 | 5,736,348 | |
| 17,151,621 | |||
| Specialized Consumer Services - 0.2% | |||
| Weight Watchers International, Inc. (a) | 38,300 | 1,149,000 | |
| TOTAL DIVERSIFIED CONSUMER SERVICES | 18,300,621 | ||
| Food & Staples Retailing - 3.4% | |||
| Food Distributors - 3.4% | |||
| Performance Food Group Co. (a) | 202,639 | 8,591,894 | |
| U.S. Foods Holding Corp. (a) | 185,200 | 6,230,128 | |
| 14,822,022 | |||
| Hotels, Restaurants & Leisure - 87.4% | |||
| Casinos & Gaming - 13.8% | |||
| Aristocrat Leisure Ltd. | 106,231 | 2,291,351 | |
| Boyd Gaming Corp. | 96,200 | 2,569,502 | |
| Churchill Downs, Inc. | 110,700 | 13,908,348 | |
| Eldorado Resorts, Inc. (a) | 215,700 | 10,823,826 | |
| Galaxy Entertainment Group Ltd. | 420,000 | 2,772,162 | |
| Las Vegas Sands Corp. | 364,908 | 21,277,785 | |
| Penn National Gaming, Inc. (a) | 203,600 | 6,020,452 | |
| 59,663,426 | |||
| Hotels, Resorts & Cruise Lines - 14.6% | |||
| Hilton Grand Vacations, Inc. (a) | 338,412 | 9,022,064 | |
| Hilton Worldwide Holdings, Inc. | 220,297 | 21,412,868 | |
| Marriott International, Inc. Class A | 90,393 | 11,208,732 | |
| Marriott Vacations Worldwide Corp. | 81,297 | 7,867,924 | |
| Royal Caribbean Cruises Ltd. | 168,990 | 13,588,486 | |
| 63,100,074 | |||
| Leisure Facilities - 6.9% | |||
| Planet Fitness, Inc. (a) | 144,500 | 9,752,305 | |
| SeaWorld Entertainment, Inc. (a) | 177,400 | 4,827,054 | |
| Vail Resorts, Inc. | 70,400 | 14,967,744 | |
| 29,547,103 | |||
| Restaurants - 52.1% | |||
| Chipotle Mexican Grill, Inc. (a) | 29,750 | 23,014,005 | |
| McDonald's Corp. | 493,908 | 95,902,115 | |
| Noodles & Co. (a)(b) | 69,500 | 564,340 | |
| Starbucks Corp. | 1,051,000 | 82,429,930 | |
| Wendy's Co. | 153,000 | 2,888,640 | |
| Yum China Holdings, Inc. | 152,200 | 6,664,838 | |
| Yum! Brands, Inc. | 146,216 | 13,049,778 | |
| 224,513,646 | |||
| TOTAL HOTELS, RESTAURANTS & LEISURE | 376,824,249 | ||
| Internet & Direct Marketing Retail - 2.8% | |||
| Internet & Direct Marketing Retail - 2.8% | |||
| The Booking Holdings, Inc. (a) | 7,100 | 12,039,186 | |
| Multiline Retail - 1.2% | |||
| General Merchandise Stores - 1.2% | |||
| Dollar General Corp. | 21,200 | 3,186,360 | |
| Ollie's Bargain Outlet Holdings, Inc. (a) | 37,800 | 1,922,886 | |
| 5,109,246 | |||
| Road & Rail - 0.3% | |||
| Trucking - 0.3% | |||
| Lyft, Inc. | 32,100 | 1,223,652 | |
| Textiles, Apparel & Luxury Goods - 0.9% | |||
| Apparel, Accessories & Luxury Goods - 0.9% | |||
| LVMH Moet Hennessy Louis Vuitton SE | 9,100 | 3,797,709 | |
| TOTAL COMMON STOCKS | |||
| (Cost $306,872,451) | 432,116,685 | ||
| Money Market Funds - 0.3% | |||
| Fidelity Securities Lending Cash Central Fund 1.60% (c)(d) | |||
| (Cost $1,014,118) | 1,014,017 | 1,014,118 | |
| TOTAL INVESTMENT IN SECURITIES - 100.5% | |||
| (Cost $307,886,569) | 433,130,803 | ||
| NET OTHER ASSETS (LIABILITIES) - (0.5)% | (1,985,035) | ||
| NET ASSETS - 100% | $431,145,768 |
Legend
(a) Non-income producing
(b) Security or a portion of the security is on loan at period end.
(c) Investment made with cash collateral received from securities on loan.
(d) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request.
Affiliated Central Funds
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:
| Fund | Income earned |
| Fidelity Cash Central Fund | $49,367 |
| Fidelity Securities Lending Cash Central Fund | 38,630 |
| Total | $87,997 |
Amounts in the income column in the above table include any capital gain distributions from underlying funds, which are presented in the corresponding line-item in the Statement of Operations, if applicable. Amount for Fidelity Securities Lending Cash Central Fund represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities.
Investment Valuation
The following is a summary of the inputs used, as of February 29, 2020, 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 below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.
| Valuation Inputs at Reporting Date: | ||||
| Description | Total | Level 1 | Level 2 | Level 3 |
| Investments in Securities: | ||||
| Common Stocks | $432,116,685 | $428,318,976 | $3,797,709 | $-- |
| Money Market Funds | 1,014,118 | 1,014,118 | -- | -- |
| Total Investments in Securities: | $433,130,803 | $429,333,094 | $3,797,709 | $-- |
See accompanying notes which are an integral part of the financial statements.
Leisure Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2020 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $981,677) — See accompanying schedule: Unaffiliated issuers (cost $306,872,451) | $432,116,685 | |
| Fidelity Central Funds (cost $1,014,118) | 1,014,118 | |
| Total Investment in Securities (cost $307,886,569) | $433,130,803 | |
| Foreign currency held at value (cost $529) | 528 | |
| Receivable for investments sold | 6,001,197 | |
| Receivable for fund shares sold | 568,526 | |
| Dividends receivable | 847,550 | |
| Distributions receivable from Fidelity Central Funds | 1,624 | |
| Prepaid expenses | 3,843 | |
| Other receivables | 830 | |
| Total assets | 440,554,901 | |
| Liabilities | ||
| Payable to custodian bank | $2,293,455 | |
| Payable for investments purchased | 909,811 | |
| Payable for fund shares redeemed | 4,857,514 | |
| Accrued management fee | 222,581 | |
| Other affiliated payables | 81,700 | |
| Other payables and accrued expenses | 36,622 | |
| Collateral on securities loaned | 1,007,450 | |
| Total liabilities | 9,409,133 | |
| Net Assets | $431,145,768 | |
| Net Assets consist of: | ||
| Paid in capital | $296,813,237 | |
| Total accumulated earnings (loss) | 134,332,531 | |
| Net Assets | $431,145,768 | |
| Net Asset Value, offering price and redemption price per share ($431,145,768 ÷ 31,035,309 shares) | $13.89 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 29, 2020 | ||
| Investment Income | ||
| Dividends | $7,720,929 | |
| Income from Fidelity Central Funds (including $38,630 from security lending) | 87,997 | |
| Total income | 7,808,926 | |
| Expenses | ||
| Management fee | $2,716,329 | |
| Transfer agent fees | 815,478 | |
| Accounting and security lending fees | 196,180 | |
| Custodian fees and expenses | 10,193 | |
| Independent trustees' fees and expenses | 2,729 | |
| Registration fees | 47,429 | |
| Audit | 39,608 | |
| Legal | 2,064 | |
| Interest | 1,357 | |
| Miscellaneous | 3,626 | |
| Total expenses before reductions | 3,834,993 | |
| Expense reductions | (19,104) | |
| Total expenses after reductions | 3,815,889 | |
| Net investment income (loss) | 3,993,037 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 44,814,270 | |
| Fidelity Central Funds | (540) | |
| Foreign currency transactions | (5,799) | |
| Total net realized gain (loss) | 44,807,931 | |
| Change in net unrealized appreciation (depreciation) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | (38,596,413) | |
| Assets and liabilities in foreign currencies | (20) | |
| Total change in net unrealized appreciation (depreciation) | (38,596,433) | |
| Net gain (loss) | 6,211,498 | |
| Net increase (decrease) in net assets resulting from operations | $10,204,535 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 29, 2020 | Year ended February 28, 2019 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $3,993,037 | $5,025,242 |
| Net realized gain (loss) | 44,807,931 | 52,534,665 |
| Change in net unrealized appreciation (depreciation) | (38,596,433) | (39,363,294) |
| Net increase (decrease) in net assets resulting from operations | 10,204,535 | 18,196,613 |
| Distributions to shareholders | (31,042,814) | (78,505,520) |
| Share transactions | ||
| Proceeds from sales of shares | 119,782,717 | 71,865,525 |
| Reinvestment of distributions | 28,804,554 | 73,488,183 |
| Cost of shares redeemed | (169,526,142) | (156,662,466) |
| Net increase (decrease) in net assets resulting from share transactions | (20,938,871) | (11,308,758) |
| Redemption fees | – | 955 |
| Total increase (decrease) in net assets | (41,777,150) | (71,616,710) |
| Net Assets | ||
| Beginning of period | 472,922,918 | 544,539,628 |
| End of period | $431,145,768 | $472,922,918 |
| Other Information | ||
| Shares | ||
| Sold | 7,488,013 | 4,800,836 |
| Issued in reinvestment of distributions | 1,846,047 | 5,206,751 |
| Redeemed | (10,835,961) | (10,316,567) |
| Net increase (decrease) | (1,501,901) | (308,980) |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights
Leisure Portfolio
| Years ended February 28, | 2020 A | 2019 B | 2018 B | 2017 B | 2016 A,B |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $14.53 | $16.58 | $14.14 | $12.83 | $14.01 |
| Income from Investment Operations | |||||
| Net investment income (loss)C | .12 | .16 | .18 | .16 | .15 |
| Net realized and unrealized gain (loss) | .25 | .39 | 3.31 | 1.29 | (.62) |
| Total from investment operations | .37 | .55 | 3.49 | 1.45 | (.47) |
| Distributions from net investment income | (.11) | (.16) | (.14) | (.14) | (.13) |
| Distributions from net realized gain | (.89) | (2.44) | (.91) | – | (.58) |
| Total distributions | (1.01)D | (2.60) | (1.05) | (.14) | (.71) |
| Redemption fees added to paid in capitalC | – | –E | –E | –E | –E |
| Net asset value, end of period | $13.89 | $14.53 | $16.58 | $14.14 | $12.83 |
| Total ReturnF | 1.76% | 4.48% | 24.75% | 11.26% | (3.48)% |
| Ratios to Average Net AssetsG,H | |||||
| Expenses before reductions | .76% | .76% | .77% | .80% | .79% |
| Expenses net of fee waivers, if any | .75% | .76% | .77% | .79% | .79% |
| Expenses net of all reductions | .75% | .76% | .77% | .79% | .78% |
| Net investment income (loss) | .79% | 1.05% | 1.09% | 1.17% | 1.08% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $431,146 | $472,923 | $544,540 | $402,941 | $416,771 |
| Portfolio turnover rateI | 53% | 41% | 56% | 23% | 48% |
A For the year ended February 29.
B Per share amounts have been adjusted to reflect the impact of the 10 for 1 share split that occurred on August 10, 2018.
C Calculated based on average shares outstanding during the period.
D Total distributions of $1.01 per share is comprised of distributions from net investment income of $.111 and distributions from net realized gain of $.894 per share.
E Amount represents less than $.005 per share.
F Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
G Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
H Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
I Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the financial statements.
Retailing Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The hypothetical investment and the average annual total returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund’s total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
| For the periods ended February 29, 2020 | Past 1 year | Past 5 years | Past 10 years |
| Retailing Portfolio | 7.02% | 12.63% | 17.12% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Retailing Portfolio on February 28, 2010.
The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
| Period Ending Values | ||
|
| $48,579 | Retailing Portfolio |
|
| $32,918 | S&P 500® Index |
Retailing Portfolio
Management's Discussion of Fund Performance
Market Recap: U.S. stocks stalled to begin the new year and declined in late February, as the outbreak and spread of the new coronavirus threatened to hamper global economic growth and corporate earnings. For the 12 months ending February 29, 2020, the U.S. equity bellwether S&P 500® index gained 8.19%. The period began with equities rising amid upbeat company earnings and signs the U.S. Federal Reserve may pause on rates. The uptrend extended until May, when the index dipped as trade talks between the U.S. and China broke down. The bull market roared back to record a series of highs in July, when the Fed cut interest rates for the first time since 2008. Volatility intensified in August, as the Treasury yield curve inverted, which some investors viewed as a sign the U.S. economy could be heading for recession. But the market proved resilient, hitting a new high on October 30, when the Fed lowered rates for the third time in 2019, and moving higher through December 31. Following a roughly flat January, stocks sank in late February, after a surge in coronavirus cases outside China created considerable uncertainty and pushed investors to safer asset classes. By sector, information technology (+27%) led the way by a wide margin, followed by utilities and communication services (+13% each). In contrast, energy (-25%) was by far the weakest category, struggling due to sluggish oil prices. Other notable laggards included materials and industrials (-2% each). Comments from Portfolio Manager Boris Shepov: For the fiscal year, the fund gained 7.02%, outpacing the 4.70% advance of the MSCI U.S. IMI Retailing 25/50 Index, but trailing the broad-based S&P 500® index. Versus the MSCI industry index, the portfolio’s outperformance the past 12 months was primarily due to security selection in the apparel retail group. Positioning among specialty stores and the fund’s underweighting in the lagging department stores segment also helped. On a stock-specific basis, an overweighting in off-price retailer Burlington Stores (+27%) was the leading contributor. Discount-store operator Dollar General (+28%), also a larger-than-index position, further aided relative performance. Both Burlington Stores and Dollar General were top-10 holdings. The portolio’s lack of exposure to home-goods retailer and index component Wayfair (-62%) – which I was unable to own due to internal capacity limits and regulatory considerations that constrained my ability to do so – contributed as well. In contrast, non-index exposure to apparel, accessories & luxury goods companies, as well hypermarkets & super centers, hampered the fund’s relative result. TV and online shopping network Qurate Retail (Liberty Interactive) proved to be the largest individual detractor, returning roughly -55% until I eliminated the position. Underweighting general merchandiser Target (+46%) also weighed on performance versus the index, as did an out-of-index stake in super center retailer BJ's Wholesale Club Holdings (-24%).The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Retailing Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 29, 2020
| % of fund's net assets | |
| Amazon.com, Inc. | 25.4 |
| The Home Depot, Inc. | 16.0 |
| Lowe's Companies, Inc. | 5.8 |
| TJX Companies, Inc. | 5.1 |
| The Booking Holdings, Inc. | 5.1 |
| Dollar Tree, Inc. | 4.7 |
| Dollar General Corp. | 4.4 |
| Ross Stores, Inc. | 3.4 |
| O'Reilly Automotive, Inc. | 2.9 |
| Burlington Stores, Inc. | 2.8 |
| 75.6 |
Top Industries (% of fund's net assets)
| As of February 29, 2020 | ||
| Specialty Retail | 44.8% | |
| Internet & Direct Marketing Retail | 31.2% | |
| Multiline Retail | 11.6% | |
| Food & Staples Retailing | 6.3% | |
| Textiles, Apparel & Luxury Goods | 3.1% | |
| All Others* | 3.0% | |
* Includes short-term investments and net other assets (liabilities).
Retailing Portfolio
Schedule of Investments February 29, 2020
Showing Percentage of Net Assets
| Common Stocks - 101.1% | |||
| Shares | Value | ||
| Distributors - 0.6% | |||
| Distributors - 0.6% | |||
| LKQ Corp. (a) | 584,591 | $17,292,202 | |
| Food & Staples Retailing - 6.3% | |||
| Food Distributors - 1.2% | |||
| U.S. Foods Holding Corp. (a) | 923,700 | 31,073,268 | |
| Food Retail - 2.0% | |||
| Kroger Co. | 1,927,700 | 54,226,201 | |
| Hypermarkets & Super Centers - 3.1% | |||
| BJ's Wholesale Club Holdings, Inc. (a)(b) | 3,309,440 | 63,739,814 | |
| Walmart, Inc. | 193,400 | 20,825,312 | |
| 84,565,126 | |||
| TOTAL FOOD & STAPLES RETAILING | 169,864,595 | ||
| Hotels, Restaurants & Leisure - 1.7% | |||
| Leisure Facilities - 1.0% | |||
| Drive Shack, Inc. (a)(b)(c) | 3,495,900 | 9,998,274 | |
| Planet Fitness, Inc. (a) | 233,500 | 15,758,915 | |
| 25,757,189 | |||
| Restaurants - 0.7% | |||
| Starbucks Corp. | 255,300 | 20,023,179 | |
| TOTAL HOTELS, RESTAURANTS & LEISURE | 45,780,368 | ||
| Interactive Media & Services - 1.1% | |||
| Interactive Media & Services - 1.1% | |||
| Alphabet, Inc. Class A (a) | 21,600 | 28,927,800 | |
| Internet & Direct Marketing Retail - 31.2% | |||
| Internet & Direct Marketing Retail - 31.2% | |||
| Amazon.com, Inc. (a) | 363,730 | 685,176,389 | |
| The Booking Holdings, Inc. (a) | 80,240 | 136,059,758 | |
| The RealReal, Inc. (b) | 1,415,915 | 19,808,651 | |
| 841,044,798 | |||
| Multiline Retail - 11.6% | |||
| General Merchandise Stores - 11.6% | |||
| Dollar General Corp. | 786,900 | 118,271,070 | |
| Dollar Tree, Inc. (a) | 1,522,800 | 126,438,084 | |
| Ollie's Bargain Outlet Holdings, Inc. (a)(b) | 591,335 | 30,081,211 | |
| Target Corp. | 361,200 | 37,203,600 | |
| 311,993,965 | |||
| Road & Rail - 0.7% | |||
| Trucking - 0.7% | |||
| Lyft, Inc. | 494,900 | 18,865,588 | |
| Specialty Retail - 44.8% | |||
| Apparel Retail - 12.8% | |||
| Burlington Stores, Inc. (a) | 346,094 | 74,846,288 | |
| Ross Stores, Inc. | 851,800 | 92,658,804 | |
| The Children's Place Retail Stores, Inc. (b) | 675,100 | 38,885,760 | |
| TJX Companies, Inc. | 2,308,400 | 138,042,320 | |
| 344,433,172 | |||
| Automotive Retail - 5.8% | |||
| AutoZone, Inc. (a) | 66,563 | 68,726,963 | |
| CarMax, Inc. (a) | 112,000 | 9,778,720 | |
| O'Reilly Automotive, Inc. (a) | 210,586 | 77,647,270 | |
| 156,152,953 | |||
| Computer & Electronics Retail - 1.8% | |||
| Best Buy Co., Inc. | 661,500 | 50,042,475 | |
| Home Improvement Retail - 22.3% | |||
| Floor & Decor Holdings, Inc. Class A (a) | 286,200 | 14,610,510 | |
| Lowe's Companies, Inc. | 1,476,400 | 157,339,948 | |
| The Home Depot, Inc. | 1,979,600 | 431,236,064 | |
| 603,186,522 | |||
| Specialty Stores - 2.1% | |||
| Five Below, Inc. (a) | 381,800 | 37,015,510 | |
| Ulta Beauty, Inc. (a) | 73,200 | 18,818,988 | |
| 55,834,498 | |||
| TOTAL SPECIALTY RETAIL | 1,209,649,620 | ||
| Textiles, Apparel & Luxury Goods - 3.1% | |||
| Apparel, Accessories & Luxury Goods - 3.1% | |||
| adidas AG | 67,600 | 19,032,659 | |
| Aritzia LP (a) | 159,100 | 2,621,935 | |
| lululemon athletica, Inc. (a) | 82,457 | 17,926,976 | |
| LVMH Moet Hennessy Louis Vuitton SE | 29,300 | 12,227,787 | |
| PVH Corp. | 324,500 | 24,048,695 | |
| Tapestry, Inc. | 350,000 | 8,207,500 | |
| 84,065,552 | |||
| TOTAL COMMON STOCKS | |||
| (Cost $1,456,361,002) | 2,727,484,488 | ||
| Money Market Funds - 3.1% | |||
| Fidelity Cash Central Fund 1.60% (d) | 54 | 54 | |
| Fidelity Securities Lending Cash Central Fund 1.60% (d)(e) | 83,849,784 | 83,858,170 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $83,858,224) | 83,858,224 | ||
| TOTAL INVESTMENT IN SECURITIES - 104.2% | |||
| (Cost $1,540,219,226) | 2,811,342,712 | ||
| NET OTHER ASSETS (LIABILITIES) - (4.2)% | (112,345,071) | ||
| NET ASSETS - 100% | $2,698,997,641 |
Legend
(a) Non-income producing
(b) Security or a portion of the security is on loan at period end.
(c) Affiliated company
(d) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request.
(e) Investment made with cash collateral received from securities on loan.
Affiliated Central Funds
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:
| Fund | Income earned |
| Fidelity Cash Central Fund | $256,064 |
| Fidelity Securities Lending Cash Central Fund | 817,524 |
| Total | $1,073,588 |
Amounts in the income column in the above table include any capital gain distributions from underlying funds, which are presented in the corresponding line-item in the Statement of Operations, if applicable. Amount for Fidelity Securities Lending Cash Central Fund represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities.
Other Affiliated Issuers
An affiliated company is a company in which the Fund has ownership of at least 5% of the voting securities. Fiscal year to date transactions with companies which are or were affiliates are as follows:
| Affiliate | Value, beginning of period | Purchases | Sales Proceeds | Dividend Income | Realized Gain (loss) | Change in Unrealized appreciation (depreciation) | Value, end of period |
| Drive Shack, Inc. | $9,881,156 | $4,377,976 | $-- | $-- | $-- | $(4,260,858) | $9,998,274 |
| Total | $9,881,156 | $4,377,976 | $-- | $-- | $-- | $(4,260,858) | $9,998,274 |
Investment Valuation
The following is a summary of the inputs used, as of February 29, 2020, 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 below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.
| Valuation Inputs at Reporting Date: | ||||
| Description | Total | Level 1 | Level 2 | Level 3 |
| Investments in Securities: | ||||
| Common Stocks | $2,727,484,488 | $2,696,224,042 | $31,260,446 | $-- |
| Money Market Funds | 83,858,224 | 83,858,224 | -- | -- |
| Total Investments in Securities: | $2,811,342,712 | $2,780,082,266 | $31,260,446 | $-- |
See accompanying notes which are an integral part of the financial statements.
Retailing Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2020 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $80,952,004) — See accompanying schedule: Unaffiliated issuers (cost $1,440,258,834) | $2,717,486,214 | |
| Fidelity Central Funds (cost $83,858,224) | 83,858,224 | |
| Other affiliated issuers (cost $16,102,168) | 9,998,274 | |
| Total Investment in Securities (cost $1,540,219,226) | $2,811,342,712 | |
| Cash | 460 | |
| Receivable for investments sold | 41,244,948 | |
| Receivable for fund shares sold | 3,292,089 | |
| Dividends receivable | 1,182,412 | |
| Distributions receivable from Fidelity Central Funds | 27,221 | |
| Prepaid expenses | 17,263 | |
| Other receivables | 10,559 | |
| Total assets | 2,857,117,664 | |
| Liabilities | ||
| Payable for investments purchased | $5,651,355 | |
| Payable for fund shares redeemed | 34,360,824 | |
| Accrued management fee | 1,358,465 | |
| Notes payable to affiliates | 32,356,000 | |
| Other affiliated payables | 491,273 | |
| Other payables and accrued expenses | 43,138 | |
| Collateral on securities loaned | 83,858,968 | |
| Total liabilities | 158,120,023 | |
| Net Assets | $2,698,997,641 | |
| Net Assets consist of: | ||
| Paid in capital | $1,432,381,036 | |
| Total accumulated earnings (loss) | 1,266,616,605 | |
| Net Assets | $2,698,997,641 | |
| Net Asset Value, offering price and redemption price per share ($2,698,997,641 ÷ 171,790,632 shares) | $15.71 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 29, 2020 | ||
| Investment Income | ||
| Dividends | $29,956,235 | |
| Income from Fidelity Central Funds (including $817,524 from security lending) | 1,073,588 | |
| Total income | 31,029,823 | |
| Expenses | ||
| Management fee | $16,603,001 | |
| Transfer agent fees | 5,300,501 | |
| Accounting and security lending fees | 911,520 | |
| Custodian fees and expenses | 14,918 | |
| Independent trustees' fees and expenses | 16,867 | |
| Registration fees | 87,680 | |
| Audit | 39,608 | |
| Legal | 8,002 | |
| Interest | 12,476 | |
| Miscellaneous | 22,010 | |
| Total expenses before reductions | 23,016,583 | |
| Expense reductions | (60,023) | |
| Total expenses after reductions | 22,956,560 | |
| Net investment income (loss) | 8,073,263 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 34,251,507 | |
| Fidelity Central Funds | (882) | |
| Foreign currency transactions | 2,255 | |
| Total net realized gain (loss) | 34,252,880 | |
| Change in net unrealized appreciation (depreciation) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 184,667,762 | |
| Affiliated issuers | (4,260,858) | |
| Assets and liabilities in foreign currencies | 4,443 | |
| Total change in net unrealized appreciation (depreciation) | 180,411,347 | |
| Net gain (loss) | 214,664,227 | |
| Net increase (decrease) in net assets resulting from operations | $222,737,490 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 29, 2020 | Year ended February 28, 2019 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $8,073,263 | $5,960,029 |
| Net realized gain (loss) | 34,252,880 | 71,852,574 |
| Change in net unrealized appreciation (depreciation) | 180,411,347 | 36,474,379 |
| Net increase (decrease) in net assets resulting from operations | 222,737,490 | 114,286,982 |
| Distributions to shareholders | (70,573,195) | (56,366,884) |
| Share transactions | ||
| Proceeds from sales of shares | 537,224,260 | 1,561,816,984 |
| Reinvestment of distributions | 67,160,431 | 53,788,995 |
| Cost of shares redeemed | (1,093,141,870) | (967,301,863) |
| Net increase (decrease) in net assets resulting from share transactions | (488,757,179) | 648,304,116 |
| Total increase (decrease) in net assets | (336,592,884) | 706,224,214 |
| Net Assets | ||
| Beginning of period | 3,035,590,525 | 2,329,366,311 |
| End of period | $2,698,997,641 | $3,035,590,525 |
| Other Information | ||
| Shares | ||
| Sold | 33,219,799 | 101,600,543 |
| Issued in reinvestment of distributions | 4,207,150 | 3,880,110 |
| Redeemed | (67,831,907) | (65,594,973) |
| Net increase (decrease) | (30,404,958) | 39,885,680 |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights
Retailing Portfolio
| Years ended February 28, | 2020 A | 2019 B | 2018 B | 2017 B | 2016 A,B |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $15.01 | $14.35 | $11.56 | $9.88 | $9.53 |
| Income from Investment Operations | |||||
| Net investment income (loss)C | .04 | .03 | .04 | .01 | .01D |
| Net realized and unrealized gain (loss) | 1.02 | .93 | 3.23 | 1.69 | .47 |
| Total from investment operations | 1.06 | .96 | 3.27 | 1.70 | .48 |
| Distributions from net investment income | (.05) | (.02) | (.03) | (.02) | (.02) |
| Distributions from net realized gain | (.31) | (.27) | (.45) | – | (.11) |
| Total distributions | (.36) | (.30)E | (.48) | (.02) | (.13) |
| Redemption fees added to paid in capitalC | – | – | – | –F | – |
| Net asset value, end of period | $15.71 | $15.01 | $14.35 | $11.56 | $9.88 |
| Total ReturnG | 7.02% | 6.83% | 28.66% | 17.20% | 5.11% |
| Ratios to Average Net AssetsH,I | |||||
| Expenses before reductions | .74% | .76% | .78% | .78% | .81% |
| Expenses net of fee waivers, if any | .74% | .75% | .77% | .78% | .80% |
| Expenses net of all reductions | .74% | .75% | .77% | .78% | .80% |
| Net investment income (loss) | .26% | .20% | .29% | .07% | .14%D |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $2,698,998 | $3,035,591 | $2,329,366 | $1,924,403 | $1,849,996 |
| Portfolio turnover rateJ | 17% | 34% | 24% | 17% | 11% |
A For the year ended February 29.
B Per share amounts have been adjusted to reflect the impact of the 10 for 1 share split that occurred on May 11, 2018.
C Calculated based on average shares outstanding during the period.
D Net investment income per share reflects a large, non-recurring dividend which amounted to $.01 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .02%.
E Total distributions of $.30 per share is comprised of distributions from net investment income of $.024 and distributions from net realized gain of $.272 per share.
F Amount represents less than $.005 per share.
G Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
H Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
I Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
J Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the financial statements.
Notes to Financial Statements
For the period ended February 29, 2020
1. Organization.
Automotive Portfolio, Communication Services Portfolio, Construction and Housing Portfolio, Consumer Discretionary Portfolio, Leisure Portfolio, and Retailing Portfolio (the Funds) are non-diversified funds of Fidelity Select Portfolios (the Trust). The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. Each Fund is authorized to issue an unlimited number of shares. Each Fund offers a single class of shares, with the exception of Communication Services Portfolio. Communication Services Portfolio offers Class A, Class M, Class C, Communication Services, Class I and Class Z shares. Communication Services Portfolio commenced sale of Class A, Class M, Class C, Class I and Class Z on November 30, 2018. Each class of Communication Services Portfolio has equal rights as to assets and voting privileges, and each class has exclusive voting rights with respect to matters that affect that class. Effective March 1, 2019, Class C shares will automatically convert to Class A shares after a holding period of ten years from the initial date of purchase, with certain exceptions. The Funds invest primarily in securities of companies whose principal business activities fall within specific industries. Share transactions on the Statement of Changes in Net Assets and Share Transactions note may contain exchanges between affiliated funds.
Effective January 1, 2020:
Investment advisers Fidelity Investments Money Management, Inc., FMR Co., Inc., and Fidelity SelectCo, LLC, merged with and into Fidelity Management & Research Company. In connection with the merger transactions, the resulting, merged investment adviser was then redomiciled from Massachusetts to Delaware, changed its corporate structure from a corporation to a limited liability company, and changed its name to "Fidelity Management & Research Company LLC".
Broker-dealer Fidelity Distributors Corporation merged with and into Fidelity Investments Institutional Services Company, Inc. ("FIISC"). FIISC was then redomiciled from Massachusetts to Delaware, changed its corporate structure from a corporation to a limited liability company, and changed its name to "Fidelity Distributors Company LLC".
Fidelity Investments Institutional Operations Company, Inc. converted from a Massachusetts corporation to a Massachusetts LLC, and changed its name to "Fidelity Investments Institutional Operations Company LLC".
2. Investments in Fidelity Central Funds.
The Funds invest in Fidelity Central Funds, which are open-end investment companies generally available only to other investment companies and accounts managed by the investment adviser and its affiliates. The Funds' Schedules of Investments list each of the Fidelity Central Funds held as of period end, if any, as an investment of each Fund, but do not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, each Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by the investment adviser. Annualized expenses of the Money Market Central Funds as of their most recent shareholder report date ranged from less than .005% to .01%.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) website at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Funds' Report of Independent Registered Public Accounting Firm, are available on the SEC website or upon request.
3. Significant Accounting Policies.
Each Fund is an investment company and applies the accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946 Financial Services – Investments Companies. The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Funds:
Investment Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Board of Trustees (the Board) has delegated the day to day responsibility for the valuation of each Fund's investments to the Fair Value Committee (the Committee) established by each Fund's investment adviser. In accordance with valuation policies and procedures approved by the Board, each Fund attempts to obtain prices from one or more third party pricing vendors or brokers to value its investments. When current market prices, quotations or currency exchange rates are not readily available or reliable, investments will be fair valued in good faith by the Committee, in accordance with procedures adopted by the Board. Factors used in determining fair value vary by investment type and may include market or investment specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The Committee oversees each Fund's valuation policies and procedures and reports to the Board on the Committee's activities and fair value determinations. The Board monitors the appropriateness of the procedures used in valuing each Fund's investments and ratifies the fair value determinations of the Committee.
Each Fund categorizes the inputs to valuation techniques used to 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)
Valuation techniques used to value each Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by a third party pricing vendor on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-Traded Funds (ETFs) and certain indexes as well as quoted prices for similar securities may be used and would be categorized as Level 2 in the hierarchy. For equity securities, including restricted 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.
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value (NAV) each business day and are categorized as Level 1 in the hierarchy.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level as of February 29, 2020 is included at the end of each applicable Fund's Schedule of Investments.
Foreign Currency. The Funds may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rates at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Funds' investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and for certain Funds include proceeds received from litigation. Dividend income is recorded 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 Funds are informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Income and capital gain distributions from Fidelity Central Funds, if any, are recorded on the ex-dividend date. Certain distributions received by the Funds represent a return of capital or capital gain. The Funds determine the components of these distributions subsequent to the ex-dividend date, based upon receipt of tax filings or other correspondence relating to the underlying investment. These distributions are recorded as a reduction of cost of investments and/or as a realized gain. Large, non-recurring dividends recognized by the Funds are presented separately on the Statement of Operations as "Special Dividends" and the impact of these dividends is presented in the Financial Highlights. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Class Allocations and Expenses. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
For Communication Services Portfolio, investment income, realized and unrealized capital gains and losses, common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated daily on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions may also differ by class. For the reporting period, the allocated portion of income and expenses to each class as a percent of its average net assets may vary due to the timing of recording these transactions in relation to fluctuating net assets of the classes.
Income Tax Information and Distributions to Shareholders. Each year, each Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for U.S. Federal income taxes is required. As of February 29, 2020, each Fund did not have any unrecognized tax benefits in the financial statements; nor is each Fund aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. Each Fund files a U.S. federal tax return, in addition to state and local tax returns as required. Each Fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. Foreign taxes are provided for based on each Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are declared and recorded on the ex-dividend date. Income and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. These differences resulted in distribution reclassifications. In addition, certain Funds claimed a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Capital accounts are not adjusted for temporary book-tax differences which will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, redemptions in kind, partnerships, net operating losses and losses deferred due to wash sales and excise tax regulations.
As of period end, the cost and unrealized appreciation (depreciation) in securities, and derivatives if applicable, for federal income tax purposes were as follows for each Fund:
| Tax cost | Gross unrealized appreciation | Gross unrealized depreciation | Net unrealized appreciation (depreciation) | |
| Automotive Portfolio | $28,188,633 | $10,569,967 | $(1,762,941) | $8,807,026 |
| Communication Services Portfolio | 494,413,117 | 131,630,110 | (24,705,822) | 106,924,288 |
| Construction and Housing Portfolio | 251,252,300 | 88,272,560 | (18,264,295) | 70,008,265 |
| Consumer Discretionary Portfolio | 299,945,230 | 131,224,596 | (20,394,982) | 110,829,614 |
| Leisure Portfolio | 309,768,863 | 144,011,734 | (20,649,794) | 123,361,940 |
| Retailing Portfolio | 1,545,727,940 | 1,385,995,620 | (120,380,848) | 1,265,614,772 |
The tax-based components of distributable earnings as of period end were as follows for each Fund:
| Undistributed ordinary income | Undistributed long-term capital gain | Capital loss carryforward | Net unrealized appreciation (depreciation) on securities and other investments | |
| Automotive Portfolio | $– | $2,838,375 | $– | $8,805,245 |
| Communication Services Portfolio | – | 13,165,063 | – | 106,924,288 |
| Construction and Housing Portfolio | 5,598,382 | 7,497,515 | – | 70,008,265 |
| Consumer Discretionary Portfolio | – | – | (2,391,308) | 110,828,190 |
| Leisure Portfolio | 638,723 | 10,331,870 | – | 123,361,940 |
| Retailing Portfolio | – | 1,991,127 | – | 1,265,619,221 |
Capital loss carryforwards are only available to offset future capital gains of the Funds to the extent provided by regulations and may be limited. The capital loss carryforward information presented below, including any applicable limitation, is estimated as of fiscal period end and is subject to adjustment.
| No expiration | |||
| Short-term | Long-term | Total capital loss carryfoward | |
| Consumer Discretionary Portfolio | (2,391,308) | – | (2,391,308) |
Certain of the Funds intend to elect to defer to the next fiscal year capital losses recognized during the period November 1, 2019 to February 29, 2020, and ordinary losses recognized during the period January 1, 2019 to February 29, 2020. Loss deferrals were as follows:
| Capital losses | Ordinary losses | |
| Automotive Portfolio | $(37,594) | $(12,920) |
| Construction and Housing Portfolio | – | (380,060) |
| Consumer Discretionary Portfolio | – | (58,248) |
| Retailing Portfolio | – | (993,743) |
The tax character of distributions paid was as follows:
| February 29, 2020 | |||
| Ordinary Income | Long-term Capital Gains | Total | |
| Automotive Portfolio | $546,146 | $1,109,808 | $1,655,954 |
| Communication Services Portfolio | 10,346,104 | 169,782,738 | 180,128,842 |
| Construction and Housing Portfolio | 8,920,109 | 15,570,107 | 24,490,216 |
| Consumer Discretionary Portfolio | 995,530 | 9,530,795 | 10,526,325 |
| Leisure Portfolio | 3,429,665 | 27,613,149 | 31,042,814 |
| Retailing Portfolio | 8,725,812 | 61,847,383 | 70,573,195 |
| February 28, 2019 | |||
| Ordinary Income | Long-term Capital Gains | Total | |
| Automotive Portfolio | $449,847 | $2,618,495 | $3,068,342 |
| Communication Services Portfolio | 1,309,008 | 66,126,972 | 67,435,980 |
| Construction and Housing Portfolio | 2,337,765 | 31,447,145 | 33,784,910 |
| Consumer Discretionary Portfolio | 2,344,452 | 16,846,201 | 19,190,653 |
| Leisure Portfolio | 5,015,959 | 73,489,561 | 78,505,520 |
| Retailing Portfolio | 12,910,093 | 43,456,791 | 56,366,884 |
Restricted Securities. The Funds may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities is included at the end of each applicable Fund's Schedule of Investments.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities and in-kind transactions are noted in the table below.
| Purchases ($) | Sales ($) | |
| Automotive Portfolio | 16,422,480 | 23,144,691 |
| Communication Services Portfolio | 447,214,580 | 473,138,602 |
| Construction and Housing Portfolio | 545,197,019 | 487,233,904 |
| Consumer Discretionary Portfolio | 184,288,421 | 217,067,768 |
| Leisure Portfolio | 262,694,036 | 303,026,590 |
| Retailing Portfolio | 508,710,793 | 1,011,669,359 |
5. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity Management & Research Company LLC (the investment adviser) and its affiliates provide the Funds with investment management related services for which the Funds pay a monthly management fee. The management fee is the sum of an individual fund fee rate and an annualized group fee rate. The individual fund fee rate is applied to each Fund's average net assets. The group fee rate is based upon the monthly average net assets of a group of registered investment companies with which the investment adviser has management contracts. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the reporting period, each Fund's annual management fee rate expressed as a percentage of each Fund's average net assets was as follows:
| Individual Rate | Group Rate | Total | |
| Automotive Portfolio | .30% | .24% | .54% |
| Communication Services Portfolio | .30% | .24% | .54% |
| Construction and Housing Portfolio | .30% | .24% | .54% |
| Consumer Discretionary Portfolio | .30% | .24% | .54% |
| Leisure Portfolio | .30% | .24% | .54% |
| Retailing Portfolio | .30% | .24% | .54% |
Distribution and Service Plan Fees. In accordance with Rule 12b-1 of the 1940 Act, Communication Services Portfolio has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Company LLC (FDC), an affiliate of the investment adviser, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of each Fund and providing shareholder support services. For the period, the Distribution and Service Fee rates, total fees and amounts retained by FDC were as follows:
| Distribution Fee | Service Fee | Total Fees | Retained by FDC | |
| Communication Services Portfolio | ||||
| Class A | -% | .25% | $13,614 | $6,210 |
| Class M | .25% | .25% | 6,676 | 136 |
| Class C | .75% | .25% | 8,845 | 44,168 |
| $29,135 | $50,514 |
Sales Load. For Communication Services Portfolio, FDC may receive a front-end sales charge of up to 5.75% for selling Class A shares and 3.50% for selling Class M shares, some of which is paid to financial intermediaries for selling shares of the Fund. Depending on the holding period, FDC may receive contingent deferred sales charges levied on Class A, Class M and Class C redemptions. The deferred sales charges are 1.00% for Class C shares, 1.00% for certain purchases of Class A shares and .25% for certain purchases of Class M shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained by FDC | |
| Communication Services Portfolio | |
| Class A | $16,460 |
| Class M | 1,411 |
| Class C(a) | 90 |
| $17,961 |
(a) When Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company LLC (FIIOC), an affiliate of the investment adviser, is the transfer, dividend disbursing and shareholder servicing agent for each class (Communication Services Portfolio) or Fund (all other Funds). FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective class or Fund, except for Class Z. FIIOC receives an asset-based fee of Class Z's average net assets. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. Effective February 1, 2020, the Board approved to change the fee for Class Z from .046% to .044%.
For the period, transfer agent fees were as follows:
| Amount | % of Average Net Assets | |
| Automotive Portfolio | $85,553 | .23 |
| Communication Services Portfolio | ||
| Class A | 11,704 | .22 |
| Class M | 3,163 | .24 |
| Class C | 2,143 | .25 |
| Communication Services | 1,100,218 | .18 |
| Class I | 2,831 | .17 |
| Class Z | 626 | .04 |
| 1,120,685 | ||
| Construction and Housing Portfolio | 554,584 | .18 |
| Consumer Discretionary Portfolio | 740,728 | .16 |
| Leisure Portfolio | 815,478 | .16 |
| Retailing Portfolio | 5,300,501 | .17 |
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of the investment adviser, maintains each Fund's accounting records. The accounting fee is based on the level of average net assets for each month. Prior to April 1, 2019, FSC had a separate agreement with each Fund for administration of the security lending program, based on the number and duration of lending transactions. For the period, the total fees paid for accounting and administration of securities lending were equivalent to the following annual rates:
| % of Average Net Assets | |
| Automotive Portfolio | .04 |
| Communication Services Portfolio | .04 |
| Construction and Housing Portfolio | .04 |
| Consumer Discretionary Portfolio | .04 |
| Leisure Portfolio | .04 |
| Retailing Portfolio | .03 |
Brokerage Commissions. A portion of portfolio transactions were placed with brokerage firms which are affiliates of the investment adviser. Brokerage commissions are included in net realized gain (loss) and change in net unrealized appreciation (depreciation) in the Statement of Operations. The commissions paid to these affiliated firms were as follows:
| Amount | |
| Automotive Portfolio | $513 |
| Communication Services Portfolio | 12,333 |
| Construction and Housing Portfolio | 6,921 |
| Consumer Discretionary Portfolio | 2,212 |
| Leisure Portfolio | 4,163 |
| Retailing Portfolio | 6,493 |
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, each fund, along with other registered investment companies having management contracts with Fidelity Management & Research Company LLC (FMR), or other affiliated entities of FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing each fund to borrow from, or lend money to, other participating affiliated funds. At period end, Retailing Portfolio had interfund loans outstanding. Any open loans, including accrued interest, at period end are presented under the caption "Notes payable to affiliates" in the Statement of Assets and Liabilities. Activity in this program during the period for which loans were outstanding was as follows:
| Borrower or Lender | Average Loan Balance | Weighted Average Interest Rate | Interest Expense | |
| Communication Services Portfolio | Borrower | $4,557,375 | 2.69% | $2,721 |
| Construction and Housing Portfolio | Borrower | $8,850,143 | 1.88% | $3,234 |
| Consumer Discretionary Portfolio | Borrower | $5,123,867 | 2.16% | $4,610 |
| Leisure Portfolio | Borrower | $5,865,500 | 2.08% | $1,357 |
| Retailing Portfolio | Borrower | $14,153,444 | 2.00% | $12,476 |
Interfund Trades. Funds may purchase from or sell securities to other Fidelity Funds under procedures adopted by the Board. The procedures have been designed to ensure these interfund trades are executed in accordance with Rule 17a-7 of the 1940 Act. Interfund trades are included within the respective purchases and sales amounts shown in the Purchases and Sales of Investments note.
Affiliated Redemptions In-Kind. During the period, 233,442 shares of the Consumer Discretionary Portfolio were redeemed in-kind for investments and cash with a value of $10,509,560. The net realized gain of $4,367,344 on investments delivered through in-kind redemptions is included in the accompanying Statement of Operations. The amount of the in-kind redemptions is included in share transactions in the accompanying Statement of Changes in Net Assets. Consumer Discretionary Portfolio recognized no gain or loss for federal income tax purposes.
Prior Fiscal Year Affiliated Redemptions In-Kind. During the prior period, 10,019,311 shares of Consumer Discretionary Portfolio were redeemed in-kind for investments and cash with a value of $420,009,534. Consumer Discretionary Portfolio had a net realized gain of $132,629,032 on investments delivered through in-kind redemptions. The amount of the in-kind redemptions is included in share transactions in the accompanying Statement of Changes in Net Assets. Consumer Discretionary Portfolio recognized no gain or loss for federal income tax purposes.
Other. During the prior period, the investment adviser reimbursed the Funds for certain losses as follows:
| Amount | |
| Communication Services Portfolio | $4,742 |
| Consumer Discretionary Portfolio | 2,652 |
| Retailing Portfolio | 5,563 |
6. Committed Line of Credit.
Certain Funds participate with other funds managed by the investment adviser or an affiliate in a $4.25 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The participating funds have agreed to pay commitment fees on their pro-rata portion of the line of credit, which are reflected in Miscellaneous expenses on the Statement of Operations, and are as follows:
| Amount | |
| Automotive Portfolio | $95 |
| Communication Services Portfolio | 1,534 |
| Construction and Housing Portfolio | 715 |
| Consumer Discretionary Portfolio | 1,144 |
| Leisure Portfolio | 1,261 |
| Retailing Portfolio | 7,887 |
During the period, there were no borrowings on this line of credit.
7. Security Lending.
Certain Funds lend portfolio securities from time to time in order to earn additional income. For equity securities, lending agents are used, including National Financial Services (NFS), an affiliate of the Funds. Pursuant to a securities lending agreement, NFS will receive a fee, which is capped at 9.9% of a Fund's daily lending revenue, for its services as lending agent. The Funds may lend securities to certain qualified borrowers, including NFS. On the settlement date of the loan, each applicable Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Funds and any additional required collateral is delivered to the Funds on the next business day. The Funds or borrower may terminate the loan at any time, and if the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, the Funds may apply collateral received from the borrower against the obligation. The Funds may experience delays and costs in recovering the securities loaned. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on each applicable Fund's Statement of Assets and Liabilities. At period end, there were no security loans outstanding with NFS, as affiliated borrower. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented on each applicable Fund's Statement of Operations as a component of income from Fidelity Central Funds. Affiliated security lending activity was as follows:
| Total Security Lending Income Fees Paid to NFS | Security Lending Income From Securities Loaned to NFS | |
| Automotive Portfolio | $1,427 | $– |
| Communication Services Portfolio | $10,897 | $– |
| Construction and Housing Portfolio | $42 | $– |
| Consumer Discretionary Portfolio | $2,749 | $– |
| Leisure Portfolio | $3,241 | $– |
| Retailing Portfolio | $82,535 | $8,607 |
8. Expense Reductions.
Commissions paid to certain brokers with whom the investment adviser, or its affiliates, places trades on behalf of certain Funds include an amount in addition to trade execution, which may be rebated back to the Funds to offset certain expenses. In addition, through arrangements with each applicable Fund's custodian and transfer agent, credits realized as a result of certain uninvested cash balances were used to reduce each applicable Fund's or class' expenses. All of the applicable expense reductions are noted in the table below.
| Brokerage service rebates | Custodian credits | Transfer Agent credits | |
| Automotive Portfolio | $1,604 | $222 | $– |
| Communication Services Portfolio | 57,286 | – | 5 |
| Construction and Housing Portfolio | 24,331 | – | – |
| Consumer Discretionary Portfolio | 12,012 | – | – |
| Leisure Portfolio | 15,676 | – | 687 |
| Retailing Portfolio | 42,311 | – | – |
In addition, during the period the investment adviser or an affiliate reimbursed and/or waived a portion of operating expenses as follows:
| Amount | |
| Automotive Portfolio | $228 |
| Communication Services Portfolio | 3,290 |
| Construction and Housing Portfolio | 1,584 |
| Consumer Discretionary Portfolio | 2,527 |
| Leisure Portfolio | 2,741 |
| Retailing Portfolio | 17,712 |
9. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
| Year ended February 29, 2020 | Year ended February 28, 2019(a) |
|
| Communication Services Portfolio | ||
| Distributions to shareholders | ||
| Class A | $798,640 | $7,552 |
| Class M | 242,564 | 7,531 |
| Class C | 201,206 | 7,488 |
| Communication Services | 178,269,893 | 67,398,247 |
| Class I | 316,058 | 7,576 |
| Class Z | 300,481 | 7,586 |
| Total | $180,128,842 | $67,435,980 |
(a) Distributions for Class A, Class M, Class C, Class I and Class Z are for the period November 30,2018 (commencement of sale of shares) to February 28, 2019.
10. Share Transactions.
Share transactions for each class were as follows and may contain automatic conversions between classes or exchanges between affiliated funds:
| Shares | Shares | Dollars | Dollars | |
| Year ended February 29, 2020 | Year ended February 28, 2019(a) | Year ended February 29, 2020 | Year ended February 28, 2019(a) | |
| Communication Services Portfolio | ||||
| Class A | ||||
| Shares sold | 163,941 | 9,932 | $10,592,862 | $728,750 |
| Reinvestment of distributions | 12,499 | 108 | 794,118 | 7,552 |
| Shares redeemed | (21,919) | (486) | (1,385,300) | (36,085) |
| Net increase (decrease) | 154,521 | 9,554 | $10,001,680 | $700,217 |
| Class M | ||||
| Shares sold | 40,632 | 6,375 | $2,626,137 | $476,789 |
| Reinvestment of distributions | 3,855 | 108 | 242,564 | 7,531 |
| Shares redeemed | (13,568) | – | (861,553) | – |
| Net increase (decrease) | 30,919 | 6,483 | $2,007,148 | $484,320 |
| Class C | ||||
| Shares sold | 32,141 | 4,996 | $2,084,369 | $372,785 |
| Reinvestment of distributions | 3,184 | 107 | 199,573 | 7,488 |
| Shares redeemed | (7,441) | (60) | (459,981) | (4,466) |
| Net increase (decrease) | 27,884 | 5,043 | $1,823,961 | $375,807 |
| Communication Services | ||||
| Shares sold | 2,955,352 | 2,437,944 | $190,171,586 | $187,426,841 |
| Reinvestment of distributions | 2,705,020 | 917,753 | 169,393,115 | 64,635,754 |
| Shares redeemed | (3,681,065) | (2,236,410) | (235,496,213) | (166,522,114) |
| Net increase (decrease) | 1,979,307 | 1,119,287 | $124,068,488 | $85,540,481 |
| Class I | ||||
| Shares sold | 63,284 | 7,326 | $4,090,035 | $539,797 |
| Reinvestment of distributions | 4,990 | 109 | 315,170 | 7,576 |
| Shares redeemed | (33,315) | (1,396) | (2,081,507) | (102,385) |
| Net increase (decrease) | 34,959 | 6,039 | $2,323,698 | $444,988 |
| Class Z | ||||
| Shares sold | 25,004 | 6,958 | $1,643,568 | $516,550 |
| Reinvestment of distributions | 4,650 | 109 | 293,270 | 7,586 |
| Shares redeemed | (6,601) | – | (443,166) | – |
| Net increase (decrease) | 23,053 | 7,067 | $1,493,672 | $524,136 |
(a) Share transactions for Class A, Class M, Class C, Class I and Class Z are for the period November 30, 2018 (commencement of sale of shares) to February 28, 2019.
11. Other.
The Funds' organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Funds. In the normal course of business, the Funds may also enter into contracts that provide general indemnifications. The Funds' maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Funds. The risk of material loss from such claims is considered remote.
12. Coronavirus (COVID-19) Pandemic.
An outbreak of COVID-19 first detected in China during December 2019 has since spread globally and was declared a pandemic by the World Health Organization during March 2020. Developments that disrupt global economies and financial markets, such as the COVID-19 pandemic, may magnify factors that affect the Funds' performance.
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of Fidelity Select Portfolios and the Shareholders of Automotive Portfolio, Communication Services Portfolio, Construction and Housing Portfolio, Consumer Discretionary Portfolio, Leisure Portfolio and Retailing Portfolio
Opinions on the Financial Statements
We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of Automotive Portfolio, Communication Services Portfolio, Construction and Housing Portfolio, Consumer Discretionary Portfolio, Leisure Portfolio and Retailing Portfolio (six of the funds constituting Fidelity Select Portfolios, hereafter collectively referred to as the “Funds”) as of February 29, 2020, the related statements of operations for the year ended February 29, 2020, the statements of changes in net assets for each of the two years in the period ended February 29, 2020, including the related notes, and the financial highlights for each of the periods indicated therein (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of each of the Funds as of February 29, 2020, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period ended February 29, 2020 and each of the financial highlights for each of the periods indicated therein in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinions
These financial statements are the responsibility of the Funds' management. Our responsibility is to express an opinion on the Funds' financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Funds in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of February 29, 2020 by correspondence with the custodian, issuers of privately offered securities and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinions.
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 9, 2020
We have served as the auditor of one or more investment companies in the Fidelity group of funds since 1932.
Trustees and Officers
The Trustees, Members of the Advisory Board (if any), and officers of the trusts and funds, as applicable, are listed below. The Board of Trustees governs each fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee each fund's activities, review contractual arrangements with companies that provide services to each fund, oversee management of the risks associated with such activities and contractual arrangements, and review each fund's performance. Except for Michael E. Wiley each of the Trustees oversees 302 funds. Mr. Wiley oversees 199 funds.
The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust. Each Trustee who is not an interested person (as defined in the 1940 Act) of the trust and the funds is referred to herein as an Independent Trustee. Each Independent Trustee shall retire not later than the last day of the calendar year in which his or her 75th birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. Officers and Advisory Board Members hold office without limit in time, except that any officer or Advisory Board Member may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years.
Each fund's Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-800-544-8544 if you’re an individual investing directly with Fidelity, call 1-800-835-5092 if you’re a plan sponsor or participant with Fidelity as your recordkeeper or call 1-877-208-0098 on institutional accounts or if you’re an advisor or invest through one.
Experience, Skills, Attributes, and Qualifications of the Trustees. The Governance and Nominating Committee has adopted a statement of policy that describes the experience, qualifications, attributes, and skills that are necessary and desirable for potential Independent Trustee candidates (Statement of Policy). The Board believes that each Trustee satisfied at the time he or she was initially elected or appointed a Trustee, and continues to satisfy, the standards contemplated by the Statement of Policy. The Governance and Nominating Committee also engages professional search firms to help identify potential Independent Trustee candidates who have the experience, qualifications, attributes, and skills consistent with the Statement of Policy. From time to time, additional criteria based on the composition and skills of the current Independent Trustees, as well as experience or skills that may be appropriate in light of future changes to board composition, business conditions, and regulatory or other developments, have also been considered by the professional search firms and the Governance and Nominating Committee. In addition, the Board takes into account the Trustees' commitment and participation in Board and committee meetings, as well as their leadership of standing and ad hoc committees throughout their tenure.
In determining that a particular Trustee was and continues to be qualified to serve as a Trustee, the Board has considered a variety of criteria, none of which, in isolation, was controlling. The Board believes that, collectively, the Trustees have balanced and diverse experience, qualifications, attributes, and skills, which allow the Board to operate effectively in governing each fund and protecting the interests of shareholders. Information about the specific experience, skills, attributes, and qualifications of each Trustee, which in each case led to the Board's conclusion that the Trustee should serve (or continue to serve) as a trustee of the funds, is provided below.
Board Structure and Oversight Function. James C. Curvey is an interested person and currently serves as Chairman. The Trustees have determined that an interested Chairman is appropriate and benefits shareholders because an interested Chairman has a personal and professional stake in the quality and continuity of services provided to the funds. Independent Trustees exercise their informed business judgment to appoint an individual of their choosing to serve as Chairman, regardless of whether the Trustee happens to be independent or a member of management. The Independent Trustees have determined that they can act independently and effectively without having an Independent Trustee serve as Chairman and that a key structural component for assuring that they are in a position to do so is for the Independent Trustees to constitute a substantial majority for the Board. The Independent Trustees also regularly meet in executive session. Ned C. Lautenbach serves as Chairman of the Independent Trustees and as such (i) acts as a liaison between the Independent Trustees and management with respect to matters important to the Independent Trustees and (ii) with management prepares agendas for Board meetings.
Fidelity® funds are overseen by different Boards of Trustees. The funds' Board oversees Fidelity's high income and certain equity funds, and other Boards oversee Fidelity's investment-grade bond, money market, asset allocation, and other equity funds. The asset allocation funds may invest in Fidelity® funds overseen by the funds' Board. The use of separate Boards, each with its own committee structure, allows the Trustees of each group of Fidelity® funds to focus on the unique issues of the funds they oversee, including common research, investment, and operational issues. On occasion, the separate Boards establish joint committees to address issues of overlapping consequences for the Fidelity® funds overseen by each Board.
The Trustees operate using a system of committees to facilitate the timely and efficient consideration of all matters of importance to the Trustees, each fund, and fund shareholders and to facilitate compliance with legal and regulatory requirements and oversight of the funds' activities and associated risks. The Board, acting through its committees, has charged FMR and its affiliates with (i) identifying events or circumstances the occurrence of which could have demonstrably adverse effects on the funds' business and/or reputation; (ii) implementing processes and controls to lessen the possibility that such events or circumstances occur or to mitigate the effects of such events or circumstances if they do occur; and (iii) creating and maintaining a system designed to evaluate continuously business and market conditions in order to facilitate the identification and implementation processes described in (i) and (ii) above. Because the day-to-day operations and activities of the funds are carried out by or through FMR, its affiliates, and other service providers, the funds' exposure to risks is mitigated but not eliminated by the processes overseen by the Trustees. While each of the Board's committees has responsibility for overseeing different aspects of the funds' activities, oversight is exercised primarily through the Operations, Audit, and Compliance Committees. Appropriate personnel, including but not limited to the funds' Chief Compliance Officer (CCO), FMR's internal auditor, the independent accountants, the funds' Treasurer and portfolio management personnel, make periodic reports to the Board's committees, as appropriate, including an annual review of Fidelity's risk management program for the Fidelity® funds. The responsibilities of each standing committee, including their oversight responsibilities, are described further under "Standing Committees of the Trustees."
Interested Trustees*:
Correspondence intended for a Trustee who is an interested person may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210.
Name, Year of Birth; Principal Occupations and Other Relevant Experience+
James C. Curvey (1935)
Year of Election or Appointment: 2018
Trustee
Chairman of the Board of Trustees
Mr. Curvey also serves as Trustee of other Fidelity® funds. Mr. Curvey is Vice Chairman (2007-present) and Director of FMR LLC (diversified financial services company). In addition, Mr. Curvey is an Overseer Emeritus for the Boston Symphony Orchestra, a Director of Artis-Naples, and a Trustee of Brewster Academy in Wolfeboro, New Hampshire. Previously, Mr. Curvey served as a Director of Fidelity Research & Analysis Co. (investment adviser firm, 2009-2018), Director of Fidelity Investments Money Management, Inc. (investment adviser firm, 2009-2014) and a Director of FMR and FMR Co., Inc. (investment adviser firms, 2007-2014).
* Determined to be an “Interested Trustee” by virtue of, among other things, his or her affiliation with the trust[s] or various entities under common control with FMR.
+ The information includes the Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to the Trustee's qualifications to serve as a Trustee, which led to the conclusion that the Trustee should serve as a Trustee for each fund.
Independent Trustees:
Correspondence intended for an Independent Trustee may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.
Name, Year of Birth; Principal Occupations and Other Relevant Experience+
Dennis J. Dirks (1948)
Year of Election or Appointment: 2018
Trustee
Mr. Dirks also serves as Trustee of other Fidelity® funds. Prior to his retirement in May 2003, Mr. Dirks served as Chief Operating Officer and as a member of the Board of The Depository Trust & Clearing Corporation (financial markets infrastructure), President, Chief Operating Officer and a member of the Board of The Depository Trust Company (DTC), President and a member of the Board of the National Securities Clearing Corporation (NSCC), Chief Executive Officer and a member of the Board of the Government Securities Clearing Corporation and Chief Executive Officer and a member of the Board of the Mortgage-Backed Securities Clearing Corporation. Mr. Dirks currently serves as a member of the Finance Committee (2016-present) and Board (2017-present) and is Treasurer (2018-present) of the Asolo Repertory Theatre.
Donald F. Donahue (1950)
Year of Election or Appointment: 2018
Trustee
Mr. Donahue also serves as Trustee of other Fidelity® funds. Mr. Donahue serves as President and Chief Executive Officer of Miranda Partners, LLC (risk consulting for the financial services industry, 2012-present). Previously, Mr. Donahue served as Chief Executive Officer (2006-2012), Chief Operating Officer (2003-2006) and Managing Director, Customer Marketing and Development (1999-2003) of The Depository Trust & Clearing Corporation (financial markets infrastructure). Mr. Donahue currently serves as a member (2007-present) and Co-Chairman (2016-present) of the Board of United Way of New York, a member of the Board of NYC Leadership Academy (2012-present) and a member of the Board of Advisors of Ripple Labs, Inc. (financial services, 2015-present). Mr. Donahue previously served as a member of the Advisory Board of certain Fidelity® funds (2015-2018).
Alan J. Lacy (1953)
Year of Election or Appointment: 2018
Trustee
Mr. Lacy also serves as Trustee of other Fidelity® funds. Previously, Mr. Lacy served as Senior Adviser (2007-2014) of Oak Hill Capital Partners, L.P. (private equity), Chief Executive Officer (2005) and Vice Chairman (2005-2006) of Sears Holdings Corporation (retail), Chief Executive Officer and Chairman of the Board of Sears, Roebuck and Co. (retail, 2000-2005) and Chairman (2014-2017) and a member of the Board (2010-2017) of Dave & Buster’s Entertainment, Inc. (restaurant and entertainment complexes). Mr. Lacy currently serves as a member of the Board of Bristol-Myers Squibb Company (global pharmaceuticals, 2008-present), Trustee of the California Chapter of The Nature Conservancy (2015-present) and a member of the Board of the Center for Advanced Study in the Behavioral Sciences at Stanford University (2015-present).
Ned C. Lautenbach (1944)
Year of Election or Appointment: 2018
Trustee
Chairman of the Independent Trustees
Mr. Lautenbach also serves as Trustee of other Fidelity® funds. Mr. Lautenbach currently serves as Chair of the Board of Governors, State University System of Florida (2013-present) and is a member of the Council on Foreign Relations (1994-present). He is also a member and has in the past served as Chairman of the Board of Directors of Artis-Naples (2012-present). Previously, Mr. Lautenbach served as a member and then Lead Director of the Board of Directors of Eaton Corporation (diversified industrial, 1997-2016). He was also a Partner at Clayton, Dubilier & Rice, LLC (private equity investment, 1998-2010); as well as Director of Sony Corporation (2006-2007). In addition, Mr. Lautenbach had a 30-year career with IBM (technology company), during which time he served as Senior Vice President and as a member of the Corporate Executive Committee (1968-1998).
Joseph Mauriello (1944)
Year of Election or Appointment: 2018
Trustee
Mr. Mauriello also serves as Trustee of other Fidelity® funds. Prior to his retirement in January 2006, Mr. Mauriello served in numerous senior management positions including Deputy Chairman and Chief Operating Officer (2004-2005), and Vice Chairman of Financial Services (2002-2004) of KPMG LLP US (professional services, 1965-2005). Mr. Mauriello currently serves as a member of the Independent Directors Council Governing Council (2015-present). Previously, Mr. Mauriello served as a member of the Board of XL Group plc. (global insurance and re-insurance, 2006-2018).
Cornelia M. Small (1944)
Year of Election or Appointment: 2018
Trustee
Ms. Small also serves as Trustee of other Fidelity® funds. Previously, Ms. Small served as Chief Investment Officer, Director of Global Equity Investments and a member of Scudder, Stevens & Clark and Scudder Kemper Investments. Ms. Small previously served as a member of the Board (2009-2019) and Chair of the Investment Committee (2010-2019) of the Teagle Foundation and a member of the Investment Committee of the Berkshire Taconic Community Foundation (2008-2019).
Garnett A. Smith (1947)
Year of Election or Appointment: 2013
Trustee
Mr. Smith also serves as Trustee of other Fidelity® funds. Prior to his retirement, Mr. Smith served as Chairman and Chief Executive Officer (1990-1997) and President (1986-1990) of Inbrand Corp. (manufacturer of personal absorbent products). Prior to his employment with Inbrand Corp., he was employed by a retail fabric chain and North Carolina National Bank (now Bank of America). Mr. Smith previously served as a member of the Advisory Board of certain Fidelity® funds (2012-2013).
David M. Thomas (1949)
Year of Election or Appointment: 2018
Trustee
Mr. Thomas also serves as Trustee of other Fidelity® funds. Previously, Mr. Thomas served as Executive Chairman (2005-2006) and Chairman and Chief Executive Officer (2000-2005) of IMS Health, Inc. (pharmaceutical and healthcare information solutions). Mr. Thomas currently serves as Non-Executive Chairman of the Board of Fortune Brands Home and Security (home and security products, 2011-present), and a member of the Board (2004-present) and Presiding Director (2013-present) of Interpublic Group of Companies, Inc. (marketing communication).
Michael E. Wiley (1950)
Year of Election or Appointment: 2008
Trustee
Mr. Wiley also serves as Trustee or a member of the Advisory Board of other Fidelity® funds. Previously, Mr. Wiley served as Chairman, President and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004). Mr. Wiley currently serves as a member of the Board of High Point Resources (exploration and production, 2005-present). Previously, Mr. Wiley served as a member of the Board of Andeavor Corporation (independent oil refiner and marketer, 2005-2018) and a member of the Board of Andeavor Logistics LP (natural resources logistics, 2015-2018).
+ The information includes the Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to the Trustee's qualifications to serve as a Trustee, which led to the conclusion that the Trustee should serve as a Trustee for each fund.
Advisory Board Members and Officers:
Correspondence intended for a Member of the Advisory Board (if any) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235. Correspondence intended for an officer or Peter S. Lynch may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210. Officers appear below in alphabetical order.
Name, Year of Birth; Principal Occupation
Vicki L. Fuller (1957)
Year of Election or Appointment: 2018
Member of the Advisory Board
Ms. Fuller also serves as a member of the Advisory Board of other Fidelity® funds. Previously, Ms. Fuller served as Chief Investment Officer of the New York State Common Retirement Fund (2012-2018) and held a variety of positions at AllianceBernstein L.P. (global asset management, 1985-2012), including Managing Director (2006-2012) and Senior Vice President and Senior Portfolio Manager (2001-2006). Ms. Fuller currently serves as a member of the Board, Audit Committee and Nominating and Governance Committee of The Williams Companies, Inc. (natural gas infrastructure, 2018-present) and as a member of the Board of Treliant, LLC (consulting, 2019-present).
Patricia L. Kampling (1959)
Year of Election or Appointment: 2020
Member of the Advisory Board
Ms. Kampling also serves as Member of the Advisory Board of other Fidelity® funds. Prior to her retirement, Ms. Kampling served as Chairman of the Board and Chief Executive Officer (2012-2019), President and Chief Operating Officer (2011-2012) and Executive Vice President and Chief Financial Officer (2010-2011) of Alliant Energy Corporation. Ms. Kampling currently serves as a member of the Board, Compensation Committee and Executive Committee and as Chair of the Audit Committee of Briggs & Stratton Corporation (manufacturing, 2011-present) and as a member of the Board, Audit, Finance and Risk Committee and Safety, Environmental, Technology and Operations Committee of American Water Works Company, Inc. (utilities company, 2019-present). In addition, Ms. Kampling currently serves as a member of the Board of the Nature Conservancy, Wisconsin Chapter (2019-present). Previously, Ms. Kampling served as a member of the Board of Interstate Power and Light Company (2012-2019) and Wisconsin Power and Light Company (2012-2019) (each a subsidiary of Alliant Energy Corporation) and as a member of the Board and Workforce Development Committee of the Business Roundtable (2018-2019).
Peter S. Lynch (1944)
Year of Election or Appointment: 2018
Member of the Advisory Board
Mr. Lynch also serves as Member of the Advisory Board of other Fidelity® funds. Mr. Lynch is Vice Chairman and a Director of Fidelity Management & Research Company LLC (investment adviser firm). In addition, Mr. Lynch serves as a Trustee of Boston College and as the Chairman of the Inner-City Scholarship Fund. Previously, Mr. Lynch served as Vice Chairman and a Director of FMR Co., Inc. (investment adviser firm) and on the Special Olympics International Board of Directors (1997-2006).
Susan Tomasky (1953)
Year of Election or Appointment: 2020
Member of the Advisory Board
Ms. Tomasky also serves as Member of the Advisory Board of other Fidelity® funds. Prior to her retirement, Ms. Tomasky served in various executive officer positions at American Electric Power Company, Inc. (1998-2011), including most recently as President of AEP Transmission (2007-2011). Ms. Tomasky currently serves as a member of the Board and Sustainability Committee and as Chair of the Audit Committee of Marathon Petroleum Corporation (2018-present) and as a member of the Board, Corporate Governance Committee and Organization and Compensation Committee and as Chair of the Audit Committee of Public Service Enterprise Group, Inc. (utilities company, 2012-present). In addition, Ms. Tomasky currently serves as a member of the Board of the Columbus Regional Airport Authority (2007-present), as a member of the Board of the Royal Shakespeare Company – America (2009-present), as a member of the Board of the Columbus Association for the Performing Arts (2011-present) and as a member of the Board of Kenyon College (2016-present). Previously, Ms. Tomasky served as a member of the Board (2011-2019) and as Lead Independent Director (2015-2018) of Andeavor Corporation (previously Tesoro Corporation) (independent oil refiner and marketer) and as a member of the Board of Summit Midstream Partners LP (energy, 2012-2018).
Elizabeth Paige Baumann (1968)
Year of Election or Appointment: 2017
Anti-Money Laundering (AML) Officer
Ms. Baumann also serves as AML Officer of other funds. She is Chief AML Officer (2012-present) and Senior Vice President (2014-present) of FMR LLC (diversified financial services company) and is an employee of Fidelity Investments. Previously, Ms. Baumann served as AML Officer of certain funds (2017-2019), as AML Officer of the funds (2012-2016), and Vice President (2007-2014) and Deputy Anti-Money Laundering Officer (2007-2012) of FMR LLC.
Craig S. Brown (1977)
Year of Election or Appointment: 2019
Assistant Treasurer
Mr. Brown also serves as Assistant Treasurer of other funds. Mr. Brown is an employee of Fidelity Investments (2013-present).
John J. Burke III (1964)
Year of Election or Appointment: 2018
Chief Financial Officer
Mr. Burke also serves as Chief Financial Officer of other funds. Mr. Burke serves as Head of Investment Operations for Fidelity Fund and Investment Operations (2018-present) and is an employee of Fidelity Investments (1998-present). Previously Mr. Burke served as head of Asset Management Investment Operations (2012-2018).
William C. Coffey (1969)
Year of Election or Appointment: 2019
Assistant Secretary
Mr. Coffey also serves as Assistant Secretary of other funds. He is Senior Vice President and Deputy General Counsel of FMR LLC (diversified financial services company, 2010-present), and is an employee of Fidelity Investments. Previously, Mr. Coffey served as Secretary and CLO of certain funds (2018-2019); CLO, Secretary, and Senior Vice President of Fidelity Management & Research Company and FMR Co., Inc. (investment adviser firms, 2018-2019); Secretary of Fidelity SelectCo, LLC and Fidelity Investments Money Management, Inc. (investment adviser firms, 2018-2019); CLO of Fidelity Management & Research (Hong Kong) Limited, FMR Investment Management (UK) Limited, and Fidelity Management & Research (Japan) Limited (investment adviser firms, 2018-2019); and Assistant Secretary of certain funds (2009-2018).
Timothy M. Cohen (1969)
Year of Election or Appointment: 2018
Vice President
Mr. Cohen also serves as Vice President of other funds. Mr. Cohen serves as Co-Head of Equity (2018-present), a Director of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2016-present), and is an employee of Fidelity Investments. Previously, Mr. Cohen served as Executive Vice President of Fidelity SelectCo, LLC (2019), Head of Global Equity Research (2016-2018), Chief Investment Officer - Equity and a Director of Fidelity Management & Research (U.K.) Inc. (investment adviser firm, 2013-2015) and as a Director of Fidelity Management & Research (Hong Kong) Limited (investment adviser firm, 2017).
Jonathan Davis (1968)
Year of Election or Appointment: 2010
Assistant Treasurer
Mr. Davis also serves as Assistant Treasurer of other funds. Mr. Davis serves as Assistant Treasurer of FMR Capital, Inc. (2017-present) and is an employee of Fidelity Investments. Previously, Mr. Davis served as Vice President and Associate General Counsel of FMR LLC (diversified financial services company, 2003-2010).
Laura M. Del Prato (1964)
Year of Election or Appointment: 2018
Assistant Treasurer
Ms. Del Prato also serves as an officer of other funds. Ms. Del Prato is an employee of Fidelity Investments (2017-present). Prior to joining Fidelity Investments, Ms. Del Prato served as a Managing Director and Treasurer of the JPMorgan Mutual Funds (2014-2017). Prior to JPMorgan, Ms. Del Prato served as a partner at Cohen Fund Audit Services (accounting firm, 2012-2013) and KPMG LLP (accounting firm, 2004-2012).
Colm A. Hogan (1973)
Year of Election or Appointment: 2020
Assistant Treasurer
Mr. Hogan also serves as an officer of other funds. Mr. Hogan serves as Assistant Treasurer of FMR Capital, Inc. (2017-present) and is an employee of Fidelity Investments (2005-present). Previously, Mr. Hogan served as Deputy Treasurer of certain Fidelity® funds (2016-2020) and Assistant Treasurer of certain Fidelity® funds (2016-2018).
Pamela R. Holding (1964)
Year of Election or Appointment: 2018
Vice President
Ms. Holding also serves as Vice President of other funds. Ms. Holding serves as Co-Head of Equity (2018-present) and is an employee of Fidelity Investments (2013-present). Previously, Ms. Holding served as Executive Vice President of Fidelity SelectCo, LLC (2019) and as Chief Investment Officer of Fidelity Institutional Asset Management (2013-2018).
Cynthia Lo Bessette (1969)
Year of Election or Appointment: 2019
Secretary and Chief Legal Officer (CLO)
Ms. Lo Bessette also serves as an officer of other funds. Ms. Lo Bessette serves as CLO, Secretary, and Senior Vice President of Fidelity Management & Research Company LLC (investment adviser firm, 2019-present); and CLO of Fidelity Management & Research (Hong Kong) Limited, FMR Investment Management (UK) Limited, and Fidelity Management & Research (Japan) Limited (investment adviser firms, 2019-present). She is a Senior Vice President and Deputy General Counsel of FMR LLC (diversified financial services company, 2019-present), and is an employee of Fidelity Investments. Previously, Ms. Lo Bessette served as CLO, Secretary, and Senior Vice President of FMR Co., Inc. (investment adviser firm, 2019); Secretary of Fidelity SelectCo, LLC and Fidelity Investments Money Management, Inc. (investment adviser firms, 2019). Prior to joining Fidelity Investments, Ms. Lo Bessette was Executive Vice President, General Counsel (2016-2019) and Senior Vice President, Deputy General Counsel (2015-2016) of OppenheimerFunds (investment management company) and Deputy Chief Legal Officer (2013-2015) of Jennison Associates LLC (investment adviser firm).
Chris Maher (1972)
Year of Election or Appointment: 2020
Deputy Treasurer
Mr. Maher also serves as an officer of other funds. Mr. Maher serves as Assistant Treasurer of FMR Capital, Inc. (2017-present), and is an employee of Fidelity Investments (2008-present). Previously, Mr. Maher served as Assistant Treasurer of certain funds (2013-2020); Vice President of Asset Management Compliance (2013), Vice President of the Program Management Group of FMR (investment adviser firm, 2010-2013), and Vice President of Valuation Oversight (2008-2010).
Kenneth B. Robins (1969)
Year of Election or Appointment: 2018
Chief Compliance Officer
Mr. Robins also serves as an officer of other funds. Mr. Robins serves as Compliance Officer of Fidelity Management & Research Company LLC (investment adviser firm, 2016-present) and is an employee of Fidelity Investments (2004-present). Previously, Mr. Robins served as Compliance Officer of FMR Co., Inc. (investment adviser firm, 2016-2019), as Executive Vice President of Fidelity Investments Money Management, Inc. (investment adviser firm, 2013-2016) and served in other fund officer roles.
Stacie M. Smith (1974)
Year of Election or Appointment: 2018
President and Treasurer
Ms. Smith also serves as an officer of other funds. Ms. Smith serves as Assistant Treasurer of FMR Capital, Inc. (2017-present), is an employee of Fidelity Investments (2009-present), and has served in other fund officer roles. Prior to joining Fidelity Investments, Ms. Smith served as Senior Audit Manager of Ernst & Young LLP (accounting firm, 1996-2009). Previously, Ms. Smith served as Assistant Treasurer (2013-2019) and Deputy Treasurer (2013-2016) of certain Fidelity® funds.
Marc L. Spector (1972)
Year of Election or Appointment: 2017
Assistant Treasurer
Mr. Spector also serves as an officer of other funds. Mr. Spector serves as Assistant Treasurer of FMR Capital, Inc. (2017-present) and is an employee of Fidelity Investments (2016-present). Prior to joining Fidelity Investments, Mr. Spector served as Director at the Siegfried Group (accounting firm, 2013-2016), and prior to Siegfried Group as audit senior manager at Deloitte & Touche LLP (accounting firm, 2005-2013).
Jim Wegmann (1979)
Year of Election or Appointment: 2019
Assistant Treasurer
Mr. Wegmann also serves as Assistant Treasurer of other funds. Mr. Wegmann is an employee of Fidelity Investments (2011-present).
Shareholder Expense Example
As a shareholder of a Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments or redemption proceeds, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (September 1, 2019 to February 29, 2020).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each Class of each fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. In addition, each Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Annualized Expense Ratio-A | Beginning Account Value September 1, 2019 | Ending Account Value February 29, 2020 | Expenses Paid During Period-B September 1, 2019 to February 29, 2020 |
|
| Automotive Portfolio | .98% | |||
| Actual | $1,000.00 | $1,103.30 | $5.12 | |
| Hypothetical-C | $1,000.00 | $1,019.99 | $4.92 | |
| Communication Services Portfolio | ||||
| Class A | 1.07% | |||
| Actual | $1,000.00 | $1,020.00 | $5.37 | |
| Hypothetical-C | $1,000.00 | $1,019.54 | $5.37 | |
| Class M | 1.33% | |||
| Actual | $1,000.00 | $1,018.50 | $6.67 | |
| Hypothetical-C | $1,000.00 | $1,018.25 | $6.67 | |
| Class C | 1.83% | |||
| Actual | $1,000.00 | $1,016.10 | $9.17 | |
| Hypothetical-C | $1,000.00 | $1,015.76 | $9.17 | |
| Communication Services | .78% | |||
| Actual | $1,000.00 | $1,021.40 | $3.92 | |
| Hypothetical-C | $1,000.00 | $1,020.98 | $3.92 | |
| Class I | .77% | |||
| Actual | $1,000.00 | $1,021.30 | $3.87 | |
| Hypothetical-C | $1,000.00 | $1,021.03 | $3.87 | |
| Class Z | .64% | |||
| Actual | $1,000.00 | $1,022.20 | $3.22 | |
| Hypothetical-C | $1,000.00 | $1,021.68 | $3.22 | |
| Construction and Housing Portfolio | .78% | |||
| Actual | $1,000.00 | $1,002.20 | $3.88 | |
| Hypothetical-C | $1,000.00 | $1,020.98 | $3.92 | |
| Consumer Discretionary Portfolio | .75% | |||
| Actual | $1,000.00 | $979.50 | $3.69 | |
| Hypothetical-C | $1,000.00 | $1,021.13 | $3.77 | |
| Leisure Portfolio | .75% | |||
| Actual | $1,000.00 | $894.70 | $3.53 | |
| Hypothetical-C | $1,000.00 | $1,021.13 | $3.77 | |
| Retailing Portfolio | .74% | |||
| Actual | $1,000.00 | $980.30 | $3.64 | |
| Hypothetical-C | $1,000.00 | $1,021.18 | $3.72 |
A Annualized expense ratio reflects expenses net of applicable fee waivers.
B Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 182/ 366 (to reflect the one-half year period).
C 5% return per year before expenses
Distributions (Unaudited)
The Board of Trustees of each fund voted to pay to shareholders of record at the opening of business on record date, the following distributions per share derived from capital gains realized from sales of portfolio securities, and dividends derived from net investment income:
| Pay Date | Record Date | Dividends | Capital Gains | |
| Automotive Portfolio | 04/09/20 | 04/08/20 | $0.000 | $2.953 |
| Communication Services Portfolio | ||||
| Class A | 04/09/20 | 04/08/20 | $0.000 | $1.402 |
| Class M | 04/09/20 | 04/08/20 | $0.000 | $1.402 |
| Class C | 04/09/20 | 04/08/20 | $0.000 | $1.402 |
| Communication Services | 04/09/20 | 04/08/20 | $0.000 | $1.402 |
| Class I | 04/09/20 | 04/08/20 | $0.000 | $1.402 |
| Class Z | 04/09/20 | 04/08/20 | $0.000 | $1.402 |
| Construction and Housing Portfolio | 04/09/20 | 04/08/20 | $0.000 | $2.832 |
| Consumer Discretionary Portfolio | 04/09/20 | 04/08/20 | $0.000 | $0.000 |
| Leisure Portfolio | 04/09/20 | 04/08/20 | $0.021 | $0.341 |
| Retailing Portfolio | 04/09/20 | 04/08/20 | $0.000 | $0.014 |
The funds hereby designate as capital gain dividend the amounts noted below for the taxable year ended February 29, 2020, or, if subsequently determined to be different, the net capital gain of such year.
| Automotive Portfolio | $4,120,244 |
| Communication Services Portfolio | $43,518,445 |
| Construction and Housing Portfolio | $14,332,740 |
| Leisure Portfolio | $43,832,437 |
| Retailing Portfolio | $3,496,760 |
A percentage of the dividends distributed during the fiscal year for the following funds qualify for the dividends–received deduction for corporate shareholders:
| April 2019 | December 2019 | |
| Automotive Portfolio | 99% | 73% |
| Communication Services Portfolio | ||
| Class A | – | 28% |
| Class M | – | 32% |
| Class C | – | 35% |
| Communication Services | – | 27% |
| Class I | – | 26% |
| Class Z | – | 25% |
| Construction and Housing Portfolio | 100% | 33% |
| Consumer Discretionary Portfolio | – | 100% |
| Leisure Portfolio | 100% | 100% |
| Retailing Portfolio | – | 100% |
A percentage of the dividends distributed during the fiscal year for the following funds may be taken into account as a dividend for purposes of the maximum rate under section 1(h)(11) of the Internal Revenue Code.
| April 2019 | December 2019 | |
| Automotive Portfolio | 100% | 100% |
| Communication Services Portfolio | ||
| Class A | – | 31% |
| Class M | – | 35% |
| Class C | – | 38% |
| Communication Services | – | 30% |
| Class I | – | 29% |
| Class Z | – | 28% |
| Construction and Housing Portfolio | 100% | 36% |
| Consumer Discretionary Portfolio | – | 100% |
| Leisure Portfolio | 100% | 100% |
| Retailing Portfolio | – | 100% |
A percentage of the dividends distributed during the fiscal year for the following funds qualify for as a section 199A dividend:
| April 2019 | December 2019 | |
| Construction and Housing Portfolio | 1% | 16% |
The funds will notify shareholders in January 2021 of amounts for use in preparing 2020 income tax returns.
Board Approval of Investment Advisory Contracts and Management Fees
Automotive Portfolio
Communication Services Portfolio
Construction and Housing Portfolio
Consumer Discretionary Portfolio
Leisure Portfolio
Retailing Portfolio
Automotive Portfolio
Communication Services Portfolio
Construction and Housing Portfolio
Consumer Discretionary Portfolio
Leisure Portfolio
Retailing Portfolio
Automotive Portfolio
Communication Services Portfolio
Construction and Housing Portfolio
Consumer Discretionary Portfolio
Leisure Portfolio
Retailing Portfolio
Liquidity Risk Management Program
The Securities and Exchange Commission adopted Rule 22e-4 under the Investment Company Act of 1940 (the Liquidity Rule) to promote effective liquidity risk management throughout the open-end investment company industry, thereby reducing the risk that funds will be unable to meet their redemption obligations and mitigating dilution of the interests of fund shareholders.
The Funds have adopted and implemented a liquidity risk management program pursuant to the Liquidity Rule (the Program) effective December 1, 2018. The Program is reasonably designed to assess and manage each Fund’s liquidity risk and to comply with the requirements of the Liquidity Rule. Each Fund’s Board of Trustees (the Board) has designated each Fund’s investment adviser as administrator of the Program. The Fidelity advisers have established a Liquidity Risk Management Committee (the LRM Committee) to manage the Program for each of the Fidelity Funds. The LRM Committee monitors the adequacy and effectiveness of implementation of the Program and on a periodic basis assesses each Fund’s liquidity risk based on a variety of factors including (1) the Fund’s investment strategy, (2) portfolio liquidity and cash flow projections during normal and reasonably foreseeable stressed conditions, (3) shareholder redemptions, (4) borrowings and other funding sources and (5) in the case of exchange-traded funds, certain additional factors including the effect of the Fund’s prices and spreads, market participants, and basket compositions on the overall liquidity of the Fund’s portfolio, as applicable.
In accordance with the Program, each of the Fund’s portfolio investments is classified into one of four liquidity categories described below based on a determination of a reasonable expectation for how long it would take to convert the investment to cash (or sell or dispose of the investment) without significantly changing its market value.
- Highly liquid investments – cash or convertible to cash within three business days or less
- Moderately liquid investments – convertible to cash in three to seven calendar days
- Less liquid investments – can be sold or disposed of, but not settled, within seven calendar days
- Illiquid investments – cannot not be sold or disposed of within seven calendar days
Liquidity classification determinations take into account a variety of factors including various market, trading and investment-specific considerations, as well as market depth, and generally utilize analysis from a third-party liquidity metrics service.
The Liquidity Rule places a 15% limit on a fund’s illiquid investments and requires funds that do not primarily hold assets that are highly liquid investments to determine and maintain a minimum percentage of the fund’s net assets to be invested in highly liquid investments (highly liquid investment minimum or HLIM). The Program includes provisions reasonably designed to comply with the 15% limit on illiquid investments and for determining, periodically reviewing and complying with the HLIM requirement as applicable.
At a recent meeting of the Fund’s Board of Trustees, the LRM Committee provided a written report to the Board pertaining to the operation, adequacy, and effectiveness of implementation of the Program for the annual period from December 1, 2018 through November 30, 2019. The report concluded that the Program has been implemented and is operating effectively and is reasonably designed to assess and manage the Fund’s liquidity risk.
SELCON-ANN-0420
1.813633.115
Fidelity® Select Portfolios®
Energy Sector
Energy Portfolio
Energy Service Portfolio
Natural Gas Portfolio
Natural Resources Portfolio
February 29, 2020
See the inside front cover for important information about access to your fund’s shareholder reports.
Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of a fund’s shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports from the fund or from your financial intermediary, such as a financial advisor, broker-dealer or bank. Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from a fund electronically, by contacting your financial intermediary. For Fidelity customers, visit Fidelity's web site or call Fidelity using the contact information listed below.
You may elect to receive all future reports in paper free of charge. If you wish to continue receiving paper copies of your shareholder reports, you may contact your financial intermediary or, if you are a Fidelity customer, visit Fidelity’s website, or call Fidelity at the applicable toll-free number listed below. Your election to receive reports in paper will apply to all funds held with the fund complex/your financial intermediary.
| Account Type | Website | Phone Number |
| Brokerage, Mutual Fund, or Annuity Contracts: | fidelity.com/mailpreferences | 1-800-343-3548 |
| Employer Provided Retirement Accounts: | netbenefits.fidelity.com/preferences (choose 'no' under Required Disclosures to continue to print) | 1-800-343-0860 |
| Advisor Sold Accounts Serviced Through Your Financial Intermediary: | Contact Your Financial Intermediary | Your Financial Intermediary's phone number |
| Advisor Sold Accounts Serviced by Fidelity: | institutional.fidelity.com | 1-877-208-0098 |
Contents
|
Energy Portfolio | |
|
Energy Service Portfolio | |
|
Natural Gas Portfolio | |
|
Natural Resources Portfolio | |
|
Board Approval of Investment Advisory Contracts and Management Fees | |
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov.
You may also call 1-800-544-8544 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third-party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company. © 2020 FMR LLC. All rights reserved.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the Funds. This report is not authorized for distribution to prospective investors in the Funds unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-PORT. Forms N-PORT are available on the SEC’s web site at http://www.sec.gov. A fund's Forms N-PORT may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330.
For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com, http://www.institutional.fidelity.com, or http://www.401k.com, as applicable.
NOT FDIC INSURED •MAY LOSE VALUE •NO BANK GUARANTEE
Neither the Funds nor Fidelity Distributors Corporation is a bank.
Note to shareholders:
(No Action is Required by You)
As part of a regular review of its organizational structure, Fidelity has decided to merge certain entities to streamline operations, increase efficiency, simplify reporting, and reduce legal, compliance, and accounting complexity and costs. In separate events, Fidelity has merged four of its investment advisers and two of its broker-dealers.
Effective on or about January 1, 2020, following any required regulatory notices and approvals:
Investment advisers Fidelity Investments Money Management, Inc., FMR Co., Inc., and Fidelity SelectCo, LLC, merged with and into Fidelity Management & Research Company. In connection with the merger transactions, the resulting, merged investment adviser was then redomiciled from Massachusetts to Delaware, changed its corporate structure from a corporation to a limited liability company, and changed its name to “Fidelity Management & Research Company LLC”.
Broker-dealer Fidelity Distributors Corporation merged with and into Fidelity Investments Institutional Services Company, Inc. (“FIISC”). FIISC was then redomiciled from Massachusetts to Delaware, changed its corporate structure from a corporation to a limited liability company, and changed its name to “Fidelity Distributors Company LLC”.
These mergers are not expected to affect fund shareholders or Fidelity clients, nor are they expected to result in any changes to the day-to-day management of Fidelity’s brokerage services, the Fidelity funds, their investment policies and practices, their portfolio management teams, or the funds’ expenses.
Early in 2020, the outbreak and spread of a new coronavirus emerged as a public health emergency that had a major influence on financial markets, primarily based on its impact on the global economy and corporate earnings. The virus causes a respiratory disease known as COVID-19. On March 11, the World Health Organization declared the COVID-19 outbreak a pandemic, citing sustained risk of further global spread.
In the weeks following the end of this reporting period, as the crisis worsened, we witnessed an escalating human tragedy with wide-scale social and economic consequences from coronavirus-containment measures. The outbreak of COVID-19 prompted a number of measures to limit the spread, including travel and border restrictions, quarantines, and restrictions on large gatherings. In turn, these resulted in lower consumer activity, diminished demand for a wide range of products and services, disruption in manufacturing and supply chains, and – given the wide variability in outcomes regarding the outbreak – significant market uncertainty and volatility. Amid the turmoil, the U.S. government took unprecedented action – in concert with the U.S. Federal Reserve and central banks around the world – to help support consumers, businesses, and the broader economy, and to limit disruption to the financial system.
The situation continues to unfold, and the extent and duration of its impact on financial markets and the economy remain highly uncertain. Extreme events such as the coronavirus crisis are “exogenous shocks” that can have significant adverse effects on mutual funds and their investments. Although multiple asset classes may be affected by market disruption, the duration and impact may not be the same for all types of assets.
Fidelity is committed to helping you stay informed amid news about COVID-19 and during increased market volatility, and we’re taking extra steps to be responsive to customer needs. We encourage you to visit our websites, where we offer ongoing updates, commentary, and analysis on the markets and our funds.
Energy Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The hypothetical investment and the average annual total returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund’s total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
| For the periods ended February 29, 2020 | Past 1 year | Past 5 years | Past 10 years |
| Energy Portfolio | (27.24)% | (8.85)% | (1.78)% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Energy Portfolio on February 28, 2010.
The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
| Period Ending Values | ||
|
| $8,352 | Energy Portfolio |
|
| $32,918 | S&P 500® Index |
Energy Portfolio
Management's Discussion of Fund Performance
Market Recap: U.S. stocks stalled to begin the new year and declined in late February, as the outbreak and spread of the new coronavirus threatened to hamper global economic growth and corporate earnings. For the 12 months ending February 29, 2020, the U.S. equity bellwether S&P 500® index gained 8.19%. The period began with equities rising amid upbeat company earnings and signs the U.S. Federal Reserve may pause on rates. The uptrend extended until May, when the index dipped as trade talks between the U.S. and China broke down. The bull market roared back to record a series of highs in July, when the Fed cut interest rates for the first time since 2008. Volatility intensified in August, as the Treasury yield curve inverted, which some investors viewed as a sign the U.S. economy could be heading for recession. But the market proved resilient, hitting a new high on October 30, when the Fed lowered rates for the third time in 2019, and moving higher through December 31. Following a roughly flat January, stocks sank in late February, after a surge in coronavirus cases outside China created considerable uncertainty and pushed investors to safer asset classes. By sector, information technology (+27%) led the way by a wide margin, followed by utilities and communication services (+13% each). In contrast, energy (-25%) was by far the weakest category, struggling due to sluggish oil prices. Other notable laggards included materials and industrials (-2% each). Comments from Portfolio Manager Maurice FitzMaurice: For the fiscal year, the fund returned -27.24%, ahead of the -28.03% result of the MSCI U.S. IMI Energy 25/50 Index, but trailing the broad-market S&P 500® index. Falling prices for crude oil and natural gas posed a challenge for energy stocks the past 12 months. The West Texas Intermediate spot price, a proxy for U.S. crude oil, returned about -23% this period, largely hampered by growing concerns about a global economic slowdown and reduced demand for energy commodities due to the outbreak and global spread of the novel coronavirus. Natural gas prices, as measured by the Henry Hub spot price, returned about -36%. Versus the MSCI sector index, favorable stock selection in the integrated oil & gas industry group contributed most, followed by an overweighting in oil & gas refining & marketing. The top individual relative contributor was an overweighted position in refining firm Valero Energy (-15%), followed by a large underweighting in integrated oil & gas company Exxon Mobil (-31%). Conversely, an underweighting and stock selection in oil & gas storage & transportation notably detracted from relative performance. Stock picks in the oil & gas equipment & services segment also hurt. Not owning Kinder Morgan (+5%) and ONEOK (+9%) – outperforming index components in the oil & gas storage & transportation industry – were the biggest individual relative detractors. A non-index position in E&P Encana also held back relative performance. I eliminated our stake in Encana before period end.The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Note to shareholders: On January 1, 2020, Maurice FitzMaurice assumed management responsibilities for the fund, succeeding John Dowd, who left Fidelity after 14 years with the firm.Energy Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 29, 2020
| % of fund's net assets | |
| Chevron Corp. | 14.5 |
| Exxon Mobil Corp. | 12.5 |
| BP PLC sponsored ADR | 6.4 |
| Valero Energy Corp. | 5.4 |
| Occidental Petroleum Corp. | 4.8 |
| Cheniere Energy, Inc. | 4.6 |
| Pioneer Natural Resources Co. | 4.4 |
| EOG Resources, Inc. | 4.3 |
| Baker Hughes Co. Class A | 4.0 |
| Marathon Petroleum Corp. | 3.3 |
| 64.2 |
Top Industries (% of fund's net assets)
| As of February 29, 2020 | ||
| Oil, Gas & Consumable Fuels | 86.0% | |
| Energy Equipment & Services | 9.1% | |
| Independent Power and Renewable Electricity Producers | 2.2% | |
| All Others* | 2.7% | |
* Includes short-term investments and net other assets (liabilities).
Energy Portfolio
Schedule of Investments February 29, 2020
Showing Percentage of Net Assets
| Common Stocks - 97.3% | |||
| Shares | Value | ||
| Energy Equipment & Services - 9.1% | |||
| Oil & Gas Drilling - 1.4% | |||
| Nabors Industries Ltd. | 1,586,900 | $2,792,944 | |
| Odfjell Drilling Ltd. (a) | 872,256 | 2,333,117 | |
| Patterson-UTI Energy, Inc. | 348,500 | 1,996,905 | |
| Shelf Drilling Ltd. (a)(b) | 1,209,713 | 2,137,918 | |
| 9,260,884 | |||
| Oil & Gas Equipment & Services - 7.7% | |||
| Baker Hughes Co. Class A | 1,694,940 | 27,271,585 | |
| Cactus, Inc. | 134,400 | 3,670,464 | |
| Forum Energy Technologies, Inc. (a) | 491,419 | 383,307 | |
| Nextier Oilfield Solutions, Inc. (a) | 700,700 | 3,265,262 | |
| Oceaneering International, Inc. (a) | 313,300 | 3,302,182 | |
| ProPetro Holding Corp. (a) | 614,600 | 5,383,896 | |
| RigNet, Inc. (a) | 498,801 | 1,755,780 | |
| Schlumberger Ltd. | 264,758 | 7,172,294 | |
| 52,204,770 | |||
| TOTAL ENERGY EQUIPMENT & SERVICES | 61,465,654 | ||
| Independent Power and Renewable Electricity Producers - 2.2% | |||
| Independent Power Producers & Energy Traders - 2.2% | |||
| Vistra Energy Corp. | 771,200 | 14,830,176 | |
| Oil, Gas & Consumable Fuels - 86.0% | |||
| Integrated Oil & Gas - 40.3% | |||
| BP PLC sponsored ADR | 1,386,000 | 43,367,940 | |
| Chevron Corp. | 1,051,623 | 98,158,488 | |
| Exxon Mobil Corp. | 1,646,048 | 84,672,709 | |
| Occidental Petroleum Corp. | 991,000 | 32,445,340 | |
| Suncor Energy, Inc. | 320,700 | 8,837,916 | |
| Total SA sponsored ADR | 126,000 | 5,435,640 | |
| 272,918,033 | |||
| Oil & Gas Exploration & Production - 24.1% | |||
| Callon Petroleum Co. (a) | 687,300 | 1,560,171 | |
| Canadian Natural Resources Ltd. | 268,100 | 6,900,991 | |
| Cimarex Energy Co. | 124,900 | 4,127,945 | |
| ConocoPhillips Co. | 416,600 | 20,171,772 | |
| Devon Energy Corp. | 754,500 | 12,253,080 | |
| Diamondback Energy, Inc. | 68,647 | 4,256,114 | |
| EOG Resources, Inc. | 458,164 | 28,983,455 | |
| Hess Corp. | 73,900 | 4,151,702 | |
| Kosmos Energy Ltd. | 935,100 | 2,852,055 | |
| Magnolia Oil & Gas Corp. Class A (a)(c) | 435,800 | 3,272,858 | |
| National Energy Services Reunited Corp. (a) | 625,100 | 5,194,581 | |
| Noble Energy, Inc. | 1,078,000 | 17,064,740 | |
| Northern Oil & Gas, Inc. (a)(c) | 2,830,200 | 4,103,790 | |
| Ovintiv, Inc. | 237,828 | 2,748,156 | |
| Parsley Energy, Inc. Class A | 312,100 | 4,182,140 | |
| PDC Energy, Inc. (a) | 418,851 | 7,970,735 | |
| Pioneer Natural Resources Co. | 242,599 | 29,786,305 | |
| Viper Energy Partners LP | 181,759 | 3,240,763 | |
| 162,821,353 | |||
| Oil & Gas Refining & Marketing - 11.7% | |||
| HollyFrontier Corp. | 15,800 | 532,144 | |
| Marathon Petroleum Corp. | 465,092 | 22,054,663 | |
| Phillips 66 Co. | 254,873 | 19,079,793 | |
| Valero Energy Corp. | 554,000 | 36,702,500 | |
| World Fuel Services Corp. | 23,400 | 661,752 | |
| 79,030,852 | |||
| Oil & Gas Storage & Transport - 9.9% | |||
| Cheniere Energy, Inc. (a) | 607,500 | 31,158,675 | |
| Enterprise Products Partners LP | 479,000 | 11,179,860 | |
| Golar LNG Ltd. | 315,400 | 4,041,851 | |
| Noble Midstream Partners LP | 424,114 | 6,510,150 | |
| Teekay LNG Partners LP | 291,400 | 3,662,898 | |
| The Williams Companies, Inc. | 561,300 | 10,692,765 | |
| 67,246,199 | |||
| TOTAL OIL, GAS & CONSUMABLE FUELS | 582,016,437 | ||
| TOTAL COMMON STOCKS | |||
| (Cost $824,738,166) | 658,312,267 | ||
| Money Market Funds - 1.6% | |||
| Fidelity Cash Central Fund 1.60% (d) | 7,203,337 | 7,204,778 | |
| Fidelity Securities Lending Cash Central Fund 1.60% (d)(e) | 3,421,236 | 3,421,578 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $10,626,356) | 10,626,356 | ||
| TOTAL INVESTMENT IN SECURITIES - 98.9% | |||
| (Cost $835,364,522) | 668,938,623 | ||
| NET OTHER ASSETS (LIABILITIES) - 1.1% | 7,373,651 | ||
| NET ASSETS - 100% | $676,312,274 |
Legend
(a) Non-income producing
(b) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the end of the period, the value of these securities amounted to $2,137,918 or 0.3% of net assets.
(c) Security or a portion of the security is on loan at period end.
(d) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request.
(e) Investment made with cash collateral received from securities on loan.
Affiliated Central Funds
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:
| Fund | Income earned |
| Fidelity Cash Central Fund | $143,741 |
| Fidelity Securities Lending Cash Central Fund | 21,167 |
| Total | $164,908 |
Amounts in the income column in the above table include any capital gain distributions from underlying funds, which are presented in the corresponding line-item in the Statement of Operations, if applicable. Amount for Fidelity Securities Lending Cash Central Fund represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities.
Investment Valuation
The following is a summary of the inputs used, as of February 29, 2020, 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 below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.
| Valuation Inputs at Reporting Date: | ||||
| Description | Total | Level 1 | Level 2 | Level 3 |
| Investments in Securities: | ||||
| Common Stocks | $658,312,267 | $653,841,232 | $4,471,035 | $-- |
| Money Market Funds | 10,626,356 | 10,626,356 | -- | -- |
| Total Investments in Securities: | $668,938,623 | $664,467,588 | $4,471,035 | $-- |
Other Information
Distribution of investments by country or territory of incorporation, as a percentage of Total Net Assets, is as follows (Unaudited):
| United States of America | 86.4% |
| United Kingdom | 6.4% |
| Canada | 2.3% |
| Bermuda | 1.4% |
| Curacao | 1.1% |
| Others (Individually Less Than 1%) | 2.4% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Energy Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2020 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $3,325,682) — See accompanying schedule: Unaffiliated issuers (cost $824,738,166) | $658,312,267 | |
| Fidelity Central Funds (cost $10,626,356) | 10,626,356 | |
| Total Investment in Securities (cost $835,364,522) | $668,938,623 | |
| Cash | 114 | |
| Receivable for fund shares sold | 9,865,361 | |
| Dividends receivable | 5,077,847 | |
| Distributions receivable from Fidelity Central Funds | 4,524 | |
| Prepaid expenses | 12,018 | |
| Other receivables | 254,742 | |
| Total assets | 684,153,229 | |
| Liabilities | ||
| Payable for investments purchased | $87,397 | |
| Payable for fund shares redeemed | 3,587,774 | |
| Accrued management fee | 343,116 | |
| Other affiliated payables | 183,661 | |
| Other payables and accrued expenses | 222,882 | |
| Collateral on securities loaned | 3,416,125 | |
| Total liabilities | 7,840,955 | |
| Net Assets | $676,312,274 | |
| Net Assets consist of: | ||
| Paid in capital | $1,261,276,978 | |
| Total accumulated earnings (loss) | (584,964,704) | |
| Net Assets | $676,312,274 | |
| Net Asset Value, offering price and redemption price per share ($676,312,274 ÷ 25,247,761 shares) | $26.79 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 29, 2020 | ||
| Investment Income | ||
| Dividends | $27,266,870 | |
| Income from Fidelity Central Funds (including $21,167 from security lending) | 164,908 | |
| Total income | 27,431,778 | |
| Expenses | ||
| Management fee | $5,236,321 | |
| Transfer agent fees | 2,218,720 | |
| Accounting and security lending fees | 326,703 | |
| Custodian fees and expenses | 23,359 | |
| Independent trustees' fees and expenses | 5,584 | |
| Registration fees | 55,472 | |
| Audit | 65,485 | |
| Legal | 2,046 | |
| Interest | 999 | |
| Miscellaneous | 10,591 | |
| Total expenses before reductions | 7,945,280 | |
| Expense reductions | (78,048) | |
| Total expenses after reductions | 7,867,232 | |
| Net investment income (loss) | 19,564,546 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers (net of foreign taxes of $226,052) | (53,226,043) | |
| Redemptions in-kind with affiliated entities | 6,179,274 | |
| Fidelity Central Funds | 456 | |
| Foreign currency transactions | 19,314 | |
| Total net realized gain (loss) | (47,026,999) | |
| Change in net unrealized appreciation (depreciation) on: | ||
| Investment securities: | ||
| Unaffiliated issuers (net of decrease in deferred foreign taxes of $121,966) | (239,087,801) | |
| Assets and liabilities in foreign currencies | (1,169) | |
| Total change in net unrealized appreciation (depreciation) | (239,088,970) | |
| Net gain (loss) | (286,115,969) | |
| Net increase (decrease) in net assets resulting from operations | $(266,551,423) |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 29, 2020 | Year ended February 28, 2019 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $19,564,546 | $17,770,142 |
| Net realized gain (loss) | (47,026,999) | 44,684,339 |
| Change in net unrealized appreciation (depreciation) | (239,088,970) | (128,275,248) |
| Net increase (decrease) in net assets resulting from operations | (266,551,423) | (65,820,767) |
| Distributions to shareholders | (17,018,375) | (15,141,238) |
| Share transactions | ||
| Proceeds from sales of shares | 208,781,170 | 441,916,034 |
| Reinvestment of distributions | 16,049,946 | 14,307,440 |
| Cost of shares redeemed | (417,122,444) | (1,001,524,132) |
| Net increase (decrease) in net assets resulting from share transactions | (192,291,328) | (545,300,658) |
| Total increase (decrease) in net assets | (475,861,126) | (626,262,663) |
| Net Assets | ||
| Beginning of period | 1,152,173,400 | 1,778,436,063 |
| End of period | $676,312,274 | $1,152,173,400 |
| Other Information | ||
| Shares | ||
| Sold | 6,071,489 | 10,039,540 |
| Issued in reinvestment of distributions | 450,411 | 402,346 |
| Redeemed | (12,000,042) | (23,082,720) |
| Net increase (decrease) | (5,478,142) | (12,640,834) |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights
Energy Portfolio
| Years ended February 28, | 2020 A | 2019 | 2018 | 2017 | 2016 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $37.50 | $41.01 | $44.10 | $32.63 | $45.64 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .71 | .49 | .75C | .18 | .42 |
| Net realized and unrealized gain (loss) | (10.76) | (3.51) | (3.06) | 11.58 | (12.98) |
| Total from investment operations | (10.05) | (3.02) | (2.31) | 11.76 | (12.56) |
| Distributions from net investment income | (.64) | (.48) | (.68) | (.24) | (.39) |
| Distributions from net realized gain | (.02) | (.01) | (.10) | (.05) | (.07) |
| Total distributions | (.66) | (.49) | (.78) | (.29) | (.45)D |
| Redemption fees added to paid in capitalB | – | – | – | –E | –E |
| Net asset value, end of period | $26.79 | $37.50 | $41.01 | $44.10 | $32.63 |
| Total ReturnF | (27.24)% | (7.30)% | (5.27)% | 36.05% | (27.61)% |
| Ratios to Average Net AssetsG,H | |||||
| Expenses before reductions | .81% | .78% | .79% | .79% | .80% |
| Expenses net of fee waivers, if any | .81% | .78% | .79% | .79% | .80% |
| Expenses net of all reductions | .80% | .77% | .78% | .78% | .79% |
| Net investment income (loss) | 2.00% | 1.12% | 1.82%C | .44% | 1.03% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $676,312 | $1,152,173 | $1,778,436 | $2,289,350 | $1,928,897 |
| Portfolio turnover rateI | 79%J | 59%J | 59% | 93%J | 79% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Net investment income per share reflects a large, non-recurring dividend which amounted to $.48 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .66%.
D Total distributions of $.45 per share is comprised of distributions from net investment income of $.387 and distributions from net realized gain of $.066 per share.
E Amount represents less than $.005 per share.
F Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
G Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
H Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
I Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
J Portfolio turnover rate excludes securities received or delivered in-kind.
See accompanying notes which are an integral part of the financial statements.
Energy Service Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The hypothetical investment and the average annual total returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund’s total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
| For the periods ended February 29, 2020 | Past 1 year | Past 5 years | Past 10 years |
| Energy Service Portfolio | (42.54)% | (18.64)% | (9.19)% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Energy Service Portfolio on February 28, 2010.
The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
| Period Ending Values | ||
|
| $3,812 | Energy Service Portfolio |
|
| $32,918 | S&P 500® Index |
Energy Service Portfolio
Management's Discussion of Fund Performance
Market Recap: U.S. stocks stalled to begin the new year and declined in late February, as the outbreak and spread of the new coronavirus threatened to hamper global economic growth and corporate earnings. For the 12 months ending February 29, 2020, the U.S. equity bellwether S&P 500® index gained 8.19%. The period began with equities rising amid upbeat company earnings and signs the U.S. Federal Reserve may pause on rates. The uptrend extended until May, when the index dipped as trade talks between the U.S. and China broke down. The bull market roared back to record a series of highs in July, when the Fed cut interest rates for the first time since 2008. Volatility intensified in August, as the Treasury yield curve inverted, which some investors viewed as a sign the U.S. economy could be heading for recession. But the market proved resilient, hitting a new high on October 30, when the Fed lowered rates for the third time in 2019, and moving higher through December 31. Following a roughly flat January, stocks sank in late February, after a surge in coronavirus cases outside China created considerable uncertainty and pushed investors to safer asset classes. By sector, information technology (+27%) led the way by a wide margin, followed by utilities and communication services (+13% each). In contrast, energy (-25%) was by far the weakest category, struggling due to sluggish oil prices. Other notable laggards included materials and industrials (-2% each). Comments from Portfolio Manager Maurice FitzMaurice: For the fiscal year, the fund returned -42.54%, ahead of the -45.33% result of the MSCI U.S. IMI Energy Equipment & Service 25/50 Index, but trailing the broad-market S&P 500® index. Falling prices for crude oil and natural gas proved to be a headwind for the profitability of energy producers the past 12 months, resulting in lower demand for oilfield and offshore equipment and services. The West Texas Intermediate spot price, a proxy for U.S. crude oil, returned about -23% this period, largely hampered by growing concerns about a global economic slowdown and reduced demand for energy commodities due to the outbreak and global spread of the novel coronavirus. Natural gas prices, as measured by the Henry Hub spot price, returned about -36%. Versus the MSCI sector index, favorable stock selection was the primary driver of the fund’s outperformance the past 12 months, particularly in the oil & gas equipment & services and the oil & gas drilling industries. An out-of-benchmark allocation to the relatively stronger-performing oil & gas storage & transportation industry also added value. The top individual relative contributor was a non-index stake in international oilfield services company National Energy Services Reunited (-4%), followed by an underweighting in offshore drilling services provider and index component Valaris (-77%). A non-index stake in Ranger Energy Services (+3%) also contributed. Conversely, an overweighting in oilfield communications and technology services firm RigNet (-77%) was the fund’s largest individual relative detractor. A sizable non-index position in shallow-water drilling services company Shelf Drilling (-62%) also held back the fund’s relative result.The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Note to shareholders: On March 1, 2019, Ben Shuleva came off the fund, leaving Maurice FitzMaurice as sole portfolio manager.Energy Service Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 29, 2020
| % of fund's net assets | |
| Schlumberger Ltd. | 17.2 |
| Baker Hughes Co. Class A | 13.3 |
| Halliburton Co. | 11.1 |
| National Energy Services Reunited Corp. | 4.9 |
| Cheniere Energy, Inc. | 3.9 |
| Odfjell Drilling Ltd. | 3.3 |
| Shelf Drilling Ltd. | 3.3 |
| Nabors Industries Ltd. | 3.0 |
| TechnipFMC PLC | 3.0 |
| ProPetro Holding Corp. | 2.8 |
| 65.8 |
Top Industries (% of fund's net assets)
| As of February 29, 2020 | ||
| Energy Equipment & Services | 87.2% | |
| Oil, Gas & Consumable Fuels | 9.4% | |
| All Others* | 3.4% | |
* Includes short-term investments and net other assets (liabilities).
Energy Service Portfolio
Schedule of Investments February 29, 2020
Showing Percentage of Net Assets
| Common Stocks - 96.6% | |||
| Shares | Value | ||
| Energy Equipment & Services - 87.2% | |||
| Oil & Gas Drilling - 15.2% | |||
| Borr Drilling Ltd. (a)(b) | 95,212 | $204,053 | |
| Helmerich & Payne, Inc. | 92,798 | 3,423,318 | |
| Independence Contract Drilling, Inc. (a) | 1,291,955 | 510,581 | |
| Nabors Industries Ltd. | 2,698,578 | 4,749,497 | |
| Odfjell Drilling Ltd. (a)(b) | 1,993,182 | 5,331,378 | |
| Patterson-UTI Energy, Inc. | 645,990 | 3,701,523 | |
| Shelf Drilling Ltd. (a)(c) | 2,966,076 | 5,241,926 | |
| Transocean Ltd. (United States) (a)(b) | 292,600 | 980,210 | |
| Valaris PLC Class A (b) | 44,062 | 162,589 | |
| 24,305,075 | |||
| Oil & Gas Equipment & Services - 72.0% | |||
| Apergy Corp. (a) | 150,548 | 2,800,193 | |
| Archrock, Inc. | 376,416 | 2,653,733 | |
| Baker Hughes Co. Class A | 1,313,338 | 21,131,608 | |
| Cactus, Inc. | 142,900 | 3,902,599 | |
| Core Laboratories NV | 20,300 | 544,852 | |
| CSI Compressco LP | 1,073,931 | 1,900,858 | |
| Dril-Quip, Inc. (a) | 100,500 | 3,579,810 | |
| Forum Energy Technologies, Inc. (a) | 652,397 | 508,870 | |
| Frank's International NV (a) | 380,283 | 1,490,709 | |
| FTS International, Inc. (a) | 31,700 | 29,323 | |
| Halliburton Co. | 1,039,650 | 17,632,464 | |
| Helix Energy Solutions Group, Inc. (a) | 292,229 | 1,960,857 | |
| National Oilwell Varco, Inc. | 159,500 | 2,984,245 | |
| NCS Multistage Holdings, Inc. (a) | 90,737 | 98,903 | |
| Nextier Oilfield Solutions, Inc. (a) | 676,600 | 3,152,956 | |
| Oceaneering International, Inc. (a) | 347,325 | 3,660,806 | |
| Oil States International, Inc. (a) | 191,425 | 1,514,172 | |
| ProPetro Holding Corp. (a) | 517,800 | 4,535,928 | |
| Ranger Energy Services, Inc. Class A (a)(b) | 599,094 | 4,121,767 | |
| RigNet, Inc. (a) | 605,035 | 2,129,723 | |
| Schlumberger Ltd. | 1,007,611 | 27,296,182 | |
| SEACOR Marine Holdings, Inc. (a) | 100 | 795 | |
| Smart Sand, Inc. (a)(b) | 261,590 | 426,392 | |
| Superior Energy Services, Inc. (a) | 45,760 | 165,651 | |
| TechnipFMC PLC | 319,472 | 4,740,964 | |
| TETRA Technologies, Inc. (a) | 1,192,422 | 1,502,452 | |
| TETRA Technologies, Inc. warrants 12/14/21 (a) | 300,100 | 11,734 | |
| U.S. Silica Holdings, Inc. | 4,200 | 19,278 | |
| Weatherford International PLC (a) | 1,499 | 31,329 | |
| Weatherford International PLC warrants 12/13/23 (a) | 16,662 | 9,997 | |
| 114,539,150 | |||
| TOTAL ENERGY EQUIPMENT & SERVICES | 138,844,225 | ||
| Oil, Gas & Consumable Fuels - 9.4% | |||
| Oil & Gas Exploration & Production - 4.9% | |||
| National Energy Services Reunited Corp. (a)(b) | 933,969 | 7,761,282 | |
| Oil & Gas Storage & Transport - 4.5% | |||
| Cheniere Energy, Inc. (a) | 120,212 | 6,165,673 | |
| Golar LNG Ltd. | 75,333 | 965,392 | |
| 7,131,065 | |||
| TOTAL OIL, GAS & CONSUMABLE FUELS | 14,892,347 | ||
| TOTAL COMMON STOCKS | |||
| (Cost $293,549,945) | 153,736,572 | ||
| Money Market Funds - 3.9% | |||
| Fidelity Cash Central Fund 1.60% (d) | 3,855,025 | 3,855,796 | |
| Fidelity Securities Lending Cash Central Fund 1.60% (d)(e) | 2,393,156 | 2,393,395 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $6,249,073) | 6,249,191 | ||
| TOTAL INVESTMENT IN SECURITIES - 100.5% | |||
| (Cost $299,799,018) | 159,985,763 | ||
| NET OTHER ASSETS (LIABILITIES) - (0.5)% | (856,196) | ||
| NET ASSETS - 100% | $159,129,567 |
Legend
(a) Non-income producing
(b) Security or a portion of the security is on loan at period end.
(c) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the end of the period, the value of these securities amounted to $5,241,926 or 3.3% of net assets.
(d) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request.
(e) Includes investment made with cash collateral received from securities on loan.
Affiliated Central Funds
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:
| Fund | Income earned |
| Fidelity Cash Central Fund | $29,399 |
| Fidelity Securities Lending Cash Central Fund | 132,384 |
| Total | $161,783 |
Amounts in the income column in the above table include any capital gain distributions from underlying funds, which are presented in the corresponding line-item in the Statement of Operations, if applicable. Amount for Fidelity Securities Lending Cash Central Fund represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities.
Other Affiliated Issuers
An affiliated company is a company in which the Fund has ownership of at least 5% of the voting securities. Fiscal year to date transactions with companies which are or were affiliates are as follows:
| Affiliate | Value, beginning of period | Purchases | Sales Proceeds | Dividend Income | Realized Gain (loss) | Change in Unrealized appreciation (depreciation) | Value, end of period |
| Enterprise Group, Inc. | $1,104,089 | $-- | $805,986 | $-- | $(6,662,065) | $6,363,962 | $-- |
| Superior Drilling Products, Inc. | 3,855,310 | -- | 2,755,415 | -- | (3,822,347) | 2,722,452 | -- |
| Total | $4,959,399 | $-- | $3,561,401 | $-- | $(10,484,412) | $9,086,414 | $-- |
Investment Valuation
The following is a summary of the inputs used, as of February 29, 2020, 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 below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.
| Valuation Inputs at Reporting Date: | ||||
| Description | Total | Level 1 | Level 2 | Level 3 |
| Investments in Securities: | ||||
| Common Stocks | $153,736,572 | $142,947,481 | $10,789,091 | $-- |
| Money Market Funds | 6,249,191 | 6,249,191 | -- | -- |
| Total Investments in Securities: | $159,985,763 | $149,196,672 | $10,789,091 | $-- |
Other Information
Distribution of investments by country or territory of incorporation, as a percentage of Total Net Assets, is as follows (Unaudited):
| United States of America | 62.7% |
| Curacao | 17.2% |
| Bermuda | 7.0% |
| British Virgin Islands | 4.9% |
| Norway | 3.3% |
| United Kingdom | 3.1% |
| Netherlands | 1.2% |
| Others (Individually Less Than 1%) | 0.6% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Energy Service Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2020 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $2,372,432) — See accompanying schedule: Unaffiliated issuers (cost $293,549,945) | $153,736,572 | |
| Fidelity Central Funds (cost $6,249,073) | 6,249,191 | |
| Total Investment in Securities (cost $299,799,018) | $159,985,763 | |
| Receivable for investments sold | 76,495 | |
| Receivable for fund shares sold | 2,031,685 | |
| Dividends receivable | 585,332 | |
| Distributions receivable from Fidelity Central Funds | 5,917 | |
| Prepaid expenses | 2,782 | |
| Other receivables | 61,155 | |
| Total assets | 162,749,129 | |
| Liabilities | ||
| Payable for fund shares redeemed | $991,008 | |
| Accrued management fee | 81,489 | |
| Other affiliated payables | 55,517 | |
| Other payables and accrued expenses | 97,587 | |
| Collateral on securities loaned | 2,393,961 | |
| Total liabilities | 3,619,562 | |
| Net Assets | $159,129,567 | |
| Net Assets consist of: | ||
| Paid in capital | $543,097,027 | |
| Total accumulated earnings (loss) | (383,967,460) | |
| Net Assets | $159,129,567 | |
| Net Asset Value, offering price and redemption price per share ($159,129,567 ÷ 9,242,188 shares) | $17.22 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 29, 2020 | ||
| Investment Income | ||
| Dividends | $5,022,311 | |
| Income from Fidelity Central Funds (including $132,384 from security lending) | 161,783 | |
| Total income | 5,184,094 | |
| Expenses | ||
| Management fee | $1,220,832 | |
| Transfer agent fees | 642,309 | |
| Accounting and security lending fees | 89,131 | |
| Custodian fees and expenses | 10,750 | |
| Independent trustees' fees and expenses | 1,316 | |
| Registration fees | 41,754 | |
| Audit | 48,420 | |
| Legal | 769 | |
| Miscellaneous | 2,243 | |
| Total expenses before reductions | 2,057,524 | |
| Expense reductions | (16,108) | |
| Total expenses after reductions | 2,041,416 | |
| Net investment income (loss) | 3,142,678 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | (83,651,881) | |
| Fidelity Central Funds | 41 | |
| Other affiliated issuers | (10,484,412) | |
| Foreign currency transactions | (21,346) | |
| Total net realized gain (loss) | (94,157,598) | |
| Change in net unrealized appreciation (depreciation) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | (44,042,767) | |
| Fidelity Central Funds | (279) | |
| Other affiliated issuers | 9,086,414 | |
| Assets and liabilities in foreign currencies | 2,007 | |
| Total change in net unrealized appreciation (depreciation) | (34,954,625) | |
| Net gain (loss) | (129,112,223) | |
| Net increase (decrease) in net assets resulting from operations | $(125,969,545) |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 29, 2020 | Year ended February 28, 2019 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $3,142,678 | $2,432,011 |
| Net realized gain (loss) | (94,157,598) | (32,141,097) |
| Change in net unrealized appreciation (depreciation) | (34,954,625) | (62,884,617) |
| Net increase (decrease) in net assets resulting from operations | (125,969,545) | (92,593,703) |
| Distributions to shareholders | (4,506,594) | (2,784,223) |
| Share transactions | ||
| Proceeds from sales of shares | 134,993,891 | 135,703,149 |
| Reinvestment of distributions | 4,269,353 | 2,638,204 |
| Cost of shares redeemed | (153,007,034) | (152,668,531) |
| Net increase (decrease) in net assets resulting from share transactions | (13,743,790) | (14,327,178) |
| Total increase (decrease) in net assets | (144,219,929) | (109,705,104) |
| Net Assets | ||
| Beginning of period | 303,349,496 | 413,054,600 |
| End of period | $159,129,567 | $303,349,496 |
| Other Information | ||
| Shares | ||
| Sold | 5,361,676 | 3,781,710 |
| Issued in reinvestment of distributions | 176,201 | 94,121 |
| Redeemed | (6,204,797) | (3,793,132) |
| Net increase (decrease) | (666,920) | 82,699 |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights
Energy Service Portfolio
| Years ended February 28, | 2020 A | 2019 | 2018 | 2017 | 2016 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $30.61 | $42.04 | $54.70 | $37.54 | $54.34 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .34 | .26 | 1.41C | .17 | .45 |
| Net realized and unrealized gain (loss) | (13.21) | (11.37) | (10.86) | 17.22 | (16.85) |
| Total from investment operations | (12.87) | (11.11) | (9.45) | 17.39 | (16.40) |
| Distributions from net investment income | (.52) | (.32) | (1.77) | (.23) | (.40) |
| Distributions from net realized gain | – | – | (1.43) | – | – |
| Total distributions | (.52) | (.32) | (3.21)D | (.23) | (.40) |
| Redemption fees added to paid in capitalB | – | – | –E | –E | –E |
| Net asset value, end of period | $17.22 | $30.61 | $42.04 | $54.70 | $37.54 |
| Total ReturnF | (42.54)% | (26.36)% | (17.41)% | 46.36% | (30.30)% |
| Ratios to Average Net AssetsG,H | |||||
| Expenses before reductions | .90% | .84% | .84% | .85% | .85% |
| Expenses net of fee waivers, if any | .90% | .84% | .84% | .85% | .84% |
| Expenses net of all reductions | .89% | .81% | .82% | .84% | .81% |
| Net investment income (loss) | 1.38% | .65% | 3.04%C | .36% | .92% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $159,130 | $303,349 | $413,055 | $734,091 | $435,375 |
| Portfolio turnover rateI | 42% | 80% | 62% | 96% | 58% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Net investment income per share reflects a large, non-recurring dividend which amounted to $1.34 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .16%.
D Total distributions of $3.21 per share is comprised of distributions from net investment income of $1.774 and distributions from net realized gain of $1.431 per share.
E Amount represents less than $.005 per share.
F Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
G Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
H Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
I Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the financial statements.
Natural Gas Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The hypothetical investment and the average annual total returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund’s total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
| For the periods ended February 29, 2020 | Past 1 year | Past 5 years | Past 10 years |
| Natural Gas Portfolio | (32.98)% | (14.40)% | (6.73)% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Natural Gas Portfolio on February 28, 2010.
The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
| Period Ending Values | ||
|
| $4,982 | Natural Gas Portfolio |
|
| $32,918 | S&P 500® Index |
Natural Gas Portfolio
Management's Discussion of Fund Performance
Market Recap: U.S. stocks stalled to begin the new year and declined in late February, as the outbreak and spread of the new coronavirus threatened to hamper global economic growth and corporate earnings. For the 12 months ending February 29, 2020, the U.S. equity bellwether S&P 500® index gained 8.19%. The period began with equities rising amid upbeat company earnings and signs the U.S. Federal Reserve may pause on rates. The uptrend extended until May, when the index dipped as trade talks between the U.S. and China broke down. The bull market roared back to record a series of highs in July, when the Fed cut interest rates for the first time since 2008. Volatility intensified in August, as the Treasury yield curve inverted, which some investors viewed as a sign the U.S. economy could be heading for recession. But the market proved resilient, hitting a new high on October 30, when the Fed lowered rates for the third time in 2019, and moving higher through December 31. Following a roughly flat January, stocks sank in late February, after a surge in coronavirus cases outside China created considerable uncertainty and pushed investors to safer asset classes. By sector, information technology (+27%) led the way by a wide margin, followed by utilities and communication services (+13% each). In contrast, energy (-25%) was by far the weakest category, struggling due to sluggish oil prices. Other notable laggards included materials and industrials (-2% each). Comments from Co-Portfolio Managers Ben Shuleva and Peter Belisle: For the fiscal year, the fund returned -32.98%, lagging the -22.68% result of the FactSet Natural Gas Linked Index as well as the broad-based S&P 500 index. Excess crude oil and natural gas supply pressured energy prices and stock returns. Versus the industry index, stock picks in the oil & gas equipment & services, storage & transportation and exploration & production (E&P) segments accounted for most of the fund’s underperformance. The biggest individual detractor was a sizable non-index position in RigNet (-77%), which provides satellite communications and technology to help energy producers. The company is exposed to offshore drilling activity, which was worse than expected this period and pressured the stock. An overweighting, on average, in E&P company Encana (-47%) also hurt. The company began doing business as Ovintiv in January and was hard hit by declining energy prices and a negative legal settlement. A non-index stake in offshore jack-up rig provider Shelf Drilling (-62%) also detracted as demand for rig equipment slumped. Conversely, our decision to underweight integrated oil & gas companies helped relative performance. The fund’s biggest individual contributor was E&P company Anadarko Petroleum (+64%), which was bought at a sizable premium by Occidental Petroleum (another fund holding) in August. The fund’s sizable non-index stake in Houston-based natural gas and crude oil pipeline company Enterprise Products Partners (-10%) also contributed.The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Note to shareholders: On January 1, 2020, Peter Belisle assumed co-management responsibilities for the fund, joining Ben Shuleva.Natural Gas Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 29, 2020
| % of fund's net assets | |
| Enbridge, Inc. | 9.2 |
| EOG Resources, Inc. | 8.1 |
| Noble Energy, Inc. | 6.3 |
| The Williams Companies, Inc. | 6.2 |
| Schlumberger Ltd. | 5.3 |
| CenterPoint Energy, Inc. | 5.1 |
| PDC Energy, Inc. | 5.1 |
| Devon Energy Corp. | 4.6 |
| Enterprise Products Partners LP | 4.2 |
| UGI Corp. | 3.7 |
| 57.8 |
Top Industries (% of fund's net assets)
| As of February 29, 2020 | ||
| Oil, Gas & Consumable Fuels | 68.8% | |
| Energy Equipment & Services | 15.7% | |
| Multi-Utilities | 6.7% | |
| Gas Utilities | 6.2% | |
| Marine | 0.6% | |
| All Others* | 2.0% | |
* Includes short-term investments and net other assets (liabilities).
Natural Gas Portfolio
Schedule of Investments February 29, 2020
Showing Percentage of Net Assets
| Common Stocks - 98.0% | |||
| Shares | Value | ||
| Energy Equipment & Services - 15.7% | |||
| Oil & Gas Drilling - 2.6% | |||
| Borr Drilling Ltd. (a) | 4,800 | $10,287 | |
| Independence Contract Drilling, Inc. (a) | 222,415 | 87,898 | |
| Shelf Drilling Ltd. (a)(b) | 1,629,256 | 2,879,373 | |
| 2,977,558 | |||
| Oil & Gas Equipment & Services - 13.1% | |||
| Baker Hughes Co. Class A | 111,100 | 1,787,599 | |
| Forum Energy Technologies, Inc. (a) | 877,814 | 684,695 | |
| Halliburton Co. | 88,700 | 1,504,352 | |
| NCS Multistage Holdings, Inc. (a) | 1,077,055 | 1,173,990 | |
| Oceaneering International, Inc. (a) | 17,100 | 180,234 | |
| Ranger Energy Services, Inc. Class A (a) | 142,306 | 979,065 | |
| RigNet, Inc. (a) | 747,035 | 2,629,563 | |
| Schlumberger Ltd. | 223,918 | 6,065,939 | |
| 15,005,437 | |||
| TOTAL ENERGY EQUIPMENT & SERVICES | 17,982,995 | ||
| Gas Utilities - 6.2% | |||
| Gas Utilities - 6.2% | |||
| Atmos Energy Corp. | 6,900 | 712,425 | |
| New Jersey Resources Corp. | 25,300 | 893,343 | |
| Southwest Gas Holdings, Inc. | 12,870 | 832,432 | |
| Spire, Inc. | 2,400 | 180,120 | |
| Superior Plus Corp. | 29,400 | 219,692 | |
| UGI Corp. | 118,700 | 4,277,948 | |
| 7,115,960 | |||
| Marine - 0.6% | |||
| Marine - 0.6% | |||
| 2020 Bulkers Ltd. (c) | 98,850 | 637,957 | |
| Multi-Utilities - 6.7% | |||
| Multi-Utilities - 6.7% | |||
| CenterPoint Energy, Inc. | 254,800 | 5,865,496 | |
| NiSource, Inc. | 67,600 | 1,826,552 | |
| 7,692,048 | |||
| Oil, Gas & Consumable Fuels - 68.8% | |||
| Integrated Oil & Gas - 2.4% | |||
| Occidental Petroleum Corp. | 85,100 | 2,786,174 | |
| Oil & Gas Exploration & Production - 35.6% | |||
| ARC Resources Ltd. (c) | 90,500 | 393,757 | |
| Cabot Oil & Gas Corp. | 75,500 | 1,051,715 | |
| Centennial Resource Development, Inc. Class A (a) | 232,300 | 550,551 | |
| Cimarex Energy Co. | 14,800 | 489,140 | |
| CNX Resources Corp. (a) | 7,400 | 39,294 | |
| ConocoPhillips Co. | 32,700 | 1,583,334 | |
| Continental Resources, Inc. | 2,600 | 49,270 | |
| Devon Energy Corp. | 326,287 | 5,298,901 | |
| EOG Resources, Inc. | 146,000 | 9,235,960 | |
| EQT Corp. | 60,523 | 355,270 | |
| Extraction Oil & Gas, Inc. (a)(c) | 2,000 | 1,377 | |
| Hess Corp. | 100 | 5,618 | |
| Matador Resources Co. (a)(c) | 24,600 | 237,144 | |
| Noble Energy, Inc. | 457,600 | 7,243,808 | |
| Northern Oil & Gas, Inc. (a) | 37,900 | 54,955 | |
| Ovintiv, Inc. | 224,441 | 2,592,294 | |
| PDC Energy, Inc. (a) | 305,700 | 5,817,471 | |
| Pioneer Natural Resources Co. | 33,700 | 4,137,686 | |
| QEP Resources, Inc. | 28,700 | 64,575 | |
| Range Resources Corp. (c) | 52,200 | 144,594 | |
| Seven Generations Energy Ltd. (a) | 75,400 | 310,082 | |
| Southwestern Energy Co. (a) | 102,307 | 145,276 | |
| Tourmaline Oil Corp. | 57,300 | 475,988 | |
| Whiting Petroleum Corp. (a) | 19,100 | 35,335 | |
| WPX Energy, Inc. (a) | 48,400 | 451,572 | |
| 40,764,967 | |||
| Oil & Gas Refining & Marketing - 2.4% | |||
| Phillips 66 Co. | 36,900 | 2,762,334 | |
| Oil & Gas Storage & Transport - 28.4% | |||
| Avenir LNG Ltd. (a) | 2,000,000 | 1,815,911 | |
| Enbridge, Inc. | 284,500 | 10,589,399 | |
| Enterprise Products Partners LP | 208,600 | 4,868,724 | |
| Keyera Corp. | 13,000 | 312,058 | |
| Kinder Morgan, Inc. | 34,300 | 657,531 | |
| Noble Midstream Partners LP | 77,192 | 1,184,897 | |
| ONEOK, Inc. | 28,000 | 1,868,160 | |
| Pembina Pipeline Corp. | 19,100 | 688,013 | |
| Targa Resources Corp. | 39,100 | 1,266,840 | |
| TC Energy Corp. | 40,800 | 2,126,555 | |
| TC Energy Corp. | 1,500 | 78,525 | |
| The Williams Companies, Inc. | 374,400 | 7,132,320 | |
| 32,588,933 | |||
| TOTAL OIL, GAS & CONSUMABLE FUELS | 78,902,408 | ||
| TOTAL COMMON STOCKS | |||
| (Cost $186,618,170) | 112,331,368 | ||
| Money Market Funds - 2.7% | |||
| Fidelity Cash Central Fund 1.60% (d) | 2,320,210 | 2,320,674 | |
| Fidelity Securities Lending Cash Central Fund 1.60% (d)(e) | 748,905 | 748,980 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $3,069,654) | 3,069,654 | ||
| TOTAL INVESTMENT IN SECURITIES - 100.7% | |||
| (Cost $189,687,824) | 115,401,022 | ||
| NET OTHER ASSETS (LIABILITIES) - (0.7)% | (770,878) | ||
| NET ASSETS - 100% | $114,630,144 |
Legend
(a) Non-income producing
(b) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the end of the period, the value of these securities amounted to $2,879,373 or 2.5% of net assets.
(c) Security or a portion of the security is on loan at period end.
(d) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request.
(e) Investment made with cash collateral received from securities on loan.
Affiliated Central Funds
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:
| Fund | Income earned |
| Fidelity Cash Central Fund | $6,704 |
| Fidelity Securities Lending Cash Central Fund | 12,336 |
| Total | $19,040 |
Amounts in the income column in the above table include any capital gain distributions from underlying funds, which are presented in the corresponding line-item in the Statement of Operations, if applicable. Amount for Fidelity Securities Lending Cash Central Fund represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities.
Investment Valuation
The following is a summary of the inputs used, as of February 29, 2020, 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 below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.
| Valuation Inputs at Reporting Date: | ||||
| Description | Total | Level 1 | Level 2 | Level 3 |
| Investments in Securities: | ||||
| Common Stocks | $112,331,368 | $106,987,840 | $5,343,528 | $-- |
| Money Market Funds | 3,069,654 | 3,069,654 | -- | -- |
| Total Investments in Securities: | $115,401,022 | $110,057,494 | $5,343,528 | $-- |
The following is a reconciliation of Investments in Securities for which Level 3 inputs were used in determining value:
| Investments in Securities: | |
| Common Stocks | |
| Beginning Balance | $3,506,045 |
| Total Realized Gain (Loss) | -- |
| Total Unrealized Gain (Loss) | -- |
| Cost of Purchases | -- |
| Proceeds of Sales | -- |
| Amortization/Accretion | -- |
| Transfers in to Level 3 | -- |
| Transfers out of Level 3 | (3,506,045) |
| Ending Balance | $-- |
| The change in unrealized gain (loss) for the period attributable to Level 3 securities held at February 29, 2020 | $-- |
The information used in the above reconciliation represents fiscal year to date activity for any Investments in Securities identified as using Level 3 inputs at either the beginning or the end of the current fiscal period includes securities. Transfers in or out of Level 3 represent the beginning value of any Security or Instrument where a change in the pricing level occurred from the beginning to the end of the period. The cost of purchases and the proceeds of sales may include securities received or delivered through corporate actions or exchanges. Realized and unrealized gains (losses) disclosed in the reconciliation are included in Net Gain (Loss) on the Fund's Statement of Operations.
Other Information
Distribution of investments by country or territory of incorporation, as a percentage of Total Net Assets, is as follows (Unaudited):
| United States of America | 76.6% |
| Canada | 13.4% |
| Curacao | 5.3% |
| Norway | 3.1% |
| Bermuda | 1.6% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Natural Gas Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2020 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $708,908) — See accompanying schedule: Unaffiliated issuers (cost $186,618,170) | $112,331,368 | |
| Fidelity Central Funds (cost $3,069,654) | 3,069,654 | |
| Total Investment in Securities (cost $189,687,824) | $115,401,022 | |
| Receivable for investments sold | 4,603,802 | |
| Receivable for fund shares sold | 540,474 | |
| Dividends receivable | 373,309 | |
| Distributions receivable from Fidelity Central Funds | 4,125 | |
| Prepaid expenses | 1,643 | |
| Other receivables | 49,106 | |
| Total assets | 120,973,481 | |
| Liabilities | ||
| Payable for investments purchased | $4,587,677 | |
| Payable for fund shares redeemed | 824,120 | |
| Accrued management fee | 59,525 | |
| Other affiliated payables | 41,092 | |
| Other payables and accrued expenses | 81,773 | |
| Collateral on securities loaned | 749,150 | |
| Total liabilities | 6,343,337 | |
| Net Assets | $114,630,144 | |
| Net Assets consist of: | ||
| Paid in capital | $523,512,847 | |
| Total accumulated earnings (loss) | (408,882,703) | |
| Net Assets | $114,630,144 | |
| Net Asset Value, offering price and redemption price per share ($114,630,144 ÷ 8,454,366 shares) | $13.56 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 29, 2020 | ||
| Investment Income | ||
| Dividends | $4,021,844 | |
| Income from Fidelity Central Funds (including $12,336 from security lending) | 19,040 | |
| Total income | 4,040,884 | |
| Expenses | ||
| Management fee | $889,666 | |
| Transfer agent fees | 489,675 | |
| Accounting and security lending fees | 64,750 | |
| Custodian fees and expenses | 19,677 | |
| Independent trustees' fees and expenses | 949 | |
| Registration fees | 36,665 | |
| Audit | 39,105 | |
| Legal | 1,019 | |
| Miscellaneous | 1,530 | |
| Total expenses before reductions | 1,543,036 | |
| Expense reductions | (8,929) | |
| Total expenses after reductions | 1,534,107 | |
| Net investment income (loss) | 2,506,777 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | (62,171,651) | |
| Fidelity Central Funds | (212) | |
| Foreign currency transactions | 3,949 | |
| Total net realized gain (loss) | (62,167,914) | |
| Change in net unrealized appreciation (depreciation) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 1,051,235 | |
| Fidelity Central Funds | 42 | |
| Assets and liabilities in foreign currencies | (2,499) | |
| Total change in net unrealized appreciation (depreciation) | 1,048,778 | |
| Net gain (loss) | (61,119,136) | |
| Net increase (decrease) in net assets resulting from operations | $(58,612,359) |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 29, 2020 | Year ended February 28, 2019 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $2,506,777 | $2,473,009 |
| Net realized gain (loss) | (62,167,914) | (42,874,910) |
| Change in net unrealized appreciation (depreciation) | 1,048,778 | 33,853,278 |
| Net increase (decrease) in net assets resulting from operations | (58,612,359) | (6,548,623) |
| Distributions to shareholders | (1,660,041) | (1,257,826) |
| Share transactions | ||
| Proceeds from sales of shares | 41,679,382 | 73,386,071 |
| Reinvestment of distributions | 1,560,585 | 1,185,845 |
| Cost of shares redeemed | (69,422,307) | (104,048,790) |
| Net increase (decrease) in net assets resulting from share transactions | (26,182,340) | (29,476,874) |
| Total increase (decrease) in net assets | (86,454,740) | (37,283,323) |
| Net Assets | ||
| Beginning of period | 201,084,884 | 238,368,207 |
| End of period | $114,630,144 | $201,084,884 |
| Other Information | ||
| Shares | ||
| Sold | 2,360,441 | 3,179,983 |
| Issued in reinvestment of distributions | 87,673 | 54,372 |
| Redeemed | (3,826,441) | (4,435,015) |
| Net increase (decrease) | (1,378,327) | (1,200,660) |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights
Natural Gas Portfolio
| Years ended February 28, | 2020 A | 2019 | 2018 | 2017 | 2016 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $20.45 | $21.60 | $27.76 | $17.83 | $32.05 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .28 | .24 | .61C | .13 | .33 |
| Net realized and unrealized gain (loss) | (6.98) | (1.27) | (5.83) | 9.98 | (14.16) |
| Total from investment operations | (6.70) | (1.03) | (5.22) | 10.11 | (13.83) |
| Distributions from net investment income | (.19) | – | (.65) | (.15) | (.39) |
| Distributions from net realized gain | – | (.12) | (.29) | (.03) | – |
| Total distributions | (.19) | (.12) | (.94) | (.18) | (.39) |
| Redemption fees added to paid in capitalB | – | – | –D | –D | –D |
| Net asset value, end of period | $13.56 | $20.45 | $21.60 | $27.76 | $17.83 |
| Total ReturnE | (32.98)% | (4.82)% | (18.97)% | 56.75% | (43.29)% |
| Ratios to Average Net AssetsF,G | |||||
| Expenses before reductions | .93% | .89% | .89% | .87% | .89% |
| Expenses net of fee waivers, if any | .93% | .89% | .89% | .87% | .88% |
| Expenses net of all reductions | .92% | .86% | .87% | .87% | .88% |
| Net investment income (loss) | 1.51% | 1.02% | 2.52%C | .50% | 1.24% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $114,630 | $201,085 | $238,368 | $479,879 | $255,990 |
| Portfolio turnover rateH | 87% | 86% | 69% | 76% | 62% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Net investment income per share reflects a large, non-recurring dividend which amounted to $.45 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .66%.
D Amount represents less than $.005 per share.
E Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
H Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the financial statements.
Natural Resources Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The hypothetical investment and the average annual total returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund’s total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
| For the periods ended February 29, 2020 | Past 1 year | Past 5 years | Past 10 years |
| Natural Resources Portfolio | (18.25)% | (7.13)% | (1.32)% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Natural Resources Portfolio on February 28, 2010.
The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
| Period Ending Values | ||
|
| $8,756 | Natural Resources Portfolio |
|
| $32,918 | S&P 500® Index |
Natural Resources Portfolio
Management's Discussion of Fund Performance
Market Recap: U.S. stocks stalled to begin the new year and declined in late February, as the outbreak and spread of the new coronavirus threatened to hamper global economic growth and corporate earnings. For the 12 months ending February 29, 2020, the U.S. equity bellwether S&P 500® index gained 8.19%. The period began with equities rising amid upbeat company earnings and signs the U.S. Federal Reserve may pause on rates. The uptrend extended until May, when the index dipped as trade talks between the U.S. and China broke down. The bull market roared back to record a series of highs in July, when the Fed cut interest rates for the first time since 2008. Volatility intensified in August, as the Treasury yield curve inverted, which some investors viewed as a sign the U.S. economy could be heading for recession. But the market proved resilient, hitting a new high on October 30, when the Fed lowered rates for the third time in 2019, and moving higher through December 31. Following a roughly flat January, stocks sank in late February, after a surge in coronavirus cases outside China created considerable uncertainty and pushed investors to safer asset classes. By sector, information technology (+27%) led the way by a wide margin, followed by utilities and communication services (+13% each). In contrast, energy (-25%) was by far the weakest category, struggling due to sluggish oil prices. Other notable laggards included materials and industrials (-2% each). Comments from Portfolio Manager Nathan Strik: For the fiscal year, the fund returned -18.25%, modestly underperforming the -17.09% result of the S&P® North American Natural Resources Sector Index, but well behind the broad-based S&P 500 index. It was a tough year for the industry, as a decline in global crude-oil prices continued to weigh on the overall profitability of natural resources stocks. However, rising gold bullion and gold stock prices otherwise proved a positive for the industry. Versus the S&P industry index, disappointing stock selection and an underweighting in the strong-performing oil & gas storage & transportation group hurt most. This included not owning index components Enbridge (+8%) and TC Energy (+23%), two Canadian firms, as well as holding an overweighted stake in Encana (-47%) the past 12 months. Encana began doing business as Ovintiv in January, and was hard hit by declining energy prices and a negative legal settlement. Not owning index component Newmont (+36%), the world’s largest gold miner, also hurt. Conversely, stock picks in integrated oil & gas were a positive, led by not owning subindustry giant Exxon Mobil (- 32%). Elsewhere, the fund’s overweighting in gold stocks added value. Specifically, it helped to own and overweight stake in Canada-based gold royalty company Franco Nevada (+44%), which benefited from rising bullion prices. The fund’s position in oil & gas exploration & production firm Anadarko Petroleum contributed. Our shares of Anadarko rallied 70% this period, as investors favorably viewed its early-August acquisition by Occidental Petroleum. Overall, foreign holdings contributed, despite a modest headwind from currency fluctuations.The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Natural Resources Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 29, 2020
| % of fund's net assets | |
| Chevron Corp. | 8.7 |
| Franco-Nevada Corp. | 5.9 |
| Suncor Energy, Inc. | 5.4 |
| Cenovus Energy, Inc. (Canada) | 5.2 |
| Barrick Gold Corp. | 4.5 |
| Pioneer Natural Resources Co. | 4.3 |
| The Williams Companies, Inc. | 4.3 |
| Crown Holdings, Inc. | 3.9 |
| ConocoPhillips Co. | 3.8 |
| Cheniere Energy, Inc. | 3.4 |
| 49.4 |
Top Industries (% of fund's net assets)
| As of February 29, 2020 | ||
| Oil, Gas & Consumable Fuels | 68.1% | |
| Metals & Mining | 13.8% | |
| Containers & Packaging | 10.2% | |
| Energy Equipment & Services | 4.9% | |
| Construction Materials | 1.8% | |
| All Others* | 1.2% | |
* Includes short-term investments and net other assets (liabilities).
Natural Resources Portfolio
Schedule of Investments February 29, 2020
Showing Percentage of Net Assets
| Common Stocks - 99.4% | |||
| Shares | Value | ||
| Construction Materials - 1.8% | |||
| Construction Materials - 1.8% | |||
| Eagle Materials, Inc. (a) | 45,500 | $3,591,315 | |
| Summit Materials, Inc. (b) | 106,200 | 2,075,148 | |
| 5,666,463 | |||
| Containers & Packaging - 10.2% | |||
| Metal & Glass Containers - 5.7% | |||
| Aptargroup, Inc. | 55,900 | 5,649,813 | |
| Crown Holdings, Inc. (b) | 174,800 | 12,323,400 | |
| 17,973,213 | |||
| Paper Packaging - 4.5% | |||
| Avery Dennison Corp. | 77,600 | 8,884,424 | |
| Graphic Packaging Holding Co. | 133,000 | 1,798,160 | |
| Packaging Corp. of America | 41,200 | 3,733,544 | |
| 14,416,128 | |||
| TOTAL CONTAINERS & PACKAGING | 32,389,341 | ||
| Energy Equipment & Services - 4.9% | |||
| Oil & Gas Drilling - 0.7% | |||
| Nabors Industries Ltd. | 139,520 | 245,555 | |
| Odfjell Drilling Ltd. (b) | 178,700 | 477,988 | |
| Shelf Drilling Ltd. (b)(c) | 759,800 | 1,342,789 | |
| 2,066,332 | |||
| Oil & Gas Equipment & Services - 4.2% | |||
| Baker Hughes Co. Class A | 424,800 | 6,835,032 | |
| Dril-Quip, Inc. (b) | 31,425 | 1,119,359 | |
| Halliburton Co. | 162,600 | 2,757,696 | |
| National Oilwell Varco, Inc. | 59,200 | 1,107,632 | |
| Oceaneering International, Inc. (b) | 49,600 | 522,784 | |
| RigNet, Inc. (b) | 270,230 | 951,210 | |
| 13,293,713 | |||
| TOTAL ENERGY EQUIPMENT & SERVICES | 15,360,045 | ||
| Metals & Mining - 13.8% | |||
| Gold - 13.8% | |||
| Agnico Eagle Mines Ltd. (Canada) | 224,900 | 10,671,545 | |
| Barrick Gold Corp. | 738,232 | 14,055,937 | |
| Franco-Nevada Corp. | 174,300 | 18,712,334 | |
| 43,439,816 | |||
| Oil, Gas & Consumable Fuels - 68.1% | |||
| Coal & Consumable Fuels - 0.3% | |||
| Pinnacle Renewable Energy, Inc. | 157,200 | 1,059,907 | |
| Integrated Oil & Gas - 19.3% | |||
| Cenovus Energy, Inc. (Canada) | 2,244,700 | 16,506,008 | |
| Chevron Corp. | 293,598 | 27,404,438 | |
| Suncor Energy, Inc. | 612,400 | 16,876,644 | |
| 60,787,090 | |||
| Oil & Gas Exploration & Production - 27.7% | |||
| Brigham Minerals, Inc. Class A | 50,000 | 797,500 | |
| Cabot Oil & Gas Corp. | 226,700 | 3,157,931 | |
| Canadian Natural Resources Ltd. | 375,900 | 9,675,802 | |
| Centennial Resource Development, Inc. Class A (b) | 240,100 | 569,037 | |
| ConocoPhillips Co. | 246,100 | 11,916,162 | |
| Crescent Point Energy Corp. | 311,600 | 847,338 | |
| Devon Energy Corp. | 295,900 | 4,805,416 | |
| Diamondback Energy, Inc. | 101,800 | 6,311,600 | |
| EOG Resources, Inc. | 91,800 | 5,807,268 | |
| Kosmos Energy Ltd. | 273,100 | 832,955 | |
| Magnolia Oil & Gas Corp. Class A (b)(d) | 963,800 | 7,238,138 | |
| Noble Energy, Inc. | 523,800 | 8,291,754 | |
| Ovintiv, Inc. (d) | 137,120 | 1,584,452 | |
| Parsley Energy, Inc. Class A | 521,600 | 6,989,440 | |
| PDC Energy, Inc. (b) | 131,800 | 2,508,154 | |
| Pioneer Natural Resources Co. | 110,200 | 13,530,356 | |
| PrairieSky Royalty Ltd. | 71,238 | 660,766 | |
| Viper Energy Partners LP | 113,200 | 2,018,356 | |
| 87,542,425 | |||
| Oil & Gas Refining & Marketing - 8.5% | |||
| Delek U.S. Holdings, Inc. | 193,804 | 4,143,530 | |
| Marathon Petroleum Corp. | 63,898 | 3,030,043 | |
| Phillips 66 Co. | 98,516 | 7,374,908 | |
| Reliance Industries Ltd. | 113,086 | 2,071,323 | |
| Valero Energy Corp. | 153,200 | 10,149,500 | |
| 26,769,304 | |||
| Oil & Gas Storage & Transport - 12.3% | |||
| Cheniere Energy, Inc. (b) | 209,700 | 10,755,513 | |
| Enterprise Products Partners LP | 392,000 | 9,149,280 | |
| Golar LNG Ltd. (d) | 129,800 | 1,663,387 | |
| Noble Midstream Partners LP | 234,377 | 3,597,687 | |
| The Williams Companies, Inc. | 709,800 | 13,521,690 | |
| 38,687,557 | |||
| TOTAL OIL, GAS & CONSUMABLE FUELS | 214,846,283 | ||
| Paper & Forest Products - 0.6% | |||
| Forest Products - 0.6% | |||
| Western Forest Products, Inc. (d) | 2,623,600 | 2,091,452 | |
| TOTAL COMMON STOCKS | |||
| (Cost $383,665,083) | 313,793,400 | ||
| Money Market Funds - 3.5% | |||
| Fidelity Securities Lending Cash Central Fund 1.60% (a)(e) | |||
| (Cost $10,920,024) | 10,918,932 | 10,920,024 | |
| TOTAL INVESTMENT IN SECURITIES - 102.9% | |||
| (Cost $394,585,107) | 324,713,424 | ||
| NET OTHER ASSETS (LIABILITIES) - (2.9)% | (9,180,205) | ||
| NET ASSETS - 100% | $315,533,219 |
Legend
(a) Investment made with cash collateral received from securities on loan.
(b) Non-income producing
(c) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the end of the period, the value of these securities amounted to $1,342,789 or 0.4% of net assets.
(d) Security or a portion of the security is on loan at period end.
(e) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request.
Affiliated Central Funds
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:
| Fund | Income earned |
| Fidelity Cash Central Fund | $65,869 |
| Fidelity Securities Lending Cash Central Fund | 27,411 |
| Total | $93,280 |
Amounts in the income column in the above table include any capital gain distributions from underlying funds, which are presented in the corresponding line-item in the Statement of Operations, if applicable. Amount for Fidelity Securities Lending Cash Central Fund represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities.
Investment Valuation
The following is a summary of the inputs used, as of February 29, 2020, 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 below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.
| Valuation Inputs at Reporting Date: | ||||
| Description | Total | Level 1 | Level 2 | Level 3 |
| Investments in Securities: | ||||
| Common Stocks | $313,793,400 | $311,972,623 | $1,820,777 | $-- |
| Money Market Funds | 10,920,024 | 10,920,024 | -- | -- |
| Total Investments in Securities: | $324,713,424 | $322,892,647 | $1,820,777 | $-- |
Other Information
Distribution of investments by country or territory of incorporation, as a percentage of Total Net Assets, is as follows (Unaudited):
| United States of America | 69.2% |
| Canada | 28.9% |
| Others (Individually Less Than 1%) | 1.9% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Natural Resources Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2020 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $10,665,778) — See accompanying schedule: Unaffiliated issuers (cost $383,665,083) | $313,793,400 | |
| Fidelity Central Funds (cost $10,920,024) | 10,920,024 | |
| Total Investment in Securities (cost $394,585,107) | $324,713,424 | |
| Foreign currency held at value (cost $7) | 7 | |
| Receivable for investments sold | 9,507,050 | |
| Receivable for fund shares sold | 3,315,439 | |
| Dividends receivable | 915,052 | |
| Distributions receivable from Fidelity Central Funds | 11,566 | |
| Prepaid expenses | 6,038 | |
| Other receivables | 71,520 | |
| Total assets | 338,540,096 | |
| Liabilities | ||
| Payable to custodian bank | $4,802,160 | |
| Payable for investments purchased | 1,987,000 | |
| Payable for fund shares redeemed | 4,883,557 | |
| Accrued management fee | 167,118 | |
| Other affiliated payables | 90,627 | |
| Other payables and accrued expenses | 157,056 | |
| Collateral on securities loaned | 10,919,359 | |
| Total liabilities | 23,006,877 | |
| Net Assets | $315,533,219 | |
| Net Assets consist of: | ||
| Paid in capital | $607,931,095 | |
| Total accumulated earnings (loss) | (292,397,876) | |
| Net Assets | $315,533,219 | |
| Net Asset Value, offering price and redemption price per share ($315,533,219 ÷ 15,321,081 shares) | $20.59 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 29, 2020 | ||
| Investment Income | ||
| Dividends | $8,095,665 | |
| Income from Fidelity Central Funds (including $27,411 from security lending) | 93,280 | |
| Total income | 8,188,945 | |
| Expenses | ||
| Management fee | $2,169,323 | |
| Transfer agent fees | 968,281 | |
| Accounting and security lending fees | 157,957 | |
| Custodian fees and expenses | 14,122 | |
| Independent trustees' fees and expenses | 2,331 | |
| Registration fees | 41,087 | |
| Audit | 55,699 | |
| Legal | 1,202 | |
| Miscellaneous | 5,204 | |
| Total expenses before reductions | 3,415,206 | |
| Expense reductions | (22,234) | |
| Total expenses after reductions | 3,392,972 | |
| Net investment income (loss) | 4,795,973 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | (5,833,881) | |
| Fidelity Central Funds | 897 | |
| Foreign currency transactions | 10,929 | |
| Total net realized gain (loss) | (5,822,055) | |
| Change in net unrealized appreciation (depreciation) on: | ||
| Investment securities: | ||
| Unaffiliated issuers (net of increase in deferred foreign taxes of $19,577) | (72,691,235) | |
| Assets and liabilities in foreign currencies | 1,266 | |
| Total change in net unrealized appreciation (depreciation) | (72,689,969) | |
| Net gain (loss) | (78,512,024) | |
| Net increase (decrease) in net assets resulting from operations | $(73,716,051) |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 29, 2020 | Year ended February 28, 2019 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $4,795,973 | $9,676,207 |
| Net realized gain (loss) | (5,822,055) | (66,304,623) |
| Change in net unrealized appreciation (depreciation) | (72,689,969) | (26,353,779) |
| Net increase (decrease) in net assets resulting from operations | (73,716,051) | (82,982,195) |
| Distributions to shareholders | (6,015,518) | (10,282,640) |
| Share transactions | ||
| Proceeds from sales of shares | 141,880,695 | 379,536,177 |
| Reinvestment of distributions | 5,281,203 | 9,981,955 |
| Cost of shares redeemed | (176,063,968) | (782,819,915) |
| Net increase (decrease) in net assets resulting from share transactions | (28,902,070) | (393,301,783) |
| Total increase (decrease) in net assets | (108,633,639) | (486,566,618) |
| Net Assets | ||
| Beginning of period | 424,166,858 | 910,733,476 |
| End of period | $315,533,219 | $424,166,858 |
| Other Information | ||
| Shares | ||
| Sold | 5,678,652 | 13,740,663 |
| Issued in reinvestment of distributions | 202,237 | 414,331 |
| Redeemed | (7,159,749) | (30,659,455) |
| Net increase (decrease) | (1,278,860) | (16,504,461) |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights
Natural Resources Portfolio
| Years ended February 28, | 2020 A | 2019 | 2018 | 2017 | 2016 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $25.55 | $27.51 | $29.13 | $21.80 | $31.49 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .30 | .29 | .43C | .10 | .18 |
| Net realized and unrealized gain (loss) | (4.88) | (1.97) | (1.64) | 7.42 | (9.69) |
| Total from investment operations | (4.58) | (1.68) | (1.21) | 7.52 | (9.51) |
| Distributions from net investment income | (.30) | (.28) | (.39) | (.11) | (.18) |
| Distributions from net realized gain | (.08) | –D | (.02) | (.08) | – |
| Total distributions | (.38) | (.28) | (.41) | (.19) | (.18) |
| Redemption fees added to paid in capitalB | – | – | –D | –D | –D |
| Net asset value, end of period | $20.59 | $25.55 | $27.51 | $29.13 | $21.80 |
| Total ReturnE | (18.25)% | (6.06)% | (4.16)% | 34.54% | (30.22)% |
| Ratios to Average Net AssetsF,G | |||||
| Expenses before reductions | .84% | .81% | .83% | .84% | .86% |
| Expenses net of fee waivers, if any | .84% | .81% | .83% | .84% | .86% |
| Expenses net of all reductions | .84% | .80% | .82% | .83% | .85% |
| Net investment income (loss) | 1.18% | 1.02% | 1.54%C | .35% | .66% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $315,533 | $424,167 | $910,733 | $912,090 | $462,869 |
| Portfolio turnover rateH | 8% | 26% | 78% | 84% | 78% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Net investment income per share reflects a large, non-recurring dividend which amounted to $.31 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .41%.
D Amount represents less than $.005 per share.
E Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
H Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the financial statements.
Notes to Financial Statements
For the period ended February 29, 2020
1. Organization.
Energy Portfolio, Energy Service Portfolio, Natural Gas Portfolio, and Natural Resources Portfolio (the Funds) are non-diversified funds of Fidelity Select Portfolios (the Trust). The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Funds invest primarily in securities of companies whose principal business activities fall within specific industries. Each Fund is authorized to issue an unlimited number of shares. Share transactions on the Statement of Changes in Net Assets may contain exchanges between affiliated funds. The Natural Resources Portfolio may also invest in certain precious metals.
Effective January 1, 2020:
Investment advisers Fidelity Investments Money Management, Inc., FMR Co., Inc., and Fidelity SelectCo, LLC, merged with and into Fidelity Management & Research Company. In connection with the merger transactions, the resulting, merged investment adviser was then redomiciled from Massachusetts to Delaware, changed its corporate structure from a corporation to a limited liability company, and changed its name to "Fidelity Management & Research Company LLC".
Fidelity Investments Institutional Operations Company, Inc. converted from a Massachusetts corporation to a Massachusetts LLC, and changed its name to "Fidelity Investments Institutional Operations Company LLC".
2. Investments in Fidelity Central Funds.
The Funds invest in Fidelity Central Funds, which are open-end investment companies generally available only to other investment companies and accounts managed by the investment adviser and its affiliates. The Funds' Schedules of Investments list each of the Fidelity Central Funds held as of period end, if any, as an investment of each Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, each Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by the investment adviser. Annualized expenses of the Money Market Central Funds as of their most recent shareholder report date ranged from less than .005% to .01%.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) website at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Funds' Report of Independent Registered Public Accounting Firm, are available on the SEC website or upon request.
3. Significant Accounting Policies.
Each Fund is an investment company and applies the accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946 Financial Services – Investments Companies. The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Funds:
Investment Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Board of Trustees (the Board) has delegated the day to day responsibility for the valuation of each Fund's investments to the Fair Value Committee (the Committee) established by each Fund's investment adviser. In accordance with valuation policies and procedures approved by the Board, each Fund attempts to obtain prices from one or more third party pricing vendors or brokers to value its investments. When current market prices, quotations or currency exchange rates are not readily available or reliable, investments will be fair valued in good faith by the Committee, in accordance with procedures adopted by the Board. Factors used in determining fair value vary by investment type and may include market or investment specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The Committee oversees each Fund's valuation policies and procedures and reports to the Board on the Committee's activities and fair value determinations. The Board monitors the appropriateness of the procedures used in valuing each Fund's investments and ratifies the fair value determinations of the Committee.
Each Fund categorizes the inputs to valuation techniques used to 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)
Valuation techniques used to value each Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by a third party pricing vendor on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-Traded Funds (ETFs) and certain indexes as well as quoted prices for similar securities may be used and would be categorized as Level 2 in the hierarchy. For equity securities, including restricted 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.
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value (NAV) each business day and are categorized as Level 1 in the hierarchy.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level as of February 29, 2020, as well as a roll forward of Level 3 investments, is included at the end of each applicable Fund's Schedule of Investments.
Foreign Currency. The Funds may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rates at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Funds' investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and for certain Funds include proceeds received from litigation. Dividend income is recorded 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 Funds are informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Income and capital gain distributions from Fidelity Central Funds, if any, are recorded on the ex-dividend date. Certain distributions received by the Funds represent a return of capital or capital gain. The Funds determine the components of these distributions subsequent to the ex-dividend date, based upon receipt of tax filings or other correspondence relating to the underlying investment. These distributions are recorded as a reduction of cost of investments and/or as a realized gain. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Deferred Trustee Compensation. Under a Deferred Compensation Plan (the Plan) the Funds, certain independent Trustees have elected to defer receipt of a portion of their annual compensation. Deferred amounts are invested in a cross-section of Fidelity funds, are marked-to-market and remain in each Fund until distributed in accordance with the Plan. The investment of deferred amounts and the offsetting payable to the Trustees presented below are included in each accompanying Statement of Assets and Liabilities in other receivables and other payables and accrued expenses, respectively.
| Energy Portfolio | $179,938 |
| Energy Service Portfolio | 60,901 |
| Natural Gas Portfolio | 44,165 |
| Natural Resources Portfolio | 70,561 |
Income Tax Information and Distributions to Shareholders. Each year, each Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for U.S. Federal income taxes is required. As of February 29, 2020, each Fund did not have any unrecognized tax benefits in the financial statements; nor is each Fund aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. Each Fund files a U.S. federal tax return, in addition to state and local tax returns as required. Each Fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. Foreign taxes are provided for based on each Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests. An estimated deferred tax liability for net unrealized appreciation on the applicable securities is included in Other payables and accrued expenses on each applicable Fund's Statement of Assets & Liabilities.
Distributions are declared and recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. In addition, certain Funds claimed a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Capital accounts are not adjusted for temporary book-tax differences which will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, certain foreign taxes, passive foreign investment companies (PFIC), redemptions in kind, partnerships, deferred trustees compensation, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
As of period end, the cost and unrealized appreciation (depreciation) in securities, and derivatives if applicable, for federal income tax purposes were as follows for each Fund:
| Tax cost | Gross unrealized appreciation | Gross unrealized depreciation | Net unrealized appreciation (depreciation) | |
| Energy Portfolio | $840,781,399 | $15,105,321 | $(186,948,097) | $(171,842,776) |
| Energy Service Portfolio | 301,601,224 | 1,015,278 | (142,630,739) | (141,615,461) |
| Natural Gas Portfolio | 195,059,948 | 866,004 | (80,524,930) | (79,658,926) |
| Natural Resources Portfolio | 393,700,362 | 22,649,699 | (91,636,637) | (68,986,938) |
The tax-based components of distributable earnings as of period end were as follows for each Fund:
| Undistributed ordinary income | Capital loss carryforward | Net unrealized appreciation (depreciation) on securities and other investments | |
| Energy Portfolio | $4,019,744 | $(411,049,739) | $(177,754,771) |
| Energy Service Portfolio | 638,861 | (238,886,417) | (145,659,003) |
| Natural Gas Portfolio | 551,756 | (328,637,452) | (80,642,912) |
| Natural Resources Portfolio | 162,807 | (218,873,592) | (73,566,784) |
Capital loss carryforwards are only available to offset future capital gains of the Funds to the extent provided by regulations and may be limited. The capital loss carryforward information presented below, including any applicable limitation, is estimated as of fiscal period end and is subject to adjustment.
| No expiration | |||
| Short-term | Long-term | Total capital loss carryfoward | |
| Energy Portfolio | $(266,229,505) | $(144,820,234) | $(411,049,739) |
| Energy Service Portfolio | (56,814,095) | (182,072,322) | (238,886,417) |
| Natural Gas Portfolio | (68,076,638) | (260,560,814) | (328,637,452) |
| Natural Resources Portfolio | (93,793,841) | (125,079,751) | (218,873,592) |
The tax character of distributions paid was as follows:
| February 29, 2020 | ||
| Ordinary Income | Total | |
| Energy Portfolio | $17,018,375 | $17,018,375 |
| Energy Service Portfolio | 4,506,594 | 4,506,594 |
| Natural Gas Portfolio | 1,660,041 | 1,660,041 |
| Natural Resources Portfolio | 6,015,518 | 6,015,518 |
| February 28, 2019 | ||
| Ordinary Income | Total | |
| Energy Portfolio | $15,141,238 | $15,141,238 |
| Energy Service Portfolio | 2,784,223 | 2,784,223 |
| Natural Gas Portfolio | 1,257,826 | 1,257,826 |
| Natural Resources Portfolio | 10,282,640 | 10,282,640 |
Restricted Securities. The Funds may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities is included at the end of each applicable Fund's Schedule of Investments.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities and in-kind transactions are noted in the table below.
| Purchases ($) | Sales ($) | |
| Energy Portfolio | 753,376,287 | 919,254,728 |
| Energy Service Portfolio | 94,816,694 | 114,378,870 |
| Natural Gas Portfolio | 143,082,895 | 170,034,652 |
| Natural Resources Portfolio | 32,837,500 | 58,398,936 |
5. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity Management & Research Company LLC (the investment adviser) and its affiliates provide the Funds with investment management related services for which the Funds pay a monthly management fee. The management fee is the sum of an individual fund fee rate and an annualized group fee rate. The individual fund fee rate is applied to each Fund's average net assets. The group fee rate is based upon the monthly average net assets of a group of registered investment companies with which the investment adviser has management contracts. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the reporting period, each Fund's annual management fee rate expressed as a percentage of each Fund's average net assets was as follows:
| Individual Rate | Group Rate | Total | |
| Energy Portfolio | .30% | .24% | .53% |
| Energy Service Portfolio | .30% | .24% | .53% |
| Natural Gas Portfolio | .30% | .24% | .53% |
| Natural Resources Portfolio | .30% | .24% | .54% |
Transfer Agent Fees. Fidelity Investments Institutional Operations Company LLC (FIIOC), an affiliate of the investment adviser, is the Funds' transfer, dividend disbursing and shareholder servicing agent. FIIOC receives account fees and asset-based fees that vary according to account size and type of account. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, transfer agent fees were equivalent to the following annual rates expressed as a percentage of average net assets:
| Energy Portfolio | .23% |
| Energy Service Portfolio | .28% |
| Natural Gas Portfolio | .29% |
| Natural Resources Portfolio | .24% |
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of the investment adviser, maintains each Fund's accounting records. The accounting fee is based on the level of average net assets for each month. Prior to April 1, 2019, FSC had a separate agreement with each Fund for administration of the security lending program, based on the number and duration of lending transactions. For the period, the total fees paid for accounting and administration of securities lending were equivalent to the following annual rates:
| % of Average Net Assets | |
| Energy Portfolio | .03 |
| Energy Service Portfolio | .04 |
| Natural Gas Portfolio | .04 |
| Natural Resources Portfolio | .04 |
Brokerage Commissions. A portion of portfolio transactions were placed with brokerage firms which are affiliates of the investment adviser. Brokerage commissions are included in net realized gain (loss) and change in net unrealized appreciation (depreciation) in the Statement of Operations. The commissions paid to these affiliated firms were as follows:
| Amount | |
| Energy Portfolio | $41,045 |
| Energy Service Portfolio | 12,655 |
| Natural Gas Portfolio | 5,655 |
| Natural Resources Portfolio | 1,715 |
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, each fund, along with other registered investment companies having management contracts with Fidelity Management & Research Company LLC (FMR), or other affiliated entities of FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing each fund to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. Activity in this program during the period for which loans were outstanding was as follows:
| Borrower or Lender | Average Loan Balance | Weighted Average Interest Rate | Interest Expense | |
| Energy Portfolio | Borrower | $4,588,667 | 2.61% | $999 |
Interfund Trades. Funds may purchase from or sell securities to other Fidelity Funds under procedures adopted by the Board. The procedures have been designed to ensure these interfund trades are executed in accordance with Rule 17a-7 of the 1940 Act. Interfund trades are included within the respective purchases and sales amounts shown in the Purchases and Sales of Investments note.
Other. During the period, the investment adviser reimbursed the Funds for certain losses as follows:
| Amount | |
| Natural Gas Portfolio | $1,658 |
Affiliated Redemptions In-Kind. During the period, 1,155,173 shares of the Energy Portfolio were redeemed in-kind for investments and cash with a value of $37,704,833. The net realized gain of $6,179,274 on investments delivered through in-kind redemptions is included in the accompanying Statement of Operations. The amount of the in-kind redemptions is included in share transactions in the accompanying Statement of Changes in Net Assets. Energy Portfolio recognized no gain or loss for federal income tax purposes.
Prior Fiscal Year Affiliated Redemptions In-Kind. During the prior period, 5,345,534 shares of Energy Portfolio were redeemed in-kind for investments and cash with a value of $239,961,028. The Fund had a net realized gain of $76,585,161 on investments delivered through in-kind redemptions. The amount of the in-kind redemptions is included in share transactions in the accompanying Statement of Changes in Net Assets. Energy Portfolio recognized no gain or loss for federal income tax purposes.
6. Committed Line of Credit.
Certain Funds participate with other funds managed by the investment adviser or an affiliate in a $4.25 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The participating funds have agreed to pay commitment fees on their pro-rata portion of the line of credit, which are reflected in Miscellaneous expenses on the Statement of Operations, and are as follows:
| Amount | |
| Energy Portfolio | $2,656 |
| Energy Service Portfolio | 629 |
| Natural Gas Portfolio | 451 |
| Natural Resources Portfolio | 1,139 |
During the period, there were no borrowings on this line of credit.
7. Security Lending.
Certain Funds lend portfolio securities from time to time in order to earn additional income. For equity securities, lending agents are used, including National Financial Services (NFS), an affiliate of the Funds. Pursuant to a securities lending agreement, NFS will receive a fee, which is capped at 9.9% of a Fund's daily lending revenue, for its services as lending agent. The Funds may lend securities to certain qualified borrowers, including NFS. On the settlement date of the loan, each applicable Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Funds and any additional required collateral is delivered to the Funds on the next business day. The Funds or borrower may terminate the loan at any time, and if the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, the Funds may apply collateral received from the borrower against the obligation. The Funds may experience delays and costs in recovering the securities loaned. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on each applicable Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented on each applicable Fund's Statement of Operations as a component of income from Fidelity Central Funds. The value of loaned securities and cash collateral at period end are disclosed on each applicable Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented on each applicable Fund's Statement of Operations as a component of income from Fidelity Central Funds. During the period, there were no securities loaned to NFS. Affiliated security lending activity was as follows:
| Total Security Lending Income Fees Paid to NFS | |
| Energy Portfolio | $347 |
| Energy Service Portfolio | $10,401 |
| Natural Gas Portfolio | $579 |
| Natural Resources Portfolio | $694 |
8. Expense Reductions.
Commissions paid to certain brokers with whom the investment adviser, or its affiliates, places trades on behalf of certain Funds include an amount in addition to trade execution, which may be rebated back to the Funds to offset certain expenses. In addition, through arrangements with each applicable Fund's custodian, credits realized as a result of certain uninvested cash balances were used to reduce each applicable Fund's expenses. All of the applicable expense reductions are noted in the table below.
| Brokerage service rebates | Transfer Agent credits | |
| Energy Portfolio | $71,387 | $479 |
| Energy Service Portfolio | 14,455 | 264 |
| Natural Gas Portfolio | 7,879 | – |
| Natural Resources Portfolio | 17,719 | 115 |
In addition, during the period the investment adviser or an affiliate reimbursed and/or waived a portion of operating expenses as follows:
| Amount | |
| Energy Portfolio | $6,182 |
| Energy Service Portfolio | 1,389 |
| Natural Gas Portfolio | 1,050 |
| Natural Resources Portfolio | 4,400 |
9. Other.
The Funds' organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Funds. In the normal course of business, the Funds may also enter into contracts that provide general indemnifications. The Funds' maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Funds. The risk of material loss from such claims is considered remote.
10. Coronavirus (COVID-19) Pandemic.
An outbreak of COVID-19 first detected in China during December 2019 has since spread globally and was declared a pandemic by the World Health Organization during March 2020. Developments that disrupt global economies and financial markets, such as the COVID-19 pandemic, may magnify factors that affect the Funds' performance.
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of Fidelity Select Portfolios and Shareholders of Natural Resources Portfolio, Natural Gas Portfolio, Energy Service Portfolio and Energy Portfolio
Opinions on the Financial Statements
We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of Natural Resources Portfolio, Natural Gas Portfolio, Energy Service Portfolio and Energy Portfolio (four of the funds constituting Fidelity Select Portfolios, hereafter collectively referred to as the “Funds”) as of February 29, 2020, the related statements of operations for the year ended February 29, 2020, the statements of changes in net assets for each of the two years in the period ended February 29, 2020, including the related notes, and the financial highlights for each of the five years in the period ended February 29, 2020 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of each of the Funds as of February 29, 2020, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period ended February 29, 2020 and each of the financial highlights for each of the five years in the period ended February 29, 2020 in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinions
These financial statements are the responsibility of the Funds' management. Our responsibility is to express an opinion on the Funds' financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Funds in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of February 29, 2020 by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinions.
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 10, 2020
We have served as the auditor of one or more investment companies in the Fidelity group of funds since 1932.
Trustees and Officers
The Trustees, Members of the Advisory Board (if any), and officers of the trusts and funds, as applicable, are listed below. The Board of Trustees governs each fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee each fund's activities, review contractual arrangements with companies that provide services to each fund, oversee management of the risks associated with such activities and contractual arrangements, and review each fund's performance. Except for Michael E. Wiley, each of the Trustees oversees 302 funds. Mr. Wiley oversees 199 funds.
The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust. Each Trustee who is not an interested person (as defined in the 1940 Act) of the trust and the funds is referred to herein as an Independent Trustee. Each Independent Trustee shall retire not later than the last day of the calendar year in which his or her 75th birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. Officers and Advisory Board Members hold office without limit in time, except that any officer or Advisory Board Member may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years.
Each fund’s Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-800-544-8544.
Experience, Skills, Attributes, and Qualifications of the Trustees. The Governance and Nominating Committee has adopted a statement of policy that describes the experience, qualifications, attributes, and skills that are necessary and desirable for potential Independent Trustee candidates (Statement of Policy). The Board believes that each Trustee satisfied at the time he or she was initially elected or appointed a Trustee, and continues to satisfy, the standards contemplated by the Statement of Policy. The Governance and Nominating Committee also engages professional search firms to help identify potential Independent Trustee candidates who have the experience, qualifications, attributes, and skills consistent with the Statement of Policy. From time to time, additional criteria based on the composition and skills of the current Independent Trustees, as well as experience or skills that may be appropriate in light of future changes to board composition, business conditions, and regulatory or other developments, have also been considered by the professional search firms and the Governance and Nominating Committee. In addition, the Board takes into account the Trustees' commitment and participation in Board and committee meetings, as well as their leadership of standing and ad hoc committees throughout their tenure.
In determining that a particular Trustee was and continues to be qualified to serve as a Trustee, the Board has considered a variety of criteria, none of which, in isolation, was controlling. The Board believes that, collectively, the Trustees have balanced and diverse experience, qualifications, attributes, and skills, which allow the Board to operate effectively in governing each fund and protecting the interests of shareholders. Information about the specific experience, skills, attributes, and qualifications of each Trustee, which in each case led to the Board's conclusion that the Trustee should serve (or continue to serve) as a trustee of the funds, is provided below.
Board Structure and Oversight Function. James C. Curvey is an interested person and currently serves as Chairman. The Trustees have determined that an interested Chairman is appropriate and benefits shareholders because an interested Chairman has a personal and professional stake in the quality and continuity of services provided to the funds. Independent Trustees exercise their informed business judgment to appoint an individual of their choosing to serve as Chairman, regardless of whether the Trustee happens to be independent or a member of management. The Independent Trustees have determined that they can act independently and effectively without having an Independent Trustee serve as Chairman and that a key structural component for assuring that they are in a position to do so is for the Independent Trustees to constitute a substantial majority for the Board. The Independent Trustees also regularly meet in executive session. Ned C. Lautenbach serves as Chairman of the Independent Trustees and as such (i) acts as a liaison between the Independent Trustees and management with respect to matters important to the Independent Trustees and (ii) with management prepares agendas for Board meetings.
Fidelity® funds are overseen by different Boards of Trustees. The funds' Board oversees Fidelity's high income and certain equity funds, and other Boards oversee Fidelity's investment-grade bond, money market, asset allocation, and other equity funds. The asset allocation funds may invest in Fidelity® funds overseen by the funds' Board. The use of separate Boards, each with its own committee structure, allows the Trustees of each group of Fidelity® funds to focus on the unique issues of the funds they oversee, including common research, investment, and operational issues. On occasion, the separate Boards establish joint committees to address issues of overlapping consequences for the Fidelity® funds overseen by each Board.
The Trustees operate using a system of committees to facilitate the timely and efficient consideration of all matters of importance to the Trustees, each fund, and fund shareholders and to facilitate compliance with legal and regulatory requirements and oversight of the funds' activities and associated risks. The Board, acting through its committees, has charged FMR and its affiliates with (i) identifying events or circumstances the occurrence of which could have demonstrably adverse effects on the funds' business and/or reputation; (ii) implementing processes and controls to lessen the possibility that such events or circumstances occur or to mitigate the effects of such events or circumstances if they do occur; and (iii) creating and maintaining a system designed to evaluate continuously business and market conditions in order to facilitate the identification and implementation processes described in (i) and (ii) above. Because the day-to-day operations and activities of the funds are carried out by or through FMR, its affiliates, and other service providers, the funds' exposure to risks is mitigated but not eliminated by the processes overseen by the Trustees. While each of the Board's committees has responsibility for overseeing different aspects of the funds' activities, oversight is exercised primarily through the Operations, Audit, and Compliance Committees. Appropriate personnel, including but not limited to the funds' Chief Compliance Officer (CCO), FMR's internal auditor, the independent accountants, the funds' Treasurer and portfolio management personnel, make periodic reports to the Board's committees, as appropriate, including an annual review of Fidelity's risk management program for the Fidelity® funds. The responsibilities of each standing committee, including their oversight responsibilities, are described further under "Standing Committees of the Trustees."
Interested Trustees*:
Correspondence intended for a Trustee who is an interested person may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210.
Name, Year of Birth; Principal Occupations and Other Relevant Experience+
James C. Curvey (1935)
Year of Election or Appointment: 2018
Trustee
Chairman of the Board of Trustees
Mr. Curvey also serves as Trustee of other Fidelity® funds. Mr. Curvey is Vice Chairman (2007-present) and Director of FMR LLC (diversified financial services company). In addition, Mr. Curvey is an Overseer Emeritus for the Boston Symphony Orchestra, a Director of Artis-Naples, and a Trustee of Brewster Academy in Wolfeboro, New Hampshire. Previously, Mr. Curvey served as a Director of Fidelity Research & Analysis Co. (investment adviser firm, 2009-2018), Director of Fidelity Investments Money Management, Inc. (investment adviser firm, 2009-2014) and a Director of FMR and FMR Co., Inc. (investment adviser firms, 2007-2014).
* Determined to be an “Interested Trustee” by virtue of, among other things, his or her affiliation with the trust or various entities under common control with FMR.
+ The information includes the Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to the Trustee's qualifications to serve as a Trustee, which led to the conclusion that the Trustee should serve as a Trustee for each fund.
Independent Trustees:
Correspondence intended for an Independent Trustee may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.
Name, Year of Birth; Principal Occupations and Other Relevant Experience+
Dennis J. Dirks (1948)
Year of Election or Appointment: 2018
Trustee
Mr. Dirks also serves as Trustee of other Fidelity® funds. Prior to his retirement in May 2003, Mr. Dirks served as Chief Operating Officer and as a member of the Board of The Depository Trust & Clearing Corporation (financial markets infrastructure), President, Chief Operating Officer and a member of the Board of The Depository Trust Company (DTC), President and a member of the Board of the National Securities Clearing Corporation (NSCC), Chief Executive Officer and a member of the Board of the Government Securities Clearing Corporation and Chief Executive Officer and a member of the Board of the Mortgage-Backed Securities Clearing Corporation. Mr. Dirks currently serves as a member of the Finance Committee (2016-present) and Board (2017-present) and is Treasurer (2018-present) of the Asolo Repertory Theatre.
Donald F. Donahue (1950)
Year of Election or Appointment: 2018
Trustee
Mr. Donahue also serves as Trustee of other Fidelity® funds. Mr. Donahue serves as President and Chief Executive Officer of Miranda Partners, LLC (risk consulting for the financial services industry, 2012-present). Previously, Mr. Donahue served as Chief Executive Officer (2006-2012), Chief Operating Officer (2003-2006) and Managing Director, Customer Marketing and Development (1999-2003) of The Depository Trust & Clearing Corporation (financial markets infrastructure). Mr. Donahue currently serves as a member (2007-present) and Co-Chairman (2016-present) of the Board of United Way of New York, a member of the Board of NYC Leadership Academy (2012-present) and a member of the Board of Advisors of Ripple Labs, Inc. (financial services, 2015-present). Mr. Donahue previously served as a member of the Advisory Board of certain Fidelity® funds (2015-2018).
Alan J. Lacy (1953)
Year of Election or Appointment: 2018
Trustee
Mr. Lacy also serves as Trustee of other Fidelity® funds. Previously, Mr. Lacy served as Senior Adviser (2007-2014) of Oak Hill Capital Partners, L.P. (private equity), Chief Executive Officer (2005) and Vice Chairman (2005-2006) of Sears Holdings Corporation (retail), Chief Executive Officer and Chairman of the Board of Sears, Roebuck and Co. (retail, 2000-2005) and Chairman (2014-2017) and a member of the Board (2010-2017) of Dave & Buster’s Entertainment, Inc. (restaurant and entertainment complexes). Mr. Lacy currently serves as a member of the Board of Bristol-Myers Squibb Company (global pharmaceuticals, 2008-present), Trustee of the California Chapter of The Nature Conservancy (2015-present) and a member of the Board of the Center for Advanced Study in the Behavioral Sciences at Stanford University (2015-present).
Ned C. Lautenbach (1944)
Year of Election or Appointment: 2018
Trustee
Chairman of the Independent Trustees
Mr. Lautenbach also serves as Trustee of other Fidelity® funds. Mr. Lautenbach currently serves as Chair of the Board of Governors, State University System of Florida (2013-present) and is a member of the Council on Foreign Relations (1994-present). He is also a member and has in the past served as Chairman of the Board of Directors of Artis-Naples (2012-present). Previously, Mr. Lautenbach served as a member and then Lead Director of the Board of Directors of Eaton Corporation (diversified industrial, 1997-2016). He was also a Partner at Clayton, Dubilier & Rice, LLC (private equity investment, 1998-2010); as well as Director of Sony Corporation (2006-2007). In addition, Mr. Lautenbach had a 30-year career with IBM (technology company), during which time he served as Senior Vice President and as a member of the Corporate Executive Committee (1968-1998).
Joseph Mauriello (1944)
Year of Election or Appointment: 2018
Trustee
Mr. Mauriello also serves as Trustee of other Fidelity® funds. Prior to his retirement in January 2006, Mr. Mauriello served in numerous senior management positions including Deputy Chairman and Chief Operating Officer (2004-2005), and Vice Chairman of Financial Services (2002-2004) of KPMG LLP US (professional services, 1965-2005). Mr. Mauriello currently serves as a member of the Independent Directors Council Governing Council (2015-present). Previously, Mr. Mauriello served as a member of the Board of XL Group plc. (global insurance and re-insurance, 2006-2018).
Cornelia M. Small (1944)
Year of Election or Appointment: 2018
Trustee
Ms. Small also serves as Trustee of other Fidelity® funds. Previously, Ms. Small served as Chief Investment Officer, Director of Global Equity Investments and a member of Scudder, Stevens & Clark and Scudder Kemper Investments. Ms. Small previously served as a member of the Board (2009-2019) and Chair of the Investment Committee (2010-2019) of the Teagle Foundation and a member of the Investment Committee of the Berkshire Taconic Community Foundation (2008-2019).
Garnett A. Smith (1947)
Year of Election or Appointment: 2013
Trustee
Mr. Smith also serves as Trustee of other Fidelity® funds. Prior to his retirement, Mr. Smith served as Chairman and Chief Executive Officer (1990-1997) and President (1986-1990) of Inbrand Corp. (manufacturer of personal absorbent products). Prior to his employment with Inbrand Corp., he was employed by a retail fabric chain and North Carolina National Bank (now Bank of America). Mr. Smith previously served as a member of the Advisory Board of certain Fidelity® funds (2012-2013).
David M. Thomas (1949)
Year of Election or Appointment: 2018
Trustee
Mr. Thomas also serves as Trustee of other Fidelity® funds. Previously, Mr. Thomas served as Executive Chairman (2005-2006) and Chairman and Chief Executive Officer (2000-2005) of IMS Health, Inc. (pharmaceutical and healthcare information solutions). Mr. Thomas currently serves as Non-Executive Chairman of the Board of Fortune Brands Home and Security (home and security products, 2011-present), and a member of the Board (2004-present) and Presiding Director (2013-present) of Interpublic Group of Companies, Inc. (marketing communication).
Michael E. Wiley (1950)
Year of Election or Appointment: 2008
Trustee
Mr. Wiley also serves as Trustee or a member of the Advisory Board of other Fidelity® funds. Previously, Mr. Wiley served as Chairman, President and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004). Mr. Wiley currently serves as a member of the Board of High Point Resources (exploration and production, 2005-present). Previously, Mr. Wiley served as a member of the Board of Andeavor Corporation (independent oil refiner and marketer, 2005-2018) and a member of the Board of Andeavor Logistics LP (natural resources logistics, 2015-2018).
+ The information includes the Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to the Trustee's qualifications to serve as a Trustee, which led to the conclusion that the Trustee should serve as a Trustee for each fund.
Advisory Board Members and Officers:
Correspondence intended for a Member of the Advisory Board (if any) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235. Correspondence intended for an officer or Peter S. Lynch may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210. Officers appear below in alphabetical order.
Name, Year of Birth; Principal Occupation
Vicki L. Fuller (1957)
Year of Election or Appointment: 2018
Member of the Advisory Board
Ms. Fuller also serves as a member of the Advisory Board of other Fidelity® funds. Previously, Ms. Fuller served as Chief Investment Officer of the New York State Common Retirement Fund (2012-2018) and held a variety of positions at AllianceBernstein L.P. (global asset management, 1985-2012), including Managing Director (2006-2012) and Senior Vice President and Senior Portfolio Manager (2001-2006). Ms. Fuller currently serves as a member of the Board, Audit Committee and Nominating and Governance Committee of The Williams Companies, Inc. (natural gas infrastructure, 2018-present) and as a member of the Board of Treliant, LLC (consulting, 2019-present).
Patricia L. Kampling (1959)
Year of Election or Appointment: 2020
Member of the Advisory Board
Ms. Kampling also serves as Member of the Advisory Board of other Fidelity® funds. Prior to her retirement, Ms. Kampling served as Chairman of the Board and Chief Executive Officer (2012-2019), President and Chief Operating Officer (2011-2012) and Executive Vice President and Chief Financial Officer (2010-2011) of Alliant Energy Corporation. Ms. Kampling currently serves as a member of the Board, Compensation Committee and Executive Committee and as Chair of the Audit Committee of Briggs & Stratton Corporation (manufacturing, 2011-present) and as a member of the Board, Audit, Finance and Risk Committee and Safety, Environmental, Technology and Operations Committee of American Water Works Company, Inc. (utilities company, 2019-present). In addition, Ms. Kampling currently serves as a member of the Board of the Nature Conservancy, Wisconsin Chapter (2019-present). Previously, Ms. Kampling served as a member of the Board of Interstate Power and Light Company (2012-2019) and Wisconsin Power and Light Company (2012-2019) (each a subsidiary of Alliant Energy Corporation) and as a member of the Board and Workforce Development Committee of the Business Roundtable (2018-2019).
Peter S. Lynch (1944)
Year of Election or Appointment: 2018
Member of the Advisory Board
Mr. Lynch also serves as Member of the Advisory Board of other Fidelity® funds. Mr. Lynch is Vice Chairman and a Director of Fidelity Management & Research Company LLC (investment adviser firm). In addition, Mr. Lynch serves as a Trustee of Boston College and as the Chairman of the Inner-City Scholarship Fund. Previously, Mr. Lynch served as Vice Chairman and a Director of FMR Co., Inc. (investment adviser firm) and on the Special Olympics International Board of Directors (1997-2006).
Susan Tomasky (1953)
Year of Election or Appointment: 2020
Member of the Advisory Board
Ms. Tomasky also serves as Member of the Advisory Board of other Fidelity® funds. Prior to her retirement, Ms. Tomasky served in various executive officer positions at American Electric Power Company, Inc. (1998-2011), including most recently as President of AEP Transmission (2007-2011). Ms. Tomasky currently serves as a member of the Board and Sustainability Committee and as Chair of the Audit Committee of Marathon Petroleum Corporation (2018-present) and as a member of the Board, Corporate Governance Committee and Organization and Compensation Committee and as Chair of the Audit Committee of Public Service Enterprise Group, Inc. (utilities company, 2012-present). In addition, Ms. Tomasky currently serves as a member of the Board of the Columbus Regional Airport Authority (2007-present), as a member of the Board of the Royal Shakespeare Company – America (2009-present), as a member of the Board of the Columbus Association for the Performing Arts (2011-present) and as a member of the Board of Kenyon College (2016-present). Previously, Ms. Tomasky served as a member of the Board (2011-2019) and as Lead Independent Director (2015-2018) of Andeavor Corporation (previously Tesoro Corporation) (independent oil refiner and marketer) and as a member of the Board of Summit Midstream Partners LP (energy, 2012-2018).
Elizabeth Paige Baumann (1968)
Year of Election or Appointment: 2017
Anti-Money Laundering (AML) Officer
Ms. Baumann also serves as AML Officer of other funds. She is Chief AML Officer (2012-present) and Senior Vice President (2014-present) of FMR LLC (diversified financial services company) and is an employee of Fidelity Investments. Previously, Ms. Baumann served as AML Officer of certain funds (2017-2019), as AML Officer of the funds (2012-2016), and Vice President (2007-2014) and Deputy Anti-Money Laundering Officer (2007-2012) of FMR LLC.
Craig S. Brown (1977)
Year of Election or Appointment: 2019
Assistant Treasurer
Mr. Brown also serves as Assistant Treasurer of other funds. Mr. Brown is an employee of Fidelity Investments (2013-present).
John J. Burke III (1964)
Year of Election or Appointment: 2018
Chief Financial Officer
Mr. Burke also serves as Chief Financial Officer of other funds. Mr. Burke serves as Head of Investment Operations for Fidelity Fund and Investment Operations (2018-present) and is an employee of Fidelity Investments (1998-present). Previously Mr. Burke served as head of Asset Management Investment Operations (2012-2018).
William C. Coffey (1969)
Year of Election or Appointment: 2019
Assistant Secretary
Mr. Coffey also serves as Assistant Secretary of other funds. He is Senior Vice President and Deputy General Counsel of FMR LLC (diversified financial services company, 2010-present), and is an employee of Fidelity Investments. Previously, Mr. Coffey served as Secretary and CLO of certain funds (2018-2019); CLO, Secretary, and Senior Vice President of Fidelity Management & Research Company and FMR Co., Inc. (investment adviser firms, 2018-2019); Secretary of Fidelity SelectCo, LLC and Fidelity Investments Money Management, Inc. (investment adviser firms, 2018-2019); CLO of Fidelity Management & Research (Hong Kong) Limited, FMR Investment Management (UK) Limited, and Fidelity Management & Research (Japan) Limited (investment adviser firms, 2018-2019); and Assistant Secretary of certain funds (2009-2018).
Timothy M. Cohen (1969)
Year of Election or Appointment: 2018
Vice President
Mr. Cohen also serves as Vice President of other funds. Mr. Cohen serves as Co-Head of Equity (2018-present), a Director of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2016-present), and is an employee of Fidelity Investments. Previously, Mr. Cohen served as Executive Vice President of Fidelity SelectCo, LLC (2019), Head of Global Equity Research (2016-2018), Chief Investment Officer - Equity and a Director of Fidelity Management & Research (U.K.) Inc. (investment adviser firm, 2013-2015) and as a Director of Fidelity Management & Research (Hong Kong) Limited (investment adviser firm, 2017).
Jonathan Davis (1968)
Year of Election or Appointment: 2010
Assistant Treasurer
Mr. Davis also serves as Assistant Treasurer of other funds. Mr. Davis serves as Assistant Treasurer of FMR Capital, Inc. (2017-present) and is an employee of Fidelity Investments. Previously, Mr. Davis served as Vice President and Associate General Counsel of FMR LLC (diversified financial services company, 2003-2010).
Laura M. Del Prato (1964)
Year of Election or Appointment: 2018
Assistant Treasurer
Ms. Del Prato also serves as an officer of other funds. Ms. Del Prato is an employee of Fidelity Investments (2017-present). Prior to joining Fidelity Investments, Ms. Del Prato served as a Managing Director and Treasurer of the JPMorgan Mutual Funds (2014-2017). Prior to JPMorgan, Ms. Del Prato served as a partner at Cohen Fund Audit Services (accounting firm, 2012-2013) and KPMG LLP (accounting firm, 2004-2012).
Colm A. Hogan (1973)
Year of Election or Appointment: 2020
Assistant Treasurer
Mr. Hogan also serves as an officer of other funds. Mr. Hogan serves as Assistant Treasurer of FMR Capital, Inc. (2017-present) and is an employee of Fidelity Investments (2005-present). Previously, Mr. Hogan served as Deputy Treasurer of certain Fidelity® funds (2016-2020) and Assistant Treasurer of certain Fidelity® funds (2016-2018).
Pamela R. Holding (1964)
Year of Election or Appointment: 2018
Vice President
Ms. Holding also serves as Vice President of other funds. Ms. Holding serves as Co-Head of Equity (2018-present) and is an employee of Fidelity Investments (2013-present). Previously, Ms. Holding served as Executive Vice President of Fidelity SelectCo, LLC (2019) and as Chief Investment Officer of Fidelity Institutional Asset Management (2013-2018).
Cynthia Lo Bessette (1969)
Year of Election or Appointment: 2019
Secretary and Chief Legal Officer (CLO)
Ms. Lo Bessette also serves as an officer of other funds. Ms. Lo Bessette serves as CLO, Secretary, and Senior Vice President of Fidelity Management & Research Company LLC (investment adviser firm, 2019-present); and CLO of Fidelity Management & Research (Hong Kong) Limited, FMR Investment Management (UK) Limited, and Fidelity Management & Research (Japan) Limited (investment adviser firms, 2019-present). She is a Senior Vice President and Deputy General Counsel of FMR LLC (diversified financial services company, 2019-present), and is an employee of Fidelity Investments. Previously, Ms. Lo Bessette served as CLO, Secretary, and Senior Vice President of FMR Co., Inc. (investment adviser firm, 2019); Secretary of Fidelity SelectCo, LLC and Fidelity Investments Money Management, Inc. (investment adviser firms, 2019). Prior to joining Fidelity Investments, Ms. Lo Bessette was Executive Vice President, General Counsel (2016-2019) and Senior Vice President, Deputy General Counsel (2015-2016) of OppenheimerFunds (investment management company) and Deputy Chief Legal Officer (2013-2015) of Jennison Associates LLC (investment adviser firm).
Chris Maher (1972)
Year of Election or Appointment: 2020
Deputy Treasurer
Mr. Maher also serves as an officer of other funds. Mr. Maher serves as Assistant Treasurer of FMR Capital, Inc. (2017-present), and is an employee of Fidelity Investments (2008-present). Previously, Mr. Maher served as Assistant Treasurer of certain funds (2013-2020); Vice President of Asset Management Compliance (2013), Vice President of the Program Management Group of FMR (investment adviser firm, 2010-2013), and Vice President of Valuation Oversight (2008-2010).
Kenneth B. Robins (1969)
Year of Election or Appointment: 2018
Chief Compliance Officer
Mr. Robins also serves as an officer of other funds. Mr. Robins serves as Compliance Officer of Fidelity Management & Research Company LLC (investment adviser firm, 2016-present) and is an employee of Fidelity Investments (2004-present). Previously, Mr. Robins served as Compliance Officer of FMR Co., Inc. (investment adviser firm, 2016-2019), as Executive Vice President of Fidelity Investments Money Management, Inc. (investment adviser firm, 2013-2016) and served in other fund officer roles.
Stacie M. Smith (1974)
Year of Election or Appointment: 2018
President and Treasurer
Ms. Smith also serves as an officer of other funds. Ms. Smith serves as Assistant Treasurer of FMR Capital, Inc. (2017-present), is an employee of Fidelity Investments (2009-present), and has served in other fund officer roles. Prior to joining Fidelity Investments, Ms. Smith served as Senior Audit Manager of Ernst & Young LLP (accounting firm, 1996-2009). Previously, Ms. Smith served as Assistant Treasurer (2013-2019) and Deputy Treasurer (2013-2016) of certain Fidelity® funds.
Marc L. Spector (1972)
Year of Election or Appointment: 2017
Assistant Treasurer
Mr. Spector also serves as an officer of other funds. Mr. Spector serves as Assistant Treasurer of FMR Capital, Inc. (2017-present) and is an employee of Fidelity Investments (2016-present). Prior to joining Fidelity Investments, Mr. Spector served as Director at the Siegfried Group (accounting firm, 2013-2016), and prior to Siegfried Group as audit senior manager at Deloitte & Touche LLP (accounting firm, 2005-2013).
Jim Wegmann (1979)
Year of Election or Appointment: 2019
Assistant Treasurer
Mr. Wegmann also serves as Assistant Treasurer of other funds. Mr. Wegmann is an employee of Fidelity Investments (2011-present).
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including and (2) ongoing costs, including management fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (September 1, 2019 to February 29, 2020).
Actual Expenses
The first line of the accompanying table for each fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. In addition, each Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each fund provides information about hypothetical account values and hypothetical expenses based on a fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. In addition, each Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Annualized Expense Ratio -A | Beginning Account Value September 1, 2019 | Ending Account Value February 29, 2020 | Expenses Paid During Period-B September 1, 2019 to February 29, 2020 |
|
| Energy Portfolio | .81% | |||
| Actual | $1,000.00 | $826.00 | $3.68 | |
| Hypothetical-C | $1,000.00 | $1,020.84 | $4.07 | |
| Energy Service Portfolio | .90% | |||
| Actual | $1,000.00 | $833.20 | $4.10 | |
| Hypothetical-C | $1,000.00 | $1,020.39 | $4.52 | |
| Natural Gas Portfolio | .92% | |||
| Actual | $1,000.00 | $809.10 | $4.14 | |
| Hypothetical-C | $1,000.00 | $1,020.29 | $4.62 | |
| Natural Resources Portfolio | .84% | |||
| Actual | $1,000.00 | $851.50 | $3.87 | |
| Hypothetical-C | $1,000.00 | $1,020.69 | $4.22 |
A Annualized expense ratio reflects expenses net of applicable fee waivers.
B Expenses are equal to each Fund's annualized expense ratio, multiplied by the average account value over the period, multiplied by 182/ 366 (to reflect the one-half year period).
C 5% return per year before expenses
Distributions (Unaudited)
A percentage of the dividends distributed during the fiscal year for the following funds qualify for the dividends–received deduction for corporate shareholders:
| April 2019 | December 2019 | |
| Energy Portfolio | 100% | 100% |
| Energy Service Portfolio | – | 47% |
| Natural Gas Portfolio | – | 100% |
| Natural Resources Portfolio | 100% | 100% |
A percentage of the dividends distributed during the fiscal year for the following funds may be taken into account as a dividend for purposes of the maximum rate under section 1(h)(11) of the Internal Revenue Code.
| April 2019 | December 2019 | |
| Energy Portfolio | 100% | 100% |
| Energy Service Portfolio | – | 89% |
| Natural Gas Portfolio | – | 100% |
| Natural Resources Portfolio | 100% | 100% |
The funds will notify shareholders in January 2021 of amounts for use in preparing 2020 income tax returns.
Board Approval of Investment Advisory Contracts and Management Fees
Energy Portfolio
Energy Service Portfolio
Natural Gas Portfolio
Natural Resources Portfolio
Energy Portfolio
Energy Service Portfolio
Natural Gas Portfolio
Natural Resources Portfolio
Energy Portfolio
Energy Service Portfolio
Natural Gas Portfolio
Natural Resources Portfolio
Liquidity Risk Management Program
The Securities and Exchange Commission adopted Rule 22e-4 under the Investment Company Act of 1940 (the Liquidity Rule) to promote effective liquidity risk management throughout the open-end investment company industry, thereby reducing the risk that funds will be unable to meet their redemption obligations and mitigating dilution of the interests of fund shareholders.
The Funds have adopted and implemented a liquidity risk management program pursuant to the Liquidity Rule (the Program) effective December 1, 2018. The Program is reasonably designed to assess and manage each Fund’s liquidity risk and to comply with the requirements of the Liquidity Rule. Each Fund’s Board of Trustees (the Board) has designated each Fund’s investment adviser as administrator of the Program. The Fidelity advisers have established a Liquidity Risk Management Committee (the LRM Committee) to manage the Program for each of the Fidelity Funds. The LRM Committee monitors the adequacy and effectiveness of implementation of the Program and on a periodic basis assesses each Fund’s liquidity risk based on a variety of factors including (1) the Fund’s investment strategy, (2) portfolio liquidity and cash flow projections during normal and reasonably foreseeable stressed conditions, (3) shareholder redemptions, (4) borrowings and other funding sources and (5) in the case of exchange-traded funds, certain additional factors including the effect of the Fund’s prices and spreads, market participants, and basket compositions on the overall liquidity of the Fund’s portfolio, as applicable.
In accordance with the Program, each of the Fund’s portfolio investments is classified into one of four liquidity categories described below based on a determination of a reasonable expectation for how long it would take to convert the investment to cash (or sell or dispose of the investment) without significantly changing its market value.
- Highly liquid investments – cash or convertible to cash within three business days or less
- Moderately liquid investments – convertible to cash in three to seven calendar days
- Less liquid investments – can be sold or disposed of, but not settled, within seven calendar days
- Illiquid investments – cannot not be sold or disposed of within seven calendar days
Liquidity classification determinations take into account a variety of factors including various market, trading and investment-specific considerations, as well as market depth, and generally utilize analysis from a third-party liquidity metrics service.
The Liquidity Rule places a 15% limit on a fund’s illiquid investments and requires funds that do not primarily hold assets that are highly liquid investments to determine and maintain a minimum percentage of the fund’s net assets to be invested in highly liquid investments (highly liquid investment minimum or HLIM). The Program includes provisions reasonably designed to comply with the 15% limit on illiquid investments and for determining, periodically reviewing and complying with the HLIM requirement as applicable.
At a recent meeting of the Fund’s Board of Trustees, the LRM Committee provided a written report to the Board pertaining to the operation, adequacy, and effectiveness of implementation of the Program for the annual period from December 1, 2018 through November 30, 2019. The report concluded that the Program has been implemented and is operating effectively and is reasonably designed to assess and manage the Fund’s liquidity risk.
SELNR-ANN-0420
1.813649.115
Fidelity® Select Portfolios®
Financials Sector
Banking Portfolio
Brokerage and Investment Management Portfolio
Consumer Finance Portfolio
Financial Services Portfolio
Insurance Portfolio
February 29, 2020
See the inside front cover for important information about access to your fund’s shareholder reports.
Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of a fund’s shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports from the fund or from your financial intermediary, such as a financial advisor, broker-dealer or bank. Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from a fund electronically, by contacting your financial intermediary. For Fidelity customers, visit Fidelity's web site or call Fidelity using the contact information listed below.
You may elect to receive all future reports in paper free of charge. If you wish to continue receiving paper copies of your shareholder reports, you may contact your financial intermediary or, if you are a Fidelity customer, visit Fidelity’s website, or call Fidelity at the applicable toll-free number listed below. Your election to receive reports in paper will apply to all funds held with the fund complex/your financial intermediary.
| Account Type | Website | Phone Number |
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Contents
|
Banking Portfolio | |
|
Brokerage and Investment Management Portfolio | |
|
Consumer Finance Portfolio | |
|
Financial Services Portfolio | |
|
Insurance Portfolio | |
|
Board Approval of Investment Advisory Contracts and Management Fees | |
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov.
You may also call 1-800-544-8544 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third-party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company. © 2020 FMR LLC. All rights reserved.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the Funds. This report is not authorized for distribution to prospective investors in the Funds unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-PORT. Forms N-PORT are available on the SEC’s web site at http://www.sec.gov. A fund's Forms N-PORT may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330.
For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com, http://www.institutional.fidelity.com, or http://www.401k.com, as applicable.
NOT FDIC INSURED •MAY LOSE VALUE •NO BANK GUARANTEE
Neither the Funds nor Fidelity Distributors Corporation is a bank.
Note to shareholders:
(No Action is Required by You)
As part of a regular review of its organizational structure, Fidelity has decided to merge certain entities to streamline operations, increase efficiency, simplify reporting, and reduce legal, compliance, and accounting complexity and costs. In separate events, Fidelity has merged four of its investment advisers and two of its broker-dealers.
Effective on or about January 1, 2020, following any required regulatory notices and approvals:
Investment advisers Fidelity Investments Money Management, Inc., FMR Co., Inc., and Fidelity SelectCo, LLC, merged with and into Fidelity Management & Research Company. In connection with the merger transactions, the resulting, merged investment adviser was then redomiciled from Massachusetts to Delaware, changed its corporate structure from a corporation to a limited liability company, and changed its name to “Fidelity Management & Research Company LLC”.
Broker-dealer Fidelity Distributors Corporation merged with and into Fidelity Investments Institutional Services Company, Inc. (“FIISC”). FIISC was then redomiciled from Massachusetts to Delaware, changed its corporate structure from a corporation to a limited liability company, and changed its name to “Fidelity Distributors Company LLC”.
These mergers are not expected to affect fund shareholders or Fidelity clients, nor are they expected to result in any changes to the day-to-day management of Fidelity’s brokerage services, the Fidelity funds, their investment policies and practices, their portfolio management teams, or the funds’ expenses.
The situation continues to unfold, and the extent and duration of its impact on financial markets and the economy remain highly uncertain. Extreme events such as the coronavirus crisis are “exogenous shocks” that can have significant adverse effects on mutual funds and their investments. Although multiple asset classes may be affected by market disruption, the duration and impact may not be the same for all types of assets.
Early in 2020, the outbreak and spread of a new coronavirus emerged as a public health emergency that had a major influence on financial markets, primarily based on its impact on the global economy and corporate earnings. The virus causes a respiratory disease known as COVID-19. On March 11, the World Health Organization declared the COVID-19 outbreak a pandemic, citing sustained risk of further global spread.
Fidelity is committed to helping you stay informed amid news about COVID-19 and during increased market volatility, and we’re taking extra steps to be responsive to customer needs. We encourage you to visit our websites, where we offer ongoing updates, commentary, and analysis on the markets and our funds.
In the weeks following the end of this reporting period, as the crisis worsened, we witnessed an escalating human tragedy with wide-scale social and economic consequences from coronavirus-containment measures. The outbreak of COVID-19 prompted a number of measures to limit the spread, including travel and border restrictions, quarantines, and restrictions on large gatherings. In turn, these resulted in lower consumer activity, diminished demand for a wide range of products and services, disruption in manufacturing and supply chains, and – given the wide variability in outcomes regarding the outbreak – significant market uncertainty and volatility. Amid the turmoil, the U.S. government took unprecedented action – in concert with the U.S. Federal Reserve and central banks around the world – to help support consumers, businesses, and the broader economy, and to limit disruption to the financial system.
Banking Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The hypothetical investment and the average annual total returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund’s total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
| For the periods ended February 29, 2020 | Past 1 year | Past 5 years | Past 10 years |
| Banking Portfolio | (6.05)% | 6.12% | 8.82% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Banking Portfolio on February 28, 2010.
The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
| Period Ending Values | ||
|
| $23,292 | Banking Portfolio |
|
| $32,918 | S&P 500® Index |
Banking Portfolio
Management's Discussion of Fund Performance
Market Recap: U.S. stocks stalled to begin the new year and declined in late February, as the outbreak and spread of the new coronavirus threatened to hamper global economic growth and corporate earnings. For the 12 months ending February 29, 2020, the U.S. equity bellwether S&P 500® index gained 8.19%. The period began with equities rising amid upbeat company earnings and signs the U.S. Federal Reserve may pause on rates. The uptrend extended until May, when the index dipped as trade talks between the U.S. and China broke down. The bull market roared back to record a series of highs in July, when the Fed cut interest rates for the first time since 2008. Volatility intensified in August, as the Treasury yield curve inverted, which some investors viewed as a sign the U.S. economy could be heading for recession. But the market proved resilient, hitting a new high on October 30, when the Fed lowered rates for the third time in 2019, and moving higher through December 31. Following a roughly flat January, stocks sank in late February, after a surge in coronavirus cases outside China created considerable uncertainty and pushed investors to safer asset classes. By sector, information technology (+27%) led the way by a wide margin, followed by utilities and communication services (+13% each). In contrast, energy (-25%) was by far the weakest category, struggling due to sluggish oil prices. Other notable laggards included materials and industrials (-2% each). Comments from Portfolio Manager Matthew Reed: For the fiscal year, the fund returned -6.05%, considerably better than the -9.52% return of the MSCI U.S. IMI Banks 5% Capped Linked Index, but lagging the broadly based S&P 500®. Versus the MSCI industry index, stock selection in regional banks bolstered the fund’s performance most. Out-of-index exposure to certain consumer finance stocks also lifted our relative result. Our top individual contributor versus the MSCI index was an out-of-index position in Cardlytics (+396%). The company provides a proprietary bank advertising platform that enables marketers to reach consumers through their trusted and frequently visited online- and mobile-banking channels. Given the stock’s massive gain in such a short time, I chose to exit the position. Within the consumer finance segment, OneMain Holdings (+29%), Capital One Financial (+7%) and SLM (+8%) were all non-index holdings that gave the fund a performance boost, benefiting from overall favorable conditions for providers of consumer credit. A sizable overweighting in Bank of America (0%) further aided the fund’s relative performance. Conversely, investment choices in diversified banks weighed on performance the past 12 months. Not owning JPMorgan Chase (+15%) resulted in this index heavyweight ending the period as the portfolio’s largest individual relative detractor. This was a case of believing that the strength of the business was well understood and seeing better relative values in other banks. A large overweighting in another diversified bank, Wells Fargo (-15%), fared poorly, and Houston-based regional bank Cadence Bancorp (-26%), a sizable overweighting in the portfolio, further detracted.The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Banking Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 29, 2020
| % of fund's net assets | |
| Wells Fargo & Co. | 8.9 |
| Bank of America Corp. | 8.6 |
| Citigroup, Inc. | 6.7 |
| Truist Financial Corp. | 6.0 |
| East West Bancorp, Inc. | 3.1 |
| Huntington Bancshares, Inc. | 3.1 |
| Capital One Financial Corp. | 2.9 |
| Signature Bank | 2.8 |
| WesBanco, Inc. | 2.7 |
| Wintrust Financial Corp. | 2.6 |
| 47.4 |
Top Industries (% of fund's net assets)
| As of February 29, 2020 | ||
| Banks | 85.5% | |
| Thrifts & Mortgage Finance | 5.6% | |
| Consumer Finance | 5.2% | |
| Capital Markets | 2.3% | |
| IT Services | 1.1% | |
| All Others* | 0.3% | |
* Includes short-term investments and net other assets (liabilities).
Banking Portfolio
Schedule of Investments February 29, 2020
Showing Percentage of Net Assets
| Common Stocks - 99.7% | |||
| Shares | Value | ||
| Banks - 85.5% | |||
| Diversified Banks - 24.2% | |||
| Bank of America Corp. | 1,081,776 | $30,830,616 | |
| Citigroup, Inc. | 382,700 | 24,286,142 | |
| Wells Fargo & Co. | 788,692 | 32,218,068 | |
| 87,334,826 | |||
| Regional Banks - 61.3% | |||
| 1st Source Corp. | 75,060 | 3,156,273 | |
| Amalgamated Bank | 58,600 | 938,186 | |
| American National Bankshares, Inc. | 105,186 | 3,249,196 | |
| Ameris Bancorp | 99,060 | 3,385,871 | |
| Associated Banc-Corp. | 313,800 | 5,312,634 | |
| Bank OZK | 272,600 | 6,921,314 | |
| BayCom Corp. (a) | 183,382 | 3,907,870 | |
| BOK Financial Corp. | 103,400 | 7,486,160 | |
| Cadence Bancorp Class A | 641,028 | 9,051,315 | |
| Camden National Corp. | 20,232 | 829,714 | |
| Community Trust Bancorp, Inc. | 109,676 | 4,242,268 | |
| ConnectOne Bancorp, Inc. | 94,700 | 1,989,647 | |
| Cullen/Frost Bankers, Inc. | 68,400 | 5,361,876 | |
| East West Bancorp, Inc. | 294,000 | 11,389,560 | |
| First Citizens Bancshares, Inc. | 4,600 | 2,085,226 | |
| First Hawaiian, Inc. | 131,200 | 3,142,240 | |
| First Horizon National Corp. | 620,100 | 8,265,933 | |
| First Interstate Bancsystem, Inc. | 205,800 | 7,009,548 | |
| Great Western Bancorp, Inc. | 319,000 | 8,571,530 | |
| Hilltop Holdings, Inc. | 173,600 | 3,616,088 | |
| Huntington Bancshares, Inc. | 913,400 | 11,207,418 | |
| KeyCorp | 548,300 | 8,964,705 | |
| Lakeland Financial Corp. | 86,800 | 3,547,516 | |
| M&T Bank Corp. | 56,600 | 7,945,508 | |
| PacWest Bancorp | 180,036 | 5,696,339 | |
| Preferred Bank, Los Angeles | 78,395 | 4,008,336 | |
| Regions Financial Corp. | 616,500 | 8,335,080 | |
| Sierra Bancorp | 83,000 | 1,977,060 | |
| Signature Bank | 81,990 | 10,256,949 | |
| Trico Bancshares | 104,287 | 3,526,986 | |
| Truist Financial Corp. | 474,850 | 21,909,579 | |
| UMB Financial Corp. | 65,266 | 3,795,218 | |
| Univest Corp. of Pennsylvania | 150,100 | 3,512,340 | |
| WesBanco, Inc. | 314,500 | 9,626,845 | |
| Wintrust Financial Corp. | 176,400 | 9,421,524 | |
| Zions Bancorp NA | 204,950 | 8,187,753 | |
| 221,831,605 | |||
| TOTAL BANKS | 309,166,431 | ||
| Capital Markets - 2.3% | |||
| Asset Management & Custody Banks - 2.3% | |||
| Northern Trust Corp. | 27,200 | 2,387,072 | |
| State Street Corp. | 88,500 | 6,027,735 | |
| 8,414,807 | |||
| Consumer Finance - 5.2% | |||
| Consumer Finance - 5.2% | |||
| Capital One Financial Corp. | 117,500 | 10,370,550 | |
| OneMain Holdings, Inc. | 93,500 | 3,436,125 | |
| SLM Corp. | 480,300 | 4,980,711 | |
| 18,787,386 | |||
| IT Services - 1.1% | |||
| Data Processing & Outsourced Services - 1.1% | |||
| Computer Services, Inc. | 30,000 | 1,560,000 | |
| GreenSky, Inc. Class A (a)(b) | 288,900 | 2,305,422 | |
| 3,865,422 | |||
| Thrifts & Mortgage Finance - 5.6% | |||
| Thrifts & Mortgage Finance - 5.6% | |||
| Essent Group Ltd. | 213,429 | 9,314,042 | |
| MGIC Investment Corp. | 236,400 | 2,843,892 | |
| NMI Holdings, Inc. (a) | 130,802 | 3,052,919 | |
| Radian Group, Inc. | 247,236 | 5,251,293 | |
| 20,462,146 | |||
| TOTAL COMMON STOCKS | |||
| (Cost $345,339,061) | 360,696,192 | ||
| Money Market Funds - 0.4% | |||
| Fidelity Securities Lending Cash Central Fund 1.60% (c)(d) | |||
| (Cost $1,324,073) | 1,323,941 | 1,324,073 | |
| TOTAL INVESTMENT IN SECURITIES - 100.1% | |||
| (Cost $346,663,134) | 362,020,265 | ||
| NET OTHER ASSETS (LIABILITIES) - (0.1)% | (324,095) | ||
| NET ASSETS - 100% | $361,696,170 |
Legend
(a) Non-income producing
(b) Security or a portion of the security is on loan at period end.
(c) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request.
(d) Investment made with cash collateral received from securities on loan.
Affiliated Central Funds
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:
| Fund | Income earned |
| Fidelity Cash Central Fund | $26,043 |
| Fidelity Securities Lending Cash Central Fund | 45,491 |
| Total | $71,534 |
Amounts in the income column in the above table include any capital gain distributions from underlying funds, which are presented in the corresponding line-item in the Statement of Operations, if applicable. Amount for Fidelity Securities Lending Cash Central Fund represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities.
Investment Valuation
All investments are categorized as Level 1 under the Fair Value Hierarchy. 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 please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.
See accompanying notes which are an integral part of the financial statements.
Banking Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2020 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $1,320,690) — See accompanying schedule: Unaffiliated issuers (cost $345,339,061) | $360,696,192 | |
| Fidelity Central Funds (cost $1,324,073) | 1,324,073 | |
| Total Investment in Securities (cost $346,663,134) | $362,020,265 | |
| Receivable for investments sold | 5,345,557 | |
| Receivable for fund shares sold | 1,058,405 | |
| Dividends receivable | 1,278,938 | |
| Distributions receivable from Fidelity Central Funds | 2,310 | |
| Prepaid expenses | 5,572 | |
| Other receivables | 7,045 | |
| Total assets | 369,718,092 | |
| Liabilities | ||
| Payable to custodian bank | $3,456,718 | |
| Payable for investments purchased | 187,454 | |
| Payable for fund shares redeemed | 2,746,831 | |
| Accrued management fee | 191,586 | |
| Other affiliated payables | 79,161 | |
| Other payables and accrued expenses | 36,172 | |
| Collateral on securities loaned | 1,324,000 | |
| Total liabilities | 8,021,922 | |
| Net Assets | $361,696,170 | |
| Net Assets consist of: | ||
| Paid in capital | $324,779,996 | |
| Total accumulated earnings (loss) | 36,916,174 | |
| Net Assets | $361,696,170 | |
| Net Asset Value, offering price and redemption price per share ($361,696,170 ÷ 15,474,802 shares) | $23.37 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 29, 2020 | ||
| Investment Income | ||
| Dividends | $13,664,041 | |
| Income from Fidelity Central Funds (including $45,491 from security lending) | 71,534 | |
| Total income | 13,735,575 | |
| Expenses | ||
| Management fee | $2,467,781 | |
| Transfer agent fees | 819,213 | |
| Accounting and security lending fees | 179,438 | |
| Custodian fees and expenses | 9,621 | |
| Independent trustees' fees and expenses | 2,545 | |
| Registration fees | 41,124 | |
| Audit | 41,668 | |
| Legal | 3,633 | |
| Interest | 549 | |
| Miscellaneous | 4,634 | |
| Total expenses before reductions | 3,570,206 | |
| Expense reductions | (26,326) | |
| Total expenses after reductions | 3,543,880 | |
| Net investment income (loss) | 10,191,695 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 39,645,048 | |
| Fidelity Central Funds | 73 | |
| Total net realized gain (loss) | 39,645,121 | |
| Change in net unrealized appreciation (depreciation) on investment securities | (72,578,685) | |
| Net gain (loss) | (32,933,564) | |
| Net increase (decrease) in net assets resulting from operations | $(22,741,869) |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 29, 2020 | Year ended February 28, 2019 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $10,191,695 | $9,788,529 |
| Net realized gain (loss) | 39,645,121 | 102,235,585 |
| Change in net unrealized appreciation (depreciation) | (72,578,685) | (165,933,677) |
| Net increase (decrease) in net assets resulting from operations | (22,741,869) | (53,909,563) |
| Distributions to shareholders | (30,093,044) | (139,846,212) |
| Share transactions | ||
| Proceeds from sales of shares | 121,977,862 | 151,956,223 |
| Reinvestment of distributions | 28,635,030 | 131,871,083 |
| Cost of shares redeemed | (250,731,343) | (405,666,643) |
| Net increase (decrease) in net assets resulting from share transactions | (100,118,451) | (121,839,337) |
| Total increase (decrease) in net assets | (152,953,364) | (315,595,112) |
| Net Assets | ||
| Beginning of period | 514,649,534 | 830,244,646 |
| End of period | $361,696,170 | $514,649,534 |
| Other Information | ||
| Shares | ||
| Sold | 4,485,997 | 4,816,713 |
| Issued in reinvestment of distributions | 1,050,495 | 5,072,697 |
| Redeemed | (9,539,655) | (12,960,820) |
| Net increase (decrease) | (4,003,163) | (3,071,410) |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights
Banking Portfolio
| Years ended February 28, | 2020 A | 2019 | 2018 | 2017 | 2016 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $26.42 | $36.82 | $33.63 | $21.70 | $26.24 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .58 | .49 | .42 | .33 | .33 |
| Net realized and unrealized gain (loss) | (1.96) | (3.62) | 3.68 | 11.85 | (3.43) |
| Total from investment operations | (1.38) | (3.13) | 4.10 | 12.18 | (3.10) |
| Distributions from net investment income | (.53) | (.54) | (.33) | (.25) | (.28) |
| Distributions from net realized gain | (1.14) | (6.73) | (.58) | – | (1.16) |
| Total distributions | (1.67) | (7.27) | (.91) | (.25) | (1.44) |
| Redemption fees added to paid in capitalB | – | – | –C | –C | –C |
| Net asset value, end of period | $23.37 | $26.42 | $36.82 | $33.63 | $21.70 |
| Total ReturnD | (6.05)% | (6.57)% | 12.31% | 56.16% | (12.57)% |
| Ratios to Average Net AssetsE,F | |||||
| Expenses before reductions | .77% | .77% | .77% | .79% | .79% |
| Expenses net of fee waivers, if any | .77% | .77% | .77% | .79% | .79% |
| Expenses net of all reductions | .77% | .76% | .77% | .79% | .79% |
| Net investment income (loss) | 2.21% | 1.54% | 1.26% | 1.20% | 1.27% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $361,696 | $514,650 | $830,245 | $1,261,859 | $565,479 |
| Portfolio turnover rateG | 31% | 44% | 35% | 34% | 63% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Amount represents less than $.005 per share.
D Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
E Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the financial statements.
Brokerage and Investment Management Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The hypothetical investment and the average annual total returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund’s total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
| For the periods ended February 29, 2020 | Past 1 year | Past 5 years | Past 10 years |
| Brokerage and Investment Management Portfolio | 9.28% | 5.60% | 8.44% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Brokerage and Investment Management Portfolio on February 28, 2010.
The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
| Period Ending Values | ||
|
| $22,480 | Brokerage and Investment Management Portfolio |
|
| $32,918 | S&P 500® Index |
Brokerage and Investment Management Portfolio
Management's Discussion of Fund Performance
Market Recap: U.S. stocks stalled to begin the new year and declined in late February, as the outbreak and spread of the new coronavirus threatened to hamper global economic growth and corporate earnings. For the 12 months ending February 29, 2020, the U.S. equity bellwether S&P 500® index gained 8.19%. The period began with equities rising amid upbeat company earnings and signs the U.S. Federal Reserve may pause on rates. The uptrend extended until May, when the index dipped as trade talks between the U.S. and China broke down. The bull market roared back to record a series of highs in July, when the Fed cut interest rates for the first time since 2008. Volatility intensified in August, as the Treasury yield curve inverted, which some investors viewed as a sign the U.S. economy could be heading for recession. But the market proved resilient, hitting a new high on October 30, when the Fed lowered rates for the third time in 2019, and moving higher through December 31. Following a roughly flat January, stocks sank in late February, after a surge in coronavirus cases outside China created considerable uncertainty and pushed investors to safer asset classes. By sector, information technology (+27%) led the way by a wide margin, followed by utilities and communication services (+13% each). In contrast, energy (-25%) was by far the weakest category, struggling due to sluggish oil prices. Other notable laggards included materials and industrials (-2% each). Comments from Portfolio Manager Charlie Ackerman: For the fiscal year, the fund returned 9.28%, outpacing the 7.49% result of the MSCI U.S. IMI Capital Markets 5% Capped Linked Index and the broad-based S&P 500® index. The fund's outperformance of the MSCI industry index was primarily due to security selection in asset management & custody banks and, to a lesser extent, our underweighting to the group. Here, the biggest individual contributor was alternative asset manager Apollo Global Management, which gained 51% the past 12 months. We held Apollo throughout the entire fiscal year, whereas it wasn't included in the MSCI benchmark until late 2019 and posted a modestly negative return from then through period-end. Additionally, not owning asset managers Franklin Resources (-31%) and significantly underweighting Affiliated Managers Group (-30%), two sizable income components, also added value. By contrast, unfavorable stock selection and an overweighting in the lagging investment banking & brokerage group detracted from the fund's relative result. In this category, we had too much exposure to TD Ameritrade (-23%) and Schwab (-10%) this period, as the firms eliminated commissions on online trading of stocks and exchange-traded funds. In the financial exchanges & data group, our underweighting in Moody's meant we missed out on some of the stock's 40% gain for the year.The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Brokerage and Investment Management Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 29, 2020
| % of fund's net assets | |
| BlackRock, Inc. Class A | 8.0 |
| S&P Global, Inc. | 7.0 |
| Intercontinental Exchange, Inc. | 6.4 |
| Morgan Stanley | 6.2 |
| Charles Schwab Corp. | 5.9 |
| CME Group, Inc. | 5.6 |
| MSCI, Inc. | 5.5 |
| Ameriprise Financial, Inc. | 4.5 |
| LPL Financial | 4.5 |
| T. Rowe Price Group, Inc. | 4.5 |
| 58.1 |
Top Industries (% of fund's net assets)
| As of February 29, 2020 | ||
| Capital Markets | 100.0% | |
Brokerage and Investment Management Portfolio
Schedule of Investments February 29, 2020
Showing Percentage of Net Assets
| Common Stocks - 100.0% | |||
| Shares | Value | ||
| Capital Markets - 100.0% | |||
| Asset Management & Custody Banks - 31.6% | |||
| Affiliated Managers Group, Inc. | 7,900 | $594,238 | |
| AllianceBernstein Holding LP | 27,000 | 821,070 | |
| Ameriprise Financial, Inc. | 99,600 | 14,073,480 | |
| Apollo Global Management LLC Class A | 262,600 | 10,939,916 | |
| Bank of New York Mellon Corp. | 223,400 | 8,913,660 | |
| BlackRock, Inc. Class A | 53,500 | 24,771,035 | |
| Eaton Vance Corp. (non-vtg.) | 25,400 | 1,048,004 | |
| Invesco Ltd. | 64,500 | 928,800 | |
| KKR & Co. LP | 87,000 | 2,488,200 | |
| Northern Trust Corp. | 66,400 | 5,827,264 | |
| State Street Corp. | 126,900 | 8,643,159 | |
| T. Rowe Price Group, Inc. | 117,000 | 13,807,170 | |
| The Blackstone Group LP | 89,800 | 4,834,832 | |
| 97,690,828 | |||
| Financial Exchanges & Data - 36.4% | |||
| Cboe Global Markets, Inc. | 70,238 | 8,007,132 | |
| CME Group, Inc. | 87,000 | 17,297,340 | |
| Intercontinental Exchange, Inc. | 220,500 | 19,673,010 | |
| MarketAxess Holdings, Inc. | 16,400 | 5,319,012 | |
| Moody's Corp. | 41,100 | 9,865,233 | |
| MSCI, Inc. | 57,800 | 17,076,432 | |
| S&P Global, Inc. | 81,300 | 21,618,483 | |
| The NASDAQ OMX Group, Inc. | 131,900 | 13,526,345 | |
| 112,382,987 | |||
| Investment Banking & Brokerage - 32.0% | |||
| BGC Partners, Inc. Class A | 400,800 | 1,867,728 | |
| Charles Schwab Corp. | 444,880 | 18,128,860 | |
| E*TRADE Financial Corp. | 182,600 | 8,359,428 | |
| Goldman Sachs Group, Inc. | 37,700 | 7,569,029 | |
| Interactive Brokers Group, Inc. | 21,400 | 1,093,540 | |
| LPL Financial | 174,200 | 13,845,416 | |
| Moelis & Co. Class A | 62,400 | 1,994,304 | |
| Morgan Stanley | 427,200 | 19,236,816 | |
| PJT Partners, Inc. | 96,012 | 4,315,739 | |
| Raymond James Financial, Inc. | 95,100 | 7,953,213 | |
| TD Ameritrade Holding Corp. | 264,800 | 11,182,504 | |
| Virtu Financial, Inc. Class A | 178,800 | 3,363,228 | |
| 98,909,805 | |||
| TOTAL INVESTMENT IN SECURITIES - 100.0% | |||
| (Cost $235,446,612) | 308,983,620 | ||
| NET OTHER ASSETS (LIABILITIES) - 0.0% | 104,485 | ||
| NET ASSETS - 100% | $309,088,105 |
Affiliated Central Funds
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:
| Fund | Income earned |
| Fidelity Cash Central Fund | $50,608 |
| Fidelity Securities Lending Cash Central Fund | 3,364 |
| Total | $53,972 |
Amounts in the income column in the above table include any capital gain distributions from underlying funds, which are presented in the corresponding line-item in the Statement of Operations, if applicable. Amount for Fidelity Securities Lending Cash Central Fund represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities.
Investment Valuation
All investments are categorized as Level 1 under the Fair Value Hierarchy. 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 please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.
See accompanying notes which are an integral part of the financial statements.
Brokerage and Investment Management Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2020 | ||
| Assets | ||
| Investment in securities, at value — See accompanying schedule: Unaffiliated issuers (cost $235,446,612) | $308,983,620 | |
| Receivable for investments sold | 1,163,373 | |
| Receivable for fund shares sold | 216,368 | |
| Dividends receivable | 466,036 | |
| Distributions receivable from Fidelity Central Funds | 593 | |
| Prepaid expenses | 3,164 | |
| Other receivables | 42,834 | |
| Total assets | 310,875,988 | |
| Liabilities | ||
| Payable to custodian bank | $515,034 | |
| Payable for fund shares redeemed | 982,143 | |
| Accrued management fee | 155,952 | |
| Other affiliated payables | 57,345 | |
| Other payables and accrued expenses | 77,409 | |
| Total liabilities | 1,787,883 | |
| Net Assets | $309,088,105 | |
| Net Assets consist of: | ||
| Paid in capital | $230,969,911 | |
| Total accumulated earnings (loss) | 78,118,194 | |
| Net Assets | $309,088,105 | |
| Net Asset Value, offering price and redemption price per share ($309,088,105 ÷ 4,121,995 shares) | $74.99 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 29, 2020 | ||
| Investment Income | ||
| Dividends | $6,754,939 | |
| Income from Fidelity Central Funds (including $3,364 from security lending) | 53,972 | |
| Total income | 6,808,911 | |
| Expenses | ||
| Management fee | $1,735,536 | |
| Transfer agent fees | 550,076 | |
| Accounting and security lending fees | 126,245 | |
| Custodian fees and expenses | 6,218 | |
| Independent trustees' fees and expenses | 1,745 | |
| Registration fees | 28,908 | |
| Audit | 39,608 | |
| Legal | 4,738 | |
| Miscellaneous | 2,624 | |
| Total expenses before reductions | 2,495,698 | |
| Expense reductions | (6,262) | |
| Total expenses after reductions | 2,489,436 | |
| Net investment income (loss) | 4,319,475 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 11,001,300 | |
| Fidelity Central Funds | 102 | |
| Total net realized gain (loss) | 11,001,402 | |
| Change in net unrealized appreciation (depreciation) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 13,076,120 | |
| Fidelity Central Funds | (10) | |
| Assets and liabilities in foreign currencies | (809) | |
| Total change in net unrealized appreciation (depreciation) | 13,075,301 | |
| Net gain (loss) | 24,076,703 | |
| Net increase (decrease) in net assets resulting from operations | $28,396,178 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 29, 2020 | Year ended February 28, 2019 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $4,319,475 | $3,778,261 |
| Net realized gain (loss) | 11,001,402 | 11,468,298 |
| Change in net unrealized appreciation (depreciation) | 13,075,301 | (49,108,346) |
| Net increase (decrease) in net assets resulting from operations | 28,396,178 | (33,861,787) |
| Distributions to shareholders | (14,519,767) | (30,375,735) |
| Share transactions | ||
| Proceeds from sales of shares | 27,899,331 | 45,360,056 |
| Reinvestment of distributions | 13,537,015 | 28,526,962 |
| Cost of shares redeemed | (73,352,343) | (144,502,646) |
| Net increase (decrease) in net assets resulting from share transactions | (31,915,997) | (70,615,628) |
| Total increase (decrease) in net assets | (18,039,586) | (134,853,150) |
| Net Assets | ||
| Beginning of period | 327,127,691 | 461,980,841 |
| End of period | $309,088,105 | $327,127,691 |
| Other Information | ||
| Shares | ||
| Sold | 356,153 | 587,267 |
| Issued in reinvestment of distributions | 175,977 | 390,034 |
| Redeemed | (972,124) | (1,884,257) |
| Net increase (decrease) | (439,994) | (906,956) |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights
Brokerage and Investment Management Portfolio
| Years ended February 28, | 2020 A | 2019 | 2018 | 2017 | 2016 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $71.71 | $84.47 | $71.13 | $54.65 | $74.78 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | 1.01 | .77 | 1.15 | .89 | .72 |
| Net realized and unrealized gain (loss) | 5.70 | (7.60) | 17.88 | 16.44 | (16.77) |
| Total from investment operations | 6.71 | (6.83) | 19.03 | 17.33 | (16.05) |
| Distributions from net investment income | (.98) | (.96) | (.82) | (.83) | (.74) |
| Distributions from net realized gain | (2.45) | (4.96) | (4.87) | (.01) | (3.34) |
| Total distributions | (3.43) | (5.93)C | (5.69) | (.85)D | (4.08) |
| Redemption fees added to paid in capitalB | – | – | –E | –E | –E |
| Net asset value, end of period | $74.99 | $71.71 | $84.47 | $71.13 | $54.65 |
| Total ReturnF | 9.28% | (8.04)% | 27.51% | 31.76% | (22.23)% |
| Ratios to Average Net AssetsG,H | |||||
| Expenses before reductions | .77% | .78% | .79% | .82% | .79% |
| Expenses net of fee waivers, if any | .77% | .77% | .79% | .82% | .79% |
| Expenses net of all reductions | .77% | .77% | .78% | .80% | .78% |
| Net investment income (loss) | 1.33% | 1.01% | 1.49% | 1.43% | 1.02% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $309,088 | $327,128 | $461,981 | $405,283 | $310,570 |
| Portfolio turnover rateI | 9% | 30% | 75% | 146% | 67% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Total distributions of $5.93 per share is comprised of distributions from net investment income of $.963 and distributions from net realized gain of $4.962 per share.
D Total distributions of $.85 per share is comprised of distributions from net investment income of $.831 and distributions from net realized gain of $.014 per share.
E Amount represents less than $.005 per share.
F Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
G Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
H Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
I Amount does not include the portfolio activity of any underlying Fidelity central Funds.
See accompanying notes which are an integral part of the financial statements.
Consumer Finance Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The hypothetical investment and the average annual total returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund’s total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
| For the periods ended February 29, 2020 | Past 1 year | Past 5 years | Past 10 years |
| Consumer Finance Portfolio | 4.54% | 8.24% | 10.85% |
Prior to December 1, 2010, the fund was named Home Finance Portfolio, and the fund operated under certain different investment policies and compared its performance to a different additional index. The fund's historical performance may not represent its current investment policies.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Consumer Finance Portfolio on February 28, 2010.
The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
| Period Ending Values | ||
|
| $28,021 | Consumer Finance Portfolio |
|
| $32,918 | S&P 500® Index |
Consumer Finance Portfolio
Management's Discussion of Fund Performance
Market Recap: U.S. stocks stalled to begin the new year and declined in late February, as the outbreak and spread of the new coronavirus threatened to hamper global economic growth and corporate earnings. For the 12 months ending February 29, 2020, the U.S. equity bellwether S&P 500® index gained 8.19%. The period began with equities rising amid upbeat company earnings and signs the U.S. Federal Reserve may pause on rates. The uptrend extended until May, when the index dipped as trade talks between the U.S. and China broke down. The bull market roared back to record a series of highs in July, when the Fed cut interest rates for the first time since 2008. Volatility intensified in August, as the Treasury yield curve inverted, which some investors viewed as a sign the U.S. economy could be heading for recession. But the market proved resilient, hitting a new high on October 30, when the Fed lowered rates for the third time in 2019, and moving higher through December 31. Following a roughly flat January, stocks sank in late February, after a surge in coronavirus cases outside China created considerable uncertainty and pushed investors to safer asset classes. By sector, information technology (+27%) led the way by a wide margin, followed by utilities and communication services (+13% each). In contrast, energy (-25%) was by far the weakest category, struggling due to sluggish oil prices. Other notable laggards included materials and industrials (-2% each). Comments from Portfolio Manager Chuck Culp: For the fiscal year, the fund returned 4.54%, outpacing the 3.66% advance of the S&P® Consumer Finance Index and lagging the broad-based S&P 500®. Low unemployment and prudent industry-wide underwriting in recent years contributed to the positive return of the industry index. Within the index, the top-performing data processing & outsourced services group (+27%) gained from growth in online buying and card purchases. In addition, the mortgage REITs (real estate investment trusts) group rose 7% the past 12 months. Conversely, consumer finance stocks (0%) stalled amid fears that the backdrop couldn’t get much better, and thrifts & mortgage finance stocks (-2%) were pressured by declining interest rates. Versus the industry index, an overweighting in the data processing & outsourced services segment and security selection in the consumer finance group aided the fund’s relative result. Top individual contributors were non-index positions in payment processors Worldpay (+41%) and Global Payments (+12%), both of which benefited from merger or acquisition activity. I eliminated our stake in Worldpay during the period. Conversely, subpar stock picking in thrift & mortgage finance, an overweighting in regional banks and non-index exposure to diversified banks nicked relative performance. The biggest individual relative detractor was a non-index position in Alliance Data Systems (-49%), which was hurt by missteps in its transition from a conglomerate to a pure-play private label card company. An underweight position in TFS Financial (+26%) also detracted.The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Note to shareholders: On March 1, 2019, Chuck Culp assumed sole management responsibilities for the fund, succeeding former Co-Manager Shilpa Mehra.Consumer Finance Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 29, 2020
| % of fund's net assets | |
| AGNC Investment Corp. | 7.4 |
| MasterCard, Inc. Class A | 7.1 |
| Visa, Inc. Class A | 6.9 |
| Capital One Financial Corp. | 6.8 |
| American Express Co. | 6.4 |
| Synchrony Financial | 6.2 |
| Ally Financial, Inc. | 4.7 |
| MGIC Investment Corp. | 4.1 |
| New Residential Investment Corp. | 4.0 |
| OneMain Holdings, Inc. | 3.9 |
| 57.5 |
Top Industries (% of fund's net assets)
| As of February 29, 2020 | ||
| Consumer Finance | 44.1% | |
| IT Services | 20.6% | |
| Mortgage Real Estate Investment Trusts | 19.5% | |
| Thrifts & Mortgage Finance | 10.6% | |
| Banks | 4.6% | |
| All Others* | 0.6% | |
* Includes short-term investments and net other assets (liabilities).
Consumer Finance Portfolio
Schedule of Investments February 29, 2020
Showing Percentage of Net Assets
| Common Stocks - 99.4% | |||
| Shares | Value | ||
| Banks - 4.6% | |||
| Diversified Banks - 1.4% | |||
| Wells Fargo & Co. | 50,200 | $2,050,670 | |
| Regional Banks - 3.2% | |||
| Huntington Bancshares, Inc. | 121,100 | 1,485,897 | |
| Signature Bank | 26,100 | 3,265,110 | |
| 4,751,007 | |||
| TOTAL BANKS | 6,801,677 | ||
| Consumer Finance - 44.1% | |||
| Consumer Finance - 44.1% | |||
| Ally Financial, Inc. | 278,900 | 6,992,023 | |
| American Express Co. | 86,500 | 9,508,945 | |
| Capital One Financial Corp. | 114,700 | 10,123,422 | |
| Credit Acceptance Corp. (a)(b) | 10,675 | 4,304,160 | |
| Discover Financial Services | 88,200 | 5,784,156 | |
| First Cash Financial Services, Inc. | 51,911 | 3,992,994 | |
| LendingClub Corp. (a) | 10,220 | 112,522 | |
| Navient Corp. | 123,300 | 1,384,659 | |
| OneMain Holdings, Inc. | 158,219 | 5,814,548 | |
| Santander Consumer U.S.A. Holdings, Inc. (b) | 160,900 | 3,925,960 | |
| SLM Corp. | 412,000 | 4,272,440 | |
| Synchrony Financial | 315,400 | 9,178,140 | |
| 65,393,969 | |||
| IT Services - 20.6% | |||
| Data Processing & Outsourced Services - 20.6% | |||
| Alliance Data Systems Corp. | 5,400 | 463,752 | |
| Black Knight, Inc. (a) | 22,200 | 1,480,962 | |
| Fidelity National Information Services, Inc. | 18,210 | 2,544,301 | |
| FleetCor Technologies, Inc. (a) | 2,900 | 770,791 | |
| Global Payments, Inc. | 14,569 | 2,680,259 | |
| MasterCard, Inc. Class A | 36,100 | 10,478,025 | |
| Network International Holdings PLC (c) | 82,600 | 564,159 | |
| PayPal Holdings, Inc. (a) | 12,700 | 1,371,473 | |
| Visa, Inc. Class A | 56,036 | 10,185,103 | |
| 30,538,825 | |||
| Mortgage Real Estate Investment Trusts - 19.5% | |||
| Mortgage REITs - 19.5% | |||
| AGNC Investment Corp. | 643,600 | 10,966,943 | |
| Annaly Capital Management, Inc. | 371,915 | 3,295,167 | |
| Invesco Mortgage Capital, Inc. | 144,757 | 2,327,693 | |
| MFA Financial, Inc. | 541,200 | 3,912,876 | |
| New Residential Investment Corp. | 384,350 | 5,980,486 | |
| Redwood Trust, Inc. | 141,700 | 2,420,236 | |
| 28,903,401 | |||
| Thrifts & Mortgage Finance - 10.6% | |||
| Thrifts & Mortgage Finance - 10.6% | |||
| Axos Financial, Inc. (a) | 16,700 | 415,997 | |
| MGIC Investment Corp. | 504,728 | 6,071,878 | |
| NMI Holdings, Inc. (a) | 28,400 | 662,856 | |
| Pennymac Financial Services, Inc. | 12,100 | 426,646 | |
| Radian Group, Inc. | 39,665 | 842,485 | |
| TFS Financial Corp. | 93,600 | 1,913,184 | |
| Washington Federal, Inc. | 82,300 | 2,468,177 | |
| WSFS Financial Corp. | 86,000 | 2,963,560 | |
| 15,764,783 | |||
| TOTAL COMMON STOCKS | |||
| (Cost $120,906,874) | 147,402,655 | ||
| Money Market Funds - 6.3% | |||
| Fidelity Cash Central Fund 1.60% (d) | 1,666,370 | 1,666,703 | |
| Fidelity Securities Lending Cash Central Fund 1.60% (d)(e) | 7,587,524 | 7,588,283 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $9,254,986) | 9,254,986 | ||
| TOTAL INVESTMENT IN SECURITIES - 105.7% | |||
| (Cost $130,161,860) | 156,657,641 | ||
| NET OTHER ASSETS (LIABILITIES) - (5.7)% | (8,410,308) | ||
| NET ASSETS - 100% | $148,247,333 |
Legend
(a) Non-income producing
(b) Security or a portion of the security is on loan at period end.
(c) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the end of the period, the value of these securities amounted to $564,159 or 0.4% of net assets.
(d) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request.
(e) Investment made with cash collateral received from securities on loan.
Affiliated Central Funds
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:
| Fund | Income earned |
| Fidelity Cash Central Fund | $80,989 |
| Fidelity Securities Lending Cash Central Fund | 4,781 |
| Total | $85,770 |
Amounts in the income column in the above table include any capital gain distributions from underlying funds, which are presented in the corresponding line-item in the Statement of Operations, if applicable. Amount for Fidelity Securities Lending Cash Central Fund represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities.
Investment Valuation
The following is a summary of the inputs used, as of February 29, 2020, 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 below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.
| Valuation Inputs at Reporting Date: | ||||
| Description | Total | Level 1 | Level 2 | Level 3 |
| Investments in Securities: | ||||
| Common Stocks | $147,402,655 | $146,838,496 | $564,159 | $-- |
| Money Market Funds | 9,254,986 | 9,254,986 | -- | -- |
| Total Investments in Securities: | $156,657,641 | $156,093,482 | $564,159 | $-- |
See accompanying notes which are an integral part of the financial statements.
Consumer Finance Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2020 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $7,191,050) — See accompanying schedule: Unaffiliated issuers (cost $120,906,874) | $147,402,655 | |
| Fidelity Central Funds (cost $9,254,986) | 9,254,986 | |
| Total Investment in Securities (cost $130,161,860) | $156,657,641 | |
| Receivable for investments sold | 1,484,340 | |
| Receivable for fund shares sold | 284,648 | |
| Dividends receivable | 638,145 | |
| Distributions receivable from Fidelity Central Funds | 6,805 | |
| Prepaid expenses | 783 | |
| Other receivables | 881 | |
| Total assets | 159,073,243 | |
| Liabilities | ||
| Payable for fund shares redeemed | $3,090,452 | |
| Accrued management fee | 76,541 | |
| Other affiliated payables | 35,453 | |
| Other payables and accrued expenses | 35,182 | |
| Collateral on securities loaned | 7,588,282 | |
| Total liabilities | 10,825,910 | |
| Net Assets | $148,247,333 | |
| Net Assets consist of: | ||
| Paid in capital | $121,894,810 | |
| Total accumulated earnings (loss) | 26,352,523 | |
| Net Assets | $148,247,333 | |
| Net Asset Value, offering price and redemption price per share ($148,247,333 ÷ 9,132,765 shares) | $16.23 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 29, 2020 | ||
| Investment Income | ||
| Dividends | $4,654,577 | |
| Income from Fidelity Central Funds (including $4,781 from security lending) | 85,770 | |
| Total income | 4,740,347 | |
| Expenses | ||
| Management fee | $808,600 | |
| Transfer agent fees | 328,824 | |
| Accounting and security lending fees | 58,840 | |
| Custodian fees and expenses | 7,525 | |
| Independent trustees' fees and expenses | 773 | |
| Registration fees | 41,644 | |
| Audit | 40,457 | |
| Legal | 4,229 | |
| Miscellaneous | 969 | |
| Total expenses before reductions | 1,291,861 | |
| Expense reductions | (3,384) | |
| Total expenses after reductions | 1,288,477 | |
| Net investment income (loss) | 3,451,870 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | (63,168) | |
| Fidelity Central Funds | (116) | |
| Foreign currency transactions | 511 | |
| Total net realized gain (loss) | (62,773) | |
| Change in net unrealized appreciation (depreciation) on investment securities | 782,674 | |
| Net gain (loss) | 719,901 | |
| Net increase (decrease) in net assets resulting from operations | $4,171,771 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 29, 2020 | Year ended February 28, 2019 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $3,451,870 | $1,557,347 |
| Net realized gain (loss) | (62,773) | 3,278,953 |
| Change in net unrealized appreciation (depreciation) | 782,674 | (547,465) |
| Net increase (decrease) in net assets resulting from operations | 4,171,771 | 4,288,835 |
| Distributions to shareholders | (2,870,396) | (7,207,802) |
| Share transactions | ||
| Proceeds from sales of shares | 141,915,304 | 21,726,183 |
| Reinvestment of distributions | 2,749,682 | 6,892,942 |
| Cost of shares redeemed | (100,053,055) | (27,471,352) |
| Net increase (decrease) in net assets resulting from share transactions | 44,611,931 | 1,147,773 |
| Total increase (decrease) in net assets | 45,913,306 | (1,771,194) |
| Net Assets | ||
| Beginning of period | 102,334,027 | 104,105,221 |
| End of period | $148,247,333 | $102,334,027 |
| Other Information | ||
| Shares | ||
| Sold | 8,358,702 | 1,401,562 |
| Issued in reinvestment of distributions | 154,483 | 473,065 |
| Redeemed | (5,856,956) | (1,787,915) |
| Net increase (decrease) | 2,656,229 | 86,712 |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights
Consumer Finance Portfolio
| Years ended February 28, | 2020 A | 2019 | 2018 | 2017 | 2016 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $15.80 | $16.29 | $14.02 | $10.94 | $14.01 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .39 | .24 | .20 | .21 | .20 |
| Net realized and unrealized gain (loss) | .35 | .43 | 2.33C | 3.38 | (1.99) |
| Total from investment operations | .74 | .67 | 2.53 | 3.59 | (1.79) |
| Distributions from net investment income | (.31) | (.20) | (.26) | (.23) | (.20) |
| Distributions from net realized gain | (.01) | (.95) | – | (.28) | (1.08) |
| Total distributions | (.31)D | (1.16)E | (.26) | (.51) | (1.28) |
| Redemption fees added to paid in capitalB | – | – | –F | –F | –F |
| Net asset value, end of period | $16.23 | $15.80 | $16.29 | $14.02 | $10.94 |
| Total ReturnG | 4.54% | 4.83% | 18.07%C | 33.57% | (14.01)% |
| Ratios to Average Net AssetsH,I | |||||
| Expenses before reductions | .86% | .87% | .90% | .94% | .90% |
| Expenses net of fee waivers, if any | .86% | .87% | .89% | .94% | .89% |
| Expenses net of all reductions | .85% | .86% | .89% | .93% | .89% |
| Net investment income (loss) | 2.29% | 1.57% | 1.38% | 1.72% | 1.53% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $148,247 | $102,334 | $104,105 | $101,823 | $86,643 |
| Portfolio turnover rateJ | 20% | 32% | 81% | 44% | 48% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Net realized and unrealized gain (loss) per share reflects proceeds from litigation which amounted to $.28 per share. Excluding these litigation proceeds, the total return would have been 16.18%.
D Total distributions of $.31 per share is comprised of distributions from net investment income of $.306 and distributions from net realized gain of $.008 per share.
E Total distributions of $1.16 per share is comprised of distributions from net investment income of $.201 and distributions from net realized gain of $.954 per share.
F Amount represents less than $.005 per share.
G Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
H Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
I Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
J Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the financial statements.
Financial Services Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The hypothetical investment and the average annual total returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund’s total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
| For the periods ended February 29, 2020 | Past 1 year | Past 5 years | Past 10 years |
| Financial Services Portfolio | 3.81% | 6.37% | 7.88% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Financial Services Portfolio on February 28, 2010.
The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
| Period Ending Values | ||
|
| $21,358 | Financial Services Portfolio |
|
| $32,918 | S&P 500® Index |
Financial Services Portfolio
Management's Discussion of Fund Performance
Market Recap: U.S. stocks stalled to begin the new year and declined in late February, as the outbreak and spread of the new coronavirus threatened to hamper global economic growth and corporate earnings. For the 12 months ending February 29, 2020, the U.S. equity bellwether S&P 500® index gained 8.19%. The period began with equities rising amid upbeat company earnings and signs the U.S. Federal Reserve may pause on rates. The uptrend extended until May, when the index dipped as trade talks between the U.S. and China broke down. The bull market roared back to record a series of highs in July, when the Fed cut interest rates for the first time since 2008. Volatility intensified in August, as the Treasury yield curve inverted, which some investors viewed as a sign the U.S. economy could be heading for recession. But the market proved resilient, hitting a new high on October 30, when the Fed lowered rates for the third time in 2019, and moving higher through December 31. Following a roughly flat January, stocks sank in late February, after a surge in coronavirus cases outside China created considerable uncertainty and pushed investors to safer asset classes. By sector, information technology (+27%) led the way by a wide margin, followed by utilities and communication services (+13% each). In contrast, energy (-25%) was by far the weakest category, struggling due to sluggish oil prices. Other notable laggards included materials and industrials (-2% each). Comments from Portfolio Manager Matthew Reed: For the fiscal year, the fund gained 3.81%, outpacing the 0.27% advance of the MSCI U.S. IMI Financials 5% Capped Linked Index, but lagging the broadly based S&P 500®. Versus the MSCI sector index, stock selection and an underweighting in weak-performing regional banks bolstered the fund’s performance. Picks in asset management & custody banks and in consumer finance also notably contributed. Among individual holdings, title insurance provider Fidelity National Financial advanced 33% while we held it the past 12 months and was the fund’s top relative contributor. I exited the position in August. Overweighting financial exchange Cboe Global Markets (+20%) further lifted the fund's relative result, as did two stocks in asset management & custody banks, a group where I did some buying in the third quarter of 2019: State Street and Apollo Global Management, which returned 36% and 40% in the fund, respectively. Conversely, a sizable underweighting in the outperforming financial exchanges & data segment detracted the most the past year. Positioning in diversified banks and reinsurance companies hurt to a lesser extent. Avoiding strong-performing index component S&P Global proved ill-timed, given this stock’s 34% gain. Selling JPMorgan Chase during the period also was untimely, as the stock advanced roughly 15%. Online broker E*Trade Financial (-5%), where we had an overweighting, also detracted.The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Note to shareholders: On June 1, 2019, Matthew Reed joined Christopher Lee as co-manager of the fund. On October 1, 2019, Chris came off the fund, leaving Matt as sole portfolio manager.Financial Services Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 29, 2020
| % of fund's net assets | |
| Citigroup, Inc. | 6.8 |
| Bank of America Corp. | 6.1 |
| Berkshire Hathaway, Inc. Class B | 6.1 |
| Wells Fargo & Co. | 5.1 |
| Morgan Stanley | 4.9 |
| Capital One Financial Corp. | 3.9 |
| The Travelers Companies, Inc. | 3.8 |
| Goldman Sachs Group, Inc. | 2.9 |
| Truist Financial Corp. | 2.8 |
| Arthur J. Gallagher & Co. | 2.7 |
| 45.1 |
Top Industries (% of fund's net assets)
| As of February 29, 2020 | ||
| Banks | 35.6% | |
| Capital Markets | 21.7% | |
| Insurance | 20.1% | |
| Consumer Finance | 7.2% | |
| Diversified Financial Services | 7.0% | |
| All Others* | 8.4% | |
* Includes short-term investments and net other assets (liabilities).
Financial Services Portfolio
Schedule of Investments February 29, 2020
Showing Percentage of Net Assets
| Common Stocks - 99.8% | |||
| Shares | Value | ||
| Banks - 35.6% | |||
| Diversified Banks - 18.0% | |||
| Bank of America Corp. | 1,043,600 | $29,742,600 | |
| Citigroup, Inc. | 515,000 | 32,681,899 | |
| Wells Fargo & Co. | 602,390 | 24,607,632 | |
| 87,032,131 | |||
| Regional Banks - 17.6% | |||
| Amalgamated Bank | 125,598 | 2,010,824 | |
| Ameris Bancorp | 76,100 | 2,601,098 | |
| Bank OZK | 172,600 | 4,382,314 | |
| BOK Financial Corp. | 28,500 | 2,063,400 | |
| Cadence Bancorp Class A | 256,500 | 3,621,780 | |
| Cullen/Frost Bankers, Inc. | 38,400 | 3,010,176 | |
| East West Bancorp, Inc. | 106,400 | 4,121,936 | |
| First Citizens Bancshares, Inc. | 1,700 | 770,627 | |
| First Hawaiian, Inc. | 52,900 | 1,266,955 | |
| First Horizon National Corp. | 330,500 | 4,405,565 | |
| First Interstate Bancsystem, Inc. | 81,400 | 2,772,484 | |
| Great Western Bancorp, Inc. | 161,600 | 4,342,192 | |
| Huntington Bancshares, Inc. | 659,900 | 8,096,973 | |
| KeyCorp | 277,900 | 4,543,665 | |
| M&T Bank Corp. | 35,300 | 4,955,414 | |
| Regions Financial Corp. | 377,800 | 5,107,856 | |
| Signature Bank | 38,600 | 4,828,860 | |
| Truist Financial Corp. | 289,318 | 13,349,133 | |
| WesBanco, Inc. | 116,700 | 3,572,187 | |
| Wintrust Financial Corp. | 59,500 | 3,177,895 | |
| Zions Bancorp NA | 59,900 | 2,393,005 | |
| 85,394,339 | |||
| TOTAL BANKS | 172,426,470 | ||
| Capital Markets - 21.7% | |||
| Asset Management & Custody Banks - 6.9% | |||
| Affiliated Managers Group, Inc. | 51,700 | 3,888,874 | |
| AllianceBernstein Holding LP | 242,273 | 7,367,522 | |
| Apollo Global Management LLC Class A | 101,500 | 4,228,490 | |
| Hamilton Lane, Inc. Class A | 200 | 12,428 | |
| Northern Trust Corp. | 96,500 | 8,468,840 | |
| State Street Corp. | 139,200 | 9,480,912 | |
| 33,447,066 | |||
| Financial Exchanges & Data - 2.1% | |||
| Cboe Global Markets, Inc. | 90,000 | 10,260,000 | |
| The NASDAQ OMX Group, Inc. | 400 | 41,020 | |
| 10,301,020 | |||
| Investment Banking & Brokerage - 12.7% | |||
| E*TRADE Financial Corp. | 97,800 | 4,477,284 | |
| Goldman Sachs Group, Inc. | 68,500 | 13,752,745 | |
| Moelis & Co. Class A | 94,300 | 3,013,828 | |
| Morgan Stanley | 526,600 | 23,712,798 | |
| PJT Partners, Inc. | 45,100 | 2,027,245 | |
| Raymond James Financial, Inc. | 97,800 | 8,179,014 | |
| Virtu Financial, Inc. Class A | 323,600 | 6,086,916 | |
| 61,249,830 | |||
| TOTAL CAPITAL MARKETS | 104,997,916 | ||
| Consumer Finance - 7.2% | |||
| Consumer Finance - 7.2% | |||
| Capital One Financial Corp. | 214,800 | 18,958,248 | |
| OneMain Holdings, Inc. | 162,000 | 5,953,500 | |
| SLM Corp. | 943,900 | 9,788,243 | |
| 34,699,991 | |||
| Diversified Financial Services - 7.0% | |||
| Multi-Sector Holdings - 7.0% | |||
| Berkshire Hathaway, Inc. Class B (a) | 143,400 | 29,589,156 | |
| Cannae Holdings, Inc. (a) | 111,100 | 4,142,919 | |
| 33,732,075 | |||
| Insurance - 20.1% | |||
| Insurance Brokers - 4.9% | |||
| Arthur J. Gallagher & Co. | 132,400 | 12,907,676 | |
| Willis Group Holdings PLC | 56,700 | 10,730,475 | |
| 23,638,151 | |||
| Life & Health Insurance - 3.8% | |||
| CNO Financial Group, Inc. | 315,700 | 5,057,514 | |
| MetLife, Inc. | 232,900 | 9,949,488 | |
| Primerica, Inc. | 28,200 | 3,139,788 | |
| Prudential Financial, Inc. | 200 | 15,090 | |
| 18,161,880 | |||
| Multi-Line Insurance - 4.4% | |||
| American International Group, Inc. | 219,200 | 9,241,472 | |
| Assurant, Inc. | 41,400 | 4,992,426 | |
| Hartford Financial Services Group, Inc. | 145,800 | 7,282,710 | |
| 21,516,608 | |||
| Property & Casualty Insurance - 7.0% | |||
| Allstate Corp. | 91,100 | 9,588,275 | |
| Old Republic International Corp. | 160,600 | 3,167,032 | |
| RSA Insurance Group PLC | 389,600 | 2,605,872 | |
| The Travelers Companies, Inc. | 153,600 | 18,402,816 | |
| 33,763,995 | |||
| TOTAL INSURANCE | 97,080,634 | ||
| IT Services - 4.5% | |||
| Data Processing & Outsourced Services - 4.5% | |||
| Black Knight, Inc. (a) | 97,500 | 6,504,225 | |
| Computer Services, Inc. | 38,681 | 2,011,412 | |
| Fidelity National Information Services, Inc. | 40,800 | 5,700,576 | |
| GreenSky, Inc. Class A (a)(b) | 213,600 | 1,704,528 | |
| Visa, Inc. Class A | 31,400 | 5,707,264 | |
| 21,628,005 | |||
| Mortgage Real Estate Investment Trusts - 0.0% | |||
| Mortgage REITs - 0.0% | |||
| AGNC Investment Corp. | 400 | 6,816 | |
| Thrifts & Mortgage Finance - 3.7% | |||
| Thrifts & Mortgage Finance - 3.7% | |||
| Essent Group Ltd. | 256,800 | 11,206,752 | |
| MGIC Investment Corp. | 331,300 | 3,985,539 | |
| NMI Holdings, Inc. (a) | 113,400 | 2,646,756 | |
| 17,839,047 | |||
| TOTAL COMMON STOCKS | |||
| (Cost $453,128,627) | 482,410,954 | ||
| Money Market Funds - 0.1% | |||
| Fidelity Securities Lending Cash Central Fund 1.60% (c)(d) | |||
| (Cost $331,079) | 331,046 | 331,079 | |
| TOTAL INVESTMENT IN SECURITIES - 99.9% | |||
| (Cost $453,459,706) | 482,742,033 | ||
| NET OTHER ASSETS (LIABILITIES) - 0.1% | 594,628 | ||
| NET ASSETS - 100% | $483,336,661 |
Legend
(a) Non-income producing
(b) Security or a portion of the security is on loan at period end.
(c) Investment made with cash collateral received from securities on loan.
(d) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request.
Affiliated Central Funds
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:
| Fund | Income earned |
| Fidelity Cash Central Fund | $92,440 |
| Fidelity Securities Lending Cash Central Fund | 19,837 |
| Total | $112,277 |
Amounts in the income column in the above table include any capital gain distributions from underlying funds, which are presented in the corresponding line-item in the Statement of Operations, if applicable. Amount for Fidelity Securities Lending Cash Central Fund represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities.
Investment Valuation
The following is a summary of the inputs used, as of February 29, 2020, 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 below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.
| Valuation Inputs at Reporting Date: | ||||
| Description | Total | Level 1 | Level 2 | Level 3 |
| Investments in Securities: | ||||
| Common Stocks | $482,410,954 | $479,805,082 | $2,605,872 | $-- |
| Money Market Funds | 331,079 | 331,079 | -- | -- |
| Total Investments in Securities: | $482,742,033 | $480,136,161 | $2,605,872 | $-- |
See accompanying notes which are an integral part of the financial statements.
Financial Services Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2020 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $330,180) — See accompanying schedule: Unaffiliated issuers (cost $453,128,627) | $482,410,954 | |
| Fidelity Central Funds (cost $331,079) | 331,079 | |
| Total Investment in Securities (cost $453,459,706) | $482,742,033 | |
| Receivable for investments sold | 12,063,573 | |
| Receivable for fund shares sold | 725,374 | |
| Dividends receivable | 1,795,104 | |
| Distributions receivable from Fidelity Central Funds | 3,550 | |
| Prepaid expenses | 8,629 | |
| Other receivables | 14,885 | |
| Total assets | 497,353,148 | |
| Liabilities | ||
| Payable to custodian bank | $1,427,909 | |
| Payable for investments purchased | 8,233,286 | |
| Payable for fund shares redeemed | 3,645,351 | |
| Accrued management fee | 248,307 | |
| Other affiliated payables | 93,401 | |
| Other payables and accrued expenses | 37,225 | |
| Collateral on securities loaned | 331,008 | |
| Total liabilities | 14,016,487 | |
| Net Assets | $483,336,661 | |
| Net Assets consist of: | ||
| Paid in capital | $433,621,929 | |
| Total accumulated earnings (loss) | 49,714,732 | |
| Net Assets | $483,336,661 | |
| Net Asset Value, offering price and redemption price per share ($483,336,661 ÷ 50,928,906 shares) | $9.49 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 29, 2020 | ||
| Investment Income | ||
| Dividends | $13,843,911 | |
| Income from Fidelity Central Funds (including $19,837 from security lending) | 112,277 | |
| Total income | 13,956,188 | |
| Expenses | ||
| Management fee | $2,910,408 | |
| Transfer agent fees | 937,576 | |
| Accounting and security lending fees | 206,650 | |
| Custodian fees and expenses | 9,231 | |
| Independent trustees' fees and expenses | 2,958 | |
| Registration fees | 39,975 | |
| Audit | 44,926 | |
| Legal | 5,606 | |
| Miscellaneous | 5,854 | |
| Total expenses before reductions | 4,163,184 | |
| Expense reductions | (44,406) | |
| Total expenses after reductions | 4,118,778 | |
| Net investment income (loss) | 9,837,410 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 45,618,121 | |
| Redemptions in-kind with affiliated entities | 4,465,779 | |
| Fidelity Central Funds | 205 | |
| Foreign currency transactions | (3,182) | |
| Total net realized gain (loss) | 50,080,923 | |
| Change in net unrealized appreciation (depreciation) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | (38,602,773) | |
| Fidelity Central Funds | (134) | |
| Assets and liabilities in foreign currencies | (38) | |
| Total change in net unrealized appreciation (depreciation) | (38,602,945) | |
| Net gain (loss) | 11,477,978 | |
| Net increase (decrease) in net assets resulting from operations | $21,315,388 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 29, 2020 | Year ended February 28, 2019 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $9,837,410 | $9,454,128 |
| Net realized gain (loss) | 50,080,923 | 171,095,579 |
| Change in net unrealized appreciation (depreciation) | (38,602,945) | (251,132,264) |
| Net increase (decrease) in net assets resulting from operations | 21,315,388 | (70,582,557) |
| Distributions to shareholders | (30,387,187) | (77,410,363) |
| Share transactions | ||
| Proceeds from sales of shares | 94,490,608 | 123,696,998 |
| Reinvestment of distributions | 28,305,777 | 73,815,465 |
| Cost of shares redeemed | (188,816,638) | (799,345,128) |
| Net increase (decrease) in net assets resulting from share transactions | (66,020,253) | (601,832,665) |
| Total increase (decrease) in net assets | (75,092,052) | (749,825,585) |
| Net Assets | ||
| Beginning of period | 558,428,713 | 1,308,254,298 |
| End of period | $483,336,661 | $558,428,713 |
| Other Information | ||
| Shares(a) | ||
| Sold | 8,971,280 | 11,614,796 |
| Issued in reinvestment of distributions | 2,601,634 | 7,838,384 |
| Redeemed | (18,497,880) | (73,744,698) |
| Net increase (decrease) | (6,924,966) | (54,291,518) |
(a) Share activity prior to August 10, 2018 has been adjusted to reflect the impact of the 10 for 1 share split occurred on that date.
See accompanying notes which are an integral part of the financial statements.
Financial Highlights
Financial Services Portfolio
| Years ended February 28, | 2020 A | 2019 B | 2018 B | 2017 B | 2016 A,B |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $9.65 | $11.67 | $10.31 | $7.50 | $8.88 |
| Income from Investment Operations | |||||
| Net investment income (loss)C | .19 | .14 | .09 | .10 | .09 |
| Net realized and unrealized gain (loss) | .26 | (1.04) | 1.76 | 2.81 | (1.33) |
| Total from investment operations | .45 | (.90) | 1.85 | 2.91 | (1.24) |
| Distributions from net investment income | (.16) | (.14) | (.07) | (.10) | (.08) |
| Distributions from net realized gain | (.45) | (.98) | (.42) | – | (.06) |
| Total distributions | (.61) | (1.12) | (.49) | (.10) | (.14) |
| Redemption fees added to paid in capitalC | – | – | – | –D | –D |
| Net asset value, end of period | $9.49 | $9.65 | $11.67 | $10.31 | $7.50 |
| Total ReturnE | 3.81% | (6.91)% | 18.33% | 38.78% | (14.18)% |
| Ratios to Average Net AssetsF,G | |||||
| Expenses before reductions | .77% | .76% | .77% | .77% | .76% |
| Expenses net of fee waivers, if any | .77% | .76% | .77% | .77% | .76% |
| Expenses net of all reductions | .76% | .75% | .76% | .76% | .75% |
| Net investment income (loss) | 1.81% | 1.28% | .87% | 1.10% | 1.01% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $483,337 | $558,429 | $1,308,254 | $1,019,656 | $1,043,574 |
| Portfolio turnover rateH | 61%I | 49%I | 54% | 84%I | 55% |
A For the year ended February 29.
B Per share amounts have been adjusted to reflect the impact of the 10 for 1 share split that occurred on August 10, 2018.
C Calculated based on average shares outstanding during the period.
D Amount represents less than $.005 per share.
E Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
H Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
I Portfolio turnover rate excludes securities received or delivered in-kind.
See accompanying notes which are an integral part of the financial statements.
Insurance Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The hypothetical investment and the average annual total returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund’s total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
| For the periods ended February 29, 2020 | Past 1 year | Past 5 years | Past 10 years |
| Insurance Portfolio | 5.95% | 8.23% | 11.68% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Insurance Portfolio on February 28, 2010.
The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
| Period Ending Values | ||
|
| $30,188 | Insurance Portfolio |
|
| $32,918 | S&P 500® Index |
Insurance Portfolio
Management's Discussion of Fund Performance
Market Recap: U.S. stocks stalled to begin the new year and declined in late February, as the outbreak and spread of the new coronavirus threatened to hamper global economic growth and corporate earnings. For the 12 months ending February 29, 2020, the U.S. equity bellwether S&P 500® index gained 8.19%. The period began with equities rising amid upbeat company earnings and signs the U.S. Federal Reserve may pause on rates. The uptrend extended until May, when the index dipped as trade talks between the U.S. and China broke down. The bull market roared back to record a series of highs in July, when the Fed cut interest rates for the first time since 2008. Volatility intensified in August, as the Treasury yield curve inverted, which some investors viewed as a sign the U.S. economy could be heading for recession. But the market proved resilient, hitting a new high on October 30, when the Fed lowered rates for the third time in 2019, and moving higher through December 31. Following a roughly flat January, stocks sank in late February, after a surge in coronavirus cases outside China created considerable uncertainty and pushed investors to safer asset classes. By sector, information technology (+27%) led the way by a wide margin, followed by utilities and communication services (+13% each). In contrast, energy (-25%) was by far the weakest category, struggling due to sluggish oil prices. Other notable laggards included materials and industrials (-2% each). Comments from Portfolio Manager Peter Deutsch: For the fiscal year, the fund gained 5.95%, outpacing the 3.47% advance of the MSCI U.S. IMI Insurance 25/50 Index but trailing the broad-based S&P 500® index. The fund’s outperformance of the MSCI industry index was primarily due to favorable stock picking, most notably within the asset management & custody banks segment. Positioning among life & health insurance companies also contributed meaningfully. On a stock-specific basis, a non-index stake in alternative asset manager Ares Management (+53%) was the portfolio’s leading contributor the past 12 months. In the same category, private equity firm Apollo Global Management (+51%) also lifted relative performance. An overweighting in insurance broker Brown & Brown (+46%), a top-10 holding on February 29, bolstered the fund’s return versus the index this period as well. In contrast, only lackluster investment choices among reinsurance stocks and underweighted exposure to the outperforming property & casualty (P&C) insurance category had a material negative impact on the fund’s relative return. The biggest individual detractor was an underweighting in U.K.-based global insurance and benefits broker Aon (+22%), given the stock’s strong gain during the reporting period. Further hampering the portfolio’s relative result were a number of key P&C companies, including an outsized position in The Travelers Companies (-8%), along with a lack of exposure to MSCI index component W.R. Berkley, whose shares rose about 23% during the fund’s fiscal year.The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Insurance Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 29, 2020
| % of fund's net assets | |
| Chubb Ltd. | 10.0 |
| The Travelers Companies, Inc. | 8.6 |
| Marsh & McLennan Companies, Inc. | 7.1 |
| American International Group, Inc. | 6.7 |
| Berkshire Hathaway, Inc. Class B | 5.9 |
| MetLife, Inc. | 5.3 |
| Allstate Corp. | 4.9 |
| Brown & Brown, Inc. | 3.9 |
| Arthur J. Gallagher & Co. | 3.7 |
| Aon PLC | 3.3 |
| 59.4 |
Top Industries (% of fund's net assets)
| As of February 29, 2020 | ||
| Insurance | 84.7% | |
| Diversified Financial Services | 8.2% | |
| Capital Markets | 4.5% | |
| IT Services | 0.7% | |
| Consumer Finance | 0.4% | |
| All Others* | 1.5% | |
* Includes short-term investments and net other assets (liabilities).
Insurance Portfolio
Schedule of Investments February 29, 2020
Showing Percentage of Net Assets
| Common Stocks - 98.5% | |||
| Shares | Value | ||
| Capital Markets - 4.5% | |||
| Asset Management & Custody Banks - 4.5% | |||
| Apollo Global Management LLC Class A | 85,144 | $3,547,099 | |
| Ares Management Corp. | 156,914 | 5,427,655 | |
| Bank of New York Mellon Corp. | 7,533 | 300,567 | |
| BlackRock, Inc. Class A | 1,300 | 601,913 | |
| 9,877,234 | |||
| Consumer Finance - 0.4% | |||
| Consumer Finance - 0.4% | |||
| OneMain Holdings, Inc. | 21,800 | 801,150 | |
| Diversified Financial Services - 8.2% | |||
| Multi-Sector Holdings - 6.2% | |||
| Berkshire Hathaway, Inc. Class B (a) | 63,100 | 13,020,054 | |
| Cannae Holdings, Inc. (a) | 15,399 | 574,229 | |
| 13,594,283 | |||
| Other Diversified Financial Services - 2.0% | |||
| Voya Financial, Inc. | 82,700 | 4,353,328 | |
| TOTAL DIVERSIFIED FINANCIAL SERVICES | 17,947,611 | ||
| Insurance - 84.7% | |||
| Insurance Brokers - 21.1% | |||
| Aon PLC | 34,700 | 7,217,600 | |
| Arthur J. Gallagher & Co. | 84,200 | 8,208,658 | |
| Brown & Brown, Inc. | 200,000 | 8,602,000 | |
| Marsh & McLennan Companies, Inc. | 148,600 | 15,537,616 | |
| Willis Group Holdings PLC | 36,128 | 6,837,224 | |
| 46,403,098 | |||
| Life & Health Insurance - 17.4% | |||
| AFLAC, Inc. | 10,100 | 432,785 | |
| Athene Holding Ltd. (a) | 17,400 | 717,750 | |
| CNO Financial Group, Inc. | 209,000 | 3,348,180 | |
| Globe Life, Inc. | 11,700 | 1,084,122 | |
| Lincoln National Corp. | 98,300 | 4,461,837 | |
| MetLife, Inc. | 269,375 | 11,507,700 | |
| Primerica, Inc. | 32,200 | 3,585,148 | |
| Principal Financial Group, Inc. | 93,100 | 4,132,709 | |
| Prudential Financial, Inc. | 79,589 | 6,004,990 | |
| Prudential PLC | 35,800 | 595,156 | |
| Unum Group | 105,161 | 2,451,303 | |
| 38,321,680 | |||
| Multi-Line Insurance - 11.8% | |||
| American International Group, Inc. | 348,450 | 14,690,652 | |
| Assurant, Inc. | 19,100 | 2,303,269 | |
| China Pacific Insurance (Group) Co. Ltd. (H Shares) | 169,600 | 558,081 | |
| Hartford Financial Services Group, Inc. | 86,900 | 4,340,655 | |
| Loews Corp. | 67,600 | 3,084,588 | |
| Zurich Insurance Group Ltd. | 2,206 | 854,234 | |
| 25,831,479 | |||
| Property & Casualty Insurance - 33.3% | |||
| Allstate Corp. | 102,800 | 10,819,700 | |
| Arch Capital Group Ltd. (a) | 145,500 | 5,882,565 | |
| Assured Guaranty Ltd. | 72,500 | 2,958,725 | |
| Chubb Ltd. | 151,605 | 21,987,273 | |
| First American Financial Corp. | 60,400 | 3,448,840 | |
| FNF Group | 73,700 | 2,856,612 | |
| Markel Corp. (a) | 2,020 | 2,386,832 | |
| Mercury General Corp. | 200 | 8,662 | |
| Progressive Corp. | 53,900 | 3,943,324 | |
| The Travelers Companies, Inc. | 156,800 | 18,786,208 | |
| 73,078,741 | |||
| Reinsurance - 1.1% | |||
| Everest Re Group Ltd. | 3,300 | 818,004 | |
| Maiden Holdings Ltd. (a) | 400 | 372 | |
| Reinsurance Group of America, Inc. | 12,333 | 1,504,996 | |
| 2,323,372 | |||
| TOTAL INSURANCE | 185,958,370 | ||
| IT Services - 0.7% | |||
| Data Processing & Outsourced Services - 0.7% | |||
| Black Knight, Inc. (a) | 22,857 | 1,524,790 | |
| Road & Rail - 0.0% | |||
| Trucking - 0.0% | |||
| Lyft, Inc. | 1,200 | 45,744 | |
| TOTAL COMMON STOCKS | |||
| (Cost $131,168,688) | 216,154,899 | ||
| Nonconvertible Preferred Stocks - 0.0% | |||
| Insurance - 0.0% | |||
| Life & Health Insurance - 0.0% | |||
| Globe Life, Inc. 6.125% | |||
| (Cost $73,591) | 2,959 | 77,703 | |
| TOTAL INVESTMENT IN SECURITIES - 98.5% | |||
| (Cost $131,242,279) | 216,232,602 | ||
| NET OTHER ASSETS (LIABILITIES) - 1.5% | 3,306,519 | ||
| NET ASSETS - 100% | $219,539,121 |
Legend
(a) Non-income producing
Affiliated Central Funds
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:
| Fund | Income earned |
| Fidelity Cash Central Fund | $102,009 |
| Fidelity Securities Lending Cash Central Fund | 2,377 |
| Total | $104,386 |
Amounts in the income column in the above table include any capital gain distributions from underlying funds, which are presented in the corresponding line-item in the Statement of Operations, if applicable. Amount for Fidelity Securities Lending Cash Central Fund represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities.
Investment Valuation
The following is a summary of the inputs used, as of February 29, 2020, 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 below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.
| Valuation Inputs at Reporting Date: | ||||
| Description | Total | Level 1 | Level 2 | Level 3 |
| Investments in Securities: | ||||
| Common Stocks | $216,154,899 | $214,705,509 | $1,449,390 | $-- |
| Nonconvertible Preferred Stocks | 77,703 | 77,703 | -- | -- |
| Total Investments in Securities: | $216,232,602 | $214,783,212 | $1,449,390 | $-- |
Other Information
Distribution of investments by country or territory of incorporation, as a percentage of Total Net Assets, is as follows (Unaudited):
| United States of America | 81.0% |
| Switzerland | 10.4% |
| Bermuda | 4.7% |
| United Kingdom | 3.6% |
| Others (Individually Less Than 1%) | 0.3% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Insurance Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2020 | ||
| Assets | ||
| Investment in securities, at value — See accompanying schedule: Unaffiliated issuers (cost $131,242,279) | $216,232,602 | |
| Receivable for investments sold | 10,897,154 | |
| Receivable for fund shares sold | 778,750 | |
| Dividends receivable | 543,385 | |
| Distributions receivable from Fidelity Central Funds | 3,644 | |
| Prepaid expenses | 2,351 | |
| Other receivables | 2,142 | |
| Total assets | 228,460,028 | |
| Liabilities | ||
| Payable to custodian bank | $221,366 | |
| Payable for investments purchased | 5,586,165 | |
| Payable for fund shares redeemed | 2,919,335 | |
| Accrued management fee | 113,152 | |
| Other affiliated payables | 48,508 | |
| Other payables and accrued expenses | 32,381 | |
| Total liabilities | 8,920,907 | |
| Net Assets | $219,539,121 | |
| Net Assets consist of: | ||
| Paid in capital | $125,745,348 | |
| Total accumulated earnings (loss) | 93,793,773 | |
| Net Assets | $219,539,121 | |
| Net Asset Value, offering price and redemption price per share ($219,539,121 ÷ 3,756,749 shares) | $58.44 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 29, 2020 | ||
| Investment Income | ||
| Dividends | $5,313,006 | |
| Income from Fidelity Central Funds (including $2,377 from security lending) | 104,386 | |
| Total income | 5,417,392 | |
| Expenses | ||
| Management fee | $1,330,324 | |
| Transfer agent fees | 492,895 | |
| Accounting and security lending fees | 96,766 | |
| Custodian fees and expenses | 5,237 | |
| Independent trustees' fees and expenses | 1,332 | |
| Registration fees | 39,439 | |
| Audit | 39,608 | |
| Legal | 537 | |
| Interest | 412 | |
| Miscellaneous | 1,964 | |
| Total expenses before reductions | 2,008,514 | |
| Expense reductions | (7,255) | |
| Total expenses after reductions | 2,001,259 | |
| Net investment income (loss) | 3,416,133 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 16,419,677 | |
| Fidelity Central Funds | (1) | |
| Foreign currency transactions | 23,242 | |
| Total net realized gain (loss) | 16,442,918 | |
| Change in net unrealized appreciation (depreciation) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | (7,313,093) | |
| Assets and liabilities in foreign currencies | 515 | |
| Total change in net unrealized appreciation (depreciation) | (7,312,578) | |
| Net gain (loss) | 9,130,340 | |
| Net increase (decrease) in net assets resulting from operations | $12,546,473 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 29, 2020 | Year ended February 28, 2019 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $3,416,133 | $3,699,355 |
| Net realized gain (loss) | 16,442,918 | 40,681,744 |
| Change in net unrealized appreciation (depreciation) | (7,312,578) | (48,058,421) |
| Net increase (decrease) in net assets resulting from operations | 12,546,473 | (3,677,322) |
| Distributions to shareholders | (16,441,347) | (67,803,862) |
| Share transactions | ||
| Proceeds from sales of shares | 122,036,657 | 36,330,834 |
| Reinvestment of distributions | 15,592,643 | 64,608,201 |
| Cost of shares redeemed | (137,276,331) | (148,119,349) |
| Net increase (decrease) in net assets resulting from share transactions | 352,969 | (47,180,314) |
| Total increase (decrease) in net assets | (3,541,905) | (118,661,498) |
| Net Assets | ||
| Beginning of period | 223,081,026 | 341,742,524 |
| End of period | $219,539,121 | $223,081,026 |
| Other Information | ||
| Shares | ||
| Sold | 1,926,289 | 576,823 |
| Issued in reinvestment of distributions | 255,136 | 1,067,443 |
| Redeemed | (2,188,784) | (2,234,071) |
| Net increase (decrease) | (7,359) | (589,805) |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights
Insurance Portfolio
| Years ended February 28, | 2020 A | 2019 | 2018 | 2017 | 2016 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $59.27 | $78.49 | $80.60 | $63.15 | $66.87 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .87 | .98 | 1.08 | .99 | .89 |
| Net realized and unrealized gain (loss) | 2.77 | (2.40) | 6.76 | 18.64 | (2.50) |
| Total from investment operations | 3.64 | (1.42) | 7.84 | 19.63 | (1.61) |
| Distributions from net investment income | (.91) | (1.16) | (.96) | (.89) | (.74) |
| Distributions from net realized gain | (3.56) | (16.63) | (8.99) | (1.29) | (1.37) |
| Total distributions | (4.47) | (17.80)C | (9.95) | (2.18) | (2.11) |
| Redemption fees added to paid in capitalB | – | – | –D | –D | –D |
| Net asset value, end of period | $58.44 | $59.27 | $78.49 | $80.60 | $63.15 |
| Total ReturnE | 5.95% | (.29)% | 9.62% | 31.60% | (2.54)% |
| Ratios to Average Net AssetsF,G | |||||
| Expenses before reductions | .81% | .82% | .79% | .80% | .80% |
| Expenses net of fee waivers, if any | .81% | .81% | .79% | .79% | .80% |
| Expenses net of all reductions | .80% | .81% | .79% | .79% | .80% |
| Net investment income (loss) | 1.37% | 1.48% | 1.30% | 1.37% | 1.32% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $219,539 | $223,081 | $341,743 | $647,787 | $459,854 |
| Portfolio turnover rateH | 28% | 9% | 21% | 16% | 25% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Total distributions of $17.80 per share is comprised of distributions from net investment income of $1.162 and distributions from net realized gain of $16.633 per share.
D Amount represents less than $.005 per share.
E Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
H Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the financial statements.
Notes to Financial Statements
For the period ended February 29, 2020
1. Organization.
Banking Portfolio, Brokerage and Investment Management Portfolio, Consumer Finance Portfolio, Financial Services Portfolio, and Insurance Portfolio (the Funds) are non-diversified funds of Fidelity Select Portfolios (the Trust). The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Funds invest primarily in securities of companies whose principal business activities fall within specific industries. Each Fund is authorized to issue an unlimited number of shares. Share transactions on the Statement of Changes in Net Assets may contain exchanges between affiliated funds.
Effective August 10, 2018, Financial Services Portfolio underwent a 10 for 1 share split. The effect of the share split transaction was to multiply the number of outstanding shares of Financial Services Portfolio by a split factor of 10:1, with a corresponding decrease in net asset value (NAV) per share. This event does not impact the overall net assets of Financial Services Portfolio. The per share data presented in the Financial Highlights and Share activity presented in the Statements of Changes in Net Assets for Financial Services Portfolio have been retroactively adjusted to reflect this share split.
Effective January 1, 2020:
Investment advisers Fidelity Investments Money Management, Inc., FMR Co., Inc., and Fidelity SelectCo, LLC, merged with and into Fidelity Management & Research Company. In connection with the merger transactions, the resulting, merged investment adviser was then redomiciled from Massachusetts to Delaware, changed its corporate structure from a corporation to a limited liability company, and changed its name to "Fidelity Management & Research Company LLC".
Fidelity Investments Institutional Operations Company, Inc. converted from a Massachusetts corporation to a Massachusetts LLC, and changed its name to "Fidelity Investments Institutional Operations Company LLC".
2. Investments in Fidelity Central Funds.
The Funds invest in Fidelity Central Funds, which are open-end investment companies generally available only to other investment companies and accounts managed by the investment adviser and its affiliates. The Funds' Schedules of Investments list each of the Fidelity Central Funds held as of period end, if any, as an investment of each Fund, but do not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, each Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by the investment adviser. Annualized expenses of the Money Market Central Funds as of their most recent shareholder report date ranged from less than .005% to .01%.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) website at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Funds' Report of Independent Registered Public Accounting Firm, are available on the SEC website or upon request.
3. Significant Accounting Policies.
Each Fund is an investment company and applies the accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946 Financial Services – Investments Companies. The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Funds:
Investment Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Board of Trustees (the Board) has delegated the day to day responsibility for the valuation of each Fund's investments to the Fair Value Committee (the Committee) established by each Fund's investment adviser. In accordance with valuation policies and procedures approved by the Board, each Fund attempts to obtain prices from one or more third party pricing vendors or brokers to value its investments. When current market prices, quotations or currency exchange rates are not readily available or reliable, investments will be fair valued in good faith by the Committee, in accordance with procedures adopted by the Board. Factors used in determining fair value vary by investment type and may include market or investment specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The Committee oversees each Fund's valuation policies and procedures and reports to the Board on the Committee's activities and fair value determinations. The Board monitors the appropriateness of the procedures used in valuing each Fund's investments and ratifies the fair value determinations of the Committee.
Each Fund categorizes the inputs to valuation techniques used to 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)
Valuation techniques used to value each Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by a third party pricing vendor on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-Traded Funds (ETFs) and certain indexes as well as quoted prices for similar securities may be used and would be categorized as Level 2 in the hierarchy. For equity securities, including restricted 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.
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value (NAV) each business day and are categorized as Level 1 in the hierarchy.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level as of February 29, 2020 is included at the end of each applicable Fund's Schedule of Investments.
Foreign Currency. The Funds may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rates at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Funds' investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and for certain Funds include proceeds received from litigation. Dividend income is recorded 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 Funds are informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Income and capital gain distributions from Fidelity Central Funds, if any, are recorded on the ex-dividend date. Certain distributions received by the Funds represent a return of capital or capital gain. The Funds determine the components of these distributions subsequent to the ex-dividend date, based upon receipt of tax filings or other correspondence relating to the underlying investment. These distributions are recorded as a reduction of cost of investments and/or as a realized gain. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Deferred Trustee Compensation. Under a Deferred Compensation Plan (the Plan) for Brokerage and Investment Management Portfolio, certain independent Trustees have elected to defer receipt of a portion of their annual compensation. Deferred amounts are invested in a cross-section of Fidelity funds, are marked-to-market and remain in each Fund until distributed in accordance with the Plan. The investment of deferred amounts and the offsetting payable to the Trustees presented below are included in each accompanying Statement of Assets and Liabilities in other receivables and other payables and accrued expenses, respectively.
| Brokerage and Investment Management Portfolio | $42,291 |
Income Tax Information and Distributions to Shareholders. Each year, each Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for U.S. Federal income taxes is required. As of February 29, 2020, each Fund did not have any unrecognized tax benefits in the financial statements; nor is each Fund aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. Each Fund files a U.S. federal tax return, in addition to state and local tax returns as required. Each Fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. Foreign taxes are provided for based on each Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are declared and recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. In addition, the Funds claimed a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Capital accounts are not adjusted for temporary book-tax differences which will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, equity-debt classifications, redemptions in kind, partnerships, deferred trustees compensation, and losses deferred due to wash sales.
As of period end, the cost and unrealized appreciation (depreciation) in securities, and derivatives if applicable, for federal income tax purposes were as follows for each Fund:
| Tax cost | Gross unrealized appreciation | Gross unrealized depreciation | Net unrealized appreciation (depreciation) | |
| Banking Portfolio | $347,887,608 | $48,135,992 | $(34,003,335) | $14,132,657 |
| Brokerage and Investment Management Portfolio | 235,999,456 | 84,896,350 | (11,912,186) | 72,984,164 |
| Consumer Finance Portfolio | 130,746,876 | 32,813,877 | (6,903,112) | 25,910,765 |
| Financial Services Portfolio | 453,843,033 | 54,991,473 | (26,092,473) | 28,899,000 |
| Insurance Portfolio | 131,761,688 | 86,747,385 | (2,276,471) | 84,470,914 |
The tax-based components of distributable earnings as of period end were as follows for each Fund:
| Undistributed ordinary income | Undistributed long-term capital gain | Net unrealized appreciation (depreciation) on securities and other investments | |
| Banking Portfolio | $1,841,680 | $20,941,838 | $14,132,657 |
| Brokerage and Investment Management Portfolio | 477,992 | 4,698,808 | 72,983,685 |
| Consumer Finance Portfolio | 441,757 | – | 25,910,765 |
| Financial Services Portfolio | 1,767,391 | 19,049,324 | 28,898,016 |
| Insurance Portfolio | 453,635 | 8,869,741 | 84,470,420 |
The tax character of distributions paid was as follows:
| February 29, 2020 | |||||
| Ordinary Income | Long-term Capital Gains | Total | |||
| Banking Portfolio | $9,410,001 | $20,683,043 | $30,093,044 | ||
| Brokerage and Investment Management Portfolio | 5,182,693 | 9,337,074 | 14,519,767 | ||
| Consumer Finance Portfolio | 2,813,328 | 57,068 | 2,870,396 | ||
| Financial Services Portfolio | 9,191,497 | 21,195,690 | 30,387,187 | ||
| Insurance Portfolio | 3,421,425 | 13,019,922 | 16,441,347 |
| February 28, 2019 | |||||
| Ordinary Income | Long-term Capital Gains | Total | |||
| Banking Portfolio | $10,214,085 | $129,632,127 | $139,846,212 | ||
| Brokerage and Investment Management Portfolio | 7,442,857 | 22,932,878 | 30,375,735 | ||
| Consumer Finance Portfolio | 1,245,766 | 5,962,036 | 7,207,802 | ||
| Financial Services Portfolio | 13,540,641 | 63,869,722 | 77,410,363 | ||
| Insurance Portfolio | 4,162,505 | 63,641,357 | 67,803,862 |
Restricted Securities. The Funds may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities is included at the end of each applicable Fund's Schedule of Investments.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities and in-kind transactions, are noted in the table below.
| Purchases ($) | Sales ($) | |
| Banking Portfolio | 142,418,516 | 259,994,302 |
| Brokerage and Investment Management Portfolio | 29,851,259 | 60,850,359 |
| Consumer Finance Portfolio | 75,374,913 | 28,139,627 |
| Financial Services Portfolio | 324,235,159 | 374,012,156 |
| Insurance Portfolio | 68,001,218 | 80,986,748 |
5. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity Management & Research Company LLC (the investment adviser) and its affiliates provide the Funds with investment management related services for which the Funds pay a monthly management fee. The management fee is the sum of an individual fund fee rate and an annualized group fee rate. The individual fund fee rate is applied to each Fund's average net assets. The group fee rate is based upon the monthly average net assets of a group of registered investment companies with which the investment adviser has management contracts. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the reporting period, each Fund's annual management fee rate expressed as a percentage of each Fund's average net assets was as follows:
| Individual Rate | Group Rate | Total | |
| Banking Portfolio | .30% | .24% | .54% |
| Brokerage and Investment Management Portfolio | .30% | .24% | .54% |
| Consumer Finance Portfolio | .30% | .24% | .54% |
| Financial Services Portfolio | .30% | .24% | .54% |
| Insurance Portfolio | .30% | .24% | .53% |
Transfer Agent Fees. Fidelity Investments Institutional Operations Company LLC (FIIOC), an affiliate of the investment adviser, is the Funds' transfer, dividend disbursing and shareholder servicing agent. FIIOC receives account fees and asset-based fees that vary according to account size and type of account. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, transfer agent fees were equivalent to the following annual rates expressed as a percentage of average net assets:
| Banking Portfolio | .18% |
| Brokerage and Investment Management Portfolio | .17% |
| Consumer Finance Portfolio | .22% |
| Financial Services Portfolio | .17% |
| Insurance Portfolio | .20% |
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of the investment adviser, maintains each Fund's accounting records. The accounting fee is based on the level of average net assets for each month. Prior to April 1, 2019, FSC had a separate agreement with each Fund for administration of the security lending program, based on the number and duration of lending transactions. For the period, the total fees paid for accounting and administration of securities lending were equivalent to the following annual rates:
| % of Average Net Assets | |
| Banking Portfolio | .04 |
| Brokerage and Investment Management Portfolio | .04 |
| Consumer Finance Portfolio | .04 |
| Financial Services Portfolio | .04 |
| Insurance Portfolio | .04 |
Brokerage Commissions. A portion of portfolio transactions were placed with brokerage firms which are affiliates of the investment adviser. Brokerage commissions are included in net realized gain (loss) and change in net unrealized appreciation (depreciation) in the Statement of Operations. The commissions paid to these affiliated firms were as follows:
| Amount | |
| Banking Portfolio | $7,909 |
| Brokerage and Investment Management Portfolio | 1,007 |
| Consumer Finance Portfolio | 1,496 |
| Financial Services Portfolio | 9,611 |
| Insurance Portfolio | 883 |
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, each fund, along with other registered investment companies having management contracts with Fidelity Management & Research Company LLC (FMR), or other affiliated entities of FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing each fund to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. Activity in this program during the period for which loans were outstanding was as follows:
| Borrower or Lender | Average Loan Balance | Weighted Average Interest Rate | Interest Expense | |
| Banking Portfolio | Borrower | $11,094,000 | 1.78% | $549 |
| Insurance Portfolio | Borrower | $6,269,000 | 2.36% | $412 |
Interfund Trades. Funds may purchase from or sell securities to other Fidelity Funds under procedures adopted by the Board. The procedures have been designed to ensure these interfund trades are executed in accordance with Rule 17a-7 of the 1940 Act. Interfund trades are included within the respective purchases and sales amounts shown in the Purchases and Sales of Investments note.
Affiliated Redemptions In-Kind. During the period, 2,278,421 shares of the Financial Services Portfolio were redeemed in-kind for investments and cash with a value of $22,465,229. The net realized gain of $4,465,779 on investments delivered through in-kind redemptions is included in the accompanying Statement of Operations. The amount of the in-kind redemptions is included in share transactions in the accompanying Statement of Changes in Net Assets. Financial Services Portfolio recognized no gain or loss for federal income tax purposes.
Prior Fiscal Year Affiliated Redemptions In-Kind. During the prior period, 42,927,330* shares of Financial Services Portfolio were redeemed in-kind for investments and cash with a value of $473,016,260. Financial Services Portfolio had a net realized gain of $122,035,415 on investments delivered through in-kind redemptions. The amount of the in-kind redemptions is included in share transactions in the accompanying Statement of Changes in Net Assets. Financial Services Portfolio recognized no gain or loss for federal income tax purposes.
*Share activity prior to August 10, 2018 has been adjusted to reflect the impact of the 10 for 1 split that occurred on that date.
6. Committed Line of Credit.
Certain Funds participate with other funds managed by the investment adviser or an affiliate in a $4.25 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The participating funds have agreed to pay commitment fees on their pro-rata portion of the line of credit, which are reflected in Miscellaneous expenses on the Statement of Operations, and are as follows:
| Amount | |
| Banking Portfolio | $1,198 |
| Brokerage and Investment Management Portfolio | 812 |
| Consumer Finance Portfolio | 347 |
| Financial Services Portfolio | 1,382 |
| Insurance Portfolio | 614 |
During the period, there were no borrowings on this line of credit.
7. Security Lending.
Certain Funds lend portfolio securities from time to time in order to earn additional income. For equity securities, lending agents are used, including National Financial Services (NFS), an affiliate of the Funds. Pursuant to a securities lending agreement, NFS will receive a fee, which is capped at 9.9% of a Fund's daily lending revenue, for its services as lending agent. The Funds may lend securities to certain qualified borrowers, including NFS. On the settlement date of the loan, each applicable Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Funds and any additional required collateral is delivered to the Funds on the next business day. The Funds or borrower may terminate the loan at any time, and if the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, the Funds may apply collateral received from the borrower against the obligation. The Funds may experience delays and costs in recovering the securities loaned. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on each applicable Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented on each applicable Fund's Statement of Operations as a component of income from Fidelity Central Funds. During the period, there were no securities loaned to NFS. Affiliated security lending activity was as follows:
| Total Security Lending Income Fees Paid to NFS | |
| Banking Portfolio | $4,687 |
| Brokerage and Investment Management Portfolio | $276 |
| Consumer Finance Portfolio | $460 |
| Financial Services Portfolio | $1,962 |
| Insurance Portfolio | $143 |
8. Expense Reductions.
Commissions paid to certain brokers with whom the investment adviser, or its affiliates, places trades on behalf of certain Funds include an amount in addition to trade execution, which may be rebated back to the Funds to offset certain expenses. In addition, through arrangements with each applicable Fund's custodian and transfer agent, credits realized as a result of certain uninvested cash balances were used to reduce each applicable Fund's expenses. All of the applicable expense reductions are noted in the table below.
| Brokerage service rebates | Custodian credits | Transfer Agent credits | |
| Banking Portfolio | $23,339 | $– | $90 |
| Brokerage and Investment Management Portfolio | 4,358 | – | 27 |
| Consumer Finance Portfolio | 2,702 | – | – |
| Financial Services Portfolio | 40,892 | 283 | – |
| Insurance Portfolio | 5,945 | – | – |
In addition, during the period the investment adviser or an affiliate reimbursed and/or waived a portion of operating expenses as follows:
| Amount | |
| Banking Portfolio | $2,897 |
| Brokerage and Investment Management Portfolio | 1,877 |
| Consumer Finance Portfolio | 682 |
| Financial Services Portfolio | 3,231 |
| Insurance Portfolio | 1,310 |
9. Other.
The Funds' organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Funds. In the normal course of business, the Funds may also enter into contracts that provide general indemnifications. The Funds' maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Funds. The risk of material loss from such claims is considered remote.
10. Coronavirus (COVID-19) Pandemic.
An outbreak of COVID-19 first detected in China during December 2019 has since spread globally and was declared a pandemic by the World Health Organization during March 2020. Developments that disrupt global economies and financial markets, such as the COVID-19 pandemic, may magnify factors that affect the Funds' performance.
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of Fidelity Select Portfolios and the Shareholders of Banking Portfolio, Brokerage and Investment Management Portfolio, Consumer Finance Portfolio, Financial Services Portfolio and Insurance Portfolio
Opinions on the Financial Statements
We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of Banking Portfolio, Brokerage and Investment Management Portfolio, Financial Services Portfolio, Consumer Finance Portfolio, and Insurance Portfolio (five of the funds constituting Fidelity Select Portfolios, hereafter collectively referred to as the “Funds”) as of February 29, 2020, the related statements of operations for the year ended February 29, 2020, the statements of changes in net assets for each of the two years in the period ended February 29, 2020, including the related notes, and the financial highlights for each of the five years in the period ended February 29, 2020 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of each of the Funds as of February 29, 2020, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period ended February 29, 2020 and each of the financial highlights for each of the five years in the period ended February 29, 2020 in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinions
These financial statements are the responsibility of the Funds' management. Our responsibility is to express an opinion on the Funds' financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Funds in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of February 29, 2020 by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinions.
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 13, 2020
We have served as the auditor of one or more investment companies in the Fidelity group of funds since 1932.
Trustees and Officers
The Trustees, Members of the Advisory Board (if any), and officers of the trust and funds, as applicable, are listed below. The Board of Trustees governs each fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee each fund's activities, review contractual arrangements with companies that provide services to each fund, oversee management of the risks associated with such activities and contractual arrangements, and review each fund's performance. Except for Michael E. Wiley, each of the Trustees oversees 302 funds. Mr. Wiley oversees 199 funds.
The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust. Each Trustee who is not an interested person (as defined in the 1940 Act) of the trust and the funds is referred to herein as an Independent Trustee. Each Independent Trustee shall retire not later than the last day of the calendar year in which his or her 75th birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. Officers and Advisory Board Members hold office without limit in time, except that any officer or Advisory Board Member may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years.
Each fund’s Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-800-544-8544.
Experience, Skills, Attributes, and Qualifications of the Trustees. The Governance and Nominating Committee has adopted a statement of policy that describes the experience, qualifications, attributes, and skills that are necessary and desirable for potential Independent Trustee candidates (Statement of Policy). The Board believes that each Trustee satisfied at the time he or she was initially elected or appointed a Trustee, and continues to satisfy, the standards contemplated by the Statement of Policy. The Governance and Nominating Committee also engages professional search firms to help identify potential Independent Trustee candidates who have the experience, qualifications, attributes, and skills consistent with the Statement of Policy. From time to time, additional criteria based on the composition and skills of the current Independent Trustees, as well as experience or skills that may be appropriate in light of future changes to board composition, business conditions, and regulatory or other developments, have also been considered by the professional search firms and the Governance and Nominating Committee. In addition, the Board takes into account the Trustees' commitment and participation in Board and committee meetings, as well as their leadership of standing and ad hoc committees throughout their tenure.
In determining that a particular Trustee was and continues to be qualified to serve as a Trustee, the Board has considered a variety of criteria, none of which, in isolation, was controlling. The Board believes that, collectively, the Trustees have balanced and diverse experience, qualifications, attributes, and skills, which allow the Board to operate effectively in governing each fund and protecting the interests of shareholders. Information about the specific experience, skills, attributes, and qualifications of each Trustee, which in each case led to the Board's conclusion that the Trustee should serve (or continue to serve) as a trustee of the funds, is provided below.
Board Structure and Oversight Function. James C. Curvey is an interested person and currently serves as Chairman. The Trustees have determined that an interested Chairman is appropriate and benefits shareholders because an interested Chairman has a personal and professional stake in the quality and continuity of services provided to the funds. Independent Trustees exercise their informed business judgment to appoint an individual of their choosing to serve as Chairman, regardless of whether the Trustee happens to be independent or a member of management. The Independent Trustees have determined that they can act independently and effectively without having an Independent Trustee serve as Chairman and that a key structural component for assuring that they are in a position to do so is for the Independent Trustees to constitute a substantial majority for the Board. The Independent Trustees also regularly meet in executive session. Ned C. Lautenbach serves as Chairman of the Independent Trustees and as such (i) acts as a liaison between the Independent Trustees and management with respect to matters important to the Independent Trustees and (ii) with management prepares agendas for Board meetings.
Fidelity® funds are overseen by different Boards of Trustees. The funds' Board oversees Fidelity's high income and certain equity funds, and other Boards oversee Fidelity's investment-grade bond, money market, asset allocation, and other equity funds. The asset allocation funds may invest in Fidelity® funds overseen by the funds' Board. The use of separate Boards, each with its own committee structure, allows the Trustees of each group of Fidelity® funds to focus on the unique issues of the funds they oversee, including common research, investment, and operational issues. On occasion, the separate Boards establish joint committees to address issues of overlapping consequences for the Fidelity® funds overseen by each Board.
The Trustees operate using a system of committees to facilitate the timely and efficient consideration of all matters of importance to the Trustees, each fund, and fund shareholders and to facilitate compliance with legal and regulatory requirements and oversight of the funds' activities and associated risks. The Board, acting through its committees, has charged FMR and its affiliates with (i) identifying events or circumstances the occurrence of which could have demonstrably adverse effects on the funds' business and/or reputation; (ii) implementing processes and controls to lessen the possibility that such events or circumstances occur or to mitigate the effects of such events or circumstances if they do occur; and (iii) creating and maintaining a system designed to evaluate continuously business and market conditions in order to facilitate the identification and implementation processes described in (i) and (ii) above. Because the day-to-day operations and activities of the funds are carried out by or through FMR, its affiliates, and other service providers, the funds' exposure to risks is mitigated but not eliminated by the processes overseen by the Trustees. While each of the Board's committees has responsibility for overseeing different aspects of the funds' activities, oversight is exercised primarily through the Operations, Audit, and Compliance Committees. Appropriate personnel, including but not limited to the funds' Chief Compliance Officer (CCO), FMR's internal auditor, the independent accountants, the funds' Treasurer and portfolio management personnel, make periodic reports to the Board's committees, as appropriate, including an annual review of Fidelity's risk management program for the Fidelity® funds. The responsibilities of each standing committee, including their oversight responsibilities, are described further under "Standing Committees of the Trustees."
Interested Trustees*:
Correspondence intended for a Trustee who is an interested person may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210.
Name, Year of Birth; Principal Occupations and Other Relevant Experience+
James C. Curvey (1935)
Year of Election or Appointment: 2018
Trustee
Chairman of the Board of Trustees
Mr. Curvey also serves as Trustee of other Fidelity® funds. Mr. Curvey is Vice Chairman (2007-present) and Director of FMR LLC (diversified financial services company). In addition, Mr. Curvey is an Overseer Emeritus for the Boston Symphony Orchestra, a Director of Artis-Naples, and a Trustee of Brewster Academy in Wolfeboro, New Hampshire. Previously, Mr. Curvey served as a Director of Fidelity Research & Analysis Co. (investment adviser firm, 2009-2018), Director of Fidelity Investments Money Management, Inc. (investment adviser firm, 2009-2014) and a Director of FMR and FMR Co., Inc. (investment adviser firms, 2007-2014).
* Determined to be an “Interested Trustee” by virtue of, among other things, his or her affiliation with the trust or various entities under common control with FMR.
+ The information includes the Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to the Trustee's qualifications to serve as a Trustee, which led to the conclusion that the Trustee should serve as a Trustee for each fund.
Independent Trustees:
Correspondence intended for an Independent Trustee may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.
Name, Year of Birth; Principal Occupations and Other Relevant Experience+
Dennis J. Dirks (1948)
Year of Election or Appointment: 2018
Trustee
Mr. Dirks also serves as Trustee of other Fidelity® funds. Prior to his retirement in May 2003, Mr. Dirks served as Chief Operating Officer and as a member of the Board of The Depository Trust & Clearing Corporation (financial markets infrastructure), President, Chief Operating Officer and a member of the Board of The Depository Trust Company (DTC), President and a member of the Board of the National Securities Clearing Corporation (NSCC), Chief Executive Officer and a member of the Board of the Government Securities Clearing Corporation and Chief Executive Officer and a member of the Board of the Mortgage-Backed Securities Clearing Corporation. Mr. Dirks currently serves as a member of the Finance Committee (2016-present) and Board (2017-present) and is Treasurer (2018-present) of the Asolo Repertory Theatre.
Donald F. Donahue (1950)
Year of Election or Appointment: 2018
Trustee
Mr. Donahue also serves as Trustee of other Fidelity® funds. Mr. Donahue serves as President and Chief Executive Officer of Miranda Partners, LLC (risk consulting for the financial services industry, 2012-present). Previously, Mr. Donahue served as Chief Executive Officer (2006-2012), Chief Operating Officer (2003-2006) and Managing Director, Customer Marketing and Development (1999-2003) of The Depository Trust & Clearing Corporation (financial markets infrastructure). Mr. Donahue currently serves as a member (2007-present) and Co-Chairman (2016-present) of the Board of United Way of New York, a member of the Board of NYC Leadership Academy (2012-present) and a member of the Board of Advisors of Ripple Labs, Inc. (financial services, 2015-present). Mr. Donahue previously served as a member of the Advisory Board of certain Fidelity® funds (2015-2018).
Alan J. Lacy (1953)
Year of Election or Appointment: 2018
Trustee
Mr. Lacy also serves as Trustee of other Fidelity® funds. Previously, Mr. Lacy served as Senior Adviser (2007-2014) of Oak Hill Capital Partners, L.P. (private equity), Chief Executive Officer (2005) and Vice Chairman (2005-2006) of Sears Holdings Corporation (retail), Chief Executive Officer and Chairman of the Board of Sears, Roebuck and Co. (retail, 2000-2005) and Chairman (2014-2017) and a member of the Board (2010-2017) of Dave & Buster’s Entertainment, Inc. (restaurant and entertainment complexes). Mr. Lacy currently serves as a member of the Board of Bristol-Myers Squibb Company (global pharmaceuticals, 2008-present), Trustee of the California Chapter of The Nature Conservancy (2015-present) and a member of the Board of the Center for Advanced Study in the Behavioral Sciences at Stanford University (2015-present).
Ned C. Lautenbach (1944)
Year of Election or Appointment: 2018
Trustee
Chairman of the Independent Trustees
Mr. Lautenbach also serves as Trustee of other Fidelity® funds. Mr. Lautenbach currently serves as Chair of the Board of Governors, State University System of Florida (2013-present) and is a member of the Council on Foreign Relations (1994-present). He is also a member and has in the past served as Chairman of the Board of Directors of Artis-Naples (2012-present). Previously, Mr. Lautenbach served as a member and then Lead Director of the Board of Directors of Eaton Corporation (diversified industrial, 1997-2016). He was also a Partner at Clayton, Dubilier & Rice, LLC (private equity investment, 1998-2010); as well as Director of Sony Corporation (2006-2007). In addition, Mr. Lautenbach had a 30-year career with IBM (technology company), during which time he served as Senior Vice President and as a member of the Corporate Executive Committee (1968-1998).
Joseph Mauriello (1944)
Year of Election or Appointment: 2018
Trustee
Mr. Mauriello also serves as Trustee of other Fidelity® funds. Prior to his retirement in January 2006, Mr. Mauriello served in numerous senior management positions including Deputy Chairman and Chief Operating Officer (2004-2005), and Vice Chairman of Financial Services (2002-2004) of KPMG LLP US (professional services, 1965-2005). Mr. Mauriello currently serves as a member of the Independent Directors Council Governing Council (2015-present). Previously, Mr. Mauriello served as a member of the Board of XL Group plc. (global insurance and re-insurance, 2006-2018).
Cornelia M. Small (1944)
Year of Election or Appointment: 2018
Trustee
Ms. Small also serves as Trustee of other Fidelity® funds. Previously, Ms. Small served as Chief Investment Officer, Director of Global Equity Investments and a member of Scudder, Stevens & Clark and Scudder Kemper Investments. Ms. Small previously served as a member of the Board (2009-2019) and Chair of the Investment Committee (2010-2019) of the Teagle Foundation and a member of the Investment Committee of the Berkshire Taconic Community Foundation (2008-2019).
Garnett A. Smith (1947)
Year of Election or Appointment: 2013
Trustee
Mr. Smith also serves as Trustee of other Fidelity® funds. Prior to his retirement, Mr. Smith served as Chairman and Chief Executive Officer (1990-1997) and President (1986-1990) of Inbrand Corp. (manufacturer of personal absorbent products). Prior to his employment with Inbrand Corp., he was employed by a retail fabric chain and North Carolina National Bank (now Bank of America). Mr. Smith previously served as a member of the Advisory Board of certain Fidelity® funds (2012-2013).
David M. Thomas (1949)
Year of Election or Appointment: 2018
Trustee
Mr. Thomas also serves as Trustee of other Fidelity® funds. Previously, Mr. Thomas served as Executive Chairman (2005-2006) and Chairman and Chief Executive Officer (2000-2005) of IMS Health, Inc. (pharmaceutical and healthcare information solutions). Mr. Thomas currently serves as Non-Executive Chairman of the Board of Fortune Brands Home and Security (home and security products, 2011-present), and a member of the Board (2004-present) and Presiding Director (2013-present) of Interpublic Group of Companies, Inc. (marketing communication).
Michael E. Wiley (1950)
Year of Election or Appointment: 2008
Trustee
Mr. Wiley also serves as Trustee or a member of the Advisory Board of other Fidelity® funds. Previously, Mr. Wiley served as Chairman, President and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004). Mr. Wiley currently serves as a member of the Board of High Point Resources (exploration and production, 2005-present). Previously, Mr. Wiley served as a member of the Board of Andeavor Corporation (independent oil refiner and marketer, 2005-2018) and a member of the Board of Andeavor Logistics LP (natural resources logistics, 2015-2018).
+ The information includes the Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to the Trustee's qualifications to serve as a Trustee, which led to the conclusion that the Trustee should serve as a Trustee for each fund.
Advisory Board Members and Officers:
Correspondence intended for a Member of the Advisory Board (if any) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235. Correspondence intended for an officer or Peter S. Lynch may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210. Officers appear below in alphabetical order.
Name, Year of Birth; Principal Occupation
Vicki L. Fuller (1957)
Year of Election or Appointment: 2018
Member of the Advisory Board
Ms. Fuller also serves as a member of the Advisory Board of other Fidelity® funds. Previously, Ms. Fuller served as Chief Investment Officer of the New York State Common Retirement Fund (2012-2018) and held a variety of positions at AllianceBernstein L.P. (global asset management, 1985-2012), including Managing Director (2006-2012) and Senior Vice President and Senior Portfolio Manager (2001-2006). Ms. Fuller currently serves as a member of the Board, Audit Committee and Nominating and Governance Committee of The Williams Companies, Inc. (natural gas infrastructure, 2018-present) and as a member of the Board of Treliant, LLC (consulting, 2019-present).
Patricia L. Kampling (1959)
Year of Election or Appointment: 2020
Member of the Advisory Board
Ms. Kampling also serves as Member of the Advisory Board of other Fidelity® funds. Prior to her retirement, Ms. Kampling served as Chairman of the Board and Chief Executive Officer (2012-2019), President and Chief Operating Officer (2011-2012) and Executive Vice President and Chief Financial Officer (2010-2011) of Alliant Energy Corporation. Ms. Kampling currently serves as a member of the Board, Compensation Committee and Executive Committee and as Chair of the Audit Committee of Briggs & Stratton Corporation (manufacturing, 2011-present) and as a member of the Board, Audit, Finance and Risk Committee and Safety, Environmental, Technology and Operations Committee of American Water Works Company, Inc. (utilities company, 2019-present). In addition, Ms. Kampling currently serves as a member of the Board of the Nature Conservancy, Wisconsin Chapter (2019-present). Previously, Ms. Kampling served as a member of the Board of Interstate Power and Light Company (2012-2019) and Wisconsin Power and Light Company (2012-2019) (each a subsidiary of Alliant Energy Corporation) and as a member of the Board and Workforce Development Committee of the Business Roundtable (2018-2019).
Peter S. Lynch (1944)
Year of Election or Appointment: 2018
Member of the Advisory Board
Mr. Lynch also serves as Member of the Advisory Board of other Fidelity® funds. Mr. Lynch is Vice Chairman and a Director of Fidelity Management & Research Company LLC (investment adviser firm). In addition, Mr. Lynch serves as a Trustee of Boston College and as the Chairman of the Inner-City Scholarship Fund. Previously, Mr. Lynch served as Vice Chairman and a Director of FMR Co., Inc. (investment adviser firm) and on the Special Olympics International Board of Directors (1997-2006).
Susan Tomasky (1953)
Year of Election or Appointment: 2020
Member of the Advisory Board
Ms. Tomasky also serves as Member of the Advisory Board of other Fidelity® funds. Prior to her retirement, Ms. Tomasky served in various executive officer positions at American Electric Power Company, Inc. (1998-2011), including most recently as President of AEP Transmission (2007-2011). Ms. Tomasky currently serves as a member of the Board and Sustainability Committee and as Chair of the Audit Committee of Marathon Petroleum Corporation (2018-present) and as a member of the Board, Corporate Governance Committee and Organization and Compensation Committee and as Chair of the Audit Committee of Public Service Enterprise Group, Inc. (utilities company, 2012-present). In addition, Ms. Tomasky currently serves as a member of the Board of the Columbus Regional Airport Authority (2007-present), as a member of the Board of the Royal Shakespeare Company – America (2009-present), as a member of the Board of the Columbus Association for the Performing Arts (2011-present) and as a member of the Board of Kenyon College (2016-present). Previously, Ms. Tomasky served as a member of the Board (2011-2019) and as Lead Independent Director (2015-2018) of Andeavor Corporation (previously Tesoro Corporation) (independent oil refiner and marketer) and as a member of the Board of Summit Midstream Partners LP (energy, 2012-2018).
Elizabeth Paige Baumann (1968)
Year of Election or Appointment: 2017
Anti-Money Laundering (AML) Officer
Ms. Baumann also serves as AML Officer of other funds. She is Chief AML Officer (2012-present) and Senior Vice President (2014-present) of FMR LLC (diversified financial services company) and is an employee of Fidelity Investments. Previously, Ms. Baumann served as AML Officer of certain funds (2017-2019), as AML Officer of the funds (2012-2016), and Vice President (2007-2014) and Deputy Anti-Money Laundering Officer (2007-2012) of FMR LLC.
Craig S. Brown (1977)
Year of Election or Appointment: 2019
Assistant Treasurer
Mr. Brown also serves as Assistant Treasurer of other funds. Mr. Brown is an employee of Fidelity Investments (2013-present).
John J. Burke III (1964)
Year of Election or Appointment: 2018
Chief Financial Officer
Mr. Burke also serves as Chief Financial Officer of other funds. Mr. Burke serves as Head of Investment Operations for Fidelity Fund and Investment Operations (2018-present) and is an employee of Fidelity Investments (1998-present). Previously Mr. Burke served as head of Asset Management Investment Operations (2012-2018).
William C. Coffey (1969)
Year of Election or Appointment: 2019
Assistant Secretary
Mr. Coffey also serves as Assistant Secretary of other funds. He is Senior Vice President and Deputy General Counsel of FMR LLC (diversified financial services company, 2010-present), and is an employee of Fidelity Investments. Previously, Mr. Coffey served as Secretary and CLO of certain funds (2018-2019); CLO, Secretary, and Senior Vice President of Fidelity Management & Research Company and FMR Co., Inc. (investment adviser firms, 2018-2019); Secretary of Fidelity SelectCo, LLC and Fidelity Investments Money Management, Inc. (investment adviser firms, 2018-2019); CLO of Fidelity Management & Research (Hong Kong) Limited, FMR Investment Management (UK) Limited, and Fidelity Management & Research (Japan) Limited (investment adviser firms, 2018-2019); and Assistant Secretary of certain funds (2009-2018).
Timothy M. Cohen (1969)
Year of Election or Appointment: 2018
Vice President
Mr. Cohen also serves as Vice President of other funds. Mr. Cohen serves as Co-Head of Equity (2018-present), a Director of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2016-present), and is an employee of Fidelity Investments. Previously, Mr. Cohen served as Executive Vice President of Fidelity SelectCo, LLC (2019), Head of Global Equity Research (2016-2018), Chief Investment Officer - Equity and a Director of Fidelity Management & Research (U.K.) Inc. (investment adviser firm, 2013-2015) and as a Director of Fidelity Management & Research (Hong Kong) Limited (investment adviser firm, 2017).
Jonathan Davis (1968)
Year of Election or Appointment: 2010
Assistant Treasurer
Mr. Davis also serves as Assistant Treasurer of other funds. Mr. Davis serves as Assistant Treasurer of FMR Capital, Inc. (2017-present) and is an employee of Fidelity Investments. Previously, Mr. Davis served as Vice President and Associate General Counsel of FMR LLC (diversified financial services company, 2003-2010).
Laura M. Del Prato (1964)
Year of Election or Appointment: 2018
Assistant Treasurer
Ms. Del Prato also serves as an officer of other funds. Ms. Del Prato is an employee of Fidelity Investments (2017-present). Prior to joining Fidelity Investments, Ms. Del Prato served as a Managing Director and Treasurer of the JPMorgan Mutual Funds (2014-2017). Prior to JPMorgan, Ms. Del Prato served as a partner at Cohen Fund Audit Services (accounting firm, 2012-2013) and KPMG LLP (accounting firm, 2004-2012).
Colm A. Hogan (1973)
Year of Election or Appointment: 2020
Assistant Treasurer
Mr. Hogan also serves as an officer of other funds. Mr. Hogan serves as Assistant Treasurer of FMR Capital, Inc. (2017-present) and is an employee of Fidelity Investments (2005-present). Previously, Mr. Hogan served as Deputy Treasurer of certain Fidelity® funds (2016-2020) and Assistant Treasurer of certain Fidelity® funds (2016-2018).
Pamela R. Holding (1964)
Year of Election or Appointment: 2018
Vice President
Ms. Holding also serves as Vice President of other funds. Ms. Holding serves as Co-Head of Equity (2018-present) and is an employee of Fidelity Investments (2013-present). Previously, Ms. Holding served as Executive Vice President of Fidelity SelectCo, LLC (2019) and as Chief Investment Officer of Fidelity Institutional Asset Management (2013-2018).
Cynthia Lo Bessette (1969)
Year of Election or Appointment: 2019
Secretary and Chief Legal Officer (CLO)
Ms. Lo Bessette also serves as an officer of other funds. Ms. Lo Bessette serves as CLO, Secretary, and Senior Vice President of Fidelity Management & Research Company LLC (investment adviser firm, 2019-present); and CLO of Fidelity Management & Research (Hong Kong) Limited, FMR Investment Management (UK) Limited, and Fidelity Management & Research (Japan) Limited (investment adviser firms, 2019-present). She is a Senior Vice President and Deputy General Counsel of FMR LLC (diversified financial services company, 2019-present), and is an employee of Fidelity Investments. Previously, Ms. Lo Bessette served as CLO, Secretary, and Senior Vice President of FMR Co., Inc. (investment adviser firm, 2019); Secretary of Fidelity SelectCo, LLC and Fidelity Investments Money Management, Inc. (investment adviser firms, 2019). Prior to joining Fidelity Investments, Ms. Lo Bessette was Executive Vice President, General Counsel (2016-2019) and Senior Vice President, Deputy General Counsel (2015-2016) of OppenheimerFunds (investment management company) and Deputy Chief Legal Officer (2013-2015) of Jennison Associates LLC (investment adviser firm).
Chris Maher (1972)
Year of Election or Appointment: 2020
Deputy Treasurer
Mr. Maher also serves as an officer of other funds. Mr. Maher serves as Assistant Treasurer of FMR Capital, Inc. (2017-present), and is an employee of Fidelity Investments (2008-present). Previously, Mr. Maher served as Assistant Treasurer of certain funds (2013-2020); Vice President of Asset Management Compliance (2013), Vice President of the Program Management Group of FMR (investment adviser firm, 2010-2013), and Vice President of Valuation Oversight (2008-2010).
Kenneth B. Robins (1969)
Year of Election or Appointment: 2018
Chief Compliance Officer
Mr. Robins also serves as an officer of other funds. Mr. Robins serves as Compliance Officer of Fidelity Management & Research Company LLC (investment adviser firm, 2016-present) and is an employee of Fidelity Investments (2004-present). Previously, Mr. Robins served as Compliance Officer of FMR Co., Inc. (investment adviser firm, 2016-2019), as Executive Vice President of Fidelity Investments Money Management, Inc. (investment adviser firm, 2013-2016) and served in other fund officer roles.
Stacie M. Smith (1974)
Year of Election or Appointment: 2018
President and Treasurer
Ms. Smith also serves as an officer of other funds. Ms. Smith serves as Assistant Treasurer of FMR Capital, Inc. (2017-present), is an employee of Fidelity Investments (2009-present), and has served in other fund officer roles. Prior to joining Fidelity Investments, Ms. Smith served as Senior Audit Manager of Ernst & Young LLP (accounting firm, 1996-2009). Previously, Ms. Smith served as Assistant Treasurer (2013-2019) and Deputy Treasurer (2013-2016) of certain Fidelity® funds.
Marc L. Spector (1972)
Year of Election or Appointment: 2017
Assistant Treasurer
Mr. Spector also serves as an officer of other funds. Mr. Spector serves as Assistant Treasurer of FMR Capital, Inc. (2017-present) and is an employee of Fidelity Investments (2016-present). Prior to joining Fidelity Investments, Mr. Spector served as Director at the Siegfried Group (accounting firm, 2013-2016), and prior to Siegfried Group as audit senior manager at Deloitte & Touche LLP (accounting firm, 2005-2013).
Jim Wegmann (1979)
Year of Election or Appointment: 2019
Assistant Treasurer
Mr. Wegmann also serves as Assistant Treasurer of other funds. Mr. Wegmann is an employee of Fidelity Investments (2011-present).
Shareholder Expense Example
As a shareholder of a Fund, you incur two types of costs: (1) transaction costs, including and (2) ongoing costs, including management fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (September 1, 2019 to February 29, 2020).
Actual Expenses
The first line of the accompanying table for each fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. In addition, each Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each fund provides information about hypothetical account values and hypothetical expenses based on a fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. In addition, each Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Annualized Expense Ratio-A | Beginning Account Value September 1, 2019 | Ending Account Value February 29, 2020 | Expenses Paid During Period-B September 1, 2019 to February 29, 2020 |
|
| Banking Portfolio | .77% | |||
| Actual | $1,000.00 | $987.00 | $3.80 | |
| Hypothetical-C | $1,000.00 | $1,021.03 | $3.87 | |
| Brokerage and Investment Management Portfolio | .76% | |||
| Actual | $1,000.00 | $1,051.60 | $3.88 | |
| Hypothetical-C | $1,000.00 | $1,021.08 | $3.82 | |
| Consumer Finance Portfolio | .84% | |||
| Actual | $1,000.00 | $989.40 | $4.15 | |
| Hypothetical-C | $1,000.00 | $1,020.69 | $4.22 | |
| Financial Services Portfolio | .76% | |||
| Actual | $1,000.00 | $1,002.80 | $3.78 | |
| Hypothetical-C | $1,000.00 | $1,021.08 | $3.82 | |
| Insurance Portfolio | .80% | |||
| Actual | $1,000.00 | $965.10 | $3.91 | |
| Hypothetical-C | $1,000.00 | $1,020.89 | $4.02 |
A Annualized expense ratio reflects expenses net of applicable fee waivers.
B Expenses are equal to each Fund's annualized expense ratio, multiplied by the average account value over the period, multiplied by 182/ 366 (to reflect the one-half year period).
C 5% return per year before expenses
Distributions (Unaudited)
The Board of Trustees of each fund voted to pay to shareholders of record at the opening of business on record date, the following distributions per share derived from capital gains realized from sales of portfolio securities, and dividends derived from net investment income:
| Pay Date | Record Date | Dividends | Capital Gains | |
| Banking Portfolio | 04/09/2020 | 04/08/2020 | $0.121 | $1.370 |
| Brokerage and Investment Management Portfolio | 04/09/2020 | 04/08/2020 | $0.073 | $1.225 |
| Consumer Finance Portfolio | 04/09/2020 | 04/08/2020 | $0.052 | $0.000 |
| Financial Services Portfolio | 04/09/2020 | 04/08/2020 | $0.037 | $0.389 |
| Insurance Portfolio | 04/09/2020 | 04/08/2020 | $0.130 | $2.542 |
The funds hereby designate as capital gain dividend the amounts noted below for the taxable year ended February 29, 2020, or, if subsequently determined to be different, the net capital gain of such year.
| Banking Portfolio | $38,548,783 |
| Brokerage and Investment Management Portfolio | $8,979,166 |
| Consumer Finance Portfolio | $45,405 |
| Financial Services Portfolio | $40,437,186 |
| Insurance Portfolio | $16,419,062 |
A percentage of the dividends distributed during the fiscal year for the following funds qualify for the dividends–received deduction for corporate shareholders:
| Banking Portfolio | |
| April 2019 | 100% |
| December 2019 | 100% |
| Brokerage and Investment Management Portfolio | |
| April 2019 | 100% |
| December 2019 | 100% |
| Consumer Finance Portfolio | |
| April 2019 | 99% |
| December 2019 | 65% |
| Financial Services Portfolio | |
| December 2019 | 100% |
| Insurance Portfolio | |
| April 2019 | 100% |
| December 2019 | 100% |
A percentage of the dividends distributed during the fiscal year for the following funds may be taken into account as a dividend for purposes of the maximum rate under section 1(h)(11) of the Internal Revenue Code.
| Banking Portfolio | |
| April 2019 | 100% |
| December 2019 | 100% |
| Brokerage and Investment Management Portfolio | |
| April 2019 | 100% |
| December 2019 | 100% |
| Consumer Finance Portfolio | |
| April 2019 | 100% |
| December 2019 | 65% |
| Financial Services Portfolio | |
| December 2019 | 100% |
| Insurance Portfolio | |
| April 2019 | 100% |
| December 2019 | 100% |
A percentage of the dividends distributed during the fiscal year for the following fund qualifies as a section 199A dividend:
| Consumer Finance Portfolio | |
| April 2019 | 1% |
| December 2019 | 36% |
The funds will notify shareholders in January 2021 of amounts for use in preparing 2020 income tax returns.
Board Approval of Investment Advisory Contracts and Management Fees
Banking Portfolio
Brokerage and Investment Management Portfolio
Consumer Finance Portfolio
Financial Services Portfolio
Insurance Portfolio
Banking Portfolio
Brokerage and Investment Management Portfolio
Consumer Finance Portfolio
Financial Services Portfolio
Insurance Portfolio
Banking Portfolio
Brokerage and Investment Management Portfolio
Consumer Finance Portfolio
Financial Services Portfolio
Insurance Portfolio
Liquidity Risk Management Program
The Securities and Exchange Commission adopted Rule 22e-4 under the Investment Company Act of 1940 (the Liquidity Rule) to promote effective liquidity risk management throughout the open-end investment company industry, thereby reducing the risk that funds will be unable to meet their redemption obligations and mitigating dilution of the interests of fund shareholders.
The Funds have adopted and implemented a liquidity risk management program pursuant to the Liquidity Rule (the Program) effective December 1, 2018. The Program is reasonably designed to assess and manage each Fund’s liquidity risk and to comply with the requirements of the Liquidity Rule. Each Fund’s Board of Trustees (the Board) has designated each Fund’s investment adviser as administrator of the Program. The Fidelity advisers have established a Liquidity Risk Management Committee (the LRM Committee) to manage the Program for each of the Fidelity Funds. The LRM Committee monitors the adequacy and effectiveness of implementation of the Program and on a periodic basis assesses each Fund’s liquidity risk based on a variety of factors including (1) the Fund’s investment strategy, (2) portfolio liquidity and cash flow projections during normal and reasonably foreseeable stressed conditions, (3) shareholder redemptions, (4) borrowings and other funding sources and (5) in the case of exchange-traded funds, certain additional factors including the effect of the Fund’s prices and spreads, market participants, and basket compositions on the overall liquidity of the Fund’s portfolio, as applicable.
In accordance with the Program, each of the Fund’s portfolio investments is classified into one of four liquidity categories described below based on a determination of a reasonable expectation for how long it would take to convert the investment to cash (or sell or dispose of the investment) without significantly changing its market value.
- Highly liquid investments – cash or convertible to cash within three business days or less
- Moderately liquid investments – convertible to cash in three to seven calendar days
- Less liquid investments – can be sold or disposed of, but not settled, within seven calendar days
- Illiquid investments – cannot not be sold or disposed of within seven calendar days
Liquidity classification determinations take into account a variety of factors including various market, trading and investment-specific considerations, as well as market depth, and generally utilize analysis from a third-party liquidity metrics service.
The Liquidity Rule places a 15% limit on a fund’s illiquid investments and requires funds that do not primarily hold assets that are highly liquid investments to determine and maintain a minimum percentage of the fund’s net assets to be invested in highly liquid investments (highly liquid investment minimum or HLIM). The Program includes provisions reasonably designed to comply with the 15% limit on illiquid investments and for determining, periodically reviewing and complying with the HLIM requirement as applicable.
At a recent meeting of the Fund’s Board of Trustees, the LRM Committee provided a written report to the Board pertaining to the operation, adequacy, and effectiveness of implementation of the Program for the annual period from December 1, 2018 through November 30, 2019. The report concluded that the Program has been implemented and is operating effectively and is reasonably designed to assess and manage the Fund’s liquidity risk.
SELFIN-ANN-0420
1.813663.115
Fidelity® Select Portfolios®
Health Care Sector
Biotechnology Portfolio
Health Care Portfolio
Health Care Services Portfolio
Medical Technology and Devices Portfolio
Pharmaceuticals Portfolio
February 29, 2020
See the inside front cover for important information about access to your fund’s shareholder reports.
Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of a fund’s shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports from the fund or from your financial intermediary, such as a financial advisor, broker-dealer or bank. Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from a fund electronically, by contacting your financial intermediary. For Fidelity customers, visit Fidelity's web site or call Fidelity using the contact information listed below.
You may elect to receive all future reports in paper free of charge. If you wish to continue receiving paper copies of your shareholder reports, you may contact your financial intermediary or, if you are a Fidelity customer, visit Fidelity’s website, or call Fidelity at the applicable toll-free number listed below. Your election to receive reports in paper will apply to all funds held with the fund complex/your financial intermediary.
| Account Type | Website | Phone Number |
| Brokerage, Mutual Fund, or Annuity Contracts: | fidelity.com/mailpreferences | 1-800-343-3548 |
| Employer Provided Retirement Accounts: | netbenefits.fidelity.com/preferences (choose 'no' under Required Disclosures to continue to print) | 1-800-343-0860 |
| Advisor Sold Accounts Serviced Through Your Financial Intermediary: | Contact Your Financial Intermediary | Your Financial Intermediary's phone number |
| Advisor Sold Accounts Serviced by Fidelity: | institutional.fidelity.com | 1-877-208-0098 |
Contents
|
Biotechnology Portfolio | |
|
Health Care Portfolio | |
|
Health Care Services Portfolio | |
|
Medical Technology and Devices Portfolio | |
|
Pharmaceuticals Portfolio | |
|
Board Approval of Investment Advisory Contracts and Management Fees | |
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov.
You may also call 1-800-544-8544 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third-party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company. © 2020 FMR LLC. All rights reserved.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the Funds. This report is not authorized for distribution to prospective investors in the Funds unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-PORT. Forms N-PORT are available on the SEC’s web site at http://www.sec.gov. A fund's Forms N-PORT may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330.
For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com, http://www.institutional.fidelity.com, or http://www.401k.com, as applicable.
NOT FDIC INSURED •MAY LOSE VALUE •NO BANK GUARANTEE
Neither the Funds nor Fidelity Distributors Corporation is a bank.
Note to shareholders:
(No Action is Required by You)
As part of a regular review of its organizational structure, Fidelity has decided to merge certain entities to streamline operations, increase efficiency, simplify reporting, and reduce legal, compliance, and accounting complexity and costs. In separate events, Fidelity has merged four of its investment advisers and two of its broker-dealers.
Effective on or about January 1, 2020, following any required regulatory notices and approvals:
Investment advisers Fidelity Investments Money Management, Inc., FMR Co., Inc., and Fidelity SelectCo, LLC, merged with and into Fidelity Management & Research Company. In connection with the merger transactions, the resulting, merged investment adviser was then redomiciled from Massachusetts to Delaware, changed its corporate structure from a corporation to a limited liability company, and changed its name to “Fidelity Management & Research Company LLC”.
Broker-dealer Fidelity Distributors Corporation merged with and into Fidelity Investments Institutional Services Company, Inc. (“FIISC”). FIISC was then redomiciled from Massachusetts to Delaware, changed its corporate structure from a corporation to a limited liability company, and changed its name to “Fidelity Distributors Company LLC”.
These mergers are not expected to affect fund shareholders or Fidelity clients, nor are they expected to result in any changes to the day-to-day management of Fidelity’s brokerage services, the Fidelity funds, their investment policies and practices, their portfolio management teams, or the funds’ expenses.
Early in 2020, the outbreak and spread of a new coronavirus emerged as a public health emergency that had a major influence on financial markets, primarily based on its impact on the global economy and corporate earnings. The virus causes a respiratory disease known as COVID-19. On March 11, the World Health Organization declared the COVID-19 outbreak a pandemic, citing sustained risk of further global spread.
In the weeks following the end of this reporting period, as the crisis worsened, we witnessed an escalating human tragedy with wide-scale social and economic consequences from coronavirus-containment measures. The outbreak of COVID-19 prompted a number of measures to limit the spread, including travel and border restrictions, quarantines, and restrictions on large gatherings. In turn, these resulted in lower consumer activity, diminished demand for a wide range of products and services, disruption in manufacturing and supply chains, and – given the wide variability in outcomes regarding the outbreak – significant market uncertainty and volatility. Amid the turmoil, the U.S. government took unprecedented action – in concert with the U.S. Federal Reserve and central banks around the world – to help support consumers, businesses, and the broader economy, and to limit disruption to the financial system.
The situation continues to unfold, and the extent and duration of its impact on financial markets and the economy remain highly uncertain. Extreme events such as the coronavirus crisis are “exogenous shocks” that can have significant adverse effects on mutual funds and their investments. Although multiple asset classes may be affected by market disruption, the duration and impact may not be the same for all types of assets.
Fidelity is committed to helping you stay informed amid news about COVID-19 and during increased market volatility, and we’re taking extra steps to be responsive to customer needs. We encourage you to visit our websites, where we offer ongoing updates, commentary, and analysis on the markets and our funds.
Biotechnology Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The hypothetical investment and the average annual total returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund’s total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
| For the periods ended February 29, 2020 | Past 1 year | Past 5 years | Past 10 years |
| Biotechnology Portfolio | 8.57% | 2.70% | 17.40% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Biotechnology Portfolio on February 28, 2010.
The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
| Period Ending Values | ||
|
| $49,743 | Biotechnology Portfolio |
|
| $32,918 | S&P 500® Index |
Biotechnology Portfolio
Management's Discussion of Fund Performance
Market Recap: U.S. stocks stalled to begin the new year and declined in late February, as the outbreak and spread of the new coronavirus threatened to hamper global economic growth and corporate earnings. For the 12 months ending February 29, 2020, the U.S. equity bellwether S&P 500® index gained 8.19%. The period began with equities rising amid upbeat company earnings and signs the U.S. Federal Reserve may pause on rates. The uptrend extended until May, when the index dipped as trade talks between the U.S. and China broke down. The bull market roared back to record a series of highs in July, when the Fed cut interest rates for the first time since 2008. Volatility intensified in August, as the Treasury yield curve inverted, which some investors viewed as a sign the U.S. economy could be heading for recession. But the market proved resilient, hitting a new high on October 30, when the Fed lowered rates for the third time in 2019, and moving higher through December 31. Following a roughly flat January, stocks sank in late February, after a surge in coronavirus cases outside China created considerable uncertainty and pushed investors to safer asset classes. By sector, information technology (+27%) led the way by a wide margin, followed by utilities and communication services (+13% each). In contrast, energy (-25%) was by far the weakest category, struggling due to sluggish oil prices. Other notable laggards included materials and industrials (-2% each). Comments from Portfolio Manager Rajiv Kaul: For the fiscal year, the fund gained 8.57%, handily topping the 4.92% advance of the MSCI U.S. IMI Biotechnology 25/50 Index, and modestly ahead of the S&P 500®. Stock selection in the fund’s core biotechnology group was responsible for virtually all of its outperformance of the MSCI industry index. My picks were especially successful among the small- and mid-cap groups. Out-of-index exposure to Belgium-based Galapagos Genomics (+118%) was the top individual relative contributor. The stock surged higher in July, after the company announced that it had entered into a 10-year global research and development agreement with Gilead Sciences. Array BioPharma (+104%), another contributor and a specialist in oncology medications, was purchased by large drug company Pfizer at a sizable premium to where it had been trading, rewarding our overweighting here. The deal was announced in June and closed in July. I’ll also mention ChemoCentryx (+338%), an overweighting for the fund that exploded higher in November after favorable trial results. The company focuses on developing new treatments for inflammatory and autoimmune diseases. Conversely, security selection in the pharmaceuticals category worked against us. Mostly avoiding Celgene (+30%) detracted more than any other holding versus the MSCI index. The company was in the process of being purchased by Bristol-Myers Squibb, a deal announced in January 2019 but tied up in regulatory delays until November. Overweighting Sage Therapeutics (-70%), a neuroscience company, also hampered our relative result, as did a non-index stake in Zogenix (-52%)%), a rare-disease specialist.The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Biotechnology Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 29, 2020
| % of fund's net assets | |
| AbbVie, Inc. | 11.3 |
| Vertex Pharmaceuticals, Inc. | 4.5 |
| Biogen, Inc. | 4.3 |
| Regeneron Pharmaceuticals, Inc. | 3.3 |
| Seattle Genetics, Inc. | 2.5 |
| Alnylam Pharmaceuticals, Inc. | 2.3 |
| Acceleron Pharma, Inc. | 2.2 |
| Sarepta Therapeutics, Inc. | 1.7 |
| Neurocrine Biosciences, Inc. | 1.6 |
| Argenx SE ADR | 1.6 |
| 35.3 |
Top Industries (% of fund's net assets)
| As of February 29, 2020 | ||
| Biotechnology | 91.3% | |
| Pharmaceuticals | 6.3% | |
| Life Sciences Tools & Services | 0.6% | |
| Health Care Equipment & Supplies | 0.5% | |
| Health Care Technology | 0.3% | |
| All Others* | 1.0% | |
* Includes short-term investments and net other assets (liabilities).
Biotechnology Portfolio
Schedule of Investments February 29, 2020
Showing Percentage of Net Assets
| Common Stocks - 98.2% | |||
| Shares | Value | ||
| Biotechnology - 90.7% | |||
| Biotechnology - 90.7% | |||
| AbbVie, Inc. | 8,738,317 | $748,961,147 | |
| AC Immune SA (a)(b) | 67,232 | 461,884 | |
| ACADIA Pharmaceuticals, Inc. (a) | 1,734,880 | 74,148,771 | |
| Acceleron Pharma, Inc. (a) | 1,703,258 | 146,360,960 | |
| Acorda Therapeutics, Inc. (a)(b)(c) | 2,605,026 | 3,751,237 | |
| Adverum Biotechnologies, Inc. (a) | 173,108 | 2,130,959 | |
| Agios Pharmaceuticals, Inc. (a)(b) | 1,827,003 | 86,746,102 | |
| Aimmune Therapeutics, Inc. (a)(b) | 354,260 | 8,434,931 | |
| Akebia Therapeutics, Inc. (a) | 1,016,067 | 9,012,514 | |
| Albireo Pharma, Inc. (a) | 275,900 | 6,450,542 | |
| Aldeyra Therapeutics, Inc. (a) | 1,206,333 | 4,584,065 | |
| Alector, Inc. (b) | 693,918 | 19,068,867 | |
| Alexion Pharmaceuticals, Inc. (a) | 276,866 | 26,033,710 | |
| Alkermes PLC (a) | 99,974 | 2,083,458 | |
| Allakos, Inc. (a)(b) | 604,425 | 37,673,810 | |
| Allena Pharmaceuticals, Inc. (a)(c) | 28,440 | 56,027 | |
| Allena Pharmaceuticals, Inc. (a)(c)(d) | 1,447,443 | 2,851,463 | |
| Allogene Therapeutics, Inc. (a)(b) | 512,605 | 13,840,335 | |
| Alnylam Pharmaceuticals, Inc. (a) | 1,269,378 | 149,355,015 | |
| Amarin Corp. PLC ADR (a)(b) | 556,831 | 8,168,711 | |
| Amgen, Inc. | 300,167 | 59,952,355 | |
| Amicus Therapeutics, Inc. (a) | 3,855,481 | 36,800,566 | |
| AnaptysBio, Inc. (a) | 51,563 | 770,867 | |
| Apellis Pharmaceuticals, Inc. (a) | 539,434 | 18,675,205 | |
| Applied Therapeutics, Inc. (a) | 973,740 | 40,458,897 | |
| Aprea Therapeutics, Inc. | 535,700 | 18,374,510 | |
| Aravive, Inc. (a) | 699,083 | 5,970,169 | |
| Arcturus Therapeutics Holdings, Inc. (a) | 400,000 | 5,540,000 | |
| Arcutis Biotherapeutics, Inc. (a) | 654,015 | 17,380,449 | |
| Ardelyx, Inc. (a) | 563,494 | 3,899,378 | |
| Arena Pharmaceuticals, Inc. (a) | 877,773 | 39,148,676 | |
| Argenx SE ADR (a) | 729,786 | 103,177,145 | |
| Arrowhead Pharmaceuticals, Inc. (a)(b) | 1,880,151 | 66,482,139 | |
| Ascendis Pharma A/S sponsored ADR (a) | 649,309 | 84,656,907 | |
| Assembly Biosciences, Inc. (a) | 578,333 | 10,479,394 | |
| Atara Biotherapeutics, Inc. (a)(b) | 673,043 | 8,177,472 | |
| Athenex, Inc. (a)(b) | 717,400 | 8,766,628 | |
| Atreca, Inc. (b) | 117,700 | 2,782,428 | |
| aTyr Pharma, Inc. (b)(c) | 407,046 | 1,510,141 | |
| Aurinia Pharmaceuticals, Inc. (a)(b) | 2,288,586 | 40,050,255 | |
| Autolus Therapeutics Ltd. ADR (a)(b) | 212,108 | 1,735,043 | |
| AVROBIO, Inc. (a) | 762,751 | 14,721,094 | |
| Axcella Health, Inc. | 511,870 | 1,927,191 | |
| BELLUS Health, Inc. (a) | 464,300 | 4,071,911 | |
| BioCryst Pharmaceuticals, Inc. (a) | 2,556,584 | 7,669,752 | |
| Biogen, Inc. (a) | 926,227 | 285,639,145 | |
| Biohaven Pharmaceutical Holding Co. Ltd. (a) | 790,293 | 34,899,339 | |
| BioMarin Pharmaceutical, Inc. (a) | 962,958 | 87,022,514 | |
| BioNTech SE ADR (a) | 29,800 | 1,045,980 | |
| BioXcel Therapeutics, Inc. (a)(b) | 605,490 | 22,705,875 | |
| Black Diamond Therapeutics, Inc. (a) | 341,300 | 9,211,687 | |
| bluebird bio, Inc. (a) | 939,007 | 67,918,376 | |
| Blueprint Medicines Corp. (a) | 941,306 | 50,952,894 | |
| Bridgebio Pharma, Inc. (b) | 784,161 | 24,999,053 | |
| Cabaletta Bio, Inc. (a)(b) | 30,550 | 456,417 | |
| ChemoCentryx, Inc. (a) | 2,018,222 | 90,315,435 | |
| Chimerix, Inc. (a) | 1,443,267 | 2,554,583 | |
| Clovis Oncology, Inc. (a)(b) | 590,070 | 4,443,227 | |
| Coherus BioSciences, Inc. (a) | 100,387 | 1,942,488 | |
| Constellation Pharmaceuticals, Inc. (a)(b) | 152,100 | 5,375,214 | |
| Corbus Pharmaceuticals Holdings, Inc. (a)(b) | 1,479,867 | 7,014,570 | |
| Cortexyme, Inc. | 8,847 | 444,562 | |
| Crinetics Pharmaceuticals, Inc. (a) | 990,700 | 20,388,606 | |
| CRISPR Therapeutics AG (a)(b) | 537,942 | 28,753,000 | |
| Cyclerion Therapeutics, Inc. (a)(b) | 837,285 | 3,583,580 | |
| Cyclerion Therapeutics, Inc. (e) | 94,809 | 405,783 | |
| Cytokinetics, Inc. (a)(b) | 1,186,356 | 16,537,803 | |
| CytomX Therapeutics, Inc. (a) | 4,700 | 31,443 | |
| CytomX Therapeutics, Inc. (a)(d) | 287,485 | 1,923,275 | |
| Deciphera Pharmaceuticals, Inc. (a) | 324,000 | 17,249,760 | |
| Denali Therapeutics, Inc. (a)(b) | 709,416 | 14,025,154 | |
| Dicerna Pharmaceuticals, Inc. (a) | 722,512 | 14,262,387 | |
| Dynavax Technologies Corp. (a)(b) | 162,598 | 641,449 | |
| Eagle Pharmaceuticals, Inc. (a) | 48,108 | 2,208,157 | |
| Editas Medicine, Inc. (a)(b) | 140,589 | 3,118,264 | |
| Eidos Therapeutics, Inc. (a)(b) | 118,947 | 6,016,339 | |
| Emergent BioSolutions, Inc. (a) | 290,222 | 17,030,227 | |
| Enanta Pharmaceuticals, Inc. (a) | 12,167 | 619,057 | |
| Epizyme, Inc. (a) | 1,992,046 | 42,689,546 | |
| Equillium, Inc. (a) | 619,843 | 2,981,445 | |
| Esperion Therapeutics, Inc. (a)(b) | 207,432 | 10,473,242 | |
| Evelo Biosciences, Inc. (a)(b) | 26,600 | 134,596 | |
| Exact Sciences Corp. (a)(b) | 868,512 | 70,306,046 | |
| Exelixis, Inc. (a) | 2,345,650 | 43,605,634 | |
| Fate Therapeutics, Inc. (a) | 1,045,687 | 30,534,060 | |
| FibroGen, Inc. (a) | 1,834,342 | 76,675,496 | |
| Forty Seven, Inc. (a) | 1,076,670 | 62,446,860 | |
| Frequency Therapeutics, Inc. (b) | 88,256 | 1,911,625 | |
| G1 Therapeutics, Inc. (a) | 789,800 | 14,169,012 | |
| Galapagos Genomics NV sponsored ADR (a)(b) | 453,279 | 95,805,049 | |
| Gamida Cell Ltd. (a) | 694,871 | 3,015,740 | |
| Genmab A/S ADR | 281,690 | 6,416,898 | |
| Geron Corp. (a)(b)(c) | 13,406,450 | 15,417,418 | |
| Global Blood Therapeutics, Inc. (a) | 943,569 | 60,350,673 | |
| Gossamer Bio, Inc. | 153,014 | 2,009,074 | |
| Gritstone Oncology, Inc. (a) | 1,248,800 | 10,489,920 | |
| Halozyme Therapeutics, Inc. (a) | 1,992,677 | 38,996,689 | |
| Heron Therapeutics, Inc. (a)(b) | 1,962,225 | 36,595,496 | |
| Homology Medicines, Inc. (a) | 327,367 | 5,237,872 | |
| Hookipa Pharma, Inc. (b) | 234,603 | 2,327,262 | |
| Idorsia Ltd. (a) | 432,921 | 11,627,220 | |
| IGM Biosciences, Inc. (a)(b) | 12,928 | 664,628 | |
| ImmunoGen, Inc. (a) | 1,573,743 | 7,003,156 | |
| Immunomedics, Inc. (a)(b) | 3,409,783 | 54,556,528 | |
| Incyte Corp. (a) | 893,771 | 67,399,271 | |
| Innovent Biolgics, Inc. (a)(d) | 1,268,500 | 5,793,278 | |
| Insmed, Inc. (a) | 1,275,820 | 31,767,918 | |
| Intellia Therapeutics, Inc. (a)(b) | 830,456 | 11,086,588 | |
| Intercept Pharmaceuticals, Inc. (a)(b) | 578,525 | 53,189,589 | |
| Ionis Pharmaceuticals, Inc. (a) | 1,773,977 | 90,082,552 | |
| Iovance Biotherapeutics, Inc. (a)(b) | 1,556,507 | 51,224,645 | |
| Ironwood Pharmaceuticals, Inc. Class A (a)(b) | 2,167,620 | 26,098,145 | |
| Jounce Therapeutics, Inc. (a)(b) | 563,774 | 2,548,258 | |
| Kalvista Pharmaceuticals, Inc. (a) | 884,861 | 11,901,380 | |
| Karuna Therapeutics, Inc. (a) | 226,008 | 19,721,458 | |
| Karyopharm Therapeutics, Inc. (a) | 631,798 | 10,323,579 | |
| Kezar Life Sciences, Inc. (a) | 820,472 | 3,593,667 | |
| Kodiak Sciences, Inc. (a)(b) | 351,813 | 22,505,478 | |
| Krystal Biotech, Inc. (a)(b)(c) | 1,148,286 | 61,375,887 | |
| Kura Oncology, Inc. (a) | 2,096,963 | 25,310,343 | |
| La Jolla Pharmaceutical Co. (a)(b) | 1,254,989 | 8,533,925 | |
| Lexicon Pharmaceuticals, Inc. (a)(b) | 390,904 | 1,084,759 | |
| Ligand Pharmaceuticals, Inc. Class B (a)(b) | 11,198 | 1,048,133 | |
| Macrogenics, Inc. (a) | 46,231 | 405,446 | |
| Madrigal Pharmaceuticals, Inc. (a)(b) | 34,241 | 2,950,547 | |
| Magenta Therapeutics, Inc. (a) | 40,712 | 478,773 | |
| MannKind Corp. (a)(b) | 4,943,162 | 6,277,816 | |
| MediciNova, Inc. (a)(b) | 96,484 | 405,233 | |
| Minerva Neurosciences, Inc. (a) | 1,946,914 | 14,173,534 | |
| Miragen Therapeutics, Inc. (a)(b)(c) | 3,888,656 | 2,887,327 | |
| Mirati Therapeutics, Inc. (a)(b) | 854,540 | 76,472,785 | |
| Mirum Pharmaceuticals, Inc. (a)(b) | 235,000 | 3,891,600 | |
| Moderna, Inc. (a) | 228,505 | 5,925,135 | |
| Molecular Templates, Inc. (a) | 387,000 | 6,226,830 | |
| Momenta Pharmaceuticals, Inc. (a) | 1,392,056 | 39,381,264 | |
| Morphic Holding, Inc. (b) | 758,437 | 11,983,305 | |
| Morphosys AG (a) | 96,475 | 10,398,850 | |
| Morphosys AG sponsored ADR (a)(b) | 444,432 | 11,861,890 | |
| Myovant Sciences Ltd. (a)(b) | 654,006 | 6,736,262 | |
| Natera, Inc. (a) | 651,431 | 24,692,492 | |
| Neurocrine Biosciences, Inc. (a) | 1,090,151 | 103,237,300 | |
| NextCure, Inc. (b) | 148,490 | 6,200,942 | |
| ObsEva SA (a)(b) | 1,222,003 | 3,702,669 | |
| Oragenics, Inc. (a) | 155,806 | 116,418 | |
| Ovid Therapeutics, Inc. (a)(b) | 2,084,900 | 6,838,472 | |
| Passage Bio, Inc. (a) | 274,633 | 6,096,853 | |
| Pharming Group NV (a) | 2,612,556 | 3,249,429 | |
| Portola Pharmaceuticals, Inc. (a)(b) | 510,932 | 5,165,523 | |
| Prevail Therapeutics, Inc. | 788,600 | 10,078,308 | |
| Principia Biopharma, Inc. (a) | 1,028,008 | 66,368,196 | |
| ProQR Therapeutics BV (a) | 890,216 | 6,311,631 | |
| Protagonist Therapeutics, Inc. (a) | 608,963 | 4,749,911 | |
| Prothena Corp. PLC (a) | 685,651 | 7,309,040 | |
| PTC Therapeutics, Inc. (a) | 1,659,927 | 91,030,397 | |
| Puma Biotechnology, Inc. (a)(b) | 122,868 | 1,321,445 | |
| Radius Health, Inc. (a) | 483,221 | 10,176,634 | |
| Regeneron Pharmaceuticals, Inc. (a) | 487,093 | 216,546,935 | |
| REGENXBIO, Inc. (a) | 412,408 | 16,496,320 | |
| Replimune Group, Inc. (a) | 868,010 | 12,039,299 | |
| Retrophin, Inc. (a) | 856,699 | 13,274,551 | |
| Revolution Medicines, Inc. | 171,598 | 5,365,869 | |
| Rhythm Pharmaceuticals, Inc. (a)(b) | 226,078 | 4,313,568 | |
| Rigel Pharmaceuticals, Inc. (a) | 290,839 | 616,579 | |
| Rocket Pharmaceuticals, Inc. (a)(b) | 1,149,536 | 22,404,457 | |
| Rubius Therapeutics, Inc. (a)(b) | 595,627 | 4,985,398 | |
| Sage Therapeutics, Inc. (a) | 836,193 | 39,301,071 | |
| Sangamo Therapeutics, Inc. (a)(b) | 915,227 | 7,806,886 | |
| Sarepta Therapeutics, Inc. (a) | 958,204 | 109,685,612 | |
| Scholar Rock Holding Corp. (a)(b)(c) | 1,528,947 | 21,573,442 | |
| Seattle Genetics, Inc. (a) | 1,443,928 | 164,405,642 | |
| Seres Therapeutics, Inc. (a)(b) | 491,475 | 1,543,232 | |
| Spectrum Pharmaceuticals, Inc. (a) | 55,103 | 157,595 | |
| Spero Therapeutics, Inc. (a) | 98,952 | 944,002 | |
| Spero Therapeutics, Inc. rights 3/3/20 (a) | 15,040 | 8,122 | |
| Springworks Therapeutics, Inc. (a)(b) | 901,412 | 28,809,128 | |
| Stemline Therapeutics, Inc. (a)(b) | 884,698 | 5,325,882 | |
| Stoke Therapeutics, Inc. (b) | 521,347 | 12,903,338 | |
| Sutro Biopharma, Inc. (a) | 96,300 | 936,999 | |
| Syros Pharmaceuticals, Inc. (a) | 704,361 | 4,120,512 | |
| Syros Pharmaceuticals, Inc. (a)(d) | 303,621 | 1,776,183 | |
| Syros Pharmaceuticals, Inc. warrants 10/10/22 (a) | 21,625 | 25,237 | |
| TG Therapeutics, Inc. (a)(b) | 2,431,403 | 30,514,108 | |
| Translate Bio, Inc. (a)(b) | 1,613,497 | 12,230,307 | |
| Turning Point Therapeutics, Inc. | 798,119 | 39,562,759 | |
| Twist Bioscience Corp. (a) | 654,831 | 20,050,925 | |
| Ultragenyx Pharmaceutical, Inc. (a)(b) | 1,343,737 | 75,356,771 | |
| uniQure B.V. (a)(b) | 529,408 | 27,243,336 | |
| United Therapeutics Corp. (a) | 276,555 | 28,474,103 | |
| UNITY Biotechnology, Inc. (a) | 51,400 | 308,914 | |
| UroGen Pharma Ltd. (a)(b) | 314,603 | 8,576,078 | |
| Vanda Pharmaceuticals, Inc. (a) | 232,692 | 2,566,593 | |
| Vertex Pharmaceuticals, Inc. (a) | 1,342,693 | 300,803,513 | |
| Viela Bio, Inc. (b) | 1,670,936 | 72,919,647 | |
| Viking Therapeutics, Inc. (a)(b) | 277,400 | 1,642,208 | |
| Voyager Therapeutics, Inc. (a) | 229,729 | 2,504,046 | |
| X4 Pharmaceuticals, Inc. (a)(c) | 824,800 | 8,808,864 | |
| X4 Pharmaceuticals, Inc. warrants 4/12/24 (a) | 450,000 | 1,618,174 | |
| Xencor, Inc. (a) | 1,034,543 | 33,612,302 | |
| Xenon Pharmaceuticals, Inc. (a) | 214,500 | 3,093,090 | |
| Y-mAbs Therapeutics, Inc. (a) | 1,390,842 | 40,918,572 | |
| Zai Lab Ltd. ADR (a) | 38,400 | 2,110,848 | |
| Zealand Pharma A/S (a) | 162,144 | 5,868,516 | |
| Zymeworks, Inc. (a) | 709,195 | 29,027,351 | |
| 6,008,397,902 | |||
| Capital Markets - 0.0% | |||
| Asset Management & Custody Banks - 0.0% | |||
| Arix Bioscience PLC (a)(b)(d) | 2,049,700 | 2,157,620 | |
| Health Care Equipment & Supplies - 0.5% | |||
| Health Care Equipment - 0.5% | |||
| Novocure Ltd. (a) | 147,700 | 10,745,175 | |
| Novocure Ltd. (a)(d) | 336,313 | 24,466,771 | |
| 35,211,946 | |||
| Health Care Providers & Services - 0.0% | |||
| Health Care Services - 0.0% | |||
| Precipio, Inc. (a)(e) | 525 | 803 | |
| Health Care Technology - 0.1% | |||
| Health Care Technology - 0.1% | |||
| Schrodinger, Inc. | 134,600 | 6,242,748 | |
| Life Sciences Tools & Services - 0.6% | |||
| Life Sciences Tools & Services - 0.6% | |||
| 10X Genomics, Inc. (a) | 45,719 | 3,643,804 | |
| Adaptive Biotechnologies Corp. (b) | 169,780 | 4,770,818 | |
| Bruker Corp. | 316,600 | 13,791,096 | |
| Evotec OAI AG (a)(b) | 540,500 | 13,159,500 | |
| 35,365,218 | |||
| Personal Products - 0.0% | |||
| Personal Products - 0.0% | |||
| MYOS Corp. (a) | 33,334 | 39,001 | |
| Pharmaceuticals - 6.3% | |||
| Pharmaceuticals - 6.3% | |||
| Adimab LLC (a)(e)(f)(g) | 1,954,526 | 89,966,832 | |
| Aerie Pharmaceuticals, Inc. (a)(b) | 440,504 | 7,708,820 | |
| Afferent Pharmaceuticals, Inc. rights 12/31/24 (a)(g) | 8,274,568 | 13,404,800 | |
| Aradigm Corp. (a) | 11,945 | 1,208 | |
| Aradigm Corp. (a) | 148,009 | 14,964 | |
| Arvinas Holding Co. LLC (a) | 519,739 | 24,495,299 | |
| Axsome Therapeutics, Inc. (a)(b) | 223,309 | 17,418,102 | |
| Chiasma, Inc. (a)(b) | 1,625,699 | 7,234,361 | |
| Chiasma, Inc. warrants 12/16/24 (a) | 382,683 | 325,992 | |
| Corcept Therapeutics, Inc. (a) | 499,959 | 6,309,483 | |
| Fulcrum Therapeutics, Inc. | 81,267 | 1,537,572 | |
| GW Pharmaceuticals PLC ADR (a)(b) | 86,800 | 8,880,508 | |
| Horizon Pharma PLC (a) | 470,319 | 16,094,316 | |
| Intra-Cellular Therapies, Inc. (a) | 804,084 | 16,966,172 | |
| Kaleido Biosciences, Inc. (a)(b) | 66,633 | 397,799 | |
| Milestone Pharmaceuticals, Inc. | 169,500 | 3,220,500 | |
| MyoKardia, Inc. (a) | 729,501 | 46,243,068 | |
| Nektar Therapeutics (a) | 543,851 | 11,317,539 | |
| Ocular Therapeutix, Inc.(a)(b) | 166,453 | 783,161 | |
| Odonate Therapeutics, Inc. (a)(b) | 154,594 | 4,574,436 | |
| OptiNose, Inc. (a) | 190,615 | 1,153,221 | |
| Reata Pharmaceuticals, Inc. (a) | 212,303 | 41,346,009 | |
| RedHill Biopharma Ltd. sponsored ADR (a)(b) | 93,300 | 385,329 | |
| Revance Therapeutics, Inc. (a) | 7,600 | 175,712 | |
| RPI International Holdings LP (e)(g) | 54,958 | 11,266,390 | |
| Stemcentrx, Inc. rights 12/31/21 (a)(g) | 876,163 | 9 | |
| TherapeuticsMD, Inc. (a)(b) | 2,529,642 | 4,275,095 | |
| Theravance Biopharma, Inc. (a) | 371,300 | 9,041,155 | |
| Trevi Therapeutics, Inc. (b) | 792,700 | 4,114,113 | |
| UCB SA | 217,400 | 20,128,188 | |
| Urovant Sciences Ltd. (a)(b) | 893,536 | 11,178,135 | |
| Verrica Pharmaceuticals, Inc. (a)(b) | 635,680 | 7,545,522 | |
| WAVE Life Sciences (a)(b) | 161,012 | 1,358,941 | |
| Zogenix, Inc. (a) | 1,018,372 | 25,540,770 | |
| 414,403,521 | |||
| TOTAL COMMON STOCKS | |||
| (Cost $4,339,978,445) | 6,501,818,759 | ||
| Preferred Stocks - 0.8% | |||
| Convertible Preferred Stocks - 0.7% | |||
| Biotechnology - 0.5% | |||
| Biotechnology - 0.5% | |||
| 23andMe, Inc. Series E (a)(e)(g) | 1,505,457 | 20,338,724 | |
| Immunocore Ltd. Series A (a)(e)(g) | 73,318 | 9,042,310 | |
| Nuvation Bio, Inc. Series A (e)(g)(h) | 2,086,600 | 1,609,562 | |
| 30,990,596 | |||
| Health Care Technology - 0.2% | |||
| Health Care Technology - 0.2% | |||
| Codiak Biosciences, Inc.: | |||
| Series A 8.00% (a)(e)(g) | 856,366 | 3,836,520 | |
| Series B 8.00% (a)(e)(g) | 2,783,187 | 12,468,678 | |
| 16,305,198 | |||
| Pharmaceuticals - 0.0% | |||
| Pharmaceuticals - 0.0% | |||
| Afferent Pharmaceuticals, Inc. Series C (a)(e)(g) | 8,274,568 | 83 | |
| TOTAL CONVERTIBLE PREFERRED STOCKS | 47,295,877 | ||
| Nonconvertible Preferred Stocks - 0.1% | |||
| Biotechnology - 0.1% | |||
| Biotechnology - 0.1% | |||
| Yumanity Holdings LLC Class A (a)(e)(g) | 588,700 | 4,792,018 | |
| TOTAL PREFERRED STOCKS | |||
| (Cost $44,891,248) | 52,087,895 | ||
| Money Market Funds - 10.1% | |||
| Fidelity Cash Central Fund 1.60% (i) | 53,592,745 | 53,603,464 | |
| Fidelity Securities Lending Cash Central Fund 1.60% (i)(j) | 618,370,805 | 618,432,642 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $671,998,329) | 672,036,106 | ||
| TOTAL INVESTMENT IN SECURITIES - 109.1% | |||
| (Cost $5,056,868,022) | 7,225,942,760 | ||
| NET OTHER ASSETS (LIABILITIES) - (9.1)% | (601,190,690) | ||
| NET ASSETS - 100% | $6,624,752,070 |
Legend
(a) Non-income producing
(b) Security or a portion of the security is on loan at period end.
(c) Affiliated company
(d) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the end of the period, the value of these securities amounted to $38,968,590 or 0.6% of net assets.
(e) Restricted securities (including private placements) - Investment in securities not registered under the Securities Act of 1933 (excluding 144A issues). At the end of the period, the value of restricted securities (excluding 144A issues) amounted to $153,727,703 or 2.3% of net assets.
(f) Investment is owned by a wholly-owned subsidiary (Subsidiary) that is treated as a corporation for U.S. tax purposes.
(g) Level 3 security
(h) Security or a portion of the security purchased on a delayed delivery or when-issued basis.
(i) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request.
(j) Includes investment made with cash collateral received from securities on loan.
Additional information on each restricted holding is as follows:
| Security | Acquisition Date | Acquisition Cost |
| 23andMe, Inc. Series E | 6/18/15 | $16,299,991 |
| Adimab LLC | 9/17/14 - 6/5/15 | $31,094,459 |
| Afferent Pharmaceuticals, Inc. Series C | 7/1/15 | $0 |
| Codiak Biosciences, Inc. Series A 8.00% | 11/12/15 | $856,366 |
| Codiak Biosciences, Inc. Series B 8.00% | 11/12/15 | $8,349,561 |
| Cyclerion Therapeutics, Inc. | 4/2/19 | $1,404,026 |
| Immunocore Ltd. Series A | 7/27/15 | $13,796,921 |
| Nuvation Bio, Inc. Series A | 6/17/19 | $1,609,562 |
| Precipio, Inc. | 2/3/12 | $2,828,200 |
| RPI International Holdings LP | 5/21/15 | $6,479,548 |
| Yumanity Holdings LLC Class A | 2/8/16 | $3,978,847 |
Affiliated Central Funds
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:
| Fund | Income earned |
| Fidelity Cash Central Fund | $1,392,758 |
| Fidelity Securities Lending Cash Central Fund | 4,972,404 |
| Total | $6,365,162 |
Amounts in the income column in the above table include any capital gain distributions from underlying funds, which are presented in the corresponding line-item in the Statement of Operations, if applicable. Amount for Fidelity Securities Lending Cash Central Fund represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities.
Other Affiliated Issuers
An affiliated company is a company in which the Fund has ownership of at least 5% of the voting securities. Fiscal year to date transactions with companies which are or were affiliates are as follows:
| Affiliate | Value, beginning of period | Purchases | Sales Proceeds | Dividend Income | Realized Gain (loss) | Change in Unrealized appreciation (depreciation) | Value, end of period |
| Acorda Therapeutics, Inc. | $27,659,463 | $8,361,220 | $1,866,677 | $-- | $(32,734,090) | $2,331,321 | $3,751,237 |
| Aldeyra Therapeutics, Inc. | 15,316,715 | -- | 4,184,130 | -- | (5,293,745) | (1,254,773) | -- |
| Allena Pharmaceuticals, Inc. | 302,085 | -- | 76,062 | -- | (111,538) | (58,458) | 56,027 |
| Allena Pharmaceuticals, Inc. | 10,450,538 | -- | -- | -- | -- | (7,599,075) | 2,851,463 |
| aTyr Pharma, Inc. | 465,786 | 1,671,404 | -- | -- | -- | (627,049) | 1,510,141 |
| BioXcel Therapeutics, Inc. | 7,133,758 | 3,620,550 | 10,984,485 | -- | 5,482,780 | 17,453,272 | -- |
| Chiasma, Inc. | 6,554,922 | 8,452,825 | 9,758,863 | -- | (3,635,775) | 5,621,252 | -- |
| Geron Corp. | 22,683,801 | -- | 2,662,756 | -- | (3,289,500) | (1,314,127) | 15,417,418 |
| Krystal Biotech, Inc. | 27,623,544 | 13,780,000 | 14,279,321 | -- | 6,963,181 | 27,288,483 | 61,375,887 |
| Kura Oncology, Inc. | 29,861,469 | 14,937,860 | 9,417,571 | -- | (2,521,237) | (7,550,178) | -- |
| La Jolla Pharmaceutical Co. | 6,781,849 | 1,074,435 | 641,807 | -- | (2,929,399) | 4,248,847 | -- |
| Minerva Neurosciences, Inc. | 22,014,584 | -- | 6,267,410 | -- | (860,316) | (713,324) | -- |
| Miragen Therapeutics, Inc. | 8,088,237 | 904,587 | -- | -- | -- | (6,105,497) | 2,887,327 |
| Ovid Therapeutics, Inc. | -- | 10,020,000 | 7,673,107 | -- | 2,875,781 | 1,615,798 | -- |
| Scholar Rock Holding Corp. | 28,051,905 | 336,000 | -- | -- | -- | (6,814,463) | 21,573,442 |
| Seres Therapeutics, Inc. | 14,224,512 | 2,160,000 | 11,245,667 | -- | (43,306,614) | 39,711,001 | -- |
| Urovant Sciences Ltd. | 16,285,606 | 4,174,941 | 8,534,706 | -- | (2,907,494) | 2,159,788 | -- |
| X4 Pharmaceuticals, Inc. | -- | 9,900,000 | 623,227 | -- | (203,973) | (263,936) | 8,808,864 |
| Total | $243,498,774 | $79,393,822 | $88,215,789 | $-- | $(82,471,939) | $68,128,882 | $118,231,806 |
Investment Valuation
The following is a summary of the inputs used, as of February 29, 2020, 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 below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.
| Valuation Inputs at Reporting Date: | ||||
| Description | Total | Level 1 | Level 2 | Level 3 |
| Investments in Securities: | ||||
| Common Stocks | $6,501,818,759 | $6,318,613,880 | $68,566,848 | $114,638,031 |
| Preferred Stocks | 52,087,895 | -- | -- | 52,087,895 |
| Money Market Funds | 672,036,106 | 672,036,106 | -- | -- |
| Total Investments in Securities: | $7,225,942,760 | $6,990,649,986 | $68,566,848 | $166,725,926 |
The following is a reconciliation of Investments in Securities for which Level 3 inputs were used in determining value:
| Investments in Securities: | |
| Common Stocks | |
| Beginning Balance | $104,032,879 |
| Total Realized Gain (Loss) | (4,352,315) |
| Total Unrealized Gain (Loss) | 14,888,041 |
| Cost of Purchases | 69,426 |
| Proceeds of Sales | -- |
| Amortization/Accretion | -- |
| Transfers in to Level 3 | 8,525,085 |
| Transfers out of Level 3 | (8,525,085) |
| Ending Balance | $114,638,031 |
| The change in unrealized gain (loss) for the period attributable to Level 3 securities held at February 29, 2020 | $10,535,857 |
| Preferred Stocks | |
| Beginning Balance | $73,988,606 |
| Total Realized Gain (Loss) | -- |
| Total Unrealized Gain (Loss) | (5,166,095) |
| Cost of Purchases | 1,609,562 |
| Proceeds of Sales | -- |
| Amortization/Accretion | -- |
| Transfers in to Level 3 | -- |
| Transfers out of Level 3 | (18,344,178) |
| Ending Balance | $52,087,895 |
| The change in unrealized gain (loss) for the period attributable to Level 3 securities held at February 29, 2020 | $(5,166,095) |
The information used in the above reconciliations represents fiscal year to date activity for any Investments in Securities identified as using Level 3 inputs at either the beginning or the end of the current fiscal period. Transfers in or out of Level 3 represent the beginning value of any Security or Instrument where a change in the pricing level occurred from the beginning to the end of the period. The cost of purchases and the proceeds of sales may include securities received or delivered through corporate actions or exchanges. Realized and unrealized gains (losses) disclosed in the reconciliations are included in Net Gain (Loss) on the Fund's Statement of Operations.
See accompanying notes which are an integral part of the financial statements.
Biotechnology Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2020 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $614,027,744) — See accompanying schedule: Unaffiliated issuers (cost $4,247,565,966) | $6,435,674,848 | |
| Fidelity Central Funds (cost $671,998,329) | 672,036,106 | |
| Other affiliated issuers (cost $137,303,727) | 118,231,806 | |
| Total Investment in Securities (cost $5,056,868,022) | $7,225,942,760 | |
| Restricted cash | 704,572 | |
| Receivable for investments sold | 116,209,989 | |
| Receivable for fund shares sold | 6,697,265 | |
| Dividends receivable | 1,471,400 | |
| Distributions receivable from Fidelity Central Funds | 395,949 | |
| Prepaid expenses | 61,873 | |
| Other receivables | 996,623 | |
| Total assets | 7,352,480,431 | |
| Liabilities | ||
| Payable for investments purchased | ||
| Regular delivery | $70,723,788 | |
| Delayed delivery | 804,781 | |
| Payable for fund shares redeemed | 32,737,627 | |
| Accrued management fee | 3,170,780 | |
| Other affiliated payables | 972,978 | |
| Other payables and accrued expenses | 1,033,152 | |
| Collateral on securities loaned | 618,285,255 | |
| Total liabilities | 727,728,361 | |
| Net Assets | $6,624,752,070 | |
| Net Assets consist of: | ||
| Paid in capital | $4,164,690,959 | |
| Total accumulated earnings (loss) | 2,460,061,111 | |
| Net Assets | $6,624,752,070 | |
| Net Asset Value, offering price and redemption price per share ($6,624,752,070 ÷ 315,118,614 shares) | $21.02 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 29, 2020 | ||
| Investment Income | ||
| Dividends | $58,182,047 | |
| Income from Fidelity Central Funds (including $4,972,404 from security lending) | 6,365,162 | |
| Total income | 64,547,209 | |
| Expenses | ||
| Management fee | $36,909,388 | |
| Transfer agent fees | 11,105,811 | |
| Accounting and security lending fees | 1,177,995 | |
| Custodian fees and expenses | 127,435 | |
| Independent trustees' fees and expenses | 37,708 | |
| Registration fees | 66,306 | |
| Audit | 76,913 | |
| Legal | 15,685 | |
| Miscellaneous | 59,485 | |
| Total expenses before reductions | 49,576,726 | |
| Expense reductions | (253,616) | |
| Total expenses after reductions | 49,323,110 | |
| Net investment income (loss) | 15,224,099 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 838,686,984 | |
| Fidelity Central Funds | 9,059 | |
| Other affiliated issuers | (82,471,939) | |
| Foreign currency transactions | (17,931) | |
| Total net realized gain (loss) | 756,206,173 | |
| Change in net unrealized appreciation (depreciation) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | (312,461,796) | |
| Affiliated issuers | 68,128,882 | |
| Total change in net unrealized appreciation (depreciation) | (244,332,914) | |
| Net gain (loss) | 511,873,259 | |
| Net increase (decrease) in net assets resulting from operations | $527,097,358 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 29, 2020 | Year ended February 28, 2019 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $15,224,099 | $(16,275,432) |
| Net realized gain (loss) | 756,206,173 | 723,982,765 |
| Change in net unrealized appreciation (depreciation) | (244,332,914) | (785,659,475) |
| Net increase (decrease) in net assets resulting from operations | 527,097,358 | (77,952,142) |
| Distributions to shareholders | (648,542,988) | (723,235,576) |
| Share transactions | ||
| Proceeds from sales of shares | 456,496,894 | 600,449,390 |
| Reinvestment of distributions | 610,226,532 | 680,697,509 |
| Cost of shares redeemed | (1,904,247,877) | (1,837,003,918) |
| Net increase (decrease) in net assets resulting from share transactions | (837,524,451) | (555,857,019) |
| Total increase (decrease) in net assets | (958,970,081) | (1,357,044,737) |
| Net Assets | ||
| Beginning of period | 7,583,722,151 | 8,940,766,888 |
| End of period | $6,624,752,070 | $7,583,722,151 |
| Other Information | ||
| Shares | ||
| Sold | 21,609,310 | 27,380,941 |
| Issued in reinvestment of distributions | 27,974,462 | 34,822,262 |
| Redeemed | (93,189,218) | (84,784,313) |
| Net increase (decrease) | (43,605,446) | (22,581,110) |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights
Biotechnology Portfolio
| Years ended February 28, | 2020 A | 2019 B | 2018 B | 2017 B | 2016 A,B |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $21.14 | $23.45 | $20.32 | $16.20 | $24.80 |
| Income from Investment Operations | |||||
| Net investment income (loss)C | .05 | (.04) | (.05) | (.08) | (.10) |
| Net realized and unrealized gain (loss) | 1.79 | (.29)D | 3.49 | 4.80 | (6.92) |
| Total from investment operations | 1.84 | (.33) | 3.44 | 4.72 | (7.02) |
| Distributions from net investment income | (.03) | – | – | – | – |
| Distributions from net realized gain | (1.93) | (1.98) | (.31) | (.60) | (1.58) |
| Total distributions | (1.96) | (1.98) | (.31) | (.60) | (1.58) |
| Redemption fees added to paid in capitalC | – | – | – | –E | –E |
| Net asset value, end of period | $21.02 | $21.14 | $23.45 | $20.32 | $16.20 |
| Total ReturnF | 8.57% | (.46)%D | 17.04% | 29.67% | (30.35)% |
| Ratios to Average Net AssetsG,H | |||||
| Expenses before reductions | .72% | .72% | .74% | .75% | .73% |
| Expenses net of fee waivers, if any | .72% | .72% | .74% | .75% | .73% |
| Expenses net of all reductions | .72% | .72% | .73% | .74% | .73% |
| Net investment income (loss) | .22% | (.20)% | (.25)% | (.43)% | (.39)% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $6,624,752 | $7,583,722 | $8,940,767 | $9,573,681 | $9,723,599 |
| Portfolio turnover rateI | 50% | 37% | 26% | 28% | 35% |
A For the year ended February 29.
B Per share amounts have been adjusted to reflect the impact of the 10 for 1 share split that occurred on August 10, 2018.
C Calculated based on average shares outstanding during the period.
D Net realized and unrealized gain (loss) per share reflects proceeds received from litigation which amounted to $.01 per share. Excluding these litigation proceeds, the total return would have been (.53)%.
E Amount represents less than .005%.
F Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
G Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
H Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
I Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the financial statements.
Health Care Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The hypothetical investment and the average annual total returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund’s total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
| For the periods ended February 29, 2020 | Past 1 year | Past 5 years | Past 10 years |
| Health Care Portfolio | 9.84% | 7.33% | 17.00% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Health Care Portfolio on February 28, 2010.
The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
| Period Ending Values | ||
|
| $48,050 | Health Care Portfolio |
|
| $32,918 | S&P 500® Index |
Health Care Portfolio
Management's Discussion of Fund Performance
Market Recap: U.S. stocks stalled to begin the new year and declined in late February, as the outbreak and spread of the new coronavirus threatened to hamper global economic growth and corporate earnings. For the 12 months ending February 29, 2020, the U.S. equity bellwether S&P 500® index gained 8.19%. The period began with equities rising amid upbeat company earnings and signs the U.S. Federal Reserve may pause on rates. The uptrend extended until May, when the index dipped as trade talks between the U.S. and China broke down. The bull market roared back to record a series of highs in July, when the Fed cut interest rates for the first time since 2008. Volatility intensified in August, as the Treasury yield curve inverted, which some investors viewed as a sign the U.S. economy could be heading for recession. But the market proved resilient, hitting a new high on October 30, when the Fed lowered rates for the third time in 2019, and moving higher through December 31. Following a roughly flat January, stocks sank in late February, after a surge in coronavirus cases outside China created considerable uncertainty and pushed investors to safer asset classes. By sector, information technology (+27%) led the way by a wide margin, followed by utilities and communication services (+13% each). In contrast, energy (-25%) was by far the weakest category, struggling due to sluggish oil prices. Other notable laggards included materials and industrials (-2% each). Comments from Portfolio Manager Eddie Yoon: For the fiscal year, the fund gained 9.84%, handily outpacing the 3.53% advance of the benchmark MSCI U.S. IMI Health Care 25/50 Index, and also ahead of the broad-market S&P 500 index. Health care stocks underperformed the broader equity market in 2019 amid a resurgence of legal and political rhetoric around the Affordable Care Act (ACA) and the potential for a “Medicare-for-all” scenario after the 2020 U.S. election.The sector did post a solid gain, however, as health care companies benefited from strong demand for products and services on the back of secular trends, including an aging population. Many firms also boasted solid business fundamentals, and several industries continued to experience innovation and accelerating growth. Versus the sector index, strong security selection significantly contributed to the fund’s performance the past 12 months. An out-of-index position in gene-sequencing technology firm 10x Genomics (+66%) was by far the fund’s biggest relative contributor. The company became publicly traded after its initial public offering in September, and its share price rallied on brisk demand for the firm’s products. Avoiding index component and pharma giant Pfizer (-20%) also boosted relative results. Conversely, an out-of-index position in Benefitfocus (-74%), a provider of cloud-based benefits software solutions, was the fund’s biggest individual detractor. Several headwinds hurt the stock this period, including Benefitfocus' announcement of its third CFO departure in three years and consecutive quarters of disappointing financial results. An overweighting in Alexion Pharmaceuticals (-31%) also hurt the fund’s relative result the past year.The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Health Care Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 29, 2020
| % of fund's net assets | |
| UnitedHealth Group, Inc. | 7.1 |
| Boston Scientific Corp. | 6.3 |
| Roche Holding AG (participation certificate) | 6.2 |
| AstraZeneca PLC (United Kingdom) | 4.7 |
| Eli Lilly & Co. | 4.6 |
| Cigna Corp. | 4.6 |
| Vertex Pharmaceuticals, Inc. | 3.7 |
| 10X Genomics, Inc. | 3.3 |
| Becton, Dickinson & Co. | 3.3 |
| Centene Corp. | 3.2 |
| 47.0 |
Top Industries (% of fund's net assets)
| As of February 29, 2020 | ||
| Health Care Equipment & Supplies | 24.1% | |
| Health Care Providers & Services | 23.6% | |
| Biotechnology | 23.5% | |
| Pharmaceuticals | 21.9% | |
| Life Sciences Tools & Services | 5.3% | |
| All Others* | 1.6% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
Health Care Portfolio
Schedule of Investments February 29, 2020
Showing Percentage of Net Assets
| Common Stocks - 98.4% | |||
| Shares | Value | ||
| Biotechnology - 23.5% | |||
| Biotechnology - 23.5% | |||
| AbbVie, Inc. | 700,000 | $59,997,000 | |
| Acceleron Pharma, Inc. (a) | 888,265 | 76,328,611 | |
| Alexion Pharmaceuticals, Inc. (a) | 650,000 | 61,119,500 | |
| Allogene Therapeutics, Inc. (a)(b) | 280,000 | 7,560,000 | |
| Alnylam Pharmaceuticals, Inc. (a) | 730,000 | 85,891,800 | |
| Amgen, Inc. | 520,000 | 103,859,600 | |
| Aprea Therapeutics, Inc. | 410,216 | 14,070,409 | |
| Arcutis Biotherapeutics, Inc. (a) | 600,000 | 15,945,000 | |
| Argenx SE ADR (a) | 600,000 | 84,828,000 | |
| Ascendis Pharma A/S sponsored ADR (a) | 853,108 | 111,228,221 | |
| BeiGene Ltd. ADR (a) | 260,000 | 41,171,000 | |
| BELLUS Health, Inc. (a) | 1,200,000 | 10,524,000 | |
| BioNTech AG | 1,638,432 | 54,633,515 | |
| Black Diamond Therapeutics, Inc. (a) | 230,000 | 6,207,700 | |
| bluebird bio, Inc. (a)(b) | 240,000 | 17,359,200 | |
| Blueprint Medicines Corp. (a) | 600,000 | 32,478,000 | |
| Cellectis SA sponsored ADR (a) | 690,000 | 10,777,800 | |
| Denali Therapeutics, Inc. (a)(b) | 360,000 | 7,117,200 | |
| FibroGen, Inc. (a) | 1,121,100 | 46,861,980 | |
| G1 Therapeutics, Inc. (a) | 920,903 | 16,521,000 | |
| Gritstone Oncology, Inc. (a) | 584,900 | 4,913,160 | |
| Innovent Biolgics, Inc. (a)(c) | 6,663,000 | 30,430,122 | |
| Insmed, Inc. (a) | 1,221,182 | 30,407,432 | |
| Intercept Pharmaceuticals, Inc. (a) | 340,600 | 31,314,764 | |
| Kura Oncology, Inc. (a) | 1,000,000 | 12,070,000 | |
| Momenta Pharmaceuticals, Inc. (a) | 500,000 | 14,145,000 | |
| Morphic Holding, Inc. | 258,259 | 4,080,492 | |
| Morphosys AG sponsored ADR (a) | 99 | 2,642 | |
| Neurocrine Biosciences, Inc. (a) | 600,000 | 56,820,000 | |
| Passage Bio, Inc. (a) | 47,700 | 1,058,940 | |
| Principia Biopharma, Inc. (a) | 782,845 | 50,540,473 | |
| Regeneron Pharmaceuticals, Inc. (a) | 113,156 | 50,305,763 | |
| Revolution Medicines, Inc. | 259,704 | 8,120,944 | |
| Sage Therapeutics, Inc. (a) | 90,079 | 4,233,713 | |
| Sarepta Therapeutics, Inc. (a)(b) | 1,000,000 | 114,470,000 | |
| Scholar Rock Holding Corp. (a) | 98,135 | 1,384,685 | |
| TG Therapeutics, Inc. (a) | 1,280,000 | 16,064,000 | |
| Turning Point Therapeutics, Inc. | 215,000 | 10,657,550 | |
| uniQure B.V. (a) | 360,000 | 18,525,600 | |
| Vertex Pharmaceuticals, Inc. (a) | 1,180,000 | 264,355,400 | |
| Viela Bio, Inc. | 700,000 | 30,548,000 | |
| Viking Therapeutics, Inc.(a)(b) | 1,160,000 | 6,867,200 | |
| Xencor, Inc. (a) | 1,200,000 | 38,988,000 | |
| Zymeworks, Inc. (a) | 856,925 | 35,073,940 | |
| 1,699,857,356 | |||
| Diversified Consumer Services - 0.1% | |||
| Specialized Consumer Services - 0.1% | |||
| Carriage Services, Inc. | 243,598 | 5,152,098 | |
| Health Care Equipment & Supplies - 24.1% | |||
| Health Care Equipment - 24.1% | |||
| Atricure, Inc. (a) | 1,000,000 | 38,420,000 | |
| Becton, Dickinson & Co. | 1,000,000 | 237,820,000 | |
| Boston Scientific Corp. (a) | 12,200,000 | 456,158,000 | |
| Danaher Corp. | 620,000 | 89,639,600 | |
| Genmark Diagnostics, Inc. (a) | 2,470,000 | 8,620,300 | |
| Hologic, Inc. (a) | 1,670,000 | 78,690,400 | |
| Insulet Corp. (a) | 1,019,100 | 193,598,427 | |
| Intuitive Surgical, Inc. (a) | 420,000 | 224,263,200 | |
| Masimo Corp. (a) | 650,000 | 106,164,500 | |
| Penumbra, Inc. (a)(b) | 747,507 | 123,981,511 | |
| Shockwave Medical, Inc. (a)(b) | 610,000 | 24,485,400 | |
| Stryker Corp. | 700,000 | 133,413,000 | |
| Tandem Diabetes Care, Inc. (a) | 300,000 | 22,398,000 | |
| 1,737,652,338 | |||
| Health Care Providers & Services - 23.2% | |||
| Health Care Distributors & Services - 0.4% | |||
| EBOS Group Ltd. | 2,280,000 | 33,190,905 | |
| Health Care Facilities - 2.0% | |||
| HCA Holdings, Inc. | 1,120,000 | 142,251,200 | |
| Health Care Services - 5.4% | |||
| 1Life Healthcare, Inc. | 1,639,892 | 31,909,019 | |
| Alignment Healthcare Partners unit (d)(e) | 2,145,460 | 26,000,002 | |
| Cigna Corp. | 1,800,000 | 329,292,000 | |
| 387,201,021 | |||
| Managed Health Care - 15.4% | |||
| Centene Corp. (a) | 4,400,000 | 233,288,000 | |
| HealthEquity, Inc. (a) | 630,000 | 44,723,700 | |
| Humana, Inc. | 700,000 | 223,776,000 | |
| Molina Healthcare, Inc. (a) | 670,000 | 82,108,500 | |
| Notre Dame Intermedica Participacoes SA | 1,200,000 | 16,967,285 | |
| UnitedHealth Group, Inc. | 2,000,000 | 509,919,999 | |
| 1,110,783,484 | |||
| TOTAL HEALTH CARE PROVIDERS & SERVICES | 1,673,426,610 | ||
| Health Care Technology - 0.1% | |||
| Health Care Technology - 0.1% | |||
| Castlight Health, Inc. (a) | 1,845,550 | 1,672,622 | |
| Castlight Health, Inc. Class B (a) | 3,850,000 | 3,489,255 | |
| Health Catalyst, Inc. (b) | 170,000 | 5,164,600 | |
| 10,326,477 | |||
| Life Sciences Tools & Services - 5.3% | |||
| Life Sciences Tools & Services - 5.3% | |||
| 10X Genomics, Inc. | 3,018,778 | 238,190,641 | |
| Bruker Corp. | 1,820,451 | 79,298,846 | |
| Lonza Group AG | 170,000 | 67,836,421 | |
| 385,325,908 | |||
| Pharmaceuticals - 21.6% | |||
| Pharmaceuticals - 21.6% | |||
| AstraZeneca PLC (United Kingdom) | 3,860,000 | 338,772,646 | |
| Bristol-Myers Squibb Co. | 800,000 | 47,248,000 | |
| Dechra Pharmaceuticals PLC | 1,280,000 | 43,951,900 | |
| Eli Lilly & Co. | 2,650,000 | 334,244,500 | |
| MyoKardia, Inc. (a) | 573,500 | 36,354,165 | |
| Nektar Therapeutics (a)(b) | 1,779,046 | 37,021,947 | |
| Recordati SpA | 600,000 | 25,660,542 | |
| Roche Holding AG (participation certificate) | 1,400,000 | 450,147,268 | |
| RPI International Holdings LP (d)(e) | 199,753 | 40,949,365 | |
| Sanofi SA | 1,700,000 | 158,551,895 | |
| Theravance Biopharma, Inc. (a)(b) | 1,295,635 | 31,548,712 | |
| Zogenix, Inc. (a) | 600,000 | 15,048,000 | |
| 1,559,498,940 | |||
| Professional Services - 0.3% | |||
| Research & Consulting Services - 0.3% | |||
| Clarivate Analytics PLC (a) | 1,000,000 | 20,340,000 | |
| Software - 0.2% | |||
| Application Software - 0.2% | |||
| Benefitfocus, Inc. (a)(b) | 344,526 | 4,299,684 | |
| Outset Medical, Inc. (a)(d)(e) | 3,279,404 | 7,214,689 | |
| 11,514,373 | |||
| TOTAL COMMON STOCKS | |||
| (Cost $4,780,746,397) | 7,103,094,100 | ||
| Preferred Stocks - 1.0% | |||
| Convertible Preferred Stocks - 0.6% | |||
| Biotechnology - 0.0% | |||
| Biotechnology - 0.0% | |||
| Generation Bio: | |||
| Series B (a)(d)(e) | 130,800 | 830,580 | |
| Series C (d)(e) | 124,500 | 696,129 | |
| 1,526,709 | |||
| Pharmaceuticals - 0.3% | |||
| Pharmaceuticals - 0.3% | |||
| Harmony Biosciences II, Inc.: | |||
| Series A (a)(d)(e) | 10,935,215 | 21,433,021 | |
| Series C (d)(e) | 1,845,926 | 3,618,015 | |
| 25,051,036 | |||
| Software - 0.3% | |||
| Application Software - 0.3% | |||
| Outset Medical, Inc.: | |||
| Series B (a)(d)(e) | 8,159,125 | 16,155,068 | |
| Series E (d)(e) | 840,909 | 1,850,000 | |
| 18,005,068 | |||
| TOTAL CONVERTIBLE PREFERRED STOCKS | 44,582,813 | ||
| Nonconvertible Preferred Stocks - 0.4% | |||
| Health Care Providers & Services - 0.4% | |||
| Health Care Services - 0.4% | |||
| Oak Street Health LLC Series III-E (d)(e)(f) | 185,552 | 28,999,922 | |
| TOTAL PREFERRED STOCKS | |||
| (Cost $58,615,509) | 73,582,735 | ||
| Money Market Funds - 1.6% | |||
| Fidelity Cash Central Fund 1.60% (g) | 36,520,440 | 36,527,744 | |
| Fidelity Securities Lending Cash Central Fund 1.60% (g)(h) | 77,920,647 | 77,928,440 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $114,453,801) | 114,456,184 | ||
| TOTAL INVESTMENT IN SECURITIES - 101.0% | |||
| (Cost $4,953,815,707) | 7,291,133,019 | ||
| NET OTHER ASSETS (LIABILITIES) - (1.0)% | (70,946,186) | ||
| NET ASSETS - 100% | $7,220,186,833 |
Legend
(a) Non-income producing
(b) Security or a portion of the security is on loan at period end.
(c) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the end of the period, the value of these securities amounted to $30,430,122 or 0.4% of net assets.
(d) Level 3 security
(e) Restricted securities (including private placements) - Investment in securities not registered under the Securities Act of 1933 (excluding 144A issues). At the end of the period, the value of restricted securities (excluding 144A issues) amounted to $147,746,791 or 2.0% of net assets.
(f) Investment is owned by a wholly-owned subsidiary (Subsidiary) that is treated as a corporation for U.S. tax purposes.
(g) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request.
(h) Includes investment made with cash collateral received from securities on loan.
Additional information on each restricted holding is as follows:
| Security | Acquisition Date | Acquisition Cost |
| Alignment Healthcare Partners unit | 2/28/20 | $26,000,002 |
| Generation Bio Series B | 2/21/18 | $1,196,258 |
| Generation Bio Series C | 1/9/20 | $696,129 |
| Harmony Biosciences II, Inc. Series A | 9/22/17 | $10,935,215 |
| Harmony Biosciences II, Inc. Series C | 8/9/19 | $3,618,015 |
| Oak Street Health LLC Series III-E | 2/21/20 | $28,999,922 |
| Outset Medical, Inc. | 1/27/20 | $7,180,030 |
| Outset Medical, Inc. Series B | 5/5/15 | $18,500,000 |
| Outset Medical, Inc. Series E | 1/27/20 | $1,850,000 |
| RPI International Holdings LP | 5/21/15 - 3/23/16 | $26,504,031 |
Affiliated Central Funds
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:
| Fund | Income earned |
| Fidelity Cash Central Fund | $727,939 |
| Fidelity Securities Lending Cash Central Fund | 1,004,929 |
| Total | $1,732,868 |
Amounts in the income column in the above table include any capital gain distributions from underlying funds, which are presented in the corresponding line-item in the Statement of Operations, if applicable. Amount for Fidelity Securities Lending Cash Central Fund represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities.
Investment Valuation
The following is a summary of the inputs used, as of February 29, 2020, 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 below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.
| Valuation Inputs at Reporting Date: | ||||
| Description | Total | Level 1 | Level 2 | Level 3 |
| Investments in Securities: | ||||
| Common Stocks | $7,103,094,100 | $5,619,276,197 | $1,409,653,847 | $74,164,056 |
| Preferred Stocks | 73,582,735 | -- | -- | 73,582,735 |
| Money Market Funds | 114,456,184 | 114,456,184 | -- | -- |
| Total Investments in Securities: | $7,291,133,019 | $5,733,732,381 | $1,409,653,847 | $147,746,791 |
The following is a reconciliation of Investments in Securities for which Level 3 inputs were used in determining value:
| Investments in Securities: | |
| Common Stocks | |
| Beginning Balance | $30,985,685 |
| Total Realized Gain (Loss) | -- |
| Total Unrealized Gain (Loss) | 9,998,339 |
| Cost of Purchases | 33,180,032 |
| Proceeds of Sales | -- |
| Amortization/Accretion | -- |
| Transfers in to Level 3 | 30,985,685 |
| Transfers out of Level 3 | (30,985,685) |
| Ending Balance | $74,164,056 |
| The change in unrealized gain (loss) for the period attributable to Level 3 securities held at February 29, 2020 | $9,998,339 |
| Preferred Stocks | |
| Beginning Balance | $119,050,694 |
| Total Realized Gain (Loss) | -- |
| Total Unrealized Gain (Loss) | 8,099,632 |
| Cost of Purchases | 35,164,066 |
| Proceeds of Sales | (7,180,030) |
| Amortization/Accretion | -- |
| Transfers in to Level 3 | -- |
| Transfers out of Level 3 | (81,551,627) |
| Ending Balance | $73,582,735 |
| The change in unrealized gain (loss) for the period attributable to Level 3 securities held at February 29, 2020 | $8,099,632 |
The information used in the above reconciliations represents fiscal year to date activity for any Investments in Securities identified as using Level 3 inputs at either the beginning or the end of the current fiscal period. Transfers in or out of Level 3 represent the beginning value of any Security or Instrument where a change in the pricing level occurred from the beginning to the end of the period. The cost of purchases and the proceeds of sales may include securities received or delivered through corporate actions or exchanges. Realized and unrealized gains (losses) disclosed in the reconciliations are included in Net Gain (Loss) on the Fund's Statement of Operations.
Other Information
Distribution of investments by country or territory of incorporation, as a percentage of Total Net Assets, is as follows (Unaudited):
| United States of America | 77.5% |
| Switzerland | 7.1% |
| United Kingdom | 5.3% |
| France | 2.4% |
| Cayman Islands | 2.0% |
| Denmark | 1.5% |
| Netherlands | 1.5% |
| Others (Individually Less Than 1%) | 2.7% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Health Care Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2020 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $78,769,477) — See accompanying schedule: Unaffiliated issuers (cost $4,839,361,906) | $7,176,676,835 | |
| Fidelity Central Funds (cost $114,453,801) | 114,456,184 | |
| Total Investment in Securities (cost $4,953,815,707) | $7,291,133,019 | |
| Cash | 92,373 | |
| Receivable for investments sold | 67,475,875 | |
| Receivable for fund shares sold | 10,477,728 | |
| Dividends receivable | 14,409,067 | |
| Distributions receivable from Fidelity Central Funds | 92,717 | |
| Prepaid expenses | 49,470 | |
| Other receivables | 638,865 | |
| Total assets | 7,384,369,114 | |
| Liabilities | ||
| Payable for investments purchased | $42,270,643 | |
| Payable for fund shares redeemed | 38,742,758 | |
| Accrued management fee | 3,537,570 | |
| Other affiliated payables | 985,105 | |
| Other payables and accrued expenses | 736,380 | |
| Collateral on securities loaned | 77,909,825 | |
| Total liabilities | 164,182,281 | |
| Net Assets | $7,220,186,833 | |
| Net Assets consist of: | ||
| Paid in capital | $4,729,250,670 | |
| Total accumulated earnings (loss) | 2,490,936,163 | |
| Net Assets | $7,220,186,833 | |
| Net Asset Value, offering price and redemption price per share ($7,220,186,833 ÷ 272,153,217 shares) | $26.53 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 29, 2020 | ||
| Investment Income | ||
| Dividends | $60,509,441 | |
| Income from Fidelity Central Funds (including $1,004,929 from security lending) | 1,732,868 | |
| Total income | 62,242,309 | |
| Expenses | ||
| Management fee | $38,700,659 | |
| Transfer agent fees | 10,527,289 | |
| Accounting and security lending fees | 1,177,377 | |
| Custodian fees and expenses | 154,307 | |
| Independent trustees' fees and expenses | 39,037 | |
| Registration fees | 110,193 | |
| Audit | 56,325 | |
| Legal | 13,958 | |
| Interest | 368 | |
| Miscellaneous | 54,316 | |
| Total expenses before reductions | 50,833,829 | |
| Expense reductions | (202,560) | |
| Total expenses after reductions | 50,631,269 | |
| Net investment income (loss) | 11,611,040 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 363,923,016 | |
| Redemptions in-kind with affiliated entities | 52,017,323 | |
| Fidelity Central Funds | (1,049) | |
| Foreign currency transactions | 128,850 | |
| Total net realized gain (loss) | 416,068,140 | |
| Change in net unrealized appreciation (depreciation) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 215,864,014 | |
| Fidelity Central Funds | (312) | |
| Assets and liabilities in foreign currencies | 134,848 | |
| Total change in net unrealized appreciation (depreciation) | 215,998,550 | |
| Net gain (loss) | 632,066,690 | |
| Net increase (decrease) in net assets resulting from operations | $643,677,730 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 29, 2020 | Year ended February 28, 2019 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $11,611,040 | $7,100,479 |
| Net realized gain (loss) | 416,068,140 | 557,360,838 |
| Change in net unrealized appreciation (depreciation) | 215,998,550 | 276,169,757 |
| Net increase (decrease) in net assets resulting from operations | 643,677,730 | 840,631,074 |
| Distributions to shareholders | (104,508,735) | (587,162,015) |
| Share transactions | ||
| Proceeds from sales of shares | 845,022,583 | 1,445,029,108 |
| Reinvestment of distributions | 96,915,411 | 550,453,790 |
| Cost of shares redeemed | (1,711,627,255) | (1,721,649,295) |
| Net increase (decrease) in net assets resulting from share transactions | (769,689,261) | 273,833,603 |
| Total increase (decrease) in net assets | (230,520,266) | 527,302,662 |
| Net Assets | ||
| Beginning of period | 7,450,707,099 | 6,923,404,437 |
| End of period | $7,220,186,833 | $7,450,707,099 |
| Other Information | ||
| Shares | ||
| Sold | 32,388,556 | 58,505,582 |
| Issued in reinvestment of distributions | 3,395,775 | 24,271,579 |
| Redeemed | (67,969,335) | (72,356,020) |
| Net increase (decrease) | (32,185,004) | 10,421,141 |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights
Health Care Portfolio
| Years ended February 28, | 2020 A | 2019 B | 2018 B | 2017 B | 2016 A,B |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $24.48 | $23.56 | $20.89 | $18.05 | $23.64 |
| Income from Investment Operations | |||||
| Net investment income (loss)C | .04 | .02 | .05 | .02 | (.01) |
| Net realized and unrealized gain (loss) | 2.40 | 2.90 | 3.17 | 2.93 | (3.16) |
| Total from investment operations | 2.44 | 2.92 | 3.22 | 2.95 | (3.17) |
| Distributions from net investment income | (.03) | (.03) | (.04) | (.02) | – |
| Distributions from net realized gain | (.36) | (1.97) | (.51) | (.09) | (2.42) |
| Total distributions | (.39) | (2.00) | (.55) | (.11) | (2.42) |
| Redemption fees added to paid in capitalC | – | – | – | –D | –D |
| Net asset value, end of period | $26.53 | $24.48 | $23.56 | $20.89 | $18.05 |
| Total ReturnE | 9.84% | 13.30% | 15.49% | 16.43% | (14.90)% |
| Ratios to Average Net AssetsF,G | |||||
| Expenses before reductions | .70% | .71% | .73% | .74% | .73% |
| Expenses net of fee waivers, if any | .70% | .71% | .73% | .73% | .73% |
| Expenses net of all reductions | .70% | .71% | .72% | .73% | .72% |
| Net investment income (loss) | .16% | .10% | .23% | .12% | (.03)% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $7,220,187 | $7,450,707 | $6,923,404 | $6,628,882 | $7,439,085 |
| Portfolio turnover rateH | 36%I | 60%I | 75% | 49%I | 76% |
A For the year ended February 29.
B Per share amounts have been adjusted to reflect the impact of the 10 for 1 share split that occurred on August 10, 2018.
C Calculated based on average shares outstanding during the period.
D Amount represents less than $.005 per share.
E Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
H Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
I Portfolio turnover rate excludes securities received or delivered in-kind.
See accompanying notes which are an integral part of the financial statements.
Health Care Services Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The hypothetical investment and the average annual total returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund’s total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
| For the periods ended February 29, 2020 | Past 1 year | Past 5 years | Past 10 years |
| Health Care Services Portfolio | 6.39% | 8.89% | 14.02% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Health Care Services Portfolio on February 28, 2010.
The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
| Period Ending Values | ||
|
| $37,121 | Health Care Services Portfolio |
|
| $32,918 | S&P 500® Index |
Health Care Services Portfolio
Management's Discussion of Fund Performance
Market Recap: U.S. stocks stalled to begin the new year and declined in late February, as the outbreak and spread of the new coronavirus threatened to hamper global economic growth and corporate earnings. For the 12 months ending February 29, 2020, the U.S. equity bellwether S&P 500® index gained 8.19%. The period began with equities rising amid upbeat company earnings and signs the U.S. Federal Reserve may pause on rates. The uptrend extended until May, when the index dipped as trade talks between the U.S. and China broke down. The bull market roared back to record a series of highs in July, when the Fed cut interest rates for the first time since 2008. Volatility intensified in August, as the Treasury yield curve inverted, which some investors viewed as a sign the U.S. economy could be heading for recession. But the market proved resilient, hitting a new high on October 30, when the Fed lowered rates for the third time in 2019, and moving higher through December 31. Following a roughly flat January, stocks sank in late February, after a surge in coronavirus cases outside China created considerable uncertainty and pushed investors to safer asset classes. By sector, information technology (+27%) led the way by a wide margin, followed by utilities and communication services (+13% each). In contrast, energy (-25%) was by far the weakest category, struggling due to sluggish oil prices. Other notable laggards included materials and industrials (-2% each). Comments from Portfolio Manager Justin Segalini: For the fiscal year, the fund returned 6.39%, ahead of the 3.12% result of the MSCI U.S. IMI Health Care Providers & Services 25/50 Index, but lagging the S&P 500® index. The MSCI industry index generally benefited from solid earnings the past 12 months. However, the industry underperformed the broader U.S. equity market, largely because progressive calls for a “Medicare-for-all” government-sponsored health plan created volatility in the managed care subindustry. Favorable security selection drove the fund’s outperformance of the MSCI index, particularly in the managed care and health care services subindustries. Among individual stocks, a non-index stake in eHealth helped relative performance the most. The company’s online marketplace provides plans related to Medicare, and also sells and helps consumers compare various private insurance options through providers such as Humana and UnitedHealth Group. Strong revenue from eHealth’s Medicare segment boosted our holdings in the stock to a roughly 116% gain this period. The fund's significant underexposure to managed care insurer and major index component Anthem (-14%) was the fund’s second-largest relative contributor. Anthem shares fell on concerns over medical costs for the company. Conversely, our stock choices in health care facilities hurt, including Universal Health Services (-10%), owner of the nation’s largest psychiatric hospital chain. Underweighting health care distributor McKesson also hurt (+11%).The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Health Care Services Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 29, 2020
| % of fund's net assets | |
| UnitedHealth Group, Inc. | 24.2 |
| Cigna Corp. | 10.5 |
| Humana, Inc. | 8.2 |
| Centene Corp. | 8.1 |
| HCA Holdings, Inc. | 4.9 |
| AmerisourceBergen Corp. | 4.7 |
| Anthem, Inc. | 4.5 |
| Molina Healthcare, Inc. | 3.9 |
| CVS Health Corp. | 3.4 |
| Chemed Corp. | 3.4 |
| 75.8 |
Top Industries (% of fund's net assets)
| As of February 29, 2020 | ||
| Health Care Providers & Services | 96.7% | |
| Diversified Consumer Services | 1.3% | |
| Insurance | 1.3% | |
| Health Care Technology | 0.4% | |
| All Others* | 0.3% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
Health Care Services Portfolio
Schedule of Investments February 29, 2020
Showing Percentage of Net Assets
| Common Stocks - 99.5% | |||
| Shares | Value | ||
| Diversified Consumer Services - 1.3% | |||
| Specialized Consumer Services - 1.3% | |||
| Service Corp. International | 260,700 | $12,458,853 | |
| Health Care Providers & Services - 96.5% | |||
| Health Care Distributors & Services - 6.9% | |||
| AmerisourceBergen Corp. | 558,800 | 47,118,016 | |
| McKesson Corp. | 160,600 | 22,461,516 | |
| 69,579,532 | |||
| Health Care Facilities - 11.2% | |||
| Brookdale Senior Living, Inc. (a) | 1,489,200 | 9,784,044 | |
| HCA Holdings, Inc. | 385,100 | 48,911,551 | |
| Surgery Partners, Inc. (a)(b) | 947,000 | 15,549,740 | |
| U.S. Physical Therapy, Inc. | 85,200 | 8,879,544 | |
| Universal Health Services, Inc. Class B | 234,400 | 29,004,656 | |
| 112,129,535 | |||
| Health Care Services - 27.0% | |||
| 1Life Healthcare, Inc. | 810,794 | 15,776,430 | |
| Alignment Healthcare Partners unit (c)(d) | 181,539 | 2,200,001 | |
| Amedisys, Inc. (a) | 141,800 | 24,674,618 | |
| Andlauer Healthcare Group, Inc. (a) | 45,700 | 803,176 | |
| Chemed Corp. | 81,000 | 33,827,220 | |
| Cigna Corp. (b) | 577,672 | 105,679,316 | |
| CVS Health Corp. | 583,700 | 34,543,366 | |
| LHC Group, Inc. (a) | 267,744 | 32,520,186 | |
| Quest Diagnostics, Inc. | 197,100 | 20,904,426 | |
| 270,928,739 | |||
| Managed Health Care - 51.4% | |||
| Anthem, Inc. | 173,902 | 44,708,465 | |
| Centene Corp. (a) | 1,540,050 | 81,653,451 | |
| HealthEquity, Inc. (a) | 352,100 | 24,995,579 | |
| Humana, Inc. | 256,600 | 82,029,888 | |
| Molina Healthcare, Inc. (a) | 322,000 | 39,461,100 | |
| UnitedHealth Group, Inc. | 951,550 | 242,607,188 | |
| 515,455,671 | |||
| TOTAL HEALTH CARE PROVIDERS & SERVICES | 968,093,477 | ||
| Health Care Technology - 0.4% | |||
| Health Care Technology - 0.4% | |||
| Teladoc Health, Inc. (a)(b) | 34,729 | 4,339,736 | |
| Insurance - 1.3% | |||
| Insurance Brokers - 1.3% | |||
| eHealth, Inc. (a)(b) | 111,500 | 13,084,525 | |
| TOTAL COMMON STOCKS | |||
| (Cost $613,999,988) | 997,976,591 | ||
| Nonconvertible Preferred Stocks - 0.2% | |||
| Health Care Providers & Services - 0.2% | |||
| Health Care Services - 0.2% | |||
| Oak Street Health LLC Series III-E (c)(d)(e) | |||
| (Cost $2,199,938) | 14,076 | 2,199,938 | |
| Money Market Funds - 1.1% | |||
| Fidelity Cash Central Fund 1.60% (f) | 3,534,522 | 3,535,229 | |
| Fidelity Securities Lending Cash Central Fund 1.60% (f)(g) | 7,248,071 | 7,248,796 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $10,784,025) | 10,784,025 | ||
| TOTAL INVESTMENT IN SECURITIES - 100.8% | |||
| (Cost $626,983,951) | 1,010,960,554 | ||
| NET OTHER ASSETS (LIABILITIES) - (0.8)% | (7,754,523) | ||
| NET ASSETS - 100% | $1,003,206,031 |
Legend
(a) Non-income producing
(b) Security or a portion of the security is on loan at period end.
(c) Level 3 security
(d) Restricted securities (including private placements) - Investment in securities not registered under the Securities Act of 1933 (excluding 144A issues). At the end of the period, the value of restricted securities (excluding 144A issues) amounted to $4,399,939 or 0.4% of net assets.
(e) Investment is owned by a wholly-owned subsidiary (Subsidiary) that is treated as a corporation for U.S. tax purposes.
(f) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request.
(g) Includes investment made with cash collateral received from securities on loan.
Additional information on each restricted holding is as follows:
| Security | Acquisition Date | Acquisition Cost |
| Alignment Healthcare Partners unit | 2/28/20 | $2,200,001 |
| Oak Street Health LLC Series III-E | 2/21/20 | $2,199,938 |
Affiliated Central Funds
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:
| Fund | Income earned |
| Fidelity Cash Central Fund | $155,852 |
| Fidelity Securities Lending Cash Central Fund | 25,459 |
| Total | $181,311 |
Amounts in the income column in the above table include any capital gain distributions from underlying funds, which are presented in the corresponding line-item in the Statement of Operations, if applicable. Amount for Fidelity Securities Lending Cash Central Fund represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities.
Investment Valuation
The following is a summary of the inputs used, as of February 29, 2020, 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 below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.
| Valuation Inputs at Reporting Date: | ||||
| Description | Total | Level 1 | Level 2 | Level 3 |
| Investments in Securities: | ||||
| Common Stocks | $997,976,591 | $980,000,160 | $15,776,430 | $2,200,001 |
| Nonconvertible Preferred Stocks | 2,199,938 | -- | -- | 2,199,938 |
| Money Market Funds | 10,784,025 | 10,784,025 | -- | -- |
| Total Investments in Securities: | $1,010,960,554 | $990,784,185 | $15,776,430 | $4,399,939 |
See accompanying notes which are an integral part of the financial statements.
Health Care Services Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2020 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $6,670,739) — See accompanying schedule: Unaffiliated issuers (cost $616,199,926) | $1,000,176,529 | |
| Fidelity Central Funds (cost $10,784,025) | 10,784,025 | |
| Total Investment in Securities (cost $626,983,951) | $1,010,960,554 | |
| Receivable for investments sold | 15,867,276 | |
| Receivable for fund shares sold | 1,037,052 | |
| Dividends receivable | 545,541 | |
| Distributions receivable from Fidelity Central Funds | 9,918 | |
| Prepaid expenses | 6,141 | |
| Other receivables | 74,777 | |
| Total assets | 1,028,501,259 | |
| Liabilities | ||
| Payable for investments purchased | $9,636,784 | |
| Payable for fund shares redeemed | 7,618,303 | |
| Accrued management fee | 508,773 | |
| Other affiliated payables | 179,426 | |
| Other payables and accrued expenses | 104,233 | |
| Collateral on securities loaned | 7,247,709 | |
| Total liabilities | 25,295,228 | |
| Net Assets | $1,003,206,031 | |
| Net Assets consist of: | ||
| Paid in capital | $682,996,428 | |
| Total accumulated earnings (loss) | 320,209,603 | |
| Net Assets | $1,003,206,031 | |
| Net Asset Value, offering price and redemption price per share ($1,003,206,031 ÷ 10,591,779 shares) | $94.72 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 29, 2020 | ||
| Investment Income | ||
| Dividends | $10,637,594 | |
| Income from Fidelity Central Funds (including $25,459 from security lending) | 181,311 | |
| Total income | 10,818,905 | |
| Expenses | ||
| Management fee | $5,817,639 | |
| Transfer agent fees | 1,851,140 | |
| Accounting and security lending fees | 356,897 | |
| Custodian fees and expenses | 16,063 | |
| Independent trustees' fees and expenses | 6,119 | |
| Registration fees | 50,733 | |
| Audit | 39,143 | |
| Legal | 1,944 | |
| Interest | 1,579 | |
| Miscellaneous | 7,850 | |
| Total expenses before reductions | 8,149,107 | |
| Expense reductions | (36,426) | |
| Total expenses after reductions | 8,112,681 | |
| Net investment income (loss) | 2,706,224 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | (27,530,567) | |
| Fidelity Central Funds | 183 | |
| Foreign currency transactions | 8,443 | |
| Total net realized gain (loss) | (27,521,941) | |
| Change in net unrealized appreciation (depreciation) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 75,937,974 | |
| Assets and liabilities in foreign currencies | (200) | |
| Total change in net unrealized appreciation (depreciation) | 75,937,774 | |
| Net gain (loss) | 48,415,833 | |
| Net increase (decrease) in net assets resulting from operations | $51,122,057 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 29, 2020 | Year ended February 28, 2019 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $2,706,224 | $1,468,668 |
| Net realized gain (loss) | (27,521,941) | 62,070,916 |
| Change in net unrealized appreciation (depreciation) | 75,937,774 | (28,936,165) |
| Net increase (decrease) in net assets resulting from operations | 51,122,057 | 34,603,419 |
| Distributions to shareholders | (3,201,281) | (130,842,102) |
| Share transactions | ||
| Proceeds from sales of shares | 234,226,310 | 924,676,252 |
| Reinvestment of distributions | 3,008,611 | 124,342,856 |
| Cost of shares redeemed | (625,019,620) | (439,402,544) |
| Net increase (decrease) in net assets resulting from share transactions | (387,784,699) | 609,616,564 |
| Total increase (decrease) in net assets | (339,863,923) | 513,377,881 |
| Net Assets | ||
| Beginning of period | 1,343,069,954 | 829,692,073 |
| End of period | $1,003,206,031 | $1,343,069,954 |
| Other Information | ||
| Shares | ||
| Sold | 2,483,026 | 9,355,084 |
| Issued in reinvestment of distributions | 28,799 | 1,381,139 |
| Redeemed | (6,963,847) | (4,690,557) |
| Net increase (decrease) | (4,452,022) | 6,045,666 |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights
Health Care Services Portfolio
| Years ended February 28, | 2020 A | 2019 | 2018 | 2017 | 2016 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $89.28 | $92.21 | $89.93 | $78.59 | $87.26 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .23 | .13 | .11 | .12 | (.03) |
| Net realized and unrealized gain (loss) | 5.50 | 8.27 | 14.23 | 15.03 | (5.21) |
| Total from investment operations | 5.73 | 8.40 | 14.34 | 15.15 | (5.24) |
| Distributions from net investment income | (.29) | (.10) | (.10) | (.13) | (.02) |
| Distributions from net realized gain | – | (11.23) | (11.96) | (3.68) | (3.41) |
| Total distributions | (.29) | (11.33) | (12.06) | (3.81) | (3.43) |
| Redemption fees added to paid in capitalB | – | – | –C | –C | –C |
| Net asset value, end of period | $94.72 | $89.28 | $92.21 | $89.93 | $78.59 |
| Total ReturnD | 6.39% | 9.61% | 17.03% | 19.71% | (6.30)% |
| Ratios to Average Net AssetsE,F | |||||
| Expenses before reductions | .75% | .76% | .77% | .78% | .77% |
| Expenses net of fee waivers, if any | .75% | .76% | .77% | .78% | .77% |
| Expenses net of all reductions | .75% | .76% | .76% | .78% | .77% |
| Net investment income (loss) | .25% | .14% | .12% | .15% | (.03)% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $1,003,206 | $1,343,070 | $829,692 | $760,108 | $837,518 |
| Portfolio turnover rateG | 37% | 60% | 65% | 26% | 39% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Amount represents less than $.005 per share.
D Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
E Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the financial statements.
Medical Technology and Devices Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The hypothetical investment and the average annual total returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund’s total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
| For the periods ended February 29, 2020 | Past 1 year | Past 5 years | Past 10 years |
| Medical Technology and Devices Portfolio | 7.46% | 13.80% | 16.23% |
Prior to January 1, 2018, the fund was named Medical Equipment and Systems Portfolio, and the fund operated under certain different investment policies and compared its performance to a different index. The fund's historical performance may not represent its current investment policies.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Medical Technology and Devices Portfolio on February 28, 2010.
The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
| Period Ending Values | ||
|
| $45,014 | Medical Technology and Devices Portfolio |
|
| $32,918 | S&P 500® Index |
Medical Technology and Devices Portfolio
Management's Discussion of Fund Performance
Market Recap: U.S. stocks stalled to begin the new year and declined in late February, as the outbreak and spread of the new coronavirus threatened to hamper global economic growth and corporate earnings. For the 12 months ending February 29, 2020, the U.S. equity bellwether S&P 500® index gained 8.19%. The period began with equities rising amid upbeat company earnings and signs the U.S. Federal Reserve may pause on rates. The uptrend extended until May, when the index dipped as trade talks between the U.S. and China broke down. The bull market roared back to record a series of highs in July, when the Fed cut interest rates for the first time since 2008. Volatility intensified in August, as the Treasury yield curve inverted, which some investors viewed as a sign the U.S. economy could be heading for recession. But the market proved resilient, hitting a new high on October 30, when the Fed lowered rates for the third time in 2019, and moving higher through December 31. Following a roughly flat January, stocks sank in late February, after a surge in coronavirus cases outside China created considerable uncertainty and pushed investors to safer asset classes. By sector, information technology (+27%) led the way by a wide margin, followed by utilities and communication services (+13% each). In contrast, energy (-25%) was by far the weakest category, struggling due to sluggish oil prices. Other notable laggards included materials and industrials (-2% each). Comments from Portfolio Manager Eddie Yoon: For the fiscal year, the fund gained 7.46%, ahead of the 6.37% advance of the MSCI U.S. IMI Custom Health Care Technology and Equipment 25/50 Linked Index, which trailed the broad-market S&P 500® index. Health care equipment (+7%) and health care technology (+20%) companies gained this period amid solid employment data and health care utilization trends globally. Strong demand for products and services continued on the back of secular trends, including an aging population. The industry overall lagged the broader equity market, however, dragged down by the underperformance of the life sciences & tools and health care supplies components of the MSCI industry index, which each gained about 2%. Versus the sector index, strong security selection significantly contributed to the fund’s performance. Insulet (+102%), a leader in insulin infusion pumps for diabetics, was the fund’s top individual relative contributor. The stock benefited from rapid adoption of Insulet’s tubeless Omnipod patch pumps, which are more convenient and lower profile than traditional insulin pumps. It also helped to avoid index component Illumina (15%), a company that engages in genetics sequencing and analysis. Conversely, the fund's large, long-time position in medical device maker Boston Scientific was the fund’s biggest detractor this period. Shares of Boston Scientific returned about -7%, struggling in January after the firm reported a fourth-quarter sales outlook that came in below analysts’ consensus expectations. An out-of-index position in Benefitfocus (-74%), a provider of cloud-based benefits software solutions, also hurt.The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Note to shareholders: On March 29, 2019, the fund closed to new accounts.Medical Technology and Devices Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 29, 2020
| % of fund's net assets | |
| Boston Scientific Corp. | 10.5 |
| Thermo Fisher Scientific, Inc. | 8.8 |
| Becton, Dickinson & Co. | 7.7 |
| Intuitive Surgical, Inc. | 7.1 |
| Stryker Corp. | 6.0 |
| Danaher Corp. | 5.0 |
| Insulet Corp. | 3.8 |
| Masimo Corp. | 3.6 |
| Hologic, Inc. | 3.1 |
| Abbott Laboratories | 3.0 |
| 58.6 |
Top Industries (% of fund's net assets)
| As of February 29, 2020 | ||
| Health Care Equipment & Supplies | 75.0% | |
| Life Sciences Tools & Services | 14.4% | |
| Health Care Providers & Services | 6.3% | |
| Health Care Technology | 1.3% | |
| Biotechnology | 1.1% | |
| All Others* | 1.9% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
Medical Technology and Devices Portfolio
Schedule of Investments February 29, 2020
Showing Percentage of Net Assets
| Common Stocks - 99.2% | |||
| Shares | Value | ||
| Biotechnology - 0.9% | |||
| Biotechnology - 0.9% | |||
| Calyxt, Inc. (a)(b) | 800,000 | $5,048,000 | |
| Natera, Inc. (a) | 900,000 | 34,114,500 | |
| Twist Bioscience Corp. (a) | 500,000 | 15,310,000 | |
| 54,472,500 | |||
| Health Care Equipment & Supplies - 75.0% | |||
| Health Care Equipment - 71.5% | |||
| Abbott Laboratories | 2,380,000 | 183,331,400 | |
| Ambu A/S Series B (b) | 1,500,000 | 34,161,472 | |
| Atricure, Inc. (a) | 1,600,000 | 61,472,000 | |
| Axonics Modulation Technologies, Inc. (a)(b) | 191,256 | 6,779,069 | |
| Becton, Dickinson & Co. | 1,950,000 | 463,749,000 | |
| Boston Scientific Corp. (a) | 17,000,000 | 635,630,000 | |
| Danaher Corp. | 2,100,000 | 303,618,000 | |
| DexCom, Inc. (a) | 585,000 | 161,460,000 | |
| Edwards Lifesciences Corp. (a) | 280,000 | 57,355,200 | |
| Fisher & Paykel Healthcare Corp. | 5,000,000 | 80,568,945 | |
| Genmark Diagnostics, Inc. (a) | 2,250,700 | 7,854,943 | |
| Hologic, Inc. (a) | 4,000,000 | 188,480,000 | |
| IDEXX Laboratories, Inc. (a) | 90,000 | 22,905,900 | |
| Insulet Corp. (a) | 1,216,300 | 231,060,511 | |
| Intuitive Surgical, Inc. (a) | 800,000 | 427,168,000 | |
| Masimo Corp. (a) | 1,350,000 | 220,495,500 | |
| Medtronic PLC | 1,670,000 | 168,118,900 | |
| Nevro Corp. (a) | 300,000 | 39,045,000 | |
| Penumbra, Inc. (a)(b) | 1,056,500 | 175,231,090 | |
| ResMed, Inc. | 800,000 | 127,168,000 | |
| Shockwave Medical, Inc. (a)(b) | 643,965 | 25,848,755 | |
| Smith & Nephew PLC sponsored ADR (b) | 1,000,000 | 45,080,000 | |
| STERIS PLC | 128,000 | 20,303,360 | |
| Stryker Corp. | 1,900,000 | 362,121,000 | |
| Tandem Diabetes Care, Inc. (a) | 1,600,000 | 119,456,000 | |
| Teleflex, Inc. (b) | 54,000 | 18,091,080 | |
| Varian Medical Systems, Inc. (a) | 1,020,000 | 125,429,400 | |
| ViewRay, Inc. (a)(b) | 5,800,000 | 16,646,000 | |
| 4,328,628,525 | |||
| Health Care Supplies - 3.5% | |||
| Align Technology, Inc. (a) | 425,000 | 92,798,750 | |
| Haemonetics Corp. (a) | 180,000 | 19,499,400 | |
| Nanosonics Ltd. (a)(c) | 21,300,000 | 92,968,430 | |
| Quotient Ltd. (a)(b) | 1,345,675 | 8,181,704 | |
| 213,448,284 | |||
| TOTAL HEALTH CARE EQUIPMENT & SUPPLIES | 4,542,076,809 | ||
| Health Care Providers & Services - 6.3% | |||
| Health Care Services - 2.2% | |||
| 1Life Healthcare, Inc. | 1,061,584 | 20,656,301 | |
| Cigna Corp. | 630,000 | 115,252,200 | |
| 135,908,501 | |||
| Managed Health Care - 4.1% | |||
| Centene Corp. (a) | 1,330,000 | 70,516,600 | |
| HealthEquity, Inc. (a)(b) | 700,000 | 49,693,000 | |
| Humana, Inc. | 160,000 | 51,148,800 | |
| UnitedHealth Group, Inc. | 300,000 | 76,488,000 | |
| 247,846,400 | |||
| TOTAL HEALTH CARE PROVIDERS & SERVICES | 383,754,901 | ||
| Health Care Technology - 1.3% | |||
| Health Care Technology - 1.3% | |||
| Castlight Health, Inc. (a) | 983,300 | 891,165 | |
| Castlight Health, Inc. Class B (a) | 5,000,000 | 4,531,500 | |
| Health Catalyst, Inc. (b) | 170,000 | 5,164,600 | |
| Veeva Systems, Inc. Class A (a) | 500,000 | 70,985,000 | |
| 81,572,265 | |||
| Insurance - 0.6% | |||
| Insurance Brokers - 0.6% | |||
| eHealth, Inc. (a) | 300,000 | 35,205,000 | |
| Life Sciences Tools & Services - 14.4% | |||
| Life Sciences Tools & Services - 14.4% | |||
| 10X Genomics, Inc. (a)(b) | 63,433 | 5,055,610 | |
| 10X Genomics, Inc. | 392,772 | 30,990,889 | |
| Avantor, Inc. | 2,000,000 | 31,500,000 | |
| Bruker Corp. | 3,416,000 | 148,800,960 | |
| Lonza Group AG | 300,000 | 119,711,331 | |
| Thermo Fisher Scientific, Inc. | 1,840,000 | 535,072,000 | |
| 871,130,790 | |||
| Pharmaceuticals - 0.2% | |||
| Pharmaceuticals - 0.2% | |||
| Intersect ENT, Inc. (a) | 600,000 | 14,316,000 | |
| Professional Services - 0.4% | |||
| Research & Consulting Services - 0.4% | |||
| Clarivate Analytics PLC (a) | 1,180,000 | 24,001,200 | |
| Software - 0.1% | |||
| Application Software - 0.1% | |||
| Benefitfocus, Inc. (a)(b) | 233,187 | 2,910,174 | |
| Outset Medical, Inc. (a)(d)(e) | 1,486,367 | 3,270,007 | |
| 6,180,181 | |||
| TOTAL COMMON STOCKS | |||
| (Cost $4,065,634,139) | 6,012,709,646 | ||
| Convertible Preferred Stocks - 0.4% | |||
| Biotechnology - 0.2% | |||
| Biotechnology - 0.2% | |||
| Element Biosciences, Inc. Series B (d)(e) | 2,385,223 | 12,500,000 | |
| Software - 0.2% | |||
| Application Software - 0.2% | |||
| Outset Medical, Inc.: | |||
| Series B (a)(d)(e) | 3,307,754 | 6,549,353 | |
| Series D (a)(d)(e) | 1,607,717 | 4,662,379 | |
| Series E (d)(e) | 1,363,636 | 2,999,999 | |
| 14,211,731 | |||
| TOTAL CONVERTIBLE PREFERRED STOCKS | |||
| (Cost $24,735,479) | 26,711,731 | ||
| Money Market Funds - 2.6% | |||
| Fidelity Cash Central Fund 1.60% (f) | 13,747,971 | 13,750,721 | |
| Fidelity Securities Lending Cash Central Fund 1.60% (f)(g) | 141,269,273 | 141,283,400 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $155,034,121) | 155,034,121 | ||
| TOTAL INVESTMENT IN SECURITIES - 102.2% | |||
| (Cost $4,245,403,739) | 6,194,455,498 | ||
| NET OTHER ASSETS (LIABILITIES) - (2.2)% | (135,689,921) | ||
| NET ASSETS - 100% | $6,058,765,577 |
Legend
(a) Non-income producing
(b) Security or a portion of the security is on loan at period end.
(c) Affiliated company
(d) Level 3 security
(e) Restricted securities (including private placements) - Investment in securities not registered under the Securities Act of 1933 (excluding 144A issues). At the end of the period, the value of restricted securities (excluding 144A issues) amounted to $29,981,738 or 0.5% of net assets.
(f) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request.
(g) Investment made with cash collateral received from securities on loan.
Additional information on each restricted holding is as follows:
| Security | Acquisition Date | Acquisition Cost |
| Element Biosciences, Inc. Series B | 12/13/19 | $12,500,000 |
| Outset Medical, Inc. | 1/27/20 | $3,264,521 |
| Outset Medical, Inc. Series B | 5/5/15 - 6/5/15 | $7,500,001 |
| Outset Medical, Inc. Series D | 8/20/18 | $5,000,000 |
| Outset Medical, Inc. Series E | 1/27/20 | $2,999,999 |
Affiliated Central Funds
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:
| Fund | Income earned |
| Fidelity Cash Central Fund | $1,117,332 |
| Fidelity Securities Lending Cash Central Fund | 1,424,342 |
| Total | $2,541,674 |
Amounts in the income column in the above table include any capital gain distributions from underlying funds, which are presented in the corresponding line-item in the Statement of Operations, if applicable. Amount for Fidelity Securities Lending Cash Central Fund represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities.
Other Affiliated Issuers
An affiliated company is a company in which the Fund has ownership of at least 5% of the voting securities. Fiscal year to date transactions with companies which are or were affiliates are as follows:
| Affiliate | Value, beginning of period | Purchases | Sales Proceeds | Dividend Income | Realized Gain (loss) | Change in Unrealized appreciation (depreciation) | Value, end of period |
| Atricure, Inc. | $66,435,200 | $6,262,251 | $25,658,438 | $-- | $8,705,978 | $5,727,009 | $-- |
| HTG Molecular Diagnostics | 6,580,684 | -- | 1,613,021 | -- | (12,802,027) | 7,834,364 | -- |
| Nanosonics Ltd. | 57,698,529 | 8,943,165 | 2,325,708 | -- | 926,625 | 27,725,819 | 92,968,430 |
| Polarityte, Inc. | 14,532,000 | -- | 5,341,535 | -- | (15,579,821) | 6,389,356 | -- |
| Total | $145,246,413 | $15,205,416 | $34,938,702 | $-- | $(18,749,245) | $47,676,548 | $92,968,430 |
Investment Valuation
The following is a summary of the inputs used, as of February 29, 2020, 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 below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.
| Valuation Inputs at Reporting Date: | ||||
| Description | Total | Level 1 | Level 2 | Level 3 |
| Investments in Securities: | ||||
| Common Stocks | $6,012,709,646 | $5,803,919,646 | $205,519,993 | $3,270,007 |
| Convertible Preferred Stocks | 26,711,731 | -- | -- | 26,711,731 |
| Money Market Funds | 155,034,121 | 155,034,121 | -- | -- |
| Total Investments in Securities: | $6,194,455,498 | $5,958,953,767 | $205,519,993 | $29,981,738 |
See accompanying notes which are an integral part of the financial statements.
Medical Technology and Devices Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2020 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $133,888,035) — See accompanying schedule: Unaffiliated issuers (cost $4,040,444,108) | $5,946,452,947 | |
| Fidelity Central Funds (cost $155,034,121) | 155,034,121 | |
| Other affiliated issuers (cost $49,925,510) | 92,968,430 | |
| Total Investment in Securities (cost $4,245,403,739) | $6,194,455,498 | |
| Cash | 18,360 | |
| Receivable for investments sold | 78,736,383 | |
| Receivable for fund shares sold | 4,967,429 | |
| Dividends receivable | 398,215 | |
| Distributions receivable from Fidelity Central Funds | 69,106 | |
| Prepaid expenses | 31,222 | |
| Other receivables | 216,970 | |
| Total assets | 6,278,893,183 | |
| Liabilities | ||
| Payable to custodian bank | $329 | |
| Payable for investments purchased | 21,234,334 | |
| Payable for fund shares redeemed | 53,418,511 | |
| Accrued management fee | 3,024,013 | |
| Other affiliated payables | 911,895 | |
| Other payables and accrued expenses | 279,776 | |
| Collateral on securities loaned | 141,258,748 | |
| Total liabilities | 220,127,606 | |
| Net Assets | $6,058,765,577 | |
| Net Assets consist of: | ||
| Paid in capital | $3,990,908,810 | |
| Total accumulated earnings (loss) | 2,067,856,767 | |
| Net Assets | $6,058,765,577 | |
| Net Asset Value, offering price and redemption price per share ($6,058,765,577 ÷ 108,433,973 shares) | $55.88 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 29, 2020 | ||
| Investment Income | ||
| Dividends | $34,609,408 | |
| Income from Fidelity Central Funds (including $1,424,342 from security lending) | 2,541,674 | |
| Total income | 37,151,082 | |
| Expenses | ||
| Management fee | $35,243,333 | |
| Transfer agent fees | 10,317,476 | |
| Accounting and security lending fees | 1,152,513 | |
| Custodian fees and expenses | 66,049 | |
| Independent trustees' fees and expenses | 35,598 | |
| Registration fees | 125,973 | |
| Audit | 42,585 | |
| Legal | 11,822 | |
| Interest | 377 | |
| Miscellaneous | 43,521 | |
| Total expenses before reductions | 47,039,247 | |
| Expense reductions | (159,264) | |
| Total expenses after reductions | 46,879,983 | |
| Net investment income (loss) | (9,728,901) | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 295,651,612 | |
| Fidelity Central Funds | 13,703 | |
| Other affiliated issuers | (18,749,245) | |
| Foreign currency transactions | 7,850 | |
| Total net realized gain (loss) | 276,923,920 | |
| Change in net unrealized appreciation (depreciation) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 148,929,634 | |
| Fidelity Central Funds | (2,320) | |
| Other affiliated issuers | 47,676,548 | |
| Assets and liabilities in foreign currencies | 1,056 | |
| Total change in net unrealized appreciation (depreciation) | 196,604,918 | |
| Net gain (loss) | 473,528,838 | |
| Net increase (decrease) in net assets resulting from operations | $463,799,937 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 29, 2020 | Year ended February 28, 2019 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $(9,728,901) | $(3,877,280) |
| Net realized gain (loss) | 276,923,920 | 196,864,394 |
| Change in net unrealized appreciation (depreciation) | 196,604,918 | 844,785,779 |
| Net increase (decrease) in net assets resulting from operations | 463,799,937 | 1,037,772,893 |
| Distributions to shareholders | (118,431,567) | (356,492,522) |
| Share transactions | ||
| Proceeds from sales of shares | 705,581,911 | 3,069,361,368 |
| Reinvestment of distributions | 111,785,832 | 339,089,973 |
| Cost of shares redeemed | (1,891,615,421) | (1,366,012,756) |
| Net increase (decrease) in net assets resulting from share transactions | (1,074,247,678) | 2,042,438,585 |
| Total increase (decrease) in net assets | (728,879,308) | 2,723,718,956 |
| Net Assets | ||
| Beginning of period | 6,787,644,885 | 4,063,925,929 |
| End of period | $6,058,765,577 | $6,787,644,885 |
| Other Information | ||
| Shares | ||
| Sold | 12,747,720 | 60,281,432 |
| Issued in reinvestment of distributions | 1,859,380 | 7,362,903 |
| Redeemed | (34,440,758) | (27,541,203) |
| Net increase (decrease) | (19,833,658) | 40,103,132 |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights
Medical Technology and Devices Portfolio
| Years ended February 28, | 2020 A | 2019 | 2018 | 2017 | 2016 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $52.92 | $46.09 | $41.48 | $33.75 | $41.90 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | (.08) | (.04) | .05 | .01 | (.03) |
| Net realized and unrealized gain (loss) | 4.10 | 10.40 | 7.31 | 9.87 | (2.25) |
| Total from investment operations | 4.02 | 10.36 | 7.36 | 9.88 | (2.28) |
| Distributions from net investment income | – | – | (.08) | – | (.01) |
| Distributions from net realized gain | (1.06) | (3.53) | (2.67) | (2.15) | (5.86) |
| Total distributions | (1.06) | (3.53) | (2.75) | (2.15) | (5.87) |
| Redemption fees added to paid in capitalB | – | – | – | –C | –C |
| Net asset value, end of period | $55.88 | $52.92 | $46.09 | $41.48 | $33.75 |
| Total ReturnD | 7.46% | 23.85% | 18.01% | 30.13% | (6.63)% |
| Ratios to Average Net AssetsE,F | |||||
| Expenses before reductions | .71% | .73% | .76% | .76% | .76% |
| Expenses net of fee waivers, if any | .71% | .73% | .76% | .76% | .76% |
| Expenses net of all reductions | .71% | .73% | .75% | .76% | .75% |
| Net investment income (loss) | (.15)% | (.07)% | .11% | .01% | (.09)% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $6,058,766 | $6,787,645 | $4,063,926 | $3,134,376 | $1,915,772 |
| Portfolio turnover rateG | 35% | 43% | 77% | 55% | 46% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Amount represents less than $.005 per share.
D Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
E Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the financial statements.
Pharmaceuticals Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The hypothetical investment and the average annual total returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund’s total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
| For the periods ended February 29, 2020 | Past 1 year | Past 5 years | Past 10 years |
| Pharmaceuticals Portfolio | 12.06% | 3.80% | 13.10% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Pharmaceuticals Portfolio on February 28, 2010.
The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
| Period Ending Values | ||
|
| $34,255 | Pharmaceuticals Portfolio |
|
| $32,918 | S&P 500® Index |
Pharmaceuticals Portfolio
Management's Discussion of Fund Performance
Market Recap: U.S. stocks stalled to begin the new year and declined in late February, as the outbreak and spread of the new coronavirus threatened to hamper global economic growth and corporate earnings. For the 12 months ending February 29, 2020, the U.S. equity bellwether S&P 500® index gained 8.19%. The period began with equities rising amid upbeat company earnings and signs the U.S. Federal Reserve may pause on rates. The uptrend extended until May, when the index dipped as trade talks between the U.S. and China broke down. The bull market roared back to record a series of highs in July, when the Fed cut interest rates for the first time since 2008. Volatility intensified in August, as the Treasury yield curve inverted, which some investors viewed as a sign the U.S. economy could be heading for recession. But the market proved resilient, hitting a new high on October 30, when the Fed lowered rates for the third time in 2019, and moving higher through December 31. Following a roughly flat January, stocks sank in late February, after a surge in coronavirus cases outside China created considerable uncertainty and pushed investors to safer asset classes. By sector, information technology (+27%) led the way by a wide margin, followed by utilities and communication services (+13% each). In contrast, energy (-25%) was by far the weakest category, struggling due to sluggish oil prices. Other notable laggards included materials and industrials (-2% each). Comments from Portfolio Manager Karim Suwwan de Felipe: For the fiscal year, the fund gained 12.06%, significantly outpacing the -1.45% return of the MSCI U.S. North America IMI + ADR Custom Pharmaceuticals 25/50 Linked Index, and ahead of the broad-market S&P 500® index. Favorable stock selection was the primary driver of the fund’s outperformance of the industry index the past 12 months, due largely to my focus on the stocks of companies with innovative drug therapies. Overall, pharma stocks generally were pressured by increased uncertainty about the industry’s business climate given a “Medicare-for-all” government-sponsored health plan proposed by some presidential candidates ahead of the U.S. elections in November. Versus the MSCI index, underexposure to index component and industry giant Pfizer (-20%) was the fund’s top contributor. Pfizer’s Upjohn unit – which includes a portfolio of established, off-patent drugs and is expected to merge with Mylan sometime this year – was hit hard by declining sales in China, as the country continued to incentivize generics in direct competition with Pfizer’s branded drugs. We eliminated our position in Pfizer by period end. Another contributor was Roche Holding (+19%), which was not a part of the MSCI index. The firm reported strong quarterly financial results this period and launched of a slew of innovative drugs for oncology, multiple sclerosis and other indications, making up for eroding legacy products facing biosimilar competition. Conversely, underweighted exposure to large-cap pharma firm Novo Nordisk (+22%) was the fund’s largest relative detractor, as the company’s new class of diabetes drugs outpaced the decline in its insulin business. A small out-of-index position in InflaRx (-91%) also held back the fund’s relative result.The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Pharmaceuticals Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 29, 2020
| % of fund's net assets | |
| AstraZeneca PLC sponsored ADR | 10.5 |
| Johnson & Johnson | 8.7 |
| Sanofi SA sponsored ADR | 8.5 |
| Bristol-Myers Squibb Co. | 8.4 |
| Roche Holding AG (participation certificate) | 7.5 |
| Eli Lilly & Co. | 5.4 |
| Merck & Co., Inc. | 4.9 |
| Novartis AG sponsored ADR | 4.7 |
| Zoetis, Inc. Class A | 4.6 |
| Amgen, Inc. | 2.6 |
| 65.8 |
Top Industries (% of fund's net assets)
| As of February 29, 2020 | ||
| Pharmaceuticals | 80.8% | |
| Biotechnology | 16.1% | |
| Health Care Equipment & Supplies | 0.9% | |
| Life Sciences Tools & Services | 0.8% | |
| All Others* | 1.4% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
Pharmaceuticals Portfolio
Schedule of Investments February 29, 2020
Showing Percentage of Net Assets
| Common Stocks - 98.3% | |||
| Shares | Value | ||
| Biotechnology - 16.1% | |||
| Biotechnology - 16.1% | |||
| Acceleron Pharma, Inc. (a) | 84,600 | $7,269,678 | |
| Amgen, Inc. | 101,200 | 20,212,676 | |
| Argenx SE (a) | 25,200 | 3,532,194 | |
| Argenx SE ADR (a) | 1,600 | 226,208 | |
| Ascendis Pharma A/S sponsored ADR (a) | 51,300 | 6,688,494 | |
| Athenex, Inc. (a)(b) | 166,800 | 2,038,296 | |
| BioNTech AG | 96,948 | 3,232,731 | |
| Black Diamond Therapeutics, Inc. (a) | 4,400 | 118,756 | |
| Blueprint Medicines Corp. (a) | 34,700 | 1,878,311 | |
| Cytokinetics, Inc. (a) | 59,700 | 832,218 | |
| Forty Seven, Inc. (a) | 48,600 | 2,818,800 | |
| Galapagos Genomics NV sponsored ADR (a)(b) | 17,000 | 3,593,120 | |
| Global Blood Therapeutics, Inc. (a) | 236,900 | 15,152,124 | |
| Innovent Biolgics, Inc. (a)(c) | 920,000 | 4,201,668 | |
| Kalvista Pharmaceuticals, Inc. (a) | 99,000 | 1,331,550 | |
| Leap Therapeutics, Inc. (a)(b) | 254,900 | 614,309 | |
| Leap Therapeutics, Inc. warrants 1/31/26 (a) | 606,000 | 776,098 | |
| Magenta Therapeutics, Inc. (a)(b) | 97,400 | 1,145,424 | |
| Mirati Therapeutics, Inc. (a) | 37,100 | 3,320,079 | |
| Moderna, Inc. (a)(b) | 71,200 | 1,846,216 | |
| Momenta Pharmaceuticals, Inc. (a) | 113,372 | 3,207,294 | |
| Olivo Labs (a)(d)(e) | 6,851 | 0 | |
| PTC Therapeutics, Inc. (a) | 230,200 | 12,624,168 | |
| Sarepta Therapeutics, Inc. (a) | 49,841 | 5,705,299 | |
| Seattle Genetics, Inc. (a) | 56,100 | 6,387,546 | |
| uniQure B.V. (a) | 48,900 | 2,516,394 | |
| Vertex Pharmaceuticals, Inc. (a) | 43,900 | 9,834,917 | |
| Xencor, Inc. (a) | 49,568 | 1,610,464 | |
| 122,715,032 | |||
| Health Care Equipment & Supplies - 0.9% | |||
| Health Care Equipment - 0.9% | |||
| Boston Scientific Corp. (a) | 178,500 | 6,674,115 | |
| Life Sciences Tools & Services - 0.8% | |||
| Life Sciences Tools & Services - 0.8% | |||
| 10X Genomics, Inc. (a)(b) | 10,109 | 805,687 | |
| Bruker Corp. | 131,700 | 5,736,852 | |
| 6,542,539 | |||
| Personal Products - 0.0% | |||
| Personal Products - 0.0% | |||
| MYOS Corp. (a) | 40,000 | 46,800 | |
| Pharmaceuticals - 80.5% | |||
| Pharmaceuticals - 80.5% | |||
| Allergan PLC | 93,038 | 17,739,555 | |
| Arvinas Holding Co. LLC (a) | 98,000 | 4,618,740 | |
| Astellas Pharma, Inc. | 710,800 | 11,196,451 | |
| AstraZeneca PLC sponsored ADR | 1,837,600 | 80,486,880 | |
| Axsome Therapeutics, Inc. (a)(b) | 43,400 | 3,385,200 | |
| Bausch Health Cos., Inc. (Canada) (a) | 76,600 | 1,697,213 | |
| Bristol-Myers Squibb Co. | 1,081,280 | 63,860,397 | |
| Catalent, Inc. (a) | 75,400 | 3,885,362 | |
| Cronos Group, Inc. (a)(b) | 273,500 | 1,587,309 | |
| Elanco Animal Health, Inc. (a) | 235,400 | 6,449,960 | |
| Eli Lilly & Co. | 328,061 | 41,378,334 | |
| GlaxoSmithKline PLC sponsored ADR | 289,000 | 11,713,170 | |
| Horizon Pharma PLC (a) | 372,400 | 12,743,528 | |
| Johnson & Johnson | 494,450 | 66,493,636 | |
| Merck & Co., Inc. | 493,036 | 37,746,836 | |
| MyoKardia, Inc. (a) | 55,100 | 3,492,789 | |
| Nektar Therapeutics (a)(b) | 368,233 | 7,662,929 | |
| Novartis AG sponsored ADR | 429,248 | 36,039,662 | |
| Novo Nordisk A/S Series B sponsored ADR | 78,200 | 4,545,766 | |
| Perrigo Co. PLC | 208,500 | 10,568,865 | |
| Reata Pharmaceuticals, Inc. (a) | 63,100 | 12,288,725 | |
| Richter Gedeon PLC | 157,700 | 3,199,678 | |
| Roche Holding AG (participation certificate) | 178,926 | 57,530,750 | |
| Sanofi SA sponsored ADR (b) | 1,397,222 | 64,621,518 | |
| Takeda Pharmaceutical Co. Ltd. ADR | 317,700 | 5,496,210 | |
| Theravance Biopharma, Inc. (a) | 35,597 | 866,787 | |
| UCB SA | 87,800 | 8,129,047 | |
| Zoetis, Inc. Class A | 264,900 | 35,292,627 | |
| Zogenix, Inc. (a) | 31,800 | 797,544 | |
| 615,515,468 | |||
| TOTAL COMMON STOCKS | |||
| (Cost $571,205,303) | 751,493,954 | ||
| Convertible Preferred Stocks - 0.3% | |||
| Biotechnology - 0.0% | |||
| Biotechnology - 0.0% | |||
| Generation Bio Series C (d)(e) | 13,200 | 73,806 | |
| Pharmaceuticals - 0.3% | |||
| Pharmaceuticals - 0.3% | |||
| Castle Creek Pharmaceutical Holdings, Inc. Series C (d)(e) | 200 | 82,370 | |
| Harmony Biosciences II, Inc. Series C (d)(e) | 1,020,408 | 2,000,000 | |
| 2,082,370 | |||
| TOTAL CONVERTIBLE PREFERRED STOCKS | |||
| (Cost $2,156,176) | 2,156,176 | ||
| Money Market Funds - 5.3% | |||
| Fidelity Cash Central Fund 1.60% (f) | 8,262,236 | 8,263,888 | |
| Fidelity Securities Lending Cash Central Fund 1.60% (f)(g) | 32,215,445 | 32,218,667 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $40,482,555) | 40,482,555 | ||
| TOTAL INVESTMENT IN SECURITIES - 103.9% | |||
| (Cost $613,844,034) | 794,132,685 | ||
| NET OTHER ASSETS (LIABILITIES) - (3.9)% | (29,848,132) | ||
| NET ASSETS - 100% | $764,284,553 |
Legend
(a) Non-income producing
(b) Security or a portion of the security is on loan at period end.
(c) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the end of the period, the value of these securities amounted to $4,201,668 or 0.5% of net assets.
(d) Level 3 security
(e) Restricted securities (including private placements) - Investment in securities not registered under the Securities Act of 1933 (excluding 144A issues). At the end of the period, the value of restricted securities (excluding 144A issues) amounted to $2,156,176 or 0.3% of net assets.
(f) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request.
(g) Investment made with cash collateral received from securities on loan.
Additional information on each restricted holding is as follows:
| Security | Acquisition Date | Acquisition Cost |
| Castle Creek Pharmaceutical Holdings, Inc. Series C | 12/9/19 | $82,370 |
| Generation Bio Series C | 1/9/20 | $73,806 |
| Harmony Biosciences II, Inc. Series C | 8/9/19 | $2,000,000 |
| Olivo Labs | 2/8/17 | $8,290 |
Affiliated Central Funds
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:
| Fund | Income earned |
| Fidelity Cash Central Fund | $73,810 |
| Fidelity Securities Lending Cash Central Fund | 472,224 |
| Total | $546,034 |
Amounts in the income column in the above table include any capital gain distributions from underlying funds, which are presented in the corresponding line-item in the Statement of Operations, if applicable. Amount for Fidelity Securities Lending Cash Central Fund represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities.
Investment Valuation
The following is a summary of the inputs used, as of February 29, 2020, 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 below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.
| Valuation Inputs at Reporting Date: | ||||
| Description | Total | Level 1 | Level 2 | Level 3 |
| Investments in Securities: | ||||
| Common Stocks | $751,493,954 | $678,293,134 | $73,200,820 | $-- |
| Convertible Preferred Stocks | 2,156,176 | -- | -- | 2,156,176 |
| Money Market Funds | 40,482,555 | 40,482,555 | -- | -- |
| Total Investments in Securities: | $794,132,685 | $718,775,689 | $73,200,820 | $2,156,176 |
Other Information
Distribution of investments by country or territory of incorporation, as a percentage of Total Net Assets, is as follows (Unaudited):
| United States of America | 53.9% |
| Switzerland | 12.2% |
| United Kingdom | 12.0% |
| France | 8.5% |
| Ireland | 5.4% |
| Japan | 2.2% |
| Belgium | 1.6% |
| Denmark | 1.5% |
| Others (Individually Less Than 1%) | 2.7% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Pharmaceuticals Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2020 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $30,922,872) — See accompanying schedule: Unaffiliated issuers (cost $573,361,479) | $753,650,130 | |
| Fidelity Central Funds (cost $40,482,555) | 40,482,555 | |
| Total Investment in Securities (cost $613,844,034) | $794,132,685 | |
| Receivable for investments sold | 5,046,950 | |
| Receivable for fund shares sold | 2,194,419 | |
| Dividends receivable | 3,986,932 | |
| Distributions receivable from Fidelity Central Funds | 30,434 | |
| Prepaid expenses | 5,274 | |
| Other receivables | 124,406 | |
| Total assets | 805,521,100 | |
| Liabilities | ||
| Payable for investments purchased | $4,307,811 | |
| Payable for fund shares redeemed | 4,041,533 | |
| Accrued management fee | 371,468 | |
| Other affiliated payables | 144,173 | |
| Other payables and accrued expenses | 162,045 | |
| Collateral on securities loaned | 32,209,517 | |
| Total liabilities | 41,236,547 | |
| Net Assets | $764,284,553 | |
| Net Assets consist of: | ||
| Paid in capital | $563,643,110 | |
| Total accumulated earnings (loss) | 200,641,443 | |
| Net Assets | $764,284,553 | |
| Net Asset Value, offering price and redemption price per share ($764,284,553 ÷ 35,204,214 shares) | $21.71 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 29, 2020 | ||
| Investment Income | ||
| Dividends | $15,200,263 | |
| Income from Fidelity Central Funds (including $472,224 from security lending) | 546,034 | |
| Total income | 15,746,297 | |
| Expenses | ||
| Management fee | $3,955,506 | |
| Transfer agent fees | 1,407,362 | |
| Accounting and security lending fees | 261,268 | |
| Custodian fees and expenses | 20,250 | |
| Independent trustees' fees and expenses | 3,957 | |
| Registration fees | 40,051 | |
| Audit | 42,912 | |
| Legal | 3,837 | |
| Interest | 1,824 | |
| Miscellaneous | 5,732 | |
| Total expenses before reductions | 5,742,699 | |
| Expense reductions | (25,007) | |
| Total expenses after reductions | 5,717,692 | |
| Net investment income (loss) | 10,028,605 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 65,415,736 | |
| Fidelity Central Funds | 609 | |
| Foreign currency transactions | 33,803 | |
| Total net realized gain (loss) | 65,450,148 | |
| Change in net unrealized appreciation (depreciation) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 5,278,667 | |
| Assets and liabilities in foreign currencies | 22,490 | |
| Total change in net unrealized appreciation (depreciation) | 5,301,157 | |
| Net gain (loss) | 70,751,305 | |
| Net increase (decrease) in net assets resulting from operations | $80,779,910 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 29, 2020 | Year ended February 28, 2019 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $10,028,605 | $10,939,589 |
| Net realized gain (loss) | 65,450,148 | 48,998,628 |
| Change in net unrealized appreciation (depreciation) | 5,301,157 | 37,013,441 |
| Net increase (decrease) in net assets resulting from operations | 80,779,910 | 96,951,658 |
| Distributions to shareholders | (66,086,434) | (14,056,846) |
| Share transactions | ||
| Proceeds from sales of shares | 129,274,481 | 102,161,790 |
| Reinvestment of distributions | 62,770,076 | 13,373,472 |
| Cost of shares redeemed | (190,057,404) | (195,388,778) |
| Net increase (decrease) in net assets resulting from share transactions | 1,987,153 | (79,853,516) |
| Total increase (decrease) in net assets | 16,680,629 | 3,041,296 |
| Net Assets | ||
| Beginning of period | 747,603,924 | 744,562,628 |
| End of period | $764,284,553 | $747,603,924 |
| Other Information | ||
| Shares | ||
| Sold | 5,749,544 | 5,084,653 |
| Issued in reinvestment of distributions | 2,784,673 | 688,424 |
| Redeemed | (8,808,887) | (9,855,467) |
| Net increase (decrease) | (274,670) | (4,082,390) |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights
Pharmaceuticals Portfolio
| Years ended February 28, | 2020 A | 2019 | 2018 | 2017 | 2016 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $21.07 | $18.82 | $18.11 | $18.20 | $23.08 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .29 | .29 | .27 | .22 | .24 |
| Net realized and unrealized gain (loss) | 2.29 | 2.34 | .74 | (.13) | (2.52) |
| Total from investment operations | 2.58 | 2.63 | 1.01 | .09 | (2.28) |
| Distributions from net investment income | (.31) | (.28) | (.25) | (.18) | (.17) |
| Distributions from net realized gain | (1.64) | (.10) | (.05) | – | (2.43) |
| Total distributions | (1.94)C | (.38) | (.30) | (.18) | (2.60) |
| Redemption fees added to paid in capitalB | – | – | – | –D | –D |
| Net asset value, end of period | $21.71 | $21.07 | $18.82 | $18.11 | $18.20 |
| Total ReturnE | 12.06% | 14.15% | 5.61% | .57% | (11.33)% |
| Ratios to Average Net AssetsF,G | |||||
| Expenses before reductions | .78% | .80% | .81% | .80% | .78% |
| Expenses net of fee waivers, if any | .78% | .79% | .81% | .80% | .78% |
| Expenses net of all reductions | .77% | .79% | .80% | .79% | .77% |
| Net investment income (loss) | 1.36% | 1.48% | 1.44% | 1.16% | 1.09% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $764,285 | $747,604 | $744,563 | $1,000,937 | $1,693,410 |
| Portfolio turnover rateH | 52% | 55% | 89% | 77% | 77% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Total distributions of $1.94 per share is comprised of distributions from net investment income of $.305 and distributions from net realized gain of $1.636 per share.
D Amount represents less than $.005 per share.
E Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
H Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the financial statements.
Notes to Financial Statements
For the period ended February 29, 2020
1. Organization.
Biotechnology Portfolio, Health Care Portfolio, Health Care Services Portfolio, Medical Technology and Devices Portfolio, and Pharmaceuticals Portfolio (the Funds) are non-diversified funds of Fidelity Select Portfolios (the Trust). The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Funds invest primarily in securities of companies whose principal business activities fall within specific industries. Each Fund is authorized to issue an unlimited number of shares. Effective after the close of business on March 29, 2019, Medical Technology and Devices Portfolio is closed to new accounts with certain exceptions. Share transactions on the Statement of Changes in Net Assets may contain exchanges between affiliated funds.
Effective January 1, 2020:
Investment advisers Fidelity Investments Money Management, Inc., FMR Co., Inc., and Fidelity SelectCo, LLC, merged with and into Fidelity Management & Research Company. In connection with the merger transactions, the resulting, merged investment adviser was then redomiciled from Massachusetts to Delaware, changed its corporate structure from a corporation to a limited liability company, and changed its name to "Fidelity Management & Research Company LLC".
Fidelity Investments Institutional Operations Company, Inc. converted from a Massachusetts corporation to a Massachusetts LLC, and changed its name to "Fidelity Investments Institutional Operations Company LLC".
Effective after the close of business on March 31, 2020, Medical Technology and Devices Portfolio was reopened to new accounts.
2. Investments in Fidelity Central Funds.
The Funds invest in Fidelity Central Funds, which are open-end investment companies generally available only to other investment companies and accounts managed by the investment adviser and its affiliates. The Funds' Schedules of Investments list each of the Fidelity Central Funds held as of period end, if any, as an investment of each Fund, but do not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, each Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by the investment adviser. Annualized expenses of the Money Market Central Funds as of their most recent shareholder report date ranged from less than .005% to .01%.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) website at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Funds' Report of Independent Registered Public Accounting Firm, are available on the SEC website or upon request.
3. Significant Accounting Policies.
Each Fund is an investment company and applies the accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946 Financial Services – Investments Companies. The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Funds:
Investment Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Board of Trustees (the Board) has delegated the day to day responsibility for the valuation of each Fund's investments to the Fair Value Committee (the Committee) established by each Fund's investment adviser. In accordance with valuation policies and procedures approved by the Board, each Fund attempts to obtain prices from one or more third party pricing vendors or brokers to value its investments. When current market prices, quotations or currency exchange rates are not readily available or reliable, investments will be fair valued in good faith by the Committee, in accordance with procedures adopted by the Board. Factors used in determining fair value vary by investment type and may include market or investment specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The Committee oversees each Fund's valuation policies and procedures and reports to the Board on the Committee's activities and fair value determinations. The Board monitors the appropriateness of the procedures used in valuing each Fund's investments and ratifies the fair value determinations of the Committee.
Each Fund categorizes the inputs to valuation techniques used to 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)
Valuation techniques used to value each Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by a third party pricing vendor on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-Traded Funds (ETFs)and certain indexes as well as quoted prices for similar securities may be used and would be categorized as Level 2 in the hierarchy. For equity securities, including restricted 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. Securities, including private placements or other restricted securities, for which observable inputs are not available are valued using alternate valuation approaches, including the market approach, the income approach and cost approach are categorized as Level 3 in the hierarchy. The market approach considers factors including the price of recent investments in the same or a similar security or financial metrics of comparable securities. The income approach considers factors including expected future cash flows, security specific risks and corresponding discount rates. The cost approach considers factors including the value of the security's underlying assets and liabilities.
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value (NAV) each business day and are categorized as Level 1 in the hierarchy.
The following provides information on Level 3 securities held by the Fund that were valued at period end based on unobservable inputs. These amounts exclude valuations provided by a broker.
Biotechnology Portfolio:
| Asset Type | Fair Value | Valuation Technique(s) | Unobservable Input | Amount or Range/Weighted Average | Impact to Valuation from an Increase in Input(a) |
| Equities | $166,725,926 | Market comparable | Enterprise value/ Sales multiple (EV/S) | 4.5 | Increase |
| Transaction price | $0.77 - $123.33 / $38.37 | Increase |
|||
| Discount rate | 15.0% | Decrease |
|||
| Proxy Premium | 18.2% | Increase |
|||
| Proxy discount | 2.7% - 22.0% / 15.3 | Decrease | |||
| Market Approach | Transaction price | $205.00 | Increase |
||
| Recovery value | Recovery value | 0.0% - 1.6% / 1.6% | Increase | ||
| Discounted cash flow | Discount Rate | 10.0% - 11.0% / 10.5% | Decrease |
||
| Growth rate | 3.5% | Increase | |||
| Probability rate | 6.3% | Increase |
(a) Represents the directional change in the fair value of the Level 3 investments that could have resulted from an increase in the corresponding input as of period end. A decrease to the unobservable input would have had the opposite effect. Significant changes in these inputs may have resulted in a significantly higher or lower fair value measurement at period end.
Health Care Portfolio:
| Asset Type | Fair Value | Valuation Technique(s) | Unobservable Input | Amount or Range/Weighted Average | Impact to Valuation from an Increase in Input(a) |
| Equities | $147,746,791 | Market comparable | Transaction price | $1.96 - $5.59 / $2.17 | Increase |
| Premium rate | 13.6% | Increase |
|||
| Market approach | Transaction price | $2.20 - $205.00 / $109.74 | Increase |
||
| Conversion rate | 0.9% | Increase |
(a) Represents the directional change in the fair value of the Level 3 investments that could have resulted from an increase in the corresponding input as of period end. A decrease to the unobservable input would have had the opposite effect. Significant changes in these inputs may have resulted in a significantly higher or lower fair value measurement at period end.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level as of February 29, 2020, as well as a roll forward of Level 3 investments, is included at the end of each applicable Fund's Schedule of Investments.
Foreign Currency. The Funds may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rates at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Funds' investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and for certain Funds include proceeds received from litigation. Dividend income is recorded 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 Funds are informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Income and capital gain distributions from Fidelity Central Funds, if any, are recorded on the ex-dividend date. Certain distributions received by the Funds represent a return of capital or capital gain. The Funds determine the components of these distributions subsequent to the ex-dividend date, based upon receipt of tax filings or other correspondence relating to the underlying investment. These distributions are recorded as a reduction of cost of investments and/or as a realized gain. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Deferred Trustee Compensation. Under a Deferred Compensation Plan (the Plan) the Funds, certain independent Trustees have elected to defer receipt of a portion of their annual compensation. Deferred amounts are invested in a cross-section of Fidelity funds, are marked-to-market and remain in each Fund until distributed in accordance with the Plan. The investment of deferred amounts and the offsetting payable to the Trustees presented below are included in each accompanying Statement of Assets and Liabilities in other receivables and other payables and accrued expenses, respectively.
| Biotechnology Portfolio | $895,524 |
| Health Care Portfolio | 617,437 |
| Health Care Services Portfolio | 67,559 |
| Medical Technology and Devices Portfolio | 202,722 |
| Pharmaceuticals Portfolio | 121,240 |
Income Tax Information and Distributions to Shareholders. Each year, each Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for U.S. Federal income taxes is required. As of February 29, 2020, each Fund did not have any unrecognized tax benefits in the financial statements; nor is each Fund aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. Each Fund files a U.S. federal tax return, in addition to state and local tax returns as required. Each Fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. Foreign taxes are provided for based on each Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are declared and recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. In addition, certain Funds claimed a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Capital accounts are not adjusted for temporary book-tax differences which will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, passive foreign investment companies (PFIC), partnerships, deferred trustees compensation, net operating losses, redemptions in-kind, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
As of period end, the cost and unrealized appreciation (depreciation) in securities, and derivatives if applicable, for federal income tax purposes were as follows for each Fund:
| Tax cost | Gross unrealized appreciation | Gross unrealized depreciation | Net unrealized appreciation (depreciation) | |
| Biotechnology Portfolio | $5,087,528,358 | $2,567,810,146 | $(429,395,744) | $2,138,414,402 |
| Health Care Portfolio | 5,014,220,596 | 2,499,059,362 | (222,146,939) | 2,276,912,423 |
| Health Care Services Portfolio | 643,036,410 | 390,398,408 | (22,474,264) | 367,924,144 |
| Medical Technology and Devices Portfolio | 4,253,230,896 | 330,238,504 | 1,610,986,098 | 1,941,224,602 |
| Pharmaceuticals Portfolio | 615,528,940 | 191,914,789 | (13,311,044) | 178,603,745 |
The tax-based components of distributable earnings as of period end were as follows for each Fund:
| Undistributed ordinary income | Undistributed long-term capital gain | Capital loss carryforward | Net unrealized appreciation (depreciation) on securities and other investments | |
| Biotechnology Portfolio | $16,419,011 | $306,123,222 | $– | $2,138,414,402 |
| Health Care Portfolio | 69,580,012 | 144,986,013 | – | 2,276,987,574 |
| Health Care Services Portfolio | 8,032,596 | – | (55,677,868) | 367,922,435 |
| Medical Technology and Devices Portfolio | – | 133,829,729 | – | 1,941,222,161 |
| Pharmaceuticals Portfolio | 5,057,504 | 17,089,070 | – | 178,616,110 |
Capital loss carryforwards are only available to offset future capital gains of the Funds to the extent provided by regulations and may be limited. The capital loss carryforward information presented below, including any applicable limitation, is estimated as of fiscal period end and is subject to adjustment.
| Short-term | |
| Health Care Services Portfolio | $(55,677,868) |
Certain of the Funds intend to elect to defer to the next fiscal year and ordinary losses recognized during the period January 1, 2020 to February 29, 2020. Loss deferrals were as follows:
| Ordinary losses | |
| Medical Technology and Devices Portfolio | $(6,992,400) |
The tax character of distributions paid was as follows:
| February 29, 2020 | |||
| Ordinary Income | Long-term Capital Gains | Total | |
| Biotechnology Portfolio | $10,687,837 | $637,855,151 | $648,542,988 |
| Health Care Portfolio | 8,393,187 | 96,115,548 | 104,508,735 |
| Health Care Services Portfolio | 3,201,281 | – | 3,201,281 |
| Medical Technology and Devices Portfolio | – | 118,431,567 | 118,431,567 |
| Pharmaceuticals Portfolio | 17,857,599 | 48,228,835 | 66,086,434 |
| February 28, 2019 | |||
| Ordinary Income | Long-term Capital Gains | Total | |
| Biotechnology Portfolio | $30,806,733 | $692,428,843 | $723,235,576 |
| Health Care Portfolio | 30,290,441 | 556,871,574 | 587,162,015 |
| Health Care Services Portfolio | 32,550,071 | 98,292,031 | 130,842,102 |
| Medical Technology and Devices Portfolio | – | 356,492,522 | 356,492,522 |
| Pharmaceuticals Portfolio | 12,320,224 | 1,736,622 | 14,056,846 |
Delayed Delivery Transactions and When-Issued Securities. During the period, certain Funds transacted in securities on a delayed delivery or when-issued basis. Payment and delivery may take place after the customary settlement period for that security. The price of the underlying securities and the date when the securities will be delivered and paid for are fixed at the time the transaction is negotiated. The securities purchased on a delayed delivery or when-issued basis are identified as such in each applicable Fund's Schedule of Investments. Losses may arise due to changes in the value of the underlying securities or if the counterparty does not perform under the contract's terms, or if the issuer does not issue the securities due to political, economic, or other factors.
Restricted Securities (including Private Placements). The Funds may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities is included at the end of each applicable Fund's Schedule of Investments.
Consolidated Subsidiary. Certain Funds invest in certain investments through a wholly-owned subsidiary ("Subsidiary"), which may be subject to federal and state taxes upon disposition.
As of period end, Biotechnology Portfolio held an investment of $90,671,404 in this Subsidiary, representing 1.37% of the Fund's net assets. As of period end, Health Care Portfolio held an investment of $28,999,922 in this Subsidiary, representing .40% of the Fund's net assets. As of period end, Health Care Services Portfolio held an investment of $2,199,938 in this Subsidiary, representing .22% of the Fund's net assets. The financial statements have been consolidated and include accounts of the Fund and the Subsidiary. Accordingly, all inter-company transactions and balances have been eliminated.
Any cash held by the Subsidiaries is restricted as to its use and is presented as Restricted cash in the Statement of Assets and Liabilities.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities and in-kind transactions are noted in the table below.
| Purchases ($) | Sales ($) | |
| Biotechnology Portfolio | 3,370,227,217 | 4,768,235,569 |
| Health Care Portfolio | 2,598,747,408 | 3,330,064,583 |
| Health Care Services Portfolio | 398,290,980 | 776,639,090 |
| Medical Technology and Devices Portfolio | 2,269,569,863 | 3,439,375,740 |
| Pharmaceuticals Portfolio | 382,622,714 | 434,080,938 |
5. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity Management & Research Company LLC (the investment adviser) and its affiliates provide the Funds with investment management related services for which the Funds pay a monthly management fee. The management fee is the sum of an individual fund fee rate and an annualized group fee rate. The individual fund fee rate is applied to each Fund's average net assets. The group fee rate is based upon the monthly average net assets of a group of registered investment companies with which the investment adviser has management contracts. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the reporting period, each Fund's annual management fee rate expressed as a percentage of each Fund's average net assets was as follows:
| Individual Rate | Group Rate | Total | |
| Biotechnology Portfolio | .30% | .24% | .54% |
| Health Care Portfolio | .30% | .24% | .54% |
| Health Care Services Portfolio | .30% | .24% | .54% |
| Medical Technology and Devices Portfolio | .30% | .24% | .54% |
| Pharmaceuticals Portfolio | .30% | .24% | .54% |
Transfer Agent Fees. Fidelity Investments Institutional Operations Company LLC (FIIOC), an affiliate of the investment adviser, is the Funds' transfer, dividend disbursing and shareholder servicing agent. FIIOC receives account fees and asset-based fees that vary according to account size and type of account. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, transfer agent fees were equivalent to the following annual rates expressed as a percentage of average net assets:
| Biotechnology Portfolio | .16% |
| Health Care Portfolio | .15% |
| Health Care Services Portfolio | .17% |
| Medical Technology and Devices Portfolio | .16% |
| Pharmaceuticals Portfolio | .19% |
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of the investment adviser, maintains each Fund's accounting records. The accounting fee is based on the level of average net assets for each month. Prior to April 1, 2019, FSC had a separate agreement with each Fund for administration of the security lending program, based on the number and duration of lending transactions. For the period, the total fees paid for accounting and administration of securities lending were equivalent to the following annual rates:
| % of Average Net Assets | |
| Biotechnology Portfolio | .02 |
| Health Care Portfolio | .02 |
| Health Care Services Portfolio | .03 |
| Medical Technology and Devices Portfolio | .02 |
| Pharmaceuticals Portfolio | .04 |
Brokerage Commissions. A portion of portfolio transactions were placed with brokerage firms which are affiliates of the investment adviser. Brokerage commissions are included in net realized gain (loss) and change in net unrealized appreciation (depreciation) in the Statement of Operations. The commissions paid to these affiliated firms were as follows:
| Amount | |
| Biotechnology Portfolio | $253,357 |
| Health Care Portfolio | 73,935 |
| Health Care Services Portfolio | 9,842 |
| Medical Technology and Devices Portfolio | 66,276 |
| Pharmaceuticals Portfolio | 11,606 |
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, each fund, along with other registered investment companies having management contracts with Fidelity Management & Research Company LLC (FMR), or other affiliated entities of FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing each fund to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. Activity in this program during the period for which loans were outstanding was as follows:
| Borrower or Lender | Average Loan Balance | Weighted Average Interest Rate | Interest Expense | |
| Health Care Portfolio | Borrower | $6,212,000 | 2.13% | $368 |
| Health Care Services Portfolio | Borrower | $3,070,000 | 2.64% | $1,579 |
| Medical Technology and Devices Portfolio | Borrower | $5,696,000 | 2.38% | $377 |
| Pharmaceuticals Portfolio | Borrower | $4,883,400 | 2.69% | $1,824 |
Interfund Trades. Funds may purchase from or sell securities to other Fidelity Funds under procedures adopted by the Board. The procedures have been designed to ensure these interfund trades are executed in accordance with Rule 17a-7 of the 1940 Act. Interfund trades are included within the respective purchases and sales amounts shown in the Purchases and Sales of Investments note.
Affiliated Redemptions In-Kind. During the period, 4,971,286 shares of the Health Care Portfolio were redeemed in-kind for investments and cash with a value of $122,939,907. The net realized gain of $52,017,323 on investments delivered through in-kind redemptions is included in the accompanying Statement of Operations. The amount of the in-kind redemptions is included in share transactions in the accompanying Statement of Changes in Net Assets. The Health Care Portfolio recognized no gain or loss for federal income tax purposes.
Prior Fiscal Year Affiliated Redemptions In-Kind. During the prior period, 23,409,830* shares of Health Care Portfolio were redeemed in-kind for investments and cash with a value of $541,001,090. Health Care had a net realized gain of $233,538,287 on investments delivered through in-kind redemptions. The amount of the in-kind redemptions is included in share transactions in the accompanying Statement of Changes in Net Assets. Health Care Portfolio recognized no gain or loss for federal income tax purposes.
* Share activity prior to August 10, 2018 has been adjusted to reflect the impact of the 10 for 1 share split that occurred on that date.
Other. During the period, the investment adviser reimbursed the Funds for certain losses as follows:
| Biotechnology Portfolio | $ 14,184 |
| Health Care Portfolio | 100,122 |
| Medical Technology and Devices Portfolio | 59,590 |
| Pharmaceuticals Portfolio | 7,786 |
6. Committed Line of Credit.
Certain Funds participate with other funds managed by the investment adviser or an affiliate in a $4.25 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The participating funds have agreed to pay commitment fees on their pro-rata portion of the line of credit, which are reflected in Miscellaneous expenses on the Statement of Operations, and are as follows:
| Amount | |
| Biotechnology Portfolio | $17,729 |
| Health Care Portfolio | 18,196 |
| Health Care Services Portfolio | 2,921 |
| Medical Technology and Devices Portfolio | 16,555 |
| Pharmaceuticals Portfolio | 1,840 |
During the period, there were no borrowings on this line of credit.
7. Security Lending.
Certain Funds lend portfolio securities from time to time in order to earn additional income. For equity securities, lending agents are used, including National Financial Services (NFS), an affiliate of the Funds. Pursuant to a securities lending agreement, NFS will receive a fee, which is capped at 9.9% of a Fund's daily lending revenue, for its services as lending agent. The Funds may lend securities to certain qualified borrowers, including NFS. On the settlement date of the loan, each applicable Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Funds and any additional required collateral is delivered to the Funds on the next business day. The Funds or borrower may terminate the loan at any time, and if the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, the Funds may apply collateral received from the borrower against the obligation. The Funds may experience delays and costs in recovering the securities loaned. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on each applicable Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented on each applicable Fund's Statement of Operations as a component of income from Fidelity Central Funds. Affiliated security lending activity was as follows:
| Total Security Lending Income Fees Paid to NFS | Security Lending Income From Securities Loaned to NFS | Value of Securities Loaned to NFS at Period End | |
| Biotechnology Portfolio | $401,192 | $47,362 | $4,113,245 |
| Health Care Portfolio | $47,024 | $– | $– |
| Health Care Services Portfolio | $1,890 | $– | $– |
| Medical Technology and Devices Portfolio | $69,285 | $– | $– |
| Pharmaceuticals Portfolio | $27,277 | $– | $– |
8. Expense Reductions.
Commissions paid to certain brokers with whom the investment adviser, or its affiliates, places trades on behalf of certain Funds include an amount in addition to trade execution, which may be rebated back to the Funds to offset certain expenses. In addition, through arrangements with each applicable Fund's custodian and transfer agent, credits realized as a result of certain uninvested cash balances were used to reduce each applicable Fund's expenses. All of the applicable expense reductions are noted in the table below.
| Brokerage service rebates | Custodian credits | Transfer Agent credits | |
| Biotechnology Portfolio | $203,777 | $4,759 | $3,305 |
| Health Care Portfolio | 151,228 | 1,540 | 6,860 |
| Health Care Services Portfolio | 28,917 | – | – |
| Medical Technology and Devices Portfolio | 122,060 | 953 | – |
| Pharmaceuticals Portfolio | 20,542 | – | – |
In addition, during the period the investment adviser or an affiliate reimbursed and/or waived a portion of operating expenses as follows:
| Amount | |
| Biotechnology Portfolio | $41,775 |
| Health Care Portfolio | 42,932 |
| Health Care Services Portfolio | 7,509 |
| Medical Technology and Devices Portfolio | 36,251 |
| Pharmaceuticals Portfolio | 4,465 |
9. Other.
The Funds' organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Funds. In the normal course of business, the Funds may also enter into contracts that provide general indemnifications. The Funds' maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Funds. The risk of material loss from such claims is considered remote.
10. Coronavirus (COVID-19) Pandemic.
An outbreak of COVID-19 first detected in China during December 2019 has since spread globally and was declared a pandemic by the World Health Organization during March 2020. Developments that disrupt global economies and financial markets, such as the COVID-19 pandemic, may magnify factors that affect the Funds' performance.
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of Fidelity Select Portfolios and the Shareholders of Biotechnology Portfolio, Health Care Portfolio, Health Care Services Portfolio, Medical Technology and Devices Portfolio and Pharmaceuticals Portfolio
Opinions on the Financial Statements
We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of Biotechnology Portfolio, Health Care Portfolio, Health Care Services Portfolio, Medical Technology and Devices Portfolio and Pharmaceuticals Portfolio (five of the funds constituting Fidelity Select Portfolios, hereafter collectively referred to as the “Funds”) as of February 29, 2020, the related statements of operations for the year ended February 29, 2020, the statements of changes in net assets for each of the two years in the period ended February 29, 2020, including the related notes, and the financial highlights for each of the five years in the period ended February 29, 2020 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of each of the Funds as of February 29, 2020, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period ended February 29, 2020 and each of the financial highlights for each of the five years in the period ended February 29, 2020 in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinions
These financial statements are the responsibility of the Funds' management. Our responsibility is to express an opinion on the Funds' financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Funds in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of February 29, 2020 by correspondence with the custodian, issuers of privately offered securities and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinions.
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 15, 2020
We have served as the auditor of one or more investment companies in the Fidelity group of funds since 1932.
Trustees and Officers
The Trustees, Members of the Advisory Board (if any), and officers of the trust for central funds housed in an LLC: Names of LLCs and funds, as applicable, are listed below. The Board of Trustees governs each fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee each fund's activities, review contractual arrangements with companies that provide services to each fund, oversee management of the risks associated with such activities and contractual arrangements, and review each fund's performance. Except for Michael E. Wiley, each of the Trustees oversees 302 funds. Mr. Wiley oversees 199 funds.
The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust. Each Trustee who is not an interested person (as defined in the 1940 Act) of the trust and the funds is referred to herein as an Independent Trustee. Each Independent Trustee shall retire not later than the last day of the calendar year in which his or her 75th birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. Officers and Advisory Board Members hold office without limit in time, except that any officer or Advisory Board Member may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years.
Each fund’s Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-800-544-8544.
Experience, Skills, Attributes, and Qualifications of the Trustees. The Governance and Nominating Committee has adopted a statement of policy that describes the experience, qualifications, attributes, and skills that are necessary and desirable for potential Independent Trustee candidates (Statement of Policy). The Board believes that each Trustee satisfied at the time he or she was initially elected or appointed a Trustee, and continues to satisfy, the standards contemplated by the Statement of Policy. The Governance and Nominating Committee also engages professional search firms to help identify potential Independent Trustee candidates who have the experience, qualifications, attributes, and skills consistent with the Statement of Policy. From time to time, additional criteria based on the composition and skills of the current Independent Trustees, as well as experience or skills that may be appropriate in light of future changes to board composition, business conditions, and regulatory or other developments, have also been considered by the professional search firms and the Governance and Nominating Committee. In addition, the Board takes into account the Trustees' commitment and participation in Board and committee meetings, as well as their leadership of standing and ad hoc committees throughout their tenure.
In determining that a particular Trustee was and continues to be qualified to serve as a Trustee, the Board has considered a variety of criteria, none of which, in isolation, was controlling. The Board believes that, collectively, the Trustees have balanced and diverse experience, qualifications, attributes, and skills, which allow the Board to operate effectively in governing each fund and protecting the interests of shareholders. Information about the specific experience, skills, attributes, and qualifications of each Trustee, which in each case led to the Board's conclusion that the Trustee should serve (or continue to serve) as a trustee of the funds, is provided below.
Board Structure and Oversight Function. James C. Curvey is an interested person and currently serves as Chairman. The Trustees have determined that an interested Chairman is appropriate and benefits shareholders because an interested Chairman has a personal and professional stake in the quality and continuity of services provided to the funds. Independent Trustees exercise their informed business judgment to appoint an individual of their choosing to serve as Chairman, regardless of whether the Trustee happens to be independent or a member of management. The Independent Trustees have determined that they can act independently and effectively without having an Independent Trustee serve as Chairman and that a key structural component for assuring that they are in a position to do so is for the Independent Trustees to constitute a substantial majority for the Board. The Independent Trustees also regularly meet in executive session. Ned C. Lautenbach serves as Chairman of the Independent Trustees and as such (i) acts as a liaison between the Independent Trustees and management with respect to matters important to the Independent Trustees and (ii) with management prepares agendas for Board meetings.
Fidelity® funds are overseen by different Boards of Trustees. The funds' Board oversees Fidelity's high income and certain equity funds, and other Boards oversee Fidelity's investment-grade bond, money market, asset allocation, and other equity funds. The asset allocation funds may invest in Fidelity® funds overseen by the funds' Board. The use of separate Boards, each with its own committee structure, allows the Trustees of each group of Fidelity® funds to focus on the unique issues of the funds they oversee, including common research, investment, and operational issues. On occasion, the separate Boards establish joint committees to address issues of overlapping consequences for the Fidelity® funds overseen by each Board.
The Trustees operate using a system of committees to facilitate the timely and efficient consideration of all matters of importance to the Trustees, each fund, and fund shareholders and to facilitate compliance with legal and regulatory requirements and oversight of the funds' activities and associated risks. The Board, acting through its committees, has charged FMR and its affiliates with (i) identifying events or circumstances the occurrence of which could have demonstrably adverse effects on the funds' business and/or reputation; (ii) implementing processes and controls to lessen the possibility that such events or circumstances occur or to mitigate the effects of such events or circumstances if they do occur; and (iii) creating and maintaining a system designed to evaluate continuously business and market conditions in order to facilitate the identification and implementation processes described in (i) and (ii) above. Because the day-to-day operations and activities of the funds are carried out by or through FMR, its affiliates, and other service providers, the funds' exposure to risks is mitigated but not eliminated by the processes overseen by the Trustees. While each of the Board's committees has responsibility for overseeing different aspects of the funds' activities, oversight is exercised primarily through the Operations, Audit, and Compliance Committees. Appropriate personnel, including but not limited to the funds' Chief Compliance Officer (CCO), FMR's internal auditor, the independent accountants, the funds' Treasurer and portfolio management personnel, make periodic reports to the Board's committees, as appropriate, including an annual review of Fidelity's risk management program for the Fidelity® funds. The responsibilities of each standing committee, including their oversight responsibilities, are described further under "Standing Committees of the Trustees."
Interested Trustees*:
Correspondence intended for a Trustee who is an interested person may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210.
Name, Year of Birth; Principal Occupations and Other Relevant Experience+
James C. Curvey (1935)
Year of Election or Appointment: 2018
Trustee
Chairman of the Board of Trustees
Mr. Curvey also serves as Trustee of other Fidelity® funds. Mr. Curvey is Vice Chairman (2007-present) and Director of FMR LLC (diversified financial services company). In addition, Mr. Curvey is an Overseer Emeritus for the Boston Symphony Orchestra, a Director of Artis-Naples, and a Trustee of Brewster Academy in Wolfeboro, New Hampshire. Previously, Mr. Curvey served as a Director of Fidelity Research & Analysis Co. (investment adviser firm, 2009-2018), Director of Fidelity Investments Money Management, Inc. (investment adviser firm, 2009-2014) and a Director of FMR and FMR Co., Inc. (investment adviser firms, 2007-2014).
* Determined to be an “Interested Trustee” by virtue of, among other things, his or her affiliation with the trusts or various entities under common control with FMR.
+ The information includes the Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to the Trustee's qualifications to serve as a Trustee, which led to the conclusion that the Trustee should serve as a Trustee for each fund.
Independent Trustees:
Correspondence intended for an Independent Trustee may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.
Name, Year of Birth; Principal Occupations and Other Relevant Experience+
Dennis J. Dirks (1948)
Year of Election or Appointment: 2018
Trustee
Mr. Dirks also serves as Trustee of other Fidelity® funds. Prior to his retirement in May 2003, Mr. Dirks served as Chief Operating Officer and as a member of the Board of The Depository Trust & Clearing Corporation (financial markets infrastructure), President, Chief Operating Officer and a member of the Board of The Depository Trust Company (DTC), President and a member of the Board of the National Securities Clearing Corporation (NSCC), Chief Executive Officer and a member of the Board of the Government Securities Clearing Corporation and Chief Executive Officer and a member of the Board of the Mortgage-Backed Securities Clearing Corporation. Mr. Dirks currently serves as a member of the Finance Committee (2016-present) and Board (2017-present) and is Treasurer (2018-present) of the Asolo Repertory Theatre.
Donald F. Donahue (1950)
Year of Election or Appointment: 2018
Trustee
Mr. Donahue also serves as Trustee of other Fidelity® funds. Mr. Donahue serves as President and Chief Executive Officer of Miranda Partners, LLC (risk consulting for the financial services industry, 2012-present). Previously, Mr. Donahue served as Chief Executive Officer (2006-2012), Chief Operating Officer (2003-2006) and Managing Director, Customer Marketing and Development (1999-2003) of The Depository Trust & Clearing Corporation (financial markets infrastructure). Mr. Donahue currently serves as a member (2007-present) and Co-Chairman (2016-present) of the Board of United Way of New York, a member of the Board of NYC Leadership Academy (2012-present) and a member of the Board of Advisors of Ripple Labs, Inc. (financial services, 2015-present). Mr. Donahue previously served as a member of the Advisory Board of certain Fidelity® funds (2015-2018).
Alan J. Lacy (1953)
Year of Election or Appointment: 2018
Trustee
Mr. Lacy also serves as Trustee of other Fidelity® funds. Previously, Mr. Lacy served as Senior Adviser (2007-2014) of Oak Hill Capital Partners, L.P. (private equity), Chief Executive Officer (2005) and Vice Chairman (2005-2006) of Sears Holdings Corporation (retail), Chief Executive Officer and Chairman of the Board of Sears, Roebuck and Co. (retail, 2000-2005) and Chairman (2014-2017) and a member of the Board (2010-2017) of Dave & Buster’s Entertainment, Inc. (restaurant and entertainment complexes). Mr. Lacy currently serves as a member of the Board of Bristol-Myers Squibb Company (global pharmaceuticals, 2008-present), Trustee of the California Chapter of The Nature Conservancy (2015-present) and a member of the Board of the Center for Advanced Study in the Behavioral Sciences at Stanford University (2015-present).
Ned C. Lautenbach (1944)
Year of Election or Appointment: 2018
Trustee
Chairman of the Independent Trustees
Mr. Lautenbach also serves as Trustee of other Fidelity® funds. Mr. Lautenbach currently serves as Chair of the Board of Governors, State University System of Florida (2013-present) and is a member of the Council on Foreign Relations (1994-present). He is also a member and has in the past served as Chairman of the Board of Directors of Artis-Naples (2012-present). Previously, Mr. Lautenbach served as a member and then Lead Director of the Board of Directors of Eaton Corporation (diversified industrial, 1997-2016). He was also a Partner at Clayton, Dubilier & Rice, LLC (private equity investment, 1998-2010); as well as Director of Sony Corporation (2006-2007). In addition, Mr. Lautenbach had a 30-year career with IBM (technology company), during which time he served as Senior Vice President and as a member of the Corporate Executive Committee (1968-1998).
Joseph Mauriello (1944)
Year of Election or Appointment: 2018
Trustee
Mr. Mauriello also serves as Trustee of other Fidelity® funds. Prior to his retirement in January 2006, Mr. Mauriello served in numerous senior management positions including Deputy Chairman and Chief Operating Officer (2004-2005), and Vice Chairman of Financial Services (2002-2004) of KPMG LLP US (professional services, 1965-2005). Mr. Mauriello currently serves as a member of the Independent Directors Council Governing Council (2015-present). Previously, Mr. Mauriello served as a member of the Board of XL Group plc. (global insurance and re-insurance, 2006-2018).
Cornelia M. Small (1944)
Year of Election or Appointment: 2018
Trustee
Ms. Small also serves as Trustee of other Fidelity® funds. Previously, Ms. Small served as Chief Investment Officer, Director of Global Equity Investments and a member of Scudder, Stevens & Clark and Scudder Kemper Investments. Ms. Small previously served as a member of the Board (2009-2019) and Chair of the Investment Committee (2010-2019) of the Teagle Foundation and a member of the Investment Committee of the Berkshire Taconic Community Foundation (2008-2019).
Garnett A. Smith (1947)
Year of Election or Appointment: 2013
Trustee
Mr. Smith also serves as Trustee of other Fidelity® funds. Prior to his retirement, Mr. Smith served as Chairman and Chief Executive Officer (1990-1997) and President (1986-1990) of Inbrand Corp. (manufacturer of personal absorbent products). Prior to his employment with Inbrand Corp., he was employed by a retail fabric chain and North Carolina National Bank (now Bank of America). Mr. Smith previously served as a member of the Advisory Board of certain Fidelity® funds (2012-2013).
David M. Thomas (1949)
Year of Election or Appointment: 2018
Trustee
Mr. Thomas also serves as Trustee of other Fidelity® funds. Previously, Mr. Thomas served as Executive Chairman (2005-2006) and Chairman and Chief Executive Officer (2000-2005) of IMS Health, Inc. (pharmaceutical and healthcare information solutions). Mr. Thomas currently serves as Non-Executive Chairman of the Board of Fortune Brands Home and Security (home and security products, 2011-present), and a member of the Board (2004-present) and Presiding Director (2013-present) of Interpublic Group of Companies, Inc. (marketing communication).
Michael E. Wiley (1950)
Year of Election or Appointment: 2008
Trustee
Mr. Wiley also serves as Trustee or a member of the Advisory Board of other Fidelity® funds. Previously, Mr. Wiley served as Chairman, President and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004). Mr. Wiley currently serves as a member of the Board of High Point Resources (exploration and production, 2005-present). Previously, Mr. Wiley served as a member of the Board of Andeavor Corporation (independent oil refiner and marketer, 2005-2018) and a member of the Board of Andeavor Logistics LP (natural resources logistics, 2015-2018).
+ The information includes the Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to the Trustee's qualifications to serve as a Trustee, which led to the conclusion that the Trustee should serve as a Trustee for each fund.
Advisory Board Members and Officers:
Correspondence intended for a Member of the Advisory Board (if any) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235. Correspondence intended for an officer or Peter S. Lynch may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210. Officers appear below in alphabetical order.
Name, Year of Birth; Principal Occupation
Vicki L. Fuller (1957)
Year of Election or Appointment: 2018
Member of the Advisory Board
Ms. Fuller also serves as a member of the Advisory Board of other Fidelity® funds. Previously, Ms. Fuller served as Chief Investment Officer of the New York State Common Retirement Fund (2012-2018) and held a variety of positions at AllianceBernstein L.P. (global asset management, 1985-2012), including Managing Director (2006-2012) and Senior Vice President and Senior Portfolio Manager (2001-2006). Ms. Fuller currently serves as a member of the Board, Audit Committee and Nominating and Governance Committee of The Williams Companies, Inc. (natural gas infrastructure, 2018-present) and as a member of the Board of Treliant, LLC (consulting, 2019-present).
Patricia L. Kampling (1959)
Year of Election or Appointment: 2020
Member of the Advisory Board
Ms. Kampling also serves as Member of the Advisory Board of other Fidelity® funds. Prior to her retirement, Ms. Kampling served as Chairman of the Board and Chief Executive Officer (2012-2019), President and Chief Operating Officer (2011-2012) and Executive Vice President and Chief Financial Officer (2010-2011) of Alliant Energy Corporation. Ms. Kampling currently serves as a member of the Board, Compensation Committee and Executive Committee and as Chair of the Audit Committee of Briggs & Stratton Corporation (manufacturing, 2011-present) and as a member of the Board, Audit, Finance and Risk Committee and Safety, Environmental, Technology and Operations Committee of American Water Works Company, Inc. (utilities company, 2019-present). In addition, Ms. Kampling currently serves as a member of the Board of the Nature Conservancy, Wisconsin Chapter (2019-present). Previously, Ms. Kampling served as a member of the Board of Interstate Power and Light Company (2012-2019) and Wisconsin Power and Light Company (2012-2019) (each a subsidiary of Alliant Energy Corporation) and as a member of the Board and Workforce Development Committee of the Business Roundtable (2018-2019).
Peter S. Lynch (1944)
Year of Election or Appointment: 2018
Member of the Advisory Board
Mr. Lynch also serves as Member of the Advisory Board of other Fidelity® funds. Mr. Lynch is Vice Chairman and a Director of Fidelity Management & Research Company LLC (investment adviser firm). In addition, Mr. Lynch serves as a Trustee of Boston College and as the Chairman of the Inner-City Scholarship Fund. Previously, Mr. Lynch served as Vice Chairman and a Director of FMR Co., Inc. (investment adviser firm) and on the Special Olympics International Board of Directors (1997-2006).
Susan Tomasky (1953)
Year of Election or Appointment: 2020
Member of the Advisory Board
Ms. Tomasky also serves as Member of the Advisory Board of other Fidelity® funds. Prior to her retirement, Ms. Tomasky served in various executive officer positions at American Electric Power Company, Inc. (1998-2011), including most recently as President of AEP Transmission (2007-2011). Ms. Tomasky currently serves as a member of the Board and Sustainability Committee and as Chair of the Audit Committee of Marathon Petroleum Corporation (2018-present) and as a member of the Board, Corporate Governance Committee and Organization and Compensation Committee and as Chair of the Audit Committee of Public Service Enterprise Group, Inc. (utilities company, 2012-present). In addition, Ms. Tomasky currently serves as a member of the Board of the Columbus Regional Airport Authority (2007-present), as a member of the Board of the Royal Shakespeare Company – America (2009-present), as a member of the Board of the Columbus Association for the Performing Arts (2011-present) and as a member of the Board of Kenyon College (2016-present). Previously, Ms. Tomasky served as a member of the Board (2011-2019) and as Lead Independent Director (2015-2018) of Andeavor Corporation (previously Tesoro Corporation) (independent oil refiner and marketer) and as a member of the Board of Summit Midstream Partners LP (energy, 2012-2018).
Elizabeth Paige Baumann (1968)
Year of Election or Appointment: 2017
Anti-Money Laundering (AML) Officer
Ms. Baumann also serves as AML Officer of other funds. She is Chief AML Officer (2012-present) and Senior Vice President (2014-present) of FMR LLC (diversified financial services company) and is an employee of Fidelity Investments. Previously, Ms. Baumann served as AML Officer of certain funds (2017-2019), as AML Officer of the funds (2012-2016), and Vice President (2007-2014) and Deputy Anti-Money Laundering Officer (2007-2012) of FMR LLC.
Craig S. Brown (1977)
Year of Election or Appointment: 2019
Assistant Treasurer
Mr. Brown also serves as Assistant Treasurer of other funds. Mr. Brown is an employee of Fidelity Investments (2013-present).
John J. Burke III (1964)
Year of Election or Appointment: 2018
Chief Financial Officer
Mr. Burke also serves as Chief Financial Officer of other funds. Mr. Burke serves as Head of Investment Operations for Fidelity Fund and Investment Operations (2018-present) and is an employee of Fidelity Investments (1998-present). Previously Mr. Burke served as head of Asset Management Investment Operations (2012-2018).
William C. Coffey (1969)
Year of Election or Appointment: 2019
Assistant Secretary
Mr. Coffey also serves as Assistant Secretary of other funds. He is Senior Vice President and Deputy General Counsel of FMR LLC (diversified financial services company, 2010-present), and is an employee of Fidelity Investments. Previously, Mr. Coffey served as Secretary and CLO of certain funds (2018-2019); CLO, Secretary, and Senior Vice President of Fidelity Management & Research Company and FMR Co., Inc. (investment adviser firms, 2018-2019); Secretary of Fidelity SelectCo, LLC and Fidelity Investments Money Management, Inc. (investment adviser firms, 2018-2019); CLO of Fidelity Management & Research (Hong Kong) Limited, FMR Investment Management (UK) Limited, and Fidelity Management & Research (Japan) Limited (investment adviser firms, 2018-2019); and Assistant Secretary of certain funds (2009-2018).
Timothy M. Cohen (1969)
Year of Election or Appointment: 2018
Vice President
Mr. Cohen also serves as Vice President of other funds. Mr. Cohen serves as Co-Head of Equity (2018-present), a Director of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2016-present), and is an employee of Fidelity Investments. Previously, Mr. Cohen served as Executive Vice President of Fidelity SelectCo, LLC (2019), Head of Global Equity Research (2016-2018), Chief Investment Officer - Equity and a Director of Fidelity Management & Research (U.K.) Inc. (investment adviser firm, 2013-2015) and as a Director of Fidelity Management & Research (Hong Kong) Limited (investment adviser firm, 2017).
Jonathan Davis (1968)
Year of Election or Appointment: 2010
Assistant Treasurer
Mr. Davis also serves as Assistant Treasurer of other funds. Mr. Davis serves as Assistant Treasurer of FMR Capital, Inc. (2017-present) and is an employee of Fidelity Investments. Previously, Mr. Davis served as Vice President and Associate General Counsel of FMR LLC (diversified financial services company, 2003-2010).
Laura M. Del Prato (1964)
Year of Election or Appointment: 2018
Assistant Treasurer
Ms. Del Prato also serves as an officer of other funds. Ms. Del Prato is an employee of Fidelity Investments (2017-present). Prior to joining Fidelity Investments, Ms. Del Prato served as a Managing Director and Treasurer of the JPMorgan Mutual Funds (2014-2017). Prior to JPMorgan, Ms. Del Prato served as a partner at Cohen Fund Audit Services (accounting firm, 2012-2013) and KPMG LLP (accounting firm, 2004-2012).
Colm A. Hogan (1973)
Year of Election or Appointment: 2020
Assistant Treasurer
Mr. Hogan also serves as an officer of other funds. Mr. Hogan serves as Assistant Treasurer of FMR Capital, Inc. (2017-present) and is an employee of Fidelity Investments (2005-present). Previously, Mr. Hogan served as Deputy Treasurer of certain Fidelity® funds (2016-2020) and Assistant Treasurer of certain Fidelity® funds (2016-2018).
Pamela R. Holding (1964)
Year of Election or Appointment: 2018
Vice President
Ms. Holding also serves as Vice President of other funds. Ms. Holding serves as Co-Head of Equity (2018-present) and is an employee of Fidelity Investments (2013-present). Previously, Ms. Holding served as Executive Vice President of Fidelity SelectCo, LLC (2019) and as Chief Investment Officer of Fidelity Institutional Asset Management (2013-2018).
Cynthia Lo Bessette (1969)
Year of Election or Appointment: 2019
Secretary and Chief Legal Officer (CLO)
Ms. Lo Bessette also serves as an officer of other funds. Ms. Lo Bessette serves as CLO, Secretary, and Senior Vice President of Fidelity Management & Research Company LLC (investment adviser firm, 2019-present); and CLO of Fidelity Management & Research (Hong Kong) Limited, FMR Investment Management (UK) Limited, and Fidelity Management & Research (Japan) Limited (investment adviser firms, 2019-present). She is a Senior Vice President and Deputy General Counsel of FMR LLC (diversified financial services company, 2019-present), and is an employee of Fidelity Investments. Previously, Ms. Lo Bessette served as CLO, Secretary, and Senior Vice President of FMR Co., Inc. (investment adviser firm, 2019); Secretary of Fidelity SelectCo, LLC and Fidelity Investments Money Management, Inc. (investment adviser firms, 2019). Prior to joining Fidelity Investments, Ms. Lo Bessette was Executive Vice President, General Counsel (2016-2019) and Senior Vice President, Deputy General Counsel (2015-2016) of OppenheimerFunds (investment management company) and Deputy Chief Legal Officer (2013-2015) of Jennison Associates LLC (investment adviser firm).
Chris Maher (1972)
Year of Election or Appointment: 2020
Deputy Treasurer
Mr. Maher also serves as an officer of other funds. Mr. Maher serves as Assistant Treasurer of FMR Capital, Inc. (2017-present), and is an employee of Fidelity Investments (2008-present). Previously, Mr. Maher served as Assistant Treasurer of certain funds (2013-2020); Vice President of Asset Management Compliance (2013), Vice President of the Program Management Group of FMR (investment adviser firm, 2010-2013), and Vice President of Valuation Oversight (2008-2010).
Kenneth B. Robins (1969)
Year of Election or Appointment: 2018
Chief Compliance Officer
Mr. Robins also serves as an officer of other funds. Mr. Robins serves as Compliance Officer of Fidelity Management & Research Company LLC (investment adviser firm, 2016-present) and is an employee of Fidelity Investments (2004-present). Previously, Mr. Robins served as Compliance Officer of FMR Co., Inc. (investment adviser firm, 2016-2019), as Executive Vice President of Fidelity Investments Money Management, Inc. (investment adviser firm, 2013-2016) and served in other fund officer roles.
Stacie M. Smith (1974)
Year of Election or Appointment: 2018
President and Treasurer
Ms. Smith also serves as an officer of other funds. Ms. Smith serves as Assistant Treasurer of FMR Capital, Inc. (2017-present), is an employee of Fidelity Investments (2009-present), and has served in other fund officer roles. Prior to joining Fidelity Investments, Ms. Smith served as Senior Audit Manager of Ernst & Young LLP (accounting firm, 1996-2009). Previously, Ms. Smith served as Assistant Treasurer (2013-2019) and Deputy Treasurer (2013-2016) of certain Fidelity® funds.
Marc L. Spector (1972)
Year of Election or Appointment: 2017
Assistant Treasurer
Mr. Spector also serves as an officer of other funds. Mr. Spector serves as Assistant Treasurer of FMR Capital, Inc. (2017-present) and is an employee of Fidelity Investments (2016-present). Prior to joining Fidelity Investments, Mr. Spector served as Director at the Siegfried Group (accounting firm, 2013-2016), and prior to Siegfried Group as audit senior manager at Deloitte & Touche LLP (accounting firm, 2005-2013).
Jim Wegmann (1979)
Year of Election or Appointment: 2019
Assistant Treasurer
Mr. Wegmann also serves as Assistant Treasurer of other funds. Mr. Wegmann is an employee of Fidelity Investments (2011-present).
Shareholder Expense Example
As a shareholder of a Fund, you incur two types of costs: (1) transaction costs, including and (2) ongoing costs, including management fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (September 1, 2019 to February 29, 2020).
Actual Expenses
The first line of the accompanying table for each fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. In addition, each Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each fund provides information about hypothetical account values and hypothetical expenses based on a fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. In addition, each Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Annualized Expense RatioA | Beginning Account Value September 1, 2019 | Ending Account Value February 29, 2020 | Expenses Paid During Period-B September 1, 2019 to February 29, 2020 |
|
| Biotechnology Portfolio | .71% | |||
| Actual | $1,000.00 | $1,144.70 | $3.79 | |
| Hypothetical-C | $1,000.00 | $1,021.33 | $3.57 | |
| Health Care Portfolio | .70% | |||
| Actual | $1,000.00 | $1,095.70 | $3.65 | |
| Hypothetical-C | $1,000.00 | $1,021.38 | $3.52 | |
| Health Care Services Portfolio | .74% | |||
| Actual | $1,000.00 | $1,099.22 | $3.85 | |
| Hypothetical-C | $1,000.00 | $1,021.18 | $3.72 | |
| Medical Technology and Devices Portfolio | .71% | |||
| Actual | $1,000.00 | $1,015.70 | $3.56 | |
| Hypothetical-C | $1,000.00 | $1,021.33 | $3.57 | |
| Pharmaceuticals Portfolio | .77% | |||
| Actual | $1,000.00 | $1,097.00 | $4.01 | |
| Hypothetical-C | $1,000.00 | $1,021.03 | $3.87 |
A Annualized expense ratio reflects expenses net of applicable fee waivers.
B Expenses are equal to each Fund's annualized expense ratio, multiplied by the average account value over the period, multiplied by 182/ 366 (to reflect the one-half year period).
C 5% return per year before expenses
Distributions (Unaudited)
The Board of Trustees of each fund voted to pay to shareholders of record at the opening of business on record date, the following distributions per share derived from capital gains realized from sales of portfolio securities, and dividends derived from net investment income:
| Pay Date | Record Date | Dividends | Capital Gains | |
| Biotechnology Portfolio | 04/09/2020 | 04/08/2020 | $0.054 | $0.998 |
| Health Care Portfolio | 04/09/2020 | 04/08/2020 | $0.057 | $0.731 |
| Health Care Services Portfolio | 04/09/2020 | 04/08/2020 | $0.791 | $0.000 |
| Medical Technology and Devices Portfolio | 04/09/2020 | 04/08/2020 | $0.000 | $1.299 |
| Pharmaceuticals Portfolio | 04/09/2020 | 04/08/2020 | $0.074 | $0.563 |
The funds hereby designate as capital gain dividend the amounts noted below for the taxable year ended February 29, 2020, or, if subsequently determined to be different, the net capital gain of such year.
| Biotechnology Portfolio | $735,709,853 |
| Health Care Portfolio | $241,101,561 |
| Medical Technology and Devices Portfolio | $269,098,498 |
| Pharmaceuticals Portfolio | $48,737,047 |
A percentage of the dividends distributed during the fiscal year for the following funds qualify for the dividends–received deduction for corporate shareholders:
| Biotechnology Portfolio | |
| April 2019 | - |
| December 2019 | 100% |
| Health Care Portfolio | |
| April 2019 | - |
| December 2019 | 100% |
| Health Care Services Portfolio | |
| April 2019 | - |
| December 2019 | 100% |
| Medical Technology and Devices Portfolio | |
| April 2019 | - |
| December 2019 | - |
| Pharmaceuticals Portfolio | |
| April 2019 | 44% |
| December 2019 | 35% |
A percentage of the dividends distributed during the fiscal year for the following funds may be taken into account as a dividend for purposes of the maximum rate under section 1(h)(11) of the Internal Revenue Code.
| Biotechnology Portfolio | |
| April 2019 | - |
| December 2019 | 100% |
| Health Care Portfolio | |
| April 2019 | - |
| December 2019 | 100% |
| Health Care Services Portfolio | |
| April 2019 | - |
| December 2019 | 100% |
| Medical Technology and Devices Portfolio | |
| April 2019 | - |
| December 2019 | - |
| Pharmaceuticals Portfolio | |
| April 2019 | 100% |
| December 2019 | 73% |
The funds will notify shareholders in January 2021 of amounts for use in preparing 2020 income tax returns.
Board Approval of Investment Advisory Contracts and Management Fees
Biotechnology Portfolio
Health Care Portfolio
Health Care Services Portfolio
Medical Technology and Devices Portfolio
Pharmaceuticals Portfolio
Biotechnology Portfolio
Health Care Portfolio
Health Care Services Portfolio
Medical Technology and Devices Portfolio
Pharmaceuticals Portfolio
Biotechnology Portfolio
Health Care Portfolio
Health Care Services Portfolio
Medical Technology and Devices Portfolio
Pharmaceuticals Portfolio
Liquidity Risk Management Program
The Securities and Exchange Commission adopted Rule 22e-4 under the Investment Company Act of 1940 (the Liquidity Rule) to promote effective liquidity risk management throughout the open-end investment company industry, thereby reducing the risk that funds will be unable to meet their redemption obligations and mitigating dilution of the interests of fund shareholders.
The Funds have adopted and implemented a liquidity risk management program pursuant to the Liquidity Rule (the Program) effective December 1, 2018. The Program is reasonably designed to assess and manage each Fund’s liquidity risk and to comply with the requirements of the Liquidity Rule. Each Fund’s Board of Trustees (the Board) has designated each Fund’s investment adviser as administrator of the Program. The Fidelity advisers have established a Liquidity Risk Management Committee (the LRM Committee) to manage the Program for each of the Fidelity Funds. The LRM Committee monitors the adequacy and effectiveness of implementation of the Program and on a periodic basis assesses each Fund’s liquidity risk based on a variety of factors including (1) the Fund’s investment strategy, (2) portfolio liquidity and cash flow projections during normal and reasonably foreseeable stressed conditions, (3) shareholder redemptions, (4) borrowings and other funding sources and (5) in the case of exchange-traded funds, certain additional factors including the effect of the Fund’s prices and spreads, market participants, and basket compositions on the overall liquidity of the Fund’s portfolio, as applicable.
In accordance with the Program, each of the Fund’s portfolio investments is classified into one of four liquidity categories described below based on a determination of a reasonable expectation for how long it would take to convert the investment to cash (or sell or dispose of the investment) without significantly changing its market value.
- Highly liquid investments – cash or convertible to cash within three business days or less
- Moderately liquid investments – convertible to cash in three to seven calendar days
- Less liquid investments – can be sold or disposed of, but not settled, within seven calendar days
- Illiquid investments – cannot not be sold or disposed of within seven calendar days
Liquidity classification determinations take into account a variety of factors including various market, trading and investment-specific considerations, as well as market depth, and generally utilize analysis from a third-party liquidity metrics service.
The Liquidity Rule places a 15% limit on a fund’s illiquid investments and requires funds that do not primarily hold assets that are highly liquid investments to determine and maintain a minimum percentage of the fund’s net assets to be invested in highly liquid investments (highly liquid investment minimum or HLIM). The Program includes provisions reasonably designed to comply with the 15% limit on illiquid investments and for determining, periodically reviewing and complying with the HLIM requirement as applicable.
At a recent meeting of the Fund’s Board of Trustees, the LRM Committee provided a written report to the Board pertaining to the operation, adequacy, and effectiveness of implementation of the Program for the annual period from December 1, 2018 through November 30, 2019. The report concluded that the Program has been implemented and is operating effectively and is reasonably designed to assess and manage the Fund’s liquidity risk.
SELHC-ANN-0420
1.813640.115
Fidelity® Select Portfolios®
Industrials Sector
Air Transportation Portfolio
Defense and Aerospace Portfolio
Environment and Alternative Energy Portfolio
Industrials Portfolio
Transportation Portfolio
February 29, 2020
See the inside front cover for important information about access to your fund’s shareholder reports.
Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of a fund’s shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports from the fund or from your financial intermediary, such as a financial advisor, broker-dealer or bank. Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from a fund electronically, by contacting your financial intermediary. For Fidelity customers, visit Fidelity's web site or call Fidelity using the contact information listed below.
You may elect to receive all future reports in paper free of charge. If you wish to continue receiving paper copies of your shareholder reports, you may contact your financial intermediary or, if you are a Fidelity customer, visit Fidelity’s website, or call Fidelity at the applicable toll-free number listed below. Your election to receive reports in paper will apply to all funds held with the fund complex/your financial intermediary.
| Account Type | Website | Phone Number |
| Brokerage, Mutual Fund, or Annuity Contracts: | fidelity.com/mailpreferences | 1-800-343-3548 |
| Employer Provided Retirement Accounts: | netbenefits.fidelity.com/preferences (choose 'no' under Required Disclosures to continue to print) | 1-800-343-0860 |
| Advisor Sold Accounts Serviced Through Your Financial Intermediary: | Contact Your Financial Intermediary | Your Financial Intermediary's phone number |
| Advisor Sold Accounts Serviced by Fidelity: | institutional.fidelity.com | 1-877-208-0098 |
Contents
|
Air Transportation Portfolio | |
|
Defense and Aerospace Portfolio | |
|
Environment and Alternative Energy Portfolio | |
|
Industrials Portfolio | |
|
Transportation Portfolio | |
|
Board Approval of Investment Advisory Contracts and Management Fees | |
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov.
You may also call 1-800-544-8544 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third-party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company. © 2020 FMR LLC. All rights reserved.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the Funds. This report is not authorized for distribution to prospective investors in the Funds unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-PORT. Forms N-PORT are available on the SEC’s web site at http://www.sec.gov. A fund's Forms N-PORT may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330.
For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com, http://www.institutional.fidelity.com, or http://www.401k.com, as applicable.
NOT FDIC INSURED •MAY LOSE VALUE •NO BANK GUARANTEE
Neither the Funds nor Fidelity Distributors Corporation is a bank.
Note to shareholders:
(No Action is Required by You)
As part of a regular review of its organizational structure, Fidelity has decided to merge certain entities to streamline operations, increase efficiency, simplify reporting, and reduce legal, compliance, and accounting complexity and costs. In separate events, Fidelity has merged four of its investment advisers and two of its broker-dealers.
Effective on or about January 1, 2020, following any required regulatory notices and approvals:
Investment advisers Fidelity Investments Money Management, Inc., FMR Co., Inc., and Fidelity SelectCo, LLC, merged with and into Fidelity Management & Research Company. In connection with the merger transactions, the resulting, merged investment adviser was then redomiciled from Massachusetts to Delaware, changed its corporate structure from a corporation to a limited liability company, and changed its name to “Fidelity Management & Research Company LLC”.
Broker-dealer Fidelity Distributors Corporation merged with and into Fidelity Investments Institutional Services Company, Inc. (“FIISC”). FIISC was then redomiciled from Massachusetts to Delaware, changed its corporate structure from a corporation to a limited liability company, and changed its name to “Fidelity Distributors Company LLC”.
These mergers are not expected to affect fund shareholders or Fidelity clients, nor are they expected to result in any changes to the day-to-day management of Fidelity’s brokerage services, the Fidelity funds, their investment policies and practices, their portfolio management teams, or the funds’ expenses.
Early in 2020, the outbreak and spread of a new coronavirus emerged as a public health emergency that had a major influence on financial markets, primarily based on its impact on the global economy and corporate earnings. The virus causes a respiratory disease known as COVID-19. On March 11, the World Health Organization declared the COVID-19 outbreak a pandemic, citing sustained risk of further global spread.
In the weeks following the end of this reporting period, as the crisis worsened, we witnessed an escalating human tragedy with wide-scale social and economic consequences from coronavirus-containment measures. The outbreak of COVID-19 prompted a number of measures to limit the spread, including travel and border restrictions, quarantines, and restrictions on large gatherings. In turn, these resulted in lower consumer activity, diminished demand for a wide range of products and services, disruption in manufacturing and supply chains, and – given the wide variability in outcomes regarding the outbreak – significant market uncertainty and volatility. Amid the turmoil, the U.S. government took unprecedented action – in concert with the U.S. Federal Reserve and central banks around the world – to help support consumers, businesses, and the broader economy, and to limit disruption to the financial system.
The situation continues to unfold, and the extent and duration of its impact on financial markets and the economy remain highly uncertain. Extreme events such as the coronavirus crisis are “exogenous shocks” that can have significant adverse effects on mutual funds and their investments. Although multiple asset classes may be affected by market disruption, the duration and impact may not be the same for all types of assets.
Fidelity is committed to helping you stay informed amid news about COVID-19 and during increased market volatility, and we’re taking extra steps to be responsive to customer needs. We encourage you to visit our websites, where we offer ongoing updates, commentary, and analysis on the markets and our funds.
Air Transportation Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The hypothetical investment and the average annual total returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund’s total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
| For the periods ended February 29, 2020 | Past 1 year | Past 5 years | Past 10 years |
| Air Transportation Portfolio | (13.48)% | 4.15% | 12.05% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Air Transportation Portfolio on February 28, 2010.
The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
| Period Ending Values | ||
|
| $31,189 | Air Transportation Portfolio |
|
| $32,918 | S&P 500® Index |
Air Transportation Portfolio
Management's Discussion of Fund Performance
Market Recap: U.S. stocks stalled to begin the new year and declined in late February, as the outbreak and spread of the new coronavirus threatened to hamper global economic growth and corporate earnings. For the 12 months ending February 29, 2020, the U.S. equity bellwether S&P 500® index gained 8.19%. The period began with equities rising amid upbeat company earnings and signs the U.S. Federal Reserve may pause on rates. The uptrend extended until May, when the index dipped as trade talks between the U.S. and China broke down. The bull market roared back to record a series of highs in July, when the Fed cut interest rates for the first time since 2008. Volatility intensified in August, as the Treasury yield curve inverted, which some investors viewed as a sign the U.S. economy could be heading for recession. But the market proved resilient, hitting a new high on October 30, when the Fed lowered rates for the third time in 2019, and moving higher through December 31. Following a roughly flat January, stocks sank in late February, after a surge in coronavirus cases outside China created considerable uncertainty and pushed investors to safer asset classes. By sector, information technology (+27%) led the way by a wide margin, followed by utilities and communication services (+13% each). In contrast, energy (-25%) was by far the weakest category, struggling due to sluggish oil prices. Other notable laggards included materials and industrials (-2% each). Comments from Portfolio Manager Matthew Moulis: For the fiscal year, the fund returned -13.48%, trailing the -11.08% result of the Nasdaq® North America Air Transportation Total Return Linked Index, and well behind the gain of the S&P 500®. Versus the air transportation index, security selection in airlines weighed on the fund's performance the most the past 12 months. Stock picks in aerospace & defense, along with an underweighting in industrial machinery, also detracted. The portfolio’s top individual relative detractor was Virgin Galactic Holdings (+128%), which hurt because it was a strong-performing index component we didn’t own. Overweighting Bombardier (-66%), a Canada-based aircraft/train manufacturer, also hampered the fund's relative return. In the airlines segment, underweighting Air Canada (+1%) proved untimely, given the stock’s outperformance. Conversely, investment choices among air freight & logistics stocks, as well as non-index exposure to industrial conglomerates, contributed this period. A cash position averaging roughly 3% also helped in an environment of declining equity markets. On a stock-specific basis, moving to an overweighting for a portion of the reporting period in TransDigm Group (+46%), a maker of aftermarket aircraft parts, made this holding the top relative contributor. Industrial conglomerate General Electric (+20%), an out-of-index position that I purchased for the portfolio this period, also figured prominently in our list of contributors. Lastly, a larger-than-index stake in major defense contractor Northrop Grumman (+3%), also purchased in the fund the past 12 months, further contributed to the fund’s relative performance.The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Air Transportation Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 29, 2020
| % of fund's net assets | |
| United Technologies Corp. | 7.6 |
| Southwest Airlines Co. | 7.2 |
| United Airlines Holdings, Inc. | 6.8 |
| United Parcel Service, Inc. Class B | 6.1 |
| Textron, Inc. | 5.4 |
| Delta Air Lines, Inc. | 5.3 |
| TransDigm Group, Inc. | 5.2 |
| SkyWest, Inc. | 4.9 |
| Teledyne Technologies, Inc. | 4.8 |
| FedEx Corp. | 4.0 |
| 57.3 |
Top Industries (% of fund's net assets)
| As of February 29, 2020 | ||
| Aerospace & Defense | 41.8% | |
| Airlines | 38.0% | |
| Air Freight & Logistics | 13.7% | |
| IT Services | 1.5% | |
| Industrial Conglomerates | 0.6% | |
| All Others* | 4.4% | |
* Includes short-term investments and net other assets (liabilities).
Air Transportation Portfolio
Schedule of Investments February 29, 2020
Showing Percentage of Net Assets
| Common Stocks - 97.4% | |||
| Shares | Value | ||
| Aerospace & Defense - 41.8% | |||
| Aerospace & Defense - 41.8% | |||
| AAR Corp. | 89,400 | $3,088,769 | |
| Bombardier, Inc. Class B (sub. vtg.) (a) | 3,301,400 | 2,361,217 | |
| CAE, Inc. | 302,000 | 8,079,583 | |
| HEICO Corp. Class A | 27,100 | 2,393,743 | |
| Heroux-Devtek, Inc. (a) | 123,500 | 1,656,174 | |
| Hexcel Corp. | 20,200 | 1,305,526 | |
| Huntington Ingalls Industries, Inc. | 16,600 | 3,411,798 | |
| Moog, Inc. Class A | 61,000 | 4,704,320 | |
| Northrop Grumman Corp. | 10,000 | 3,288,400 | |
| Spirit AeroSystems Holdings, Inc. Class A | 52,204 | 2,758,459 | |
| Teledyne Technologies, Inc. (a) | 30,700 | 10,355,724 | |
| Textron, Inc. | 287,200 | 11,660,320 | |
| The Boeing Co. | 27,310 | 7,513,254 | |
| TransDigm Group, Inc. | 20,100 | 11,211,981 | |
| United Technologies Corp. | 126,800 | 16,558,813 | |
| 90,348,081 | |||
| Air Freight & Logistics - 13.7% | |||
| Air Freight & Logistics - 13.7% | |||
| Air Transport Services Group, Inc. (a) | 1,900 | 34,010 | |
| Atlas Air Worldwide Holdings, Inc. (a) | 34,500 | 921,840 | |
| Expeditors International of Washington, Inc. | 80,100 | 5,640,642 | |
| FedEx Corp. | 61,800 | 8,724,306 | |
| Forward Air Corp. | 20,200 | 1,192,002 | |
| United Parcel Service, Inc. Class B | 145,500 | 13,166,295 | |
| 29,679,095 | |||
| Airlines - 38.0% | |||
| Airlines - 38.0% | |||
| Air Canada (a) | 275,800 | 7,037,549 | |
| Alaska Air Group, Inc. | 135,800 | 6,852,468 | |
| Allegiant Travel Co. | 5,000 | 677,700 | |
| American Airlines Group, Inc. | 364,100 | 6,936,105 | |
| Copa Holdings SA Class A | 6,400 | 532,096 | |
| Delta Air Lines, Inc. | 248,102 | 11,444,945 | |
| Hawaiian Holdings, Inc. | 65,300 | 1,363,464 | |
| JetBlue Airways Corp. (a)(b) | 307,900 | 4,858,662 | |
| SkyWest, Inc. | 234,100 | 10,628,140 | |
| Southwest Airlines Co. | 337,300 | 15,579,887 | |
| Spirit Airlines, Inc. (a) | 55,300 | 1,573,285 | |
| United Airlines Holdings, Inc. (a) | 237,300 | 14,615,307 | |
| 82,099,608 | |||
| Industrial Conglomerates - 0.6% | |||
| Industrial Conglomerates - 0.6% | |||
| General Electric Co. | 116,300 | 1,265,344 | |
| Internet & Direct Marketing Retail - 0.0% | |||
| Internet & Direct Marketing Retail - 0.0% | |||
| Points International Ltd. (a) | 400 | 6,336 | |
| IT Services - 1.5% | |||
| IT Consulting & Other Services - 1.5% | |||
| CACI International, Inc. Class A (a) | 13,400 | 3,283,268 | |
| Machinery - 0.2% | |||
| Industrial Machinery - 0.2% | |||
| Park-Ohio Holdings Corp. | 17,990 | 441,115 | |
| Road & Rail - 0.5% | |||
| Trucking - 0.5% | |||
| Landstar System, Inc. | 4,900 | 494,753 | |
| TFI International, Inc. | 15,300 | 475,065 | |
| 969,818 | |||
| Software - 0.5% | |||
| Application Software - 0.5% | |||
| Descartes Systems Group, Inc. (Canada) (a) | 11,400 | 473,326 | |
| j2 Global, Inc. | 6,900 | 602,577 | |
| 1,075,903 | |||
| Trading Companies & Distributors - 0.6% | |||
| Trading Companies & Distributors - 0.6% | |||
| AerCap Holdings NV (a) | 18,800 | 979,104 | |
| Willis Lease Finance Corp. (a) | 6,000 | 340,200 | |
| 1,319,304 | |||
| TOTAL COMMON STOCKS | |||
| (Cost $183,382,376) | 210,487,872 | ||
| Money Market Funds - 5.6% | |||
| Fidelity Cash Central Fund 1.60% (c) | 6,863,014 | 6,864,387 | |
| Fidelity Securities Lending Cash Central Fund 1.60% (c)(d) | 5,155,134 | 5,155,650 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $12,019,953) | 12,020,037 | ||
| TOTAL INVESTMENT IN SECURITIES - 103.0% | |||
| (Cost $195,402,329) | 222,507,909 | ||
| NET OTHER ASSETS (LIABILITIES) - (3.0)% | (6,412,770) | ||
| NET ASSETS - 100% | $216,095,139 |
Legend
(a) Non-income producing
(b) Security or a portion of the security is on loan at period end.
(c) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request.
(d) Investment made with cash collateral received from securities on loan.
Affiliated Central Funds
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:
| Fund | Income earned |
| Fidelity Cash Central Fund | $181,716 |
| Fidelity Securities Lending Cash Central Fund | 292 |
| Total | $182,008 |
Amounts in the income column in the above table include any capital gain distributions from underlying funds, which are presented in the corresponding line-item in the Statement of Operations, if applicable. Amount for Fidelity Securities Lending Cash Central Fund represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities.
Investment Valuation
All investments are categorized as Level 1 under the Fair Value Hierarchy. 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 please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.
See accompanying notes which are an integral part of the financial statements.
Air Transportation Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2020 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $4,857,084) — See accompanying schedule: Unaffiliated issuers (cost $183,382,376) | $210,487,872 | |
| Fidelity Central Funds (cost $12,019,953) | 12,020,037 | |
| Total Investment in Securities (cost $195,402,329) | $222,507,909 | |
| Receivable for investments sold | 2,782,355 | |
| Receivable for fund shares sold | 635,657 | |
| Dividends receivable | 473,013 | |
| Distributions receivable from Fidelity Central Funds | 10,301 | |
| Prepaid expenses | 2,639 | |
| Other receivables | 1,507 | |
| Total assets | 226,413,381 | |
| Liabilities | ||
| Payable for investments purchased | $2,322,993 | |
| Payable for fund shares redeemed | 2,632,976 | |
| Accrued management fee | 116,706 | |
| Other affiliated payables | 55,602 | |
| Other payables and accrued expenses | 34,315 | |
| Collateral on securities loaned | 5,155,650 | |
| Total liabilities | 10,318,242 | |
| Net Assets | $216,095,139 | |
| Net Assets consist of: | ||
| Paid in capital | $186,320,603 | |
| Total accumulated earnings (loss) | 29,774,536 | |
| Net Assets | $216,095,139 | |
| Net Asset Value, offering price and redemption price per share ($216,095,139 ÷ 3,558,862 shares) | $60.72 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 29, 2020 | ||
| Investment Income | ||
| Dividends | $3,576,502 | |
| Special dividends | 2,068,750 | |
| Income from Fidelity Central Funds (including $292 from security lending) | 182,008 | |
| Total income | 5,827,260 | |
| Expenses | ||
| Management fee | $1,557,005 | |
| Transfer agent fees | 609,707 | |
| Accounting and security lending fees | 113,242 | |
| Custodian fees and expenses | 6,811 | |
| Independent trustees' fees and expenses | 1,597 | |
| Registration fees | 34,799 | |
| Audit | 39,408 | |
| Legal | 1,785 | |
| Miscellaneous | 2,295 | |
| Total expenses before reductions | 2,366,649 | |
| Expense reductions | (8,461) | |
| Total expenses after reductions | 2,358,188 | |
| Net investment income (loss) | 3,469,072 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 25,992,374 | |
| Foreign currency transactions | (3,030) | |
| Total net realized gain (loss) | 25,989,344 | |
| Change in net unrealized appreciation (depreciation) on investment securities | (62,958,416) | |
| Net gain (loss) | (36,969,072) | |
| Net increase (decrease) in net assets resulting from operations | $(33,500,000) |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 29, 2020 | Year ended February 28, 2019 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $3,469,072 | $2,251,097 |
| Net realized gain (loss) | 25,989,344 | 18,552,096 |
| Change in net unrealized appreciation (depreciation) | (62,958,416) | (12,856,555) |
| Net increase (decrease) in net assets resulting from operations | (33,500,000) | 7,946,638 |
| Distributions to shareholders | (26,369,146) | (35,655,527) |
| Share transactions | ||
| Proceeds from sales of shares | 68,675,973 | 52,101,305 |
| Reinvestment of distributions | 25,095,120 | 34,073,279 |
| Cost of shares redeemed | (124,669,961) | (134,132,078) |
| Net increase (decrease) in net assets resulting from share transactions | (30,898,868) | (47,957,494) |
| Total increase (decrease) in net assets | (90,768,014) | (75,666,383) |
| Net Assets | ||
| Beginning of period | 306,863,153 | 382,529,536 |
| End of period | $216,095,139 | $306,863,153 |
| Other Information | ||
| Shares | ||
| Sold | 889,941 | 666,871 |
| Issued in reinvestment of distributions | 339,914 | 475,878 |
| Redeemed | (1,681,395) | (1,761,425) |
| Net increase (decrease) | (451,540) | (618,676) |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights
Air Transportation Portfolio
| Years ended February 28, | 2020 A | 2019 | 2018 | 2017 | 2016 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $76.52 | $82.64 | $76.04 | $60.60 | $73.09 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .90C | .54 | .48D | .32 | .18 |
| Net realized and unrealized gain (loss) | (10.09) | 1.73 | 13.85 | 15.61 | (6.82) |
| Total from investment operations | (9.19) | 2.27 | 14.33 | 15.93 | (6.64) |
| Distributions from net investment income | (.70) | (.48) | (.38) | (.25) | (.17) |
| Distributions from net realized gain | (5.92) | (7.91) | (7.36) | (.24) | (5.68) |
| Total distributions | (6.61)E | (8.39) | (7.73)F | (.49) | (5.85) |
| Redemption fees added to paid in capitalB | – | – | –G | –G | –G |
| Net asset value, end of period | $60.72 | $76.52 | $82.64 | $76.04 | $60.60 |
| Total ReturnH | (13.48)% | 3.79% | 19.07% | 26.30% | (9.24)% |
| Ratios to Average Net AssetsI,J | |||||
| Expenses before reductions | .81% | .81% | .82% | .85% | .83% |
| Expenses net of fee waivers, if any | .81% | .81% | .82% | .85% | .83% |
| Expenses net of all reductions | .81% | .81% | .82% | .84% | .82% |
| Net investment income (loss) | 1.19%C | .70% | .59%D | .48% | .27% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $216,095 | $306,863 | $382,530 | $394,143 | $325,630 |
| Portfolio turnover rateK | 95% | 32% | 86% | 106% | 97% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Net investment income per share reflects large, non-recurring dividends which amounted to $.54 per share. Excluding these non-recurring dividends, the ratio of net investment income (loss) to average net assets would have been .48%.
D Net investment income per share reflects a large, non-recurring dividend which amounted to $.22 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .31%.
E Total distributions of $6.61 per share is comprised of distributions from net investment income of $.699 and distributions from net realized gain of $5.915 per share.
F Total distributions of $7.73 per share is comprised of distributions from net investment income of $.377 and distributions from net realized gain of $7.357 per share.
G Amount represents less than $.005 per share.
H Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
I Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
J Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
K Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the financial statements.
Defense and Aerospace Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The hypothetical investment and the average annual total returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund’s total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
| For the periods ended February 29, 2020 | Past 1 year | Past 5 years | Past 10 years |
| Defense and Aerospace Portfolio | (1.32)% | 11.08% | 15.10% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Defense and Aerospace Portfolio on February 28, 2010.
The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
| Period Ending Values | ||
|
| $40,824 | Defense and Aerospace Portfolio |
|
| $32,918 | S&P 500® Index |
Defense and Aerospace Portfolio
Management's Discussion of Fund Performance
Market Recap: U.S. stocks stalled to begin the new year and declined in late February, as the outbreak and spread of the new coronavirus threatened to hamper global economic growth and corporate earnings. For the 12 months ending February 29, 2020, the U.S. equity bellwether S&P 500® index gained 8.19%. The period began with equities rising amid upbeat company earnings and signs the U.S. Federal Reserve may pause on rates. The uptrend extended until May, when the index dipped as trade talks between the U.S. and China broke down. The bull market roared back to record a series of highs in July, when the Fed cut interest rates for the first time since 2008. Volatility intensified in August, as the Treasury yield curve inverted, which some investors viewed as a sign the U.S. economy could be heading for recession. But the market proved resilient, hitting a new high on October 30, when the Fed lowered rates for the third time in 2019, and moving higher through December 31. Following a roughly flat January, stocks sank in late February, after a surge in coronavirus cases outside China created considerable uncertainty and pushed investors to safer asset classes. By sector, information technology (+27%) led the way by a wide margin, followed by utilities and communication services (+13% each). In contrast, energy (-25%) was by far the weakest category, struggling due to sluggish oil prices. Other notable laggards included materials and industrials (-2% each). Comments from Portfolio Manager Jonathan Siegmann: For the fiscal year, the fund returned -1.32%, topping the -1.94% result of the MSCI U.S. IMI Aerospace & Defense 25/50 Index, but considerably trailing the S&P 500®. Versus the MSCI industry index, out-of-index exposure to the IT consulting & other services segment contributed most to performance the past 12 months, with stock selection in the fund’s core aerospace & defense category also providing a lift. On a stock-specific basis, the fund’s largest relative contributor was Boeing (-36%) by virtue of our sizable underweighting in the company. Other key positions that added value included aftermarket aircraft parts maker Transdigm Group (+44%) and major defense contractor Northrop Grumman (+15%), the fund’s largest position at period end. Additionally, CACI International (+36%) was a noteworthy contributor in IT consulting & other services, and a new non-index position for the fund this period. The company provides mission and enterprise technology for U.S. military and intelligence customers. Conversely, there were no meaningful detractors at the industry level. Among individual holdings, a sizable out-of-index position in Bombardier (-66%) weighed on the portfolio's relative result the most by far. In February, Bombardier announced plans to sell its train division to France-based Alstom. Investors were not enthusiastic about the sale, and broader market weakness hurt the stock too. A large underweighting in defense contractor Lockheed Martin (+23%) also pressured relative performance.The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Defense and Aerospace Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 29, 2020
| % of fund's net assets | |
| Northrop Grumman Corp. | 12.1 |
| The Boeing Co. | 11.3 |
| TransDigm Group, Inc. | 9.1 |
| General Dynamics Corp. | 7.9 |
| HEICO Corp. Class A | 5.5 |
| Huntington Ingalls Industries, Inc. | 5.3 |
| Teledyne Technologies, Inc. | 5.1 |
| Moog, Inc. Class A | 4.8 |
| United Technologies Corp. | 4.8 |
| Lockheed Martin Corp. | 4.7 |
| 70.6 |
Top Industries (% of fund's net assets)
| As of February 29, 2020 | ||
| Aerospace & Defense | 91.9% | |
| IT Services | 4.3% | |
| Machinery | 3.1% | |
| Industrial Conglomerates | 0.6% | |
| All Others* | 0.1% | |
* Includes short-term investments and net other assets (liabilities).
Defense and Aerospace Portfolio
Schedule of Investments February 29, 2020
Showing Percentage of Net Assets
| Common Stocks - 99.9% | |||
| Shares | Value | ||
| Aerospace & Defense - 91.9% | |||
| Aerospace & Defense - 91.9% | |||
| Airbus Group NV | 350,000 | $42,244,516 | |
| Bombardier, Inc. Class B (sub. vtg.) (a) | 65,000,000 | 46,489,104 | |
| BWX Technologies, Inc. (b) | 1,900,000 | 104,196,000 | |
| CAE, Inc. | 3,000,000 | 80,260,756 | |
| Elbit Systems Ltd. (b) | 550,000 | 81,130,500 | |
| General Dynamics Corp. | 1,350,000 | 215,581,500 | |
| Harris Corp. | 130,000 | 25,704,900 | |
| HEICO Corp. Class A | 1,700,000 | 150,161,000 | |
| Hexcel Corp. | 1,100,000 | 71,093,000 | |
| Huntington Ingalls Industries, Inc. | 700,000 | 143,871,000 | |
| Kratos Defense & Security Solutions, Inc. (a) | 3,300,000 | 53,658,000 | |
| Lockheed Martin Corp. | 350,000 | 129,454,500 | |
| Moog, Inc. Class A | 1,700,000 | 131,104,000 | |
| Northrop Grumman Corp. | 1,000,000 | 328,840,001 | |
| Parsons Corp. | 1,000,000 | 39,090,000 | |
| Raytheon Co. | 25,000 | 4,714,000 | |
| Teledyne Technologies, Inc. (a) | 410,000 | 138,301,200 | |
| Textron, Inc. | 500,000 | 20,300,000 | |
| The Boeing Co. | 1,120,000 | 308,123,200 | |
| TransDigm Group, Inc. | 445,000 | 248,225,450 | |
| United Technologies Corp. | 1,000,000 | 130,590,000 | |
| Vectrus, Inc. (a) | 322,423 | 16,795,014 | |
| 2,509,927,641 | |||
| Industrial Conglomerates - 0.6% | |||
| Industrial Conglomerates - 0.6% | |||
| General Electric Co. | 1,500,000 | 16,320,000 | |
| IT Services - 4.3% | |||
| IT Consulting & Other Services - 4.3% | |||
| CACI International, Inc. Class A (a) | 375,000 | 91,882,500 | |
| Perspecta, Inc. | 1,000,000 | 24,970,000 | |
| 116,852,500 | |||
| Machinery - 3.1% | |||
| Construction Machinery & Heavy Trucks - 0.3% | |||
| Oshkosh Corp. | 100,000 | 7,215,000 | |
| Industrial Machinery - 2.8% | |||
| Barnes Group, Inc. | 250,000 | 13,425,000 | |
| ESCO Technologies, Inc. | 75,000 | 6,819,000 | |
| Woodward, Inc. | 555,000 | 57,276,000 | |
| 77,520,000 | |||
| TOTAL MACHINERY | 84,735,000 | ||
| TOTAL COMMON STOCKS | |||
| (Cost $2,043,537,134) | 2,727,835,141 | ||
| Money Market Funds - 0.1% | |||
| Fidelity Securities Lending Cash Central Fund 1.60% (c)(d) | |||
| (Cost $2,130,464) | 2,130,251 | 2,130,464 | |
| TOTAL INVESTMENT IN SECURITIES - 100.0% | |||
| (Cost $2,045,667,598) | 2,729,965,605 | ||
| NET OTHER ASSETS (LIABILITIES) - 0.0% | (1,006,583) | ||
| NET ASSETS - 100% | $2,728,959,022 |
Legend
(a) Non-income producing
(b) Security or a portion of the security is on loan at period end.
(c) Investment made with cash collateral received from securities on loan.
(d) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request.
Affiliated Central Funds
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:
| Fund | Income earned |
| Fidelity Cash Central Fund | $449,771 |
| Fidelity Securities Lending Cash Central Fund | 6,875 |
| Total | $456,646 |
Amounts in the income column in the above table include any capital gain distributions from underlying funds, which are presented in the corresponding line-item in the Statement of Operations, if applicable. Amount for Fidelity Securities Lending Cash Central Fund represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities.
Investment Valuation
The following is a summary of the inputs used, as of February 29, 2020, 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 below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.
| Valuation Inputs at Reporting Date: | ||||
| Description | Total | Level 1 | Level 2 | Level 3 |
| Investments in Securities: | ||||
| Common Stocks | $2,727,835,141 | $2,685,590,625 | $42,244,516 | $-- |
| Money Market Funds | 2,130,464 | 2,130,464 | -- | -- |
| Total Investments in Securities: | $2,729,965,605 | $2,687,721,089 | $42,244,516 | $-- |
See accompanying notes which are an integral part of the financial statements.
Defense and Aerospace Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2020 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $2,061,126) — See accompanying schedule: Unaffiliated issuers (cost $2,043,537,134) | $2,727,835,141 | |
| Fidelity Central Funds (cost $2,130,464) | 2,130,464 | |
| Total Investment in Securities (cost $2,045,667,598) | $2,729,965,605 | |
| Cash | 229 | |
| Receivable for investments sold | 83,110,955 | |
| Receivable for fund shares sold | 5,278,202 | |
| Dividends receivable | 6,673,401 | |
| Distributions receivable from Fidelity Central Funds | 18,125 | |
| Prepaid expenses | 21,582 | |
| Other receivables | 133,212 | |
| Total assets | 2,825,201,311 | |
| Liabilities | ||
| Payable for investments purchased | $37,654,094 | |
| Payable for fund shares redeemed | 42,861,827 | |
| Accrued management fee | 1,434,499 | |
| Notes payable to affiliates | 11,497,000 | |
| Other affiliated payables | 522,551 | |
| Other payables and accrued expenses | 141,868 | |
| Collateral on securities loaned | 2,130,450 | |
| Total liabilities | 96,242,289 | |
| Net Assets | $2,728,959,022 | |
| Net Assets consist of: | ||
| Paid in capital | $2,007,667,364 | |
| Total accumulated earnings (loss) | 721,291,658 | |
| Net Assets | $2,728,959,022 | |
| Net Asset Value, offering price and redemption price per share ($2,728,959,022 ÷ 164,315,450 shares) | $16.61 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 29, 2020 | ||
| Investment Income | ||
| Dividends | $35,610,020 | |
| Special dividends | 29,448,880 | |
| Income from Fidelity Central Funds (including $6,875 from security lending) | 456,646 | |
| Total income | 65,515,546 | |
| Expenses | ||
| Management fee | $15,746,305 | |
| Transfer agent fees | 5,036,724 | |
| Accounting and security lending fees | 866,802 | |
| Custodian fees and expenses | 24,281 | |
| Independent trustees' fees and expenses | 15,563 | |
| Registration fees | 149,151 | |
| Audit | 39,408 | |
| Legal | 4,193 | |
| Interest | 1,172 | |
| Miscellaneous | 21,933 | |
| Total expenses before reductions | 21,905,532 | |
| Expense reductions | (72,038) | |
| Total expenses after reductions | 21,833,494 | |
| Net investment income (loss) | 43,682,052 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 96,125,109 | |
| Fidelity Central Funds | 14 | |
| Foreign currency transactions | 18,732 | |
| Total net realized gain (loss) | 96,143,855 | |
| Change in net unrealized appreciation (depreciation) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | (188,449,567) | |
| Assets and liabilities in foreign currencies | 13,360 | |
| Total change in net unrealized appreciation (depreciation) | (188,436,207) | |
| Net gain (loss) | (92,292,352) | |
| Net increase (decrease) in net assets resulting from operations | $(48,610,300) |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 29, 2020 | Year ended February 28, 2019 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $43,682,052 | $18,430,029 |
| Net realized gain (loss) | 96,143,855 | 166,542,771 |
| Change in net unrealized appreciation (depreciation) | (188,436,207) | (133,968,209) |
| Net increase (decrease) in net assets resulting from operations | (48,610,300) | 51,004,591 |
| Distributions to shareholders | (79,290,455) | (258,550,952) |
| Share transactions | ||
| Proceeds from sales of shares | 1,019,400,280 | 996,158,246 |
| Reinvestment of distributions | 75,052,031 | 244,578,007 |
| Cost of shares redeemed | (1,032,851,200) | (1,311,720,576) |
| Net increase (decrease) in net assets resulting from share transactions | 61,601,111 | (70,984,323) |
| Total increase (decrease) in net assets | (66,299,644) | (278,530,684) |
| Net Assets | ||
| Beginning of period | 2,795,258,666 | 3,073,789,350 |
| End of period | $2,728,959,022 | $2,795,258,666 |
| Other Information | ||
| Shares(a) | ||
| Sold | 56,160,058 | 57,403,273 |
| Issued in reinvestment of distributions | 4,058,280 | 15,780,023 |
| Redeemed | (57,771,315) | (77,908,049) |
| Net increase (decrease) | 2,447,023 | (4,724,753) |
(a) Share activity prior to August 10, 2018 has been adjusted to reflect the impact of the 10 for 1 share split that occurred on that date.
See accompanying notes which are an integral part of the financial statements.
Financial Highlights
Defense and Aerospace Portfolio
| Years ended February 28, | 2020 A | 2019 B | 2018 B | 2017 B | 2016 A,B |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $17.27 | $18.45 | $13.83 | $10.81 | $12.90 |
| Income from Investment Operations | |||||
| Net investment income (loss)C | .27D | .11 | .09E | .13F | .11 |
| Net realized and unrealized gain (loss) | (.45) | .33 | 5.14 | 3.52 | (1.47) |
| Total from investment operations | (.18) | .44 | 5.23 | 3.65 | (1.36) |
| Distributions from net investment income | (.22) | (.10) | (.07) | (.12) | (.10) |
| Distributions from net realized gain | (.26) | (1.52) | (.54) | (.51) | (.63) |
| Total distributions | (.48) | (1.62) | (.61) | (.63) | (.73) |
| Redemption fees added to paid in capitalC | – | – | – | –G | –G |
| Net asset value, end of period | $16.61 | $17.27 | $18.45 | $13.83 | $10.81 |
| Total ReturnH | (1.32)% | 3.57% | 38.46% | 34.36% | (11.08)% |
| Ratios to Average Net AssetsI,J | |||||
| Expenses before reductions | .75% | .75% | .76% | .79% | .80% |
| Expenses net of fee waivers, if any | .74% | .75% | .76% | .79% | .79% |
| Expenses net of all reductions | .74% | .75% | .76% | .79% | .79% |
| Net investment income (loss) | 1.49%D | .66% | .58%E | 1.03%F | .92% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $2,728,959 | $2,795,259 | $3,073,789 | $1,601,468 | $885,398 |
| Portfolio turnover rateK | 40% | 44% | 32% | 24% | 52% |
A For the year ended February 29.
B Per share amounts have been adjusted to reflect the impact of the 10 for 1 share split that occurred on August 10, 2018.
C Calculated based on average shares outstanding during the period.
D Net investment income per share reflects large, non-recurring dividends which amounted to $.18 per share. Excluding these non-recurring dividends, the ratio of net investment income (loss) to average net assets would have been .48%.
E Net investment income per share reflects a large, non-recurring dividend which amounted to $.07 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .14%.
F Net investment income per share reflects a large, non-recurring dividend which amounted to $.05 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .64%.
G Amount represents less than $.005 per share.
H Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
I Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
J Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
K Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the financial statements.
Environment and Alternative Energy Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The hypothetical investment and the average annual total returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund’s total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
| For the periods ended February 29, 2020 | Past 1 year | Past 5 years | Past 10 years |
| Environment and Alternative Energy Portfolio | (2.35)% | 6.53% | 8.52% |
If disclosing performance data prior to 7/1/10: Prior to July 1, 2010, the fund was named Environmental Portfolio, and the fund operated under certain different investment policies and compared its performance to a different additional index. The fund's historical performance may not represent its current investment policies.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Environment and Alternative Energy Portfolio on February 28, 2010.
The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
| Period Ending Values | ||
|
| $22,659 | Environment and Alternative Energy Portfolio |
|
| $32,918 | S&P 500® Index |
Environment and Alternative Energy Portfolio
Management's Discussion of Fund Performance
Market Recap: U.S. stocks stalled to begin the new year and declined in late February, as the outbreak and spread of the new coronavirus threatened to hamper global economic growth and corporate earnings. For the 12 months ending February 29, 2020, the U.S. equity bellwether S&P 500® index gained 8.19%. The period began with equities rising amid upbeat company earnings and signs the U.S. Federal Reserve may pause on rates. The uptrend extended until May, when the index dipped as trade talks between the U.S. and China broke down. The bull market roared back to record a series of highs in July, when the Fed cut interest rates for the first time since 2008. Volatility intensified in August, as the Treasury yield curve inverted, which some investors viewed as a sign the U.S. economy could be heading for recession. But the market proved resilient, hitting a new high on October 30, when the Fed lowered rates for the third time in 2019, and moving higher through December 31. Following a roughly flat January, stocks sank in late February, after a surge in coronavirus cases outside China created considerable uncertainty and pushed investors to safer asset classes. By sector, information technology (+27%) led the way by a wide margin, followed by utilities and communication services (+13% each). In contrast, energy (-25%) was by far the weakest category, struggling due to sluggish oil prices. Other notable laggards included materials and industrials (-2% each). Comments from Portfolio Manager Kevin Walenta: For the fiscal year, the fund returned -2.35%, lagging the 10.56% gain of the FTSE® Environmental Opportunities & Alternative Energy Index and the broadly based S&P 500®. The fund’s value bias, which favors stocks with attractive valuations that seem out of favor for transitory reasons, hurt its performance the past 12 months. During this time, investors willingly paid up for stocks with relatively stable earnings and dividends, such as utilities, as well as the stocks of unprofitable companies with aggressive-earnings-growth expectations, particularly in the renewable & alternative energy segment. Versus the industry index, security selection was primarily responsible for the fund’s underperformance this period, most notably in the energy efficiency group. Stock picks in the renewable & alternative energy and waste management & technologies segments also had a negative impact, as did positioning in the environmental support services category. In terms of individual relative detractors, not owning electric car company Tesla (+109%) in the energy efficiency group hurt most, following the company’s better-than-expected deliveries and profitability in the fourth quarter. Within environmental support services, the fund’s overweighting in industrial conglomerate 3M (-26%) sank partly due to litigation concerns. Conversely, the fund top relative contributor was an overweight position in Brazil-based Cosan SA Industria E Comercio (+43%), a profitable ethanol producer in the renewable & alternative energy group. A sizable stake in energy efficiency company Trane Technologies (+25%) also contributed.The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Environment and Alternative Energy Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 29, 2020
| % of fund's net assets | |
| Honeywell International, Inc. | 9.9 |
| 3M Co. | 7.2 |
| Trane Technologies PLC | 5.4 |
| Eaton Corp. PLC | 5.1 |
| Emerson Electric Co. | 4.4 |
| TE Connectivity Ltd. | 4.0 |
| Cummins, Inc. | 3.6 |
| Parker Hannifin Corp. | 3.5 |
| Innospec, Inc. | 3.3 |
| Dover Corp. | 3.0 |
| 49.4 |
Top Industries (% of fund's net assets)
| As of February 29, 2020 | ||
| Energy Efficiency | 45.2% | |
| Other | 14.0% | |
| Environmental Support Services | 13.7% | |
| Water Infrastructure & Technologies | 8.8% | |
| Renewable & Alternative Energy | 8.7% | |
| All Others* | 9.6% | |
* Includes short-term investments and net other assets (liabilities).
Environment and Alternative Energy Portfolio
Schedule of Investments February 29, 2020
Showing Percentage of Net Assets
| Common Stocks - 96.7% | |||
| Shares | Value | ||
| Energy Efficiency - 45.2% | |||
| Buildings Energy Efficiency - 13.0% | |||
| A.O. Smith Corp. | 74,840 | $2,959,922 | |
| Acuity Brands, Inc. | 24,680 | 2,538,585 | |
| Carlisle Companies, Inc. | 29,080 | 4,225,033 | |
| Comfort Systems U.S.A., Inc. | 95,870 | 4,047,631 | |
| Trane Technologies PLC | 75,760 | 9,776,070 | |
| 23,547,241 | |||
| Diversified Energy Efficiency - 9.9% | |||
| Honeywell International, Inc. | 110,447 | 17,911,187 | |
| Industrial Energy Efficiency - 9.8% | |||
| EMCOR Group, Inc. | 62,828 | 4,832,730 | |
| Emerson Electric Co. | 123,560 | 7,921,432 | |
| Minerals Technologies, Inc. | 17,680 | 793,302 | |
| Regal Beloit Corp. | 54,304 | 4,216,163 | |
| 17,763,627 | |||
| Power Network Efficiency - 7.1% | |||
| Eaton Corp. PLC | 103,090 | 9,352,325 | |
| Hubbell, Inc. Class B | 27,360 | 3,645,446 | |
| 12,997,771 | |||
| Transport Energy Efficiency - 5.4% | |||
| BorgWarner, Inc. | 114,000 | 3,602,400 | |
| Innospec, Inc. | 69,607 | 6,023,790 | |
| Modine Manufacturing Co.(a) | 30,770 | 229,544 | |
| 9,855,734 | |||
| TOTAL ENERGY EFFICIENCY | 82,075,560 | ||
| Environmental Support Services - 13.7% | |||
| Diversified Environmental - 13.7% | |||
| 3M Co. | 87,772 | 13,099,093 | |
| Dover Corp. | 52,010 | 5,343,507 | |
| Parker Hannifin Corp. | 34,540 | 6,381,956 | |
| 24,824,556 | |||
| Miscellaneous Environmental - 3.3% | |||
| Other Environmental - 3.3% | |||
| Accenture PLC Class A | 6,070 | 1,096,181 | |
| C.H. Robinson Worldwide, Inc. | 10,640 | 733,096 | |
| Oracle Corp. | 18,530 | 916,494 | |
| Philips Lighting NV(b) | 108,160 | 3,222,787 | |
| 5,968,558 | |||
| Other - 10.7% | |||
| Other - 10.7% | |||
| American Express Co. | 10,220 | 1,123,485 | |
| Amgen, Inc. | 5,920 | 1,182,402 | |
| Bank of New York Mellon Corp. | 29,210 | 1,165,479 | |
| BlackRock, Inc. Class A | 2,380 | 1,101,964 | |
| HCA Holdings, Inc. | 9,070 | 1,151,981 | |
| Host Hotels & Resorts, Inc. | 80,090 | 1,159,703 | |
| Janus Henderson Group PLC | 51,210 | 1,085,652 | |
| Microsoft Corp. | 7,350 | 1,190,774 | |
| Premier, Inc. (a) | 42,320 | 1,245,478 | |
| Procter & Gamble Co. | 10,920 | 1,236,472 | |
| Reliance Steel & Aluminum Co. | 26,720 | 2,733,189 | |
| Robert Half International, Inc. | 44,840 | 2,260,384 | |
| Steelcase, Inc. Class A | 70,820 | 1,148,700 | |
| The Western Union Co. | 16,380 | 366,748 | |
| Visa, Inc. Class A | 6,650 | 1,208,704 | |
| 19,361,115 | |||
| Pollution Control - 3.6% | |||
| Pollution Control Solutions - 3.6% | |||
| Cummins, Inc. | 43,122 | 6,523,927 | |
| Renewable & Alternative Energy - 8.7% | |||
| Biofuels - 2.3% | |||
| Cosan SA Industria e Comercio | 260,370 | 4,260,219 | |
| Renewable Energy Developers and Independent Power Producers - 6.4% | |||
| Colbun SA | 12,213,060 | 1,533,539 | |
| Empresa Nacional de Electricidad SA sponsored ADR | 125,010 | 1,375,110 | |
| Hollysys Automation Technologies Ltd. | 89,061 | 1,348,384 | |
| TE Connectivity Ltd. | 88,280 | 7,315,764 | |
| 11,572,797 | |||
| TOTAL RENEWABLE & ALTERNATIVE ENERGY | 15,833,016 | ||
| Waste Management & Technologies - 2.7% | |||
| Recycling and Value Added Waste Processing - 2.7% | |||
| Schnitzer Steel Industries, Inc. Class A | 143,050 | 2,357,464 | |
| Steel Dynamics, Inc. | 95,550 | 2,544,497 | |
| 4,901,961 | |||
| Water Infrastructure & Technologies - 8.8% | |||
| Water Infrastructure - 8.8% | |||
| Crane Co. | 47,647 | 3,237,614 | |
| HD Supply Holdings, Inc. (a) | 45,110 | 1,715,082 | |
| IDEX Corp. | 32,520 | 4,812,960 | |
| Rexnord Corp. | 108,510 | 3,164,152 | |
| Watts Water Technologies, Inc. Class A | 32,090 | 3,013,572 | |
| 15,943,380 | |||
| TOTAL COMMON STOCKS | |||
| (Cost $172,227,296) | 175,432,073 | ||
| Money Market Funds - 3.3% | |||
| Fidelity Cash Central Fund 1.60% (c) | |||
| (Cost $5,944,246) | 5,943,058 | 5,944,246 | |
| TOTAL INVESTMENT IN SECURITIES - 100.0% | |||
| (Cost $178,171,542) | 181,376,319 | ||
| NET OTHER ASSETS (LIABILITIES) - 0.0% | 80,113 | ||
| NET ASSETS - 100% | $181,456,432 |
Legend
(a) Non-income producing
(b) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the end of the period, the value of these securities amounted to $3,222,787 or 1.8% of net assets.
(c) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request.
Affiliated Central Funds
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:
| Fund | Income earned |
| Fidelity Cash Central Fund | $146,977 |
| Fidelity Securities Lending Cash Central Fund | 33,372 |
| Total | $180,349 |
Amounts in the income column in the above table include any capital gain distributions from underlying funds, which are presented in the corresponding line-item in the Statement of Operations, if applicable. Amount for Fidelity Securities Lending Cash Central Fund represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities.
Investment Valuation
The following is a summary of the inputs used, as of February 29, 2020, 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 below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.
| Valuation Inputs at Reporting Date: | ||||
| Description | Total | Level 1 | Level 2 | Level 3 |
| Investments in Securities: | ||||
| Common Stocks | $175,432,073 | $172,209,286 | $3,222,787 | $-- |
| Money Market Funds | 5,944,246 | 5,944,246 | -- | -- |
| Total Investments in Securities: | $181,376,319 | $178,153,532 | $3,222,787 | $-- |
Other Information
Distribution of investments by country or territory of incorporation, as a percentage of Total Net Assets, is as follows (Unaudited):
| United States of America | 78.6% |
| Ireland | 11.1% |
| Switzerland | 4.0% |
| Brazil | 2.3% |
| Netherlands | 1.8% |
| Others (Individually Less Than 1%) | 2.2% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Environment and Alternative Energy Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2020 | ||
| Assets | ||
| Investment in securities, at value — See accompanying schedule: Unaffiliated issuers (cost $172,227,296) | $175,432,073 | |
| Fidelity Central Funds (cost $5,944,246) | 5,944,246 | |
| Total Investment in Securities (cost $178,171,542) | $181,376,319 | |
| Cash | 310 | |
| Receivable for fund shares sold | 391,521 | |
| Dividends receivable | 676,197 | |
| Distributions receivable from Fidelity Central Funds | 7,896 | |
| Prepaid expenses | 1,325 | |
| Other receivables | 3,541 | |
| Total assets | 182,457,109 | |
| Liabilities | ||
| Payable for fund shares redeemed | $833,599 | |
| Accrued management fee | 89,206 | |
| Other affiliated payables | 41,668 | |
| Other payables and accrued expenses | 36,204 | |
| Total liabilities | 1,000,677 | |
| Net Assets | $181,456,432 | |
| Net Assets consist of: | ||
| Paid in capital | $166,272,781 | |
| Total accumulated earnings (loss) | 15,183,651 | |
| Net Assets | $181,456,432 | |
| Net Asset Value, offering price and redemption price per share ($181,456,432 ÷ 7,622,919 shares) | $23.80 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 29, 2020 | ||
| Investment Income | ||
| Dividends | $3,273,149 | |
| Income from Fidelity Central Funds (including $33,372 from security lending) | 180,349 | |
| Total income | 3,453,498 | |
| Expenses | ||
| Management fee | $957,447 | |
| Transfer agent fees | 401,265 | |
| Accounting and security lending fees | 69,643 | |
| Custodian fees and expenses | 10,520 | |
| Independent trustees' fees and expenses | 941 | |
| Registration fees | 32,731 | |
| Audit | 51,555 | |
| Legal | 238 | |
| Interest | 1,861 | |
| Miscellaneous | 1,279 | |
| Total expenses before reductions | 1,527,480 | |
| Expense reductions | (11,107) | |
| Total expenses after reductions | 1,516,373 | |
| Net investment income (loss) | 1,937,125 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 11,963,246 | |
| Fidelity Central Funds | 310 | |
| Foreign currency transactions | 2,966 | |
| Total net realized gain (loss) | 11,966,522 | |
| Change in net unrealized appreciation (depreciation) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | (20,696,524) | |
| Assets and liabilities in foreign currencies | (1,513) | |
| Total change in net unrealized appreciation (depreciation) | (20,698,037) | |
| Net gain (loss) | (8,731,515) | |
| Net increase (decrease) in net assets resulting from operations | $(6,794,390) |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 29, 2020 | Year ended February 28, 2019 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $1,937,125 | $1,466,779 |
| Net realized gain (loss) | 11,966,522 | 7,646,839 |
| Change in net unrealized appreciation (depreciation) | (20,698,037) | (8,828,163) |
| Net increase (decrease) in net assets resulting from operations | (6,794,390) | 285,455 |
| Distributions to shareholders | (4,290,450) | (8,454,008) |
| Share transactions | ||
| Proceeds from sales of shares | 109,059,408 | 40,206,295 |
| Reinvestment of distributions | 4,066,285 | 7,969,907 |
| Cost of shares redeemed | (81,544,645) | (67,430,135) |
| Net increase (decrease) in net assets resulting from share transactions | 31,581,048 | (19,253,933) |
| Total increase (decrease) in net assets | 20,496,208 | (27,422,486) |
| Net Assets | ||
| Beginning of period | 160,960,224 | 188,382,710 |
| End of period | $181,456,432 | $160,960,224 |
| Other Information | ||
| Shares | ||
| Sold | 4,278,847 | 1,651,291 |
| Issued in reinvestment of distributions | 156,342 | 340,861 |
| Redeemed | (3,270,425) | (2,693,678) |
| Net increase (decrease) | 1,164,764 | (701,526) |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights
Environment and Alternative Energy Portfolio
| Years ended February 28, | 2020 A | 2019 | 2018 | 2017 | 2016 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $24.92 | $26.31 | $23.89 | $18.20 | $20.94 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .27 | .24 | .27 | .20 | .17 |
| Net realized and unrealized gain (loss) | (.81) | (.25) | 3.83 | 5.78 | (2.34) |
| Total from investment operations | (.54) | (.01) | 4.10 | 5.98 | (2.17) |
| Distributions from net investment income | (.23) | (.22) | (.22) | (.16) | (.13) |
| Distributions from net realized gain | (.35) | (1.16) | (1.46) | (.13) | (.44) |
| Total distributions | (.58) | (1.38) | (1.68) | (.29) | (.57) |
| Redemption fees added to paid in capitalB | – | – | –C | –C | –C |
| Net asset value, end of period | $23.80 | $24.92 | $26.31 | $23.89 | $18.20 |
| Total ReturnD | (2.35)% | .39% | 17.73% | 33.02% | (10.63)% |
| Ratios to Average Net AssetsE,F | |||||
| Expenses before reductions | .85% | .87% | .87% | .94% | .95% |
| Expenses net of fee waivers, if any | .85% | .87% | .87% | .94% | .95% |
| Expenses net of all reductions | .85% | .87% | .86% | .94% | .95% |
| Net investment income (loss) | 1.08% | .96% | 1.07% | .94% | .86% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $181,456 | $160,960 | $188,383 | $137,674 | $73,432 |
| Portfolio turnover rateG | 49% | 62% | 47% | 82% | 20% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Amount represents less than $.005 per share.
D Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
E Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the financial statements.
Industrials Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The hypothetical investment and the average annual total returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund’s total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
| For the periods ended February 29, 2020 | Past 1 year | Past 5 years | Past 10 years |
| Industrials Portfolio | (1.82)% | 5.36% | 11.26% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Industrials Portfolio on February 28, 2010.
The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
| Period Ending Values | ||
|
| $29,058 | Industrials Portfolio |
|
| $32,918 | S&P 500® Index |
Industrials Portfolio
Management's Discussion of Fund Performance
Market Recap: U.S. stocks stalled to begin the new year and declined in late February, as the outbreak and spread of the new coronavirus threatened to hamper global economic growth and corporate earnings. For the 12 months ending February 29, 2020, the U.S. equity bellwether S&P 500® index gained 8.19%. The period began with equities rising amid upbeat company earnings and signs the U.S. Federal Reserve may pause on rates. The uptrend extended until May, when the index dipped as trade talks between the U.S. and China broke down. The bull market roared back to record a series of highs in July, when the Fed cut interest rates for the first time since 2008. Volatility intensified in August, as the Treasury yield curve inverted, which some investors viewed as a sign the U.S. economy could be heading for recession. But the market proved resilient, hitting a new high on October 30, when the Fed lowered rates for the third time in 2019, and moving higher through December 31. Following a roughly flat January, stocks sank in late February, after a surge in coronavirus cases outside China created considerable uncertainty and pushed investors to safer asset classes. By sector, information technology (+27%) led the way by a wide margin, followed by utilities and communication services (+13% each). In contrast, energy (-25%) was by far the weakest category, struggling due to sluggish oil prices. Other notable laggards included materials and industrials (-2% each). Comments from Portfolio Manager Janet Glazer: For the fiscal year, the fund returned -1.82%, lagging the -0.70% return of the MSCI U.S. IMI Industrials 25/50 Index, and well behind the S&P 500®. Versus the MSCI sector index, an underweighting and weak stock selection in research & consulting services notably detracted from fund performance. Positioning in environmental & facilities services and in trading companies & distributors also weighed on the fund’s relative result. Fortive, one of the fund’s larger overweightings, was our biggest detractor. During this period of uncertainty about trade with China and the coronavirus outbreak, shares of this provider of professional instrumentation equipment, fuel-management systems and automotive-diagnostic equipment returned -15%. TriNet Group (-14%), a position I began building in the summer, also detracted. The company provides payroll and other human resources services. HD Supply Holdings (-14%) also weighed on our relative result. Conversely, solid picks and an overweighting in aerospace & defense bolstered the fund’s performance, as did positioning in industrial conglomerates and industrial machinery. At the stock level, minimal exposure to industrial conglomerate 3M (-21%) made this lagging benchmark component our top relative contributor. I sold our position here in May. However, later in the period, I established a slightly overweighted position in the stock, as I thought most of the bad news was already reflected in its valuation. In the aerospace & defense segment, overweighting TransDigm Group (+44%) was timely.The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Industrials Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 29, 2020
| % of fund's net assets | |
| Roper Technologies, Inc. | 8.0 |
| AMETEK, Inc. | 6.0 |
| Fortive Corp. | 5.4 |
| Honeywell International, Inc. | 5.4 |
| General Electric Co. | 5.1 |
| Union Pacific Corp. | 4.9 |
| ITT, Inc. | 4.3 |
| TransDigm Group, Inc. | 3.9 |
| Ingersoll-Rand PLC | 3.5 |
| 3M Co. | 3.5 |
| 50.0 |
Top Industries (% of fund's net assets)
| As of February 29, 2020 | ||
| Machinery | 22.7% | |
| Industrial Conglomerates | 22.0% | |
| Aerospace & Defense | 17.6% | |
| Road & Rail | 12.8% | |
| Electrical Equipment | 9.7% | |
| All Others* | 15.2% | |
* Includes short-term investments and net other assets (liabilities).
Industrials Portfolio
Schedule of Investments February 29, 2020
Showing Percentage of Net Assets
| Common Stocks - 99.7% | |||
| Shares | Value | ||
| Aerospace & Defense - 17.6% | |||
| Aerospace & Defense - 17.6% | |||
| General Dynamics Corp. | 5,235 | $835,977 | |
| Harris Corp. | 36,162 | 7,150,312 | |
| HEICO Corp. Class A | 81,420 | 7,191,829 | |
| Lockheed Martin Corp. | 21,206 | 7,843,463 | |
| Northrop Grumman Corp. | 31,799 | 10,456,783 | |
| Raytheon Co. | 29,682 | 5,596,838 | |
| Teledyne Technologies, Inc. (a) | 30,903 | 10,424,200 | |
| The Boeing Co. | 31,349 | 8,624,423 | |
| TransDigm Group, Inc. | 37,127 | 20,709,812 | |
| United Technologies Corp. | 107,361 | 14,020,273 | |
| 92,853,910 | |||
| Air Freight & Logistics - 2.4% | |||
| Air Freight & Logistics - 2.4% | |||
| XPO Logistics, Inc. (a) | 172,100 | 12,730,237 | |
| Building Products - 2.4% | |||
| Building Products - 2.4% | |||
| Allegion PLC | 18,800 | 2,161,812 | |
| Fortune Brands Home & Security, Inc. | 168,300 | 10,392,525 | |
| 12,554,337 | |||
| Commercial Services & Supplies - 3.5% | |||
| Diversified Support Services - 1.4% | |||
| Cintas Corp. | 11,108 | 2,962,948 | |
| Copart, Inc. (a) | 51,600 | 4,359,168 | |
| 7,322,116 | |||
| Environmental & Facility Services - 2.1% | |||
| Waste Connection, Inc. (United States) | 116,026 | 11,195,349 | |
| TOTAL COMMERCIAL SERVICES & SUPPLIES | 18,517,465 | ||
| Construction & Engineering - 1.8% | |||
| Construction & Engineering - 1.8% | |||
| AECOM (a) | 174,200 | 7,828,548 | |
| Jacobs Engineering Group, Inc. | 19,500 | 1,800,630 | |
| 9,629,178 | |||
| Electrical Equipment - 9.7% | |||
| Electrical Components & Equipment - 9.7% | |||
| AMETEK, Inc. | 368,046 | 31,651,956 | |
| Eaton Corp. PLC | 64,600 | 5,860,512 | |
| nVent Electric PLC | 140,700 | 3,378,207 | |
| Regal Beloit Corp. | 122,000 | 9,472,080 | |
| Vertiv Holdings LLC (b) | 61,271 | 722,385 | |
| 51,085,140 | |||
| Electronic Equipment & Components - 0.3% | |||
| Electronic Equipment & Instruments - 0.3% | |||
| Hexagon AB (B Shares) | 32,400 | 1,745,360 | |
| Industrial Conglomerates - 22.0% | |||
| Industrial Conglomerates - 22.0% | |||
| 3M Co. | 124,700 | 18,610,228 | |
| General Electric Co. | 2,475,637 | 26,934,931 | |
| Honeywell International, Inc. | 175,998 | 28,541,596 | |
| Roper Technologies, Inc. | 120,968 | 42,544,444 | |
| 116,631,199 | |||
| Life Sciences Tools & Services - 0.7% | |||
| Life Sciences Tools & Services - 0.7% | |||
| Thermo Fisher Scientific, Inc. | 12,600 | 3,664,080 | |
| Machinery - 22.7% | |||
| Industrial Machinery - 22.7% | |||
| Colfax Corp. (a) | 17,600 | 589,072 | |
| Evoqua Water Technologies Corp. (a) | 40,600 | 851,382 | |
| Fortive Corp. | 412,701 | 28,542,401 | |
| Gardner Denver Holdings, Inc. | 212,164 | 6,956,858 | |
| IDEX Corp. | 76,407 | 11,308,236 | |
| Illinois Tool Works, Inc. | 65,000 | 10,905,700 | |
| Ingersoll-Rand PLC | 144,965 | 18,706,284 | |
| ITT, Inc. | 379,950 | 22,853,993 | |
| Nordson Corp. | 71,500 | 10,388,950 | |
| Parker Hannifin Corp. | 29,800 | 5,506,146 | |
| Rexnord Corp. | 16,749 | 488,401 | |
| Xylem, Inc. | 39,400 | 3,047,196 | |
| 120,144,619 | |||
| Professional Services - 3.6% | |||
| Human Resource & Employment Services - 0.1% | |||
| TriNet Group, Inc. (a) | 9,522 | 503,333 | |
| Research & Consulting Services - 3.5% | |||
| Clarivate Analytics PLC (a) | 232,200 | 4,722,948 | |
| Equifax, Inc. | 96,359 | 13,686,832 | |
| 18,409,780 | |||
| TOTAL PROFESSIONAL SERVICES | 18,913,113 | ||
| Road & Rail - 12.8% | |||
| Railroads - 10.3% | |||
| CSX Corp. | 79,105 | 5,572,947 | |
| Kansas City Southern | 67,400 | 10,155,832 | |
| Norfolk Southern Corp. | 70,909 | 12,930,256 | |
| Union Pacific Corp. | 163,121 | 26,068,367 | |
| 54,727,402 | |||
| Trucking - 2.5% | |||
| Knight-Swift Transportation Holdings, Inc. Class A | 261,713 | 8,359,113 | |
| Saia, Inc. (a) | 53,200 | 4,644,892 | |
| 13,004,005 | |||
| TOTAL ROAD & RAIL | 67,731,407 | ||
| Trading Companies & Distributors - 0.2% | |||
| Trading Companies & Distributors - 0.2% | |||
| HD Supply Holdings, Inc. (a) | 33,366 | 1,268,575 | |
| TOTAL COMMON STOCKS | |||
| (Cost $461,374,330) | 527,468,620 | ||
| Money Market Funds - 0.1% | |||
| Fidelity Cash Central Fund 1.60% (c) | |||
| (Cost $485,875) | 485,777 | 485,875 | |
| TOTAL INVESTMENT IN SECURITIES - 99.8% | |||
| (Cost $461,860,205) | 527,954,495 | ||
| NET OTHER ASSETS (LIABILITIES) - 0.2% | 1,068,512 | ||
| NET ASSETS - 100% | $529,023,007 |
Legend
(a) Non-income producing
(b) Restricted securities (including private placements) - Investment in securities not registered under the Securities Act of 1933 (excluding 144A issues). At the end of the period, the value of restricted securities (excluding 144A issues) amounted to $722,385 or 0.1% of net assets.
(c) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request.
Additional information on each restricted holding is as follows:
| Security | Acquisition Date | Acquisition Cost |
| Vertiv Holdings LLC | 2/6/20 | $612,710 |
Affiliated Central Funds
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:
| Fund | Income earned |
| Fidelity Cash Central Fund | $67,302 |
| Fidelity Securities Lending Cash Central Fund | 3,621 |
| Total | $70,923 |
Amounts in the income column in the above table include any capital gain distributions from underlying funds, which are presented in the corresponding line-item in the Statement of Operations, if applicable. Amount for Fidelity Securities Lending Cash Central Fund represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities.
Investment Valuation
The following is a summary of the inputs used, as of February 29, 2020, 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 below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.
| Valuation Inputs at Reporting Date: | ||||
| Description | Total | Level 1 | Level 2 | Level 3 |
| Investments in Securities: | ||||
| Common Stocks | $527,468,620 | $525,723,260 | $1,745,360 | $-- |
| Money Market Funds | 485,875 | 485,875 | -- | -- |
| Total Investments in Securities: | $527,954,495 | $526,209,135 | $1,745,360 | $-- |
See accompanying notes which are an integral part of the financial statements.
Industrials Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2020 | ||
| Assets | ||
| Investment in securities, at value — See accompanying schedule: Unaffiliated issuers (cost $461,374,330) | $527,468,620 | |
| Fidelity Central Funds (cost $485,875) | 485,875 | |
| Total Investment in Securities (cost $461,860,205) | $527,954,495 | |
| Receivable for investments sold | 24,729,654 | |
| Receivable for fund shares sold | 456,197 | |
| Dividends receivable | 1,004,456 | |
| Distributions receivable from Fidelity Central Funds | 1,904 | |
| Prepaid expenses | 7,272 | |
| Other receivables | 95,944 | |
| Total assets | 554,249,922 | |
| Liabilities | ||
| Payable for investments purchased | $21,714,430 | |
| Payable for fund shares redeemed | 3,017,987 | |
| Accrued management fee | 268,352 | |
| Other affiliated payables | 97,983 | |
| Other payables and accrued expenses | 128,163 | |
| Total liabilities | 25,226,915 | |
| Net Assets | $529,023,007 | |
| Net Assets consist of: | ||
| Paid in capital | $452,010,799 | |
| Total accumulated earnings (loss) | 77,012,208 | |
| Net Assets | $529,023,007 | |
| Net Asset Value, offering price and redemption price per share ($529,023,007 ÷ 16,581,444 shares) | $31.90 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 29, 2020 | ||
| Investment Income | ||
| Dividends | $8,420,826 | |
| Special dividends | 1,047,000 | |
| Income from Fidelity Central Funds (including $3,621 from security lending) | 70,923 | |
| Total income | 9,538,749 | |
| Expenses | ||
| Management fee | $3,270,932 | |
| Transfer agent fees | 1,019,575 | |
| Accounting and security lending fees | 225,172 | |
| Custodian fees and expenses | 13,976 | |
| Independent trustees' fees and expenses | 3,332 | |
| Registration fees | 34,021 | |
| Audit | 43,835 | |
| Legal | 2,385 | |
| Interest | 322 | |
| Miscellaneous | 5,806 | |
| Total expenses before reductions | 4,619,356 | |
| Expense reductions | (40,837) | |
| Total expenses after reductions | 4,578,519 | |
| Net investment income (loss) | 4,960,230 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 39,874,446 | |
| Redemptions in-kind with affiliated entities | 4,051,467 | |
| Fidelity Central Funds | 957 | |
| Foreign currency transactions | (976) | |
| Total net realized gain (loss) | 43,925,894 | |
| Change in net unrealized appreciation (depreciation) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | (55,478,286) | |
| Assets and liabilities in foreign currencies | (6) | |
| Total change in net unrealized appreciation (depreciation) | (55,478,292) | |
| Net gain (loss) | (11,552,398) | |
| Net increase (decrease) in net assets resulting from operations | $(6,592,168) |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 29, 2020 | Year ended February 28, 2019 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $4,960,230 | $6,617,484 |
| Net realized gain (loss) | 43,925,894 | 96,502,940 |
| Change in net unrealized appreciation (depreciation) | (55,478,292) | (119,039,649) |
| Net increase (decrease) in net assets resulting from operations | (6,592,168) | (15,919,225) |
| Distributions to shareholders | (24,419,475) | (65,750,180) |
| Share transactions | ||
| Proceeds from sales of shares | 75,905,271 | 81,696,031 |
| Reinvestment of distributions | 22,923,326 | 62,911,721 |
| Cost of shares redeemed | (171,263,736) | (507,418,619) |
| Net increase (decrease) in net assets resulting from share transactions | (72,435,139) | (362,810,867) |
| Total increase (decrease) in net assets | (103,446,782) | (444,480,272) |
| Net Assets | ||
| Beginning of period | 632,469,789 | 1,076,950,061 |
| End of period | $529,023,007 | $632,469,789 |
| Other Information | ||
| Shares | ||
| Sold | 2,169,004 | 2,374,933 |
| Issued in reinvestment of distributions | 650,311 | 1,933,852 |
| Redeemed | (4,925,986) | (14,757,500) |
| Net increase (decrease) | (2,106,671) | (10,448,715) |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights
Industrials Portfolio
| Years ended February 28, | 2020 A | 2019 | 2018 | 2017 | 2016 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $33.84 | $36.96 | $33.72 | $28.10 | $32.69 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .28C | .32 | .21 | .26 | .24 |
| Net realized and unrealized gain (loss) | (.76) | (.70) | 4.95 | 6.76 | (2.90) |
| Total from investment operations | (.48) | (.38) | 5.16 | 7.02 | (2.66) |
| Distributions from net investment income | (.24) | (.25) | (.22) | (.19) | (.20) |
| Distributions from net realized gain | (1.23) | (2.49) | (1.71) | (1.21) | (1.73) |
| Total distributions | (1.46)D | (2.74) | (1.92)E | (1.40) | (1.93) |
| Redemption fees added to paid in capitalB | – | – | – | –F | –F |
| Net asset value, end of period | $31.90 | $33.84 | $36.96 | $33.72 | $28.10 |
| Total ReturnG | (1.82)% | (.45)% | 15.73% | 25.18% | (8.29)% |
| Ratios to Average Net AssetsH,I | |||||
| Expenses before reductions | .76% | .76% | .77% | .77% | .77% |
| Expenses net of fee waivers, if any | .76% | .76% | .77% | .77% | .76% |
| Expenses net of all reductions | .75% | .75% | .77% | .77% | .76% |
| Net investment income (loss) | .81%C | .92% | .60% | .83% | .79% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $529,023 | $632,470 | $1,076,950 | $1,006,420 | $978,550 |
| Portfolio turnover rateJ | 143%K | 88%K | 64%L | 62%K | 75%K |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Net investment income per share reflects a large, non-recurring dividend which amounted to $.06 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .64%.
D Total distributions of $1.46 per share is comprised of distributions from net investment income of $.235 and distributions from net realized gain of $1.229 per share.
E Total distributions of $1.92 per share is comprised of distributions from net investment income of $.216 and distributions from net realized gain of $1.705 per share.
F Amount represents less than $.005 per share.
G Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
H Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
I Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
J Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
K Portfolio turnover rate excludes securities received or delivered in-kind.
L The portfolio turnover rate does not include the assets acquired in the merger.
See accompanying notes which are an integral part of the financial statements.
Transportation Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The hypothetical investment and the average annual total returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund’s total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
| For the periods ended February 29, 2020 | Past 1 year | Past 5 years | Past 10 years |
| Transportation Portfolio | (10.49)% | 3.11% | 12.17% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Transportation Portfolio on February 28, 2010.
The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
| Period Ending Values | ||
|
| $31,531 | Transportation Portfolio |
|
| $32,918 | S&P 500® Index |
Transportation Portfolio
Management's Discussion of Fund Performance
Market Recap: U.S. stocks stalled to begin the new year and declined in late February, as the outbreak and spread of the new coronavirus threatened to hamper global economic growth and corporate earnings. For the 12 months ending February 29, 2020, the U.S. equity bellwether S&P 500® index gained 8.19%. The period began with equities rising amid upbeat company earnings and signs the U.S. Federal Reserve may pause on rates. The uptrend extended until May, when the index dipped as trade talks between the U.S. and China broke down. The bull market roared back to record a series of highs in July, when the Fed cut interest rates for the first time since 2008. Volatility intensified in August, as the Treasury yield curve inverted, which some investors viewed as a sign the U.S. economy could be heading for recession. But the market proved resilient, hitting a new high on October 30, when the Fed lowered rates for the third time in 2019, and moving higher through December 31. Following a roughly flat January, stocks sank in late February, after a surge in coronavirus cases outside China created considerable uncertainty and pushed investors to safer asset classes. By sector, information technology (+27%) led the way by a wide margin, followed by utilities and communication services (+13% each). In contrast, energy (-25%) was by far the weakest category, struggling due to sluggish oil prices. Other notable laggards included materials and industrials (-2% each). Comments from Portfolio Manager Matthew Moulis: For the fiscal year, the fund returned -10.49%, trailing the -7.95% result of the MSCI U.S. IMI Transportation 25/50 Index, and well behind the S&P 500®. Versus the MSCI industry index, security selection and an underweighting in the trucking group hurt fund performance most the past 12 months. Stock picks among airlines also weighed on the fund’s relative result. Looking at individual holdings, the fund’s top-two relative detractors were underweighted positions in Old Dominion Freight Lines (+6%) – which I bought and then sold for a profit during the period – as well as XPO Logistics (-1%), both of which rely on less-than-truckload (LTL) hauling for most of their business. Untimely positioning in trucking stock J.B. Hunt Transport Services (-8%) during the first half of the period also detracted, as did the portfolio's larger-than-index stake in SkyWest Airlines (-16%), a well-run regional air carrier headquartered in Utah. Conversely, investment choices in railroads notably lifted the fund’s relative return this period. Non-index exposure to the extremely strong-performing diversified support services category also helped. Railroad Genesee & Wyoming (+36%) – long a fund overweighting – contributed to the fund's relative result more than any other holding. On the last day of June, news broke that Toronto-based investment company Brookfield Asset Management planned to buy the company, sending the share price higher. The deal closed at the end of 2019. An overweight position in Kansas City Southern (+40%), a north-south rail carrier connecting the U.S. with Mexico, also lifted relative performance. Lastly, timely ownership of United Parcel Service (-15%), the fund’s second-largest holding during the period, also paid off.The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Transportation Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 29, 2020
| % of fund's net assets | |
| Union Pacific Corp. | 18.4 |
| United Parcel Service, Inc. Class B | 9.3 |
| CSX Corp. | 8.1 |
| Norfolk Southern Corp. | 6.8 |
| Kansas City Southern | 5.8 |
| FedEx Corp. | 5.2 |
| United Airlines Holdings, Inc. | 4.7 |
| SkyWest, Inc. | 4.5 |
| Expeditors International of Washington, Inc. | 3.6 |
| Southwest Airlines Co. | 3.2 |
| 69.6 |
Top Industries (% of fund's net assets)
| As of February 29, 2020 | ||
| Road & Rail | 50.9% | |
| Air Freight & Logistics | 22.9% | |
| Airlines | 17.0% | |
| Marine | 2.3% | |
| Trading Companies & Distributors | 1.3% | |
| All Others* | 5.6% | |
* Includes short-term investments and net other assets (liabilities).
Transportation Portfolio
Schedule of Investments February 29, 2020
Showing Percentage of Net Assets
| Common Stocks - 98.7% | |||
| Shares | Value | ||
| Aerospace & Defense - 0.4% | |||
| Aerospace & Defense - 0.4% | |||
| Bombardier, Inc. Class B (sub. vtg.) (a) | 815,600 | $583,331 | |
| Moog, Inc. Class A | 8,400 | 647,808 | |
| 1,231,139 | |||
| Air Freight & Logistics - 22.9% | |||
| Air Freight & Logistics - 22.9% | |||
| Air Transport Services Group, Inc. (a)(b) | 44,900 | 803,710 | |
| Atlas Air Worldwide Holdings, Inc. (a) | 7,300 | 195,056 | |
| C.H. Robinson Worldwide, Inc. | 73,696 | 5,077,654 | |
| Echo Global Logistics, Inc. (a) | 121,500 | 2,241,675 | |
| Expeditors International of Washington, Inc. | 159,500 | 11,231,990 | |
| FedEx Corp. | 114,450 | 16,156,907 | |
| Forward Air Corp. | 55,100 | 3,251,451 | |
| Hub Group, Inc. Class A (a) | 37,700 | 1,742,871 | |
| United Parcel Service, Inc. Class B | 319,074 | 28,873,006 | |
| XPO Logistics, Inc. (a) | 20,600 | 1,523,782 | |
| 71,098,102 | |||
| Airlines - 17.0% | |||
| Airlines - 17.0% | |||
| Alaska Air Group, Inc. | 79,200 | 3,996,432 | |
| American Airlines Group, Inc. (b) | 196,600 | 3,745,230 | |
| Delta Air Lines, Inc. | 89,602 | 4,133,340 | |
| Hawaiian Holdings, Inc. (b) | 41,200 | 860,256 | |
| JetBlue Airways Corp. (a)(b) | 62,900 | 992,562 | |
| SkyWest, Inc. | 305,900 | 13,887,860 | |
| Southwest Airlines Co. | 217,500 | 10,046,325 | |
| Spirit Airlines, Inc. (a) | 19,293 | 548,886 | |
| United Airlines Holdings, Inc.(a) | 237,500 | 14,627,625 | |
| 52,838,516 | |||
| Commercial Services & Supplies - 0.9% | |||
| Diversified Support Services - 0.9% | |||
| Boyd Group Services, Inc. | 17,500 | 2,737,940 | |
| Internet & Direct Marketing Retail - 0.3% | |||
| Internet & Direct Marketing Retail - 0.3% | |||
| Points International Ltd. (a) | 48,700 | 771,408 | |
| IT Services - 0.6% | |||
| IT Consulting & Other Services - 0.6% | |||
| CACI International, Inc. Class A (a) | 7,300 | 1,788,646 | |
| Marine - 2.3% | |||
| Marine - 2.3% | |||
| A.P. Moller - Maersk A/S Series A | 1,000 | 948,283 | |
| Kirby Corp. (a) | 76,100 | 4,851,375 | |
| Matson, Inc. | 38,995 | 1,295,024 | |
| 7,094,682 | |||
| Professional Services - 0.1% | |||
| Research & Consulting Services - 0.1% | |||
| FTI Consulting, Inc. (a) | 3,100 | 349,029 | |
| Road & Rail - 50.9% | |||
| Railroads - 39.1% | |||
| CSX Corp. | 355,646 | 25,055,261 | |
| Kansas City Southern | 119,100 | 17,945,988 | |
| Norfolk Southern Corp. | 116,250 | 21,198,188 | |
| Union Pacific Corp. | 358,295 | 57,259,122 | |
| 121,458,559 | |||
| Trucking - 11.8% | |||
| AMERCO | 14,100 | 4,547,391 | |
| Avis Budget Group, Inc. (a) | 47,500 | 1,537,813 | |
| Covenant Transport Group, Inc. Class A (a) | 36,929 | 446,841 | |
| Hertz Global Holdings, Inc. (a)(b) | 81,491 | 1,042,270 | |
| J.B. Hunt Transport Services, Inc. | 54,900 | 5,294,556 | |
| Knight-Swift Transportation Holdings, Inc. Class A | 131,500 | 4,200,110 | |
| Landstar System, Inc. | 62,600 | 6,320,722 | |
| Lyft, Inc. | 52,700 | 2,008,924 | |
| Marten Transport Ltd. | 52,951 | 1,034,663 | |
| Ryder System, Inc. | 110,425 | 4,200,567 | |
| TFI International, Inc. | 73,200 | 2,257,761 | |
| TFI International, Inc. | 43,000 | 1,335,150 | |
| U.S. Xpress Enterprises, Inc. (a)(b) | 18,084 | 77,942 | |
| U.S.A. Truck, Inc. (a) | 6,148 | 30,832 | |
| Universal Logistics Holdings, Inc. | 48,700 | 750,467 | |
| Werner Enterprises, Inc. | 44,083 | 1,481,189 | |
| 36,567,198 | |||
| TOTAL ROAD & RAIL | 158,025,757 | ||
| Software - 0.7% | |||
| Application Software - 0.7% | |||
| Descartes Systems Group, Inc. (Canada) (a) | 13,200 | 548,062 | |
| j2 Global, Inc. | 19,400 | 1,694,202 | |
| 2,242,264 | |||
| Trading Companies & Distributors - 1.3% | |||
| Trading Companies & Distributors - 1.3% | |||
| AerCap Holdings NV (a) | 63,500 | 3,307,080 | |
| Willis Lease Finance Corp. (a) | 12,500 | 708,750 | |
| 4,015,830 | |||
| Transportation Infrastructure - 1.3% | |||
| Airport Services - 1.3% | |||
| Macquarie Infrastructure Co. LLC | 105,100 | 4,125,175 | |
| TOTAL COMMON STOCKS | |||
| (Cost $218,536,324) | 306,318,488 | ||
| Money Market Funds - 2.5% | |||
| Fidelity Cash Central Fund 1.60% (c) | 4,891,251 | 4,892,230 | |
| Fidelity Securities Lending Cash Central Fund 1.60% (c)(d) | 2,828,455 | 2,828,738 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $7,720,968) | 7,720,968 | ||
| TOTAL INVESTMENT IN SECURITIES - 101.2% | |||
| (Cost $226,257,292) | 314,039,456 | ||
| NET OTHER ASSETS (LIABILITIES) - (1.2)% | (3,598,515) | ||
| NET ASSETS - 100% | $310,440,941 |
Legend
(a) Non-income producing
(b) Security or a portion of the security is on loan at period end.
(c) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request.
(d) Investment made with cash collateral received from securities on loan.
Affiliated Central Funds
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:
| Fund | Income earned |
| Fidelity Cash Central Fund | $270,538 |
| Fidelity Securities Lending Cash Central Fund | 9,301 |
| Total | $279,839 |
Amounts in the income column in the above table include any capital gain distributions from underlying funds, which are presented in the corresponding line-item in the Statement of Operations, if applicable. Amount for Fidelity Securities Lending Cash Central Fund represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities.
Investment Valuation
The following is a summary of the inputs used, as of February 29, 2020, 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 below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.
| Valuation Inputs at Reporting Date: | ||||
| Description | Total | Level 1 | Level 2 | Level 3 |
| Investments in Securities: | ||||
| Common Stocks | $306,318,488 | $305,370,205 | $948,283 | $-- |
| Money Market Funds | 7,720,968 | 7,720,968 | -- | -- |
| Total Investments in Securities: | $314,039,456 | $313,091,173 | $948,283 | $-- |
See accompanying notes which are an integral part of the financial statements.
Transportation Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2020 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $2,608,018) — See accompanying schedule: Unaffiliated issuers (cost $218,536,324) | $306,318,488 | |
| Fidelity Central Funds (cost $7,720,968) | 7,720,968 | |
| Total Investment in Securities (cost $226,257,292) | $314,039,456 | |
| Receivable for investments sold | 3,567,476 | |
| Receivable for fund shares sold | 299,511 | |
| Dividends receivable | 1,012,633 | |
| Distributions receivable from Fidelity Central Funds | 13,180 | |
| Prepaid expenses | 3,573 | |
| Other receivables | 3,549 | |
| Total assets | 318,939,378 | |
| Liabilities | ||
| Payable for investments purchased | $2,801,980 | |
| Payable for fund shares redeemed | 2,601,621 | |
| Accrued management fee | 161,449 | |
| Other affiliated payables | 70,566 | |
| Other payables and accrued expenses | 34,146 | |
| Collateral on securities loaned | 2,828,675 | |
| Total liabilities | 8,498,437 | |
| Net Assets | $310,440,941 | |
| Net Assets consist of: | ||
| Paid in capital | $199,542,458 | |
| Total accumulated earnings (loss) | 110,898,483 | |
| Net Assets | $310,440,941 | |
| Net Asset Value, offering price and redemption price per share ($310,440,941 ÷ 3,780,434 shares) | $82.12 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 29, 2020 | ||
| Investment Income | ||
| Dividends | $7,040,748 | |
| Income from Fidelity Central Funds (including $9,301 from security lending) | 279,839 | |
| Total income | 7,320,587 | |
| Expenses | ||
| Management fee | $2,190,740 | |
| Transfer agent fees | 793,927 | |
| Accounting and security lending fees | 159,338 | |
| Custodian fees and expenses | 7,023 | |
| Independent trustees' fees and expenses | 2,281 | |
| Registration fees | 31,961 | |
| Audit | 46,496 | |
| Legal | 2,830 | |
| Miscellaneous | 3,231 | |
| Total expenses before reductions | 3,237,827 | |
| Expense reductions | (16,590) | |
| Total expenses after reductions | 3,221,237 | |
| Net investment income (loss) | 4,099,350 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 27,950,325 | |
| Fidelity Central Funds | 63 | |
| Foreign currency transactions | (18,066) | |
| Total net realized gain (loss) | 27,932,322 | |
| Change in net unrealized appreciation (depreciation) on investment securities | (68,395,892) | |
| Net gain (loss) | (40,463,570) | |
| Net increase (decrease) in net assets resulting from operations | $(36,364,220) |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 29, 2020 | Year ended February 28, 2019 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $4,099,350 | $4,120,803 |
| Net realized gain (loss) | 27,932,322 | 35,678,195 |
| Change in net unrealized appreciation (depreciation) | (68,395,892) | (13,313,644) |
| Net increase (decrease) in net assets resulting from operations | (36,364,220) | 26,485,354 |
| Distributions to shareholders | (16,996,996) | (46,373,355) |
| Share transactions | ||
| Proceeds from sales of shares | 36,956,264 | 101,838,716 |
| Reinvestment of distributions | 16,103,156 | 43,939,054 |
| Cost of shares redeemed | (140,448,927) | (186,853,315) |
| Net increase (decrease) in net assets resulting from share transactions | (87,389,507) | (41,075,545) |
| Total increase (decrease) in net assets | (140,750,723) | (60,963,546) |
| Net Assets | ||
| Beginning of period | 451,191,664 | 512,155,210 |
| End of period | $310,440,941 | $451,191,664 |
| Other Information | ||
| Shares | ||
| Sold | 396,518 | 1,020,111 |
| Issued in reinvestment of distributions | 168,242 | 490,031 |
| Redeemed | (1,513,069) | (1,950,861) |
| Net increase (decrease) | (948,309) | (440,719) |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights
Transportation Portfolio
| Years ended February 28, | 2020 A | 2019 | 2018 | 2017 | 2016 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $95.41 | $99.07 | $92.98 | $73.25 | $94.04 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .93 | .85 | .78 | .63 | .50 |
| Net realized and unrealized gain (loss) | (10.43) | 5.05 | 10.83 | 20.86 | (15.81) |
| Total from investment operations | (9.50) | 5.90 | 11.61 | 21.49 | (15.31) |
| Distributions from net investment income | (1.10) | (.78) | (.67) | (.38) | (.52) |
| Distributions from net realized gain | (2.70) | (8.78) | (4.85) | (1.39) | (4.95) |
| Total distributions | (3.79)C | (9.56) | (5.52) | (1.77) | (5.48)D |
| Redemption fees added to paid in capitalB | – | – | –E | .01 | –E |
| Net asset value, end of period | $82.12 | $95.41 | $99.07 | $92.98 | $73.25 |
| Total ReturnF | (10.49)% | 6.85% | 12.48% | 29.40% | (16.28)% |
| Ratios to Average Net AssetsG,H | |||||
| Expenses before reductions | .79% | .79% | .80% | .83% | .81% |
| Expenses net of fee waivers, if any | .79% | .79% | .80% | .83% | .81% |
| Expenses net of all reductions | .79% | .78% | .80% | .82% | .80% |
| Net investment income (loss) | 1.00% | .87% | .80% | .76% | .60% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $310,441 | $451,192 | $512,155 | $643,067 | $408,171 |
| Portfolio turnover rateI | 78% | 58% | 47% | 104% | 80% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Total distributions of $3.79 per share is comprised of distributions from net investment income of $1.097 and distributions from net realized gain of $2.695 per share.
D Total distributions of $5.48 per share is comprised of distributions from net investment income of $.521 and distributions from net realized gain of $4.954 per share.
E Amount represents less than $.005 per share.
F Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
G Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
H Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
I Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the financial statements.
Notes to Financial Statements
For the period ended February 29, 2020
1. Organization.
Air Transportation Portfolio, Defense and Aerospace Portfolio, Environment and Alternative Energy Portfolio, Industrials Portfolio, and Transportation Portfolio (the Funds) are non-diversified funds of Fidelity Select Portfolios (the Trust). The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Funds invest primarily in securities of companies whose principal business activities fall within specific industries. Each Fund is authorized to issue an unlimited number of shares. Share transactions on the Statement of Changes in Net Assets may contain exchanges between affiliated funds.
Effective January 1, 2020:
Investment advisers Fidelity Investments Money Management, Inc., FMR Co., Inc., and Fidelity SelectCo, LLC, merged with and into Fidelity Management & Research Company. In connection with the merger transactions, the resulting, merged investment adviser was then redomiciled from Massachusetts to Delaware, changed its corporate structure from a corporation to a limited liability company, and changed its name to "Fidelity Management & Research Company LLC".
Fidelity Investments Institutional Operations Company, Inc. converted from a Massachusetts corporation to a Massachusetts LLC, and changed its name to "Fidelity Investments Institutional Operations Company LLC".
2. Investments in Fidelity Central Funds.
The Funds invest in Fidelity Central Funds, which are open-end investment companies generally available only to other investment companies and accounts managed by the investment adviser and its affiliates. The Funds' Schedules of Investments list each of the Fidelity Central Funds held as of period end, if any, as an investment of each Fund, but do not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, each Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by the investment adviser. Annualized expenses of the Money Market Central Funds as of their most recent shareholder report date ranged from less than .005% to .01%.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) website at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Funds' Report of Independent Registered Public Accounting Firm, are available on the SEC website or upon request.
3. Significant Accounting Policies.
Each Fund is an investment company and applies the accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946 Financial Services – Investments Companies. The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Funds:
Investment Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Board of Trustees (the Board) has delegated the day to day responsibility for the valuation of each Fund's investments to the Fair Value Committee (the Committee) established by each Fund's investment adviser. In accordance with valuation policies and procedures approved by the Board, each Fund attempts to obtain prices from one or more third party pricing vendors or brokers to value its investments. When current market prices, quotations or currency exchange rates are not readily available or reliable, investments will be fair valued in good faith by the Committee, in accordance with procedures adopted by the Board. Factors used in determining fair value vary by investment type and may include market or investment specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The Committee oversees each Fund's valuation policies and procedures and reports to the Board on the Committee's activities and fair value determinations. The Board monitors the appropriateness of the procedures used in valuing each Fund's investments and ratifies the fair value determinations of the Committee.
Each Fund categorizes the inputs to valuation techniques used to 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)
Valuation techniques used to value each Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by a third party pricing vendor on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-Traded Funds (ETFs) and certain indexes as well as quoted prices for similar securities may be used and would be categorized as Level 2 in the hierarchy. For equity securities, including restricted 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.
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value (NAV) each business day and are categorized as Level 1 in the hierarchy.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level as of February 29, 2020 is included at the end of each applicable Fund's Schedule of Investments.
Foreign Currency. The Funds may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rates at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Funds' investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and for certain Funds include proceeds received from litigation. Dividend income is recorded 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 Funds are informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Income and capital gain distributions from Fidelity Central Funds, if any, are recorded on the ex-dividend date. Certain distributions received by the Funds represent a return of capital or capital gain. The Funds determine the components of these distributions subsequent to the ex-dividend date, based upon receipt of tax filings or other correspondence relating to the underlying investment. These distributions are recorded as a reduction of cost of investments and/or as a realized gain. Large, non-recurring dividends recognized by the Funds are presented separately on the Statement of Operations as "Special Dividends" and the impact of these dividends is presented in the Financial Highlights. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Deferred Trustee Compensation. Under a Deferred Compensation Plan (the Plan) certain Funds, certain independent Trustees have elected to defer receipt of a portion of their annual compensation. Deferred amounts are invested in a cross-section of Fidelity funds, are marked-to-market and remain in each Fund until distributed in accordance with the Plan. The investment of deferred amounts and the offsetting payable to the Trustees presented below are included in each accompanying Statement of Assets and Liabilities in other receivables and other payables and accrued expenses, respectively.
| Defense and Aerospace Portfolio | $99,240 |
| Industrials Portfolio | 89,835 |
Income Tax Information and Distributions to Shareholders. Each year, each Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for U.S. Federal income taxes is required. As of February 29, 2020, each Fund did not have any unrecognized tax benefits in the financial statements; nor is each Fund aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. Each Fund files a U.S. federal tax return, in addition to state and local tax returns as required. Each Fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. Foreign taxes are provided for based on each Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are declared and recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. In addition, the Funds claimed a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Capital accounts are not adjusted for temporary book-tax differences which will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, redemptions in kind, deferred trustees compensation and losses deferred due to wash sales and excise tax regulations.
As of period end, the cost and unrealized appreciation (depreciation) in securities, and derivatives if applicable, for federal income tax purposes were as follows for each Fund:
| Tax cost | Gross unrealized appreciation | Gross unrealized depreciation | Net unrealized appreciation (depreciation) | |
| Air Transportation Portfolio | $198,021,662 | $47,561,170 | $(23,074,923) | $24,486,247 |
| Defense and Aerospace Portfolio | 2,060,880,472 | 818,492,873 | (149,407,740) | 669,085,133 |
| Environment and Alternative Energy Portfolio | 178,329,548 | 20,227,558 | (17,180,787) | 3,046,771 |
| Industrials Portfolio | 467,592,576 | 85,718,837 | (25,356,918) | 60,361,919 |
| Transportaion Portfolio | 228,129,620 | 107,787,949 | (21,878,113) | 85,909,836 |
The tax-based components of distributable earnings as of period end were as follows for each Fund:
| Undistributed ordinary income | Undistributed long-term capital gain | Net unrealized appreciation (depreciation) on securities and other investments | |
| Air Transportation Portfolio | $1,273,382 | $4,014,906 | $ 24,486,247 |
| Defense and Aerospace Portfolio | 7,562,332 | 44,730,668 | 669,097,898 |
| Environment and Alternative Energy Portfolio | 3,485,606 | 8,654,086 | 3,043,958 |
| Industrials Portfolio | 1,046,826 | 15,693,330 | 60,361,887 |
| Transportation Portfolio | 589,980 | 24,398,667 | 85,909,836 |
The tax character of distributions paid was as follows:
| February 29, 2020 | |||
| Ordinary Income | Long-term Capital Gains | Total | |
| Air Transportation Portfolio | $6,970,913 | $19,398,233 | $26,369,146 |
| Defense and Aerospace Portfolio | 36,154,792 | 43,135,663 | 79,290,455 |
| Environment and Alternative Energy Portfolio | 1,647,024 | 2,643,426 | 4,290,450 |
| Industrials Portfolio | 3,927,627 | 20,491,848 | 24,419,475 |
| Transportation Portfolio | 4,619,486 | 12,377,510 | 16,996,996 |
| February 28, 2019 | |||
| Ordinary Income | Long-term Capital Gains | Total | |
| Air Transportation Portfolio | $9,453,579 | $26,201,948 | $35,655,527 |
| Defense and Aerospace Portfolio | 46,737,621 | 211,813,331 | 258,550,952 |
| Environment and Alternative Energy Portfolio | 2,257,022 | 6,196,986 | 8,454,008 |
| Industrials Portfolio | 11,514,105 | 54,236,075 | 65,750,180 |
| Transportation Portfolio | 5,383,802 | 40,989,553 | 46,373,355 |
Restricted Securities. The Funds may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities is included at the end of each applicable Fund's Schedule of Investments.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities and in-kind transactions, are noted in the table below.
| Purchases ($) | Sales ($) | |
| Air Transportation Portfolio | 264,464,598 | 313,607,315 |
| Defense and Aerospace Portfolio | 1,199,400,757 | 1,147,056,209 |
| Environment and Alternative Energy Portfolio | 113,360,072 | 83,477,534 |
| Industrials Portfolio | 862,918,745 | 937,286,457 |
| Transportation Portfolio | 306,998,705 | 385,822,615 |
5. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity Management & Research Company LLC (the investment adviser) and its affiliates provide the Funds with investment management related services for which the Funds pay a monthly management fee. The management fee is the sum of an individual fund fee rate and an annualized group fee rate. The individual fund fee rate is applied to each Fund's average net assets. The group fee rate is based upon the monthly average net assets of a group of registered investment companies with which the investment adviser has management contracts. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the reporting period, each Fund's annual management fee rate expressed as a percentage of each Fund's average net assets was as follows:
| Individual Rate | Group Rate | Total | |
| Air Transportation Portfolio | .30% | .24% | .54% |
| Defense and Aerospace Portfolio | .30% | .24% | .54% |
| Environment and Alternative Energy Portfolio | .30% | .24% | .54% |
| Industrials Portfolio | .30% | .24% | .54% |
| Transportation Portfolio | .30% | .24% | .53% |
Transfer Agent Fees. Fidelity Investments Institutional Operations Company LLC (FIIOC), an affiliate of the investment adviser, is the Funds' transfer, dividend disbursing and shareholder servicing agent. FIIOC receives account fees and asset-based fees that vary according to account size and type of account. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, transfer agent fees were equivalent to the following annual rates expressed as a percentage of average net assets:
| Air Transportation Portfolio | .21% |
| Defense and Aerospace Portfolio | .17% |
| Environment and Alternative Energy Portfolio | .22% |
| Industrials Portfolio | .17% |
| Transportation Portfolio | .19% |
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of the investment adviser, maintains each Fund's accounting records. The accounting fee is based on the level of average net assets for each month. Prior to April 1, 2019, FSC had a separate agreement with each Fund for administration of the security lending program, based on the number and duration of lending transactions. For the period, the total fees paid for accounting and administration of securities lending were equivalent to the following annual rates:
| % of Average Net Assets | |
| Air Transportation Portfolio | .04 |
| Defense and Aerospace Portfolio | .03 |
| Environment and Alternative Energy Portfolio | .04 |
| Industrials Portfolio | .04 |
| Transportation Portfolio | .04 |
Brokerage Commissions. A portion of portfolio transactions were placed with brokerage firms which are affiliates of the investment adviser. Brokerage commissions are included in net realized gain (loss) and change in net unrealized appreciation (depreciation) in the Statement of Operations. The commissions paid to these affiliated firms were as follows:
| Amount | |
| Air Transportation Portfolio | $4,814 |
| Defense and Aerospace Portfolio | 31,166 |
| Environment and Alternative Energy Portfolio | 1,475 |
| Industrials Portfolio | 17,192 |
| Transportation Portfolio | 6,342 |
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, each fund, along with other registered investment companies having management contracts with Fidelity Management & Research Company LLC (FMR), or other affiliated entities of FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing each fund to borrow from, or lend money to, other participating affiliated funds. At period end, Environment and Alternative Energy Portfolio and Industrials Portfolio had no interfund loans outstanding. Any open loans, including accrued interest, at period end are presented under the caption "Notes payable to affiliates" in the their Statements of Assets and Liabilities. Activity in this program during the period for which loans were outstanding was as follows:
| Borrower or Lender | Average Loan Balance | Weighted Average Interest Rate | Interest Expense | |
| Defense and Aerospace Portfolio | Borrower | $11,497,000 | 1.84% | $1,172 |
| Environment and Alternative Energy Portfolio | Borrower | $12,808,000 | 2.62% | $1,861 |
| Industrials Portfolio | Borrower | $5,541,000 | 2.09% | $322 |
Interfund Trades. Funds may purchase from or sell securities to other Fidelity Funds under procedures adopted by the Board. The procedures have been designed to ensure these interfund trades are executed in accordance with Rule 17a-7 of the 1940 Act. Interfund trades are included within the respective purchases and sales amounts shown in the Purchases and Sales of Investments note.
Affiliated Redemptions In-Kind. During the period, 386,628 shares of the Industrials Portfolio were redeemed in-kind for investments and cash with a value of $13,207,212. The net realized gain of $4,051,467 on investments delivered through in-kind redemptions is included in the accompanying Statement of Operations. The amount of the in-kind redemptions is included in share transactions in the accompanying Statement of Changes in Net Assets. Industrials Portfolio recognized no gain or loss for federal income tax purposes.
Prior Fiscal Year Affiliated Redemptions In-Kind. During the prior period, 8,024,186 shares of Industrials Portfolio were redeemed in-kind for investments and cash with a value of $278,038,031. Industrials Portfolio had a net realized gain of $79,998,333 on investments delivered through in-kind redemptions. The amount of the in-kind redemptions is included in share transactions in the accompanying Statement of Changes in Net Assets. Industrials Portfolio recognized no gain or loss for federal income tax purposes.
6. Committed Line of Credit.
Certain Funds participate with other funds managed by the investment adviser or an affiliate in a $4.25 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The participating funds have agreed to pay commitment fees on their pro-rata portion of the line of credit, which are reflected in Miscellaneous expenses on the Statement of Operations, and are as follows:
| Amount | |
| Air Transportation Portfolio | $749 |
| Defense and Aerospace Portfolio | 7,151 |
| Environment and Alternative Energy Portfolio | 432 |
| Industrials Portfolio | 1,553 |
| Transportation Portfolio | 1,073 |
During the period, there were no borrowings on this line of credit.
7. Security Lending.
Certain Funds lend portfolio securities from time to time in order to earn additional income. For equity securities, lending agents are used, including National Financial Services (NFS), an affiliate of the Funds. Pursuant to a securities lending agreement, NFS will receive a fee, which is capped at 9.9% of a Fund's daily lending revenue, for its services as lending agent. The Funds may lend securities to certain qualified borrowers, including NFS. On the settlement date of the loan, each applicable Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Funds and any additional required collateral is delivered to the Funds on the next business day. The Funds or borrower may terminate the loan at any time, and if the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, the Funds may apply collateral received from the borrower against the obligation. The Funds may experience delays and costs in recovering the securities loaned. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on each applicable Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented on each applicable Fund's Statement of Operations as a component of income from Fidelity Central Funds. During the period, there were no securities loaned to NFS. Affiliated security lending activity was as follows:
| Total Security Lending Income Fees Paid to NFS | |
| Air Transportation Portfolio | $31 |
| Defense and Aerospace Portfolio | $522 |
| Environment and Alternative Energy Portfolio | $1,955 |
| Industrials Portfolio | $360 |
| Transportation Portfolio | $791 |
8. Expense Reductions.
Commissions paid to certain brokers with whom the investment adviser, or its affiliates, places trades on behalf of certain Funds include an amount in addition to trade execution, which may be rebated back to the Funds to offset certain expenses. In addition, through arrangements with each applicable Fund's custodian and transfer agent, credits realized as a result of certain uninvested cash balances were used to reduce each applicable Fund's expenses. All of the applicable expense reductions are noted in the table below.
| Brokerage service rebates | Custodian credits | Transfer Agent credits | |
| Air Transportation Portfolio | $6,634 | $68 | $– |
| Defense and Aerospace Portfolio | 49,612 | 6,692 | – |
| Environment and Alternative Energy Portfolio | 8,977 | 1,221 | – |
| Industrials Portfolio | 37,139 | – | 218 |
| Transportation Portfolio | 14,014 | 93 | – |
In addition, during the period the investment adviser or an affiliate reimbursed and/or waived a portion of operating expenses as follows:
| Amount | |
| Air Transportation Portfolio | $1,759 |
| Defense and Aerospace Portfolio | 15,734 |
| Environment and Alternative Energy Portfolio | 909 |
| Industrials Portfolio | 3,480 |
| Transportation Portfolio | 2,483 |
9. Other.
The Funds' organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Funds. In the normal course of business, the Funds may also enter into contracts that provide general indemnifications. The Funds' maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Funds. The risk of material loss from such claims is considered remote.
10. Coronavirus (COVID-19) Pandemic.
An outbreak of COVID-19 first detected in China during December 2019 has since spread globally and was declared a pandemic by the World Health Organization during March 2020. Developments that disrupt global economies and financial markets, such as the COVID-19 pandemic, may magnify factors that affect the Funds' performance.
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of Fidelity Select Portfolios and the Shareholders of Air Transportation Portfolio, Defense and Aerospace Portfolio, Environment and Alternative Energy Portfolio, Industrials Portfolio and Transportation Portfolio
Opinions on the Financial Statements
We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of Air Transportation Portfolio, Defense and Aerospace Portfolio, Environment and Alternative Energy Portfolio, Industrials Portfolio and Transportation Portfolio (five of the funds constituting Fidelity Select Portfolios, hereafter collectively referred to as the “Funds”) as of February 29, 2020, the related statements of operations for the year ended February 29, 2020, the statements of changes in net assets for each of the two years in the period ended February 29, 2020, including the related notes, and the financial highlights for each of the five years in the period ended February 29, 2020 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of each of the Funds as of February 29, 2020, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period ended February 29, 2020 and each of the financial highlights for each of the five years in the period ended February 29, 2020 in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinions
These financial statements are the responsibility of the Funds' management. Our responsibility is to express an opinion on the Funds' financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Funds in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of February 29, 2020 by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinions.
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 9, 2020
We have served as the auditor of one or more investment companies in the Fidelity group of funds since 1932.
Trustees and Officers
The Trustees, Members of the Advisory Board (if any), and officers of the trust and funds, as applicable, are listed below. The Board of Trustees governs each fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee each fund's activities, review contractual arrangements with companies that provide services to each fund, oversee management of the risks associated with such activities and contractual arrangements, and review each fund's performance. Except for Michael E. Wiley, each of the Trustees oversees 302 funds. Mr. Wiley oversees 199 funds.
The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust. Each Trustee who is not an interested person (as defined in the 1940 Act) of the trust and the funds is referred to herein as an Independent Trustee. Each Independent Trustee shall retire not later than the last day of the calendar year in which his or her 75th birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. Officers and Advisory Board Members hold office without limit in time, except that any officer or Advisory Board Member may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years.
Each fund's Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-800-544-8544.
Experience, Skills, Attributes, and Qualifications of the Trustees. The Governance and Nominating Committee has adopted a statement of policy that describes the experience, qualifications, attributes, and skills that are necessary and desirable for potential Independent Trustee candidates (Statement of Policy). The Board believes that each Trustee satisfied at the time he or she was initially elected or appointed a Trustee, and continues to satisfy, the standards contemplated by the Statement of Policy. The Governance and Nominating Committee also engages professional search firms to help identify potential Independent Trustee candidates who have the experience, qualifications, attributes, and skills consistent with the Statement of Policy. From time to time, additional criteria based on the composition and skills of the current Independent Trustees, as well as experience or skills that may be appropriate in light of future changes to board composition, business conditions, and regulatory or other developments, have also been considered by the professional search firms and the Governance and Nominating Committee. In addition, the Board takes into account the Trustees' commitment and participation in Board and committee meetings, as well as their leadership of standing and ad hoc committees throughout their tenure.
In determining that a particular Trustee was and continues to be qualified to serve as a Trustee, the Board has considered a variety of criteria, none of which, in isolation, was controlling. The Board believes that, collectively, the Trustees have balanced and diverse experience, qualifications, attributes, and skills, which allow the Board to operate effectively in governing each fund and protecting the interests of shareholders. Information about the specific experience, skills, attributes, and qualifications of each Trustee, which in each case led to the Board's conclusion that the Trustee should serve (or continue to serve) as a trustee of the funds, is provided below.
Board Structure and Oversight Function. James C. Curvey is an interested person and currently serves as Chairman. The Trustees have determined that an interested Chairman is appropriate and benefits shareholders because an interested Chairman has a personal and professional stake in the quality and continuity of services provided to the funds. Independent Trustees exercise their informed business judgment to appoint an individual of their choosing to serve as Chairman, regardless of whether the Trustee happens to be independent or a member of management. The Independent Trustees have determined that they can act independently and effectively without having an Independent Trustee serve as Chairman and that a key structural component for assuring that they are in a position to do so is for the Independent Trustees to constitute a substantial majority for the Board. The Independent Trustees also regularly meet in executive session. Ned C. Lautenbach serves as Chairman of the Independent Trustees and as such (i) acts as a liaison between the Independent Trustees and management with respect to matters important to the Independent Trustees and (ii) with management prepares agendas for Board meetings.
Fidelity® funds are overseen by different Boards of Trustees. The funds' Board oversees Fidelity's high income and certain equity funds, and other Boards oversee Fidelity's investment-grade bond, money market, asset allocation, and other equity funds. The asset allocation funds may invest in Fidelity® funds overseen by the funds' Board. The use of separate Boards, each with its own committee structure, allows the Trustees of each group of Fidelity® funds to focus on the unique issues of the funds they oversee, including common research, investment, and operational issues. On occasion, the separate Boards establish joint committees to address issues of overlapping consequences for the Fidelity® funds overseen by each Board.
The Trustees operate using a system of committees to facilitate the timely and efficient consideration of all matters of importance to the Trustees, each fund, and fund shareholders and to facilitate compliance with legal and regulatory requirements and oversight of the funds' activities and associated risks. The Board, acting through its committees, has charged FMR and its affiliates with (i) identifying events or circumstances the occurrence of which could have demonstrably adverse effects on the funds' business and/or reputation; (ii) implementing processes and controls to lessen the possibility that such events or circumstances occur or to mitigate the effects of such events or circumstances if they do occur; and (iii) creating and maintaining a system designed to evaluate continuously business and market conditions in order to facilitate the identification and implementation processes described in (i) and (ii) above. Because the day-to-day operations and activities of the funds are carried out by or through FMR, its affiliates, and other service providers, the funds' exposure to risks is mitigated but not eliminated by the processes overseen by the Trustees. While each of the Board's committees has responsibility for overseeing different aspects of the funds' activities, oversight is exercised primarily through the Operations, Audit, and Compliance Committees. Appropriate personnel, including but not limited to the funds' Chief Compliance Officer (CCO), FMR's internal auditor, the independent accountants, the funds' Treasurer and portfolio management personnel, make periodic reports to the Board's committees, as appropriate, including an annual review of Fidelity's risk management program for the Fidelity® funds. The responsibilities of each standing committee, including their oversight responsibilities, are described further under "Standing Committees of the Trustees."
Interested Trustees*:
Correspondence intended for a Trustee who is an interested person may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210.
Name, Year of Birth; Principal Occupations and Other Relevant Experience+
James C. Curvey (1935)
Year of Election or Appointment: 2018
Trustee
Chairman of the Board of Trustees
Mr. Curvey also serves as Trustee of other Fidelity® funds. Mr. Curvey is Vice Chairman (2007-present) and Director of FMR LLC (diversified financial services company). In addition, Mr. Curvey is an Overseer Emeritus for the Boston Symphony Orchestra, a Director of Artis-Naples, and a Trustee of Brewster Academy in Wolfeboro, New Hampshire. Previously, Mr. Curvey served as a Director of Fidelity Research & Analysis Co. (investment adviser firm, 2009-2018), Director of Fidelity Investments Money Management, Inc. (investment adviser firm, 2009-2014) and a Director of FMR and FMR Co., Inc. (investment adviser firms, 2007-2014).
* Determined to be an “Interested Trustee” by virtue of, among other things, his or her affiliation with the trust or various entities under common control with FMR.
+ The information includes the Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to the Trustee's qualifications to serve as a Trustee, which led to the conclusion that the Trustee should serve as a Trustee for each fund.
Independent Trustees:
Correspondence intended for an Independent Trustee may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.
Name, Year of Birth; Principal Occupations and Other Relevant Experience+
Dennis J. Dirks (1948)
Year of Election or Appointment: 2018
Trustee
Mr. Dirks also serves as Trustee of other Fidelity® funds. Prior to his retirement in May 2003, Mr. Dirks served as Chief Operating Officer and as a member of the Board of The Depository Trust & Clearing Corporation (financial markets infrastructure), President, Chief Operating Officer and a member of the Board of The Depository Trust Company (DTC), President and a member of the Board of the National Securities Clearing Corporation (NSCC), Chief Executive Officer and a member of the Board of the Government Securities Clearing Corporation and Chief Executive Officer and a member of the Board of the Mortgage-Backed Securities Clearing Corporation. Mr. Dirks currently serves as a member of the Finance Committee (2016-present) and Board (2017-present) and is Treasurer (2018-present) of the Asolo Repertory Theatre.
Donald F. Donahue (1950)
Year of Election or Appointment: 2018
Trustee
Mr. Donahue also serves as Trustee of other Fidelity® funds. Mr. Donahue serves as President and Chief Executive Officer of Miranda Partners, LLC (risk consulting for the financial services industry, 2012-present). Previously, Mr. Donahue served as Chief Executive Officer (2006-2012), Chief Operating Officer (2003-2006) and Managing Director, Customer Marketing and Development (1999-2003) of The Depository Trust & Clearing Corporation (financial markets infrastructure). Mr. Donahue currently serves as a member (2007-present) and Co-Chairman (2016-present) of the Board of United Way of New York, a member of the Board of NYC Leadership Academy (2012-present) and a member of the Board of Advisors of Ripple Labs, Inc. (financial services, 2015-present). Mr. Donahue previously served as a member of the Advisory Board of certain Fidelity® funds (2015-2018).
Alan J. Lacy (1953)
Year of Election or Appointment: 2018
Trustee
Mr. Lacy also serves as Trustee of other Fidelity® funds. Previously, Mr. Lacy served as Senior Adviser (2007-2014) of Oak Hill Capital Partners, L.P. (private equity), Chief Executive Officer (2005) and Vice Chairman (2005-2006) of Sears Holdings Corporation (retail), Chief Executive Officer and Chairman of the Board of Sears, Roebuck and Co. (retail, 2000-2005) and Chairman (2014-2017) and a member of the Board (2010-2017) of Dave & Buster’s Entertainment, Inc. (restaurant and entertainment complexes). Mr. Lacy currently serves as a member of the Board of Bristol-Myers Squibb Company (global pharmaceuticals, 2008-present), Trustee of the California Chapter of The Nature Conservancy (2015-present) and a member of the Board of the Center for Advanced Study in the Behavioral Sciences at Stanford University (2015-present).
Ned C. Lautenbach (1944)
Year of Election or Appointment: 2018
Trustee
Chairman of the Independent Trustees
Mr. Lautenbach also serves as Trustee of other Fidelity® funds. Mr. Lautenbach currently serves as Chair of the Board of Governors, State University System of Florida (2013-present) and is a member of the Council on Foreign Relations (1994-present). He is also a member and has in the past served as Chairman of the Board of Directors of Artis-Naples (2012-present). Previously, Mr. Lautenbach served as a member and then Lead Director of the Board of Directors of Eaton Corporation (diversified industrial, 1997-2016). He was also a Partner at Clayton, Dubilier & Rice, LLC (private equity investment, 1998-2010); as well as Director of Sony Corporation (2006-2007). In addition, Mr. Lautenbach had a 30-year career with IBM (technology company), during which time he served as Senior Vice President and as a member of the Corporate Executive Committee (1968-1998).
Joseph Mauriello (1944)
Year of Election or Appointment: 2018
Trustee
Mr. Mauriello also serves as Trustee of other Fidelity® funds. Prior to his retirement in January 2006, Mr. Mauriello served in numerous senior management positions including Deputy Chairman and Chief Operating Officer (2004-2005), and Vice Chairman of Financial Services (2002-2004) of KPMG LLP US (professional services, 1965-2005). Mr. Mauriello currently serves as a member of the Independent Directors Council Governing Council (2015-present). Previously, Mr. Mauriello served as a member of the Board of XL Group plc. (global insurance and re-insurance, 2006-2018).
Cornelia M. Small (1944)
Year of Election or Appointment: 2018
Trustee
Ms. Small also serves as Trustee of other Fidelity® funds. Previously, Ms. Small served as Chief Investment Officer, Director of Global Equity Investments and a member of Scudder, Stevens & Clark and Scudder Kemper Investments. Ms. Small previously served as a member of the Board (2009-2019) and Chair of the Investment Committee (2010-2019) of the Teagle Foundation and a member of the Investment Committee of the Berkshire Taconic Community Foundation (2008-2019).
Garnett A. Smith (1947)
Year of Election or Appointment: 2013
Trustee
Mr. Smith also serves as Trustee of other Fidelity® funds. Prior to his retirement, Mr. Smith served as Chairman and Chief Executive Officer (1990-1997) and President (1986-1990) of Inbrand Corp. (manufacturer of personal absorbent products). Prior to his employment with Inbrand Corp., he was employed by a retail fabric chain and North Carolina National Bank (now Bank of America). Mr. Smith previously served as a member of the Advisory Board of certain Fidelity® funds (2012-2013).
David M. Thomas (1949)
Year of Election or Appointment: 2018
Trustee
Mr. Thomas also serves as Trustee of other Fidelity® funds. Previously, Mr. Thomas served as Executive Chairman (2005-2006) and Chairman and Chief Executive Officer (2000-2005) of IMS Health, Inc. (pharmaceutical and healthcare information solutions). Mr. Thomas currently serves as Non-Executive Chairman of the Board of Fortune Brands Home and Security (home and security products, 2011-present), and a member of the Board (2004-present) and Presiding Director (2013-present) of Interpublic Group of Companies, Inc. (marketing communication).
Michael E. Wiley (1950)
Year of Election or Appointment: 2008
Trustee
Mr. Wiley also serves as Trustee or a member of the Advisory Board of other Fidelity® funds. Previously, Mr. Wiley served as Chairman, President and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004). Mr. Wiley currently serves as a member of the Board of High Point Resources (exploration and production, 2005-present). Previously, Mr. Wiley served as a member of the Board of Andeavor Corporation (independent oil refiner and marketer, 2005-2018) and a member of the Board of Andeavor Logistics LP (natural resources logistics, 2015-2018).
+ The information includes the Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to the Trustee's qualifications to serve as a Trustee, which led to the conclusion that the Trustee should serve as a Trustee for each fund.
Advisory Board Members and Officers:
Correspondence intended for a Member of the Advisory Board (if any) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235. Correspondence intended for an officer or Peter S. Lynch may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210. Officers appear below in alphabetical order.
Name, Year of Birth; Principal Occupation
Vicki L. Fuller (1957)
Year of Election or Appointment: 2018
Member of the Advisory Board
Ms. Fuller also serves as a member of the Advisory Board of other Fidelity® funds. Previously, Ms. Fuller served as Chief Investment Officer of the New York State Common Retirement Fund (2012-2018) and held a variety of positions at AllianceBernstein L.P. (global asset management, 1985-2012), including Managing Director (2006-2012) and Senior Vice President and Senior Portfolio Manager (2001-2006). Ms. Fuller currently serves as a member of the Board, Audit Committee and Nominating and Governance Committee of The Williams Companies, Inc. (natural gas infrastructure, 2018-present) and as a member of the Board of Treliant, LLC (consulting, 2019-present).
Patricia L. Kampling (1959)
Year of Election or Appointment: 2020
Member of the Advisory Board
Ms. Kampling also serves as Member of the Advisory Board of other Fidelity® funds. Prior to her retirement, Ms. Kampling served as Chairman of the Board and Chief Executive Officer (2012-2019), President and Chief Operating Officer (2011-2012) and Executive Vice President and Chief Financial Officer (2010-2011) of Alliant Energy Corporation. Ms. Kampling currently serves as a member of the Board, Compensation Committee and Executive Committee and as Chair of the Audit Committee of Briggs & Stratton Corporation (manufacturing, 2011-present) and as a member of the Board, Audit, Finance and Risk Committee and Safety, Environmental, Technology and Operations Committee of American Water Works Company, Inc. (utilities company, 2019-present). In addition, Ms. Kampling currently serves as a member of the Board of the Nature Conservancy, Wisconsin Chapter (2019-present). Previously, Ms. Kampling served as a member of the Board of Interstate Power and Light Company (2012-2019) and Wisconsin Power and Light Company (2012-2019) (each a subsidiary of Alliant Energy Corporation) and as a member of the Board and Workforce Development Committee of the Business Roundtable (2018-2019).
Peter S. Lynch (1944)
Year of Election or Appointment: 2018
Member of the Advisory Board
Mr. Lynch also serves as Member of the Advisory Board of other Fidelity® funds. Mr. Lynch is Vice Chairman and a Director of Fidelity Management & Research Company LLC (investment adviser firm). In addition, Mr. Lynch serves as a Trustee of Boston College and as the Chairman of the Inner-City Scholarship Fund. Previously, Mr. Lynch served as Vice Chairman and a Director of FMR Co., Inc. (investment adviser firm) and on the Special Olympics International Board of Directors (1997-2006).
Susan Tomasky (1953)
Year of Election or Appointment: 2020
Member of the Advisory Board
Ms. Tomasky also serves as Member of the Advisory Board of other Fidelity® funds. Prior to her retirement, Ms. Tomasky served in various executive officer positions at American Electric Power Company, Inc. (1998-2011), including most recently as President of AEP Transmission (2007-2011). Ms. Tomasky currently serves as a member of the Board and Sustainability Committee and as Chair of the Audit Committee of Marathon Petroleum Corporation (2018-present) and as a member of the Board, Corporate Governance Committee and Organization and Compensation Committee and as Chair of the Audit Committee of Public Service Enterprise Group, Inc. (utilities company, 2012-present). In addition, Ms. Tomasky currently serves as a member of the Board of the Columbus Regional Airport Authority (2007-present), as a member of the Board of the Royal Shakespeare Company – America (2009-present), as a member of the Board of the Columbus Association for the Performing Arts (2011-present) and as a member of the Board of Kenyon College (2016-present). Previously, Ms. Tomasky served as a member of the Board (2011-2019) and as Lead Independent Director (2015-2018) of Andeavor Corporation (previously Tesoro Corporation) (independent oil refiner and marketer) and as a member of the Board of Summit Midstream Partners LP (energy, 2012-2018).
Elizabeth Paige Baumann (1968)
Year of Election or Appointment: 2017
Anti-Money Laundering (AML) Officer
Ms. Baumann also serves as AML Officer of other funds. She is Chief AML Officer (2012-present) and Senior Vice President (2014-present) of FMR LLC (diversified financial services company) and is an employee of Fidelity Investments. Previously, Ms. Baumann served as AML Officer of certain funds (2017-2019), as AML Officer of the funds (2012-2016), and Vice President (2007-2014) and Deputy Anti-Money Laundering Officer (2007-2012) of FMR LLC.
Craig S. Brown (1977)
Year of Election or Appointment: 2019
Assistant Treasurer
Mr. Brown also serves as Assistant Treasurer of other funds. Mr. Brown is an employee of Fidelity Investments (2013-present).
John J. Burke III (1964)
Year of Election or Appointment: 2018
Chief Financial Officer
Mr. Burke also serves as Chief Financial Officer of other funds. Mr. Burke serves as Head of Investment Operations for Fidelity Fund and Investment Operations (2018-present) and is an employee of Fidelity Investments (1998-present). Previously Mr. Burke served as head of Asset Management Investment Operations (2012-2018).
William C. Coffey (1969)
Year of Election or Appointment: 2019
Assistant Secretary
Mr. Coffey also serves as Assistant Secretary of other funds. He is Senior Vice President and Deputy General Counsel of FMR LLC (diversified financial services company, 2010-present), and is an employee of Fidelity Investments. Previously, Mr. Coffey served as Secretary and CLO of certain funds (2018-2019); CLO, Secretary, and Senior Vice President of Fidelity Management & Research Company and FMR Co., Inc. (investment adviser firms, 2018-2019); Secretary of Fidelity SelectCo, LLC and Fidelity Investments Money Management, Inc. (investment adviser firms, 2018-2019); CLO of Fidelity Management & Research (Hong Kong) Limited, FMR Investment Management (UK) Limited, and Fidelity Management & Research (Japan) Limited (investment adviser firms, 2018-2019); and Assistant Secretary of certain funds (2009-2018).
Timothy M. Cohen (1969)
Year of Election or Appointment: 2018
Vice President
Mr. Cohen also serves as Vice President of other funds. Mr. Cohen serves as Co-Head of Equity (2018-present), a Director of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2016-present), and is an employee of Fidelity Investments. Previously, Mr. Cohen served as Executive Vice President of Fidelity SelectCo, LLC (2019), Head of Global Equity Research (2016-2018), Chief Investment Officer - Equity and a Director of Fidelity Management & Research (U.K.) Inc. (investment adviser firm, 2013-2015) and as a Director of Fidelity Management & Research (Hong Kong) Limited (investment adviser firm, 2017).
Jonathan Davis (1968)
Year of Election or Appointment: 2010
Assistant Treasurer
Mr. Davis also serves as Assistant Treasurer of other funds. Mr. Davis serves as Assistant Treasurer of FMR Capital, Inc. (2017-present) and is an employee of Fidelity Investments. Previously, Mr. Davis served as Vice President and Associate General Counsel of FMR LLC (diversified financial services company, 2003-2010).
Laura M. Del Prato (1964)
Year of Election or Appointment: 2018
Assistant Treasurer
Ms. Del Prato also serves as an officer of other funds. Ms. Del Prato is an employee of Fidelity Investments (2017-present). Prior to joining Fidelity Investments, Ms. Del Prato served as a Managing Director and Treasurer of the JPMorgan Mutual Funds (2014-2017). Prior to JPMorgan, Ms. Del Prato served as a partner at Cohen Fund Audit Services (accounting firm, 2012-2013) and KPMG LLP (accounting firm, 2004-2012).
Colm A. Hogan (1973)
Year of Election or Appointment: 2020
Assistant Treasurer
Mr. Hogan also serves as an officer of other funds. Mr. Hogan serves as Assistant Treasurer of FMR Capital, Inc. (2017-present) and is an employee of Fidelity Investments (2005-present). Previously, Mr. Hogan served as Deputy Treasurer of certain Fidelity® funds (2016-2020) and Assistant Treasurer of certain Fidelity® funds (2016-2018).
Pamela R. Holding (1964)
Year of Election or Appointment: 2018
Vice President
Ms. Holding also serves as Vice President of other funds. Ms. Holding serves as Co-Head of Equity (2018-present) and is an employee of Fidelity Investments (2013-present). Previously, Ms. Holding served as Executive Vice President of Fidelity SelectCo, LLC (2019) and as Chief Investment Officer of Fidelity Institutional Asset Management (2013-2018).
Cynthia Lo Bessette (1969)
Year of Election or Appointment: 2019
Secretary and Chief Legal Officer (CLO)
Ms. Lo Bessette also serves as an officer of other funds. Ms. Lo Bessette serves as CLO, Secretary, and Senior Vice President of Fidelity Management & Research Company LLC (investment adviser firm, 2019-present); and CLO of Fidelity Management & Research (Hong Kong) Limited, FMR Investment Management (UK) Limited, and Fidelity Management & Research (Japan) Limited (investment adviser firms, 2019-present). She is a Senior Vice President and Deputy General Counsel of FMR LLC (diversified financial services company, 2019-present), and is an employee of Fidelity Investments. Previously, Ms. Lo Bessette served as CLO, Secretary, and Senior Vice President of FMR Co., Inc. (investment adviser firm, 2019); Secretary of Fidelity SelectCo, LLC and Fidelity Investments Money Management, Inc. (investment adviser firms, 2019). Prior to joining Fidelity Investments, Ms. Lo Bessette was Executive Vice President, General Counsel (2016-2019) and Senior Vice President, Deputy General Counsel (2015-2016) of OppenheimerFunds (investment management company) and Deputy Chief Legal Officer (2013-2015) of Jennison Associates LLC (investment adviser firm).
Chris Maher (1972)
Year of Election or Appointment: 2020
Deputy Treasurer
Mr. Maher also serves as an officer of other funds. Mr. Maher serves as Assistant Treasurer of FMR Capital, Inc. (2017-present), and is an employee of Fidelity Investments (2008-present). Previously, Mr. Maher served as Assistant Treasurer of certain funds (2013-2020); Vice President of Asset Management Compliance (2013), Vice President of the Program Management Group of FMR (investment adviser firm, 2010-2013), and Vice President of Valuation Oversight (2008-2010).
Kenneth B. Robins (1969)
Year of Election or Appointment: 2018
Chief Compliance Officer
Mr. Robins also serves as an officer of other funds. Mr. Robins serves as Compliance Officer of Fidelity Management & Research Company LLC (investment adviser firm, 2016-present) and is an employee of Fidelity Investments (2004-present). Previously, Mr. Robins served as Compliance Officer of FMR Co., Inc. (investment adviser firm, 2016-2019), as Executive Vice President of Fidelity Investments Money Management, Inc. (investment adviser firm, 2013-2016) and served in other fund officer roles.
Stacie M. Smith (1974)
Year of Election or Appointment: 2018
President and Treasurer
Ms. Smith also serves as an officer of other funds. Ms. Smith serves as Assistant Treasurer of FMR Capital, Inc. (2017-present), is an employee of Fidelity Investments (2009-present), and has served in other fund officer roles. Prior to joining Fidelity Investments, Ms. Smith served as Senior Audit Manager of Ernst & Young LLP (accounting firm, 1996-2009). Previously, Ms. Smith served as Assistant Treasurer (2013-2019) and Deputy Treasurer (2013-2016) of certain Fidelity® funds.
Marc L. Spector (1972)
Year of Election or Appointment: 2017
Assistant Treasurer
Mr. Spector also serves as an officer of other funds. Mr. Spector serves as Assistant Treasurer of FMR Capital, Inc. (2017-present) and is an employee of Fidelity Investments (2016-present). Prior to joining Fidelity Investments, Mr. Spector served as Director at the Siegfried Group (accounting firm, 2013-2016), and prior to Siegfried Group as audit senior manager at Deloitte & Touche LLP (accounting firm, 2005-2013).
Jim Wegmann (1979)
Year of Election or Appointment: 2019
Assistant Treasurer
Mr. Wegmann also serves as Assistant Treasurer of other funds. Mr. Wegmann is an employee of Fidelity Investments (2011-present).
Shareholder Expense Example
As a shareholder of a Fund, you incur two types of costs: (1) transaction costs, including and (2) ongoing costs, including management fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (September 1, 2019 to February 29, 2020).
Actual Expenses
The first line of the accompanying table for each fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. In addition, each Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each fund provides information about hypothetical account values and hypothetical expenses based on a fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. In addition, each Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Annualized Expense RatioA | Beginning Account Value September 1, 2019 | Ending Account Value February 29, 2020 | Expenses Paid During Period-B September 1, 2019 to February 29, 2020 |
|
| Air Transportation Portfolio | .81% | |||
| Actual | $1,000.00 | $859.70 | $3.75 | |
| Hypothetical-C | $1,000.00 | $1,020.84 | $4.07 | |
| Defense and Aerospace Portfolio | .74% | |||
| Actual | $1,000.00 | $921.70 | $3.54 | |
| Hypothetical-C | $1,000.00 | $1,021.18 | $3.72 | |
| Environment and Alternative Energy Portfolio | .84% | |||
| Actual | $1,000.00 | $1,004.70 | $4.19 | |
| Hypothetical-C | $1,000.00 | $1,020.69 | $4.22 | |
| Industrials Portfolio | .75% | |||
| Actual | $1,000.00 | $960.30 | $3.66 | |
| Hypothetical-C | $1,000.00 | $1,021.13 | $3.77 | |
| Transportation Portfolio | .78% | |||
| Actual | $1,000.00 | $921.90 | $3.73 | |
| Hypothetical-C | $1,000.00 | $1,020.98 | $3.92 |
A Annualized expense ratio reflects expenses net of applicable fee waivers.
B Expenses are equal to each Fund's annualized expense ratio, multiplied by the average account value over the period, multiplied by 182/ 366 (to reflect the one-half year period).
C 5% return per year before expenses
Distributions (Unaudited)
The Board of Trustees of each fund voted to pay to shareholders of record at the opening of business on record date, the following distributions per share derived from capital gains realized from sales of portfolio securities, and dividends derived from net investment income:
| Pay Date | Record Date | Dividends | Capital Gains | |
| Air Transportation Portfolio | 04/09/20 | 04/08/20 | $0.316 | $0.995 |
| Defense and Aerospace Portfolio | 04/09/20 | 04/08/20 | $0.050 | $0.297 |
| Environment and Alternative Energy Portfolio | 04/09/20 | 04/08/20 | $0.093 | $1.638 |
| Industrials Portfolio | 04/09/20 | 04/08/20 | $0.067 | $1.001 |
| Transportation Portfolio | 04/09/20 | 04/08/20 | $0.167 | $6.875 |
The funds hereby designate as capital gain dividend the amounts noted below for the taxable year ended February 29, 2020, or, if subsequently determined to be different, the net capital gain of such year.
| Air Transportation Portfolio | $22,174,928 |
| Defense and Aerospace Portfolio | $98,165,318 |
| Environment and Alternative Energy Portfolio | $8,661,352 |
| Industrials Portfolio | $38,982,791 |
| Transportation Portfolio | $27,464,025 |
A percentage of the dividends distributed during the fiscal year for the following funds qualify for the dividends–received deduction for corporate shareholders:
| April 2019 | December 2019 | |
| Air Transportation Portfolio | 100% | 78% |
| Defense and Aerospace Portfolio | – | 100% |
| Environment and Alternative Energy Portfolio | 100% | 100% |
| Industrials Portfolio | – | 100% |
| Transportation Portfolio | 100% | 100% |
A percentage of the dividends distributed during the fiscal year for the following funds may be taken into account as a dividend for purposes of the maximum rate under section 1(h)(11) of the Internal Revenue Code.
| April 2019 | December 2019 | |
| Air Transportation Portfolio | 100% | 81% |
| Defense and Aerospace Portfolio | – | 100% |
| Environment and Alternative Energy Portfolio | 100% | 100% |
| Industrials Portfolio | – | 100% |
| Transportation Portfolio | 100% | 100% |
The funds will notify shareholders in January 2021 of amounts for use in preparing 2020 income tax returns.
Board Approval of Investment Advisory Contracts and Management Fees
Air Transportation Portfolio
Defense and Aerospace Portfolio
Environment and Alternative Energy Portfolio
Industrials Portfolio
Transportation Portfolio
Air Transportation Portfolio
Defense and Aerospace Portfolio
Environment and Alternative Energy Portfolio
Industrials Portfolio
Transportation Portfolio
Air Transportation Portfolio
Defense and Aerospace Portfolio
Environment and Alternative Energy Portfolio
Industrials Portfolio
Transportation Portfolio
Liquidity Risk Management Program
The Securities and Exchange Commission adopted Rule 22e-4 under the Investment Company Act of 1940 (the Liquidity Rule) to promote effective liquidity risk management throughout the open-end investment company industry, thereby reducing the risk that funds will be unable to meet their redemption obligations and mitigating dilution of the interests of fund shareholders.
The Funds have adopted and implemented a liquidity risk management program pursuant to the Liquidity Rule (the Program) effective December 1, 2018. The Program is reasonably designed to assess and manage each Fund’s liquidity risk and to comply with the requirements of the Liquidity Rule. Each Fund’s Board of Trustees (the Board) has designated each Fund’s investment adviser as administrator of the Program. The Fidelity advisers have established a Liquidity Risk Management Committee (the LRM Committee) to manage the Program for each of the Fidelity Funds. The LRM Committee monitors the adequacy and effectiveness of implementation of the Program and on a periodic basis assesses each Fund’s liquidity risk based on a variety of factors including (1) the Fund’s investment strategy, (2) portfolio liquidity and cash flow projections during normal and reasonably foreseeable stressed conditions, (3) shareholder redemptions, (4) borrowings and other funding sources and (5) in the case of exchange-traded funds, certain additional factors including the effect of the Fund’s prices and spreads, market participants, and basket compositions on the overall liquidity of the Fund’s portfolio, as applicable.
In accordance with the Program, each of the Fund’s portfolio investments is classified into one of four liquidity categories described below based on a determination of a reasonable expectation for how long it would take to convert the investment to cash (or sell or dispose of the investment) without significantly changing its market value.
- Highly liquid investments – cash or convertible to cash within three business days or less
- Moderately liquid investments – convertible to cash in three to seven calendar days
- Less liquid investments – can be sold or disposed of, but not settled, within seven calendar days
- Illiquid investments – cannot not be sold or disposed of within seven calendar days
Liquidity classification determinations take into account a variety of factors including various market, trading and investment-specific considerations, as well as market depth, and generally utilize analysis from a third-party liquidity metrics service.
The Liquidity Rule places a 15% limit on a fund’s illiquid investments and requires funds that do not primarily hold assets that are highly liquid investments to determine and maintain a minimum percentage of the fund’s net assets to be invested in highly liquid investments (highly liquid investment minimum or HLIM). The Program includes provisions reasonably designed to comply with the 15% limit on illiquid investments and for determining, periodically reviewing and complying with the HLIM requirement as applicable.
At a recent meeting of the Fund’s Board of Trustees, the LRM Committee provided a written report to the Board pertaining to the operation, adequacy, and effectiveness of implementation of the Program for the annual period from December 1, 2018 through November 30, 2019. The report concluded that the Program has been implemented and is operating effectively and is reasonably designed to assess and manage the Fund’s liquidity risk.
SELCI-ANN-0420
1.813657.115
Fidelity® Select Portfolios®
Information Technology Sector
Communications Equipment Portfolio
Computers Portfolio
IT Services Portfolio
Semiconductors Portfolio
Software and IT Services Portfolio
Technology Portfolio
February 29, 2020
See the inside front cover for important information about access to your fund’s shareholder reports.
Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of a fund’s shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports from the fund or from your financial intermediary, such as a financial advisor, broker-dealer or bank. Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from a fund electronically, by contacting your financial intermediary. For Fidelity customers, visit Fidelity's web site or call Fidelity using the contact information listed below.
You may elect to receive all future reports in paper free of charge. If you wish to continue receiving paper copies of your shareholder reports, you may contact your financial intermediary or, if you are a Fidelity customer, visit Fidelity’s website, or call Fidelity at the applicable toll-free number listed below. Your election to receive reports in paper will apply to all funds held with the fund complex/your financial intermediary.
| Account Type | Website | Phone Number |
| Brokerage, Mutual Fund, or Annuity Contracts: | fidelity.com/mailpreferences | 1-800-343-3548 |
| Employer Provided Retirement Accounts: | netbenefits.fidelity.com/preferences (choose 'no' under Required Disclosures to continue to print) | 1-800-343-0860 |
| Advisor Sold Accounts Serviced Through Your Financial Intermediary: | Contact Your Financial Intermediary | Your Financial Intermediary's phone number |
| Advisor Sold Accounts Serviced by Fidelity: | institutional.fidelity.com | 1-877-208-0098 |
Contents
|
Communications Equipment Portfolio | |
|
Computers Portfolio | |
|
IT Services Portfolio | |
|
Semiconductors Portfolio | |
|
Software and IT Services Portfolio | |
|
Technology Portfolio | |
|
Board Approval of Investment Advisory Contracts and Management Fees | |
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov.
You may also call 1-800-544-8544 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third-party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company. © 2020 FMR LLC. All rights reserved.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the Funds. This report is not authorized for distribution to prospective investors in the Funds unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-PORT. Forms N-PORT are available on the SEC’s web site at http://www.sec.gov. A fund's Forms N-PORT may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330.
For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com, http://www.institutional.fidelity.com, or http://www.401k.com, as applicable.
NOT FDIC INSURED •MAY LOSE VALUE •NO BANK GUARANTEE
Neither the Funds nor Fidelity Distributors Corporation is a bank.
Note to shareholders:
(No Action is Required by You)
As part of a regular review of its organizational structure, Fidelity has decided to merge certain entities to streamline operations, increase efficiency, simplify reporting, and reduce legal, compliance, and accounting complexity and costs. In separate events, Fidelity has merged four of its investment advisers and two of its broker-dealers.
Effective on or about January 1, 2020, following any required regulatory notices and approvals:
Investment advisers Fidelity Investments Money Management, Inc., FMR Co., Inc., and Fidelity SelectCo, LLC, merged with and into Fidelity Management & Research Company. In connection with the merger transactions, the resulting, merged investment adviser was then redomiciled from Massachusetts to Delaware, changed its corporate structure from a corporation to a limited liability company, and changed its name to “Fidelity Management & Research Company LLC”.
Broker-dealer Fidelity Distributors Corporation merged with and into Fidelity Investments Institutional Services Company, Inc. (“FIISC”). FIISC was then redomiciled from Massachusetts to Delaware, changed its corporate structure from a corporation to a limited liability company, and changed its name to “Fidelity Distributors Company LLC”.
These mergers are not expected to affect fund shareholders or Fidelity clients, nor are they expected to result in any changes to the day-to-day management of Fidelity’s brokerage services, the Fidelity funds, their investment policies and practices, their portfolio management teams, or the funds’ expenses.
Early in 2020, the outbreak and spread of a new coronavirus emerged as a public health emergency that had a major influence on financial markets, primarily based on its impact on the global economy and corporate earnings. The virus causes a respiratory disease known as COVID-19. On March 11, the World Health Organization declared the COVID-19 outbreak a pandemic, citing sustained risk of further global spread.
In the weeks following the end of this reporting period, as the crisis worsened, we witnessed an escalating human tragedy with wide-scale social and economic consequences from coronavirus-containment measures. The outbreak of COVID-19 prompted a number of measures to limit the spread, including travel and border restrictions, quarantines, and restrictions on large gatherings. In turn, these resulted in lower consumer activity, diminished demand for a wide range of products and services, disruption in manufacturing and supply chains, and – given the wide variability in outcomes regarding the outbreak – significant market uncertainty and volatility. Amid the turmoil, the U.S. government took unprecedented action – in concert with the U.S. Federal Reserve and central banks around the world – to help support consumers, businesses, and the broader economy, and to limit disruption to the financial system.
The situation continues to unfold, and the extent and duration of its impact on financial markets and the economy remain highly uncertain. Extreme events such as the coronavirus crisis are “exogenous shocks” that can have significant adverse effects on mutual funds and their investments. Although multiple asset classes may be affected by market disruption, the duration and impact may not be the same for all types of assets.
Fidelity is committed to helping you stay informed amid news about COVID-19 and during increased market volatility, and we’re taking extra steps to be responsive to customer needs. We encourage you to visit our websites, where we offer ongoing updates, commentary, and analysis on the markets and our funds.
Communications Equipment Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The hypothetical investment and the average annual total returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund’s total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
| For the periods ended February 29, 2020 | Past 1 year | Past 5 years | Past 10 years |
| Communications Equipment Portfolio | (18.84)% | 2.61% | 6.93% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Communications Equipment Portfolio on February 28, 2010.
The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
| Period Ending Values | ||
|
| $19,550 | Communications Equipment Portfolio |
|
| $32,918 | S&P 500® Index |
Communications Equipment Portfolio
Management's Discussion of Fund Performance
Market Recap: U.S. stocks stalled to begin the new year and declined in late February, as the outbreak and spread of the new coronavirus threatened to hamper global economic growth and corporate earnings. For the 12 months ending February 29, 2020, the U.S. equity bellwether S&P 500® index gained 8.19%. The period began with equities rising amid upbeat company earnings and signs the U.S. Federal Reserve may pause on rates. The uptrend extended until May, when the index dipped as trade talks between the U.S. and China broke down. The bull market roared back to record a series of highs in July, when the Fed cut interest rates for the first time since 2008. Volatility intensified in August, as the Treasury yield curve inverted, which some investors viewed as a sign the U.S. economy could be heading for recession. But the market proved resilient, hitting a new high on October 30, when the Fed lowered rates for the third time in 2019, and moving higher through December 31. Following a roughly flat January, stocks sank in late February, after a surge in coronavirus cases outside China created considerable uncertainty and pushed investors to safer asset classes. By sector, information technology (+27%) led the way by a wide margin, followed by utilities and communication services (+13% each). In contrast, energy (-25%) was by far the weakest category, struggling due to sluggish oil prices. Other notable laggards included materials and industrials (-2% each). Comments from Portfolio Manager Caroline Tall: For the fiscal year, the fund returned -18.84%, modestly behind the -18.11% result of the MSCI North America IMI + ADR Custom Communications Equipment 25/50 Linked Index, and considerably trailing the S&P 500®. Versus the MSCI industry index, out-of-index exposure to application software via our position in Pivotal Software (-47%) – which I sold – weighed on the fund’s performance most. Stock selection in the fund’s core segment of communications equipment also detracted. Along with Pivotal Software, the fund was hurt by a large underweighting in optical networking equipment maker Infinera (+33%), as well as overweights in multinational networking and telecommunications equipment supplier Ericsson (-10%), headquartered in Sweden, network hardware and software company Extreme Networks (-39%), and F5 Networks (-29%), an application-delivery services provider. In the latter two cases, untimely ownership exacerbated the impact of the stock’s decline. Conversely, the fund’s relative performance benefited from non-index allocations to the integrated telecommunication services, cable & satellite, systems software, and movies & entertainment groups. Relative performance also benefited from a cash position of roughly 1%, on average. At the stock level, underweighting Nokia (-35%) made this holding our largest individual contributor compared with the MSCI index. I’ll also mention Motorola Solutions (+18%), a provider of public safety communications networks and equipment. I significantly increased the fund’s exposure here, making Motorola Solutions the fund’s second-largest position by period end.The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Communications Equipment Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 29, 2020
| % of fund's net assets | |
| Cisco Systems, Inc. | 19.0 |
| Motorola Solutions, Inc. | 14.3 |
| Ericsson (B Shares) sponsored ADR | 10.0 |
| Ciena Corp. | 6.5 |
| F5 Networks, Inc. | 4.9 |
| Lumentum Holdings, Inc. | 4.7 |
| ViaSat, Inc. | 3.9 |
| CommScope Holding Co., Inc. | 3.7 |
| Nokia Corp. sponsored ADR | 3.5 |
| Arista Networks, Inc. | 3.5 |
| 74.0 |
Top Industries (% of fund's net assets)
| As of February 29, 2020 | ||
| Communications Equipment | 89.0% | |
| Diversified Telecommunication Services | 2.9% | |
| Software | 2.2% | |
| IT Services | 1.0% | |
| All Others* | 4.9% | |
* Includes short-term investments and net other assets (liabilities).
Communications Equipment Portfolio
Schedule of Investments February 29, 2020
Showing Percentage of Net Assets
| Common Stocks - 95.1% | |||
| Shares | Value | ||
| Communications Equipment - 89.0% | |||
| Communications Equipment - 89.0% | |||
| Acacia Communications, Inc. (a) | 29,366 | $2,011,865 | |
| Arista Networks, Inc. (a) | 26,004 | 5,021,892 | |
| Casa Systems, Inc. (a) | 58,869 | 193,090 | |
| Ciena Corp. (a) | 247,265 | 9,507,339 | |
| Cisco Systems, Inc. | 690,263 | 27,562,200 | |
| CommScope Holding Co., Inc. (a) | 484,767 | 5,337,285 | |
| Comtech Telecommunications Corp. | 49,300 | 1,381,386 | |
| EchoStar Holding Corp. Class A (a) | 139,168 | 4,859,747 | |
| Ericsson (B Shares) sponsored ADR (b) | 1,803,310 | 14,498,612 | |
| Extreme Networks, Inc. (a) | 591,691 | 2,976,206 | |
| F5 Networks, Inc. (a) | 59,426 | 7,128,149 | |
| Infinera Corp. (a) | 14,814 | 100,735 | |
| InterDigital, Inc. | 18,846 | 996,765 | |
| Juniper Networks, Inc. | 79,735 | 1,691,977 | |
| Lumentum Holdings, Inc. (a) | 87,704 | 6,825,125 | |
| Motorola Solutions, Inc. | 124,921 | 20,696,911 | |
| NetScout Systems, Inc. (a) | 67,791 | 1,742,229 | |
| Nokia Corp. sponsored ADR | 1,314,859 | 5,088,504 | |
| Plantronics, Inc. (b) | 70,800 | 972,084 | |
| Sierra Wireless, Inc. (a)(b) | 163,900 | 1,274,812 | |
| ViaSat, Inc. (a) | 99,451 | 5,718,433 | |
| Viavi Solutions, Inc. (a) | 274,212 | 3,616,856 | |
| 129,202,202 | |||
| Diversified Telecommunication Services - 2.9% | |||
| Integrated Telecommunication Services - 2.9% | |||
| Cellnex Telecom SA (c) | 37,200 | 1,813,658 | |
| Orange SA ADR | 179,900 | 2,407,062 | |
| 4,220,720 | |||
| Interactive Media & Services - 0.0% | |||
| Interactive Media & Services - 0.0% | |||
| Alphabet, Inc. Class A (a) | 6 | 8,036 | |
| IT Services - 1.0% | |||
| Internet Services & Infrastructure - 1.0% | |||
| Fastly, Inc. Class A (b) | 75,502 | 1,494,940 | |
| Software - 2.2% | |||
| Systems Software - 2.2% | |||
| Crowdstrike Holdings, Inc. | 20,000 | 1,192,800 | |
| Rapid7, Inc. (a) | 41,201 | 1,907,606 | |
| 3,100,406 | |||
| TOTAL COMMON STOCKS | |||
| (Cost $117,451,532) | 138,026,304 | ||
| Money Market Funds - 6.4% | |||
| Fidelity Cash Central Fund 1.60% (d) | 4,723,603 | 4,724,548 | |
| Fidelity Securities Lending Cash Central Fund 1.60% (d)(e) | 4,503,941 | 4,504,391 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $9,228,939) | 9,228,939 | ||
| TOTAL INVESTMENT IN SECURITIES - 101.5% | |||
| (Cost $126,680,471) | 147,255,243 | ||
| NET OTHER ASSETS (LIABILITIES) - (1.5)% | (2,117,814) | ||
| NET ASSETS - 100% | $145,137,429 |
Legend
(a) Non-income producing
(b) Security or a portion of the security is on loan at period end.
(c) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the end of the period, the value of these securities amounted to $1,813,658 or 1.2% of net assets.
(d) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request.
(e) Investment made with cash collateral received from securities on loan.
Affiliated Central Funds
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:
| Fund | Income earned |
| Fidelity Cash Central Fund | $64,684 |
| Fidelity Securities Lending Cash Central Fund | 209,658 |
| Total | $274,342 |
Amounts in the income column in the above table include any capital gain distributions from underlying funds, which are presented in the corresponding line-item in the Statement of Operations, if applicable. Amount for Fidelity Securities Lending Cash Central Fund represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities.
Investment Valuation
The following is a summary of the inputs used, as of February 29, 2020, 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 below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.
| Valuation Inputs at Reporting Date: | ||||
| Description | Total | Level 1 | Level 2 | Level 3 |
| Investments in Securities: | ||||
| Common Stocks | $138,026,304 | $136,212,646 | $1,813,658 | $-- |
| Money Market Funds | 9,228,939 | 9,228,939 | -- | -- |
| Total Investments in Securities: | $147,255,243 | $145,441,585 | $1,813,658 | $-- |
Other Information
Distribution of investments by country or territory of incorporation, as a percentage of Total Net Assets, is as follows (Unaudited):
| United States of America | 82.7% |
| Sweden | 10.0% |
| Finland | 3.5% |
| France | 1.7% |
| Spain | 1.2% |
| Others (Individually Less Than 1%) | 0.9% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Communications Equipment Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2020 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $4,310,446) — See accompanying schedule: Unaffiliated issuers (cost $117,451,532) | $138,026,304 | |
| Fidelity Central Funds (cost $9,228,939) | 9,228,939 | |
| Total Investment in Securities (cost $126,680,471) | $147,255,243 | |
| Foreign currency held at value (cost $8) | 8 | |
| Receivable for investments sold | 2,787,427 | |
| Receivable for fund shares sold | 74,018 | |
| Dividends receivable | 26,566 | |
| Distributions receivable from Fidelity Central Funds | 4,922 | |
| Prepaid expenses | 1,490 | |
| Other receivables | 4,208 | |
| Total assets | 150,153,882 | |
| Liabilities | ||
| Payable for fund shares redeemed | 352,871 | |
| Accrued management fee | 72,188 | |
| Other affiliated payables | 34,417 | |
| Other payables and accrued expenses | 50,761 | |
| Collateral on securities loaned | 4,506,216 | |
| Total liabilities | 5,016,453 | |
| Net Assets | $145,137,429 | |
| Net Assets consist of: | ||
| Paid in capital | $127,700,972 | |
| Total accumulated earnings (loss) | 17,436,457 | |
| Net Assets | $145,137,429 | |
| Net Asset Value, offering price and redemption price per share ($145,137,429 ÷ 4,657,794 shares) | $31.16 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 29, 2020 | ||
| Investment Income | ||
| Dividends | $2,287,763 | |
| Income from Fidelity Central Funds (including $209,658 from security lending) | 274,342 | |
| Total income | 2,562,105 | |
| Expenses | ||
| Management fee | $1,044,716 | |
| Transfer agent fees | 403,184 | |
| Accounting and security lending fees | 76,981 | |
| Custodian fees and expenses | 22,539 | |
| Independent trustees' fees and expenses | 1,092 | |
| Registration fees | 36,298 | |
| Audit | 39,436 | |
| Legal | 1,527 | |
| Miscellaneous | 1,545 | |
| Total expenses before reductions | 1,627,318 | |
| Expense reductions | (34,329) | |
| Total expenses after reductions | 1,592,989 | |
| Net investment income (loss) | 969,116 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 4,125,376 | |
| Fidelity Central Funds | (1,549) | |
| Foreign currency transactions | 935 | |
| Total net realized gain (loss) | 4,124,762 | |
| Change in net unrealized appreciation (depreciation) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | (42,282,916) | |
| Assets and liabilities in foreign currencies | 11 | |
| Total change in net unrealized appreciation (depreciation) | (42,282,905) | |
| Net gain (loss) | (38,158,143) | |
| Net increase (decrease) in net assets resulting from operations | $(37,189,027) |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 29, 2020 | Year ended February 28, 2019 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $969,116 | $1,439,378 |
| Net realized gain (loss) | 4,124,762 | 5,596,798 |
| Change in net unrealized appreciation (depreciation) | (42,282,905) | 13,337,823 |
| Net increase (decrease) in net assets resulting from operations | (37,189,027) | 20,373,999 |
| Distributions to shareholders | (9,589,306) | (15,319,912) |
| Share transactions | ||
| Proceeds from sales of shares | 43,801,317 | 95,495,326 |
| Reinvestment of distributions | 9,043,238 | 14,435,389 |
| Cost of shares redeemed | (79,873,603) | (105,217,924) |
| Net increase (decrease) in net assets resulting from share transactions | (27,029,048) | 4,712,791 |
| Total increase (decrease) in net assets | (73,807,381) | 9,766,878 |
| Net Assets | ||
| Beginning of period | 218,944,810 | 209,177,932 |
| End of period | $145,137,429 | $218,944,810 |
| Other Information | ||
| Shares | ||
| Sold | 1,090,635 | 2,510,396 |
| Issued in reinvestment of distributions | 241,125 | 396,991 |
| Redeemed | (2,098,473) | (2,828,010) |
| Net increase (decrease) | (766,713) | 79,377 |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights
Communications Equipment Portfolio
| Years ended February 28, | 2020 A | 2019 | 2018 | 2017 | 2016 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $40.36 | $39.13 | $34.12 | $26.71 | $32.99 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .19 | .25 | .17 | .38 | .31 |
| Net realized and unrealized gain (loss) | (7.51) | 3.76 | 5.45C | 7.39 | (5.64) |
| Total from investment operations | (7.32) | 4.01 | 5.62 | 7.77 | (5.33) |
| Distributions from net investment income | (.20) | (.17)D | (.33) | (.36) | (.30) |
| Distributions from net realized gain | (1.69) | (2.61)D | (.28) | – | (.65) |
| Total distributions | (1.88)E | (2.78) | (.61) | (.36) | (.95) |
| Redemption fees added to paid in capitalB | – | – | –F | –F | –F |
| Net asset value, end of period | $31.16 | $40.36 | $39.13 | $34.12 | $26.71 |
| Total ReturnG | (18.84)% | 11.11% | 16.71%C | 29.24% | (16.38)% |
| Ratios to Average Net AssetsH,I | |||||
| Expenses before reductions | .83% | .84% | .85% | .88% | .90% |
| Expenses net of fee waivers, if any | .83% | .84% | .85% | .88% | .89% |
| Expenses net of all reductions | .82% | .83% | .85% | .88% | .89% |
| Net investment income (loss) | .50% | .66% | .48% | 1.27% | 1.04% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $145,137 | $218,945 | $209,178 | $204,651 | $169,455 |
| Portfolio turnover rateJ | 108% | 71% | 56% | 38% | 30% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Net realized and unrealized gain (loss) per share reflects proceeds received from litigation which amounted to $.01 per share. Excluding these litigation proceeds, the total return would have been 16.67%.
D The amounts shown reflect certain reclassifications related to book to tax differences that were made in the year shown.
E Total distributions of $1.88 per share is comprised of distributions from net investment income of $.197 and distributions from net realized gain of $1.687 per share.
F Amount represents less than $.005 per share.
G Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
H Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
I Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
J Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the financial statements.
Computers Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The hypothetical investment and the average annual total returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund’s total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
| For the periods ended February 29, 2020 | Past 1 year | Past 5 years | Past 10 years |
| Computers Portfolio | 17.80% | 10.42% | 13.37% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Computers Portfolio on February 28, 2010.
The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
| Period Ending Values | ||
|
| $35,084 | Computers Portfolio |
|
| $32,918 | S&P 500® Index |
Computers Portfolio
Management's Discussion of Fund Performance
Market Recap: U.S. stocks stalled to begin the new year and declined in late February, as the outbreak and spread of the new coronavirus threatened to hamper global economic growth and corporate earnings. For the 12 months ending February 29, 2020, the U.S. equity bellwether S&P 500® index gained 8.19%. The period began with equities rising amid upbeat company earnings and signs the U.S. Federal Reserve may pause on rates. The uptrend extended until May, when the index dipped as trade talks between the U.S. and China broke down. The bull market roared back to record a series of highs in July, when the Fed cut interest rates for the first time since 2008. Volatility intensified in August, as the Treasury yield curve inverted, which some investors viewed as a sign the U.S. economy could be heading for recession. But the market proved resilient, hitting a new high on October 30, when the Fed lowered rates for the third time in 2019, and moving higher through December 31. Following a roughly flat January, stocks sank in late February, after a surge in coronavirus cases outside China created considerable uncertainty and pushed investors to safer asset classes. By sector, information technology (+27%) led the way by a wide margin, followed by utilities and communication services (+13% each). In contrast, energy (-25%) was by far the weakest category, struggling due to sluggish oil prices. Other notable laggards included materials and industrials (-2% each). Comments from Portfolio Manager Caroline Tall: For the fiscal year, the fund gained 17.80%, handily topping the 12.91% advance of the FactSet Computers and Peripherals Linked Index, and also outpacing the S&P 500®. Versus the FactSet industry index, stock selection and an underweighting in our core segment of technology hardware, storage & peripherals contributed most. Non-index exposure to systems software, semiconductor equipment, and data processing & outsourced services also boosted the fund’s relative result. Electronics for Imaging was one of the fund’s top individual relative contributors, gaining 36% while held in the portfolio. Shares of the digital printing firm bolted higher in April, after private-equity firm Siris Capital Group said it planned to buy the company for $37 per share. I sold the stock soon after this news to look for other opportunities. A meaningful non-index stake in Microsoft (+48%) also was timely, and overweighting Apple (+60%), the fund’s second-largest holding at period end, also paid off. Conversely, non-index allocations to weak-performing application software and communications equipment stocks detracted, as did an underweighting in the strong-performing consumer electronics segment. Among individual holdings, the largest relative detractor was Pure Storage (-22%). Shares of the flash-storage company hit the skids in May, after the company reported a higher-than-expected quarterly loss and lowered its full-year financial guidance. Untimely positioning in index heavyweight Sony (+29%) also weighed on the fund’s relative performance, and an out-of-index stake in Pivotal Software (-46%), which I established in April, detracted as well. I exited the position in Pivotal Software by period end.The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Computers Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 29, 2020
| % of fund's net assets | |
| Samsung Electronics Co. Ltd. | 17.3 |
| Apple, Inc. | 16.4 |
| Sony Corp. | 16.0 |
| HP, Inc. | 4.9 |
| Xiaomi Corp. Class B | 4.4 |
| Western Digital Corp. | 4.1 |
| Alphabet, Inc. Class A | 3.2 |
| Xerox Holdings Corp. | 3.1 |
| Logitech International SA (Reg.) | 2.9 |
| Mellanox Technologies Ltd. | 2.8 |
| 75.1 |
Top Industries (% of fund's net assets)
| As of February 29, 2020 | ||
| Technology Hardware, Storage & Peripherals | 67.3% | |
| Household Durables | 16.0% | |
| Interactive Media & Services | 4.4% | |
| Software | 3.1% | |
| Semiconductors & Semiconductor Equipment | 2.8% | |
| All Others* | 6.4% | |
* Includes short-term investments and net other assets (liabilities).
Computers Portfolio
Schedule of Investments February 29, 2020
Showing Percentage of Net Assets
| Common Stocks - 100.5% | |||
| Shares | Value | ||
| Electronic Equipment & Components - 2.1% | |||
| Electronic Components - 2.1% | |||
| Kyocera Corp. | 176,144 | $11,098,411 | |
| Household Durables - 16.0% | |||
| Consumer Electronics - 16.0% | |||
| Sony Corp. | 1,386,545 | 85,477,562 | |
| Interactive Media & Services - 4.4% | |||
| Interactive Media & Services - 4.4% | |||
| Alphabet, Inc. Class A (a) | 12,713 | 17,025,885 | |
| Tencent Holdings Ltd. sponsored ADR | 126,664 | 6,288,868 | |
| 23,314,753 | |||
| Internet & Direct Marketing Retail - 0.7% | |||
| Internet & Direct Marketing Retail - 0.7% | |||
| MercadoLibre, Inc. (a) | 5,888 | 3,627,185 | |
| Machinery - 1.8% | |||
| Industrial Machinery - 1.8% | |||
| Kornit Digital Ltd. (a)(b) | 244,639 | 9,748,864 | |
| Road & Rail - 1.4% | |||
| Trucking - 1.4% | |||
| Lyft, Inc. | 179,246 | 6,832,858 | |
| Uber Technologies, Inc. | 19,769 | 669,576 | |
| 7,502,434 | |||
| Semiconductors & Semiconductor Equipment - 2.8% | |||
| Semiconductors - 2.8% | |||
| Mellanox Technologies Ltd. (a) | 126,147 | 15,064,475 | |
| Software - 3.1% | |||
| Systems Software - 3.1% | |||
| Microsoft Corp. | 65,460 | 10,605,175 | |
| Nortonlifelock, Inc. | 312,474 | 5,946,380 | |
| 16,551,555 | |||
| Technology Hardware, Storage & Peripherals - 67.3% | |||
| Technology Hardware, Storage & Peripherals - 67.3% | |||
| Apple, Inc. | 319,874 | 87,440,757 | |
| Canon, Inc. | 558,445 | 14,054,549 | |
| Dell Technologies, Inc. (a) | 70,623 | 2,857,407 | |
| Diebold Nixdorf, Inc. (a) | 872 | 6,121 | |
| Fujifilm Holdings Corp. | 227,069 | 11,109,245 | |
| Hewlett Packard Enterprise Co. | 589,818 | 7,543,772 | |
| HP, Inc. | 1,262,360 | 26,244,464 | |
| Logitech International SA (Reg.) | 399,021 | 15,476,214 | |
| NetApp, Inc. | 267,788 | 12,511,055 | |
| Pure Storage, Inc. Class A (a) | 732,257 | 11,174,242 | |
| Quanta Computer, Inc. | 3,516,011 | 7,131,387 | |
| Samsung Electronics Co. Ltd. | 2,047,004 | 92,390,133 | |
| Seagate Technology LLC | 209,882 | 10,063,842 | |
| Western Digital Corp. | 389,561 | 21,644,009 | |
| Xerox Holdings Corp. | 505,241 | 16,268,760 | |
| Xiaomi Corp. Class B (a)(c) | 14,600,606 | 23,525,800 | |
| 359,441,757 | |||
| Wireless Telecommunication Services - 0.9% | |||
| Wireless Telecommunication Services - 0.9% | |||
| SoftBank Group Corp. | 100,000 | 4,645,832 | |
| TOTAL COMMON STOCKS | |||
| (Cost $396,966,253) | 536,472,828 | ||
| Money Market Funds - 0.2% | |||
| Fidelity Securities Lending Cash Central Fund 1.60% (d)(e) | |||
| (Cost $975,665) | 975,567 | 975,665 | |
| TOTAL INVESTMENT IN SECURITIES - 100.7% | |||
| (Cost $397,941,918) | 537,448,493 | ||
| NET OTHER ASSETS (LIABILITIES) - (0.7)% | (3,655,934) | ||
| NET ASSETS - 100% | $533,792,559 |
Legend
(a) Non-income producing
(b) Security or a portion of the security is on loan at period end.
(c) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the end of the period, the value of these securities amounted to $23,525,800 or 4.4% of net assets.
(d) Investment made with cash collateral received from securities on loan.
(e) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request.
Affiliated Central Funds
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:
| Fund | Income earned |
| Fidelity Cash Central Fund | $135,297 |
| Fidelity Securities Lending Cash Central Fund | 49,592 |
| Total | $184,889 |
Amounts in the income column in the above table include any capital gain distributions from underlying funds, which are presented in the corresponding line-item in the Statement of Operations, if applicable. Amount for Fidelity Securities Lending Cash Central Fund represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities.
Investment Valuation
The following is a summary of the inputs used, as of February 29, 2020, 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 below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.
| Valuation Inputs at Reporting Date: | ||||
| Description | Total | Level 1 | Level 2 | Level 3 |
| Investments in Securities: | ||||
| Common Stocks | $536,472,828 | $409,687,284 | $126,785,544 | $-- |
| Money Market Funds | 975,665 | 975,665 | -- | -- |
| Total Investments in Securities: | $537,448,493 | $410,662,949 | $126,785,544 | $-- |
Other Information
Distribution of investments by country or territory of incorporation, as a percentage of Total Net Assets, is as follows (Unaudited):
| United States of America | 42.7% |
| Japan | 23.7% |
| Korea (South) | 17.3% |
| Cayman Islands | 5.6% |
| Israel | 4.6% |
| Switzerland | 2.9% |
| Ireland | 1.9% |
| Taiwan | 1.3% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Computers Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2020 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $984,295) — See accompanying schedule: Unaffiliated issuers (cost $396,966,253) | $536,472,828 | |
| Fidelity Central Funds (cost $975,665) | 975,665 | |
| Total Investment in Securities (cost $397,941,918) | $537,448,493 | |
| Receivable for investments sold | 3,247,704 | |
| Receivable for fund shares sold | 214,188 | |
| Dividends receivable | 881,072 | |
| Distributions receivable from Fidelity Central Funds | 8,446 | |
| Prepaid expenses | 3,784 | |
| Other receivables | 174,745 | |
| Total assets | 541,978,432 | |
| Liabilities | ||
| Payable to custodian bank | $492,158 | |
| Payable for fund shares redeemed | 6,264,080 | |
| Accrued management fee | 268,812 | |
| Other affiliated payables | 91,687 | |
| Other payables and accrued expenses | 93,486 | |
| Collateral on securities loaned | 975,650 | |
| Total liabilities | 8,185,873 | |
| Net Assets | $533,792,559 | |
| Net Assets consist of: | ||
| Paid in capital | $372,543,005 | |
| Total accumulated earnings (loss) | 161,249,554 | |
| Net Assets | $533,792,559 | |
| Net Asset Value, offering price and redemption price per share ($533,792,559 ÷ 6,788,027 shares) | $78.64 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 29, 2020 | ||
| Investment Income | ||
| Dividends | $8,533,508 | |
| Special dividends | 5,228,328 | |
| Income from Fidelity Central Funds (including $49,592 from security lending) | 184,889 | |
| Total income | 13,946,725 | |
| Expenses | ||
| Management fee | $2,772,266 | |
| Transfer agent fees | 836,754 | |
| Accounting and security lending fees | 198,764 | |
| Custodian fees and expenses | 30,125 | |
| Independent trustees' fees and expenses | 2,741 | |
| Registration fees | 33,699 | |
| Audit | 43,013 | |
| Legal | 2,705 | |
| Interest | 2,744 | |
| Miscellaneous | 3,914 | |
| Total expenses before reductions | 3,926,725 | |
| Expense reductions | (51,727) | |
| Total expenses after reductions | 3,874,998 | |
| Net investment income (loss) | 10,071,727 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 41,346,794 | |
| Fidelity Central Funds | (36) | |
| Foreign currency transactions | (96,390) | |
| Total net realized gain (loss) | 41,250,368 | |
| Change in net unrealized appreciation (depreciation) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 28,092,637 | |
| Assets and liabilities in foreign currencies | 23,381 | |
| Total change in net unrealized appreciation (depreciation) | 28,116,018 | |
| Net gain (loss) | 69,366,386 | |
| Net increase (decrease) in net assets resulting from operations | $79,438,113 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 29, 2020 | Year ended February 28, 2019 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $10,071,727 | $4,700,043 |
| Net realized gain (loss) | 41,250,368 | 119,220,783 |
| Change in net unrealized appreciation (depreciation) | 28,116,018 | (121,913,173) |
| Net increase (decrease) in net assets resulting from operations | 79,438,113 | 2,007,653 |
| Distributions to shareholders | (66,135,088) | (87,948,443) |
| Share transactions | ||
| Proceeds from sales of shares | 97,658,347 | 34,349,889 |
| Reinvestment of distributions | 63,117,629 | 83,463,307 |
| Cost of shares redeemed | (132,066,756) | (78,423,602) |
| Net increase (decrease) in net assets resulting from share transactions | 28,709,220 | 39,389,594 |
| Total increase (decrease) in net assets | 42,012,245 | (46,551,196) |
| Net Assets | ||
| Beginning of period | 491,780,314 | 538,331,510 |
| End of period | $533,792,559 | $491,780,314 |
| Other Information | ||
| Shares | ||
| Sold | 1,202,453 | 391,378 |
| Issued in reinvestment of distributions | 818,801 | 1,189,565 |
| Redeemed | (1,718,015) | (896,723) |
| Net increase (decrease) | 303,239 | 684,220 |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights
Computers Portfolio
| Years ended February 28, | 2020 A | 2019 | 2018 | 2017 | 2016 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $75.84 | $92.81 | $83.01 | $62.46 | $83.28 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | 1.51C | .81 | .67 | .73 | .69 |
| Net realized and unrealized gain (loss) | 11.48 | (1.67) | 19.24 | 24.69 | (18.42) |
| Total from investment operations | 12.99 | (.86) | 19.91 | 25.42 | (17.73) |
| Distributions from net investment income | (.77) | (.88)D | (.73)D | (.88) | (.80) |
| Distributions from net realized gain | (9.42) | (15.23)D | (9.38)D | (4.00) | (2.29) |
| Total distributions | (10.19) | (16.11) | (10.11) | (4.87)E | (3.09) |
| Redemption fees added to paid in capitalB | – | – | –F | –F | –F |
| Net asset value, end of period | $78.64 | $75.84 | $92.81 | $83.01 | $62.46 |
| Total ReturnG | 17.80% | .54% | 24.82% | 41.57% | (21.56)% |
| Ratios to Average Net AssetsH,I | |||||
| Expenses before reductions | .76% | .77% | .79% | .81% | .80% |
| Expenses net of fee waivers, if any | .76% | .77% | .79% | .81% | .80% |
| Expenses net of all reductions | .75% | .77% | .78% | .81% | .79% |
| Net investment income (loss) | 1.95%C | .90% | .75% | 1.01% | .91% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $533,793 | $491,780 | $538,332 | $472,745 | $388,554 |
| Portfolio turnover rate | 116% | 81% | 57% | 49% | 31% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Net investment income per share reflects a large, non-recurring dividend which amounted to $.78 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .94%.
D The amounts shown reflect certain reclassifications related to book to tax differences that were made in the year shown.
E Total distributions of $4.87 per share is comprised of distributions from net investment income of $.879 and distributions from net realized gain of $3.995 per share.
F Amount represents less than $.005 per share.
G Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
H Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
I Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
See accompanying notes which are an integral part of the financial statements.
IT Services Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The hypothetical investment and the average annual total returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund’s total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
| For the periods ended February 29, 2020 | Past 1 year | Past 5 years | Past 10 years |
| IT Services Portfolio | 15.99% | 16.97% | 19.03% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in IT Services Portfolio on February 28, 2010.
The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
| Period Ending Values | ||
|
| $57,105 | IT Services Portfolio |
|
| $32,918 | S&P 500® Index |
IT Services Portfolio
Management's Discussion of Fund Performance
Market Recap: U.S. stocks stalled to begin the new year and declined in late February, as the outbreak and spread of the new coronavirus threatened to hamper global economic growth and corporate earnings. For the 12 months ending February 29, 2020, the U.S. equity bellwether S&P 500® index gained 8.19%. The period began with equities rising amid upbeat company earnings and signs the U.S. Federal Reserve may pause on rates. The uptrend extended until May, when the index dipped as trade talks between the U.S. and China broke down. The bull market roared back to record a series of highs in July, when the Fed cut interest rates for the first time since 2008. Volatility intensified in August, as the Treasury yield curve inverted, which some investors viewed as a sign the U.S. economy could be heading for recession. But the market proved resilient, hitting a new high on October 30, when the Fed lowered rates for the third time in 2019, and moving higher through December 31. Following a roughly flat January, stocks sank in late February, after a surge in coronavirus cases outside China created considerable uncertainty and pushed investors to safer asset classes. By sector, information technology (+27%) led the way by a wide margin, followed by utilities and communication services (+13% each). In contrast, energy (-25%) was by far the weakest category, struggling due to sluggish oil prices. Other notable laggards included materials and industrials (-2% each). Comments from Portfolio Manager Zach Turner: For the fiscal year, the fund gained 15.99%, topping the 15.51% advance of the MSCI U.S. IMI Information Technology Services 25/50 Index, and also well ahead of the S&P 500®. Versus the MSCI industry index, stock selection in the data processing & outsourced services segment contributed most. Timely picks and an underweighting in IT consulting & other services also helped. Our top individual relative contributor was a sizable underweighting in index heavyweight IBM (-1%). Timely positioning in Twilio, which I bought during the period and gained 17% in the fund, also aided our relative result. This company provides a cloud-communications platform that enables developers to build, scale and operate communications within software applications. I’ll also mention a non-index stake in Adobe (+31%), provider of a suite of applications for creating and managing documents. Conversely, non-index exposure to application software and systems software weighed on the fund’s relative result, as did a cash position of 2%, on average. The largest individual relative detractor was Virtusa (-26%). Shares of this provider of digital engineering and IT outsourcing services were hurt by the company’s high exposure to European banks, as these customers cut their spending. I exited the position. Within application software, a non-index stake in Pivotal Software (-39%) was a noteworthy detractor, as was out-of-index exposure to SS&C Technologies Holdings (-7%). I exited the position in Pivotal Software by period end.The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Note to shareholders: On April 1, 2019, Zach Turner assumed co-management responsibilities for the fund, joining Co-Manager Dan Sherwood. On October 1, 2019, Dan came off the fund, leaving Zach as sole portfolio manager.IT Services Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 29, 2020
| % of fund's net assets | |
| MasterCard, Inc. Class A | 18.8 |
| Visa, Inc. Class A | 16.8 |
| Fidelity National Information Services, Inc. | 8.2 |
| Fiserv, Inc. | 6.0 |
| PayPal Holdings, Inc. | 4.7 |
| IBM Corp. | 4.5 |
| Global Payments, Inc. | 3.8 |
| EPAM Systems, Inc. | 2.3 |
| Genpact Ltd. | 2.3 |
| WNS Holdings Ltd. sponsored ADR | 2.1 |
| 69.5 |
Top Industries (% of fund's net assets)
| As of February 29, 2020 | ||
| IT Services | 88.8% | |
| Software | 6.9% | |
| Interactive Media & Services | 0.6% | |
| Media | 0.4% | |
| Entertainment | 0.3% | |
| All Others* | 3.0% | |
* Includes short-term investments and net other assets (liabilities).
IT Services Portfolio
Schedule of Investments February 29, 2020
Showing Percentage of Net Assets
| Common Stocks - 97.5% | |||
| Shares | Value | ||
| Entertainment - 0.3% | |||
| Interactive Home Entertainment - 0.3% | |||
| Activision Blizzard, Inc. | 190,100 | $11,050,513 | |
| Interactive Media & Services - 0.6% | |||
| Interactive Media & Services - 0.6% | |||
| Match Group, Inc. (a)(b) | 400,830 | 26,053,950 | |
| Internet & Direct Marketing Retail - 0.2% | |||
| Internet & Direct Marketing Retail - 0.2% | |||
| MercadoLibre, Inc. (a) | 15,200 | 9,363,656 | |
| IT Services - 88.8% | |||
| Data Processing & Outsourced Services - 68.9% | |||
| Adyen BV (a)(c) | 2,500 | 2,200,362 | |
| Amadeus IT Holding SA Class A | 800 | 56,713 | |
| Automatic Data Processing, Inc. | 483,600 | 74,832,264 | |
| Black Knight, Inc. (a) | 953,400 | 63,601,314 | |
| CoreLogic, Inc. | 2,700 | 122,499 | |
| Euronet Worldwide, Inc. (a) | 139,600 | 17,315,984 | |
| Fidelity National Information Services, Inc. | 2,404,397 | 335,942,349 | |
| Fiserv, Inc. (a) | 2,234,417 | 244,355,843 | |
| FleetCor Technologies, Inc. (a) | 31,600 | 8,398,964 | |
| Genpact Ltd. | 2,413,080 | 92,807,057 | |
| Global Payments, Inc. | 852,903 | 156,908,565 | |
| MasterCard, Inc. Class A | 2,658,500 | 771,629,625 | |
| PagSeguro Digital Ltd. (a)(b) | 713,300 | 22,376,221 | |
| PayPal Holdings, Inc. (a) | 1,763,900 | 190,483,561 | |
| Square, Inc. (a) | 596,000 | 49,664,680 | |
| StoneCo Ltd. Class A (a)(b) | 40,700 | 1,623,523 | |
| The Western Union Co. | 4,800 | 107,472 | |
| Ttec Holdings, Inc. | 2,000 | 74,860 | |
| Verra Mobility Corp. (a) | 946,000 | 14,327,170 | |
| Visa, Inc. Class A (b) | 3,797,248 | 690,187,796 | |
| WEX, Inc. (a) | 700 | 131,068 | |
| WNS Holdings Ltd. sponsored ADR (a) | 1,328,692 | 87,481,081 | |
| 2,824,628,971 | |||
| Internet Services & Infrastructure - 4.4% | |||
| GoDaddy, Inc. (a) | 1,245,227 | 87,140,985 | |
| MongoDB, Inc. Class A (a)(b) | 146,400 | 22,326,000 | |
| Twilio, Inc. Class A (a)(b) | 489,900 | 55,182,336 | |
| VeriSign, Inc. (a) | 86,900 | 16,489,275 | |
| 181,138,596 | |||
| IT Consulting & Other Services - 15.5% | |||
| Accenture PLC Class A | 353,580 | 63,853,012 | |
| Amdocs Ltd. | 155,700 | 9,925,875 | |
| Booz Allen Hamilton Holding Corp. Class A | 807,000 | 57,539,100 | |
| Cognizant Technology Solutions Corp. Class A | 1,198,332 | 73,014,369 | |
| DXC Technology Co. | 861,100 | 20,761,121 | |
| Endava PLC ADR (a) | 493,861 | 26,199,326 | |
| EPAM Systems, Inc. (a) | 427,700 | 95,462,640 | |
| IBM Corp. | 1,410,250 | 183,544,038 | |
| InterXion Holding NV (a) | 295,700 | 25,101,973 | |
| Leidos Holdings, Inc. | 655,825 | 67,320,436 | |
| Reply SpA | 109,932 | 8,360,102 | |
| Science Applications International Corp. | 800 | 64,104 | |
| Unisys Corp. (a) | 167,753 | 2,605,204 | |
| 633,751,300 | |||
| TOTAL IT SERVICES | 3,639,518,867 | ||
| Media - 0.4% | |||
| Advertising - 0.4% | |||
| S4 Capital PLC (a) | 6,232,800 | 14,241,864 | |
| Professional Services - 0.3% | |||
| Research & Consulting Services - 0.3% | |||
| ICF International, Inc. | 178,011 | 13,525,276 | |
| Software - 6.9% | |||
| Application Software - 6.4% | |||
| Adobe, Inc. (a) | 229,569 | 79,228,853 | |
| Ceridian HCM Holding, Inc. (a)(b) | 349,573 | 24,725,298 | |
| Intuit, Inc. | 318,400 | 84,646,640 | |
| Lightspeed POS, Inc. (a) | 519,700 | 12,870,053 | |
| Netcompany Group A/S (a)(c) | 358,030 | 16,995,146 | |
| SAP SE sponsored ADR | 165,000 | 20,389,050 | |
| SS&C Technologies Holdings, Inc. | 75,700 | 4,201,350 | |
| Temenos Group AG | 4,990 | 713,456 | |
| Workday, Inc. Class A (a) | 111,300 | 19,282,725 | |
| 263,052,571 | |||
| Systems Software - 0.5% | |||
| Blue Prism Group PLC (a)(b) | 1,033,000 | 19,572,940 | |
| TOTAL SOFTWARE | 282,625,511 | ||
| TOTAL COMMON STOCKS | |||
| (Cost $2,344,227,417) | 3,996,379,637 | ||
| Money Market Funds - 9.6% | |||
| Fidelity Cash Central Fund 1.60% (d) | 6,231,997 | 6,233,244 | |
| Fidelity Securities Lending Cash Central Fund 1.60% (d)(e) | 385,623,489 | 385,662,051 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $391,895,295) | 391,895,295 | ||
| TOTAL INVESTMENT IN SECURITIES - 107.1% | |||
| (Cost $2,736,122,712) | 4,388,274,932 | ||
| NET OTHER ASSETS (LIABILITIES) - (7.1)% | (289,160,873) | ||
| NET ASSETS - 100% | $4,099,114,059 |
Legend
(a) Non-income producing
(b) Security or a portion of the security is on loan at period end.
(c) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the end of the period, the value of these securities amounted to $19,195,508 or 0.5% of net assets.
(d) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request.
(e) Investment made with cash collateral received from securities on loan.
Affiliated Central Funds
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:
| Fund | Income earned |
| Fidelity Cash Central Fund | $1,623,691 |
| Fidelity Securities Lending Cash Central Fund | 468,216 |
| Total | $2,091,907 |
Amounts in the income column in the above table include any capital gain distributions from underlying funds, which are presented in the corresponding line-item in the Statement of Operations, if applicable. Amount for Fidelity Securities Lending Cash Central Fund represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities.
Investment Valuation
The following is a summary of the inputs used, as of February 29, 2020, 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 below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.
| Valuation Inputs at Reporting Date: | ||||
| Description | Total | Level 1 | Level 2 | Level 3 |
| Investments in Securities: | ||||
| Common Stocks | $3,996,379,637 | $3,934,239,054 | $62,140,583 | $-- |
| Money Market Funds | 391,895,295 | 391,895,295 | -- | -- |
| Total Investments in Securities: | $4,388,274,932 | $4,326,134,349 | $62,140,583 | $-- |
Other Information
Distribution of investments by country or territory of incorporation, as a percentage of Total Net Assets, is as follows (Unaudited):
| United States of America | 89.7% |
| Bermuda | 2.3% |
| Bailiwick of Jersey | 2.1% |
| Ireland | 1.6% |
| United Kingdom | 1.5% |
| Others (Individually Less Than 1%) | 2.8% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
IT Services Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2020 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $380,507,999) — See accompanying schedule: Unaffiliated issuers (cost $2,344,227,417) | $3,996,379,637 | |
| Fidelity Central Funds (cost $391,895,295) | 391,895,295 | |
| Total Investment in Securities (cost $2,736,122,712) | $4,388,274,932 | |
| Foreign currency held at value (cost $78,977) | 78,977 | |
| Receivable for investments sold | 156,600,141 | |
| Receivable for fund shares sold | 12,710,535 | |
| Dividends receivable | 3,328,786 | |
| Distributions receivable from Fidelity Central Funds | 201,941 | |
| Prepaid expenses | 17,432 | |
| Other receivables | 30,747 | |
| Total assets | 4,561,243,491 | |
| Liabilities | ||
| Payable for investments purchased | $78,977 | |
| Payable for fund shares redeemed | 73,639,363 | |
| Accrued management fee | 2,067,218 | |
| Other affiliated payables | 636,874 | |
| Other payables and accrued expenses | 44,949 | |
| Collateral on securities loaned | 385,662,051 | |
| Total liabilities | 462,129,432 | |
| Net Assets | $4,099,114,059 | |
| Net Assets consist of: | ||
| Paid in capital | $2,435,476,422 | |
| Total accumulated earnings (loss) | 1,663,637,637 | |
| Net Assets | $4,099,114,059 | |
| Net Asset Value, offering price and redemption price per share ($4,099,114,059 ÷ 55,677,760 shares) | $73.62 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 29, 2020 | ||
| Investment Income | ||
| Dividends | $27,301,371 | |
| Income from Fidelity Central Funds (including $468,216 from security lending) | 2,091,907 | |
| Total income | 29,393,278 | |
| Expenses | ||
| Management fee | $20,569,072 | |
| Transfer agent fees | 5,940,435 | |
| Accounting and security lending fees | 1,014,543 | |
| Custodian fees and expenses | 28,781 | |
| Independent trustees' fees and expenses | 19,631 | |
| Registration fees | 245,589 | |
| Audit | 47,054 | |
| Legal | 5,682 | |
| Interest | 1,478 | |
| Miscellaneous | 23,389 | |
| Total expenses before reductions | 27,895,654 | |
| Expense reductions | (79,282) | |
| Total expenses after reductions | 27,816,372 | |
| Net investment income (loss) | 1,576,906 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 102,604,876 | |
| Fidelity Central Funds | (32) | |
| Foreign currency transactions | (5,278) | |
| Total net realized gain (loss) | 102,599,566 | |
| Change in net unrealized appreciation (depreciation) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 386,272,177 | |
| Fidelity Central Funds | (313) | |
| Assets and liabilities in foreign currencies | (44,979) | |
| Total change in net unrealized appreciation (depreciation) | 386,226,885 | |
| Net gain (loss) | 488,826,451 | |
| Net increase (decrease) in net assets resulting from operations | $490,403,357 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 29, 2020 | Year ended February 28, 2019 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $1,576,906 | $1,576,745 |
| Net realized gain (loss) | 102,599,566 | 94,401,044 |
| Change in net unrealized appreciation (depreciation) | 386,226,885 | 266,646,267 |
| Net increase (decrease) in net assets resulting from operations | 490,403,357 | 362,624,056 |
| Distributions to shareholders | (92,016,949) | (111,405,360) |
| Share transactions | ||
| Proceeds from sales of shares | 2,205,695,282 | 866,407,438 |
| Reinvestment of distributions | 87,345,122 | 105,563,259 |
| Cost of shares redeemed | (1,459,634,052) | (640,019,796) |
| Net increase (decrease) in net assets resulting from share transactions | 833,406,352 | 331,950,901 |
| Total increase (decrease) in net assets | 1,231,792,760 | 583,169,597 |
| Net Assets | ||
| Beginning of period | 2,867,321,299 | 2,284,151,702 |
| End of period | $4,099,114,059 | $2,867,321,299 |
| Other Information | ||
| Shares | ||
| Sold | 30,329,506 | 14,047,200 |
| Issued in reinvestment of distributions | 1,178,021 | 1,880,626 |
| Redeemed | (19,968,785) | (10,707,678) |
| Net increase (decrease) | 11,538,742 | 5,220,148 |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights
IT Services Portfolio
| Years ended February 28, | 2020 A | 2019 | 2018 | 2017 | 2016 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $64.96 | $58.69 | $44.84 | $37.16 | $38.88 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .03 | .04 | .04 | .13C | (.02) |
| Net realized and unrealized gain (loss) | 10.36 | 8.92 | 15.50 | 7.68 | (.15) |
| Total from investment operations | 10.39 | 8.96 | 15.54 | 7.81 | (.17) |
| Distributions from net investment income | (.03) | (.03) | (.02) | (.13) | – |
| Distributions from net realized gain | (1.70) | (2.66) | (1.67) | – | (1.55) |
| Total distributions | (1.73) | (2.69) | (1.69) | (.13) | (1.55) |
| Redemption fees added to paid in capitalB | – | – | – | –D | –D |
| Net asset value, end of period | $73.62 | $64.96 | $58.69 | $44.84 | $37.16 |
| Total ReturnE | 15.99% | 16.04% | 35.17% | 21.05% | (.59)% |
| Ratios to Average Net AssetsF,G | |||||
| Expenses before reductions | .73% | .74% | .77% | .79% | .81% |
| Expenses net of fee waivers, if any | .73% | .74% | .77% | .79% | .81% |
| Expenses net of all reductions | .73% | .74% | .77% | .79% | .80% |
| Net investment income (loss) | .04% | .06% | .08% | .33%C | (.06)% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $4,099,114 | $2,867,321 | $2,284,152 | $1,663,802 | $1,894,175 |
| Portfolio turnover rateH | 24% | 26% | 26% | 27% | 24% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Net investment income per share reflects a large, non-recurring dividend which amounted to $.13 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .02%.
D Amount represents less than $.005 per share.
E Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
H Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the financial statements.
Semiconductors Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The hypothetical investment and the average annual total returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund’s total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
| For the periods ended February 29, 2020 | Past 1 year | Past 5 years | Past 10 years |
| Semiconductors Portfolio | 26.01% | 18.16% | 18.42% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Semiconductors Portfolio on February 28, 2010.
The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
| Period Ending Values | ||
|
| $54,246 | Semiconductors Portfolio |
|
| $32,918 | S&P 500® Index |
Semiconductors Portfolio
Management's Discussion of Fund Performance
Market Recap: U.S. stocks stalled to begin the new year and declined in late February, as the outbreak and spread of the new coronavirus threatened to hamper global economic growth and corporate earnings. For the 12 months ending February 29, 2020, the U.S. equity bellwether S&P 500® index gained 8.19%. The period began with equities rising amid upbeat company earnings and signs the U.S. Federal Reserve may pause on rates. The uptrend extended until May, when the index dipped as trade talks between the U.S. and China broke down. The bull market roared back to record a series of highs in July, when the Fed cut interest rates for the first time since 2008. Volatility intensified in August, as the Treasury yield curve inverted, which some investors viewed as a sign the U.S. economy could be heading for recession. But the market proved resilient, hitting a new high on October 30, when the Fed lowered rates for the third time in 2019, and moving higher through December 31. Following a roughly flat January, stocks sank in late February, after a surge in coronavirus cases outside China created considerable uncertainty and pushed investors to safer asset classes. By sector, information technology (+27%) led the way by a wide margin, followed by utilities and communication services (+13% each). In contrast, energy (-25%) was by far the weakest category, struggling due to sluggish oil prices. Other notable laggards included materials and industrials (-2% each). Comments from Co-Portfolio Manager Stephen Barwikowski: For the fiscal year, the fund gained 26.01%, topping the 23.25% advance of the MSCI U.S. IMI Semiconductors & Semiconductor Equipment 25/50 Index, and considerably ahead of the S&P 500®. Versus the MSCI industry index, stock selection in semiconductors – which represented the vast majority of the portfolio and the index this period – was the primary driver of the fund’s outperformance. Non-index exposure to technology hardware, storage & peripherals also helped. On a stock-specific basis, a sizable underweighting in Intel (+7%) made the largest contribution to relative performance. Underweighting Texas Instruments (-9%) also lifted our relative result. Like Intel, this company hasn’t grown much the past few years. I’ll also mention Qualcomm, a major provider of wireless handset components, in which the fund’s overweighted stake returned about 53%. Conversely, out-of-index allocations to communications equipment and electronic manufacturing services detracted from the fund’s relative result. Underweighting the semiconductor equipment group also hurt, but fortunately most of the negative impact was offset by favorable stock selection in that segment. An out-of-index position in CommScope Holding (-42%) was our largest detractor versus the MSCI index. Shares of the maker of cables, antennas and other network-infrastructure equipment declined significantly in the late spring and summer, reflecting lower sales to cable system operators and costs related to the acquisition and restructuring of set-top box maker Arris, which CommScope bought in April. Overweighting ON Semiconductor (-13%) also worked against the fund.The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Note to shareholders: On March 16, 2020, Adam Benjamin assumed co-management responsibilities for the fund, joining Steve Barwikowski.Semiconductors Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 29, 2020
| % of fund's net assets | |
| NVIDIA Corp. | 11.6 |
| Qualcomm, Inc. | 11.5 |
| Broadcom, Inc. | 9.7 |
| Intel Corp. | 9.6 |
| Micron Technology, Inc. | 7.3 |
| Marvell Technology Group Ltd. | 4.6 |
| Xilinx, Inc. | 4.6 |
| ON Semiconductor Corp. | 4.1 |
| NXP Semiconductors NV | 3.7 |
| CommScope Holding Co., Inc. | 3.4 |
| 70.1 |
Top Industries (% of fund's net assets)
| As of February 29, 2020 | ||
| Semiconductors & Semiconductor Equipment | 84.1% | |
| Electronic Equipment & Components | 8.3% | |
| Communications Equipment | 3.8% | |
| Technology Hardware, Storage & Peripherals | 2.9% | |
| IT Services | 0.8% | |
| All Others* | 0.1% | |
* Includes short-term investments and net other assets (liabilities).
Semiconductors Portfolio
Schedule of Investments February 29, 2020
Showing Percentage of Net Assets
| Common Stocks - 100.1% | |||
| Shares | Value | ||
| Communications Equipment - 3.8% | |||
| Communications Equipment - 3.8% | |||
| CommScope Holding Co., Inc. (a)(b)(c) | 11,659,500 | $128,371,095 | |
| NETGEAR, Inc. (a) | 163,829 | 3,091,453 | |
| Plantronics, Inc. (b) | 757,900 | 10,405,967 | |
| 141,868,515 | |||
| Electronic Equipment & Components - 8.3% | |||
| Electronic Components - 0.3% | |||
| II-VI, Inc. (a)(b) | 374,300 | 11,112,967 | |
| Electronic Manufacturing Services - 7.7% | |||
| Flextronics International Ltd. (a) | 11,084,400 | 123,147,684 | |
| Jabil, Inc. | 3,609,372 | 115,680,373 | |
| TTM Technologies, Inc. (a)(b) | 3,938,167 | 51,156,789 | |
| 289,984,846 | |||
| Technology Distributors - 0.3% | |||
| Arrow Electronics, Inc. (a) | 177,000 | 11,869,620 | |
| TOTAL ELECTRONIC EQUIPMENT & COMPONENTS | 312,967,433 | ||
| IT Services - 0.8% | |||
| IT Consulting & Other Services - 0.8% | |||
| DXC Technology Co. | 1,242,500 | 29,956,675 | |
| Semiconductors & Semiconductor Equipment - 84.0% | |||
| Semiconductor Equipment - 7.9% | |||
| Advanced Energy Industries, Inc. (a) | 352,164 | 20,944,954 | |
| Applied Materials, Inc. | 2,000,800 | 116,286,496 | |
| Lam Research Corp. | 403,073 | 118,273,710 | |
| MKS Instruments, Inc. | 158,600 | 15,890,134 | |
| Xperi Corp. | 1,559,570 | 26,809,008 | |
| 298,204,302 | |||
| Semiconductors - 76.1% | |||
| Alpha & Omega Semiconductor Ltd. (a) | 462,196 | 5,010,205 | |
| Ambarella, Inc. (a) | 101,700 | 6,046,065 | |
| Analog Devices, Inc. | 776,596 | 84,687,794 | |
| Broadcom, Inc. | 1,343,950 | 366,387,649 | |
| Cirrus Logic, Inc. (a) | 21,400 | 1,468,896 | |
| Cree, Inc. (a) | 32,400 | 1,449,252 | |
| Dialog Semiconductor PLC (a) | 10,700 | 369,128 | |
| Intel Corp. | 6,544,896 | 363,372,626 | |
| Marvell Technology Group Ltd. (b) | 8,077,293 | 172,046,341 | |
| Maxim Integrated Products, Inc. | 309,500 | 17,214,390 | |
| MaxLinear, Inc. Class A (a) | 792,231 | 12,247,891 | |
| MediaTek, Inc. | 57,000 | 666,308 | |
| Microchip Technology, Inc. (b) | 1,066,200 | 96,715,002 | |
| Micron Technology, Inc. (a) | 5,232,160 | 275,002,330 | |
| NVIDIA Corp. | 1,616,092 | 436,457,968 | |
| NXP Semiconductors NV | 1,234,218 | 140,318,244 | |
| ON Semiconductor Corp. (a) | 8,387,646 | 156,513,474 | |
| Qorvo, Inc. (a) | 117,524 | 11,820,564 | |
| Qualcomm, Inc. | 5,530,784 | 433,060,387 | |
| Sanken Electric Co. Ltd. | 584,200 | 13,849,429 | |
| Semtech Corp. (a) | 136,000 | 5,370,640 | |
| Skyworks Solutions, Inc. | 792,173 | 79,359,891 | |
| SMART Global Holdings, Inc. (a) | 484,400 | 13,001,296 | |
| Synaptics, Inc. (a) | 133,564 | 8,821,902 | |
| Tower Semiconductor Ltd. (a) | 128,168 | 2,533,881 | |
| Xilinx, Inc. | 2,057,000 | 171,738,930 | |
| 2,875,530,483 | |||
| TOTAL SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT | 3,173,734,785 | ||
| Software - 0.3% | |||
| Application Software - 0.3% | |||
| Micro Focus International PLC | 1,279,800 | 12,188,454 | |
| Technology Hardware, Storage & Peripherals - 2.9% | |||
| Technology Hardware, Storage & Peripherals - 2.9% | |||
| Dell Technologies, Inc. (a) | 326,300 | 13,202,098 | |
| HP, Inc. | 822,300 | 17,095,617 | |
| Western Digital Corp. | 1,198,100 | 66,566,436 | |
| Xerox Holdings Corp. | 458,700 | 14,770,140 | |
| 111,634,291 | |||
| TOTAL COMMON STOCKS | |||
| (Cost $2,971,094,607) | 3,782,350,153 | ||
| Principal Amount | Value | ||
| Convertible Bonds - 0.1% | |||
| Semiconductors & Semiconductor Equipment - 0.1% | |||
| Semiconductors - 0.1% | |||
| SMART Global Holdings, Inc. 2.25% 2/15/26 (d) | |||
| (Cost $3,690,000) | 3,690,000 | 3,671,550 | |
| Shares | Value | ||
| Money Market Funds - 4.3% | |||
| Fidelity Cash Central Fund 1.60% (e) | 41,283,458 | 41,291,714 | |
| Fidelity Securities Lending Cash Central Fund 1.60% (e)(f) | 120,894,900 | 120,906,990 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $162,198,423) | 162,198,704 | ||
| TOTAL INVESTMENT IN SECURITIES - 104.5% | |||
| (Cost $3,136,983,030) | 3,948,220,407 | ||
| NET OTHER ASSETS (LIABILITIES) - (4.5)% | (169,663,625) | ||
| NET ASSETS - 100% | $3,778,556,782 |
Legend
(a) Non-income producing
(b) Security or a portion of the security is on loan at period end.
(c) Affiliated company
(d) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the end of the period, the value of these securities amounted to $3,671,550 or 0.1% of net assets.
(e) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request.
(f) Investment made with cash collateral received from securities on loan.
Affiliated Central Funds
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:
| Fund | Income earned |
| Fidelity Cash Central Fund | $2,142,860 |
| Fidelity Securities Lending Cash Central Fund | 203,874 |
| Total | $2,346,734 |
Amounts in the income column in the above table include any capital gain distributions from underlying funds, which are presented in the corresponding line-item in the Statement of Operations, if applicable. Amount for Fidelity Securities Lending Cash Central Fund represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities.
Other Affiliated Issuers
An affiliated company is a company in which the Fund has ownership of at least 5% of the voting securities. Fiscal year to date transactions with companies which are or were affiliates are as follows:
| Affiliate | Value, beginning of period | Purchases | Sales Proceeds | Dividend Income | Realized Gain (loss) | Change in Unrealized appreciation (depreciation) | Value, end of period |
| Alpha & Omega Semiconductor Ltd. | $10,846,575 | $6,750,672 | $14,383,466 | $-- | $(2,667,200) | $4,463,624 | $-- |
| CommScope Holding Co., Inc. | -- | 186,111,303 | 28,362,493 | -- | (3,143,333) | (26,234,382) | 128,371,095 |
| Total | $10,846,575 | $192,861,975 | $42,745,959 | $-- | $(5,810,533) | $(21,770,758) | $128,371,095 |
Investment Valuation
The following is a summary of the inputs used, as of February 29, 2020, 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 below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.
| Valuation Inputs at Reporting Date: | ||||
| Description | Total | Level 1 | Level 2 | Level 3 |
| Investments in Securities: | ||||
| Common Stocks | $3,782,350,153 | $3,769,126,263 | $13,223,890 | $-- |
| Convertible Bonds | 3,671,550 | -- | 3,671,550 | -- |
| Money Market Funds | 162,198,704 | 162,198,704 | -- | -- |
| Total Investments in Securities: | $3,948,220,407 | $3,931,324,967 | $16,895,440 | $-- |
Other Information
Distribution of investments by country or territory of incorporation, as a percentage of Total Net Assets, is as follows (Unaudited):
| United States of America | 87.2% |
| Bermuda | 4.7% |
| Netherlands | 3.7% |
| Singapore | 3.3% |
| Others (Individually Less Than 1%) | 1.1% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Semiconductors Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2020 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $120,082,665) — See accompanying schedule: Unaffiliated issuers (cost $2,820,179,130) | $3,657,650,608 | |
| Fidelity Central Funds (cost $162,198,423) | 162,198,704 | |
| Other affiliated issuers (cost $154,605,477) | 128,371,095 | |
| Total Investment in Securities (cost $3,136,983,030) | $3,948,220,407 | |
| Receivable for investments sold | 117,764,008 | |
| Receivable for fund shares sold | 5,179,526 | |
| Dividends receivable | 4,516,637 | |
| Interest receivable | 6,479 | |
| Distributions receivable from Fidelity Central Funds | 133,894 | |
| Prepaid expenses | 25,525 | |
| Other receivables | 295,123 | |
| Total assets | 4,076,141,599 | |
| Liabilities | ||
| Payable to custodian bank | $1,098,854 | |
| Payable for investments purchased | 119,990,014 | |
| Payable for fund shares redeemed | 52,843,558 | |
| Accrued management fee | 1,913,115 | |
| Other affiliated payables | 579,104 | |
| Other payables and accrued expenses | 258,296 | |
| Collateral on securities loaned | 120,901,876 | |
| Total liabilities | 297,584,817 | |
| Net Assets | $3,778,556,782 | |
| Net Assets consist of: | ||
| Paid in capital | $2,753,713,624 | |
| Total accumulated earnings (loss) | 1,024,843,158 | |
| Net Assets | $3,778,556,782 | |
| Net Asset Value, offering price and redemption price per share ($3,778,556,782 ÷ 329,421,640 shares) | $11.47 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 29, 2020 | ||
| Investment Income | ||
| Dividends | $53,241,472 | |
| Interest | 4,386 | |
| Income from Fidelity Central Funds (including $203,874 from security lending) | 2,346,734 | |
| Total income | 55,592,592 | |
| Expenses | ||
| Management fee | $19,067,003 | |
| Transfer agent fees | 5,335,162 | |
| Accounting and security lending fees | 991,628 | |
| Custodian fees and expenses | 67,115 | |
| Independent trustees' fees and expenses | 18,395 | |
| Registration fees | 139,294 | |
| Audit | 41,396 | |
| Legal | 6,321 | |
| Miscellaneous | 26,116 | |
| Total expenses before reductions | 25,692,430 | |
| Expense reductions | (285,122) | |
| Total expenses after reductions | 25,407,308 | |
| Net investment income (loss) | 30,185,284 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 429,438,068 | |
| Fidelity Central Funds | (115) | |
| Other affiliated issuers | (5,810,533) | |
| Foreign currency transactions | (4,561) | |
| Total net realized gain (loss) | 423,622,859 | |
| Change in net unrealized appreciation (depreciation) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 321,850,842 | |
| Affiliated issuers | (21,770,758) | |
| Assets and liabilities in foreign currencies | 95,340 | |
| Total change in net unrealized appreciation (depreciation) | 300,175,424 | |
| Net gain (loss) | 723,798,283 | |
| Net increase (decrease) in net assets resulting from operations | $753,983,567 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 29, 2020 | Year ended February 28, 2019 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $30,185,284 | $30,274,775 |
| Net realized gain (loss) | 423,622,859 | 295,665,075 |
| Change in net unrealized appreciation (depreciation) | 300,175,424 | (362,836,983) |
| Net increase (decrease) in net assets resulting from operations | 753,983,567 | (36,897,133) |
| Distributions to shareholders | (137,447,610) | (611,562,086) |
| Share transactions | ||
| Proceeds from sales of shares | 1,132,808,025 | 593,371,840 |
| Reinvestment of distributions | 131,251,931 | 585,226,471 |
| Cost of shares redeemed | (1,154,544,829) | (1,130,198,787) |
| Net increase (decrease) in net assets resulting from share transactions | 109,515,127 | 48,399,524 |
| Total increase (decrease) in net assets | 726,051,084 | (600,059,695) |
| Net Assets | ||
| Beginning of period | 3,052,505,698 | 3,652,565,393 |
| End of period | $3,778,556,782 | $3,052,505,698 |
| Other Information | ||
| Shares | ||
| Sold | 100,264,558 | 55,572,693 |
| Issued in reinvestment of distributions | 10,533,281 | 66,721,427 |
| Redeemed | (105,721,572) | (108,362,277) |
| Net increase (decrease) | 5,076,267 | 13,931,843 |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights
Semiconductors Portfolio
| Years ended February 28, | 2020 A | 2019 B | 2018 B | 2017 B | 2016 A,B |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $9.41 | $11.77 | $10.12 | $6.99 | $8.95 |
| Income from Investment Operations | |||||
| Net investment income (loss)C | .09 | .10 | .05 | .10 | .07 |
| Net realized and unrealized gain (loss) | 2.39 | (.35) | 3.24 | 3.40 | (.88) |
| Total from investment operations | 2.48 | (.25) | 3.29 | 3.50 | (.81) |
| Distributions from net investment income | (.10) | (.06) | (.12) | (.07) | (.08) |
| Distributions from net realized gain | (.33) | (2.05) | (1.52) | (.30) | (1.07) |
| Total distributions | (.42)D | (2.11) | (1.64) | (.37) | (1.15) |
| Redemption fees added to paid in capitalC | – | – | –E | –E | –E |
| Net asset value, end of period | $11.47 | $9.41 | $11.77 | $10.12 | $6.99 |
| Total ReturnF | 26.01% | .19% | 34.20% | 51.79% | (10.44)% |
| Ratios to Average Net AssetsG,H | |||||
| Expenses before reductions | .72% | .73% | .75% | .77% | .77% |
| Expenses net of fee waivers, if any | .72% | .73% | .75% | .77% | .77% |
| Expenses net of all reductions | .71% | .72% | .74% | .75% | .74% |
| Net investment income (loss) | .85% | .92% | .47% | 1.19% | .88% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $3,778,557 | $3,052,506 | $3,652,565 | $3,012,372 | $1,338,175 |
| Portfolio turnover rateI | 114% | 130% | 110% | 110% | 179% |
A For the year ended February 29.
B Per share amounts have been adjusted to reflect the impact of the 10 for 1 share split that occurred on May 11, 2018.
C Calculated based on average shares outstanding during the period.
D Total distributions of $.42 per share is comprised of distributions from net investment income of $.095 and distributions from net realized gain of $.326 per share.
E Amount represents less than $.005 per share.
F Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
G Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
H Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
I Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the financial statements.
Software and IT Services Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The hypothetical investment and the average annual total returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund’s total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
| For the periods ended February 29, 2020 | Past 1 year | Past 5 years | Past 10 years |
| Software and IT Services Portfolio | 21.33% | 18.95% | 19.71% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Software and IT Services Portfolio on February 28, 2010.
The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
| Period Ending Values | ||
|
| $60,422 | Software and IT Services Portfolio |
|
| $32,918 | S&P 500® Index |
Software and IT Services Portfolio
Management's Discussion of Fund Performance
Market Recap: U.S. stocks stalled to begin the new year and declined in late February, as the outbreak and spread of the new coronavirus threatened to hamper global economic growth and corporate earnings. For the 12 months ending February 29, 2020, the U.S. equity bellwether S&P 500® index gained 8.19%. The period began with equities rising amid upbeat company earnings and signs the U.S. Federal Reserve may pause on rates. The uptrend extended until May, when the index dipped as trade talks between the U.S. and China broke down. The bull market roared back to record a series of highs in July, when the Fed cut interest rates for the first time since 2008. Volatility intensified in August, as the Treasury yield curve inverted, which some investors viewed as a sign the U.S. economy could be heading for recession. But the market proved resilient, hitting a new high on October 30, when the Fed lowered rates for the third time in 2019, and moving higher through December 31. Following a roughly flat January, stocks sank in late February, after a surge in coronavirus cases outside China created considerable uncertainty and pushed investors to safer asset classes. By sector, information technology (+27%) led the way by a wide margin, followed by utilities and communication services (+13% each). In contrast, energy (-25%) was by far the weakest category, struggling due to sluggish oil prices. Other notable laggards included materials and industrials (-2% each). Comments from Portfolio Manager Ali Khan: For the fiscal year ending February 29, 2020, the fund gained 21.33%, outpacing the 19.69% result of the industry benchmark, the MSCI U.S. IMI Software & Services 25/50 Index, and the broad-market S&P 500® index. The strong performance of software and IT services stocks was driven by continued growth in mobile engagement, strong demand for wireless services, ongoing investments in 5G networks, and the companies' relatively limited exposure to global trade uncertainty. Versus the MSCI industry index, favorable stock selection was the primary driver of the fund's performance the past 12 months, while subindustry positioning contributed to a lesser extent. Stock picking in the systems software segment gave the fund a significant edge, led by an overweighting in tech company Microsoft (+47%) and an underweighting in database software and technology firm Oracle (-3%), both index heavyweights and top fund holdings at period end. Owning a non-index stake in consumer electronics manufacturer Apple (+58%) also added value. Conversely, choices in the application software group detracted from the fund's relative result, largely due to an out-of-index position in U.K.-based software and tech firm Micro Focus International and an overweighting in software-as-a-service provider Pivotal Software. We eliminated our stake in Pivotal during the period. In an up-trending market, the fund's cash position of about 5% of assets, on average, also hurt the fund's performance relative to the industry index.The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Software and IT Services Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 29, 2020
| % of fund's net assets | |
| Microsoft Corp. | 24.9 |
| Visa, Inc. Class A | 6.3 |
| Adobe, Inc. | 6.3 |
| Salesforce.com, Inc. | 5.3 |
| PayPal Holdings, Inc. | 4.6 |
| MasterCard, Inc. Class A | 4.6 |
| Alphabet, Inc. Class A | 3.1 |
| Cognizant Technology Solutions Corp. Class A | 2.5 |
| Autodesk, Inc. | 2.3 |
| Oracle Corp. | 1.7 |
| 61.6 |
Top Industries (% of fund's net assets)
| As of February 29, 2020 | ||
| Software | 58.0% | |
| IT Services | 30.5% | |
| Interactive Media & Services | 5.0% | |
| Entertainment | 2.8% | |
| Internet & Direct Marketing Retail | 1.1% | |
| All Others* | 2.6% | |
* Includes short-term investments and net other assets (liabilities).
Software and IT Services Portfolio
Schedule of Investments February 29, 2020
Showing Percentage of Net Assets
| Common Stocks - 98.5% | |||
| Shares | Value | ||
| Electronic Equipment & Components - 0.7% | |||
| Electronic Equipment & Instruments - 0.7% | |||
| Trimble, Inc. (a) | 1,501,500 | $59,279,220 | |
| Entertainment - 2.8% | |||
| Interactive Home Entertainment - 2.4% | |||
| Activision Blizzard, Inc. | 1,508,700 | 87,700,731 | |
| Electronic Arts, Inc. (a) | 1,031,500 | 104,563,155 | |
| 192,263,886 | |||
| Movies & Entertainment - 0.4% | |||
| Spotify Technology SA (a) | 237,500 | 32,566,000 | |
| TOTAL ENTERTAINMENT | 224,829,886 | ||
| Interactive Media & Services - 5.0% | |||
| Interactive Media & Services - 5.0% | |||
| Alphabet, Inc. Class A (a) | 187,000 | 250,439,750 | |
| Facebook, Inc. Class A (a) | 456,800 | 87,920,296 | |
| Tencent Holdings Ltd. | 622,100 | 31,543,399 | |
| Twitter, Inc. (a) | 1,010,200 | 33,538,640 | |
| 403,442,085 | |||
| Internet & Direct Marketing Retail - 1.1% | |||
| Internet & Direct Marketing Retail - 1.1% | |||
| Alibaba Group Holding Ltd. sponsored ADR (a) | 223,100 | 46,404,800 | |
| The Booking Holdings, Inc. (a) | 24,500 | 41,543,670 | |
| 87,948,470 | |||
| IT Services - 30.5% | |||
| Data Processing & Outsourced Services - 18.5% | |||
| Alliance Data Systems Corp. | 220,900 | 18,970,892 | |
| Broadridge Financial Solutions, Inc. | 115,800 | 12,084,888 | |
| ExlService Holdings, Inc. (a) | 473,100 | 35,316,915 | |
| Fidelity National Information Services, Inc. | 213,300 | 29,802,276 | |
| FleetCor Technologies, Inc. (a) | 173,400 | 46,087,986 | |
| Global Payments, Inc. | 496,070 | 91,261,998 | |
| MasterCard, Inc. Class A | 1,274,400 | 369,894,600 | |
| PayPal Holdings, Inc. (a) | 3,425,800 | 369,952,142 | |
| Visa, Inc. Class A (b) | 2,773,320 | 504,078,643 | |
| WEX, Inc. (a) | 56,400 | 10,560,336 | |
| 1,488,010,676 | |||
| Internet Services & Infrastructure - 3.7% | |||
| Akamai Technologies, Inc. (a) | 1,091,700 | 94,442,967 | |
| GoDaddy, Inc. (a) | 1,188,500 | 83,171,230 | |
| Twilio, Inc. Class A (a)(b) | 1,073,000 | 120,862,720 | |
| 298,476,917 | |||
| IT Consulting & Other Services - 8.3% | |||
| Accenture PLC Class A | 469,900 | 84,859,241 | |
| Capgemini SA | 898,700 | 99,591,463 | |
| Cognizant Technology Solutions Corp. Class A | 3,302,500 | 201,221,325 | |
| DXC Technology Co. | 1,236,900 | 29,821,659 | |
| Gartner, Inc. (a) | 637,300 | 82,460,247 | |
| IBM Corp. | 830,400 | 108,076,560 | |
| Leidos Holdings, Inc. | 198,700 | 20,396,555 | |
| Liveramp Holdings, Inc. (a) | 1,030,400 | 36,517,376 | |
| 662,944,426 | |||
| TOTAL IT SERVICES | 2,449,432,019 | ||
| Software - 58.0% | |||
| Application Software - 27.5% | |||
| Adobe, Inc. (a) | 1,457,600 | 503,046,912 | |
| Anaplan, Inc. (a) | 207,600 | 9,329,544 | |
| Autodesk, Inc. (a) | 955,100 | 182,309,488 | |
| Blackbaud, Inc. | 608,900 | 41,283,420 | |
| Box, Inc. Class A (a) | 1,309,200 | 21,929,100 | |
| Citrix Systems, Inc. | 1,128,050 | 116,629,090 | |
| Constellation Software, Inc. | 27,200 | 27,710,260 | |
| Dropbox, Inc. Class A (a) | 1,064,000 | 20,811,840 | |
| Elastic NV (a) | 1,061,800 | 78,424,548 | |
| Everbridge, Inc. (a) | 294,200 | 31,085,172 | |
| HubSpot, Inc. (a) | 463,200 | 83,121,240 | |
| Instructure, Inc. (a) | 378,593 | 18,460,195 | |
| Intuit, Inc. | 278,300 | 73,986,055 | |
| LogMeIn, Inc. | 187,300 | 15,964,516 | |
| Micro Focus International PLC | 2,089,564 | 19,900,417 | |
| Mimecast Ltd. (a) | 736,500 | 29,158,035 | |
| New Relic, Inc. (a) | 778,100 | 43,775,906 | |
| Parametric Technology Corp. (a) | 913,100 | 68,984,705 | |
| Pluralsight, Inc. (a)(b) | 3,539,900 | 63,116,417 | |
| RealPage, Inc. (a) | 810,700 | 51,965,870 | |
| Salesforce.com, Inc. (a) | 2,491,126 | 424,487,870 | |
| Slack Technologies, Inc. Class A (a)(b) | 2,593,400 | 70,073,668 | |
| Workday, Inc. Class A (a) | 775,500 | 134,355,375 | |
| Workiva, Inc. (a) | 153,401 | 6,556,359 | |
| Zendesk, Inc. (a) | 926,800 | 73,504,508 | |
| 2,209,970,510 | |||
| Systems Software - 30.5% | |||
| Check Point Software Technologies Ltd. (a) | 202,100 | 20,977,980 | |
| Microsoft Corp. | 12,327,200 | 1,997,129,672 | |
| Nortonlifelock, Inc. | 4,487,600 | 85,399,028 | |
| Oracle Corp. | 2,739,200 | 135,480,832 | |
| Palo Alto Networks, Inc. (a) | 605,400 | 111,768,948 | |
| Proofpoint, Inc. (a) | 246,400 | 26,278,560 | |
| Talend SA ADR (a)(b) | 734,685 | 27,124,570 | |
| Tenable Holdings, Inc. (a) | 1,617,600 | 39,663,552 | |
| 2,443,823,142 | |||
| TOTAL SOFTWARE | 4,653,793,652 | ||
| Technology Hardware, Storage & Peripherals - 0.4% | |||
| Technology Hardware, Storage & Peripherals - 0.4% | |||
| Apple, Inc. | 89,900 | 24,575,064 | |
| Pure Storage, Inc. Class A (a) | 558,900 | 8,528,814 | |
| 33,103,878 | |||
| TOTAL COMMON STOCKS | |||
| (Cost $4,863,899,484) | 7,911,829,210 | ||
| Money Market Funds - 8.6% | |||
| Fidelity Cash Central Fund 1.60% (c) | 161,596,632 | 161,628,951 | |
| Fidelity Securities Lending Cash Central Fund 1.60% (c)(d) | 527,548,329 | 527,601,084 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $689,226,190) | 689,230,035 | ||
| TOTAL INVESTMENT IN SECURITIES - 107.1% | |||
| (Cost $5,553,125,674) | 8,601,059,245 | ||
| NET OTHER ASSETS (LIABILITIES) - (7.1)% | (569,148,415) | ||
| NET ASSETS - 100% | $8,031,910,830 |
Legend
(a) Non-income producing
(b) Security or a portion of the security is on loan at period end.
(c) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request.
(d) Investment made with cash collateral received from securities on loan.
Affiliated Central Funds
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:
| Fund | Income earned |
| Fidelity Cash Central Fund | $7,460,858 |
| Fidelity Securities Lending Cash Central Fund | 250,293 |
| Total | $7,711,151 |
Amounts in the income column in the above table include any capital gain distributions from underlying funds, which are presented in the corresponding line-item in the Statement of Operations, if applicable. Amount for Fidelity Securities Lending Cash Central Fund represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities.
Investment Valuation
The following is a summary of the inputs used, as of February 29, 2020, 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 below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.
| Valuation Inputs at Reporting Date: | ||||
| Description | Total | Level 1 | Level 2 | Level 3 |
| Investments in Securities: | ||||
| Common Stocks | $7,911,829,210 | $7,760,793,931 | $151,035,279 | $-- |
| Money Market Funds | 689,230,035 | 689,230,035 | -- | -- |
| Total Investments in Securities: | $8,601,059,245 | $8,450,023,966 | $151,035,279 | $-- |
See accompanying notes which are an integral part of the financial statements.
Software and IT Services Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2020 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $523,696,471) — See accompanying schedule: Unaffiliated issuers (cost $4,863,899,484) | $7,911,829,210 | |
| Fidelity Central Funds (cost $689,226,190) | 689,230,035 | |
| Total Investment in Securities (cost $5,553,125,674) | $8,601,059,245 | |
| Receivable for investments sold | 44,988,929 | |
| Receivable for fund shares sold | 21,748,693 | |
| Dividends receivable | 9,366,672 | |
| Distributions receivable from Fidelity Central Funds | 526,249 | |
| Prepaid expenses | 40,900 | |
| Other receivables | 407,383 | |
| Total assets | 8,678,138,071 | |
| Liabilities | ||
| Payable for investments purchased | $21,517,418 | |
| Payable for fund shares redeemed | 91,766,691 | |
| Accrued management fee | 3,929,497 | |
| Other affiliated payables | 1,058,960 | |
| Other payables and accrued expenses | 356,277 | |
| Collateral on securities loaned | 527,598,398 | |
| Total liabilities | 646,227,241 | |
| Net Assets | $8,031,910,830 | |
| Net Assets consist of: | ||
| Paid in capital | $4,766,509,413 | |
| Total accumulated earnings (loss) | 3,265,401,417 | |
| Net Assets | $8,031,910,830 | |
| Net Asset Value, offering price and redemption price per share ($8,031,910,830 ÷ 403,671,912 shares) | $19.90 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 29, 2020 | ||
| Investment Income | ||
| Dividends | $60,904,911 | |
| Special dividends | 56,455,200 | |
| Income from Fidelity Central Funds (including $250,293 from security lending) | 7,711,151 | |
| Total income | 125,071,262 | |
| Expenses | ||
| Management fee | $39,879,752 | |
| Transfer agent fees | 10,963,140 | |
| Accounting and security lending fees | 1,182,594 | |
| Custodian fees and expenses | 65,206 | |
| Independent trustees' fees and expenses | 38,976 | |
| Registration fees | 175,746 | |
| Audit | 46,816 | |
| Legal | 11,392 | |
| Miscellaneous | 50,102 | |
| Total expenses before reductions | 52,413,724 | |
| Expense reductions | (113,698) | |
| Total expenses after reductions | 52,300,026 | |
| Net investment income (loss) | 72,771,236 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 418,220,655 | |
| Fidelity Central Funds | (5) | |
| Foreign currency transactions | (20,025) | |
| Total net realized gain (loss) | 418,200,625 | |
| Change in net unrealized appreciation (depreciation) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 879,026,801 | |
| Assets and liabilities in foreign currencies | (2,211) | |
| Total change in net unrealized appreciation (depreciation) | 879,024,590 | |
| Net gain (loss) | 1,297,225,215 | |
| Net increase (decrease) in net assets resulting from operations | $1,369,996,451 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 29, 2020 | Year ended February 28, 2019 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $72,771,236 | $6,169,057 |
| Net realized gain (loss) | 418,200,625 | 951,041,361 |
| Change in net unrealized appreciation (depreciation) | 879,024,590 | (361,820,252) |
| Net increase (decrease) in net assets resulting from operations | 1,369,996,451 | 595,390,166 |
| Distributions to shareholders | (906,376,597) | (333,011,171) |
| Share transactions | ||
| Proceeds from sales of shares | 1,845,099,056 | 1,674,148,271 |
| Reinvestment of distributions | 859,465,256 | 316,098,925 |
| Cost of shares redeemed | (1,677,168,985) | (1,251,087,217) |
| Net increase (decrease) in net assets resulting from share transactions | 1,027,395,327 | 739,159,979 |
| Total increase (decrease) in net assets | 1,491,015,181 | 1,001,538,974 |
| Net Assets | ||
| Beginning of period | 6,540,895,649 | 5,539,356,675 |
| End of period | $8,031,910,830 | $6,540,895,649 |
| Other Information | ||
| Shares | ||
| Sold | 94,168,380 | 90,790,200 |
| Issued in reinvestment of distributions | 46,835,753 | 18,671,999 |
| Redeemed | (86,927,730) | (69,476,890) |
| Net increase (decrease) | 54,076,403 | 39,985,309 |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights
Software and IT Services Portfolio
| Years ended February 28, | 2020 A | 2019 B | 2018 B | 2017 B | 2016 A,B |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $18.71 | $17.89 | $14.09 | $11.11 | $11.94 |
| Income from Investment Operations | |||||
| Net investment income (loss)C | .19D | .02 | (.02) | (.01) | .01 |
| Net realized and unrealized gain (loss) | 3.52 | 1.81 | 5.01 | 3.50 | (.20) |
| Total from investment operations | 3.71 | 1.83 | 4.99 | 3.49 | (.19) |
| Distributions from net investment income | (.05) | (.01) | – | (.01) | (.01) |
| Distributions from net realized gain | (2.47) | (1.00) | (1.19) | (.50) | (.63) |
| Total distributions | (2.52) | (1.01) | (1.19) | (.51) | (.64) |
| Redemption fees added to paid in capitalC | – | – | – | –E | –E |
| Net asset value, end of period | $19.90 | $18.71 | $17.89 | $14.09 | $11.11 |
| Total ReturnF | 21.33% | 10.90% | 36.76% | 31.83% | (1.84)% |
| Ratios to Average Net AssetsG,H | |||||
| Expenses before reductions | .70% | .72% | .73% | .76% | .77% |
| Expenses net of fee waivers, if any | .70% | .72% | .73% | .76% | .76% |
| Expenses net of all reductions | .70% | .71% | .73% | .75% | .76% |
| Net investment income (loss) | .98%D | .10% | (.09)% | (.11)% | .10% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $8,031,911 | $6,540,896 | $5,539,357 | $4,155,435 | $2,971,370 |
| Portfolio turnover rateI | 23% | 48% | 31% | 44% | 36% |
A For the year ended February 29.
B Per share amounts have been adjusted to reflect the impact of the 10 for 1 share split that occurred on May 11, 2018.
C Calculated based on average shares outstanding during the period.
D Net investment income per share reflects a large, non-recurring dividend which amounted to $.15 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .22%.
E Amount represents less than $.005 per share.
F Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
G Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
H Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
I Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the financial statements.
Technology Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The hypothetical investment and the average annual total returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund’s total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
| For the periods ended February 29, 2020 | Past 1 year | Past 5 years | Past 10 years |
| Technology Portfolio | 29.57% | 18.35% | 17.49% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Technology Portfolio on February 28, 2010.
The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
| Period Ending Values | ||
|
| $50,125 | Technology Portfolio |
|
| $32,918 | S&P 500® Index |
Technology Portfolio
Management's Discussion of Fund Performance
Market Recap: U.S. stocks stalled to begin the new year and declined in late February, as the outbreak and spread of the new coronavirus threatened to hamper global economic growth and corporate earnings. For the 12 months ending February 29, 2020, the U.S. equity bellwether S&P 500® index gained 8.19%. The period began with equities rising amid upbeat company earnings and signs the U.S. Federal Reserve may pause on rates. The uptrend extended until May, when the index dipped as trade talks between the U.S. and China broke down. The bull market roared back to record a series of highs in July, when the Fed cut interest rates for the first time since 2008. Volatility intensified in August, as the Treasury yield curve inverted, which some investors viewed as a sign the U.S. economy could be heading for recession. But the market proved resilient, hitting a new high on October 30, when the Fed lowered rates for the third time in 2019, and moving higher through December 31. Following a roughly flat January, stocks sank in late February, after a surge in coronavirus cases outside China created considerable uncertainty and pushed investors to safer asset classes. By sector, information technology (+27%) led the way by a wide margin, followed by utilities and communication services (+13% each). In contrast, energy (-25%) was by far the weakest category, struggling due to sluggish oil prices. Other notable laggards included materials and industrials (-2% each). Comments from Portfolio Manager Nidhi Gupta: For the fiscal year, the fund gained 29.57%, handily beating the 23.55% return of the MSCI U.S. IMI Information Technology 25/50 Index, and considerably ahead of the S&P 500®. Versus the MSCI sector index, stock selection and industry positioning aided the fund’s performance in roughly equal measure this period. Underweighting the lagging communications equipment segment was a noteworthy contributor. Stock picking in systems software and positioning in technology hardware, storage & peripherals, IT consulting & other services, and several other groups also added value. Among individual holdings, it helped to underweight or avoid four slower-growing, large-cap benchmark components: Cisco Systems (-21%), Oracle (-3%), IBM (-1%) and Intel (+7%). We didn’t own Oracle or IBM at all this period, and sold off our holdings in Cisco and Intel before period end. Overweighting Apple (+60%), the fund’s largest holding during the year, also paid off, as did an out-of-benchmark position in Meituan Dianping (+53%), a fast-growing operator of a leading food-delivery service in China. I eliminated our stake in Meituan during the period. Conversely, positions in several out-of-index categories, as well as stock selection in the application software group, detracted from our relative performance. The fund’s largest individual relative detractor was PTC (-29%), where we had an overweighting. The industrial software maker is experiencing some speed bumps as it transitions to a cloud-based, subscription business model. I sold the stock from the fund by period end. A non-index stake in the shares of ride-hailing company Lyft (-46%) also hurt performance this period, as did an overweighted position in enterprise cloud platform provider Nutanix (-55%).The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Technology Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 29, 2020
| % of fund's net assets | |
| Apple, Inc. | 20.2 |
| Microsoft Corp. | 18.7 |
| Adobe, Inc. | 3.7 |
| MasterCard, Inc. Class A | 3.7 |
| Facebook, Inc. Class A | 3.7 |
| Salesforce.com, Inc. | 3.3 |
| Netflix, Inc. | 2.9 |
| Visa, Inc. Class A | 2.6 |
| Fidelity National Information Services, Inc. | 2.5 |
| NVIDIA Corp. | 2.2 |
| 63.5 |
Top Industries (% of fund's net assets)
| As of February 29, 2020 | ||
| Software | 35.4% | |
| Technology Hardware, Storage & Peripherals | 20.4% | |
| IT Services | 15.5% | |
| Semiconductors & Semiconductor Equipment | 12.7% | |
| Interactive Media & Services | 5.5% | |
| All Others* | 10.5% | |
* Includes short-term investments and net other assets (liabilities).
Technology Portfolio
Schedule of Investments February 29, 2020
Showing Percentage of Net Assets
| Common Stocks - 99.5% | |||
| Shares | Value | ||
| Electronic Equipment & Components - 1.0% | |||
| Electronic Manufacturing Services - 1.0% | |||
| Flextronics International Ltd. (a) | 5,888,100 | $65,416,791 | |
| Entertainment - 3.4% | |||
| Interactive Home Entertainment - 0.5% | |||
| Activision Blizzard, Inc. | 525,200 | 30,529,876 | |
| Movies & Entertainment - 2.9% | |||
| Netflix, Inc. (a) | 515,486 | 190,229,799 | |
| TOTAL ENTERTAINMENT | 220,759,675 | ||
| Equity Real Estate Investment Trusts (REITs) - 0.5% | |||
| Diversified REITs - 0.5% | |||
| Ant International Co. Ltd. Class C (a)(b)(c) | 4,366,389 | 33,664,859 | |
| Interactive Media & Services - 5.5% | |||
| Interactive Media & Services - 5.5% | |||
| Alphabet, Inc. Class C (a) | 73,768 | 98,799,695 | |
| Facebook, Inc. Class A (a) | 1,267,800 | 244,013,466 | |
| Wise Talent Information Technology Co. Ltd. (a) | 8,578,726 | 21,130,409 | |
| 363,943,570 | |||
| Internet & Direct Marketing Retail - 2.9% | |||
| Internet & Direct Marketing Retail - 2.9% | |||
| Amazon.com, Inc. (a) | 31,500 | 59,338,125 | |
| eBay, Inc. | 1,691,400 | 58,590,096 | |
| Pinduoduo, Inc. ADR (a) | 2,007,300 | 71,821,194 | |
| 189,749,415 | |||
| IT Services - 15.5% | |||
| Data Processing & Outsourced Services - 12.8% | |||
| Fidelity National Information Services, Inc. | 1,164,427 | 162,693,740 | |
| Fiserv, Inc. (a) | 643,185 | 70,338,712 | |
| Global Payments, Inc. | 288,530 | 53,080,864 | |
| MasterCard, Inc. Class A | 840,900 | 244,071,225 | |
| PagSeguro Digital Ltd. (a) | 207,100 | 6,496,727 | |
| PayPal Holdings, Inc. (a) | 1,028,000 | 111,013,720 | |
| Square, Inc. (a) | 285,500 | 23,790,715 | |
| Visa, Inc. Class A | 930,300 | 169,091,328 | |
| 840,577,031 | |||
| Internet Services & Infrastructure - 2.7% | |||
| GoDaddy, Inc. (a) | 1,137,200 | 79,581,256 | |
| MongoDB, Inc. Class A (a)(d) | 313,500 | 47,808,750 | |
| Twilio, Inc. Class A (a)(d) | 420,300 | 47,342,592 | |
| 174,732,598 | |||
| TOTAL IT SERVICES | 1,015,309,629 | ||
| Life Sciences Tools & Services - 0.0% | |||
| Life Sciences Tools & Services - 0.0% | |||
| JHL Biotech, Inc. (a)(c) | 1,015,442 | 518,461 | |
| Road & Rail - 2.2% | |||
| Trucking - 2.2% | |||
| Lyft, Inc. | 971,994 | 37,052,411 | |
| Uber Technologies, Inc. | 3,134,296 | 106,158,606 | |
| 143,211,017 | |||
| Semiconductors & Semiconductor Equipment - 12.7% | |||
| Semiconductor Equipment - 4.8% | |||
| Applied Materials, Inc. | 2,384,400 | 138,581,328 | |
| ASML Holding NV (Netherlands) | 99,200 | 27,507,481 | |
| KLA-Tencor Corp. | 154,200 | 23,702,082 | |
| Lam Research Corp. | 416,500 | 122,213,595 | |
| 312,004,486 | |||
| Semiconductors - 7.9% | |||
| Advanced Micro Devices, Inc. (a) | 893,100 | 40,618,188 | |
| Marvell Technology Group Ltd. | 1,619,154 | 34,487,980 | |
| Micron Technology, Inc. (a) | 2,571,200 | 135,142,272 | |
| NVIDIA Corp. | 534,050 | 144,230,884 | |
| NXP Semiconductors NV | 571,800 | 65,007,942 | |
| Qualcomm, Inc. | 1,307,000 | 102,338,100 | |
| 521,825,366 | |||
| TOTAL SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT | 833,829,852 | ||
| Software - 35.4% | |||
| Application Software - 16.1% | |||
| Adobe, Inc. (a) | 707,339 | 244,116,836 | |
| Autodesk, Inc. (a) | 743,100 | 141,842,928 | |
| Datadog, Inc. Class A (a) | 13,700 | 618,555 | |
| Elastic NV (a) | 1,020,500 | 75,374,130 | |
| Everbridge, Inc. (a) | 439,700 | 46,458,702 | |
| HubSpot, Inc. (a) | 431,400 | 77,414,730 | |
| Intuit, Inc. | 349,500 | 92,914,575 | |
| Nutanix, Inc. Class B (a)(e) | 72,872 | 1,737,268 | |
| Salesforce.com, Inc. (a) | 1,262,288 | 215,093,875 | |
| Splunk, Inc. (a) | 124,000 | 18,268,920 | |
| SS&C Technologies Holdings, Inc. | 503,200 | 27,927,600 | |
| Workday, Inc. Class A (a) | 541,660 | 93,842,595 | |
| Yext, Inc. (a)(d) | 1,443,200 | 21,878,912 | |
| 1,057,489,626 | |||
| Systems Software - 19.3% | |||
| Cloudflare, Inc. (a) | 27,500 | 585,750 | |
| Crowdstrike Holdings, Inc. | 8,900 | 530,796 | |
| Microsoft Corp. | 7,558,540 | 1,224,559,065 | |
| ServiceNow, Inc. (a) | 125,300 | 40,859,077 | |
| 1,266,534,688 | |||
| TOTAL SOFTWARE | 2,324,024,314 | ||
| Technology Hardware, Storage & Peripherals - 20.4% | |||
| Technology Hardware, Storage & Peripherals - 20.4% | |||
| Apple, Inc. | 4,837,097 | 1,322,268,838 | |
| Western Digital Corp. | 253,300 | 14,073,348 | |
| 1,336,342,186 | |||
| TOTAL COMMON STOCKS | |||
| (Cost $4,758,696,402) | 6,526,769,769 | ||
| Convertible Preferred Stocks - 0.5% | |||
| Food & Staples Retailing - 0.3% | |||
| Food Retail - 0.3% | |||
| Roofoods Ltd. Series F (a)(b)(c) | 41,041 | 19,457,128 | |
| Internet & Direct Marketing Retail - 0.1% | |||
| Internet & Direct Marketing Retail - 0.1% | |||
| Reddit, Inc. Series D (a)(b)(c) | 250,861 | 8,127,896 | |
| Road & Rail - 0.1% | |||
| Trucking - 0.1% | |||
| Convoy, Inc. Series D (b)(c) | 203,844 | 2,760,048 | |
| Software - 0.0% | |||
| Application Software - 0.0% | |||
| UiPath, Inc.: | |||
| Series A1 (b)(c) | 25,657 | 1,036,543 | |
| Series B1 (b)(c) | 1,278 | 51,631 | |
| Series B2 (b)(c) | 6,365 | 257,146 | |
| 1,345,320 | |||
| TOTAL CONVERTIBLE PREFERRED STOCKS | |||
| (Cost $24,021,597) | 31,690,392 | ||
| Money Market Funds - 0.7% | |||
| Fidelity Cash Central Fund 1.60% (f) | 122 | 122 | |
| Fidelity Securities Lending Cash Central Fund 1.60% (f)(g) | 44,061,138 | 44,065,544 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $44,065,666) | 44,065,666 | ||
| TOTAL INVESTMENT IN SECURITIES - 100.7% | |||
| (Cost $4,826,783,665) | 6,602,525,827 | ||
| NET OTHER ASSETS (LIABILITIES) - (0.7)% | (43,947,524) | ||
| NET ASSETS - 100% | $6,558,578,303 |
Legend
(a) Non-income producing
(b) Restricted securities (including private placements) - Investment in securities not registered under the Securities Act of 1933 (excluding 144A issues). At the end of the period, the value of restricted securities (excluding 144A issues) amounted to $65,355,251 or 1.0% of net assets.
(c) Level 3 security
(d) Security or a portion of the security is on loan at period end.
(e) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the end of the period, the value of these securities amounted to $1,737,268 or 0.0% of net assets.
(f) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request.
(g) Investment made with cash collateral received from securities on loan.
Additional information on each restricted holding is as follows:
| Security | Acquisition Date | Acquisition Cost |
| Ant International Co. Ltd. Class C | 5/16/18 | $24,495,442 |
| Convoy, Inc. Series D | 10/30/19 | $2,760,048 |
| Reddit, Inc. Series D | 2/4/19 | $5,440,247 |
| Roofoods Ltd. Series F | 9/12/17 | $14,510,890 |
| UiPath, Inc. Series A1 | 6/14/19 | $1,009,647 |
| UiPath, Inc. Series B1 | 6/14/19 | $50,291 |
| UiPath, Inc. Series B2 | 6/14/19 | $250,474 |
Affiliated Central Funds
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:
| Fund | Income earned |
| Fidelity Cash Central Fund | $1,057,058 |
| Fidelity Securities Lending Cash Central Fund | 140,964 |
| Total | $1,198,022 |
Amounts in the income column in the above table include any capital gain distributions from underlying funds, which are presented in the corresponding line-item in the Statement of Operations, if applicable. Amount for Fidelity Securities Lending Cash Central Fund represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities.
Investment Valuation
The following is a summary of the inputs used, as of February 29, 2020, 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 below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.
| Valuation Inputs at Reporting Date: | ||||
| Description | Total | Level 1 | Level 2 | Level 3 |
| Investments in Securities: | ||||
| Common Stocks | $6,526,769,769 | $6,465,078,968 | $27,507,481 | $34,183,320 |
| Convertible Preferred Stocks | 31,690,392 | -- | -- | 31,690,392 |
| Money Market Funds | 44,065,666 | 44,065,666 | -- | -- |
| Total Investments in Securities: | $6,602,525,827 | $6,509,144,634 | $27,507,481 | $65,873,712 |
The following is a reconciliation of Investments in Securities for which Level 3 inputs were used in determining value:
| Investments in Securities: | |
| Convertible Preferred Stocks | |
| Beginning Balance | $70,182,546 |
| Total Realized Gain (Loss) | -- |
| Total Unrealized Gain (Loss) | (325,557) |
| Cost of Purchases | 4,070,459 |
| Proceeds of Sales | -- |
| Amortization/Accretion | -- |
| Transfers in to Level 3 | -- |
| Transfers out of Level 3 | (42,237,056) |
| Ending Balance | $31,690,392 |
| The change in unrealized gain (loss) for the period attributable to Level 3 securities held at February 29, 2020 | $(325,557) |
| Other Investments in Securities | |
| Beginning Balance | $29,260,049 |
| Total Realized Gain (Loss) | -- |
| Total Unrealized Gain (Loss) | 4,923,271 |
| Cost of Purchases | -- |
| Proceeds of Sales | -- |
| Amortization/Accretion | -- |
| Transfers in to Level 3 | -- |
| Transfers out of Level 3 | -- |
| Ending Balance | $34,183,320 |
| The change in unrealized gain (loss) for the period attributable to Level 3 securities held at February 29, 2020 | $4,923,271 |
The information used in the above reconciliations represents fiscal year to date activity for any Investments in Securities identified as using Level 3 inputs at either the beginning or the end of the current fiscal period. Transfers in or out of Level 3 represent the beginning value of any Security or Instrument where a change in the pricing level occurred from the beginning to the end of the period. The cost of purchases and the proceeds of sales may include securities received or delivered through corporate actions or exchanges. Realized and unrealized gains (losses) disclosed in the reconciliations are included in Net Gain (Loss) on the Fund's Statement of Operations.
See accompanying notes which are an integral part of the financial statements.
Technology Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2020 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $43,721,116) — See accompanying schedule: Unaffiliated issuers (cost $4,782,717,999) | $6,558,460,161 | |
| Fidelity Central Funds (cost $44,065,666) | 44,065,666 | |
| Total Investment in Securities (cost $4,826,783,665) | $6,602,525,827 | |
| Foreign currency held at value (cost $7) | 7 | |
| Receivable for investments sold | 120,884,310 | |
| Receivable for fund shares sold | 24,829,059 | |
| Dividends receivable | 5,316,206 | |
| Distributions receivable from Fidelity Central Funds | 90,703 | |
| Prepaid expenses | 50,018 | |
| Other receivables | 440,226 | |
| Total assets | 6,754,136,356 | |
| Liabilities | ||
| Payable for investments purchased | $838,081 | |
| Payable for fund shares redeemed | 83,742,409 | |
| Accrued management fee | 3,261,469 | |
| Notes payable to affiliates | 62,435,000 | |
| Other affiliated payables | 876,120 | |
| Other payables and accrued expenses | 352,235 | |
| Collateral on securities loaned | 44,052,739 | |
| Total liabilities | 195,558,053 | |
| Net Assets | $6,558,578,303 | |
| Net Assets consist of: | ||
| Paid in capital | $4,558,628,506 | |
| Total accumulated earnings (loss) | 1,999,949,797 | |
| Net Assets | $6,558,578,303 | |
| Net Asset Value, offering price and redemption price per share ($6,558,578,303 ÷ 333,690,790 shares) | $19.65 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 29, 2020 | ||
| Investment Income | ||
| Dividends | $57,770,153 | |
| Income from Fidelity Central Funds (including $140,964 from security lending) | 1,198,022 | |
| Total income | 58,968,175 | |
| Expenses | ||
| Management fee | $31,430,012 | |
| Transfer agent fees | 8,582,275 | |
| Accounting and security lending fees | 1,119,382 | |
| Custodian fees and expenses | 19,283 | |
| Independent trustees' fees and expenses | 30,510 | |
| Registration fees | 152,570 | |
| Audit | 60,408 | |
| Legal | 10,610 | |
| Interest | 19,456 | |
| Miscellaneous | 46,278 | |
| Total expenses before reductions | 41,470,784 | |
| Expense reductions | (89,621) | |
| Total expenses after reductions | 41,381,163 | |
| Net investment income (loss) | 17,587,012 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 388,906,288 | |
| Redemptions in-kind with affiliated entities | 44,795,304 | |
| Fidelity Central Funds | 1,884 | |
| Foreign currency transactions | (11,919) | |
| Total net realized gain (loss) | 433,691,557 | |
| Change in net unrealized appreciation (depreciation) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 981,337,172 | |
| Assets and liabilities in foreign currencies | (531) | |
| Total change in net unrealized appreciation (depreciation) | 981,336,641 | |
| Net gain (loss) | 1,415,028,198 | |
| Net increase (decrease) in net assets resulting from operations | $1,432,615,210 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 29, 2020 | Year ended February 28, 2019 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $17,587,012 | $19,936,210 |
| Net realized gain (loss) | 433,691,557 | 1,037,466,722 |
| Change in net unrealized appreciation (depreciation) | 981,336,641 | (1,294,917,827) |
| Net increase (decrease) in net assets resulting from operations | 1,432,615,210 | (237,514,895) |
| Distributions to shareholders | (116,939,082) | (1,122,751,603) |
| Share transactions | ||
| Proceeds from sales of shares | 1,714,479,733 | 1,410,590,985 |
| Reinvestment of distributions | 111,024,657 | 1,076,404,658 |
| Cost of shares redeemed | (1,706,723,713) | (3,244,907,806) |
| Net increase (decrease) in net assets resulting from share transactions | 118,780,677 | (757,912,163) |
| Total increase (decrease) in net assets | 1,434,456,805 | (2,118,178,661) |
| Net Assets | ||
| Beginning of period | 5,124,121,498 | 7,242,300,159 |
| End of period | $6,558,578,303 | $5,124,121,498 |
| Other Information | ||
| Shares | ||
| Sold | 89,932,658 | 80,059,360 |
| Issued in reinvestment of distributions | 5,624,350 | 68,331,578 |
| Redeemed | (93,619,847) | (190,798,339) |
| Net increase (decrease) | 1,937,161 | (42,407,401) |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights
Technology Portfolio
| Years ended February 28, | 2020 A | 2019 B | 2018 B | 2017 B | 2016 A,B |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $15.45 | $19.36 | $14.70 | $10.78 | $12.09 |
| Income from Investment Operations | |||||
| Net investment income (loss)C | .05 | .06 | – | .01 | .01 |
| Net realized and unrealized gain (loss) | 4.52 | (.78) | 6.15 | 4.11 | (.82) |
| Total from investment operations | 4.57 | (.72) | 6.15 | 4.12 | (.81) |
| Distributions from net investment income | (.05) | (.02) | – | (.01) | (.01) |
| Distributions from net realized gain | (.32) | (3.17) | (1.49) | (.19) | (.49) |
| Total distributions | (.37) | (3.19) | (1.49) | (.20) | (.50) |
| Redemption fees added to paid in capitalC | – | – | – | –D | –D |
| Net asset value, end of period | $19.65 | $15.45 | $19.36 | $14.70 | $10.78 |
| Total ReturnE | 29.57% | (3.03)% | 43.71% | 38.52% | (7.16)% |
| Ratios to Average Net AssetsF,G | |||||
| Expenses before reductions | .71% | .72% | .75% | .77% | .78% |
| Expenses net of fee waivers, if any | .71% | .72% | .75% | .77% | .77% |
| Expenses net of all reductions | .71% | .71% | .74% | .76% | .76% |
| Net investment income (loss) | .30% | .34% | .01% | .11% | .11% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $6,558,578 | $5,124,121 | $7,242,300 | $4,119,489 | $2,777,346 |
| Portfolio turnover rateH | 32%I | 126%I | 71% | 82% | 130% |
A For the year ended February 29.
B Per share amounts have been adjusted to reflect the impact of the 10 for 1 share split that occurred on August 10, 2018.
C Calculated based on average shares outstanding during the period.
D Amount represents less than $.005 per share.
E Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
H Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
I Portfolio turnover rate excludes securities received or delivered in-kind.
See accompanying notes which are an integral part of the financial statements.
Notes to Financial Statements
For the period ended February 29, 2020
1. Organization.
Communications Equipment Portfolio, Computers Portfolio, IT Services Portfolio, Semiconductors Portfolio, Software and IT Services Portfolio, and Technology Portfolio (the Funds) are non-diversified funds of Fidelity Select Portfolios (the Trust). The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Funds invest primarily in securities of companies whose principal business activities fall within specific industries. Each Fund is authorized to issue an unlimited number of shares. Share transactions on the Statement of Changes in Net Assets may contain exchanges between affiliated funds.
Effective January 1, 2020:
Investment advisers Fidelity Investments Money Management, Inc., FMR Co., Inc., and Fidelity SelectCo, LLC, merged with and into Fidelity Management & Research Company. In connection with the merger transactions, the resulting, merged investment adviser was then redomiciled from Massachusetts to Delaware, changed its corporate structure from a corporation to a limited liability company, and changed its name to "Fidelity Management & Research Company LLC".
Fidelity Investments Institutional Operations Company, Inc. converted from a Massachusetts corporation to a Massachusetts LLC, and changed its name to "Fidelity Investments Institutional Operations Company LLC".
2. Investments in Fidelity Central Funds.
The Funds invest in Fidelity Central Funds, which are open-end investment companies generally available only to other investment companies and accounts managed by the investment adviser and its affiliates. The Funds' Schedules of Investments list each of the Fidelity Central Funds held as of period end, if any, as an investment of each Fund, but do not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, each Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by the investment adviser. Annualized expenses of the Money Market Central Funds as of their most recent shareholder report date ranged from less than .005% to .01%.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) website at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Funds' Report of Independent Registered Public Accounting Firm, are available on the SEC website or upon request.
3. Significant Accounting Policies.
Each Fund is an investment company and applies the accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946 Financial Services – Investments Companies. The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Funds:
Investment Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Board of Trustees (the Board) has delegated the day to day responsibility for the valuation of each Fund's investments to the Fair Value Committee (the Committee) established by each Fund's investment adviser. In accordance with valuation policies and procedures approved by the Board, each Fund attempts to obtain prices from one or more third party pricing vendors or brokers to value its investments. When current market prices, quotations or currency exchange rates are not readily available or reliable, investments will be fair valued in good faith by the Committee, in accordance with procedures adopted by the Board. Factors used in determining fair value vary by investment type and may include market or investment specific events, changes in interest rates and credit quality. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The Committee oversees each Fund's valuation policies and procedures and reports to the Board on the Committee's activities and fair value determinations. The Board monitors the appropriateness of the procedures used in valuing each Fund's investments and ratifies the fair value determinations of the Committee.
Each Fund categorizes the inputs to valuation techniques used to 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)
Valuation techniques used to value each Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by a third party pricing vendor on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-Traded Funds (ETFs) and certain indexes as well as quoted prices for similar securities may be used and would be categorized as Level 2 in the hierarchy. For equity securities, including restricted 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. Securities, including private placements or other restricted securities, for which observable inputs are not available are valued using alternate valuation approaches, including the market approach, the income approach and cost approach are categorized as Level 3 in the hierarchy. The market approach considers factors including the price of recent investments in the same or a similar security or financial metrics of comparable securities. The income approach considers factors including expected future cash flows, security specific risks and corresponding discount rates. The cost approach considers factors including the value of the security's underlying assets and liabilities.
Debt securities, including restricted securities, are valued based on evaluated prices received from third party pricing vendors or from brokers who make markets in such securities. Corporate bonds are valued by pricing vendors who utilize matrix pricing which considers yield or price of bonds of comparable quality, coupon, maturity and type or by broker-supplied prices. When independent prices are unavailable or unreliable, debt securities may be valued utilizing pricing methodologies which consider similar factors that would be used by third party pricing vendors. Debt securities are generally categorized as Level 2 in the hierarchy but may be Level 3 depending on the circumstances.
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value (NAV) each business day and are categorized as Level 1 in the hierarchy.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level as of February 29, 2020, as well as a roll forward of Level 3 investments, is included at the end of each applicable Fund's Schedule of Investments.
Foreign Currency. The Funds may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rates at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Funds' investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and for certain Funds include proceeds received from litigation. Dividend income is recorded 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 Funds are informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Income and capital gain distributions from Fidelity Central Funds, if any, are recorded on the ex-dividend date. Certain distributions received by the Funds represent a return of capital or capital gain. The Funds determine the components of these distributions subsequent to the ex-dividend date, based upon receipt of tax filings or other correspondence relating to the underlying investment. These distributions are recorded as a reduction of cost of investments and/or as a realized gain. Large, non-recurring dividends recognized by the Funds are presented separately on the Statement of Operations as "Special Dividends" and the impact of these dividends is presented in the Financial Highlights. Interest income is accrued as earned and includes coupon interest and amortization of premium and accretion of discount on debt securities as applicable. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Deferred Trustee Compensation. Under a Deferred Compensation Plan (the Plan) for Computers Portfolio, Semiconductors Portfolio, Software and IT Services Portfolio and Technology Portfolio, certain independent Trustees have elected to defer receipt of a portion of their annual compensation. Deferred amounts are invested in a cross-section of Fidelity funds, are marked-to-market and remain in each Fund until distributed in accordance with the Plan. The investment of deferred amounts and the offsetting payable to the Trustees presented below are included in each accompanying Statement of Assets and Liabilities in other receivables and other payables and accrued expenses, respectively.
| Computers Portfolio | $46,841 |
| Semiconductors Portfolio | 190,680 |
| Software and IT Services Portfolio | 294,213 |
| Technology Portfolio | 283,771 |
Income Tax Information and Distributions to Shareholders. Each year, each Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for U.S. Federal income taxes is required. As of February 29, 2020, each Fund did not have any unrecognized tax benefits in the financial statements; nor is each Fund aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. Each Fund files a U.S. federal tax return, in addition to state and local tax returns as required. Each Fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. Foreign taxes are provided for based on each Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are declared and recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. In addition, certain Funds claimed a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Capital accounts are not adjusted for temporary book-tax differences which will reverse in a subsequent period.
Book-tax differences are primarily due to in-kind transactions, foreign currency transactions, passive foreign investment companies (PFIC), deferred trustees compensation and losses deferred due to wash sales and excise tax regulations.
As of period end, the cost and unrealized appreciation (depreciation) in securities, and derivatives if applicable, for federal income tax purposes were as follows for each Fund:
| Tax cost | Gross unrealized appreciation | Gross unrealized depreciation | Net unrealized appreciation (depreciation) | |
| Communications Equipment Portfolio | $127,637,285 | $29,268,655 | $(9,650,697) | $19,617,958 |
| Computers Portfolio | 402,177,034 | 155,115,338 | (19,843,879) | 135,271,459 |
| IT Services Portfolio | 2,749,294,534 | 1,707,979,848 | (68,999,450) | 1,638,980,398 |
| Semiconductors Portfolio | 3,151,514,065 | 955,410,320 | (158,703,978) | 796,706,342 |
| Software and IT Services Portfolio | 5,557,553,710 | 3,257,671,917 | (214,166,382) | 3,043,505,535 |
| Technology Portfolio | 4,841,291,337 | 1,854,760,145 | (93,525,655) | 1,761,234,490 |
The tax-based components of distributable earnings as of period end were as follows for each Fund:
| Undistributed ordinary income | Undistributed long-term capital gain | Net unrealized appreciation (depreciation) on securities and other investments | |
| Communications Equipment Portfolio | $63,234 | $– | $19,617,958 |
| Computers Portfolio | 18,143,673 | 7,997,982 | 135,154,741 |
| IT Services Portfolio | 263,930 | 24,447,148 | 1,638,926,560 |
| Semiconductors Portfolio | 133,339,383 | 94,892,723 | 796,801,733 |
| Software and IT Services Portfolio | 85,319,228 | 136,957,922 | 3,043,418,480 |
| Technology Portfolio | 8,160,908 | 230,840,417 | 1,761,232,243 |
In addition, certain of the Funds intend to elect to defer to the next fiscal year capital losses recognized during the period November 1, 2018 to February 29, 2020. Loss deferrals were as follows:
| Capital losses | |
| Communications Equipment Portfolio | $(2,244,736) |
The tax character of distributions paid was as follows:
| February 29, 2020 | |||
| Ordinary Income | Long-term Capital Gains | Total | |
| Communications Equipment Portfolio | $932,462 | $8,656,844 | $9,589,306 |
| Computers Portfolio | 10,240,600 | 55,894,488 | 66,135,088 |
| IT Services Portfolio | 1,583,948 | 90,433,001 | 92,016,949 |
| Semiconductors Portfolio | 31,024,498 | 106,423,112 | 137,447,610 |
| Software and IT Services Portfolio | 56,832,072 | 849,544,525 | 906,376,597 |
| Technology Portfolio | 15,486,529 | 101,452,553 | 116,939,082 |
| February 28, 2019 | |||
| Ordinary Income | Long-term Capital Gains | Total | |
| Communications Equipment Portfolio | $3,815,877 | $11,504,035 | $15,319,912 |
| Computers Portfolio | 6,584,043 | 81,364,400 | 87,948,443 |
| IT Services Portfolio | 5,754,493 | 105,650,867 | 111,405,360 |
| Semiconductors Portfolio | 238,841,513 | 372,720,573 | 611,562,086 |
| Software and IT Services Portfolio | 86,334,756 | 246,676,415 | 333,011,171 |
| Technology Portfolio | 232,174,304 | 890,577,299 | 1,122,751,603 |
Restricted Securities (including private placements). The Funds may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities is included at the end of each applicable Fund's Schedule of Investments.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities and in-kind transactions are noted in the table below.
| Purchases ($) | Sales ($) | |
| Communications Equipment Portfolio | 206,865,123 | 241,262,289 |
| Computers Portfolio | 586,530,409 | 606,271,498 |
| IT Services Portfolio | 1,604,511,611 | 889,778,478 |
| Semiconductors Portfolio | 4,022,285,537 | 3,896,685,885 |
| Software and IT Services Portfolio | 2,274,117,170 | 1,634,058,464 |
| Technology Portfolio | 2,031,198,544 | 1,868,736,650 |
5. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity Management & Research Company LLC (the investment adviser) and its affiliates provide the Funds with investment management related services for which the Funds pay a monthly management fee. The management fee is the sum of an individual fund fee rate and an annualized group fee rate. The individual fund fee rate is applied to each Fund's average net assets. The group fee rate is based upon the monthly average net assets of a group of registered investment companies with which the investment adviser has management contracts. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the reporting period, each Fund's annual management fee rate expressed as a percentage of each Fund's average net assets was as follows:
| Individual Rate | Group Rate | Total | |
| Communications Equipment Portfolio | .30% | .24% | .53% |
| Computers Portfolio | .30% | .24% | .54% |
| IT Services Portfolio | .30% | .24% | .54% |
| Semiconductors Portfolio | .30% | .24% | .54% |
| Software and IT Services Portfolio | .30% | .24% | .54% |
| Technology Portfolio | .30% | .24% | .54% |
Transfer Agent Fees. Fidelity Investments Institutional Operations Company LLC (FIIOC), an affiliate of the investment adviser, is the Funds' transfer, dividend disbursing and shareholder servicing agent. FIIOC receives account fees and asset-based fees that vary according to account size and type of account. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, transfer agent fees were equivalent to the following annual rates expressed as a percentage of average net assets:
| Communications Equipment Portfolio | .21% |
| Computers Portfolio | .16% |
| IT Services Portfolio | .15% |
| Semiconductors Portfolio | .15% |
| Software and IT Services Portfolio | .15% |
| Technology Portfolio | .15% |
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of the investment adviser, maintains each Fund's accounting records. The accounting fee is based on the level of average net assets for each month. Prior to April 1, 2019, FSC had a separate agreement with each Fund for administration of the security lending program, based on the number and duration of lending transactions. For the period, the total fees paid for accounting and administration of securities lending were equivalent to the following annual rates:
| % of Average Net Assets | |
| Communications Equipment Portfolio | .04 |
| Computers Portfolio | .04 |
| IT Services Portfolio | .03 |
| Semiconductors Portfolio | .03 |
| Software and IT Services Portfolio | .02 |
| Technology Portfolio | .02 |
Brokerage Commissions. A portion of portfolio transactions were placed with brokerage firms which are affiliates of the investment adviser. Brokerage commissions are included in net realized gain (loss) and change in net unrealized appreciation (depreciation) in the Statement of Operations. The commissions paid to these affiliated firms were as follows:
| Amount | |
| Communications Equipment Portfolio | $21,142 |
| Computers Portfolio | 16,482 |
| IT Services Portfolio | 29,427 |
| Semiconductors Portfolio | 186,215 |
| Software and IT Services Portfolio | 65,143 |
| Technology Portfolio | 47,222 |
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, each fund, along with other registered investment companies having management contracts with Fidelity Management & Research Company LLC (FMR), or other affiliated entities of FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing each fund to borrow from, or lend money to, other participating affiliated funds. At period end, Computers Portfolio and IT Services Portfolio had no interfund loans outstanding. Any open loans, including accrued interest, at period end are presented under the caption "Notes payable to affiliates" in the Statement of Assets and Liabilities. Activity in this program during the period for which loans were outstanding was as follows:
| Borrower or Lender | Average Loan Balance | Weighted Average Interest Rate | Interest Expense | |
| Computers Portfolio | Borrower | $8,714,600 | 2.27% | $2,744 |
| IT Services Portfolio | Borrower | $12,711,000 | 2.09% | $1,478 |
| Technology Portfolio | Borrower | $2,584,000 | 2.63% | $19,076 |
Interfund Trades. Funds may purchase from or sell securities to other Fidelity Funds under procedures adopted by the Board. The procedures have been designed to ensure these interfund trades are executed in accordance with Rule 17a-7 of the 1940 Act. Interfund trades are included within the respective purchases and sales amounts shown in the Purchases and Sales of Investments note.
Affiliated Redemptions In-Kind. During the period, 5,658,948 shares of Technology Portfolio were redeemed in-kind for investments and cash with a value of $97,220,739. The net realized gain of $44,795,304 on investments delivered through in-kind redemptions is included in the accompanying Statement of Operations. The amount of the in-kind redemptions is included in share transactions in the accompanying Statement of Changes in Net Assets. Technology Portfolio recognized no gain or loss for federal income tax purposes.
Prior Fiscal Year Affiliated Redemptions In-Kind. During the prior period, 68,677,500* shares of Technology Portfolio were redeemed in-kind for investments and cash with a value of $1,186,541,219. Technology Portfolio had a net realized gain of $473,405,337 on investments delivered through in-kind redemptions. The amount of the in-kind redemptions is included in share transactions in the accompanying Statement of Changes in Net Assets. Technology Portfolio recognized no gain or loss for federal income tax purposes.
*Share activity prior to August 10, 2018 has been adjusted to reflect the impact of the 10 for 1 split that occurred on that date.
Other. During the period, the investment adviser reimbursed the Funds for certain loses as follows:
| Amount | |
| IT Services Portfolio | $7,164 |
| Software and IT Services Portfolio | 16,122 |
| Technology Portfolio | 15,031 |
6. Committed Line of Credit.
Certain Funds participate with other funds managed by the investment adviser or an affiliate in a $4.25 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The participating funds have agreed to pay commitment fees on their pro-rata portion of the line of credit, which are reflected in Miscellaneous expenses on the Statement of Operations, and are as follows:
| Amount | |
| Communications Equipment Portfolio | $513 |
| Computers Portfolio | 1,265 |
| IT Services Portfolio | 8,857 |
| Semiconductors Portfolio | 8,382 |
| Software and IT Services Portfolio | 17,865 |
| Technology Portfolio | 13,928 |
During the period, there were no borrowings on this line of credit.
7. Security Lending.
Certain Funds lend portfolio securities from time to time in order to earn additional income. For equity securities, lending agents are used, including National Financial Services (NFS), an affiliate of the Funds. Pursuant to a securities lending agreement, NFS will receive a fee, which is capped at 9.9% of a Fund's daily lending revenue, for its services as lending agent. The Funds may lend securities to certain qualified borrowers, including NFS. On the settlement date of the loan, each applicable Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Funds and any additional required collateral is delivered to the Funds on the next business day. The Funds or borrower may terminate the loan at any time, and if the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, the Funds may apply collateral received from the borrower against the obligation. The Funds may experience delays and costs in recovering the securities loaned. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on each applicable Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented on each applicable Fund's Statement of Operations as a component of income from Fidelity Central Funds. Affiliated security lending activity was as follows:
| Total Security Lending Income Fees Paid to NFS | Security Lending Income From Securities Loaned to NFS | Value of Securities Loaned to NFS | |
| Communications Equipment Portfolio | $18,498 | $– | $– |
| Computers Portfolio | 158 | – | – |
| IT Services Portfolio | 19,620 | 138 | 260,000 |
| Semiconductors Portfolio | 16,551 | – | – |
| Software and IT Services Portfolio | 24,444 | – | – |
| Technology Portfolio | 8,516 | – | – |
8. Bank Borrowings.
Each Fund is permitted to have bank borrowings for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity requirements. Each Fund has established borrowing arrangements with certain banks. The interest rate on the borrowings is the bank's base rate, as revised from time to time. Any open loans, including accrued interest, at period end are presented under the caption "Notes payable" in the Statement of Assets and Liabilities, if applicable. Activity in this program during the period for which loans were outstanding was as follows:
| Average Loan Balance | Weighted Average Interest Rate | Interest Expense | |
| Technology Portfolio | $15,420,280 | 2.08% | $380 |
9. Expense Reductions.
Commissions paid to certain brokers with whom the investment adviser, or its affiliates, places trades on behalf of certain Funds include an amount in addition to trade execution, which may be rebated back to the Funds to offset certain expenses. In addition, through arrangements with each applicable Fund's custodian and transfer agent, credits realized as a result of certain uninvested cash balances were used to reduce each applicable Fund's expenses. All of the applicable expense reductions are noted in the table below.
| Brokerage service rebates | Custodian credits | Transfer Agent credits | |
| Communications Equipment Portfolio | $33,047 | $132 | $– |
| Computers Portfolio | 48,316 | 389 | 109 |
| IT Services Portfolio | 60,543 | 802 | – |
| Semiconductors Portfolio | 263,319 | 698 | 2,620 |
| Software and IT Services Portfolio | 71,325 | 1,534 | 2,091 |
| Technology Portfolio | 54,651 | 360 | 3,272 |
In addition, during the period the investment adviser or an affiliate reimbursed and/or waived a portion of operating expenses as follows:
| Amount | |
| Communications Equipment Portfolio | $1,150 |
| Computers Portfolio | 2,913 |
| IT Services Portfolio | 17,937 |
| Semiconductors Portfolio | 18,485 |
| Software and IT Services Portfolio | 38,748 |
| Technology Portfolio | 31,338 |
10. Other.
The Funds' organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Funds. In the normal course of business, the Funds may also enter into contracts that provide general indemnifications. The Funds' maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Funds. The risk of material loss from such claims is considered remote.
11. Coronavirus (COVID-19) Pandemic.
An outbreak of COVID-19 first detected in China during December 2019 has since spread globally and was declared a pandemic by the World Health Organization during March 2020. Developments that disrupt global economies and financial markets, such as the COVID-19 pandemic, may magnify factors that affect the Funds' performance.
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of Fidelity Select Portfolios and the Shareholders of Communications Equipment Portfolio, Computers Portfolio, IT Services Portfolio, Semiconductors Portfolio, Software and IT Services Portfolio and Technology Portfolio
Opinions on the Financial Statements
We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of Communications Equipment Portfolio, Computers Portfolio, IT Services Portfolio, Semiconductors Portfolio, Software and IT Services Portfolio, and Technology Portfolio (six of the funds constituting Fidelity Select Portfolios, hereafter collectively referred to as the “Funds”) as of February 29, 2020, the related statements of operations for the year ended February 29, 2020, the statements of changes in net assets for each of the two years in the period ended February 29, 2020, including the related notes, and the financial highlights for each of the five years in the period ended February 29, 2020 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of each of the Funds as of February 29, 2020, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period ended February 29, 2020 and each of the financial highlights for each of the five years in the period ended February 29, 2020 in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinions
These financial statements are the responsibility of the Funds' management. Our responsibility is to express an opinion on the Funds' financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Funds in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of February 29, 2020 by correspondence with the custodian, issuers of privately offered securities and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinions.
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 14, 2020
We have served as the auditor of one or more investment companies in the Fidelity group of funds since 1932.
Trustees and Officers
The Trustees, Members of the Advisory Board (if any), and officers of the trust and funds, as applicable, are listed below. The Board of Trustees governs each fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee each fund's activities, review contractual arrangements with companies that provide services to each fund, oversee management of the risks associated with such activities and contractual arrangements, and review each fund's performance. Except for Michael E. Wiley, each of the Trustees oversees 302 funds. Mr. Wiley oversees 199 funds.
The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust. Each Trustee who is not an interested person (as defined in the 1940 Act) of the trust and the funds is referred to herein as an Independent Trustee. Each Independent Trustee shall retire not later than the last day of the calendar year in which his or her 75th birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. Officers and Advisory Board Members hold office without limit in time, except that any officer or Advisory Board Member may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years.
Each fund’s Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-800-544-8544.
Experience, Skills, Attributes, and Qualifications of the Trustees. The Governance and Nominating Committee has adopted a statement of policy that describes the experience, qualifications, attributes, and skills that are necessary and desirable for potential Independent Trustee candidates (Statement of Policy). The Board believes that each Trustee satisfied at the time he or she was initially elected or appointed a Trustee, and continues to satisfy, the standards contemplated by the Statement of Policy. The Governance and Nominating Committee also engages professional search firms to help identify potential Independent Trustee candidates who have the experience, qualifications, attributes, and skills consistent with the Statement of Policy. From time to time, additional criteria based on the composition and skills of the current Independent Trustees, as well as experience or skills that may be appropriate in light of future changes to board composition, business conditions, and regulatory or other developments, have also been considered by the professional search firms and the Governance and Nominating Committee. In addition, the Board takes into account the Trustees' commitment and participation in Board and committee meetings, as well as their leadership of standing and ad hoc committees throughout their tenure.
In determining that a particular Trustee was and continues to be qualified to serve as a Trustee, the Board has considered a variety of criteria, none of which, in isolation, was controlling. The Board believes that, collectively, the Trustees have balanced and diverse experience, qualifications, attributes, and skills, which allow the Board to operate effectively in governing each fund and protecting the interests of shareholders. Information about the specific experience, skills, attributes, and qualifications of each Trustee, which in each case led to the Board's conclusion that the Trustee should serve (or continue to serve) as a trustee of the funds, is provided below.
Board Structure and Oversight Function. James C. Curvey is an interested person and currently serves as Chairman. The Trustees have determined that an interested Chairman is appropriate and benefits shareholders because an interested Chairman has a personal and professional stake in the quality and continuity of services provided to the funds. Independent Trustees exercise their informed business judgment to appoint an individual of their choosing to serve as Chairman, regardless of whether the Trustee happens to be independent or a member of management. The Independent Trustees have determined that they can act independently and effectively without having an Independent Trustee serve as Chairman and that a key structural component for assuring that they are in a position to do so is for the Independent Trustees to constitute a substantial majority for the Board. The Independent Trustees also regularly meet in executive session. Ned C. Lautenbach serves as Chairman of the Independent Trustees and as such (i) acts as a liaison between the Independent Trustees and management with respect to matters important to the Independent Trustees and (ii) with management prepares agendas for Board meetings.
Fidelity® funds are overseen by different Boards of Trustees. The funds' Board oversees Fidelity's high income and certain equity funds, and other Boards oversee Fidelity's investment-grade bond, money market, asset allocation, and other equity funds. The asset allocation funds may invest in Fidelity® funds overseen by the funds' Board. The use of separate Boards, each with its own committee structure, allows the Trustees of each group of Fidelity® funds to focus on the unique issues of the funds they oversee, including common research, investment, and operational issues. On occasion, the separate Boards establish joint committees to address issues of overlapping consequences for the Fidelity® funds overseen by each Board.
The Trustees operate using a system of committees to facilitate the timely and efficient consideration of all matters of importance to the Trustees, each fund, and fund shareholders and to facilitate compliance with legal and regulatory requirements and oversight of the funds' activities and associated risks. The Board, acting through its committees, has charged FMR and its affiliates with (i) identifying events or circumstances the occurrence of which could have demonstrably adverse effects on the funds' business and/or reputation; (ii) implementing processes and controls to lessen the possibility that such events or circumstances occur or to mitigate the effects of such events or circumstances if they do occur; and (iii) creating and maintaining a system designed to evaluate continuously business and market conditions in order to facilitate the identification and implementation processes described in (i) and (ii) above. Because the day-to-day operations and activities of the funds are carried out by or through FMR, its affiliates, and other service providers, the funds' exposure to risks is mitigated but not eliminated by the processes overseen by the Trustees. While each of the Board's committees has responsibility for overseeing different aspects of the funds' activities, oversight is exercised primarily through the Operations, Audit, and Compliance Committees. Appropriate personnel, including but not limited to the funds' Chief Compliance Officer (CCO), FMR's internal auditor, the independent accountants, the funds' Treasurer and portfolio management personnel, make periodic reports to the Board's committees, as appropriate, including an annual review of Fidelity's risk management program for the Fidelity® funds. The responsibilities of each standing committee, including their oversight responsibilities, are described further under "Standing Committees of the Trustees."
Interested Trustees*:
Correspondence intended for a Trustee who is an interested person may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210.
Name, Year of Birth; Principal Occupations and Other Relevant Experience+
James C. Curvey (1935)
Year of Election or Appointment: 2018
Trustee
Chairman of the Board of Trustees
Mr. Curvey also serves as Trustee of other Fidelity® funds. Mr. Curvey is Vice Chairman (2007-present) and Director of FMR LLC (diversified financial services company). In addition, Mr. Curvey is an Overseer Emeritus for the Boston Symphony Orchestra, a Director of Artis-Naples, and a Trustee of Brewster Academy in Wolfeboro, New Hampshire. Previously, Mr. Curvey served as a Director of Fidelity Research & Analysis Co. (investment adviser firm, 2009-2018), Director of Fidelity Investments Money Management, Inc. (investment adviser firm, 2009-2014) and a Director of FMR and FMR Co., Inc. (investment adviser firms, 2007-2014).
* Determined to be an “Interested Trustee” by virtue of, among other things, his or her affiliation with the trust or various entities under common control with FMR.
+ The information includes the Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to the Trustee's qualifications to serve as a Trustee, which led to the conclusion that the Trustee should serve as a Trustee for each fund.
Independent Trustees:
Correspondence intended for an Independent Trustee may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.
Name, Year of Birth; Principal Occupations and Other Relevant Experience+
Dennis J. Dirks (1948)
Year of Election or Appointment: 2018
Trustee
Mr. Dirks also serves as Trustee of other Fidelity® funds. Prior to his retirement in May 2003, Mr. Dirks served as Chief Operating Officer and as a member of the Board of The Depository Trust & Clearing Corporation (financial markets infrastructure), President, Chief Operating Officer and a member of the Board of The Depository Trust Company (DTC), President and a member of the Board of the National Securities Clearing Corporation (NSCC), Chief Executive Officer and a member of the Board of the Government Securities Clearing Corporation and Chief Executive Officer and a member of the Board of the Mortgage-Backed Securities Clearing Corporation. Mr. Dirks currently serves as a member of the Finance Committee (2016-present) and Board (2017-present) and is Treasurer (2018-present) of the Asolo Repertory Theatre.
Donald F. Donahue (1950)
Year of Election or Appointment: 2018
Trustee
Mr. Donahue also serves as Trustee of other Fidelity® funds. Mr. Donahue serves as President and Chief Executive Officer of Miranda Partners, LLC (risk consulting for the financial services industry, 2012-present). Previously, Mr. Donahue served as Chief Executive Officer (2006-2012), Chief Operating Officer (2003-2006) and Managing Director, Customer Marketing and Development (1999-2003) of The Depository Trust & Clearing Corporation (financial markets infrastructure). Mr. Donahue currently serves as a member (2007-present) and Co-Chairman (2016-present) of the Board of United Way of New York, a member of the Board of NYC Leadership Academy (2012-present) and a member of the Board of Advisors of Ripple Labs, Inc. (financial services, 2015-present). Mr. Donahue previously served as a member of the Advisory Board of certain Fidelity® funds (2015-2018).
Alan J. Lacy (1953)
Year of Election or Appointment: 2018
Trustee
Mr. Lacy also serves as Trustee of other Fidelity® funds. Previously, Mr. Lacy served as Senior Adviser (2007-2014) of Oak Hill Capital Partners, L.P. (private equity), Chief Executive Officer (2005) and Vice Chairman (2005-2006) of Sears Holdings Corporation (retail), Chief Executive Officer and Chairman of the Board of Sears, Roebuck and Co. (retail, 2000-2005) and Chairman (2014-2017) and a member of the Board (2010-2017) of Dave & Buster’s Entertainment, Inc. (restaurant and entertainment complexes). Mr. Lacy currently serves as a member of the Board of Bristol-Myers Squibb Company (global pharmaceuticals, 2008-present), Trustee of the California Chapter of The Nature Conservancy (2015-present) and a member of the Board of the Center for Advanced Study in the Behavioral Sciences at Stanford University (2015-present).
Ned C. Lautenbach (1944)
Year of Election or Appointment: 2018
Trustee
Chairman of the Independent Trustees
Mr. Lautenbach also serves as Trustee of other Fidelity® funds. Mr. Lautenbach currently serves as Chair of the Board of Governors, State University System of Florida (2013-present) and is a member of the Council on Foreign Relations (1994-present). He is also a member and has in the past served as Chairman of the Board of Directors of Artis-Naples (2012-present). Previously, Mr. Lautenbach served as a member and then Lead Director of the Board of Directors of Eaton Corporation (diversified industrial, 1997-2016). He was also a Partner at Clayton, Dubilier & Rice, LLC (private equity investment, 1998-2010); as well as Director of Sony Corporation (2006-2007). In addition, Mr. Lautenbach had a 30-year career with IBM (technology company), during which time he served as Senior Vice President and as a member of the Corporate Executive Committee (1968-1998).
Joseph Mauriello (1944)
Year of Election or Appointment: 2018
Trustee
Mr. Mauriello also serves as Trustee of other Fidelity® funds. Prior to his retirement in January 2006, Mr. Mauriello served in numerous senior management positions including Deputy Chairman and Chief Operating Officer (2004-2005), and Vice Chairman of Financial Services (2002-2004) of KPMG LLP US (professional services, 1965-2005). Mr. Mauriello currently serves as a member of the Independent Directors Council Governing Council (2015-present). Previously, Mr. Mauriello served as a member of the Board of XL Group plc. (global insurance and re-insurance, 2006-2018).
Cornelia M. Small (1944)
Year of Election or Appointment: 2018
Trustee
Ms. Small also serves as Trustee of other Fidelity® funds. Previously, Ms. Small served as Chief Investment Officer, Director of Global Equity Investments and a member of Scudder, Stevens & Clark and Scudder Kemper Investments. Ms. Small previously served as a member of the Board (2009-2019) and Chair of the Investment Committee (2010-2019) of the Teagle Foundation and a member of the Investment Committee of the Berkshire Taconic Community Foundation (2008-2019).
Garnett A. Smith (1947)
Year of Election or Appointment: 2013
Trustee
Mr. Smith also serves as Trustee of other Fidelity® funds. Prior to his retirement, Mr. Smith served as Chairman and Chief Executive Officer (1990-1997) and President (1986-1990) of Inbrand Corp. (manufacturer of personal absorbent products). Prior to his employment with Inbrand Corp., he was employed by a retail fabric chain and North Carolina National Bank (now Bank of America). Mr. Smith previously served as a member of the Advisory Board of certain Fidelity® funds (2012-2013).
David M. Thomas (1949)
Year of Election or Appointment: 2018
Trustee
Mr. Thomas also serves as Trustee of other Fidelity® funds. Previously, Mr. Thomas served as Executive Chairman (2005-2006) and Chairman and Chief Executive Officer (2000-2005) of IMS Health, Inc. (pharmaceutical and healthcare information solutions). Mr. Thomas currently serves as Non-Executive Chairman of the Board of Fortune Brands Home and Security (home and security products, 2011-present), and a member of the Board (2004-present) and Presiding Director (2013-present) of Interpublic Group of Companies, Inc. (marketing communication).
Michael E. Wiley (1950)
Year of Election or Appointment: 2008
Trustee
Mr. Wiley also serves as Trustee or a member of the Advisory Board of other Fidelity® funds. Previously, Mr. Wiley served as Chairman, President and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004). Mr. Wiley currently serves as a member of the Board of High Point Resources (exploration and production, 2005-present). Previously, Mr. Wiley served as a member of the Board of Andeavor Corporation (independent oil refiner and marketer, 2005-2018) and a member of the Board of Andeavor Logistics LP (natural resources logistics, 2015-2018).
+ The information includes the Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to the Trustee's qualifications to serve as a Trustee, which led to the conclusion that the Trustee should serve as a Trustee for each fund.
Advisory Board Members and Officers:
Correspondence intended for a Member of the Advisory Board (if any) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235. Correspondence intended for an officer or Peter S. Lynch may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210. Officers appear below in alphabetical order.
Name, Year of Birth; Principal Occupation
Vicki L. Fuller (1957)
Year of Election or Appointment: 2018
Member of the Advisory Board
Ms. Fuller also serves as a member of the Advisory Board of other Fidelity® funds. Previously, Ms. Fuller served as Chief Investment Officer of the New York State Common Retirement Fund (2012-2018) and held a variety of positions at AllianceBernstein L.P. (global asset management, 1985-2012), including Managing Director (2006-2012) and Senior Vice President and Senior Portfolio Manager (2001-2006). Ms. Fuller currently serves as a member of the Board, Audit Committee and Nominating and Governance Committee of The Williams Companies, Inc. (natural gas infrastructure, 2018-present) and as a member of the Board of Treliant, LLC (consulting, 2019-present).
Patricia L. Kampling (1959)
Year of Election or Appointment: 2020
Member of the Advisory Board
Ms. Kampling also serves as Member of the Advisory Board of other Fidelity® funds. Prior to her retirement, Ms. Kampling served as Chairman of the Board and Chief Executive Officer (2012-2019), President and Chief Operating Officer (2011-2012) and Executive Vice President and Chief Financial Officer (2010-2011) of Alliant Energy Corporation. Ms. Kampling currently serves as a member of the Board, Compensation Committee and Executive Committee and as Chair of the Audit Committee of Briggs & Stratton Corporation (manufacturing, 2011-present) and as a member of the Board, Audit, Finance and Risk Committee and Safety, Environmental, Technology and Operations Committee of American Water Works Company, Inc. (utilities company, 2019-present). In addition, Ms. Kampling currently serves as a member of the Board of the Nature Conservancy, Wisconsin Chapter (2019-present). Previously, Ms. Kampling served as a member of the Board of Interstate Power and Light Company (2012-2019) and Wisconsin Power and Light Company (2012-2019) (each a subsidiary of Alliant Energy Corporation) and as a member of the Board and Workforce Development Committee of the Business Roundtable (2018-2019).
Peter S. Lynch (1944)
Year of Election or Appointment: 2018
Member of the Advisory Board
Mr. Lynch also serves as Member of the Advisory Board of other Fidelity® funds. Mr. Lynch is Vice Chairman and a Director of Fidelity Management & Research Company LLC (investment adviser firm). In addition, Mr. Lynch serves as a Trustee of Boston College and as the Chairman of the Inner-City Scholarship Fund. Previously, Mr. Lynch served as Vice Chairman and a Director of FMR Co., Inc. (investment adviser firm) and on the Special Olympics International Board of Directors (1997-2006).
Susan Tomasky (1953)
Year of Election or Appointment: 2020
Member of the Advisory Board
Ms. Tomasky also serves as Member of the Advisory Board of other Fidelity® funds. Prior to her retirement, Ms. Tomasky served in various executive officer positions at American Electric Power Company, Inc. (1998-2011), including most recently as President of AEP Transmission (2007-2011). Ms. Tomasky currently serves as a member of the Board and Sustainability Committee and as Chair of the Audit Committee of Marathon Petroleum Corporation (2018-present) and as a member of the Board, Corporate Governance Committee and Organization and Compensation Committee and as Chair of the Audit Committee of Public Service Enterprise Group, Inc. (utilities company, 2012-present). In addition, Ms. Tomasky currently serves as a member of the Board of the Columbus Regional Airport Authority (2007-present), as a member of the Board of the Royal Shakespeare Company – America (2009-present), as a member of the Board of the Columbus Association for the Performing Arts (2011-present) and as a member of the Board of Kenyon College (2016-present). Previously, Ms. Tomasky served as a member of the Board (2011-2019) and as Lead Independent Director (2015-2018) of Andeavor Corporation (previously Tesoro Corporation) (independent oil refiner and marketer) and as a member of the Board of Summit Midstream Partners LP (energy, 2012-2018).
Elizabeth Paige Baumann (1968)
Year of Election or Appointment: 2017
Anti-Money Laundering (AML) Officer
Ms. Baumann also serves as AML Officer of other funds. She is Chief AML Officer (2012-present) and Senior Vice President (2014-present) of FMR LLC (diversified financial services company) and is an employee of Fidelity Investments. Previously, Ms. Baumann served as AML Officer of certain funds (2017-2019), as AML Officer of the funds (2012-2016), and Vice President (2007-2014) and Deputy Anti-Money Laundering Officer (2007-2012) of FMR LLC.
Craig S. Brown (1977)
Year of Election or Appointment: 2019
Assistant Treasurer
Mr. Brown also serves as Assistant Treasurer of other funds. Mr. Brown is an employee of Fidelity Investments (2013-present).
John J. Burke III (1964)
Year of Election or Appointment: 2018
Chief Financial Officer
Mr. Burke also serves as Chief Financial Officer of other funds. Mr. Burke serves as Head of Investment Operations for Fidelity Fund and Investment Operations (2018-present) and is an employee of Fidelity Investments (1998-present). Previously Mr. Burke served as head of Asset Management Investment Operations (2012-2018).
William C. Coffey (1969)
Year of Election or Appointment: 2019
Assistant Secretary
Mr. Coffey also serves as Assistant Secretary of other funds. He is Senior Vice President and Deputy General Counsel of FMR LLC (diversified financial services company, 2010-present), and is an employee of Fidelity Investments. Previously, Mr. Coffey served as Secretary and CLO of certain funds (2018-2019); CLO, Secretary, and Senior Vice President of Fidelity Management & Research Company and FMR Co., Inc. (investment adviser firms, 2018-2019); Secretary of Fidelity SelectCo, LLC and Fidelity Investments Money Management, Inc. (investment adviser firms, 2018-2019); CLO of Fidelity Management & Research (Hong Kong) Limited, FMR Investment Management (UK) Limited, and Fidelity Management & Research (Japan) Limited (investment adviser firms, 2018-2019); and Assistant Secretary of certain funds (2009-2018).
Timothy M. Cohen (1969)
Year of Election or Appointment: 2018
Vice President
Mr. Cohen also serves as Vice President of other funds. Mr. Cohen serves as Co-Head of Equity (2018-present), a Director of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2016-present), and is an employee of Fidelity Investments. Previously, Mr. Cohen served as Executive Vice President of Fidelity SelectCo, LLC (2019), Head of Global Equity Research (2016-2018), Chief Investment Officer - Equity and a Director of Fidelity Management & Research (U.K.) Inc. (investment adviser firm, 2013-2015) and as a Director of Fidelity Management & Research (Hong Kong) Limited (investment adviser firm, 2017).
Jonathan Davis (1968)
Year of Election or Appointment: 2010
Assistant Treasurer
Mr. Davis also serves as Assistant Treasurer of other funds. Mr. Davis serves as Assistant Treasurer of FMR Capital, Inc. (2017-present) and is an employee of Fidelity Investments. Previously, Mr. Davis served as Vice President and Associate General Counsel of FMR LLC (diversified financial services company, 2003-2010).
Laura M. Del Prato (1964)
Year of Election or Appointment: 2018
Assistant Treasurer
Ms. Del Prato also serves as an officer of other funds. Ms. Del Prato is an employee of Fidelity Investments (2017-present). Prior to joining Fidelity Investments, Ms. Del Prato served as a Managing Director and Treasurer of the JPMorgan Mutual Funds (2014-2017). Prior to JPMorgan, Ms. Del Prato served as a partner at Cohen Fund Audit Services (accounting firm, 2012-2013) and KPMG LLP (accounting firm, 2004-2012).
Colm A. Hogan (1973)
Year of Election or Appointment: 2020
Assistant Treasurer
Mr. Hogan also serves as an officer of other funds. Mr. Hogan serves as Assistant Treasurer of FMR Capital, Inc. (2017-present) and is an employee of Fidelity Investments (2005-present). Previously, Mr. Hogan served as Deputy Treasurer of certain Fidelity® funds (2016-2020) and Assistant Treasurer of certain Fidelity® funds (2016-2018).
Pamela R. Holding (1964)
Year of Election or Appointment: 2018
Vice President
Ms. Holding also serves as Vice President of other funds. Ms. Holding serves as Co-Head of Equity (2018-present) and is an employee of Fidelity Investments (2013-present). Previously, Ms. Holding served as Executive Vice President of Fidelity SelectCo, LLC (2019) and as Chief Investment Officer of Fidelity Institutional Asset Management (2013-2018).
Cynthia Lo Bessette (1969)
Year of Election or Appointment: 2019
Secretary and Chief Legal Officer (CLO)
Ms. Lo Bessette also serves as an officer of other funds. Ms. Lo Bessette serves as CLO, Secretary, and Senior Vice President of Fidelity Management & Research Company LLC (investment adviser firm, 2019-present); and CLO of Fidelity Management & Research (Hong Kong) Limited, FMR Investment Management (UK) Limited, and Fidelity Management & Research (Japan) Limited (investment adviser firms, 2019-present). She is a Senior Vice President and Deputy General Counsel of FMR LLC (diversified financial services company, 2019-present), and is an employee of Fidelity Investments. Previously, Ms. Lo Bessette served as CLO, Secretary, and Senior Vice President of FMR Co., Inc. (investment adviser firm, 2019); Secretary of Fidelity SelectCo, LLC and Fidelity Investments Money Management, Inc. (investment adviser firms, 2019). Prior to joining Fidelity Investments, Ms. Lo Bessette was Executive Vice President, General Counsel (2016-2019) and Senior Vice President, Deputy General Counsel (2015-2016) of OppenheimerFunds (investment management company) and Deputy Chief Legal Officer (2013-2015) of Jennison Associates LLC (investment adviser firm).
Chris Maher (1972)
Year of Election or Appointment: 2020
Deputy Treasurer
Mr. Maher also serves as an officer of other funds. Mr. Maher serves as Assistant Treasurer of FMR Capital, Inc. (2017-present), and is an employee of Fidelity Investments (2008-present). Previously, Mr. Maher served as Assistant Treasurer of certain funds (2013-2020); Vice President of Asset Management Compliance (2013), Vice President of the Program Management Group of FMR (investment adviser firm, 2010-2013), and Vice President of Valuation Oversight (2008-2010).
Kenneth B. Robins (1969)
Year of Election or Appointment: 2018
Chief Compliance Officer
Mr. Robins also serves as an officer of other funds. Mr. Robins serves as Compliance Officer of Fidelity Management & Research Company LLC (investment adviser firm, 2016-present) and is an employee of Fidelity Investments (2004-present). Previously, Mr. Robins served as Compliance Officer of FMR Co., Inc. (investment adviser firm, 2016-2019), as Executive Vice President of Fidelity Investments Money Management, Inc. (investment adviser firm, 2013-2016) and served in other fund officer roles.
Stacie M. Smith (1974)
Year of Election or Appointment: 2018
President and Treasurer
Ms. Smith also serves as an officer of other funds. Ms. Smith serves as Assistant Treasurer of FMR Capital, Inc. (2017-present), is an employee of Fidelity Investments (2009-present), and has served in other fund officer roles. Prior to joining Fidelity Investments, Ms. Smith served as Senior Audit Manager of Ernst & Young LLP (accounting firm, 1996-2009). Previously, Ms. Smith served as Assistant Treasurer (2013-2019) and Deputy Treasurer (2013-2016) of certain Fidelity® funds.
Marc L. Spector (1972)
Year of Election or Appointment: 2017
Assistant Treasurer
Mr. Spector also serves as an officer of other funds. Mr. Spector serves as Assistant Treasurer of FMR Capital, Inc. (2017-present) and is an employee of Fidelity Investments (2016-present). Prior to joining Fidelity Investments, Mr. Spector served as Director at the Siegfried Group (accounting firm, 2013-2016), and prior to Siegfried Group as audit senior manager at Deloitte & Touche LLP (accounting firm, 2005-2013).
Jim Wegmann (1979)
Year of Election or Appointment: 2019
Assistant Treasurer
Mr. Wegmann also serves as Assistant Treasurer of other funds. Mr. Wegmann is an employee of Fidelity Investments (2011-present).
Shareholder Expense Example
As a shareholder of a Fund, you incur two types of costs: (1) transaction costs, including and (2) ongoing costs, including management fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (September 1, 2019 to February 29, 2020).
Actual Expenses
The first line of the accompanying table for each fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. In addition, each Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each fund provides information about hypothetical account values and hypothetical expenses based on a fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. In addition, each Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Annualized Expense Ratio-A | Beginning Account Value September 1, 2019 | Ending Account Value February 29, 2020 | Expenses Paid During Period-B September 1, 2019 to February 29, 2020 |
|
| Communications Equipment Portfolio | .84% | |||
| Actual | $1,000.00 | $906.00 | $3.98 | |
| Hypothetical-C | $1,000.00 | $1,020.69 | $4.22 | |
| Computers Portfolio | .75% | |||
| Actual | $1,000.00 | $1,144.80 | $4.00 | |
| Hypothetical-C | $1,000.00 | $1,021.13 | $3.77 | |
| IT Services Portfolio | .72% | |||
| Actual | $1,000.00 | $1,020.30 | $3.62 | |
| Hypothetical-C | $1,000.00 | $1,021.28 | $3.62 | |
| Semiconductors Portfolio | .71% | |||
| Actual | $1,000.00 | $1,154.80 | $3.80 | |
| Hypothetical-C | $1,000.00 | $1,021.33 | $3.57 | |
| Software and IT Services Portfolio | .70% | |||
| Actual | $1,000.00 | $1,097.60 | $3.65 | |
| Hypothetical-C | $1,000.00 | $1,021.38 | $3.52 | |
| Technology Portfolio | .70% | |||
| Actual | $1,000.00 | $1,146.50 | $3.74 | |
| Hypothetical-C | $1,000.00 | $1,021.38 | $3.52 |
A Annualized expense ratio reflects expenses net of applicable fee waivers.
B Expenses are equal to each Fund's annualized expense ratio, multiplied by the average account value over the period, multiplied by 182/ 366 (to reflect the one-half year period).
C 5% return per year before expenses
Distributions (Unaudited)
The Board of Trustees of each fund voted to pay to shareholders of record at the opening of business on record date, the following distributions per share derived from capital gains realized from sales of portfolio securities, and dividends derived from net investment income:
| Pay Date | Record Date | Dividends | Capital Gains | |
| Communications Equipment Portfolio | 04/09/20 | 04/08/20 | $0.015 | $0.000 |
| Computers Portfolio | 04/09/20 | 04/08/20 | $1.148 | $2.867 |
| IT Services Portfolio | 04/09/20 | 04/08/20 | $0.006 | $0.466 |
| Semiconductors Portfolio | 04/09/20 | 04/08/20 | $0.004 | $0.727 |
| Software and IT Services Portfolio | 04/09/20 | 04/08/20 | $0.150 | $0.409 |
| Technology Portfolio | 04/09/20 | 04/08/20 | $0.025 | $0.702 |
The funds hereby designate as capital gain dividend the amounts noted below for the taxable year ended February 29, 2020, or, if subsequently determined to be different, the net capital gain of such year.
| Communications Equipment Portfolio | $4,928,247 |
| Computers Portfolio | $21,955,015 |
| IT Services Portfolio | $107,404,851 |
| Semiconductors Portfolio | $201,315,835 |
| Software and IT Services Portfolio | $321,457,159 |
| Technology Portfolio | $353,872,961 |
A percentage of the dividends distributed during the fiscal year for the following funds qualify for the dividends–received deduction for corporate shareholders:
| April 2019 | December 2019 | |
| Communications Equipment Portfolio | 100% | 100% |
| Computers Portfolio | – | 33% |
| IT Services Portfolio | 100% | 100% |
| Semiconductors Portfolio | 100% | 100% |
| Software and IT Services Portfolio | 99% | 77% |
| Technology Portfolio | – | 100% |
A percentage of the dividends distributed during the fiscal year for the following funds may be taken into account as a dividend for purposes of the maximum rate under section 1(h)(11) of the Internal Revenue Code.
| April 2019 | December 2019 | |
| Communications Equipment Portfolio | 100% | 100% |
| Computers Portfolio | – | 73% |
| IT Services Portfolio | 100% | 100% |
| Semiconductors Portfolio | 100% | 100% |
| Software and IT Services Portfolio | 100% | 91% |
| Technology Portfolio | – | 100% |
The funds will notify shareholders in January 2021 of amounts for use in preparing 2020 income tax returns.
Board Approval of Investment Advisory Contracts and Management Fees
Communications Equipment Portfolio
Computers Portfolio
IT Services Portfolio
Semiconductors Portfolio
Software and IT Services Portfolio
Technology Portfolio
Communications Equipment Portfolio
Computers Portfolio
IT Services Portfolio
Semiconductors Portfolio
Software and IT Services Portfolio
Technology Portfolio
Communications Equipment Portfolio
Computers Portfolio
IT Services Portfolio
Semiconductors Portfolio
Software and IT Services Portfolio
Technology Portfolio
Liquidity Risk Management Program
The Securities and Exchange Commission adopted Rule 22e-4 under the Investment Company Act of 1940 (the Liquidity Rule) to promote effective liquidity risk management throughout the open-end investment company industry, thereby reducing the risk that funds will be unable to meet their redemption obligations and mitigating dilution of the interests of fund shareholders.
The Funds have adopted and implemented a liquidity risk management program pursuant to the Liquidity Rule (the Program) effective December 1, 2018. The Program is reasonably designed to assess and manage each Fund’s liquidity risk and to comply with the requirements of the Liquidity Rule. Each Fund’s Board of Trustees (the Board) has designated each Fund’s investment adviser as administrator of the Program. The Fidelity advisers have established a Liquidity Risk Management Committee (the LRM Committee) to manage the Program for each of the Fidelity Funds. The LRM Committee monitors the adequacy and effectiveness of implementation of the Program and on a periodic basis assesses each Fund’s liquidity risk based on a variety of factors including (1) the Fund’s investment strategy, (2) portfolio liquidity and cash flow projections during normal and reasonably foreseeable stressed conditions, (3) shareholder redemptions, (4) borrowings and other funding sources and (5) in the case of exchange-traded funds, certain additional factors including the effect of the Fund’s prices and spreads, market participants, and basket compositions on the overall liquidity of the Fund’s portfolio, as applicable.
In accordance with the Program, each of the Fund’s portfolio investments is classified into one of four liquidity categories described below based on a determination of a reasonable expectation for how long it would take to convert the investment to cash (or sell or dispose of the investment) without significantly changing its market value.
- Highly liquid investments – cash or convertible to cash within three business days or less
- Moderately liquid investments – convertible to cash in three to seven calendar days
- Less liquid investments – can be sold or disposed of, but not settled, within seven calendar days
- Illiquid investments – cannot not be sold or disposed of within seven calendar days
Liquidity classification determinations take into account a variety of factors including various market, trading and investment-specific considerations, as well as market depth, and generally utilize analysis from a third-party liquidity metrics service.
The Liquidity Rule places a 15% limit on a fund’s illiquid investments and requires funds that do not primarily hold assets that are highly liquid investments to determine and maintain a minimum percentage of the fund’s net assets to be invested in highly liquid investments (highly liquid investment minimum or HLIM). The Program includes provisions reasonably designed to comply with the 15% limit on illiquid investments and for determining, periodically reviewing and complying with the HLIM requirement as applicable.
At a recent meeting of the Fund’s Board of Trustees, the LRM Committee provided a written report to the Board pertaining to the operation, adequacy, and effectiveness of implementation of the Program for the annual period from December 1, 2018 through November 30, 2019. The report concluded that the Program has been implemented and is operating effectively and is reasonably designed to assess and manage the Fund’s liquidity risk.
SELTEC-ANN-0420
1.813669.115
Fidelity® Select Portfolios®
Materials Sector
Chemicals Portfolio
Gold Portfolio
Materials Portfolio
February 29, 2020
Includes Fidelity and Fidelity Advisor share classes
See the inside front cover for important information about access to your fund’s shareholder reports.
Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of a fund’s shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports from the fund or from your financial intermediary, such as a financial advisor, broker-dealer or bank. Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from a fund electronically, by contacting your financial intermediary. For Fidelity customers, visit Fidelity's web site or call Fidelity using the contact information listed below.
You may elect to receive all future reports in paper free of charge. If you wish to continue receiving paper copies of your shareholder reports, you may contact your financial intermediary or, if you are a Fidelity customer, visit Fidelity’s website, or call Fidelity at the applicable toll-free number listed below. Your election to receive reports in paper will apply to all funds held with the fund complex/your financial intermediary.
| Account Type | Website | Phone Number |
| Brokerage, Mutual Fund, or Annuity Contracts: | fidelity.com/mailpreferences | 1-800-343-3548 |
| Employer Provided Retirement Accounts: | netbenefits.fidelity.com/preferences (choose 'no' under Required Disclosures to continue to print) | 1-800-343-0860 |
| Advisor Sold Accounts Serviced Through Your Financial Intermediary: | Contact Your Financial Intermediary | Your Financial Intermediary's phone number |
| Advisor Sold Accounts Serviced by Fidelity: | institutional.fidelity.com | 1-877-208-0098 |
Contents
|
Chemicals Portfolio | |
|
Gold Portfolio | |
|
Materials Portfolio | |
|
Board Approval of Investment Advisory Contracts and Management Fees | |
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov.
You may also call 1-800-544-8544 if you’re an individual investing directly with Fidelity, call 1-800-835-5092 if you’re a plan sponsor or participant with Fidelity as your recordkeeper or call 1-877-208-0098 on institutional accounts or if you’re an advisor or invest through one to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third-party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company. © 2020 FMR LLC. All rights reserved.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the Funds. This report is not authorized for distribution to prospective investors in the Funds unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-PORT. Forms N-PORT are available on the SEC’s web site at http://www.sec.gov. A fund's Forms N-PORT may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330.
For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com, http://www.institutional.fidelity.com, or http://www.401k.com, as applicable.
NOT FDIC INSURED •MAY LOSE VALUE •NO BANK GUARANTEE
Neither the Funds nor Fidelity Distributors Corporation is a bank.
Note to shareholders:
(No Action is Required by You)
As part of a regular review of its organizational structure, Fidelity has decided to merge certain entities to streamline operations, increase efficiency, simplify reporting, and reduce legal, compliance, and accounting complexity and costs. In separate events, Fidelity has merged four of its investment advisers and two of its broker-dealers.
Effective on or about January 1, 2020, following any required regulatory notices and approvals:
Investment advisers Fidelity Investments Money Management, Inc., FMR Co., Inc., and Fidelity SelectCo, LLC, merged with and into Fidelity Management & Research Company. In connection with the merger transactions, the resulting, merged investment adviser was then redomiciled from Massachusetts to Delaware, changed its corporate structure from a corporation to a limited liability company, and changed its name to “Fidelity Management & Research Company LLC”.
Broker-dealer Fidelity Distributors Corporation merged with and into Fidelity Investments Institutional Services Company, Inc. (“FIISC”). FIISC was then redomiciled from Massachusetts to Delaware, changed its corporate structure from a corporation to a limited liability company, and changed its name to “Fidelity Distributors Company LLC”.
These mergers are not expected to affect fund shareholders or Fidelity clients, nor are they expected to result in any changes to the day-to-day management of Fidelity’s brokerage services, the Fidelity funds, their investment policies and practices, their portfolio management teams, or the funds’ expenses.
Early in 2020, the outbreak and spread of a new coronavirus emerged as a public health emergency that had a major influence on financial markets, primarily based on its impact on the global economy and corporate earnings. The virus causes a respiratory disease known as COVID-19. On March 11, the World Health Organization declared the COVID-19 outbreak a pandemic, citing sustained risk of further global spread.
In the weeks following the end of this reporting period, as the crisis worsened, we witnessed an escalating human tragedy with wide-scale social and economic consequences from coronavirus-containment measures. The outbreak of COVID-19 prompted a number of measures to limit the spread, including travel and border restrictions, quarantines, and restrictions on large gatherings. In turn, these resulted in lower consumer activity, diminished demand for a wide range of products and services, disruption in manufacturing and supply chains, and – given the wide variability in outcomes regarding the outbreak – significant market uncertainty and volatility. Amid the turmoil, the U.S. government took unprecedented action – in concert with the U.S. Federal Reserve and central banks around the world – to help support consumers, businesses, and the broader economy, and to limit disruption to the financial system.
The situation continues to unfold, and the extent and duration of its impact on financial markets and the economy remain highly uncertain. Extreme events such as the coronavirus crisis are “exogenous shocks” that can have significant adverse effects on mutual funds and their investments. Although multiple asset classes may be affected by market disruption, the duration and impact may not be the same for all types of assets.
Fidelity is committed to helping you stay informed amid news about COVID-19 and during increased market volatility, and we’re taking extra steps to be responsive to customer needs. We encourage you to visit our websites, where we offer ongoing updates, commentary, and analysis on the markets and our funds.
Chemicals Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The hypothetical investment and the average annual total returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund’s total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
| For the periods ended February 29, 2020 | Past 1 year | Past 5 years | Past 10 years |
| Chemicals Portfolio | (17.63)% | 0.11% | 9.27% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Chemicals Portfolio on February 28, 2010.
The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
| Period Ending Values | ||
|
| $24,262 | Chemicals Portfolio |
|
| $32,918 | S&P 500® Index |
Chemicals Portfolio
Management's Discussion of Fund Performance
Market Recap: U.S. stocks stalled to begin the new year and declined in late February, as the outbreak and spread of the new coronavirus threatened to hamper global economic growth and corporate earnings. For the 12 months ending February 29, 2020, the U.S. equity bellwether S&P 500® index gained 8.19%. The period began with equities rising amid upbeat company earnings and signs the U.S. Federal Reserve may pause on rates. The uptrend extended until May, when the index dipped as trade talks between the U.S. and China broke down. The bull market roared back to record a series of highs in July, when the Fed cut interest rates for the first time since 2008. Volatility intensified in August, as the Treasury yield curve inverted, which some investors viewed as a sign the U.S. economy could be heading for recession. But the market proved resilient, hitting a new high on October 30, when the Fed lowered rates for the third time in 2019, and moving higher through December 31. Following a roughly flat January, stocks sank in late February, after a surge in coronavirus cases outside China created considerable uncertainty and pushed investors to safer asset classes. By sector, information technology (+27%) led the way by a wide margin, followed by utilities and communication services (+13% each). In contrast, energy (-25%) was by far the weakest category, struggling due to sluggish oil prices. Other notable laggards included materials and industrials (-2% each). Comments from Co-Managers Rick Malnight and David Wagner: For the fiscal year, the fund returned -17.63%, considerably behind the -7.84% result of the MSCI U.S. IMI Chemicals 25/50 Index, and also trailing the S&P 500® index. Most of the fund’s underperformance of the MSCI index occurred in the first half of the reporting period, as the decision to position the fund for a low-growth but still-expanding global economy was out of step with the market. Versus the MSCI industry index, security selection in diversified chemicals, commodity chemicals and specialty chemicals companies detracted significantly, with overweightings in the first two categories also weighing on relative performance. Among individual holdings, a large overweighting in titanium dioxide (TiO2) producer Chemours (-59%) detracted the most by a wide margin. A larger-than-index stake in Tronox Holdings was another TiO2 producer that hurt the fund’s relative result. The fund’s overweight stake in Olin (-36%), a supplier of polyvinyl chloride (PVC) and caustic soda, also significantly detracted the past 12 months. Underweighting the strong-performing shares of Ecolab (+8%) further weighed on the fund’s relative result. Conversely, picks in the metal & glass containers segment of the industry aided the fund’s relative performance a bit. At an individual stock level, overweighting Air Products & Chemicals (+24%), a provider of industrial gases, bolstered our relative result. Mostly avoiding index constituent Albemarle (-9%), a lithium producer, also paid off. Avoiding or underweighting a number of small-cap stocks in the MSCI index that performed poorly further worked in our favor. This included Kraton (-72%), Rayonier Advanced Materials (-82%) and Advansix (-56%).The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Note to shareholders: On August 1, 2019, David Wagner assumed co-management responsibilities for the fund, joining Rick Malnight. Rick plans to retire from the firm on June 30, 2020, at which time David will assume sole management of the fund.Chemicals Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 29, 2020
| % of fund's net assets | |
| Linde PLC | 21.3 |
| Air Products & Chemicals, Inc. | 11.5 |
| Ecolab, Inc. | 10.0 |
| Sherwin-Williams Co. | 5.6 |
| DuPont de Nemours, Inc. | 4.6 |
| International Flavors & Fragrances, Inc. | 3.5 |
| PPG Industries, Inc. | 3.4 |
| Corteva, Inc. | 3.3 |
| FMC Corp. | 3.1 |
| RPM International, Inc. | 2.8 |
| 69.1 |
Top Industries (% of fund's net assets)
| As of February 29, 2020 | ||
| Chemicals | 97.9% | |
| All Others* | 2.1% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
Chemicals Portfolio
Schedule of Investments February 29, 2020
Showing Percentage of Net Assets
| Common Stocks - 97.9% | |||
| Shares | Value | ||
| Chemicals - 97.9% | |||
| Commodity Chemicals - 9.9% | |||
| Dow, Inc. | 241,800 | $9,771,138 | |
| LyondellBasell Industries NV Class A | 93,600 | 6,688,656 | |
| Olin Corp. | 1,127,540 | 18,254,873 | |
| Orion Engineered Carbons SA | 790,726 | 11,236,216 | |
| Tronox Holdings PLC | 1,111,069 | 8,155,246 | |
| Westlake Chemical Corp. | 192,556 | 10,758,104 | |
| 64,864,233 | |||
| Diversified Chemicals - 3.5% | |||
| Eastman Chemical Co. | 93,800 | 5,769,638 | |
| Huntsman Corp. | 333,100 | 6,308,914 | |
| The Chemours Co. LLC (a) | 732,359 | 10,882,855 | |
| 22,961,407 | |||
| Fertilizers & Agricultural Chemicals - 9.1% | |||
| CF Industries Holdings, Inc. | 319,117 | 11,762,653 | |
| Corteva, Inc. | 787,593 | 21,422,530 | |
| FMC Corp. | 219,616 | 20,446,250 | |
| The Mosaic Co. | 343,900 | 5,856,617 | |
| 59,488,050 | |||
| Industrial Gases - 32.8% | |||
| Air Products & Chemicals, Inc. | 342,211 | 75,152,958 | |
| Linde PLC (a) | 732,516 | 139,917,879 | |
| 215,070,837 | |||
| Specialty Chemicals - 42.6% | |||
| Albemarle Corp. U.S. (a) | 155,600 | 12,735,860 | |
| Celanese Corp. Class A | 103,600 | 9,711,464 | |
| DuPont de Nemours, Inc. | 703,593 | 30,184,140 | |
| Ecolab, Inc. | 363,800 | 65,647,710 | |
| Element Solutions, Inc. (b) | 1,659,043 | 17,237,457 | |
| Innospec, Inc. | 191,000 | 16,529,140 | |
| International Flavors & Fragrances, Inc. (a) | 191,100 | 22,889,958 | |
| Livent Corp. (a)(b) | 1,124,300 | 10,039,999 | |
| PPG Industries, Inc. | 211,200 | 22,059,840 | |
| Quaker Chemical Corp. (a) | 111,300 | 17,537,541 | |
| RPM International, Inc. | 286,100 | 18,341,871 | |
| Sherwin-Williams Co. | 71,833 | 37,119,703 | |
| 280,034,683 | |||
| TOTAL COMMON STOCKS | |||
| (Cost $594,795,601) | 642,419,210 | ||
| Money Market Funds - 14.0% | |||
| Fidelity Securities Lending Cash Central Fund 1.60% (c)(d) | |||
| (Cost $91,905,879) | 91,896,690 | 91,905,879 | |
| TOTAL INVESTMENT IN SECURITIES - 111.9% | |||
| (Cost $686,701,480) | 734,325,089 | ||
| NET OTHER ASSETS (LIABILITIES) - (11.9)% | (77,883,887) | ||
| NET ASSETS - 100% | $656,441,202 |
Legend
(a) Security or a portion of the security is on loan at period end.
(b) Non-income producing
(c) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request.
(d) Investment made with cash collateral received from securities on loan.
Affiliated Central Funds
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:
| Fund | Income earned |
| Fidelity Cash Central Fund | $86,892 |
| Fidelity Securities Lending Cash Central Fund | 82,040 |
| Total | $168,932 |
Amounts in the income column in the above table include any capital gain distributions from underlying funds, which are presented in the corresponding line-item in the Statement of Operations, if applicable. Amount for Fidelity Securities Lending Cash Central Fund represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities.
Investment Valuation
All investments are categorized as Level 1 under the Fair Value Hierarchy. 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 please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.
Other Information
Distribution of investments by country or territory of incorporation, as a percentage of Total Net Assets, is as follows (Unaudited):
| United States of America | 74.7% |
| Ireland | 21.3% |
| Luxembourg | 1.7% |
| United Kingdom | 1.3% |
| Netherlands | 1.0% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Chemicals Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2020 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $89,027,712) — See accompanying schedule: Unaffiliated issuers (cost $594,795,601) | $642,419,210 | |
| Fidelity Central Funds (cost $91,905,879) | 91,905,879 | |
| Total Investment in Securities (cost $686,701,480) | $734,325,089 | |
| Receivable for investments sold | 25,356,864 | |
| Receivable for fund shares sold | 710,426 | |
| Dividends receivable | 1,705,435 | |
| Distributions receivable from Fidelity Central Funds | 23,074 | |
| Prepaid expenses | 12,121 | |
| Other receivables | 126,172 | |
| Total assets | 762,259,181 | |
| Liabilities | ||
| Payable to custodian bank | $1,843,887 | |
| Payable for investments purchased | 6,820,011 | |
| Payable for fund shares redeemed | 4,605,144 | |
| Accrued management fee | 335,045 | |
| Other affiliated payables | 154,030 | |
| Other payables and accrued expenses | 159,400 | |
| Collateral on securities loaned | 91,900,462 | |
| Total liabilities | 105,817,979 | |
| Net Assets | $656,441,202 | |
| Net Assets consist of: | ||
| Paid in capital | $650,161,453 | |
| Total accumulated earnings (loss) | 6,279,749 | |
| Net Assets | $656,441,202 | |
| Net Asset Value, offering price and redemption price per share ($656,441,202 ÷ 62,672,808 shares) | $10.47 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 29, 2020 | ||
| Investment Income | ||
| Dividends | $18,538,757 | |
| Income from Fidelity Central Funds (including $82,040 from security lending) | 168,932 | |
| Total income | 18,707,689 | |
| Expenses | ||
| Management fee | $5,038,923 | |
| Transfer agent fees | 1,912,467 | |
| Accounting and security lending fees | 316,500 | |
| Custodian fees and expenses | 15,156 | |
| Independent trustees' fees and expenses | 5,390 | |
| Registration fees | 33,269 | |
| Audit | 47,832 | |
| Legal | 2,375 | |
| Interest | 5,268 | |
| Miscellaneous | 10,197 | |
| Total expenses before reductions | 7,387,377 | |
| Expense reductions | (101,459) | |
| Total expenses after reductions | 7,285,918 | |
| Net investment income (loss) | 11,421,771 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | (16,249,854) | |
| Fidelity Central Funds | 5,418 | |
| Foreign currency transactions | 58,013 | |
| Total net realized gain (loss) | (16,186,423) | |
| Change in net unrealized appreciation (depreciation) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | (153,942,747) | |
| Assets and liabilities in foreign currencies | (9,747) | |
| Total change in net unrealized appreciation (depreciation) | (153,952,494) | |
| Net gain (loss) | (170,138,917) | |
| Net increase (decrease) in net assets resulting from operations | $(158,717,146) |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 29, 2020 | Year ended February 28, 2019 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $11,421,771 | $21,659,821 |
| Net realized gain (loss) | (16,186,423) | 93,669,306 |
| Change in net unrealized appreciation (depreciation) | (153,952,494) | (285,174,370) |
| Net increase (decrease) in net assets resulting from operations | (158,717,146) | (169,845,243) |
| Distributions to shareholders | (64,898,786) | (172,397,316) |
| Share transactions | ||
| Proceeds from sales of shares | 51,439,480 | 142,345,479 |
| Reinvestment of distributions | 61,546,519 | 163,460,684 |
| Cost of shares redeemed | (386,307,907) | (600,405,301) |
| Net increase (decrease) in net assets resulting from share transactions | (273,321,908) | (294,599,138) |
| Total increase (decrease) in net assets | (496,937,840) | (636,841,697) |
| Net Assets | ||
| Beginning of period | 1,153,379,042 | 1,790,220,739 |
| End of period | $656,441,202 | $1,153,379,042 |
| Other Information | ||
| Shares(a) | ||
| Sold | 4,140,804 | 9,180,276 |
| Issued in reinvestment of distributions | 4,713,661 | 11,635,665 |
| Redeemed | (31,186,535) | (39,027,003) |
| Net increase (decrease) | (22,332,070) | (18,211,062) |
(a) Share activity prior to August 10, 2018 has been adjusted to reflect the impact of the 10 for 1 share split that occurred on that date.
See accompanying notes which are an integral part of the financial statements.
Financial Highlights
Chemicals Portfolio
| Years ended February 28, | 2020 A | 2019 B | 2018 B | 2017 B | 2016 A,B |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $13.57 | $17.34 | $16.24 | $12.32 | $15.33 |
| Income from Investment Operations | |||||
| Net investment income (loss)C | .15 | .23 | .19 | .18 | .19 |
| Net realized and unrealized gain (loss) | (2.39) | (2.17) | 2.36 | 4.44 | (2.34) |
| Total from investment operations | (2.24) | (1.94) | 2.55 | 4.62 | (2.15) |
| Distributions from net investment income | (.20) | (.21) | (.16) | (.17) | (.18) |
| Distributions from net realized gain | (.66) | (1.62) | (1.29) | (.53) | (.68) |
| Total distributions | (.86) | (1.83) | (1.45) | (.70) | (.86) |
| Redemption fees added to paid in capitalC | – | – | – | –D | –D |
| Net asset value, end of period | $10.47 | $13.57 | $17.34 | $16.24 | $12.32 |
| Total ReturnE | (17.63)% | (11.10)% | 16.31% | 38.02% | (14.46)% |
| Ratios to Average Net AssetsF,G | |||||
| Expenses before reductions | .78% | .77% | .77% | .80% | .80% |
| Expenses net of fee waivers, if any | .78% | .77% | .77% | .80% | .80% |
| Expenses net of all reductions | .77% | .76% | .77% | .79% | .79% |
| Net investment income (loss) | 1.21% | 1.50% | 1.12% | 1.26% | 1.36% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $656,441 | $1,153,379 | $1,790,221 | $1,626,642 | $1,046,827 |
| Portfolio turnover rateH | 77% | 62% | 62% | 85% | 79% |
A For the year ended February 29.
B Per share amounts have been adjusted to reflect the impact of the 10 for 1 share split that occurred on August 10, 2018.
C Calculated based on average shares outstanding during the period.
D Amount represents less than $.005 per share.
E Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
H Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the financial statements.
Notes to Financial Statements
For the period ended February 29, 2020
1. Organization.
Chemicals Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the Trust) and is authorized to issue an unlimited number of shares. Share transactions on the Statement of Changes in Net Assets may contain exchanges between affiliated funds. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries.
Effective August 10, 2018, Chemicals Portfolio underwent a 10 for 1 share split. The effect of the share split transaction was to multiply the number of outstanding shares of Chemicals Portfolio by a split factor of 10:1, with a corresponding decrease in net asset value (NAV) per share. This event does not impact the overall net assets of Chemicals Portfolio. The per share data presented in the Financial Highlights and Share activity presented in the Statements of Changes in Net Assets for Chemicals Portfolio have been retroactively adjusted to reflect this share split.
Effective January 1, 2020:
Investment advisers Fidelity Investments Money Management, Inc., FMR Co., Inc., and Fidelity SelectCo, LLC, merged with and into Fidelity Management & Research Company. In connection with the merger transactions, the resulting, merged investment adviser was then redomiciled from Massachusetts to Delaware, changed its corporate structure from a corporation to a limited liability company, and changed its name to "Fidelity Management & Research Company LLC".
Fidelity Investments Institutional Operations Company, Inc. converted from a Massachusetts corporation to a Massachusetts LLC, and changed its name to "Fidelity Investments Institutional Operations Company LLC".
2. Investments in Fidelity Central Funds.
The Fund invests in Fidelity Central Funds, which are open-end investment companies generally available only to other investment companies and accounts managed by the investment adviser and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by the investment adviser. Annualized expenses of the Money Market Central Funds as of their most recent shareholder report date ranged from less than .005% to .01%.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) website at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC website or upon request.
3. Significant Accounting Policies.
The Fund is an investment company and applies the accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946 Financial Services – Investments Companies. The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:
Investment Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Board of Trustees (the Board) has delegated the day to day responsibility for the valuation of the Fund's investments to the Fair Value Committee (the Committee) established by the Fund's investment adviser. In accordance with valuation policies and procedures approved by the Board, the Fund attempts to obtain prices from one or more third party pricing vendors or brokers to value its investments. When current market prices, quotations or currency exchange rates are not readily available or reliable, investments will be fair valued in good faith by the Committee, in accordance with procedures adopted by the Board. Factors used in determining fair value vary by investment type and may include market or investment specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The Committee oversees the Fund's valuation policies and procedures and reports to the Board on the Committee's activities and fair value determinations. The Board monitors the appropriateness of the procedures used in valuing the Fund's investments and ratifies the fair value determinations of the Committee.
The Fund categorizes the inputs to valuation techniques used to 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)
Valuation techniques used to value the Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by a third party pricing vendor on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-Traded Funds (ETFs) and certain indexes as well as quoted prices for similar securities may be used and would be categorized as Level 2 in the hierarchy. For equity securities, including restricted 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.
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value (NAV) each business day and are categorized as Level 1 in the hierarchy.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy.
Foreign Currency. The Fund may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rates at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and include proceeds received from litigation. Dividend income is recorded 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. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Income and capital gain distributions from Fidelity Central Funds, if any, are recorded on the ex-dividend date. Certain distributions received by the Fund represent a return of capital or capital gain. The Fund determines the components of these distributions subsequent to the ex-dividend date, based upon receipt of tax filings or other correspondence relating to the underlying investment. These distributions are recorded as a reduction of cost of investments and/or as a realized gain. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Deferred Trustee Compensation. Under a Deferred Compensation Plan (the Plan) for the Fund, certain independent Trustees have elected to defer receipt of a portion of their annual compensation. Deferred amounts are invested in a cross-section of Fidelity funds, are marked-to-market and remain in the Fund until distributed in accordance with the Plan. The investment of deferred amounts and the offsetting payable to the Trustees of $122,113 are included in the accompanying Statement of Assets and Liabilities in other receivables and other payables and accrued expenses, respectively.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for U.S. Federal income taxes is required. As of February 29, 2020, the Fund did not have any unrecognized tax benefits in the financial statements; nor is the Fund aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. The Fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are declared and recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. In addition, the Fund claimed a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Capital accounts are not adjusted for temporary book-tax differences which will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, partnerships, deferred trustees compensation and losses deferred due to wash sales and excise tax regulations.
As of period end, the cost and unrealized appreciation (depreciation) in securities, and derivatives if applicable, for federal income tax purposes were as follows:
| Gross unrealized appreciation | $90,372,073 |
| Gross unrealized depreciation | (45,726,281) |
| Net unrealized appreciation (depreciation) | $44,645,792 |
| Tax Cost | $689,679,297 |
The tax-based components of distributable earnings as of period end were as follows:
| Net unrealized appreciation (depreciation) on securities and other investments | $44,621,890 |
The Fund intends to elect to defer to its next fiscal year $38,220,028 of capital losses recognized during the period November 1, 2019 to February 29, 2020.
The tax character of distributions paid was as follows:
| February 29, 2020 | February 28, 2019 | |
| Ordinary Income | $13,950,855 | $ 18,521,629 |
| Long-term Capital Gains | 50,947,931 | 153,875,687 |
| Total | $64,898,786 | $ 172,397,316 |
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, are noted in the table below.
| Purchases ($) | Sales ($) | |
| Chemicals Portfolio | 708,685,821 | 1,040,070,094 |
5. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity Management & Research Company LLC (the investment adviser) and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and an annualized group fee rate that averaged .24% during the period. The group fee rate is based upon the monthly average net assets of a group of registered investment companies with which the investment adviser has management contracts. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the reporting period, the total annual management fee rate was .53% of the Fund's average net assets.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company LLC (FIIOC), an affiliate of the investment adviser, is the Fund's transfer, dividend disbursing and shareholder servicing agent. FIIOC receives account fees and asset-based fees that vary according to account size and type of account. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, the transfer agent fees were equivalent to an annual rate of .20% of average net assets.
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of the investment adviser, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for each month. Prior to April 1, 2019, FSC had a separate agreement with the Fund for administration of the security lending program, based on the number and duration of lending transactions. For the period, the total fees paid for accounting and administration of securities lending were equivalent to the following annual rates:
| % of Average Net Assets | |
| Chemicals Portfolio | .03 |
Brokerage Commissions. A portion of portfolio transactions were placed with brokerage firms which are affiliates of the investment adviser. Brokerage commissions are included in net realized gain (loss) and change in net unrealized appreciation (depreciation) in the Statement of Operations. The commissions paid to these affiliated firms were as follows:
| Amount | |
| Chemicals Portfolio | $33,476 |
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the fund, along with other registered investment companies having management contracts with Fidelity Management & Research Company LLC (FMR), or other affiliated entities of FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the fund to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. Activity in this program during the period for which loans were outstanding was as follows:
| Borrower or Lender | Average Loan Balance | Weighted Average Interest Rate | Interest Expense | |
| Chemicals Portfolio | Borrower | $3,926,727 | 2.20% | $5,268 |
Interfund Trades. Funds may purchase from or sell securities to other Fidelity Funds under procedures adopted by the Board. The procedures have been designed to ensure these interfund trades are executed in accordance with Rule 17a-7 of the 1940 Act. Interfund trades are included within the respective purchases and sales amounts shown in the Purchases and Sales of Investments note.
6. Committed Line of Credit.
Certain Funds participate with other funds managed by the investment adviser or an affiliate in a $4.25 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The participating funds have agreed to pay commitment fees on their pro-rata portion of the line of credit, which are reflected in Miscellaneous expenses on the Statement of Operations, and are as follows:
| Amount | |
| Chemicals Portfolio | $2,580 |
During the period, there were no borrowings on this line of credit.
7. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. For equity securities, lending agents are used, including National Financial Services (NFS), an affiliate of the Fund. Pursuant to a securities lending agreement, NFS will receive a fee, which is capped at 9.9% of daily lending revenue, for its services as lending agent. The Fund may lend securities to certain qualified borrowers, including NFS. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. The Fund or borrower may terminate the loan at any time, and if the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, the Fund may apply collateral received from the borrower against the obligation. The Fund may experience delays and costs in recovering the securities loaned. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Total fees paid by the Fund to NFS, as lending agent, amounted to $6,180. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. During the period, there were no securities loaned to NFS.
8. Expense Reductions.
Commissions paid to certain brokers with whom the investment adviser, or its affiliates, places trades on behalf of the Fund include an amount in addition to trade execution, which may be rebated back to the Fund to offset certain expenses. This amount totaled $95,388 for the period.
In addition, during the period the investment adviser or an affiliate reimbursed and/or waived a portion of operating expenses in the amount of $6,071.
9. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
10. Coronavirus (COVID-19) Pandemic.
An outbreak of COVID-19 first detected in China during December 2019 has since spread globally and was declared a pandemic by the World Health Organization during March 2020. Developments that disrupt global economies and financial markets, such as the COVID-19 pandemic, may magnify factors that affect the Fund's performance.
Gold Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The hypothetical investment and the average annual total returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund’s total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
| For the periods ended February 29, 2020 | Past 1 year | Past 5 years | Past 10 years |
| Class A (incl. 5.75% sales charge) | 10.49% | 3.19% | (4.98)% |
| Class M (incl. 3.50% sales charge) | 12.75% | 3.37% | (5.03)% |
| Class C (incl. contingent deferred sales charge) | 15.42% | 3.70% | (5.10)% |
| Gold Portfolio | 17.60% | 4.74% | (4.14)% |
| Class I | 17.60% | 4.76% | (4.10)% |
| Class Z | 17.75% | 4.80% | (4.08)% |
Class C shares' contingent deferred sales charges included in the past one year, past five years and past ten years total return figures are 1%, 0% and 0%, respectively.
The initial offering of Class Z shares took place on October 2, 2018. Returns prior to October 2, 2018, are those of Class I.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Gold Portfolio, a class of the fund, on February 28, 2010.
The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
| Period Ending Values | ||
|
| $6,551 | Gold Portfolio |
|
| $32,918 | S&P 500® Index |
Gold Portfolio
Management's Discussion of Fund Performance
Market Recap: U.S. stocks stalled to begin the new year and declined in late February, as the outbreak and spread of the new coronavirus threatened to hamper global economic growth and corporate earnings. For the 12 months ending February 29, 2020, the U.S. equity bellwether S&P 500® index gained 8.19%. The period began with equities rising amid upbeat company earnings and signs the U.S. Federal Reserve may pause on rates. The uptrend extended until May, when the index dipped as trade talks between the U.S. and China broke down. The bull market roared back to record a series of highs in July, when the Fed cut interest rates for the first time since 2008. Volatility intensified in August, as the Treasury yield curve inverted, which some investors viewed as a sign the U.S. economy could be heading for recession. But the market proved resilient, hitting a new high on October 30, when the Fed lowered rates for the third time in 2019, and moving higher through December 31. Following a roughly flat January, stocks sank in late February, after a surge in coronavirus cases outside China created considerable uncertainty and pushed investors to safer asset classes. By sector, information technology (+27%) led the way by a wide margin, followed by utilities and communication services (+13% each). In contrast, energy (-25%) was by far the weakest category, struggling due to sluggish oil prices. Other notable laggards included materials and industrials (-2% each). Comments from Portfolio Manager Steven Calhoun: For the fiscal year, the fund’s share classes (excluding sales charges, if applicable) gained roughly 16% to 18%, trailing the 24.32% advance of the S&P® Global BMI Gold Capped Index 20/45 Linked Index, but handily outperforming the broad-based S&P 500® index. The fund’s underperformance of the S&P gold index the past 12 months was due to unfavorable security selection. The fund’s largest individual relative detractor was an overweighted position in OceanaGold (-55%). An out-of-index position in Gold Standard Ventures (-47%) also hurt, as did not owning index constituent Kinross Gold (+51%). Currency movement had negligible influence on the fund’s performance, while a strong U.S. dollar had a negative impact. Conversely, non-index exposure to the precious metals & mining category added value relative to the sector index. Here, establishing positions in Impala Platinum Holdings (+25%) and SilverCrest Metals (+85%) made them notable relative contributors. The fund’s biggest individual relative contributors were not owning index components St. Barbara (-50%) and SEMAFO (-92%). A cash position of 1% of assets, on average, also detracted in an uptrending market for gold bullion and gold stocks.The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Note to shareholders: On March 30, 2019, Joe Wickwire retired from Fidelity, leaving Steven Calhoun as sole portfolio manager.Gold Portfolio
Consolidated Investment Summary (Unaudited)
The information in the following tables is based on the consolidated investments of the Fund.Top Ten Holdings as of February 29, 2020
| (excluding repurchase agreements) | % of fund's net assets |
| Newmont Corp. | 17.0 |
| Barrick Gold Corp. (Canada) | 16.1 |
| Franco-Nevada Corp. | 9.2 |
| Agnico Eagle Mines Ltd. (Canada) | 5.7 |
| Northern Star Resources Ltd. | 4.5 |
| AngloGold Ashanti Ltd. | 4.4 |
| Gold Fields Ltd. | 3.6 |
| Yamana Gold, Inc. | 3.2 |
| Sibanye Stillwater Ltd. | 2.8 |
| Alamos Gold, Inc. | 2.4 |
| 68.9 |
Top Industries (% of fund's net assets)
| As of February 29, 2020 | ||
| Gold | 90.8% | |
| Silver | 4.8% | |
| Precious Metals & Minerals | 1.9% | |
| Diversified Metals & Mining | 1.5% | |
| All Others** | 0.4% | |
* Includes gold bullion and/or silver bullion.
** Includes Short-Term investments and Net Other Assets (Liabilities).
Geographic Diversification (% of fund's net assets)
| As of February 29, 2020 | ||
| Canada | 59.6% | |
| United States of America* | 20.1% | |
| South Africa | 11.5% | |
| Australia | 8.8% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
Percentages are based on country or territory of incorporation and are adjusted for the effect of futures contracts, if applicable.
Gold Portfolio
Consolidated Schedule of Investments February 29, 2020
Showing Percentage of Net Assets
| Common Stocks - 99.0% | |||
| Shares | Value | ||
| Australia - 8.8% | |||
| Metals & Mining - 8.8% | |||
| Gold - 8.8% | |||
| Gold Road Resources Ltd. (a) | 15,813,386 | $14,937,364 | |
| Newcrest Mining Ltd. | 2,057,335 | 35,248,598 | |
| Northern Star Resources Ltd. | 8,488,713 | 74,433,424 | |
| Resolute Mng Ltd. (a) | 30,000,000 | 19,934,370 | |
| 144,553,756 | |||
| Canada - 59.6% | |||
| Metals & Mining - 59.6% | |||
| Diversified Metals & Mining - 1.5% | |||
| New Pacific Holdings Corp. (a)(b) | 2,000,000 | 8,061,091 | |
| Orla Mining Ltd. (a)(b)(c) | 10,000,000 | 17,284,411 | |
| 25,345,502 | |||
| Gold - 52.1% | |||
| Agnico Eagle Mines Ltd. (Canada) | 1,957,001 | 92,860,044 | |
| Alamos Gold, Inc. | 6,688,812 | 38,919,443 | |
| B2Gold Corp. | 9,199,293 | 36,735,489 | |
| Barrick Gold Corp. (Canada) | 13,794,195 | 263,089,135 | |
| Franco-Nevada Corp. | 1,409,331 | 151,301,618 | |
| Gold Standard Ventures Corp. (a)(b)(c) | 20,814,591 | 12,871,008 | |
| Kirkland Lake Gold Ltd. | 960,780 | 30,986,900 | |
| Lundin Gold, Inc. (a)(b) | 3,000,000 | 23,222,202 | |
| Novagold Resources, Inc. (a) | 1,870,700 | 14,842,954 | |
| OceanaGold Corp. | 9,428,932 | 13,768,454 | |
| Osisko Gold Royalties Ltd. | 3,000,000 | 24,652,636 | |
| Pretium Resources, Inc. (a) | 3,514,783 | 25,007,396 | |
| Pretium Resources, Inc. (a)(d) | 225,000 | 1,600,857 | |
| Seabridge Gold, Inc. (a)(b) | 1,678,210 | 16,528,915 | |
| SSR Mining, Inc. (a) | 2,359,900 | 36,921,512 | |
| Torex Gold Resources, Inc. (a) | 1,405,000 | 18,611,213 | |
| Yamana Gold, Inc. | 13,596,200 | 52,976,812 | |
| 854,896,588 | |||
| Precious Metals & Minerals - 1.2% | |||
| SilverCrest Metals, Inc. (a) | 3,000,000 | 19,243,807 | |
| Silver - 4.8% | |||
| First Majestic Silver Corp. (a) | 2,000,000 | 15,094,058 | |
| MAG Silver Corp. (a) | 1,710,801 | 14,504,686 | |
| Pan American Silver Corp. | 800,000 | 15,840,000 | |
| Wheaton Precious Metals Corp. | 1,157,400 | 32,913,360 | |
| 78,352,104 | |||
| TOTAL METALS & MINING | 977,838,001 | ||
| South Africa - 11.5% | |||
| Metals & Mining - 11.5% | |||
| Gold - 10.8% | |||
| AngloGold Ashanti Ltd. | 4,048,871 | 72,103,341 | |
| Gold Fields Ltd. | 9,729,700 | 59,173,936 | |
| Sibanye Stillwater Ltd. (a) | 21,935,700 | 45,047,575 | |
| 176,324,852 | |||
| Precious Metals & Minerals - 0.7% | |||
| Impala Platinum Holdings Ltd. | 1,381,806 | 11,231,560 | |
| TOTAL METALS & MINING | 187,556,412 | ||
| United States of America - 19.1% | |||
| Metals & Mining - 19.1% | |||
| Gold - 19.1% | |||
| Newmont Corp. | 6,260,681 | 279,414,195 | |
| Royal Gold, Inc. | 350,667 | 33,828,845 | |
| 313,243,040 | |||
| TOTAL COMMON STOCKS | |||
| (Cost $1,176,458,484) | 1,623,191,209 | ||
| Troy Ounces | |||
| Commodities - 0.6% | |||
| Gold Bullion | |||
| (Cost $6,051,546) | 6,980 | 11,009,973 | |
| Shares | |||
| Money Market Funds - 1.3% | |||
| Fidelity Cash Central Fund 1.60% (e) | 15,138,178 | 15,141,206 | |
| Fidelity Securities Lending Cash Central Fund 1.60% (e)(f) | 5,973,912 | 5,974,509 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $21,115,715) | 21,115,715 | ||
| TOTAL INVESTMENT IN SECURITIES - 100.9% | |||
| (Cost $1,203,625,745) | 1,655,316,897 | ||
| NET OTHER ASSETS (LIABILITIES) - (0.9)% | (15,371,828) | ||
| NET ASSETS - 100% | $1,639,945,069 |
Legend
(a) Non-income producing
(b) Security or a portion of the security is on loan at period end.
(c) Affiliated company
(d) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the end of the period, the value of these securities amounted to $1,600,857 or 0.1% of net assets.
(e) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request.
(f) Investment made with cash collateral received from securities on loan.
Affiliated Central Funds
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:
| Fund | Income earned |
| Fidelity Cash Central Fund | $374,633 |
| Fidelity Securities Lending Cash Central Fund | 135,053 |
| Total | $509,686 |
Amounts in the income column in the above table include any capital gain distributions from underlying funds, which are presented in the corresponding line-item in the Consolidated Statement of Operations, if applicable.
Consolidated Subsidiary
| Fund | Value, beginning of period | Purchases | Sales Proceeds | Dividend Income | Realized Gain/Loss | Change in Unrealized appreciation (depreciation) | Value, end of period |
| Fidelity Select Cayman Gold Ltd. | $14,429,238 | $43,049 | $5,931,271 | $-- | $1,855,029 | $636,958 | $11,033,003 |
Other Affiliated Issuers
An affiliated company is a company in which the Fund has ownership of at least 5% of the voting securities. Fiscal year to date transactions with companies which are or were affiliates are as follows:
| Affiliate | Value, beginning of period | Purchases | Sales Proceeds | Dividend Income | Realized Gain (loss) | Change in Unrealized appreciation (depreciation) | Value, end of period |
| Gold Standard Ventures Corp. | $3,745,642 | $17,749,007 | $-- | $-- | $-- | $(8,623,641) | $12,871,008 |
| Orla Mining Ltd. | -- | 14,084,052 | -- | -- | -- | 3,200,359 | 17,284,411 |
| Premier Gold Mines Ltd. | 20,806,293 | 1,368,553 | 22,067,649 | -- | (15,030,839) | 14,923,642 | -- |
| Total | $24,551,935 | $33,201,612 | $22,067,649 | $-- | $(15,030,839) | $9,500,360 | $30,155,419 |
Investment Valuation
The following is a summary of the inputs used, as of February 29, 2020, 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 below, please refer to the Investment Valuation section in the accompanying Notes to Consolidated Financial Statements.
| Valuation Inputs at Reporting Date: | ||||
| Description | Total | Level 1 | Level 2 | Level 3 |
| Investments in Securities: | ||||
| Common Stocks | $1,623,191,209 | $1,435,634,797 | $187,556,412 | $-- |
| Commodities | 11,009,973 | 11,009,973 | -- | -- |
| Money Market Funds | 21,115,715 | 21,115,715 | -- | -- |
| Total Investments in Securities: | $1,655,316,897 | $1,467,760,485 | $187,556,412 | $-- |
See accompanying notes which are an integral part of the consolidated financial statements.
Gold Portfolio
Consolidated Financial Statements
Consolidated Statement of Assets and Liabilities
| February 29, 2020 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $4,746,803) — See accompanying schedule: Unaffiliated issuers (cost $1,141,255,386) | $1,593,035,790 | |
| Fidelity Central Funds (cost $21,115,715) | 21,115,715 | |
| Commodities (cost $6,051,546) | 11,009,973 | |
| Other affiliated issuers (cost $35,203,098) | 30,155,419 | |
| Total Investment in Securities (cost $1,203,625,745) | $1,655,316,897 | |
| Cash | 23,693 | |
| Foreign currency held at value (cost $112,836) | 112,836 | |
| Receivable for investments sold | 6,463,298 | |
| Receivable for fund shares sold | 12,532,419 | |
| Dividends receivable | 1,396,351 | |
| Interest receivable | 18 | |
| Distributions receivable from Fidelity Central Funds | 31,355 | |
| Prepaid expenses | 8,971 | |
| Other receivables | 146,260 | |
| Total assets | 1,676,032,098 | |
| Liabilities | ||
| Payable for investments purchased | $3,962,953 | |
| Payable for fund shares redeemed | 24,757,576 | |
| Accrued management fee | 792,488 | |
| Distribution and service plan fees payable | 71,367 | |
| Other affiliated payables | 319,809 | |
| Other payables and accrued expenses | 207,748 | |
| Collateral on securities loaned | 5,975,088 | |
| Total liabilities | 36,087,029 | |
| Net Assets | $1,639,945,069 | |
| Net Assets consist of: | ||
| Paid in capital | $2,842,469,682 | |
| Total accumulated earnings (loss) | (1,202,524,613) | |
| Net Assets | $1,639,945,069 | |
| Net Asset Value and Maximum Offering Price | ||
| Class A: | ||
| Net Asset Value and redemption price per share ($64,970,603 ÷ 2,998,460 shares)(a) | $21.67 | |
| Maximum offering price per share (100/94.25 of $21.67) | $22.99 | |
| Class M: | ||
| Net Asset Value and redemption price per share ($19,619,768 ÷ 927,020 shares)(a) | $21.16 | |
| Maximum offering price per share (100/96.50 of $21.16) | $21.93 | |
| Class C: | ||
| Net Asset Value and offering price per share ($52,375,467 ÷ 2,609,410 shares)(a) | $20.07 | |
| Gold: | ||
| Net Asset Value, offering price and redemption price per share ($1,292,204,306 ÷ 57,872,936 shares) | $22.33 | |
| Class I: | ||
| Net Asset Value, offering price and redemption price per share ($115,699,288 ÷ 5,180,846 shares) | $22.33 | |
| Class Z: | ||
| Net Asset Value, offering price and redemption price per share ($95,075,637 ÷ 4,255,389 shares) | $22.34 |
(a) Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
See accompanying notes which are an integral part of the consolidated financial statements.
Consolidated Statement of Operations
| Year ended February 29, 2020 | ||
| Investment Income | ||
| Dividends | $13,950,781 | |
| Special dividends | 3,377,597 | |
| Interest | 343 | |
| Income from Fidelity Central Funds (including $135,053 from security lending) | 509,686 | |
| Income before foreign taxes withheld | 17,838,407 | |
| Less foreign taxes withheld | (1,114,090) | |
| Total income | 16,724,317 | |
| Expenses | ||
| Management fee | $8,379,297 | |
| Transfer agent fees | 2,981,278 | |
| Distribution and service plan fees | 838,684 | |
| Accounting and security lending fees | 701,914 | |
| Custodian fees and expenses | 69,741 | |
| Independent trustees' fees and expenses | 8,151 | |
| Registration fees | 159,571 | |
| Audit | 70,832 | |
| Legal | 2,008 | |
| Interest | 7,860 | |
| Miscellaneous | 10,451 | |
| Total expenses before reductions | 13,229,787 | |
| Expense reductions | (205,458) | |
| Total expenses after reductions | 13,024,329 | |
| Net investment income (loss) | 3,699,988 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investments: | ||
| Unaffiliated issuers | (48,483,102) | |
| Fidelity Central Funds | (165) | |
| Other affiliated issuers | (15,030,839) | |
| Commodities | 1,465,678 | |
| Foreign currency transactions | (187,951) | |
| Total net realized gain (loss) | (62,236,379) | |
| Change in net unrealized appreciation (depreciation) on: | ||
| Investments: | ||
| Investments | 250,270,608 | |
| Fidelity Central Funds | (414) | |
| Other affiliated issuers | 9,500,360 | |
| Assets and liabilities in foreign currencies | 99,977 | |
| Commodities | 1,016,905 | |
| Total change in net unrealized appreciation (depreciation) | 260,887,436 | |
| Net gain (loss) | 198,651,057 | |
| Net increase (decrease) in net assets resulting from operations | $202,351,045 |
See accompanying notes which are an integral part of the consolidated financial statements.
Consolidated Statement of Changes in Net Assets
| Year ended February 29, 2020 | Year ended February 28, 2019 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $3,699,988 | $1,072,405 |
| Net realized gain (loss) | (62,236,379) | (221,994,173) |
| Change in net unrealized appreciation (depreciation) | 260,887,436 | 239,641,869 |
| Net increase (decrease) in net assets resulting from operations | 202,351,045 | 18,720,101 |
| Distributions to shareholders | (6,847,722) | – |
| Share transactions - net increase (decrease) | 185,112,852 | (6,262,689) |
| Total increase (decrease) in net assets | 380,616,175 | 12,457,412 |
| Net Assets | ||
| Beginning of period | 1,259,328,894 | 1,246,871,482 |
| End of period | $1,639,945,069 | $1,259,328,894 |
See accompanying notes which are an integral part of the consolidated financial statements.
Consolidated Financial Highlights
Gold Portfolio Class A
| Years ended February 28, | 2020 A | 2019 | 2018 | 2017 | 2016 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $18.52 | $18.30 | $20.54 | $17.70 | $18.11 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | (.01)C | (.03) | (.12) | (.16) | (.06) |
| Net realized and unrealized gain (loss) | 3.20 | .25 | (2.09) | 3.59 | (.35) |
| Total from investment operations | 3.19 | .22 | (2.21) | 3.43 | (.41) |
| Distributions from net investment income | (.01) | – | – | – | – |
| Distributions from net realized gain | (.03) | – | (.03) | (.60) | – |
| Total distributions | (.04) | – | (.03) | (.60) | – |
| Redemption fees added to paid in capitalB | – | – | – | .01 | –D |
| Net asset value, end of period | $21.67 | $18.52 | $18.30 | $20.54 | $17.70 |
| Total ReturnE,F | 17.23% | 1.20% | (10.77)% | 19.97% | (2.26)% |
| Ratios to Average Net AssetsG,H | |||||
| Expenses before reductions | 1.13% | 1.19% | 1.18% | 1.19% | 1.23% |
| Expenses net of fee waivers, if any | 1.13% | 1.18% | 1.16% | 1.16% | 1.20% |
| Expenses net of all reductions | 1.12% | 1.18% | 1.16% | 1.16% | 1.20% |
| Net investment income (loss) | (.05)%C | (.15)% | (.58)% | (.71)% | (.44)% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $64,971 | $50,479 | $61,703 | $83,589 | $53,509 |
| Portfolio turnover rateI | 56% | 37% | 13% | 28% | 20% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Net investment income per share reflects a large, non-recurring dividend which amounted to $.05 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been (.26) %.
D Amount represents less than $.005 per share.
E Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
F Total returns do not include the effect of the sales charges.
G Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
I Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the consolidated financial statements.
Gold Portfolio Class M
| Years ended February 28, | 2020 A | 2019 | 2018 | 2017 | 2016 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $18.11 | $17.94 | $20.19 | $17.37 | $17.83 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | (.07)C | (.07) | (.17) | (.22) | (.11) |
| Net realized and unrealized gain (loss) | 3.12 | .24 | (2.05) | 3.54 | (.35) |
| Total from investment operations | 3.05 | .17 | (2.22) | 3.32 | (.46) |
| Distributions from net realized gain | – | – | (.03) | (.51) | – |
| Total distributions | – | – | (.03) | (.51) | – |
| Redemption fees added to paid in capitalB | – | – | – | .01 | –D |
| Net asset value, end of period | $21.16 | $18.11 | $17.94 | $20.19 | $17.37 |
| Total ReturnE,F | 16.84% | .95% | (11.04)% | 19.62% | (2.58)% |
| Ratios to Average Net AssetsG,H | |||||
| Expenses before reductions | 1.42% | 1.48% | 1.48% | 1.49% | 1.52% |
| Expenses net of fee waivers, if any | 1.42% | 1.46% | 1.47% | 1.46% | 1.48% |
| Expenses net of all reductions | 1.41% | 1.46% | 1.47% | 1.46% | 1.48% |
| Net investment income (loss) | (.34)%C | (.43)% | (.88)% | (1.01)% | (.72)% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $19,620 | $17,401 | $19,355 | $25,170 | $17,720 |
| Portfolio turnover rateI | 56% | 37% | 13% | 28% | 20% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Net investment income per share reflects a large, non-recurring dividend which amounted to $.04 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been (.56) %.
D Amount represents less than $.005 per share.
E Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
F Total returns do not include the effect of the sales charges.
G Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
I Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the consolidated financial statements.
Gold Portfolio Class C
| Years ended February 28, | 2020 A | 2019 | 2018 | 2017 | 2016 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $17.24 | $17.15 | $19.36 | $16.68 | $17.20 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | (.14)C | (.13) | (.24) | (.29) | (.16) |
| Net realized and unrealized gain (loss) | 2.97 | .22 | (1.95) | 3.42 | (.36) |
| Total from investment operations | 2.83 | .09 | (2.19) | 3.13 | (.52) |
| Distributions from net realized gain | – | – | (.02) | (.45) | – |
| Total distributions | – | – | (.02) | (.45) | – |
| Redemption fees added to paid in capitalB | – | – | – | –D | –D |
| Net asset value, end of period | $20.07 | $17.24 | $17.15 | $19.36 | $16.68 |
| Total ReturnE,F | 16.42% | .52% | (11.35)% | 19.19% | (3.02)% |
| Ratios to Average Net AssetsG,H | |||||
| Expenses before reductions | 1.80% | 1.84% | 1.85% | 1.88% | 1.97% |
| Expenses net of fee waivers, if any | 1.80% | 1.83% | 1.83% | 1.85% | 1.93% |
| Expenses net of all reductions | 1.79% | 1.83% | 1.83% | 1.84% | 1.93% |
| Net investment income (loss) | (.72)%C | (.80)% | (1.25)% | (1.40)% | (1.17)% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $52,375 | $67,760 | $92,724 | $101,215 | $52,732 |
| Portfolio turnover rateI | 56% | 37% | 13% | 28% | 20% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Net investment income per share reflects a large, non-recurring dividend which amounted to $.04 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been (.94) %.
D Amount represents less than $.005 per share.
E Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
F Total returns do not include the effect of the contingent deferred sales charge.
G Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
I Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the consolidated financial statements.
Gold Portfolio
| Years ended February 28, | 2020 A | 2019 | 2018 | 2017 | 2016 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $19.07 | $18.78 | $21.02 | $18.12 | $18.50 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .06C | .03 | (.05) | (.09) | (.03) |
| Net realized and unrealized gain (loss) | 3.30 | .26 | (2.14) | 3.66 | (.35) |
| Total from investment operations | 3.36 | .29 | (2.19) | 3.57 | (.38) |
| Distributions from net investment income | (.06) | – | – | – | – |
| Distributions from net realized gain | (.03) | – | (.05) | (.68) | – |
| Total distributions | (.10)D | – | (.05) | (.68) | – |
| Redemption fees added to paid in capitalB | – | – | – | .01 | –E |
| Net asset value, end of period | $22.33 | $19.07 | $18.78 | $21.02 | $18.12 |
| Total ReturnF | 17.60% | 1.54% | (10.47)% | 20.38% | (2.05)% |
| Ratios to Average Net AssetsG,H | |||||
| Expenses before reductions | .79% | .86% | .86% | .87% | .97% |
| Expenses net of fee waivers, if any | .79% | .85% | .85% | .84% | .93% |
| Expenses net of all reductions | .78% | .85% | .84% | .84% | .93% |
| Net investment income (loss) | .29%C | .18% | (.26)% | (.39)% | (.17)% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $1,292,204 | $1,035,697 | $1,011,412 | $1,271,458 | $1,076,206 |
| Portfolio turnover rateI | 56% | 37% | 13% | 28% | 20% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Net investment income per share reflects a large, non-recurring dividend which amounted to $.05 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .07%.
D Total distributions of $.10 per share is comprised of distributions from net investment income of $.064 and distributions from net realized gain of $.034 per share.
E Amount represents less than $.005 per share.
F Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
G Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
I Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the consolidated financial statements.
Gold Portfolio Class I
| Years ended February 28, | 2020 A | 2019 | 2018 | 2017 | 2016 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $19.07 | $18.78 | $21.02 | $18.13 | $18.50 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .06C | .04 | (.05) | (.09) | (.02) |
| Net realized and unrealized gain (loss) | 3.30 | .25 | (2.14) | 3.67 | (.35) |
| Total from investment operations | 3.36 | .29 | (2.19) | 3.58 | (.37) |
| Distributions from net investment income | (.07) | – | – | – | – |
| Distributions from net realized gain | (.03) | – | (.05) | (.70) | – |
| Total distributions | (.10) | – | (.05) | (.70) | – |
| Redemption fees added to paid in capitalB | – | – | – | .01 | –D |
| Net asset value, end of period | $22.33 | $19.07 | $18.78 | $21.02 | $18.13 |
| Total ReturnE | 17.60% | 1.54% | (10.47)% | 20.41% | (2.00)% |
| Ratios to Average Net AssetsF,G | |||||
| Expenses before reductions | .79% | .84% | .85% | .87% | .92% |
| Expenses net of fee waivers, if any | .79% | .82% | .83% | .84% | .88% |
| Expenses net of all reductions | .77% | .82% | .83% | .84% | .88% |
| Net investment income (loss) | .30%C | .21% | (.24)% | (.39)% | (.12)% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $115,699 | $84,956 | $61,677 | $58,673 | $52,607 |
| Portfolio turnover rateH | 56% | 37% | 13% | 28% | 20% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Net investment income per share reflects a large, non-recurring dividend which amounted to $.05 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .08%.
D Amount represents less than $.005 per share.
E Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
H Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the consolidated financial statements.
Gold Portfolio Class Z
| Years ended February 28, | 2020 A | 2019 B |
| Selected Per–Share Data | ||
| Net asset value, beginning of period | $19.08 | $16.62 |
| Income from Investment Operations | ||
| Net investment income (loss)C | .10D | .07 |
| Net realized and unrealized gain (loss) | 3.29 | 2.39 |
| Total from investment operations | 3.39 | 2.46 |
| Distributions from net investment income | (.10) | – |
| Distributions from net realized gain | (.03) | – |
| Total distributions | (.13) | – |
| Net asset value, end of period | $22.34 | $19.08 |
| Total ReturnE,F | 17.75% | 14.80% |
| Ratios to Average Net AssetsG,H | ||
| Expenses before reductions | .65% | .68%I |
| Expenses net of fee waivers, if any | .64% | .68%I |
| Expenses net of all reductions | .63% | .67%I |
| Net investment income (loss) | .44%D | .97%I |
| Supplemental Data | ||
| Net assets, end of period (000 omitted) | $95,076 | $3,037 |
| Portfolio turnover rateJ | 56% | 37% |
A For the year ended February 29.
B For the period October 2, 2018 (commencement of sale of shares) to February 28, 2019.
C Calculated based on average shares outstanding during the period.
D Net investment income per share reflects a large, non-recurring dividend which amounted to $.05 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .22%.
E Total returns for periods of less than one year are not annualized.
F Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
G Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
I Annualized
J Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the consolidated financial statements.
Notes to Consolidated Financial Statements
For the period ended February 29, 2020
1. Organization.
Gold Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the Trust) and is authorized to issue an unlimited number of shares. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries. The Fund offers Class A, Class M, Class C, Gold, Class I and Class Z shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. Effective March 1, 2019, Class C shares will automatically convert to Class A shares after a holding period of ten years from the initial date of purchase, with certain exceptions.
Effective January 1, 2020:
Investment advisers Fidelity Investments Money Management, Inc., FMR Co., Inc., and Fidelity SelectCo, LLC, merged with and into Fidelity Management & Research Company. In connection with the merger transactions, the resulting, merged investment adviser was then redomiciled from Massachusetts to Delaware, changed its corporate structure from a corporation to a limited liability company, and changed its name to "Fidelity Management & Research Company LLC".
Broker-dealer Fidelity Distributors Corporation merged with and into Fidelity Investments Institutional Services Company, Inc. ("FIISC"). FIISC was then redomiciled from Massachusetts to Delaware, changed its corporate structure from a corporation to a limited liability company, and changed its name to "Fidelity Distributors Company LLC".
Fidelity Investments Institutional Operations Company, Inc. converted from a Massachusetts corporation to a Massachusetts LLC, and changed its name to "Fidelity Investments Institutional Operations Company LLC".
2. Consolidated Subsidiary.
The Fund invests in certain commodity-related investments through Fidelity Select Gold Cayman Ltd., a wholly owned subsidiary (the "Subsidiary"). As of period end, the Fund held an investment of $11,033,003 in the Subsidiary, representing 0.7% of the Fund's net assets.
The financial statements have been consolidated and include accounts of the Fund and the Subsidiary. Accordingly, all inter-company transactions and balances have been eliminated.
3. Investments in Fidelity Central Funds.
The Fund invests in Fidelity Central Funds, which are open-end investment companies generally available only to other investment companies and accounts managed by the investment adviser and its affiliates. The Fund's Consolidated Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by the investment adviser. Annualized expenses of the Money Market Central Funds as of their most recent shareholder report date ranged from less than .005% to .01%.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) website at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC website or upon request.
4. Significant Accounting Policies.
The Fund is an investment company and applies the accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946 Financial Services – Investments Companies. The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the consolidated financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the consolidated financial statements were issued have been evaluated in the preparation of the consolidated financial statements. The following summarizes the significant accounting policies of the Fund:
Investment Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Board of Trustees (the Board) has delegated the day to day responsibility for the valuation of the Fund's investments to the Fair Value Committee (the Committee) established by the Fund's investment adviser. In accordance with valuation policies and procedures approved by the Board, the Fund attempts to obtain prices from one or more third party pricing vendors or brokers to value its investments. When current market prices, quotations or currency exchange rates are not readily available or reliable, investments will be fair valued in good faith by the Committee, in accordance with procedures adopted by the Board. Factors used in determining fair value vary by investment type and may include market or investment specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The Committee oversees the Fund's valuation policies and procedures and reports to the Board on the Committee's activities and fair value determinations. The Board monitors the appropriateness of the procedures used in valuing the Fund's investments and ratifies the fair value determinations of the Committee.
The Fund categorizes the inputs to valuation techniques used to 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)
Valuation techniques used to value the Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by a third party pricing vendor on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-Traded Funds (ETFs) and certain indexes as well as quoted prices for similar securities may be used and would be categorized as Level 2 in the hierarchy. For equity securities, including restricted 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.
Investments in commodities are valued at their last traded price at 4:00 p.m. Eastern time each business day and are categorized as Level 1 in the hierarchy. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value (NAV) each business day and are categorized as Level 1 in the hierarchy.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level as of February 29, 2020, is included at the end of the Fund's Consolidated Schedule of Investments.
Foreign Currency. The Fund may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rates at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and include proceeds received from litigation. Dividend income is recorded 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. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Income and capital gain distributions from Fidelity Central Funds, if any, are recorded on the ex-dividend date. Certain distributions received by the Fund represent a return of capital or capital gain. The Fund determines the components of these distributions subsequent to the ex-dividend date, based upon receipt of tax filings or other correspondence relating to the underlying investment. These distributions are recorded as a reduction of cost of investments and/or as a realized gain. Large, non-recurring dividends recognized by the Fund are presented separately on the Statement of Operations as "Special Dividends" and the impact of these dividends is presented in the Financial Highlights. Interest income is accrued as earned and includes coupon interest and amortization of premium and accretion of discount on debt securities as applicable. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Class Allocations and Expenses. Investment income, realized and unrealized capital gains and losses, common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated daily on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions may also differ by class. For the reporting period, the allocated portion of income and expenses to each class as a percent of its average net assets may vary due to the timing of recording these transactions in relation to fluctuating net assets of the classes. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Deferred Trustee Compensation. Under a Deferred Compensation Plan (the Plan) for the Fund, certain independent Trustees have elected to defer receipt of a portion of their annual compensation. Deferred amounts are invested in a cross-section of Fidelity funds, are marked-to-market and remain in the Fund until distributed in accordance with the Plan. The investment of deferred amounts and the offsetting payable to the Trustees of $113,130 are included in the accompanying Statement of Assets and Liabilities in other receivables and other payables and accrued expenses, respectively.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for U.S. Federal income taxes is required. As of February 29, 2020, the Fund did not have any unrecognized tax benefits in the consolidated financial statements; nor is the Fund aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. The Fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
The Subsidiary is classified as a controlled foreign corporation under Subchapter N of the Internal Revenue Code. Therefore, the Fund is required to increase its taxable income by its share of the Subsidiary's income. Net investment losses of the Subsidiary cannot be deducted by the Fund in the current period nor carried forward to offset taxable income in future periods.
Distributions are declared and recorded on the ex-dividend date. Income and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP.
Capital accounts within the consolidated financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Capital accounts are not adjusted for temporary book-tax differences which will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, passive foreign investment companies (PFIC), controlled foreign corporations, deferred trustees compensation, capital loss carryforwards and losses deferred due to wash sales.
As of period end, the cost and unrealized appreciation (depreciation) in securities, and derivatives if applicable, for federal income tax purposes on an unconsolidated basis were as follows:
| Gross unrealized appreciation | $411,343,579 |
| Gross unrealized depreciation | (82,564,460) |
| Net unrealized appreciation (depreciation) | $328,779,119 |
| Tax Cost | $1,326,560,808 |
The tax-based components of distributable earnings as of period end were as follows:
| Undistributed ordinary income | $11,716,793 |
| Capital loss carryforward | $(1,590,735,131) |
| Net unrealized appreciation (depreciation) on securities and other investments | $328,845,989 |
Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. The capital loss carryforward information presented below, including any applicable limitation, is estimated as of fiscal period end and is subject to adjustment.
| No expiration | |
| Short-term | $(147,641,269) |
| Long-term | (1,443,093,862) |
| Total capital loss carryforward | $(1,590,735,131) |
The tax character of distributions paid was as follows:
| February 29, 2020 | February 28, 2019 | |
| Ordinary Income | $6,847,722 | $– |
Restricted Securities. The Fund may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities is included at the end of the Fund's Consolidated Schedule of Investments.
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, are noted in the table below.
| Purchases ($) | Sales ($) | |
| Gold Portfolio | 1,044,747,601 | 868,292,983 |
6. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity Management & Research Company LLC (the investment adviser) and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and an annualized group fee rate that averaged .24% during the period. The group fee rate is based upon the monthly average net assets of a group of registered investment companies with which the investment adviser has management contracts. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the reporting period, the total annual management fee rate was .54% of the Fund's average net assets.
The investment adviser, either through itself or through an affiliate provides investment management related services to the Subsidiary. The Subsidiary does not pay the investment adviser a fee for these services. Under the management contract with the subsidiary, the investment adviser pays all other expenses of the Subsidiary, except custodian fees.
Distribution and Service Plan Fees. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Company LLC (FDC), an affiliate of the investment adviser, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the Fund and providing shareholder support services. For the period, the Distribution and Service Fee rates, total fees and amounts retained by FDC were as follows:
| Distribution Fee | Service Fee | Total Fees | Retained by FDC | |
| Class A | -% | .25% | $152,587 | $9,027 |
| Class M | .25% | .25% | 95,946 | 484 |
| Class C | .75% | .25% | 590,151 | 44,168 |
| $838,684 | $53,679 |
Sales Load. FDC may receive a front-end sales charge of up to 5.75% for selling Class A shares and 3.50% for selling Class M shares, some of which is paid to financial intermediaries for selling shares of the Fund. Depending on the holding period, FDC may receive contingent deferred sales charges levied on Class A, Class M and Class C redemptions. The deferred sales charges are 1.00% for Class C shares, 1.00% for certain purchases of Class A shares and .25% for certain purchases of Class M shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained by FDC | |
| Class A | $31,179 |
| Class M | 5,134 |
| Class C(a) | 9,322 |
| $45,635 |
(a) When Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company LLC (FIIOC), an affiliate of the investment adviser, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the Fund, except for Class Z. FIIOC receives an asset-based fee of Class Z's average net assets. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. Effective February 1, 2020, the Board approved to change the fee for Class Z from .046% to .044%.
For the period, transfer agent fees for each class were as follows:
| Amount | % of Class-Level Average Net Assets | |
| Class A | $168,761 | .28 |
| Class M | 61,234 | .32 |
| Class C | 118,865 | .20 |
| Gold | 2,401,119 | .19 |
| Class I | 208,161 | .19 |
| Class Z | 23,138 | .04 |
| $2,981,278 |
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of the investment adviser, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for each month. Prior to April 1, 2019, FSC had a separate agreement with the Fund for administration of the security lending program, based on the number and duration of lending transactions. For the period, the total fees paid for accounting and administration of securities lending were equivalent to the following annual rates:
| % of Average Net Assets | |
| Gold Portfolio | .04 |
Brokerage Commissions. A portion of portfolio transactions were placed with brokerage firms which are affiliates of the investment adviser. Brokerage commissions are included in net realized gain (loss) and change in net unrealized appreciation (depreciation) in the Consolidated Statement of Operations. The commissions paid to these affiliated firms were as follows:
| Amount | |
| Gold Portfolio | $7,906 |
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the fund, along with other registered investment companies having management contracts with Fidelity Management & Research Company LLC (FMR), or other affiliated entities of FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the fund to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. Activity in this program during the period for which loans were outstanding was as follows:
| Borrower or Lender | Average Loan Balance | Weighted Average Interest Rate | Interest Expense | |
| Gold Portfolio | Borrower | $8,221,471 | 2.02% | $7,860 |
Interfund Trades. Funds may purchase from or sell securities to other Fidelity Funds under procedures adopted by the Board. The procedures have been designed to ensure these interfund trades are executed in accordance with Rule 17a-7 of the 1940 Act. Interfund trades are included within the respective purchases and sales amounts shown in the Purchases and Sales of Investments note.
7. Committed Line of Credit.
Certain Funds participate with other funds managed by the investment adviser or an affiliate in a $4.25 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The participating funds have agreed to pay commitment fees on their pro-rata portion of the line of credit, which are reflected in Miscellaneous expenses on the Consolidated Statement of Operations, and are as follows:
| Amount | |
| Gold Portfolio | $3,731 |
During the period, there were no borrowings on this line of credit.
8. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. For equity securities, lending agents are used, including National Financial Services (NFS), an affiliate of the Fund. Pursuant to a securities lending agreement, NFS will receive a fee, which is capped at 9.9% of daily lending revenue, for its services as lending agent. The Fund may lend securities to certain qualified borrowers, including NFS. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. The Fund or borrower may terminate the loan at any time, and if the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, the Fund may apply collateral received from the borrower against the obligation. The Fund may experience delays and costs in recovering the securities loaned. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Consolidated Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Consolidated Statement of Operations as a component of income from Fidelity Central Funds. During the period, there were no securities loaned to NFS.
9. Expense Reductions.
Commissions paid to certain brokers with whom the investment adviser, or its affiliates, places trades on behalf of the Fund include an amount in addition to trade execution, which may be rebated back to the Fund to offset certain expenses. This amount totaled $170,939 for the period. In addition, through arrangements with the Fund's custodian and each class' transfer agent, credits realized as a result of certain uninvested cash balances were used to reduce the Fund's expenses. During the period, custodian credits reduced the Fund's expenses by $19,282. During the period, transfer agent credits reduced each class' expenses as noted in the table below.
| Expense reduction | |
| Gold | $146 |
In addition, during the period the investment adviser or an affiliate reimbursed and/or waived a portion of fund-level operating expenses in the amount of $7,961.
In addition, during the period the investment adviser or an affiliate reimbursed the Fund $7,130 for an operational error which is included in the accompanying Statement of Operations.
10. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
| Year ended February 29, 2020 | Year ended February 28, 2019 |
|
| Distributions to shareholders | ||
| Class A | $126,430 | $– |
| Gold | 5,685,007 | – |
| Class I | 512,501 | – |
| Class Z | 523,784 | – |
| Total | $6,847,722 | $– |
11. Share Transactions.
Share transactions for each class were as follows and may contain automatic conversions between classes or exchanges between affiliated funds:
| Shares | Shares | Dollars | Dollars | |
| Year ended February 29, 2020 | Year ended February 28, 2019(a) | Year ended February 29, 2020 | Year ended February 28, 2019(a) | |
| Class A | ||||
| Shares sold | 1,071,031 | 562,437 | $23,081,577 | $9,909,468 |
| Reinvestment of distributions | 5,541 | – | 124,685 | – |
| Shares redeemed | (803,447) | (1,208,833) | (17,157,110) | (21,611,552) |
| Net increase (decrease) | 273,125 | (646,396) | $6,049,152 | $(11,702,084) |
| Class M | ||||
| Shares sold | 235,440 | 229,723 | $4,985,960 | $3,924,126 |
| Shares redeemed | (269,260) | (347,502) | (5,455,321) | (6,015,227) |
| Net increase (decrease) | (33,820) | (117,779) | $(469,361) | $(2,091,101) |
| Class C | ||||
| Shares sold | 447,770 | 752,482 | $9,285,024 | $12,855,428 |
| Shares redeemed | (1,768,549) | (2,230,268) | (33,587,608) | (35,991,400) |
| Net increase (decrease) | (1,320,779) | (1,477,786) | $(24,302,584) | $(23,135,972) |
| Gold | ||||
| Shares sold | 35,604,152 | 18,855,174 | $801,315,881 | $336,678,749 |
| Reinvestment of distributions | 237,526 | – | 5,435,729 | – |
| Shares redeemed | (32,282,204) | (18,402,999) | (714,942,656) | (329,426,640) |
| Net increase (decrease) | 3,559,474 | 452,175 | $91,808,954 | $7,252,109 |
| Class I | ||||
| Shares sold | 2,911,958 | 2,830,267 | $63,117,217 | $50,462,127 |
| Reinvestment of distributions | 21,730 | – | 497,247 | – |
| Shares redeemed | (2,207,535) | (1,660,500) | (48,726,909) | (29,601,141) |
| Net increase (decrease) | 726,153 | 1,169,767 | $14,887,555 | $20,860,986 |
| Class Z | ||||
| Shares sold | 5,524,932 | 368,708 | $130,157,436 | $6,495,798 |
| Reinvestment of distributions | 22,294 | – | 509,236 | – |
| Shares redeemed | (1,450,995) | (209,550) | (33,527,536) | (3,942,425) |
| Net increase (decrease) | 4,096,231 | 159,158 | $97,139,136 | $2,553,373 |
(a) Share transactions for Class Z are for the period October 2, 2018 (commencement of sale of shares) to February 28, 2019.
12. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
13. Coronavirus (COVID-19) Pandemic.
An outbreak of COVID-19 first detected in China during December 2019 has since spread globally and was declared a pandemic by the World Health Organization during March 2020. Developments that disrupt global economies and financial markets, such as the COVID-19 pandemic, may magnify factors that affect the Fund's performance.
Materials Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The hypothetical investment and the average annual total returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund’s total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
| For the periods ended February 29, 2020 | Past 1 year | Past 5 years | Past 10 years |
| Class A (incl. 5.75% sales charge) | (18.76)% | (3.25)% | 4.47% |
| Class M (incl. 3.50% sales charge) | (17.06)% | (3.08)% | 4.41% |
| Class C (incl. contingent deferred sales charge) | (15.31)% | (2.83)% | 4.30% |
| Materials Portfolio | (13.57)% | (1.83)% | 5.38% |
| Class I | (13.55)% | (1.82)% | 5.39% |
| Class Z | (13.43)% | (1.78)% | 5.41% |
Class C shares' contingent deferred sales charges included in the past one year, past five years and past ten years total return figures are 1%, 0% and 0%, respectively.
The initial offering of Class Z shares took place on August 13, 2013. Returns prior to August 13, 2013, are those of Class I.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Materials Portfolio, a class of the fund, on February 28, 2010.
The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
| Period Ending Values | ||
|
| $16,881 | Materials Portfolio |
|
| $32,918 | S&P 500® Index |
Materials Portfolio
Management's Discussion of Fund Performance
Market Recap: U.S. stocks stalled to begin the new year and declined in late February, as the outbreak and spread of the new coronavirus threatened to hamper global economic growth and corporate earnings. For the 12 months ending February 29, 2020, the U.S. equity bellwether S&P 500® index gained 8.19%. The period began with equities rising amid upbeat company earnings and signs the U.S. Federal Reserve may pause on rates. The uptrend extended until May, when the index dipped as trade talks between the U.S. and China broke down. The bull market roared back to record a series of highs in July, when the Fed cut interest rates for the first time since 2008. Volatility intensified in August, as the Treasury yield curve inverted, which some investors viewed as a sign the U.S. economy could be heading for recession. But the market proved resilient, hitting a new high on October 30, when the Fed lowered rates for the third time in 2019, and moving higher through December 31. Following a roughly flat January, stocks sank in late February, after a surge in coronavirus cases outside China created considerable uncertainty and pushed investors to safer asset classes. By sector, information technology (+27%) led the way by a wide margin, followed by utilities and communication services (+13% each). In contrast, energy (-25%) was by far the weakest category, struggling due to sluggish oil prices. Other notable laggards included materials and industrials (-2% each). Comments from Co-Managers Rick Malnight and Jody Simes: For the fiscal year, the fund’s share classes (excluding sales charges, if applicable) returned roughly -13% to -14%, considerably trailing the -5.33% result of the MSCI U.S. IMI Materials 25/50 Linked Index, and even further behind the S&P 500®. Most of the fund’s underperformance of the MSCI sector index occurred in the first half of the reporting period, as the decision to position the fund for a low-growth but still-expanding global economy was out of step with the market. Versus the MSCI index, security selection in specialty chemicals, commodity chemicals and diversified chemicals companies detracted significantly, with overweightings in the latter two categories also weighing on relative performance. Among individual holdings, a large overweighting in diversified chemicals stock Chemours (-58%) detracted the most by a wide margin amid lower demand for its titanium dioxide (TiO2) pigment. The fund’s overweight position in polyvinyl chloride (PVC) and caustic soda producer Olin (-35%) also significantly detracted the past 12 months, as did overweighting specialty chemicals stock DuPont (-45%), which was spun off from DowDuPont in June 2019. Conversely, the portfolio's favorable positioning in the steel, metal & glass containers, and paper packaging groups added value. Specifically, a larger-than-index stake in Crown Holdings (+30%) was a defensive holding in the metal & glass containers group that lifted the fund’s relative performance. Largely avoiding two weak-performing metals producers in the MSCI materials index also bolstered the fund’s relative performance: steel manufacturer Nucor (-30%) and copper producer Freeport-McMoRan (-25%). We established a position in Freeport in May but didn’t hold Nucor at all this period.The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Note to shareholders: On November 8, 2019, Jody Simes assumed co-management responsibilities for the fund, joining Rick Malnight. Rick plans to retire from the firm on June 30, 2020, at which time Jody will assume sole management of the fund.Materials Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 29, 2020
| % of fund's net assets | |
| Linde PLC | 17.5 |
| Air Products & Chemicals, Inc. | 7.0 |
| Ecolab, Inc. | 5.8 |
| Sherwin-Williams Co. | 5.4 |
| Newmont Corp. | 5.3 |
| DuPont de Nemours, Inc. | 4.2 |
| Crown Holdings, Inc. | 3.9 |
| PPG Industries, Inc. | 3.9 |
| Vulcan Materials Co. | 3.4 |
| Martin Marietta Materials, Inc. | 3.1 |
| 59.5 |
Top Industries (% of fund's net assets)
| As of February 29, 2020 | ||
| Chemicals | 62.8% | |
| Metals & Mining | 17.6% | |
| Containers & Packaging | 12.3% | |
| Construction Materials | 7.2% | |
| All Others* | 0.1% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
Materials Portfolio
Schedule of Investments February 29, 2020
Showing Percentage of Net Assets
| Common Stocks - 99.9% | |||
| Shares | Value | ||
| Chemicals - 62.8% | |||
| Commodity Chemicals - 3.4% | |||
| Olin Corp. | 485,550 | $7,861,055 | |
| Tronox Holdings PLC | 2,069,603 | 15,190,886 | |
| 23,051,941 | |||
| Diversified Chemicals - 1.8% | |||
| The Chemours Co. LLC (a) | 841,880 | 12,510,337 | |
| Fertilizers & Agricultural Chemicals - 6.4% | |||
| CF Industries Holdings, Inc. | 259,300 | 9,557,798 | |
| Corteva, Inc. | 338,311 | 9,202,059 | |
| FMC Corp. | 129,317 | 12,039,413 | |
| Nutrien Ltd. | 181,700 | 7,346,131 | |
| The Mosaic Co. | 196,600 | 3,348,098 | |
| The Scotts Miracle-Gro Co. Class A | 19,300 | 2,045,607 | |
| 43,539,106 | |||
| Industrial Gases - 24.5% | |||
| Air Products & Chemicals, Inc. | 216,000 | 47,435,760 | |
| Linde PLC (a) | 618,986 | 118,232,515 | |
| 165,668,275 | |||
| Specialty Chemicals - 26.7% | |||
| Albemarle Corp. U.S. (a) | 154,100 | 12,613,085 | |
| Ashland Global Holdings, Inc. | 61,700 | 4,414,018 | |
| Balchem Corp. | 31,000 | 2,928,260 | |
| DuPont de Nemours, Inc. | 670,611 | 28,769,212 | |
| Ecolab, Inc. | 217,700 | 39,283,965 | |
| Ingevity Corp. (b) | 48,900 | 2,202,456 | |
| Innospec, Inc. | 36,900 | 3,193,326 | |
| International Flavors & Fragrances, Inc. (a) | 109,131 | 13,071,711 | |
| Livent Corp. (b) | 445,297 | 3,976,502 | |
| PPG Industries, Inc. | 252,700 | 26,394,515 | |
| RPM International, Inc. | 27,600 | 1,769,436 | |
| Sherwin-Williams Co. | 70,800 | 36,585,900 | |
| Stepan Co. | 19,900 | 1,747,817 | |
| Wacker Chemie AG | 51,500 | 3,663,344 | |
| 180,613,547 | |||
| TOTAL CHEMICALS | 425,383,206 | ||
| Construction Materials - 7.2% | |||
| Construction Materials - 7.2% | |||
| Martin Marietta Materials, Inc. | 93,500 | 21,274,055 | |
| Summit Materials, Inc. (b) | 232,100 | 4,535,234 | |
| Vulcan Materials Co. | 188,600 | 22,681,036 | |
| 48,490,325 | |||
| Containers & Packaging - 12.3% | |||
| Metal & Glass Containers - 8.9% | |||
| Aptargroup, Inc. | 139,700 | 14,119,479 | |
| Ball Corp. | 277,600 | 19,559,696 | |
| Crown Holdings, Inc. (b) | 382,159 | 26,942,210 | |
| 60,621,385 | |||
| Paper Packaging - 3.4% | |||
| Avery Dennison Corp. | 100,400 | 11,494,796 | |
| Graphic Packaging Holding Co. | 151,800 | 2,052,336 | |
| Packaging Corp. of America | 59,200 | 5,364,704 | |
| WestRock Co. | 116,800 | 3,883,600 | |
| 22,795,436 | |||
| TOTAL CONTAINERS & PACKAGING | 83,416,821 | ||
| Metals & Mining - 17.6% | |||
| Aluminum - 0.2% | |||
| Kaiser Aluminum Corp. | 13,900 | 1,314,245 | |
| Copper - 5.1% | |||
| First Quantum Minerals Ltd. | 2,303,600 | 17,024,930 | |
| Freeport-McMoRan, Inc. | 337,100 | 3,357,516 | |
| Lundin Mining Corp. | 2,727,800 | 13,920,976 | |
| 34,303,422 | |||
| Diversified Metals & Mining - 0.4% | |||
| MMC Norilsk Nickel PJSC sponsored ADR | 101,000 | 3,053,923 | |
| Gold - 7.7% | |||
| Agnico Eagle Mines Ltd. (Canada) | 205,800 | 9,765,246 | |
| Newmont Corp. | 803,400 | 35,855,742 | |
| Royal Gold, Inc. | 64,300 | 6,203,021 | |
| 51,824,009 | |||
| Silver - 1.3% | |||
| Wheaton Precious Metals Corp. | 309,800 | 8,809,883 | |
| Steel - 2.9% | |||
| Allegheny Technologies, Inc. (a)(b) | 114,300 | 1,953,387 | |
| Commercial Metals Co. | 231,000 | 4,218,060 | |
| Reliance Steel & Aluminum Co. | 85,900 | 8,786,711 | |
| Steel Dynamics, Inc. | 181,300 | 4,828,019 | |
| 19,786,177 | |||
| TOTAL METALS & MINING | 119,091,659 | ||
| TOTAL COMMON STOCKS | |||
| (Cost $651,047,011) | 676,382,011 | ||
| Money Market Funds - 17.1% | |||
| Fidelity Cash Central Fund 1.60% (c) | 4,708,861 | 4,709,803 | |
| Fidelity Securities Lending Cash Central Fund 1.60% (c)(d) | 111,390,094 | 111,401,233 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $116,111,036) | 116,111,036 | ||
| TOTAL INVESTMENT IN SECURITIES - 117.0% | |||
| (Cost $767,158,047) | 792,493,047 | ||
| NET OTHER ASSETS (LIABILITIES) - (17.0)% | (115,140,331) | ||
| NET ASSETS - 100% | $677,352,716 |
Legend
(a) Security or a portion of the security is on loan at period end.
(b) Non-income producing
(c) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request.
(d) Investment made with cash collateral received from securities on loan.
Affiliated Central Funds
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:
| Fund | Income earned |
| Fidelity Cash Central Fund | $79,336 |
| Fidelity Securities Lending Cash Central Fund | 57,742 |
| Total | $137,078 |
Amounts in the income column in the above table include any capital gain distributions from underlying funds, which are presented in the corresponding line-item in the Statement of Operations, if applicable. Amount for Fidelity Securities Lending Cash Central Fund represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities.
Investment Valuation
The following is a summary of the inputs used, as of February 29, 2020, 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 below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.
| Valuation Inputs at Reporting Date: | ||||
| Description | Total | Level 1 | Level 2 | Level 3 |
| Investments in Securities: | ||||
| Common Stocks | $676,382,011 | $669,664,744 | $6,717,267 | $-- |
| Money Market Funds | 116,111,036 | 116,111,036 | -- | -- |
| Total Investments in Securities: | $792,493,047 | $785,775,780 | $6,717,267 | $-- |
Other Information
Distribution of investments by country or territory of incorporation, as a percentage of Total Net Assets, is as follows (Unaudited):
| United States of America | 70.9% |
| Ireland | 17.5% |
| Canada | 8.5% |
| United Kingdom | 2.2% |
| Others (Individually Less Than 1%) | 0.9% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Materials Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2020 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $107,852,575) — See accompanying schedule: Unaffiliated issuers (cost $651,047,011) | $676,382,011 | |
| Fidelity Central Funds (cost $116,111,036) | 116,111,036 | |
| Total Investment in Securities (cost $767,158,047) | $792,493,047 | |
| Foreign currency held at value (cost $19,217) | 19,160 | |
| Receivable for investments sold | 1,980,362 | |
| Receivable for fund shares sold | 614,027 | |
| Dividends receivable | 1,259,248 | |
| Distributions receivable from Fidelity Central Funds | 17,534 | |
| Prepaid expenses | 12,604 | |
| Other receivables | 146,668 | |
| Total assets | 796,542,650 | |
| Liabilities | ||
| Payable for investments purchased | $2,067,601 | |
| Payable for fund shares redeemed | 4,985,339 | |
| Accrued management fee | 342,968 | |
| Distribution and service plan fees payable | 50,918 | |
| Other affiliated payables | 159,783 | |
| Other payables and accrued expenses | 188,625 | |
| Collateral on securities loaned | 111,394,700 | |
| Total liabilities | 119,189,934 | |
| Net Assets | $677,352,716 | |
| Net Assets consist of: | ||
| Paid in capital | $757,409,450 | |
| Total accumulated earnings (loss) | (80,056,734) | |
| Net Assets | $677,352,716 | |
| Net Asset Value and Maximum Offering Price | ||
| Class A: | ||
| Net Asset Value and redemption price per share ($76,869,244 ÷ 1,294,306 shares)(a) | $59.39 | |
| Maximum offering price per share (100/94.25 of $59.39) | $63.01 | |
| Class M: | ||
| Net Asset Value and redemption price per share ($19,422,807 ÷ 330,111 shares)(a) | $58.84 | |
| Maximum offering price per share (100/96.50 of $58.84) | $60.97 | |
| Class C: | ||
| Net Asset Value and offering price per share ($24,239,278 ÷ 422,988 shares)(a) | $57.30 | |
| Materials: | ||
| Net Asset Value, offering price and redemption price per share ($405,667,520 ÷ 6,803,153 shares) | $59.63 | |
| Class I: | ||
| Net Asset Value, offering price and redemption price per share ($137,886,776 ÷ 2,316,825 shares) | $59.52 | |
| Class Z: | ||
| Net Asset Value, offering price and redemption price per share ($13,267,091 ÷ 223,352 shares) | $59.40 |
(a) Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 29, 2020 | ||
| Investment Income | ||
| Dividends | $17,618,644 | |
| Income from Fidelity Central Funds (including $57,742 from security lending) | 137,078 | |
| Total income | 17,755,722 | |
| Expenses | ||
| Management fee | $4,906,783 | |
| Transfer agent fees | 1,939,991 | |
| Distribution and service plan fees | 743,564 | |
| Accounting and security lending fees | 309,547 | |
| Custodian fees and expenses | 18,807 | |
| Independent trustees' fees and expenses | 5,210 | |
| Registration fees | 101,046 | |
| Audit | 51,939 | |
| Legal | 2,728 | |
| Interest | 7,733 | |
| Miscellaneous | 10,045 | |
| Total expenses before reductions | 8,097,393 | |
| Expense reductions | (86,756) | |
| Total expenses after reductions | 8,010,637 | |
| Net investment income (loss) | 9,745,085 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | (91,727,369) | |
| Fidelity Central Funds | 6,373 | |
| Foreign currency transactions | 50,290 | |
| Total net realized gain (loss) | (91,670,706) | |
| Change in net unrealized appreciation (depreciation) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | (34,449,569) | |
| Assets and liabilities in foreign currencies | (8,257) | |
| Total change in net unrealized appreciation (depreciation) | (34,457,826) | |
| Net gain (loss) | (126,128,532) | |
| Net increase (decrease) in net assets resulting from operations | $(116,383,447) |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 29, 2020 | Year ended February 28, 2019 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $9,745,085 | $18,081,625 |
| Net realized gain (loss) | (91,670,706) | 91,013,519 |
| Change in net unrealized appreciation (depreciation) | (34,457,826) | (319,877,443) |
| Net increase (decrease) in net assets resulting from operations | (116,383,447) | (210,782,299) |
| Distributions to shareholders | (9,657,928) | (148,511,389) |
| Share transactions - net increase (decrease) | (292,920,936) | (426,989,061) |
| Total increase (decrease) in net assets | (418,962,311) | (786,282,749) |
| Net Assets | ||
| Beginning of period | 1,096,315,027 | 1,882,597,776 |
| End of period | $677,352,716 | $1,096,315,027 |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights
Materials Portfolio Class A
| Years ended February 28, | 2020 A | 2019 | 2018 | 2017 | 2016 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $69.57 | $88.50 | $81.27 | $62.94 | $80.43 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .58 | .84 | .55 | .70 | .79 |
| Net realized and unrealized gain (loss) | (10.10) | (12.01) | 11.18 | 18.26 | (16.80) |
| Total from investment operations | (9.52) | (11.17) | 11.73 | 18.96 | (16.01) |
| Distributions from net investment income | (.66) | (.67) | (.50) | (.63) | (.58) |
| Distributions from net realized gain | – | (7.09) | (4.00) | – | (.91) |
| Total distributions | (.66) | (7.76) | (4.50) | (.63) | (1.48)C |
| Redemption fees added to paid in capitalB | – | – | – | –D | –D |
| Net asset value, end of period | $59.39 | $69.57 | $88.50 | $81.27 | $62.94 |
| Total ReturnE,F | (13.81)% | (12.59)% | 14.65% | 30.18% | (20.01)% |
| Ratios to Average Net AssetsG,H | |||||
| Expenses before reductions | 1.08% | 1.06% | 1.07% | 1.08% | 1.06% |
| Expenses net of fee waivers, if any | 1.08% | 1.06% | 1.07% | 1.08% | 1.06% |
| Expenses net of all reductions | 1.07% | 1.05% | 1.06% | 1.07% | 1.06% |
| Net investment income (loss) | .87% | 1.08% | .64% | .96% | 1.09% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $76,869 | $126,182 | $201,933 | $229,086 | $202,747 |
| Portfolio turnover rateI | 69% | 77%J | 67% | 49%J | 64% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Total distributions of $1.48 per share is comprised of distributions from net investment income of $.575 and distributions from net realized gain of $.906 per share.
D Amount represents less than $.005 per share.
E Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
F Total returns do not include the effect of the sales charges.
G Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
I Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
J Portfolio turnover rate excludes securities received or delivered in-kind.
See accompanying notes which are an integral part of the financial statements.
Materials Portfolio Class M
| Years ended February 28, | 2020 A | 2019 | 2018 | 2017 | 2016 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $68.98 | $87.79 | $80.66 | $62.52 | $79.95 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .39 | .61 | .30 | .47 | .56 |
| Net realized and unrealized gain (loss) | (10.01) | (11.88) | 11.08 | 18.12 | (16.69) |
| Total from investment operations | (9.62) | (11.27) | 11.38 | 18.59 | (16.13) |
| Distributions from net investment income | (.52) | (.45) | (.25) | (.45) | (.40) |
| Distributions from net realized gain | – | (7.09) | (4.00) | – | (.91) |
| Total distributions | (.52) | (7.54) | (4.25) | (.45) | (1.30)C |
| Redemption fees added to paid in capitalB | – | – | – | –D | –D |
| Net asset value, end of period | $58.84 | $68.98 | $87.79 | $80.66 | $62.52 |
| Total ReturnE,F | (14.05)% | (12.84)% | 14.30% | 29.78% | (20.27)% |
| Ratios to Average Net AssetsG,H | |||||
| Expenses before reductions | 1.37% | 1.35% | 1.36% | 1.39% | 1.38% |
| Expenses net of fee waivers, if any | 1.36% | 1.35% | 1.36% | 1.39% | 1.37% |
| Expenses net of all reductions | 1.36% | 1.34% | 1.35% | 1.38% | 1.37% |
| Net investment income (loss) | .58% | .79% | .35% | .65% | .77% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $19,423 | $27,436 | $40,107 | $40,935 | $30,118 |
| Portfolio turnover rateI | 69% | 77%J | 67% | 49%J | 64% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Total distributions of $1.30 per share is comprised of distributions from net investment income of $.395 and distributions from net realized gain of $.906 per share.
D Amount represents less than $.005 per share.
E Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
F Total returns do not include the effect of the sales charges.
G Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
I Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
J Portfolio turnover rate excludes securities received or delivered in-kind.
See accompanying notes which are an integral part of the financial statements.
Materials Portfolio Class C
| Years ended February 28, | 2020 A | 2019 | 2018 | 2017 | 2016 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $67.13 | $85.52 | $78.72 | $61.09 | $78.12 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .08 | .25 | (.09) | .15 | .24 |
| Net realized and unrealized gain (loss) | (9.76) | (11.50) | 10.80 | 17.68 | (16.28) |
| Total from investment operations | (9.68) | (11.25) | 10.71 | 17.83 | (16.04) |
| Distributions from net investment income | (.15) | (.04) | (.02) | (.20) | (.08) |
| Distributions from net realized gain | – | (7.09) | (3.89) | – | (.91) |
| Total distributions | (.15) | (7.14)C | (3.91) | (.20) | (.99) |
| Redemption fees added to paid in capitalB | – | – | – | –D | –D |
| Net asset value, end of period | $57.30 | $67.13 | $85.52 | $78.72 | $61.09 |
| Total ReturnE,F | (14.46)% | (13.24)% | 13.78% | 29.21% | (20.61)% |
| Ratios to Average Net AssetsG,H | |||||
| Expenses before reductions | 1.82% | 1.81% | 1.82% | 1.83% | 1.81% |
| Expenses net of fee waivers, if any | 1.82% | 1.81% | 1.82% | 1.82% | 1.81% |
| Expenses net of all reductions | 1.81% | 1.79% | 1.82% | 1.82% | 1.81% |
| Net investment income (loss) | .12% | .33% | (.11)% | .21% | .34% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $24,239 | $51,659 | $85,792 | $80,225 | $66,896 |
| Portfolio turnover rateI | 69% | 77%J | 67% | 49%J | 64% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Total distributions of $7.14 per share is comprised of distributions from net investment income of $.042 and distributions from net realized gain of $7.094 per share.
D Amount represents less than $.005 per share.
E Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
F Total returns do not include the effect of the contingent deferred sales charge.
G Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
I Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
J Portfolio turnover rate excludes securities received or delivered in-kind.
See accompanying notes which are an integral part of the financial statements.
Materials Portfolio
| Years ended February 28, | 2020 A | 2019 | 2018 | 2017 | 2016 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $69.84 | $88.90 | $81.64 | $63.20 | $80.77 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .77 | 1.06 | .79 | .90 | .98 |
| Net realized and unrealized gain (loss) | (10.14) | (12.09) | 11.24 | 18.34 | (16.89) |
| Total from investment operations | (9.37) | (11.03) | 12.03 | 19.24 | (15.91) |
| Distributions from net investment income | (.84) | (.93) | (.77) | (.80) | (.76) |
| Distributions from net realized gain | – | (7.09) | (4.00) | – | (.91) |
| Total distributions | (.84) | (8.03)C | (4.77) | (.80) | (1.66)D |
| Redemption fees added to paid in capitalB | – | – | – | –E | –E |
| Net asset value, end of period | $59.63 | $69.84 | $88.90 | $81.64 | $63.20 |
| Total ReturnF | (13.57)% | (12.35)% | 14.96% | 30.52% | (19.81)% |
| Ratios to Average Net AssetsG,H | |||||
| Expenses before reductions | .80% | .79% | .79% | .81% | .81% |
| Expenses net of fee waivers, if any | .80% | .79% | .79% | .81% | .81% |
| Expenses net of all reductions | .79% | .78% | .79% | .81% | .80% |
| Net investment income (loss) | 1.14% | 1.35% | .91% | 1.22% | 1.34% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $405,668 | $626,759 | $1,043,704 | $882,504 | $711,985 |
| Portfolio turnover rateI | 69% | 77%J | 67% | 49%J | 64% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Total distributions of $8.03 per share is comprised of distributions from net investment income of $.932 and distributions from net realized gain of $7.094 per share.
D Total distributions of $1.66 per share is comprised of distributions from net investment income of $.756 and distributions from net realized gain of $.906 per share.
E Amount represents less than $.005 per share.
F Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
G Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
I Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
J Portfolio turnover rate excludes securities received or delivered in-kind.
See accompanying notes which are an integral part of the financial statements.
Materials Portfolio Class I
| Years ended February 28, | 2020 A | 2019 | 2018 | 2017 | 2016 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $69.70 | $88.73 | $81.49 | $63.07 | $80.60 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .78 | 1.07 | .80 | .91 | 1.00 |
| Net realized and unrealized gain (loss) | (10.12) | (12.08) | 11.22 | 18.31 | (16.86) |
| Total from investment operations | (9.34) | (11.01) | 12.02 | 19.22 | (15.86) |
| Distributions from net investment income | (.84) | (.93) | (.78) | (.80) | (.77) |
| Distributions from net realized gain | – | (7.09) | (4.00) | – | (.91) |
| Total distributions | (.84) | (8.02) | (4.78) | (.80) | (1.67)C |
| Redemption fees added to paid in capitalB | – | – | – | –D | –D |
| Net asset value, end of period | $59.52 | $69.70 | $88.73 | $81.49 | $63.07 |
| Total ReturnE | (13.55)% | (12.34)% | 14.97% | 30.55% | (19.79)% |
| Ratios to Average Net AssetsF,G | |||||
| Expenses before reductions | .79% | .78% | .79% | .79% | .78% |
| Expenses net of fee waivers, if any | .79% | .78% | .79% | .79% | .78% |
| Expenses net of all reductions | .78% | .77% | .78% | .78% | .78% |
| Net investment income (loss) | 1.16% | 1.36% | .92% | 1.25% | 1.37% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $137,887 | $254,240 | $511,062 | $335,124 | $306,145 |
| Portfolio turnover rateH | 69% | 77%I | 67% | 49%I | 64% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Total distributions of $1.67 per share is comprised of distributions from net investment income of $.767 and distributions from net realized gain of $.906 per share.
D Amount represents less than $.005 per share.
E Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
H Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
I Portfolio turnover rate excludes securities received or delivered in-kind.
See accompanying notes which are an integral part of the financial statements.
Materials Portfolio Class Z
| Years ended February 28, | 2020 A | 2019 B |
| Selected Per–Share Data | ||
| Net asset value, beginning of period | $69.58 | $79.81 |
| Income from Investment Operations | ||
| Net investment income (loss)C | .88 | .62 |
| Net realized and unrealized gain (loss) | (10.10) | (6.96) |
| Total from investment operations | (9.22) | (6.34) |
| Distributions from net investment income | (.96) | (.96) |
| Distributions from net realized gain | – | (2.93) |
| Total distributions | (.96) | (3.89) |
| Net asset value, end of period | $59.40 | $69.58 |
| Total ReturnD,E | (13.43)% | (7.35)% |
| Ratios to Average Net AssetsF,G | ||
| Expenses before reductions | .63% | .63%H |
| Expenses net of fee waivers, if any | .63% | .62%H |
| Expenses net of all reductions | .62% | .61%H |
| Net investment income (loss) | 1.31% | 2.27%H |
| Supplemental Data | ||
| Net assets, end of period (000 omitted) | $13,267 | $10,039 |
| Portfolio turnover rateI | 69% | 77%J |
A For the year ended February 29.
B For the period October 2, 2018 (commencement of sale of shares) to February 28, 2019.
C Calculated based on average shares outstanding during the period.
D Total returns for periods of less than one year are not annualized.
E Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
H Annualized
I Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
J Portfolio turnover rate excludes securities received or delivered in-kind.
See accompanying notes which are an integral part of the financial statements.
Notes to Financial Statements
For the period ended February 29, 2020
1. Organization.
Materials Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the Trust) and is authorized to issue an unlimited number of shares. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries. The Fund offers Class A, Class M, Class C, Materials, Class I and Class Z shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. Effective March 1, 2019, Class C shares will automatically convert to Class A shares after a holding period of ten years from the initial date of purchase, with certain exceptions.
Effective January 1, 2020:
Investment advisers Fidelity Investments Money Management, Inc., FMR Co., Inc., and Fidelity SelectCo, LLC, merged with and into Fidelity Management & Research Company. In connection with the merger transactions, the resulting, merged investment adviser was then redomiciled from Massachusetts to Delaware, changed its corporate structure from a corporation to a limited liability company, and changed its name to "Fidelity Management & Research Company LLC".
Broker-dealer Fidelity Distributors Corporation merged with and into Fidelity Investments Institutional Services Company, Inc. ("FIISC"). FIISC was then redomiciled from Massachusetts to Delaware, changed its corporate structure from a corporation to a limited liability company, and changed its name to "Fidelity Distributors Company LLC".
Fidelity Investments Institutional Operations Company, Inc. converted from a Massachusetts corporation to a Massachusetts LLC, and changed its name to "Fidelity Investments Institutional Operations Company LLC".
2. Investments in Fidelity Central Funds.
The Fund invests in Fidelity Central Funds, which are open-end investment companies generally available only to other investment companies and accounts managed by the investment adviser and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by the investment adviser. Annualized expenses of the Money Market Central Funds as of their most recent shareholder report date ranged from less than .005% to .01%.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) website at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC website or upon request.
3. Significant Accounting Policies.
The Fund is an investment company and applies the accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946 Financial Services – Investments Companies. The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:
Investment Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Board of Trustees (the Board) has delegated the day to day responsibility for the valuation of the Fund's investments to the Fair Value Committee (the Committee) established by the Fund's investment adviser. In accordance with valuation policies and procedures approved by the Board, the Fund attempts to obtain prices from one or more third party pricing vendors or brokers to value its investments. When current market prices, quotations or currency exchange rates are not readily available or reliable, investments will be fair valued in good faith by the Committee, in accordance with procedures adopted by the Board. Factors used in determining fair value vary by investment type and may include market or investment specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The Committee oversees the Fund's valuation policies and procedures and reports to the Board on the Committee's activities and fair value determinations. The Board monitors the appropriateness of the procedures used in valuing the Fund's investments and ratifies the fair value determinations of the Committee.
The Fund categorizes the inputs to valuation techniques used to 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)
Valuation techniques used to value the Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by a third party pricing vendor on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-Traded Funds (ETFs) and certain indexes as well as quoted prices for similar securities may be used and would be categorized as Level 2 in the hierarchy. For equity securities, including restricted 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.
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value (NAV) each business day and are categorized as Level 1 in the hierarchy.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level as of February 29, 2020 is included at the end of the Fund's Schedule of Investments.
Foreign Currency. The Fund may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rates at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and include proceeds received from litigation. Dividend income is recorded 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. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Income and capital gain distributions from Fidelity Central Funds, if any, are recorded on the ex-dividend date. Certain distributions received by the Fund represent a return of capital or capital gain. The Fund determines the components of these distributions subsequent to the ex-dividend date, based upon receipt of tax filings or other correspondence relating to the underlying investment. These distributions are recorded as a reduction of cost of investments and/or as a realized gain. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Class Allocations and Expenses. Investment income, realized and unrealized capital gains and losses, common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated daily on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions may also differ by class. For the reporting period, the allocated portion of income and expenses to each class as a percent of its average net assets may vary due to the timing of recording these transactions in relation to fluctuating net assets of the classes. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Deferred Trustee Compensation. Under a Deferred Compensation Plan (the Plan) for the Fund, certain independent Trustees have elected to defer receipt of a portion of their annual compensation. Deferred amounts are invested in a cross-section of Fidelity funds, are marked-to-market and remain in the Fund until distributed in accordance with the Plan. The investment of deferred amounts and the offsetting payable to the Trustees of $145,295 are included in the accompanying Statement of Assets and Liabilities in other receivables and other payables and accrued expenses, respectively.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for U.S. Federal income taxes is required. As of February 29, 2020, the Fund did not have any unrecognized tax benefits in the financial statements; nor is the Fund aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. The Fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are declared and recorded on the ex-dividend date. Income and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. In addition, the Fund claimed a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Capital accounts are not adjusted for temporary book-tax differences which will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, deferred trustees compensation, partnerships, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
As of period end, the cost and unrealized appreciation (depreciation) in securities, and derivatives if applicable, for federal income tax purposes were as follows:
| Gross unrealized appreciation | $86,993,525 |
| Gross unrealized depreciation | (63,009,215) |
| Net unrealized appreciation (depreciation) | $23,984,310 |
| Tax Cost | $768,508,737 |
The tax-based components of distributable earnings as of period end were as follows:
| Capital loss carryforward | $(103,876,084) |
| Net unrealized appreciation (depreciation) on securities and other investments | $23,964,641 |
Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. The capital loss carryforward information presented below, including any applicable limitation, is estimated as of fiscal period end and is subject to adjustment.
| No expiration | |
| Short-term | $(34,373,469) |
| Long-term | (69,502,615) |
| Total capital loss carryforward | $(103,876,084) |
The tax character of distributions paid was as follows:
| February 29, 2020 | February 28, 2019 | |
| Ordinary Income | $9,657,928 | $ 14,413,957 |
| Long-term Capital Gains | – | 134,097,432 |
| Total | $9,657,928 | $ 148,511,389 |
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities are noted in the table below.
| Purchases ($) | Sales ($) | |
| Materials Portfolio | 626,862,265 | 918,399,775 |
5. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity Management & Research Company LLC (the investment adviser) and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and an annualized group fee rate that averaged .24% during the period. The group fee rate is based upon the monthly average net assets of a group of registered investment companies with which the investment adviser has management contracts. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the reporting period, the total annual management fee rate was .53% of the Fund's average net assets.
Distribution and Service Plan Fees. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Company LLC (FDC), an affiliate of the investment adviser, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the Fund and providing shareholder support services. For the period, the Distribution and Service Fee rates, total fees and amounts retained by FDC were as follows:
| Distribution Fee | Service Fee | Total Fees | Retained by FDC | |
| Class A | -% | .25% | $259,440 | $1,638 |
| Class M | .25% | .25% | 124,832 | 838 |
| Class C | .75% | .25% | 359,292 | 14,123 |
| $743,564 | $16,599 |
Sales Load. FDC may receive a front-end sales charge of up to 5.75% for selling Class A shares and 3.50% for selling Class M shares, some of which is paid to financial intermediaries for selling shares of the Fund. Depending on the holding period, FDC may receive contingent deferred sales charges levied on Class A, Class M and Class C redemptions. The deferred sales charges are 1.00% for Class C shares, 1.00% for certain purchases of Class A shares and .25% for certain purchases of Class M shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained by FDC | |
| Class A | $16,787 |
| Class M | 2,721 |
| Class C(a) | 1,543 |
| $21,051 |
(a) When Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company LLC (FIIOC), an affiliate of the investment adviser, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the Fund, except for Class Z. FIIOC receives an asset-based fee of Class Z's average net assets. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. Effective February 1, 2020, the Board approved to change the fee for Class Z from .046% to .044%.
For the period, transfer agent fees for each class were as follows:
| Amount | % of Class-Level Average Net Assets | |
| Class A | $246,731 | .24 |
| Class M | 68,804 | .28 |
| Class C | 83,521 | .23 |
| Materials | 1,132,316 | .21 |
| Class I | 402,714 | .20 |
| Class Z | 5,905 | .04 |
| $1,939,991 |
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of the investment adviser, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for each month. Prior to April 1, 2019, FSC had a separate agreement with the Fund for administration of the security lending program, based on the number and duration of lending transactions. For the period, the total fees paid for accounting and administration of securities lending were equivalent to the following annual rates:
| % of Average Net Assets | |
| Materials Portfolio | .03 |
Brokerage Commissions. A portion of portfolio transactions were placed with brokerage firms which are affiliates of the investment adviser. Brokerage commissions are included in net realized gain (loss) and change in net unrealized appreciation (depreciation) in the Statement of Operations. The commissions paid to these affiliated firms were as follows:
| Amount | |
| Materials Portfolio | $28,009 |
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the fund, along with other registered investment companies having management contracts with Fidelity Management & Research Company LLC (FMR), or other affiliated entities of FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the fund to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. Activity in this program during the period for which loans were outstanding was as follows:
| Borrower or Lender | Average Loan Balance | Weighted Average Interest Rate | Interest Expense | |
| Materials Portfolio | Borrower | $6,669,842 | 2.17% | $7,651 |
Interfund Trades. Funds may purchase from or sell securities to other Fidelity Funds under procedures adopted by the Board. The procedures have been designed to ensure these interfund trades are executed in accordance with Rule 17a-7 of the 1940 Act. Interfund trades are included within the respective purchases and sales amounts shown in the Purchases and Sales of Investments note.
Prior Fiscal Year Affiliated Redemptions In-Kind. During the prior period, 1,531,828 shares of the Fund were redeemed in kind for investments and cash with a value of $126,544,324. The Fund had a net realized gain of $42,386,899 on investments delivered through in-kind redemptions. The amount of the in-kind redemptions is included in share transactions in the accompanying Statement of Changes in Net Assets as well as the Notes to Financial Statements. The Fund recognized no gain or loss for federal income tax purposes.
6. Committed Line of Credit.
Certain Funds participate with other funds managed by the investment adviser or an affiliate in a $4.25 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The participating funds have agreed to pay commitment fees on their pro-rata portion of the line of credit, which are reflected in Miscellaneous expenses on the Statement of Operations, and are as follows:
| Amount | |
| Materials Portfolio | $2,481 |
During the period, there were no borrowings on this line of credit.
7. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. For equity securities, lending agents are used, including National Financial Services (NFS), an affiliate of the Fund. Pursuant to a securities lending agreement, NFS will receive a fee, which is capped at 9.9% of daily lending revenue, for its services as lending agent. The Fund may lend securities to certain qualified borrowers, including NFS. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. The Fund or borrower may terminate the loan at any time, and if the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, the Fund may apply collateral received from the borrower against the obligation. The Fund may experience delays and costs in recovering the securities loaned. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Total fees paid by the Fund to NFS, as lending agent, amounted to $4,379. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. During the period, there were no securities loaned to NFS.
8. Bank Borrowings.
The Fund is permitted to have bank borrowings for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity requirements. The Fund has established borrowing arrangements with certain banks. The interest rate on the borrowings is the bank's base rate, as revised from time to time. Any open loans, including accrued interest, at period end are presented under the caption "Notes payable" in the Statement of Assets and Liabilities, if applicable. Activity in this program during the period for which loans were outstanding was as follows:
| Average Loan Balance | Weighted Average Interest Rate | Interest Expense | |
| Materials Portfolio | $1,002,000 | 2.94% | $82 |
9. Expense Reductions.
Commissions paid to certain brokers with whom the investment adviser, or its affiliates, places trades on behalf of the Fund include an amount in addition to trade execution, which may be rebated back to the Fund to offset certain expenses. This amount totaled $72,301 for the period.
In addition, during the period the investment adviser or an affiliate reimbursed and/or waived a portion of fund-level operating expenses in the amount of $5,945.
In addition, during the period the investment adviser or an affiliate reimbursed the Fund $8,510 for an operational error which is included in the accompanying Statement of Operations.
10. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
| Year ended February 29, 2020 | Year ended February 28, 2019(a) |
|
| Distributions to shareholders | ||
| Class A | $898,677 | $15,708,925 |
| Class M | 184,051 | 3,202,320 |
| Class C | 66,737 | 6,520,876 |
| Materials | 6,084,056 | 82,797,754 |
| Class I | 2,187,246 | 39,718,583 |
| Class Z | 237,161 | 562,931 |
| Total | $9,657,928 | $148,511,389 |
(a) Distributions for Class Z are for the period October 2, 2018 (commencement of sale of shares) to February 28, 2019.
11. Share Transactions.
Share transactions for each class were as follows and may contain automatic conversions between classes or exchanges between affiliated funds:
| Shares | Shares | Dollars | Dollars | |
| Year ended February 29, 2020 | Year ended February 28, 2019(a) | Year ended February 29, 2020 | Year ended February 28, 2019(a) | |
| Class A | ||||
| Shares sold | 244,450 | 308,373 | $16,509,685 | $22,956,940 |
| Reinvestment of distributions | 12,915 | 212,733 | 880,535 | 15,369,185 |
| Shares redeemed | (776,678) | (989,324) | (52,530,774) | (75,462,106) |
| Net increase (decrease) | (519,313) | (468,218) | $(35,140,554) | $(37,135,981) |
| Class M | ||||
| Shares sold | 35,457 | 54,673 | $2,382,633 | $4,209,329 |
| Reinvestment of distributions | 2,714 | 44,672 | 183,413 | 3,195,601 |
| Shares redeemed | (105,772) | (158,456) | (7,006,735) | (12,302,958) |
| Net increase (decrease) | (67,601) | (59,111) | $(4,440,689) | $(4,898,028) |
| Class C | ||||
| Shares sold | 17,268 | 52,426 | $1,120,535 | $3,945,243 |
| Reinvestment of distributions | 966 | 88,963 | 63,603 | 6,259,533 |
| Shares redeemed | (364,770) | (375,023) | (23,591,304) | (27,023,944) |
| Net increase (decrease) | (346,536) | (233,634) | $(22,407,166) | $(16,819,168) |
| Materials | ||||
| Shares sold | 436,712 | 723,502 | $29,584,388 | $55,284,340 |
| Reinvestment of distributions | 82,761 | 1,071,623 | 5,662,504 | 77,748,766 |
| Shares redeemed | (2,690,491) | (4,560,838)(b) | (181,389,398) | (359,459,696)(b) |
| Net increase (decrease) | (2,171,018) | (2,765,713) | $(146,142,506) | $(226,426,590) |
| Class I | ||||
| Shares sold | 507,369 | 1,171,052 | $34,230,110 | $91,157,331 |
| Reinvestment of distributions | 30,204 | 515,251 | 2,062,607 | 37,224,159 |
| Shares redeemed | (1,868,270) | (3,798,586) | (125,984,780) | (280,329,178) |
| Net increase (decrease) | (1,330,697) | (2,112,283) | $(89,692,063) | $(151,947,688) |
| Class Z | ||||
| Shares sold | 212,839 | 190,704 | $13,863,966 | $13,136,478 |
| Reinvestment of distributions | 3,047 | 6,745 | 207,591 | 418,264 |
| Shares redeemed | (136,815) | (53,168) | (9,169,515) | (3,316,348) |
| Net increase (decrease) | 79,071 | 144,281 | $4,902,042 | $10,238,394 |
(a) Share transactions for Class Z are for the period October 2, 2018 (commencement of sale of shares) to February 28, 2019.
(b) Amount includes in-kind redemptions (See Prior Fiscal Year Affiliated Redemptions In-Kind note for additional details).
12. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
13. Coronavirus (COVID-19) Pandemic.
An outbreak of COVID-19 first detected in China during December 2019 has since spread globally and was declared a pandemic by the World Health Organization during March 2020. Developments that disrupt global economies and financial markets, such as the COVID-19 pandemic, may magnify factors that affect the Fund's performance.
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of Fidelity Select Portfolios and Shareholders of Chemicals Portfolio and Materials Portfolio
Opinions on the Financial Statements
We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of Chemicals Portfolio and Materials Portfolio (two of the funds constituting Fidelity Select Portfolios, hereafter collectively referred to as the “Funds”) as of February 29, 2020, the related statements of operations for the year ended February 29, 2020, the statements of changes in net assets for each of the two years in the period ended February 29, 2020, including the related notes, and the financial highlights for each of the periods indicated therein (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of each of the Funds as of February 29, 2020, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period ended February 29, 2020 and each of the financial highlights for each of the periods indicated therein in conformity with accounting principles generally accepted in the United States of America
Basis for Opinions
These financial statements are the responsibility of the Funds’ management. Our responsibility is to express an opinion on the Funds’ financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Funds in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of February 29, 2020 by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinions.
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 13, 2020
We have served as the auditor of one or more investment companies in the Fidelity group of funds since 1932.
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of Fidelity Select Portfolios and Shareholders of Gold Portfolio
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated statement of assets and liabilities, including the consolidated schedule of investments, of Gold Portfolio and its subsidiary (one of the funds constituting Fidelity Select Portfolios, referred to hereafter as the “Fund”) as of February 29, 2020, the related consolidated statement of operations for the year ended February 29, 2020, the consolidated statement of changes in net assets for each of the two years in the period ended February 29, 2020, including the related notes, and the consolidated financial highlights for each of the periods indicated therein (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Fund as of February 29, 2020, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended February 29, 2020 and the financial highlights for each of the periods indicated therein in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These consolidated financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our procedures included confirmation of securities owned as of February 29, 2020 by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 13, 2020
We have served as the auditor of one or more investment companies in the Fidelity group of funds since 1932.
Trustees and Officers
The Trustees, Members of the Advisory Board (if any), and officers of the trust and funds, as applicable, are listed below. The Board of Trustees governs each fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee each fund's activities, review contractual arrangements with companies that provide services to each fund, oversee management of the risks associated with such activities and contractual arrangements, and review each fund's performance. Except for Michael E. Wiley, each of the Trustees oversees 302 funds. Mr. Wiley oversees 199 funds.
The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust. Each Trustee who is not an interested person (as defined in the 1940 Act) of the trust and the funds is referred to herein as an Independent Trustee. Each Independent Trustee shall retire not later than the last day of the calendar year in which his or her 75th birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. Officers and Advisory Board Members hold office without limit in time, except that any officer or Advisory Board Member may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years.
Each fund's Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-800-544-8544 if you’re an individual investing directly with Fidelity, call 1-800-835-5092 if you’re a plan sponsor or participant with Fidelity as your recordkeeper or call 1-877-208-0098 on institutional accounts or if you’re an advisor or invest through one.
Experience, Skills, Attributes, and Qualifications of the Trustees. The Governance and Nominating Committee has adopted a statement of policy that describes the experience, qualifications, attributes, and skills that are necessary and desirable for potential Independent Trustee candidates (Statement of Policy). The Board believes that each Trustee satisfied at the time he or she was initially elected or appointed a Trustee, and continues to satisfy, the standards contemplated by the Statement of Policy. The Governance and Nominating Committee also engages professional search firms to help identify potential Independent Trustee candidates who have the experience, qualifications, attributes, and skills consistent with the Statement of Policy. From time to time, additional criteria based on the composition and skills of the current Independent Trustees, as well as experience or skills that may be appropriate in light of future changes to board composition, business conditions, and regulatory or other developments, have also been considered by the professional search firms and the Governance and Nominating Committee. In addition, the Board takes into account the Trustees' commitment and participation in Board and committee meetings, as well as their leadership of standing and ad hoc committees throughout their tenure.
In determining that a particular Trustee was and continues to be qualified to serve as a Trustee, the Board has considered a variety of criteria, none of which, in isolation, was controlling. The Board believes that, collectively, the Trustees have balanced and diverse experience, qualifications, attributes, and skills, which allow the Board to operate effectively in governing each fund and protecting the interests of shareholders. Information about the specific experience, skills, attributes, and qualifications of each Trustee, which in each case led to the Board's conclusion that the Trustee should serve (or continue to serve) as a trustee of the funds, is provided below.
Board Structure and Oversight Function. James C. Curvey is an interested person and currently serves as Chairman. The Trustees have determined that an interested Chairman is appropriate and benefits shareholders because an interested Chairman has a personal and professional stake in the quality and continuity of services provided to the funds. Independent Trustees exercise their informed business judgment to appoint an individual of their choosing to serve as Chairman, regardless of whether the Trustee happens to be independent or a member of management. The Independent Trustees have determined that they can act independently and effectively without having an Independent Trustee serve as Chairman and that a key structural component for assuring that they are in a position to do so is for the Independent Trustees to constitute a substantial majority for the Board. The Independent Trustees also regularly meet in executive session. Ned C. Lautenbach serves as Chairman of the Independent Trustees and as such (i) acts as a liaison between the Independent Trustees and management with respect to matters important to the Independent Trustees and (ii) with management prepares agendas for Board meetings.
Fidelity® funds are overseen by different Boards of Trustees. The funds' Board oversees Fidelity's high income and certain equity funds, and other Boards oversee Fidelity's investment-grade bond, money market, asset allocation, and other equity funds. The asset allocation funds may invest in Fidelity® funds overseen by the funds' Board. The use of separate Boards, each with its own committee structure, allows the Trustees of each group of Fidelity® funds to focus on the unique issues of the funds they oversee, including common research, investment, and operational issues. On occasion, the separate Boards establish joint committees to address issues of overlapping consequences for the Fidelity® funds overseen by each Board.
The Trustees operate using a system of committees to facilitate the timely and efficient consideration of all matters of importance to the Trustees, each fund, and fund shareholders and to facilitate compliance with legal and regulatory requirements and oversight of the funds' activities and associated risks. The Board, acting through its committees, has charged FMR and its affiliates with (i) identifying events or circumstances the occurrence of which could have demonstrably adverse effects on the funds' business and/or reputation; (ii) implementing processes and controls to lessen the possibility that such events or circumstances occur or to mitigate the effects of such events or circumstances if they do occur; and (iii) creating and maintaining a system designed to evaluate continuously business and market conditions in order to facilitate the identification and implementation processes described in (i) and (ii) above. Because the day-to-day operations and activities of the funds are carried out by or through FMR, its affiliates, and other service providers, the funds' exposure to risks is mitigated but not eliminated by the processes overseen by the Trustees. While each of the Board's committees has responsibility for overseeing different aspects of the funds' activities, oversight is exercised primarily through the Operations, Audit, and Compliance Committees. Appropriate personnel, including but not limited to the funds' Chief Compliance Officer (CCO), FMR's internal auditor, the independent accountants, the funds' Treasurer and portfolio management personnel, make periodic reports to the Board's committees, as appropriate, including an annual review of Fidelity's risk management program for the Fidelity® funds. The responsibilities of each standing committee, including their oversight responsibilities, are described further under "Standing Committees of the Trustees."
Interested Trustees*:
Correspondence intended for a Trustee who is an interested person may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210.
Name, Year of Birth; Principal Occupations and Other Relevant Experience+
James C. Curvey (1935)
Year of Election or Appointment: 2018
Trustee
Chairman of the Board of Trustees
Mr. Curvey also serves as Trustee of other Fidelity® funds. Mr. Curvey is Vice Chairman (2007-present) and Director of FMR LLC (diversified financial services company). In addition, Mr. Curvey is an Overseer Emeritus for the Boston Symphony Orchestra, a Director of Artis-Naples, and a Trustee of Brewster Academy in Wolfeboro, New Hampshire. Previously, Mr. Curvey served as a Director of Fidelity Research & Analysis Co. (investment adviser firm, 2009-2018), Director of Fidelity Investments Money Management, Inc. (investment adviser firm, 2009-2014) and a Director of FMR and FMR Co., Inc. (investment adviser firms, 2007-2014).
* Determined to be an “Interested Trustee” by virtue of, among other things, his or her affiliation with the trust or various entities under common control with FMR.
+ The information includes the Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to the Trustee's qualifications to serve as a Trustee, which led to the conclusion that the Trustee should serve as a Trustee for each fund.
Independent Trustees:
Correspondence intended for an Independent Trustee may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.
Name, Year of Birth; Principal Occupations and Other Relevant Experience+
Dennis J. Dirks (1948)
Year of Election or Appointment: 2018
Trustee
Mr. Dirks also serves as Trustee of other Fidelity® funds. Prior to his retirement in May 2003, Mr. Dirks served as Chief Operating Officer and as a member of the Board of The Depository Trust & Clearing Corporation (financial markets infrastructure), President, Chief Operating Officer and a member of the Board of The Depository Trust Company (DTC), President and a member of the Board of the National Securities Clearing Corporation (NSCC), Chief Executive Officer and a member of the Board of the Government Securities Clearing Corporation and Chief Executive Officer and a member of the Board of the Mortgage-Backed Securities Clearing Corporation. Mr. Dirks currently serves as a member of the Finance Committee (2016-present) and Board (2017-present) and is Treasurer (2018-present) of the Asolo Repertory Theatre.
Donald F. Donahue (1950)
Year of Election or Appointment: 2018
Trustee
Mr. Donahue also serves as Trustee of other Fidelity® funds. Mr. Donahue serves as President and Chief Executive Officer of Miranda Partners, LLC (risk consulting for the financial services industry, 2012-present). Previously, Mr. Donahue served as Chief Executive Officer (2006-2012), Chief Operating Officer (2003-2006) and Managing Director, Customer Marketing and Development (1999-2003) of The Depository Trust & Clearing Corporation (financial markets infrastructure). Mr. Donahue currently serves as a member (2007-present) and Co-Chairman (2016-present) of the Board of United Way of New York, a member of the Board of NYC Leadership Academy (2012-present) and a member of the Board of Advisors of Ripple Labs, Inc. (financial services, 2015-present). Mr. Donahue previously served as a member of the Advisory Board of certain Fidelity® funds (2015-2018).
Alan J. Lacy (1953)
Year of Election or Appointment: 2018
Trustee
Mr. Lacy also serves as Trustee of other Fidelity® funds. Previously, Mr. Lacy served as Senior Adviser (2007-2014) of Oak Hill Capital Partners, L.P. (private equity), Chief Executive Officer (2005) and Vice Chairman (2005-2006) of Sears Holdings Corporation (retail), Chief Executive Officer and Chairman of the Board of Sears, Roebuck and Co. (retail, 2000-2005) and Chairman (2014-2017) and a member of the Board (2010-2017) of Dave & Buster’s Entertainment, Inc. (restaurant and entertainment complexes). Mr. Lacy currently serves as a member of the Board of Bristol-Myers Squibb Company (global pharmaceuticals, 2008-present), Trustee of the California Chapter of The Nature Conservancy (2015-present) and a member of the Board of the Center for Advanced Study in the Behavioral Sciences at Stanford University (2015-present).
Ned C. Lautenbach (1944)
Year of Election or Appointment: 2018
Trustee
Chairman of the Independent Trustees
Mr. Lautenbach also serves as Trustee of other Fidelity® funds. Mr. Lautenbach currently serves as Chair of the Board of Governors, State University System of Florida (2013-present) and is a member of the Council on Foreign Relations (1994-present). He is also a member and has in the past served as Chairman of the Board of Directors of Artis-Naples (2012-present). Previously, Mr. Lautenbach served as a member and then Lead Director of the Board of Directors of Eaton Corporation (diversified industrial, 1997-2016). He was also a Partner at Clayton, Dubilier & Rice, LLC (private equity investment, 1998-2010); as well as Director of Sony Corporation (2006-2007). In addition, Mr. Lautenbach had a 30-year career with IBM (technology company), during which time he served as Senior Vice President and as a member of the Corporate Executive Committee (1968-1998).
Joseph Mauriello (1944)
Year of Election or Appointment: 2018
Trustee
Mr. Mauriello also serves as Trustee of other Fidelity® funds. Prior to his retirement in January 2006, Mr. Mauriello served in numerous senior management positions including Deputy Chairman and Chief Operating Officer (2004-2005), and Vice Chairman of Financial Services (2002-2004) of KPMG LLP US (professional services, 1965-2005). Mr. Mauriello currently serves as a member of the Independent Directors Council Governing Council (2015-present). Previously, Mr. Mauriello served as a member of the Board of XL Group plc. (global insurance and re-insurance, 2006-2018).
Cornelia M. Small (1944)
Year of Election or Appointment: 2018
Trustee
Ms. Small also serves as Trustee of other Fidelity® funds. Previously, Ms. Small served as Chief Investment Officer, Director of Global Equity Investments and a member of Scudder, Stevens & Clark and Scudder Kemper Investments. Ms. Small previously served as a member of the Board (2009-2019) and Chair of the Investment Committee (2010-2019) of the Teagle Foundation and a member of the Investment Committee of the Berkshire Taconic Community Foundation (2008-2019).
Garnett A. Smith (1947)
Year of Election or Appointment: 2013
Trustee
Mr. Smith also serves as Trustee of other Fidelity® funds. Prior to his retirement, Mr. Smith served as Chairman and Chief Executive Officer (1990-1997) and President (1986-1990) of Inbrand Corp. (manufacturer of personal absorbent products). Prior to his employment with Inbrand Corp., he was employed by a retail fabric chain and North Carolina National Bank (now Bank of America). Mr. Smith previously served as a member of the Advisory Board of certain Fidelity® funds (2012-2013).
David M. Thomas (1949)
Year of Election or Appointment: 2018
Trustee
Mr. Thomas also serves as Trustee of other Fidelity® funds. Previously, Mr. Thomas served as Executive Chairman (2005-2006) and Chairman and Chief Executive Officer (2000-2005) of IMS Health, Inc. (pharmaceutical and healthcare information solutions). Mr. Thomas currently serves as Non-Executive Chairman of the Board of Fortune Brands Home and Security (home and security products, 2011-present), and a member of the Board (2004-present) and Presiding Director (2013-present) of Interpublic Group of Companies, Inc. (marketing communication).
Michael E. Wiley (1950)
Year of Election or Appointment: 2008
Trustee
Mr. Wiley also serves as Trustee or a member of the Advisory Board of other Fidelity® funds. Previously, Mr. Wiley served as Chairman, President and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004). Mr. Wiley currently serves as a member of the Board of High Point Resources (exploration and production, 2005-present). Previously, Mr. Wiley served as a member of the Board of Andeavor Corporation (independent oil refiner and marketer, 2005-2018) and a member of the Board of Andeavor Logistics LP (natural resources logistics, 2015-2018).
+ The information includes the Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to the Trustee's qualifications to serve as a Trustee, which led to the conclusion that the Trustee should serve as a Trustee for each fund.
Advisory Board Members and Officers:
Correspondence intended for a Member of the Advisory Board (if any) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235. Correspondence intended for an officer or Peter S. Lynch may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210. Officers appear below in alphabetical order.
Name, Year of Birth; Principal Occupation
Vicki L. Fuller (1957)
Year of Election or Appointment: 2018
Member of the Advisory Board
Ms. Fuller also serves as a member of the Advisory Board of other Fidelity® funds. Previously, Ms. Fuller served as Chief Investment Officer of the New York State Common Retirement Fund (2012-2018) and held a variety of positions at AllianceBernstein L.P. (global asset management, 1985-2012), including Managing Director (2006-2012) and Senior Vice President and Senior Portfolio Manager (2001-2006). Ms. Fuller currently serves as a member of the Board, Audit Committee and Nominating and Governance Committee of The Williams Companies, Inc. (natural gas infrastructure, 2018-present) and as a member of the Board of Treliant, LLC (consulting, 2019-present).
Patricia L. Kampling (1959)
Year of Election or Appointment: 2020
Member of the Advisory Board
Ms. Kampling also serves as Member of the Advisory Board of other Fidelity® funds. Prior to her retirement, Ms. Kampling served as Chairman of the Board and Chief Executive Officer (2012-2019), President and Chief Operating Officer (2011-2012) and Executive Vice President and Chief Financial Officer (2010-2011) of Alliant Energy Corporation. Ms. Kampling currently serves as a member of the Board, Compensation Committee and Executive Committee and as Chair of the Audit Committee of Briggs & Stratton Corporation (manufacturing, 2011-present) and as a member of the Board, Audit, Finance and Risk Committee and Safety, Environmental, Technology and Operations Committee of American Water Works Company, Inc. (utilities company, 2019-present). In addition, Ms. Kampling currently serves as a member of the Board of the Nature Conservancy, Wisconsin Chapter (2019-present). Previously, Ms. Kampling served as a member of the Board of Interstate Power and Light Company (2012-2019) and Wisconsin Power and Light Company (2012-2019) (each a subsidiary of Alliant Energy Corporation) and as a member of the Board and Workforce Development Committee of the Business Roundtable (2018-2019).
Peter S. Lynch (1944)
Year of Election or Appointment: 2018
Member of the Advisory Board
Mr. Lynch also serves as Member of the Advisory Board of other Fidelity® funds. Mr. Lynch is Vice Chairman and a Director of Fidelity Management & Research Company LLC (investment adviser firm). In addition, Mr. Lynch serves as a Trustee of Boston College and as the Chairman of the Inner-City Scholarship Fund. Previously, Mr. Lynch served as Vice Chairman and a Director of FMR Co., Inc. (investment adviser firm) and on the Special Olympics International Board of Directors (1997-2006).
Susan Tomasky (1953)
Year of Election or Appointment: 2020
Member of the Advisory Board
Ms. Tomasky also serves as Member of the Advisory Board of other Fidelity® funds. Prior to her retirement, Ms. Tomasky served in various executive officer positions at American Electric Power Company, Inc. (1998-2011), including most recently as President of AEP Transmission (2007-2011). Ms. Tomasky currently serves as a member of the Board and Sustainability Committee and as Chair of the Audit Committee of Marathon Petroleum Corporation (2018-present) and as a member of the Board, Corporate Governance Committee and Organization and Compensation Committee and as Chair of the Audit Committee of Public Service Enterprise Group, Inc. (utilities company, 2012-present). In addition, Ms. Tomasky currently serves as a member of the Board of the Columbus Regional Airport Authority (2007-present), as a member of the Board of the Royal Shakespeare Company – America (2009-present), as a member of the Board of the Columbus Association for the Performing Arts (2011-present) and as a member of the Board of Kenyon College (2016-present). Previously, Ms. Tomasky served as a member of the Board (2011-2019) and as Lead Independent Director (2015-2018) of Andeavor Corporation (previously Tesoro Corporation) (independent oil refiner and marketer) and as a member of the Board of Summit Midstream Partners LP (energy, 2012-2018).
Elizabeth Paige Baumann (1968)
Year of Election or Appointment: 2017
Anti-Money Laundering (AML) Officer
Ms. Baumann also serves as AML Officer of other funds. She is Chief AML Officer (2012-present) and Senior Vice President (2014-present) of FMR LLC (diversified financial services company) and is an employee of Fidelity Investments. Previously, Ms. Baumann served as AML Officer of certain funds (2017-2019), as AML Officer of the funds (2012-2016), and Vice President (2007-2014) and Deputy Anti-Money Laundering Officer (2007-2012) of FMR LLC.
Craig S. Brown (1977)
Year of Election or Appointment: 2019
Assistant Treasurer
Mr. Brown also serves as Assistant Treasurer of other funds. Mr. Brown is an employee of Fidelity Investments (2013-present).
John J. Burke III (1964)
Year of Election or Appointment: 2018
Chief Financial Officer
Mr. Burke also serves as Chief Financial Officer of other funds. Mr. Burke serves as Head of Investment Operations for Fidelity Fund and Investment Operations (2018-present) and is an employee of Fidelity Investments (1998-present). Previously Mr. Burke served as head of Asset Management Investment Operations (2012-2018).
William C. Coffey (1969)
Year of Election or Appointment: 2019
Assistant Secretary
Mr. Coffey also serves as Assistant Secretary of other funds. He is Senior Vice President and Deputy General Counsel of FMR LLC (diversified financial services company, 2010-present), and is an employee of Fidelity Investments. Previously, Mr. Coffey served as Secretary and CLO of certain funds (2018-2019); CLO, Secretary, and Senior Vice President of Fidelity Management & Research Company and FMR Co., Inc. (investment adviser firms, 2018-2019); Secretary of Fidelity SelectCo, LLC and Fidelity Investments Money Management, Inc. (investment adviser firms, 2018-2019); CLO of Fidelity Management & Research (Hong Kong) Limited, FMR Investment Management (UK) Limited, and Fidelity Management & Research (Japan) Limited (investment adviser firms, 2018-2019); and Assistant Secretary of certain funds (2009-2018).
Timothy M. Cohen (1969)
Year of Election or Appointment: 2018
Vice President
Mr. Cohen also serves as Vice President of other funds. Mr. Cohen serves as Co-Head of Equity (2018-present), a Director of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2016-present), and is an employee of Fidelity Investments. Previously, Mr. Cohen served as Executive Vice President of Fidelity SelectCo, LLC (2019), Head of Global Equity Research (2016-2018), Chief Investment Officer - Equity and a Director of Fidelity Management & Research (U.K.) Inc. (investment adviser firm, 2013-2015) and as a Director of Fidelity Management & Research (Hong Kong) Limited (investment adviser firm, 2017).
Jonathan Davis (1968)
Year of Election or Appointment: 2010
Assistant Treasurer
Mr. Davis also serves as Assistant Treasurer of other funds. Mr. Davis serves as Assistant Treasurer of FMR Capital, Inc. (2017-present) and is an employee of Fidelity Investments. Previously, Mr. Davis served as Vice President and Associate General Counsel of FMR LLC (diversified financial services company, 2003-2010).
Laura M. Del Prato (1964)
Year of Election or Appointment: 2018
Assistant Treasurer
Ms. Del Prato also serves as an officer of other funds. Ms. Del Prato is an employee of Fidelity Investments (2017-present). Prior to joining Fidelity Investments, Ms. Del Prato served as a Managing Director and Treasurer of the JPMorgan Mutual Funds (2014-2017). Prior to JPMorgan, Ms. Del Prato served as a partner at Cohen Fund Audit Services (accounting firm, 2012-2013) and KPMG LLP (accounting firm, 2004-2012).
Colm A. Hogan (1973)
Year of Election or Appointment: 2020
Assistant Treasurer
Mr. Hogan also serves as an officer of other funds. Mr. Hogan serves as Assistant Treasurer of FMR Capital, Inc. (2017-present) and is an employee of Fidelity Investments (2005-present). Previously, Mr. Hogan served as Deputy Treasurer of certain Fidelity® funds (2016-2020) and Assistant Treasurer of certain Fidelity® funds (2016-2018).
Pamela R. Holding (1964)
Year of Election or Appointment: 2018
Vice President
Ms. Holding also serves as Vice President of other funds. Ms. Holding serves as Co-Head of Equity (2018-present) and is an employee of Fidelity Investments (2013-present). Previously, Ms. Holding served as Executive Vice President of Fidelity SelectCo, LLC (2019) and as Chief Investment Officer of Fidelity Institutional Asset Management (2013-2018).
Cynthia Lo Bessette (1969)
Year of Election or Appointment: 2019
Secretary and Chief Legal Officer (CLO)
Ms. Lo Bessette also serves as an officer of other funds. Ms. Lo Bessette serves as CLO, Secretary, and Senior Vice President of Fidelity Management & Research Company LLC (investment adviser firm, 2019-present); and CLO of Fidelity Management & Research (Hong Kong) Limited, FMR Investment Management (UK) Limited, and Fidelity Management & Research (Japan) Limited (investment adviser firms, 2019-present). She is a Senior Vice President and Deputy General Counsel of FMR LLC (diversified financial services company, 2019-present), and is an employee of Fidelity Investments. Previously, Ms. Lo Bessette served as CLO, Secretary, and Senior Vice President of FMR Co., Inc. (investment adviser firm, 2019); Secretary of Fidelity SelectCo, LLC and Fidelity Investments Money Management, Inc. (investment adviser firms, 2019). Prior to joining Fidelity Investments, Ms. Lo Bessette was Executive Vice President, General Counsel (2016-2019) and Senior Vice President, Deputy General Counsel (2015-2016) of OppenheimerFunds (investment management company) and Deputy Chief Legal Officer (2013-2015) of Jennison Associates LLC (investment adviser firm).
Chris Maher (1972)
Year of Election or Appointment: 2020
Deputy Treasurer
Mr. Maher also serves as an officer of other funds. Mr. Maher serves as Assistant Treasurer of FMR Capital, Inc. (2017-present), and is an employee of Fidelity Investments (2008-present). Previously, Mr. Maher served as Assistant Treasurer of certain funds (2013-2020); Vice President of Asset Management Compliance (2013), Vice President of the Program Management Group of FMR (investment adviser firm, 2010-2013), and Vice President of Valuation Oversight (2008-2010).
Kenneth B. Robins (1969)
Year of Election or Appointment: 2018
Chief Compliance Officer
Mr. Robins also serves as an officer of other funds. Mr. Robins serves as Compliance Officer of Fidelity Management & Research Company LLC (investment adviser firm, 2016-present) and is an employee of Fidelity Investments (2004-present). Previously, Mr. Robins served as Compliance Officer of FMR Co., Inc. (investment adviser firm, 2016-2019), as Executive Vice President of Fidelity Investments Money Management, Inc. (investment adviser firm, 2013-2016) and served in other fund officer roles.
Stacie M. Smith (1974)
Year of Election or Appointment: 2018
President and Treasurer
Ms. Smith also serves as an officer of other funds. Ms. Smith serves as Assistant Treasurer of FMR Capital, Inc. (2017-present), is an employee of Fidelity Investments (2009-present), and has served in other fund officer roles. Prior to joining Fidelity Investments, Ms. Smith served as Senior Audit Manager of Ernst & Young LLP (accounting firm, 1996-2009). Previously, Ms. Smith served as Assistant Treasurer (2013-2019) and Deputy Treasurer (2013-2016) of certain Fidelity® funds.
Marc L. Spector (1972)
Year of Election or Appointment: 2017
Assistant Treasurer
Mr. Spector also serves as an officer of other funds. Mr. Spector serves as Assistant Treasurer of FMR Capital, Inc. (2017-present) and is an employee of Fidelity Investments (2016-present). Prior to joining Fidelity Investments, Mr. Spector served as Director at the Siegfried Group (accounting firm, 2013-2016), and prior to Siegfried Group as audit senior manager at Deloitte & Touche LLP (accounting firm, 2005-2013).
Jim Wegmann (1979)
Year of Election or Appointment: 2019
Assistant Treasurer
Mr. Wegmann also serves as Assistant Treasurer of other funds. Mr. Wegmann is an employee of Fidelity Investments (2011-present).
Shareholder Expense Example
As a shareholder of a Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments or redemption proceeds, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (September 1, 2019 to February 29, 2020).
Actual Expenses
The first line of the accompanying table for each Class of each fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a Class of the fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. In addition, each Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each Class of each fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. In addition, each Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Annualized Expense Ratio-A | Beginning Account Value September 1, 2019 | Ending Account Value February 29, 2020 | Expenses Paid During Period-B September 1, 2019 to February 29, 2020 |
|
| Chemicals Portfolio | .78% | |||
| Actual | $1,000.00 | $920.30 | $3.72 | |
| Hypothetical-C | $1,000.00 | $1,020.98 | $3.92 | |
| Gold Portfolio | ||||
| Class A | 1.12% | |||
| Actual | $1,000.00 | $908.40 | $5.31 | |
| Hypothetical-C | $1,000.00 | $1,019.29 | $5.62 | |
| Class M | 1.41% | |||
| Actual | $1,000.00 | $906.60 | $6.68 | |
| Hypothetical-C | $1,000.00 | $1,017.85 | $7.07 | |
| Class C | 1.80% | |||
| Actual | $1,000.00 | $904.90 | $8.53 | |
| Hypothetical-C | $1,000.00 | $1,015.91 | $9.02 | |
| Gold | .79% | |||
| Actual | $1,000.00 | $909.80 | $3.75 | |
| Hypothetical-C | $1,000.00 | $1,020.93 | $3.97 | |
| Class I | .78% | |||
| Actual | $1,000.00 | $909.80 | $3.70 | |
| Hypothetical-C | $1,000.00 | $1,020.98 | $3.92 | |
| Class Z | .64% | |||
| Actual | $1,000.00 | $910.30 | $3.04 | |
| Hypothetical-C | $1,000.00 | $1,021.68 | $3.22 | |
| Materials Portfolio | ||||
| Class A | 1.08% | |||
| Actual | $1,000.00 | $922.40 | $5.16 | |
| Hypothetical-C | $1,000.00 | $1,019.49 | $5.42 | |
| Class M | 1.36% | |||
| Actual | $1,000.00 | $921.10 | $6.50 | |
| Hypothetical-C | $1,000.00 | $1,018.10 | $6.82 | |
| Class C | 1.82% | |||
| Actual | $1,000.00 | $918.80 | $8.68 | |
| Hypothetical-C | $1,000.00 | $1,015.81 | $9.12 | |
| Materials | .80% | |||
| Actual | $1,000.00 | $923.60 | $3.83 | |
| Hypothetical-C | $1,000.00 | $1,020.89 | $4.02 | |
| Class I | .79% | |||
| Actual | $1,000.00 | $923.70 | $3.78 | |
| Hypothetical-C | $1,000.00 | $1,020.93 | $3.97 | |
| Class Z | .63% | |||
| Actual | $1,000.00 | $924.40 | $3.01 | |
| Hypothetical-C | $1,000.00 | $1,021.73 | $3.17 |
A Annualized expense ratio reflects expenses net of applicable fee waivers.
B Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 182/ 366 (to reflect the one-half year period).
C 5% return per year before expenses
Distributions (Unaudited)
The funds hereby designate as capital gain dividend the amounts noted below for the taxable year ended February 29, 2020, or, if subsequently determined to be different, the net capital gain of such year.
| Chemicals Portfolio | $20,886,538 |
A percentage of the dividends distributed during the fiscal year for the following funds qualify for the dividends–received deduction for corporate shareholders:
| April 15, 2019 | December 16, 2019 | December 23, 2019 | December 31, 2019 | |
| Chemicals Portfolio | 100% | – | 100% | – |
| Gold Portfolio | ||||
| Class A | – | 100% | – | 89% |
| Class M | – | – | – | – |
| Class C | – | – | – | – |
| Gold | – | 91% | – | 89% |
| Class I | – | 90% | – | 89% |
| Class Z | – | 69% | – | 89% |
| Materials Portfolio | ||||
| Class A | – | – | 100% | – |
| Class M | – | – | 100% | – |
| Class C | – | – | 100% | – |
| Materials | – | – | 100% | – |
| Class I | – | – | 100% | – |
| Class Z | – | – | 100% | – |
A percentage of the dividends distributed during the fiscal year for the following funds may be taken into account as a dividend for purposes of the maximum rate under section 1(h)(11) of the Internal Revenue Code.
| April 2019 | December 2019 | |
| Chemicals Portfolio | 100% | 100% |
| Gold Portfolio | ||
| Class A | – | 100% |
| Class M | – | – |
| Class C | – | – |
| Gold | – | 100% |
| Class I | – | 100% |
| Class Z | – | 100% |
| Materials Portfolio | ||
| Class A | – | 100% |
| Class M | – | 100% |
| Class C | – | 100% |
| Materials | – | 100% |
| Class I | – | 100% |
| Class Z | – | 100% |
The funds will notify shareholders in January 2021 of amounts for use in preparing 2020 income tax returns.
Board Approval of Investment Advisory Contracts and Management Fees
Chemicals Portfolio
Gold Portfolio
Materials Portfolio
Chemicals Portfolio
Gold Portfolio
Materials Portfolio
Chemicals Portfolio
Gold Portfolio
Materials Portfolio
Liquidity Risk Management Program
The Securities and Exchange Commission adopted Rule 22e-4 under the Investment Company Act of 1940 (the Liquidity Rule) to promote effective liquidity risk management throughout the open-end investment company industry, thereby reducing the risk that funds will be unable to meet their redemption obligations and mitigating dilution of the interests of fund shareholders.
The Funds have adopted and implemented a liquidity risk management program pursuant to the Liquidity Rule (the Program) effective December 1, 2018. The Program is reasonably designed to assess and manage each Fund’s liquidity risk and to comply with the requirements of the Liquidity Rule. Each Fund’s Board of Trustees (the Board) has designated each Fund’s investment adviser as administrator of the Program. The Fidelity advisers have established a Liquidity Risk Management Committee (the LRM Committee) to manage the Program for each of the Fidelity Funds. The LRM Committee monitors the adequacy and effectiveness of implementation of the Program and on a periodic basis assesses each Fund’s liquidity risk based on a variety of factors including (1) the Fund’s investment strategy, (2) portfolio liquidity and cash flow projections during normal and reasonably foreseeable stressed conditions, (3) shareholder redemptions, (4) borrowings and other funding sources and (5) in the case of exchange-traded funds, certain additional factors including the effect of the Fund’s prices and spreads, market participants, and basket compositions on the overall liquidity of the Fund’s portfolio, as applicable.
In accordance with the Program, each of the Fund’s portfolio investments is classified into one of four liquidity categories described below based on a determination of a reasonable expectation for how long it would take to convert the investment to cash (or sell or dispose of the investment) without significantly changing its market value.
- Highly liquid investments – cash or convertible to cash within three business days or less
- Moderately liquid investments – convertible to cash in three to seven calendar days
- Less liquid investments – can be sold or disposed of, but not settled, within seven calendar days
- Illiquid investments – cannot not be sold or disposed of within seven calendar days
Liquidity classification determinations take into account a variety of factors including various market, trading and investment-specific considerations, as well as market depth, and generally utilize analysis from a third-party liquidity metrics service.
The Liquidity Rule places a 15% limit on a fund’s illiquid investments and requires funds that do not primarily hold assets that are highly liquid investments to determine and maintain a minimum percentage of the fund’s net assets to be invested in highly liquid investments (highly liquid investment minimum or HLIM). The Program includes provisions reasonably designed to comply with the 15% limit on illiquid investments and for determining, periodically reviewing and complying with the HLIM requirement as applicable.
At a recent meeting of the Fund’s Board of Trustees, the LRM Committee provided a written report to the Board pertaining to the operation, adequacy, and effectiveness of implementation of the Program for the annual period from December 1, 2018 through November 30, 2019. The report concluded that the Program has been implemented and is operating effectively and is reasonably designed to assess and manage the Fund’s liquidity risk.
SELMT-ANN-0420
1.846032.113
Fidelity® Select Portfolios®
Telecommunications Services Sector
Telecommunications Portfolio
Wireless Portfolio
February 29, 2020
Includes Fidelity and Fidelity Advisor share classes
See the inside front cover for important information about access to your fund’s shareholder reports.
Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of a fund’s shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports from the fund or from your financial intermediary, such as a financial advisor, broker-dealer or bank. Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from a fund electronically, by contacting your financial intermediary. For Fidelity customers, visit Fidelity's web site or call Fidelity using the contact information listed below.
You may elect to receive all future reports in paper free of charge. If you wish to continue receiving paper copies of your shareholder reports, you may contact your financial intermediary or, if you are a Fidelity customer, visit Fidelity’s website, or call Fidelity at the applicable toll-free number listed below. Your election to receive reports in paper will apply to all funds held with the fund complex/your financial intermediary.
| Account Type | Website | Phone Number |
| Brokerage, Mutual Fund, or Annuity Contracts: | fidelity.com/mailpreferences | 1-800-343-3548 |
| Employer Provided Retirement Accounts: | netbenefits.fidelity.com/preferences (choose 'no' under Required Disclosures to continue to print) | 1-800-343-0860 |
| Advisor Sold Accounts Serviced Through Your Financial Intermediary: | Contact Your Financial Intermediary | Your Financial Intermediary's phone number |
| Advisor Sold Accounts Serviced by Fidelity: | institutional.fidelity.com | 1-877-208-0098 |
Contents
|
Telecommunications Portfolio | |
|
Wireless Portfolio | |
|
Board Approval of Investment Advisory Contracts and Management Fees | |
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov.
You may also call 1-800-544-8544 if you’re an individual investing directly with Fidelity, call 1-800-835-5092 if you’re a plan sponsor or participant with Fidelity as your recordkeeper or call 1-877-208-0098 on institutional accounts or if you’re an advisor or invest through one to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third-party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company. © 2020 FMR LLC. All rights reserved.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the Funds. This report is not authorized for distribution to prospective investors in the Funds unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-PORT. Forms N-PORT are available on the SEC’s web site at http://www.sec.gov. A fund's Forms N-PORT may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330.
For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com, http://www.institutional.fidelity.com, or http://www.401k.com, as applicable.
NOT FDIC INSURED •MAY LOSE VALUE •NO BANK GUARANTEE
Neither the Funds nor Fidelity Distributors Corporation is a bank.
Note to shareholders:
(No Action is Required by You)
As part of a regular review of its organizational structure, Fidelity has decided to merge certain entities to streamline operations, increase efficiency, simplify reporting, and reduce legal, compliance, and accounting complexity and costs. In separate events, Fidelity has merged four of its investment advisers and two of its broker-dealers.
Effective on or about January 1, 2020, following any required regulatory notices and approvals:
Investment advisers Fidelity Investments Money Management, Inc., FMR Co., Inc., and Fidelity SelectCo, LLC, merged with and into Fidelity Management & Research Company. In connection with the merger transactions, the resulting, merged investment adviser was then redomiciled from Massachusetts to Delaware, changed its corporate structure from a corporation to a limited liability company, and changed its name to “Fidelity Management & Research Company LLC”.
Broker-dealer Fidelity Distributors Corporation merged with and into Fidelity Investments Institutional Services Company, Inc. (“FIISC”). FIISC was then redomiciled from Massachusetts to Delaware, changed its corporate structure from a corporation to a limited liability company, and changed its name to “Fidelity Distributors Company LLC”.
These mergers are not expected to affect fund shareholders or Fidelity clients, nor are they expected to result in any changes to the day-to-day management of Fidelity’s brokerage services, the Fidelity funds, their investment policies and practices, their portfolio management teams, or the funds’ expenses.
Early in 2020, the outbreak and spread of a new coronavirus emerged as a public health emergency that had a major influence on financial markets, primarily based on its impact on the global economy and corporate earnings. The virus causes a respiratory disease known as COVID-19. On March 11, the World Health Organization declared the COVID-19 outbreak a pandemic, citing sustained risk of further global spread.
In the weeks following the end of this reporting period, as the crisis worsened, we witnessed an escalating human tragedy with wide-scale social and economic consequences from coronavirus-containment measures. The outbreak of COVID-19 prompted a number of measures to limit the spread, including travel and border restrictions, quarantines, and restrictions on large gatherings. In turn, these resulted in lower consumer activity, diminished demand for a wide range of products and services, disruption in manufacturing and supply chains, and – given the wide variability in outcomes regarding the outbreak – significant market uncertainty and volatility. Amid the turmoil, the U.S. government took unprecedented action – in concert with the U.S. Federal Reserve and central banks around the world – to help support consumers, businesses, and the broader economy, and to limit disruption to the financial system.
The situation continues to unfold, and the extent and duration of its impact on financial markets and the economy remain highly uncertain. Extreme events such as the coronavirus crisis are “exogenous shocks” that can have significant adverse effects on mutual funds and their investments. Although multiple asset classes may be affected by market disruption, the duration and impact may not be the same for all types of assets.
Fidelity is committed to helping you stay informed amid news about COVID-19 and during increased market volatility, and we’re taking extra steps to be responsive to customer needs. We encourage you to visit our websites, where we offer ongoing updates, commentary, and analysis on the markets and our funds.
Telecommunications Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The hypothetical investment and the average annual total returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund’s total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
| For the periods ended February 29, 2020 | Past 1 year | Past 5 years | Past 10 years |
| Class A (incl. 5.75% sales charge) | 5.67% | 4.42% | 8.73% |
| Class M (incl. 3.50% sales charge) | 7.90% | 4.57% | 8.65% |
| Class C (incl. contingent deferred sales charge) | 10.34% | 4.90% | 8.59% |
| Telecommunications Portfolio | 12.50% | 6.02% | 9.73% |
| Class I | 12.47% | 6.00% | 9.71% |
| Class Z | 12.68% | 6.07% | 9.75% |
Class C shares' contingent deferred sales charges included in the past one year, past five years and past ten years total return figures are 1%, 0% and 0%, respectively.
The initial offering of Class Z shares took place on October 2, 2018. Returns prior to October 2, 2018, are those of Class I.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Telecommunications Portfolio, a class of the fund, on February 28, 2010.
The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
| Period Ending Values | ||
|
| $25,309 | Telecommunications Portfolio |
|
| $32,918 | S&P 500® Index |
Telecommunications Portfolio
Management's Discussion of Fund Performance
Market Recap: U.S. stocks stalled to begin the new year and declined in late February, as the outbreak and spread of the new coronavirus threatened to hamper global economic growth and corporate earnings. For the 12 months ending February 29, 2020, the U.S. equity bellwether S&P 500® index gained 8.19%. The period began with equities rising amid upbeat company earnings and signs the U.S. Federal Reserve may pause on rates. The uptrend extended until May, when the index dipped as trade talks between the U.S. and China broke down. The bull market roared back to record a series of highs in July, when the Fed cut interest rates for the first time since 2008. Volatility intensified in August, as the Treasury yield curve inverted, which some investors viewed as a sign the U.S. economy could be heading for recession. But the market proved resilient, hitting a new high on October 30, when the Fed lowered rates for the third time in 2019, and moving higher through December 31. Following a roughly flat January, stocks sank in late February, after a surge in coronavirus cases outside China created considerable uncertainty and pushed investors to safer asset classes. By sector, information technology (+27%) led the way by a wide margin, followed by utilities and communication services (+13% each). In contrast, energy (-25%) was by far the weakest category, struggling due to sluggish oil prices. Other notable laggards included materials and industrials (-2% each). Comments from Portfolio Manager Matthew Drukker: For the fiscal year, the fund's share classes posted gains in the range of roughly 11% to 13%, outpacing the 8.66% result of the industry benchmark, the MSCI U.S. IMI Telecommunication Services 25/50 Index. The fund's share classes also topped the S&P 500®. Telecommunication services companies, given their more utility-like characteristics and their focus on U.S.-based connectivity services, benefited from relatively limited exposure to global trade uncertainty. Many also capitalized on digital growth trends that drove strong business fundamentals the past 12 months. Versus the industry benchmark, stock selection delivered the biggest boost to the fund's outperformance. Choices in the integrated telecommunication services segment gave the fund a significant edge, led by avoiding shares of weak-performing index component Pareteum (-91%), a cloud communications platform provider. The fund's positioning in multinational media and telecom provider AT&T (+20%) added value. I sold about half the fund's stake in AT&T by period end. Conversely, underweighting alternative carriers – especially communications infrastructure provider Zayo (+41%) – detracted. I sold Zayo by period end. A non-index position in U.K.-based cable provider Liberty Global (-27%) hurt the fund's relative return as well.The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Telecommunications Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 29, 2020
| % of fund's net assets | |
| Verizon Communications, Inc. | 20.4 |
| AT&T, Inc. | 12.4 |
| Sprint Corp. | 7.9 |
| T-Mobile U.S., Inc. | 6.9 |
| Vonage Holdings Corp. | 4.9 |
| Iridium Communications, Inc. | 4.7 |
| Orange SA ADR | 4.0 |
| Liberty Global PLC Class C | 3.8 |
| Cogent Communications Group, Inc. | 3.7 |
| GCI Liberty, Inc. | 3.6 |
| 72.3 |
Top Industries (% of fund's net assets)
| As of February 29, 2020 | ||
| Diversified Telecommunication Services | 64.1% | |
| Wireless Telecommunication Services | 22.8% | |
| Media | 6.2% | |
| Entertainment | 2.7% | |
| Road & Rail | 1.5% | |
| All Others* | 2.7% | |
* Includes short-term investments and net other assets (liabilities).
Telecommunications Portfolio
Schedule of Investments February 29, 2020
Showing Percentage of Net Assets
| Common Stocks - 99.0% | |||
| Shares | Value | ||
| Communications Equipment - 1.2% | |||
| Communications Equipment - 1.2% | |||
| CommScope Holding Co., Inc. (a) | 189,900 | $2,090,799 | |
| EchoStar Holding Corp. Class A (a) | 40,900 | 1,428,228 | |
| 3,519,027 | |||
| Construction & Engineering - 0.5% | |||
| Construction & Engineering - 0.5% | |||
| Dycom Industries, Inc. (a) | 44,200 | 1,306,552 | |
| Diversified Telecommunication Services - 64.1% | |||
| Alternative Carriers - 21.3% | |||
| Bandwidth, Inc. (a)(b) | 83,300 | 5,238,737 | |
| CenturyLink, Inc. | 204,800 | 2,471,936 | |
| Cogent Communications Group, Inc. | 149,439 | 10,910,541 | |
| GCI Liberty, Inc. (a) | 151,100 | 10,442,521 | |
| Globalstar, Inc. (a)(b) | 1,102,348 | 450,199 | |
| Iliad SA (b) | 24,667 | 3,467,297 | |
| Iridium Communications, Inc. (a) | 504,311 | 13,651,699 | |
| ORBCOMM, Inc. (a) | 370,949 | 1,227,841 | |
| Vonage Holdings Corp. (a) | 1,609,171 | 14,418,172 | |
| 62,278,943 | |||
| Integrated Telecommunication Services - 42.8% | |||
| AT&T, Inc. | 1,030,720 | 36,301,958 | |
| ATN International, Inc. | 82,400 | 4,441,360 | |
| Bezeq The Israel Telecommunication Corp. Ltd. (a) | 12,128,829 | 8,958,933 | |
| Cincinnati Bell, Inc. (a) | 119,802 | 1,563,416 | |
| Consolidated Communications Holdings, Inc. | 10,300 | 64,066 | |
| Masmovil Ibercom SA (a) | 128,600 | 2,554,398 | |
| Orange SA ADR | 859,800 | 11,504,124 | |
| Verizon Communications, Inc. | 1,102,797 | 59,727,487 | |
| 125,115,742 | |||
| TOTAL DIVERSIFIED TELECOMMUNICATION SERVICES | 187,394,685 | ||
| Entertainment - 2.7% | |||
| Interactive Home Entertainment - 2.0% | |||
| Activision Blizzard, Inc. | 98,300 | 5,714,179 | |
| Movies & Entertainment - 0.7% | |||
| Spotify Technology SA (a) | 15,000 | 2,056,800 | |
| TOTAL ENTERTAINMENT | 7,770,979 | ||
| Media - 6.2% | |||
| Cable & Satellite - 6.2% | |||
| Liberty Broadband Corp. Class A (a) | 33,600 | 4,155,648 | |
| Liberty Global PLC Class C (a) | 604,236 | 11,232,747 | |
| Liberty Latin America Ltd. Class C (a) | 81,734 | 1,241,539 | |
| Megacable Holdings S.A.B. de CV unit | 314,800 | 1,053,971 | |
| SES SA (France) (depositary receipt) | 48,000 | 550,386 | |
| 18,234,291 | |||
| Road & Rail - 1.5% | |||
| Trucking - 1.5% | |||
| Lyft, Inc. | 115,900 | 4,418,108 | |
| Wireless Telecommunication Services - 22.8% | |||
| Wireless Telecommunication Services - 22.8% | |||
| Boingo Wireless, Inc. (a) | 232,300 | 2,943,241 | |
| Millicom International Cellular SA | 70,400 | 3,203,904 | |
| Shenandoah Telecommunications Co. | 166,267 | 7,387,243 | |
| Sprint Corp. (a) | 2,520,674 | 23,164,994 | |
| T-Mobile U.S., Inc. (a) | 221,597 | 19,979,186 | |
| Telephone & Data Systems, Inc. | 236,164 | 4,756,343 | |
| U.S. Cellular Corp. (a) | 164,800 | 5,176,368 | |
| 66,611,279 | |||
| TOTAL COMMON STOCKS | |||
| (Cost $237,760,284) | 289,254,921 | ||
| Money Market Funds - 2.0% | |||
| Fidelity Securities Lending Cash Central Fund 1.60% (c)(d) | |||
| (Cost $5,891,038) | 5,890,540 | 5,891,129 | |
| TOTAL INVESTMENT IN SECURITIES - 101.0% | |||
| (Cost $243,651,322) | 295,146,050 | ||
| NET OTHER ASSETS (LIABILITIES) - (1.0)% | (2,855,491) | ||
| NET ASSETS - 100% | $292,290,559 |
Legend
(a) Non-income producing
(b) Security or a portion of the security is on loan at period end.
(c) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request.
(d) Investment made with cash collateral received from securities on loan.
Affiliated Central Funds
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:
| Fund | Income earned |
| Fidelity Cash Central Fund | $31,649 |
| Fidelity Securities Lending Cash Central Fund | 79,213 |
| Total | $110,862 |
Amounts in the income column in the above table include any capital gain distributions from underlying funds, which are presented in the corresponding line-item in the Statement of Operations, if applicable. Amount for Fidelity Securities Lending Cash Central Fund represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities.
Investment Valuation
The following is a summary of the inputs used, as of February 29, 2020, 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 below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.
| Valuation Inputs at Reporting Date: | ||||
| Description | Total | Level 1 | Level 2 | Level 3 |
| Investments in Securities: | ||||
| Common Stocks | $289,254,921 | $282,682,840 | $6,572,081 | $-- |
| Money Market Funds | 5,891,129 | 5,891,129 | -- | -- |
| Total Investments in Securities: | $295,146,050 | $288,573,969 | $6,572,081 | $-- |
Other Information
Distribution of investments by country or territory of incorporation, as a percentage of Total Net Assets, is as follows (Unaudited):
| United States of America | 85.3% |
| France | 5.2% |
| United Kingdom | 3.8% |
| Israel | 3.1% |
| Others (Individually Less Than 1%) | 2.6% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Telecommunications Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2020 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $5,077,584) — See accompanying schedule: Unaffiliated issuers (cost $237,760,284) | $289,254,921 | |
| Fidelity Central Funds (cost $5,891,038) | 5,891,129 | |
| Total Investment in Securities (cost $243,651,322) | $295,146,050 | |
| Foreign currency held at value (cost $751,695) | 751,695 | |
| Receivable for investments sold | 5,832,562 | |
| Receivable for fund shares sold | 1,152,623 | |
| Distributions receivable from Fidelity Central Funds | 2,766 | |
| Prepaid expenses | 2,502 | |
| Other receivables | 7,169 | |
| Total assets | 302,895,367 | |
| Liabilities | ||
| Payable to custodian bank | $2,006,338 | |
| Payable for investments purchased | 1,845,269 | |
| Payable for fund shares redeemed | 622,376 | |
| Accrued management fee | 136,722 | |
| Distribution and service plan fees payable | 13,367 | |
| Other affiliated payables | 54,811 | |
| Other payables and accrued expenses | 43,525 | |
| Collateral on securities loaned | 5,882,400 | |
| Total liabilities | 10,604,808 | |
| Net Assets | $292,290,559 | |
| Net Assets consist of: | ||
| Paid in capital | $237,781,786 | |
| Total accumulated earnings (loss) | 54,508,773 | |
| Net Assets | $292,290,559 | |
| Net Asset Value and Maximum Offering Price | ||
| Class A: | ||
| Net Asset Value and redemption price per share ($21,375,798 ÷ 352,763 shares)(a) | $60.60 | |
| Maximum offering price per share (100/94.25 of $60.60) | $64.30 | |
| Class M: | ||
| Net Asset Value and redemption price per share ($6,919,066 ÷ 114,848 shares)(a) | $60.25 | |
| Maximum offering price per share (100/96.50 of $60.25) | $62.44 | |
| Class C: | ||
| Net Asset Value and offering price per share ($6,491,440 ÷ 107,624 shares)(a) | $60.32 | |
| Telecommunications: | ||
| Net Asset Value, offering price and redemption price per share ($219,853,879 ÷ 3,604,629 shares) | $60.99 | |
| Class I: | ||
| Net Asset Value, offering price and redemption price per share ($12,427,720 ÷ 204,202 shares) | $60.86 | |
| Class Z: | ||
| Net Asset Value, offering price and redemption price per share ($25,222,656 ÷ 415,182 shares) | $60.75 |
(a) Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 29, 2020 | ||
| Investment Income | ||
| Dividends | $7,597,052 | |
| Income from Fidelity Central Funds (including $79,213 from security lending) | 110,862 | |
| Total income | 7,707,914 | |
| Expenses | ||
| Management fee | $1,561,742 | |
| Transfer agent fees | 593,840 | |
| Distribution and service plan fees | 152,196 | |
| Accounting and security lending fees | 113,781 | |
| Custodian fees and expenses | 10,972 | |
| Independent trustees' fees and expenses | 1,580 | |
| Registration fees | 99,571 | |
| Audit | 55,447 | |
| Legal | 853 | |
| Miscellaneous | 2,202 | |
| Total expenses before reductions | 2,592,184 | |
| Expense reductions | (21,677) | |
| Total expenses after reductions | 2,570,507 | |
| Net investment income (loss) | 5,137,407 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 16,212,530 | |
| Fidelity Central Funds | 925 | |
| Foreign currency transactions | (12,205) | |
| Total net realized gain (loss) | 16,201,250 | |
| Change in net unrealized appreciation (depreciation) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 12,371,389 | |
| Fidelity Central Funds | (318) | |
| Assets and liabilities in foreign currencies | 3,963 | |
| Total change in net unrealized appreciation (depreciation) | 12,375,034 | |
| Net gain (loss) | 28,576,284 | |
| Net increase (decrease) in net assets resulting from operations | $33,713,691 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 29, 2020 | Year ended February 28, 2019 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $5,137,407 | $6,750,662 |
| Net realized gain (loss) | 16,201,250 | 6,025,654 |
| Change in net unrealized appreciation (depreciation) | 12,375,034 | (5,510,177) |
| Net increase (decrease) in net assets resulting from operations | 33,713,691 | 7,266,139 |
| Distributions to shareholders | (9,566,584) | (9,778,496) |
| Share transactions - net increase (decrease) | (18,459,242) | (71,184,477) |
| Total increase (decrease) in net assets | 5,687,865 | (73,696,834) |
| Net Assets | ||
| Beginning of period | 286,602,694 | 360,299,528 |
| End of period | $292,290,559 | $286,602,694 |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights
Telecommunications Portfolio Class A
| Years ended February 28, | 2020 A | 2019 | 2018 | 2017 | 2016 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $55.68 | $55.58 | $69.61 | $62.32 | $63.26 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .87 | 1.10C | 1.05 | .88 | .81 |
| Net realized and unrealized gain (loss) | 5.86 | .56 | (3.38) | 10.68 | (.76) |
| Total from investment operations | 6.73 | 1.66 | (2.33) | 11.56 | .05 |
| Distributions from net investment income | (.96) | (.94) | (1.31) | (1.11) | (.54) |
| Distributions from net realized gain | (.85) | (.62) | (10.39) | (3.16) | (.45) |
| Total distributions | (1.81) | (1.56) | (11.70) | (4.27) | (.99) |
| Redemption fees added to paid in capitalB | – | – | – | –D | –D |
| Net asset value, end of period | $60.60 | $55.68 | $55.58 | $69.61 | $62.32 |
| Total ReturnE,F | 12.12% | 3.03% | (4.06)% | 18.65% | .16% |
| Ratios to Average Net AssetsG,H | |||||
| Expenses before reductions | 1.18% | 1.18% | 1.14% | 1.14% | 1.15% |
| Expenses net of fee waivers, if any | 1.17% | 1.17% | 1.14% | 1.14% | 1.15% |
| Expenses net of all reductions | 1.17% | 1.16% | 1.12% | 1.12% | 1.15% |
| Net investment income (loss) | 1.47% | 1.96%C | 1.59% | 1.28% | 1.33% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $21,376 | $20,589 | $17,816 | $31,966 | $13,032 |
| Portfolio turnover rateI | 58% | 64%J | 66% | 105%J | 51% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Net investment income per share reflects a large, non-recurring dividend which amounted to $.25 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been 1.52%.
D Amount represents less than $.005 per share.
E Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
F Total returns do not include the effect of the sales charges.
G Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
I Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
J Portfolio turnover rate excludes securities received or delivered in-kind.
See accompanying notes which are an integral part of the financial statements.
Telecommunications Portfolio Class M
| Years ended February 28, | 2020 A | 2019 | 2018 | 2017 | 2016 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $55.40 | $55.31 | $69.33 | $61.95 | $63.04 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .70 | .92C | .81 | .65 | .61 |
| Net realized and unrealized gain (loss) | 5.83 | .55 | (3.36) | 10.62 | (.76) |
| Total from investment operations | 6.53 | 1.47 | (2.55) | 11.27 | (.15) |
| Distributions from net investment income | (.83) | (.76) | (1.07) | (.73) | (.49) |
| Distributions from net realized gain | (.85) | (.62) | (10.39) | (3.16) | (.45) |
| Total distributions | (1.68) | (1.38) | (11.47)D | (3.89) | (.94) |
| Redemption fees added to paid in capitalB | – | – | – | –E | –E |
| Net asset value, end of period | $60.25 | $55.40 | $55.31 | $69.33 | $61.95 |
| Total ReturnF,G | 11.81% | 2.69% | (4.40)% | 18.26% | (.16)% |
| Ratios to Average Net AssetsH,I | |||||
| Expenses before reductions | 1.46% | 1.50% | 1.49% | 1.46% | 1.47% |
| Expenses net of fee waivers, if any | 1.46% | 1.49% | 1.49% | 1.46% | 1.47% |
| Expenses net of all reductions | 1.45% | 1.48% | 1.48% | 1.44% | 1.46% |
| Net investment income (loss) | 1.19% | 1.64%C | 1.24% | .96% | 1.01% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $6,919 | $6,018 | $4,847 | $6,933 | $8,280 |
| Portfolio turnover rateJ | 58% | 64%K | 66% | 105%K | 51% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Net investment income per share reflects a large, non-recurring dividend which amounted to $.25 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been 1.19%.
D Total distributions of $11.47 per share is comprised of distributions from net investment income of $1.073 and distributions from net realized gain of $10.393 per share.
E Amount represents less than $.005 per share.
F Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
G Total returns do not include the effect of the sales charges.
H Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
J Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
K Portfolio turnover rate excludes securities received or delivered in-kind.
See accompanying notes which are an integral part of the financial statements.
Telecommunications Portfolio Class C
| Years ended February 28, | 2020 A | 2019 | 2018 | 2017 | 2016 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $55.45 | $55.29 | $69.24 | $62.10 | $63.04 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .46 | .70C | .57 | .37 | .36 |
| Net realized and unrealized gain (loss) | 5.82 | .56 | (3.36) | 10.62 | (.75) |
| Total from investment operations | 6.28 | 1.26 | (2.79) | 10.99 | (.39) |
| Distributions from net investment income | (.56) | (.48) | (.77) | (.69) | (.10) |
| Distributions from net realized gain | (.85) | (.62) | (10.39) | (3.16) | (.45) |
| Total distributions | (1.41) | (1.10) | (11.16) | (3.85) | (.55) |
| Redemption fees added to paid in capitalB | – | – | – | –D | –D |
| Net asset value, end of period | $60.32 | $55.45 | $55.29 | $69.24 | $62.10 |
| Total ReturnE,F | 11.34% | 2.30% | (4.75)% | 17.77% | (.57)% |
| Ratios to Average Net AssetsG,H | |||||
| Expenses before reductions | 1.88% | 1.88% | 1.86% | 1.88% | 1.89% |
| Expenses net of fee waivers, if any | 1.87% | 1.88% | 1.86% | 1.88% | 1.89% |
| Expenses net of all reductions | 1.87% | 1.86% | 1.85% | 1.86% | 1.88% |
| Net investment income (loss) | .77% | 1.26%C | .87% | .54% | .60% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $6,491 | $6,994 | $8,396 | $13,528 | $7,735 |
| Portfolio turnover rateI | 58% | 64%J | 66% | 105%J | 51% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Net investment income per share reflects a large, non-recurring dividend which amounted to $.25 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .81%.
D Amount represents less than $.005 per share.
E Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
F Total returns do not include the effect of the contingent deferred sales charge.
G Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
I Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
J Portfolio turnover rate excludes securities received or delivered in-kind.
See accompanying notes which are an integral part of the financial statements.
Telecommunications Portfolio
| Years ended February 28, | 2020 A | 2019 | 2018 | 2017 | 2016 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $56.04 | $55.88 | $69.97 | $62.58 | $63.54 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | 1.09 | 1.30C | 1.28 | 1.12 | 1.02 |
| Net realized and unrealized gain (loss) | 5.90 | .56 | (3.42) | 10.74 | (.77) |
| Total from investment operations | 6.99 | 1.86 | (2.14) | 11.86 | .25 |
| Distributions from net investment income | (1.19) | (1.08) | (1.56) | (1.31) | (.76) |
| Distributions from net realized gain | (.85) | (.62) | (10.39) | (3.16) | (.45) |
| Total distributions | (2.04) | (1.70) | (11.95) | (4.47) | (1.21) |
| Redemption fees added to paid in capitalB | – | – | – | –D | –D |
| Net asset value, end of period | $60.99 | $56.04 | $55.88 | $69.97 | $62.58 |
| Total ReturnE | 12.50% | 3.38% | (3.76)% | 19.06% | .49% |
| Ratios to Average Net AssetsF,G | |||||
| Expenses before reductions | .83% | .84% | .82% | .80% | .82% |
| Expenses net of fee waivers, if any | .82% | .83% | .82% | .80% | .81% |
| Expenses net of all reductions | .82% | .82% | .80% | .78% | .81% |
| Net investment income (loss) | 1.82% | 2.30%C | 1.92% | 1.62% | 1.67% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $219,854 | $227,438 | $320,908 | $690,720 | $689,600 |
| Portfolio turnover rateH | 58% | 64%I | 66% | 105%I | 51% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Net investment income per share reflects a large, non-recurring dividend which amounted to $.25 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been 1.85%.
D Amount represents less than $.005 per share.
E Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
H Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
I Portfolio turnover rate excludes securities received or delivered in-kind.
See accompanying notes which are an integral part of the financial statements.
Telecommunications Portfolio Class I
| Years ended February 28, | 2020 A | 2019 | 2018 | 2017 | 2016 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $55.84 | $55.74 | $69.82 | $62.46 | $63.38 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | 1.04 | 1.27C | 1.26 | 1.12 | 1.02 |
| Net realized and unrealized gain (loss) | 5.91 | .57 | (3.39) | 10.70 | (.76) |
| Total from investment operations | 6.95 | 1.84 | (2.13) | 11.82 | .26 |
| Distributions from net investment income | (1.08) | (1.12) | (1.56) | (1.30) | (.73) |
| Distributions from net realized gain | (.85) | (.62) | (10.39) | (3.16) | (.45) |
| Total distributions | (1.93) | (1.74) | (11.95) | (4.46) | (1.18) |
| Redemption fees added to paid in capitalB | – | – | – | –D | –D |
| Net asset value, end of period | $60.86 | $55.84 | $55.74 | $69.82 | $62.46 |
| Total ReturnE | 12.47% | 3.35% | (3.75)% | 19.03% | .51% |
| Ratios to Average Net AssetsF,G | |||||
| Expenses before reductions | .88% | .91% | .82% | .80% | .82% |
| Expenses net of fee waivers, if any | .88% | .90% | .82% | .80% | .82% |
| Expenses net of all reductions | .88% | .88% | .80% | .78% | .81% |
| Net investment income (loss) | 1.76% | 2.23%C | 1.91% | 1.62% | 1.67% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $12,428 | $25,181 | $8,332 | $14,550 | $6,197 |
| Portfolio turnover rateH | 58% | 64%I | 66% | 105%I | 51% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Net investment income per share reflects a large, non-recurring dividend which amounted to $.25 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been 1.79%.
D Amount represents less than $.005 per share.
E Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
H Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
I Portfolio turnover rate excludes securities received or delivered in-kind.
See accompanying notes which are an integral part of the financial statements.
Telecommunications Portfolio Class Z
| Years ended February 28, | 2020 A | 2019 B |
| Selected Per–Share Data | ||
| Net asset value, beginning of period | $55.84 | $60.97 |
| Income from Investment Operations | ||
| Net investment income (loss)C | 1.20 | .39D |
| Net realized and unrealized gain (loss) | 5.86 | (4.55)E |
| Total from investment operations | 7.06 | (4.16) |
| Distributions from net investment income | (1.30) | (.97) |
| Distributions from net realized gain | (.85) | – |
| Total distributions | (2.15) | (.97) |
| Net asset value, end of period | $60.75 | $55.84 |
| Total ReturnF,G | 12.68% | (6.80)% |
| Ratios to Average Net AssetsH,I | ||
| Expenses before reductions | .68% | .68%J |
| Expenses net of fee waivers, if any | .67% | .66%J |
| Expenses net of all reductions | .67% | .64%J |
| Net investment income (loss) | 1.97% | 1.67%D,J |
| Supplemental Data | ||
| Net assets, end of period (000 omitted) | $25,223 | $383 |
| Portfolio turnover rateK | 58% | 64%L |
A For the year ended February 29.
B For the period October 2, 2018 (commencement of sale of shares) to February 28, 2019.
C Calculated based on average shares outstanding during the period.
D Net investment income per share reflects a large, non-recurring dividend which amounted to $.10 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been 1.23%.
E The amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchases of shares in relation to fluctuating market values of the investments of the Fund.
F Total returns for periods of less than one year are not annualized.
G Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
H Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
J Annualized
K Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
L Portfolio turnover rate excludes securities received or delivered in-kind.
See accompanying notes which are an integral part of the financial statements.
Notes to Financial Statements
For the period ended February 29, 2020
1. Organization.
Telecommunications Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the Trust) and is authorized to issue an unlimited number of shares. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries. The Fund offers Class A, Class M, Class C, Telecommunications, Class I and Class Z shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. Effective March 1, 2019, Class C shares will automatically convert to Class A shares after a holding period of ten years from the initial date of purchase, with certain exceptions.
Effective January 1, 2020:
Investment advisers Fidelity Investments Money Management, Inc., FMR Co., Inc., and Fidelity SelectCo, LLC, merged with and into Fidelity Management & Research Company. In connection with the merger transactions, the resulting, merged investment adviser was then redomiciled from Massachusetts to Delaware, changed its corporate structure from a corporation to a limited liability company, and changed its name to "Fidelity Management & Research Company LLC".
Broker-dealer Fidelity Distributors Corporation merged with and into Fidelity Investments Institutional Services Company, Inc. ("FIISC"). FIISC was then redomiciled from Massachusetts to Delaware, changed its corporate structure from a corporation to a limited liability company, and changed its name to "Fidelity Distributors Company LLC".
Fidelity Investments Institutional Operations Company, Inc. converted from a Massachusetts corporation to a Massachusetts LLC, and changed its name to "Fidelity Investments Institutional Operations Company LLC".
2. Investments in Fidelity Central Funds.
The Fund invests in Fidelity Central Funds, which are open-end investment companies generally available only to other investment companies and accounts managed by the investment adviser and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by the investment adviser. Annualized expenses of the Money Market Central Funds as of their most recent shareholder report date ranged from less than .005% to .01%.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) website at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC website or upon request.
3. Significant Accounting Policies.
The Fund is an investment company and applies the accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946 Financial Services – Investments Companies. The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:
Investment Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Board of Trustees (the Board) has delegated the day to day responsibility for the valuation of the Fund's investments to the Fair Value Committee (the Committee) established by the Fund's investment adviser. In accordance with valuation policies and procedures approved by the Board, the Fund attempts to obtain prices from one or more third party pricing vendors or brokers to value its investments. When current market prices, quotations or currency exchange rates are not readily available or reliable, investments will be fair valued in good faith by the Committee, in accordance with procedures adopted by the Board. Factors used in determining fair value vary by investment type and may include market or investment specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The Committee oversees the Fund's valuation policies and procedures and reports to the Board on the Committee's activities and fair value determinations. The Board monitors the appropriateness of the procedures used in valuing the Fund's investments and ratifies the fair value determinations of the Committee.
The Fund categorizes the inputs to valuation techniques used to 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)
Valuation techniques used to value the Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by a third party pricing vendor on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-Traded Funds (ETFs) and certain indexes as well as quoted prices for similar securities may be used and would be categorized as Level 2 in the hierarchy. For equity securities, including restricted 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.
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value (NAV) each business day and are categorized as Level 1 in the hierarchy.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level as of February 29, 2020 is included at the end of the Fund's Schedule of Investments.
Foreign Currency. The Fund may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rates at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and include proceeds received from litigation. Dividend income is recorded 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. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Income and capital gain distributions from Fidelity Central Funds, if any, are recorded on the ex-dividend date. Certain distributions received by the Fund represent a return of capital or capital gain. The Fund determines the components of these distributions subsequent to the ex-dividend date, based upon receipt of tax filings or other correspondence relating to the underlying investment. These distributions are recorded as a reduction of cost of investments and/or as a realized gain. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Class Allocations and Expenses. Investment income, realized and unrealized capital gains and losses, common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated daily on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions may also differ by class. For the reporting period, the allocated portion of income and expenses to each class as a percent of its average net assets may vary due to the timing of recording these transactions in relation to fluctuating net assets of the classes. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for U.S. Federal income taxes is required. As of February 29, 2020, the Fund did not have any unrecognized tax benefits in the financial statements; nor is the Fund aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. The Fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are declared and recorded on the ex-dividend date. Income and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Capital accounts are not adjusted for temporary book-tax differences which will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, capital loss carryforwards and losses deferred due to wash sales.
As of period end, the cost and unrealized appreciation (depreciation) in securities, and derivatives if applicable, for federal income tax purposes were as follows:
| Gross unrealized appreciation | $69,907,749 |
| Gross unrealized depreciation | (20,562,114) |
| Net unrealized appreciation (depreciation) | $49,345,635 |
| Tax Cost | $245,800,415 |
The tax-based components of distributable earnings as of period end were as follows:
| Undistributed ordinary income | $2,939,995 |
| Undistributed long-term capital gain | $2,222,937 |
| Net unrealized appreciation (depreciation) on securities and other investments | $49,345,837 |
The tax character of distributions paid was as follows:
| February 29, 2020 | February 28, 2019 | |
| Ordinary Income | $5,516,461 | $ 5,875,297 |
| Long-term Capital Gains | 4,050,123 | 3,903,199 |
| Total | $9,566,584 | $ 9,778,496 |
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, are noted in the table below.
| Purchases ($) | Sales ($) | |
| Telecommunications Portfolio | 165,202,006 | 187,502,647 |
5. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity Management & Research Company LLC (the investment adviser) and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and an annualized group fee rate that averaged .24% during the period. The group fee rate is based upon the monthly average net assets of a group of registered investment companies with which the investment adviser has management contracts. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the reporting period, the total annual management fee rate was .54% of the Fund's average net assets.
Distribution and Service Plan Fees. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Company LLC (FDC), an affiliate of the investment adviser, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the Fund and providing shareholder support services. For the period, the Distribution and Service Fee rates, total fees and amounts retained by FDC were as follows:
| Distribution Fee | Service Fee | Total Fees | Retained by FDC | |
| Class A | -% | .25% | $52,988 | $1,471 |
| Class M | .25% | .25% | 33,188 | – |
| Class C | .75% | .25% | 66,020 | 7,791 |
| $152,196 | $9,262 |
Sales Load. FDC may receive a front-end sales charge of up to 5.75% for selling Class A shares and 3.50% for selling Class M shares, some of which is paid to financial intermediaries for selling shares of the Fund. Depending on the holding period, FDC may receive contingent deferred sales charges levied on Class A, Class M and Class C redemptions. The deferred sales charges are 1.00% for Class C shares, 1.00% for certain purchases of Class A shares and .25% for certain purchases of Class M shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained by FDC | |
| Class A | $10,978 |
| Class M | 1,468 |
| Class C(a) | 524 |
| $12,970 |
(a) When Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company LLC (FIIOC), an affiliate of the investment adviser, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the Fund, except for Class Z. FIIOC receives an asset-based fee of Class Z's average net assets. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. Effective February 1, 2020, the Board approved to change the fee for Class Z from .046% to .044%.
For the period, transfer agent fees for each class were as follows:
| Amount | % of Class-Level Average Net Assets | |
| Class A | $62,011 | .29 |
| Class M | 21,733 | .33 |
| Class C | 16,089 | .24 |
| Telecommunications | 440,908 | .19 |
| Class I | 47,861 | .25 |
| Class Z | 5,238 | .04 |
| $593,840 |
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of the investment adviser, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for each month. Prior to April 1, 2019, FSC had a separate agreement with the Fund for administration of the security lending program, based on the number and duration of lending transactions. For the period, the total fees paid for accounting and administration of securities lending were equivalent to the following annual rates:
| % of Average Net Assets | |
| Telecommunications Portfolio | .04 |
Brokerage Commissions. A portion of portfolio transactions were placed with brokerage firms which are affiliates of the investment adviser. Brokerage commissions are included in net realized gain (loss) and change in net unrealized appreciation (depreciation) in the Statement of Operations. The commissions paid to these affiliated firms were as follows:
| Amount | |
| Telecommunications Portfolio | $13,803 |
Interfund Trades. Funds may purchase from or sell securities to other Fidelity Funds under procedures adopted by the Board. The procedures have been designed to ensure these interfund trades are executed in accordance with Rule 17a-7 of the 1940 Act. Interfund trades are included within the respective purchases and sales amounts shown in the Purchases and Sales of Investments note.
Prior Fiscal Year Affiliated Redemptions In-Kind. During the prior period, 1,218,775 shares of the Fund were redeemed in-kind for investments and cash with a value of $67,398,250. The Fund had a net realized gain of $14,071,812 on investments delivered through in-kind redemptions. The amount of the in-kind redemptions is included in share transactions in the accompanying Statement of Changes in Net Assets as well as the Notes to Financial Statements. The Fund recognized no gain or loss for federal income tax purposes.
6. Committed Line of Credit.
Certain Funds participate with other funds managed by the investment adviser or an affiliate in a $4.25 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The participating funds have agreed to pay commitment fees on their pro-rata portion of the line of credit, which are reflected in Miscellaneous expenses on the Statement of Operations, and are as follows:
| Amount | |
| Telecommunications Portfolio | $739 |
During the period, there were no borrowings on this line of credit.
7. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. For equity securities, lending agents are used, including National Financial Services (NFS), an affiliate of the Fund. Pursuant to a securities lending agreement, NFS will receive a fee, which is capped at 9.9% of daily lending revenue, for its services as lending agent. The Fund may lend securities to certain qualified borrowers, including NFS. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. The Fund or borrower may terminate the loan at any time, and if the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, the Fund may apply collateral received from the borrower against the obligation. The Fund may experience delays and costs in recovering the securities loaned. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Total fees paid by the Fund to NFS, as lending agent, amounted to $792. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. During the period, there were no securities loaned to NFS.
8. Expense Reductions.
Commissions paid to certain brokers with whom the investment adviser, or its affiliates, places trades on behalf of the Fund include an amount in addition to trade execution, which may be rebated back to the Fund to offset certain expenses. This amount totaled $14,058 for the period. In addition, through arrangements with each class' transfer agent, credits realized as a result of certain uninvested cash balances were used to reduce the Fund's expenses. During the period, transfer agent credits reduced each class' expenses as noted in the table below.
| Expense reduction | |
| Telecommunications | $35 |
In addition, during the period the investment adviser or an affiliate reimbursed and/or waived a portion of fund-level operating expenses in the amount of $1,754.
During the period the investment adviser or an affiliate reimbursed the Fund $5,830 for an operational error which is included in the accompanying Statement of Operations.
9. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
| Year ended February 29, 2020 | Year ended February 28, 2019(a) |
|
| Distributions to shareholders | ||
| Class A | $604,045 | $535,063 |
| Class M | 187,105 | 130,556 |
| Class C | 153,979 | 159,015 |
| Telecommunications | 7,412,079 | 8,378,886 |
| Class I | 463,300 | 568,868 |
| Class Z | 746,076 | 6,108 |
| Total | $9,566,584 | $9,778,496 |
(a) Distributions for Class Z are for the period October 2, 2018 (commencement of sale of shares) to February 28, 2019.
10. Share Transactions.
Share transactions for each class were as follows and may contain automatic conversions between classes or exchanges between affiliated funds:
| Shares | Shares | Dollars | Dollars | |
| Year ended February 29, 2020 | Year ended February 28, 2019(a) | Year ended February 29, 2020 | Year ended February 28, 2019(a) | |
| Class A | ||||
| Shares sold | 131,076 | 178,681 | $7,742,577 | $10,119,847 |
| Reinvestment of distributions | 9,514 | 9,360 | 574,157 | 516,144 |
| Shares redeemed | (157,632) | (138,810) | (9,303,325) | (7,791,536) |
| Net increase (decrease) | (17,042) | 49,231 | $(986,591) | $2,844,455 |
| Class M | ||||
| Shares sold | 39,034 | 44,519 | $2,290,232 | $2,532,619 |
| Reinvestment of distributions | 3,102 | 2,373 | 186,377 | 130,297 |
| Shares redeemed | (35,902) | (25,923) | (2,107,496) | (1,462,119) |
| Net increase (decrease) | 6,234 | 20,969 | $369,113 | $1,200,797 |
| Class C | ||||
| Shares sold | 20,297 | 31,491 | $1,201,861 | $1,771,517 |
| Reinvestment of distributions | 2,359 | 2,644 | 141,967 | 145,392 |
| Shares redeemed | (41,159) | (59,867) | (2,410,442) | (3,334,750) |
| Net increase (decrease) | (18,503) | (25,732) | $(1,066,614) | $(1,417,841) |
| Telecommunications | ||||
| Shares sold | 518,015 | 715,808 | $31,128,263 | $41,325,429 |
| Reinvestment of distributions | 114,924 | 143,615 | 6,977,492 | 7,967,864 |
| Shares redeemed | (1,086,758) | (2,543,354)(b) | (64,730,175) | (142,062,236)(b) |
| Net increase (decrease) | (453,819) | (1,683,931) | $(26,624,420) | $(92,768,943) |
| Class I | ||||
| Shares sold | 156,686 | 628,872 | $9,424,886 | $37,138,940 |
| Reinvestment of distributions | 6,643 | 8,061 | 401,406 | 444,865 |
| Shares redeemed | (410,057) | (335,488) | (24,520,400) | (19,029,976) |
| Net increase (decrease) | (246,728) | 301,445 | $(14,694,108) | $18,553,829 |
| Class Z | ||||
| Shares sold | 468,706 | 6,750 | $28,191,952 | $397,427 |
| Reinvestment of distributions | 9,319 | 110 | 565,974 | 6,066 |
| Shares redeemed | (69,698) | (5) | (4,214,548) | (267) |
| Net increase (decrease) | 408,327 | 6,855 | $24,543,378 | $403,226 |
(a) Share transactions for Class Z are for the period October 2, 2018 (commencement of sale of shares) to February 28, 2019.
(b) Amount includes in-kind redemptions (see the Prior Fiscal Year Affiliated Redemptions In-Kind note for additional details).
11. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
12. Coronavirus (COVID-19) Pandemic.
The An outbreak of COVID-19 first detected in China during December 2019 has since spread globally and was declared a pandemic by the World Health Organization during March 2020. Developments that disrupt global economies and financial markets, such as the COVID-19 pandemic, may magnify factors that affect the Fund's performance.
Wireless Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The hypothetical investment and the average annual total returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund’s total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
| For the periods ended February 29, 2020 | Past 1 year | Past 5 years | Past 10 years |
| Wireless Portfolio | 23.01% | 9.78% | 11.83% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Wireless Portfolio on February 28, 2010.
The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
| Period Ending Values | ||
|
| $30,598 | Wireless Portfolio |
|
| $32,918 | S&P 500® Index |
Wireless Portfolio
Management's Discussion of Fund Performance
Market Recap: U.S. stocks stalled to begin the new year and declined in late February, as the outbreak and spread of the new coronavirus threatened to hamper global economic growth and corporate earnings. For the 12 months ending February 29, 2020, the U.S. equity bellwether S&P 500® index gained 8.19%. The period began with equities rising amid upbeat company earnings and signs the U.S. Federal Reserve may pause on rates. The uptrend extended until May, when the index dipped as trade talks between the U.S. and China broke down. The bull market roared back to record a series of highs in July, when the Fed cut interest rates for the first time since 2008. Volatility intensified in August, as the Treasury yield curve inverted, which some investors viewed as a sign the U.S. economy could be heading for recession. But the market proved resilient, hitting a new high on October 30, when the Fed lowered rates for the third time in 2019, and moving higher through December 31. Following a roughly flat January, stocks sank in late February, after a surge in coronavirus cases outside China created considerable uncertainty and pushed investors to safer asset classes. By sector, information technology (+27%) led the way by a wide margin, followed by utilities and communication services (+13% each). In contrast, energy (-25%) was by far the weakest category, struggling due to sluggish oil prices. Other notable laggards included materials and industrials (-2% each). Comments from Portfolio Manager Matthew Drukker: For the fiscal year, the fund gained 23.01%, notably outpacing the 15.35% result of the industry benchmark, the Fidelity Wireless Index, and the S&P 500®. Wireless services companies, given their more utility-like characteristics and primary focus on the development of 5G networks, benefited from their relatively limited exposure to global trade uncertainty. Many also capitalized on digital trends that drove strong business fundamentals the past 12 months. Versus the industry benchmark, both stock and market selection added value. Stock picking in the wireless telecommunication services contributed on a relative basis, as did overweighting the technology hardware, storage & peripherals group. On an individual basis, underweighting Finland-based telecom technology company Nokia (-35%) helped. The fund's slight average overweighting in tech giant Apple (+59%) also added value. Conversely, choices in the non-index cable & satellite segment detracted modestly. Within this group, a position in Liberty Global (-27%) hurt the fund's relative result. This U.K.-based cable and wireless service provider suffered from the slower-than-expected expansion of its infrastructure upgrades across Europe.The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Wireless Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 29, 2020
| % of fund's net assets | |
| Apple, Inc. | 13.1 |
| Orange SA ADR | 8.4 |
| American Tower Corp. | 8.3 |
| Verizon Communications, Inc. | 8.1 |
| AT&T, Inc. | 4.5 |
| Activision Blizzard, Inc. | 4.2 |
| T-Mobile U.S., Inc. | 3.6 |
| Amazon.com, Inc. | 3.4 |
| RingCentral, Inc. | 3.2 |
| Ericsson (B Shares) | 3.0 |
| 59.8 |
Top Industries (% of fund's net assets)
| As of February 29, 2020 | ||
| Diversified Telecommunication Services | 28.2% | |
| Technology Hardware, Storage & Peripherals | 15.0% | |
| Communications Equipment | 10.8% | |
| Wireless Telecommunication Services | 10.6% | |
| Equity Real Estate Investment Trusts (Reits) | 10.3% | |
| All Others* | 25.1% | |
* Includes short-term investments and net other assets (liabilities).
Wireless Portfolio
Schedule of Investments February 29, 2020
Showing Percentage of Net Assets
| Common Stocks - 100.1% | |||
| Shares | Value | ||
| Communications Equipment - 10.8% | |||
| Communications Equipment - 10.8% | |||
| CommScope Holding Co., Inc. (a) | 774,800 | $8,530,548 | |
| EchoStar Holding Corp. Class A (a) | 107,000 | 3,736,440 | |
| Ericsson: | |||
| (B Shares) | 157,100 | 1,260,057 | |
| (B Shares) sponsored ADR (b) | 1,165,400 | 9,369,816 | |
| Motorola Solutions, Inc. | 58,268 | 9,653,842 | |
| Nokia Corp. sponsored ADR | 460,400 | 1,781,748 | |
| ViaSat, Inc. (a) | 69,601 | 4,002,058 | |
| 38,334,509 | |||
| Diversified Telecommunication Services - 28.2% | |||
| Alternative Carriers - 1.5% | |||
| Iliad SA (b) | 37,095 | 5,214,229 | |
| Integrated Telecommunication Services - 26.7% | |||
| AT&T, Inc. | 453,600 | 15,975,792 | |
| BCE, Inc. | 141,000 | 6,192,550 | |
| Bezeq The Israel Telecommunication Corp. Ltd. (a) | 8,753,100 | 6,465,458 | |
| Masmovil Ibercom SA (a) | 160,050 | 3,179,093 | |
| Orange SA ADR | 2,234,300 | 29,894,934 | |
| Telefonica SA sponsored ADR (b) | 757,797 | 4,478,580 | |
| Verizon Communications, Inc. | 533,901 | 28,916,078 | |
| 95,102,485 | |||
| TOTAL DIVERSIFIED TELECOMMUNICATION SERVICES | 100,316,714 | ||
| Entertainment - 4.7% | |||
| Interactive Home Entertainment - 4.2% | |||
| Activision Blizzard, Inc. | 253,900 | 14,759,207 | |
| Movies & Entertainment - 0.5% | |||
| Spotify Technology SA (a) | 14,100 | 1,933,392 | |
| TOTAL ENTERTAINMENT | 16,692,599 | ||
| Equity Real Estate Investment Trusts (REITs) - 10.3% | |||
| Specialized REITs - 10.3% | |||
| American Tower Corp. | 129,792 | 29,436,826 | |
| Crown Castle International Corp. | 49,201 | 7,050,011 | |
| 36,486,837 | |||
| Internet & Direct Marketing Retail - 3.4% | |||
| Internet & Direct Marketing Retail - 3.4% | |||
| Amazon.com, Inc. (a) | 6,400 | 12,056,000 | |
| Media - 2.4% | |||
| Cable & Satellite - 2.4% | |||
| DISH Network Corp. Class A (a) | 48,849 | 1,637,418 | |
| Liberty Global PLC Class A (a) | 313,500 | 6,119,520 | |
| SES SA (France) (depositary receipt) | 69,900 | 801,499 | |
| 8,558,437 | |||
| Road & Rail - 2.7% | |||
| Trucking - 2.7% | |||
| Lyft, Inc. | 248,400 | 9,469,008 | |
| Semiconductors & Semiconductor Equipment - 8.1% | |||
| Semiconductors - 8.1% | |||
| Marvell Technology Group Ltd. | 437,600 | 9,320,880 | |
| NXP Semiconductors NV | 32,300 | 3,672,187 | |
| Qualcomm, Inc. | 89,050 | 6,972,615 | |
| Skyworks Solutions, Inc. | 63,000 | 6,311,340 | |
| Synaptics, Inc. (a) | 38,900 | 2,569,345 | |
| 28,846,367 | |||
| Software - 3.9% | |||
| Application Software - 3.8% | |||
| LivePerson, Inc. (a)(b) | 86,000 | 2,275,560 | |
| RingCentral, Inc. (a) | 47,500 | 11,198,125 | |
| 13,473,685 | |||
| Systems Software - 0.1% | |||
| BlackBerry Ltd. (a) | 76,401 | 394,456 | |
| TOTAL SOFTWARE | 13,868,141 | ||
| Technology Hardware, Storage & Peripherals - 15.0% | |||
| Technology Hardware, Storage & Peripherals - 15.0% | |||
| Apple, Inc. | 170,005 | 46,472,568 | |
| Samsung Electronics Co. Ltd. | 152,540 | 6,884,789 | |
| 53,357,357 | |||
| Wireless Telecommunication Services - 10.6% | |||
| Wireless Telecommunication Services - 10.6% | |||
| China Mobile Ltd. sponsored ADR | 191,700 | 7,633,494 | |
| Millicom International Cellular SA | 89,700 | 4,082,247 | |
| Shenandoah Telecommunications Co. | 300 | 13,329 | |
| Spok Holdings, Inc. | 1 | 10 | |
| Sprint Corp. (a) | 593,332 | 5,452,721 | |
| T-Mobile U.S., Inc. (a) | 141,575 | 12,764,402 | |
| Vodafone Group PLC sponsored ADR | 439,781 | 7,696,168 | |
| 37,642,371 | |||
| TOTAL COMMON STOCKS | |||
| (Cost $304,410,160) | 355,628,340 | ||
| Money Market Funds - 3.0% | |||
| Fidelity Securities Lending Cash Central Fund 1.60% (c)(d) | |||
| (Cost $10,760,436) | 10,759,360 | 10,760,436 | |
| TOTAL INVESTMENT IN SECURITIES - 103.1% | |||
| (Cost $315,170,596) | 366,388,776 | ||
| NET OTHER ASSETS (LIABILITIES) - (3.1)% | (11,080,087) | ||
| NET ASSETS - 100% | $355,308,689 |
Legend
(a) Non-income producing
(b) Security or a portion of the security is on loan at period end.
(c) Investment made with cash collateral received from securities on loan.
(d) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request.
Affiliated Central Funds
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:
| Fund | Income earned |
| Fidelity Cash Central Fund | $50,807 |
| Fidelity Securities Lending Cash Central Fund | 194,275 |
| Total | $245,082 |
Amounts in the income column in the above table include any capital gain distributions from underlying funds, which are presented in the corresponding line-item in the Statement of Operations, if applicable. Amount for Fidelity Securities Lending Cash Central Fund represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities.
Investment Valuation
The following is a summary of the inputs used, as of February 29, 2020, 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 below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.
| Valuation Inputs at Reporting Date: | ||||
| Description | Total | Level 1 | Level 2 | Level 3 |
| Investments in Securities: | ||||
| Common Stocks | $355,628,340 | $345,173,462 | $10,454,878 | $-- |
| Money Market Funds | 10,760,436 | 10,760,436 | -- | -- |
| Total Investments in Securities: | $366,388,776 | $355,933,898 | $10,454,878 | $-- |
Other Information
Distribution of investments by country or territory of incorporation, as a percentage of Total Net Assets, is as follows (Unaudited):
| United States of America | 68.6% |
| France | 9.9% |
| United Kingdom | 3.9% |
| Sweden | 3.0% |
| Bermuda | 2.6% |
| Spain | 2.2% |
| Hong Kong | 2.1% |
| Korea (South) | 1.9% |
| Canada | 1.8% |
| Israel | 1.8% |
| Netherlands | 1.0% |
| Others (Individually Less Than 1%) | 1.2% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Wireless Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2020 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $10,004,371) — See accompanying schedule: Unaffiliated issuers (cost $304,410,160) | $355,628,340 | |
| Fidelity Central Funds (cost $10,760,436) | 10,760,436 | |
| Total Investment in Securities (cost $315,170,596) | $366,388,776 | |
| Receivable for investments sold | 6,127,775 | |
| Receivable for fund shares sold | 979,841 | |
| Dividends receivable | 206,154 | |
| Distributions receivable from Fidelity Central Funds | 5,925 | |
| Prepaid expenses | 1,951 | |
| Other receivables | 13,356 | |
| Total assets | 373,723,778 | |
| Liabilities | ||
| Payable to custodian bank | $2,138,260 | |
| Payable for fund shares redeemed | 5,209,789 | |
| Accrued management fee | 175,334 | |
| Other affiliated payables | 70,308 | |
| Other payables and accrued expenses | 62,335 | |
| Collateral on securities loaned | 10,759,063 | |
| Total liabilities | 18,415,089 | |
| Net Assets | $355,308,689 | |
| Net Assets consist of: | ||
| Paid in capital | $284,893,445 | |
| Total accumulated earnings (loss) | 70,415,244 | |
| Net Assets | $355,308,689 | |
| Net Asset Value, offering price and redemption price per share ($355,308,689 ÷ 33,222,295 shares) | $10.69 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 29, 2020 | ||
| Investment Income | ||
| Dividends | $6,329,420 | |
| Income from Fidelity Central Funds (including $194,275 from security lending) | 245,082 | |
| Total income | 6,574,502 | |
| Expenses | ||
| Management fee | $1,608,822 | |
| Transfer agent fees | 576,684 | |
| Accounting and security lending fees | 117,529 | |
| Custodian fees and expenses | 25,747 | |
| Independent trustees' fees and expenses | 1,525 | |
| Registration fees | 51,410 | |
| Audit | 45,700 | |
| Legal | 1,723 | |
| Interest | 2,906 | |
| Miscellaneous | 1,931 | |
| Total expenses before reductions | 2,433,977 | |
| Expense reductions | (14,857) | |
| Total expenses after reductions | 2,419,120 | |
| Net investment income (loss) | 4,155,382 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 30,881,317 | |
| Fidelity Central Funds | (978) | |
| Foreign currency transactions | (77,772) | |
| Total net realized gain (loss) | 30,802,567 | |
| Change in net unrealized appreciation (depreciation) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 19,597,352 | |
| Assets and liabilities in foreign currencies | (13,358) | |
| Total change in net unrealized appreciation (depreciation) | 19,583,994 | |
| Net gain (loss) | 50,386,561 | |
| Net increase (decrease) in net assets resulting from operations | $54,541,943 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 29, 2020 | Year ended February 28, 2019 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $4,155,382 | $5,089,450 |
| Net realized gain (loss) | 30,802,567 | 25,048,460 |
| Change in net unrealized appreciation (depreciation) | 19,583,994 | (30,802,695) |
| Net increase (decrease) in net assets resulting from operations | 54,541,943 | (664,785) |
| Distributions to shareholders | (9,722,332) | (31,692,225) |
| Share transactions | ||
| Proceeds from sales of shares | 170,798,888 | 36,649,769 |
| Reinvestment of distributions | 9,037,221 | 30,046,831 |
| Cost of shares redeemed | (107,253,657) | (72,175,357) |
| Net increase (decrease) in net assets resulting from share transactions | 72,582,452 | (5,478,757) |
| Total increase (decrease) in net assets | 117,402,063 | (37,835,767) |
| Net Assets | ||
| Beginning of period | 237,906,626 | 275,742,393 |
| End of period | $355,308,689 | $237,906,626 |
| Other Information | ||
| Shares | ||
| Sold | 16,059,963 | 3,719,654 |
| Issued in reinvestment of distributions | 812,700 | 3,493,506 |
| Redeemed | (10,283,730) | (7,373,198) |
| Net increase (decrease) | 6,588,933 | (160,038) |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights
Wireless Portfolio
| Years ended February 28, | 2020 A | 2019 | 2018 | 2017 | 2016 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $8.93 | $10.29 | $9.11 | $7.85 | $9.54 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .14 | .20C | .16 | .10 | .11 |
| Net realized and unrealized gain (loss) | 1.93 | (.24)D | 1.39 | 1.71 | (1.11) |
| Total from investment operations | 2.07 | (.04) | 1.55 | 1.81 | (1.00) |
| Distributions from net investment income | (.12) | (.19) | (.14) | (.09) | (.12) |
| Distributions from net realized gain | (.19) | (1.13) | (.24) | (.46) | (.57) |
| Total distributions | (.31) | (1.32) | (.37)E | (.55) | (.69) |
| Redemption fees added to paid in capitalB | – | – | –F | –F | –F |
| Net asset value, end of period | $10.69 | $8.93 | $10.29 | $9.11 | $7.85 |
| Total ReturnG | 23.01% | .21%D | 17.21% | 24.09% | (11.07)% |
| Ratios to Average Net AssetsH,I | |||||
| Expenses before reductions | .81% | .83% | .83% | .87% | .86% |
| Expenses net of fee waivers, if any | .81% | .83% | .83% | .87% | .86% |
| Expenses net of all reductions | .81% | .82% | .82% | .86% | .85% |
| Net investment income (loss) | 1.39% | 2.07%C | 1.61% | 1.23% | 1.23% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $355,309 | $237,907 | $275,742 | $239,359 | $207,492 |
| Portfolio turnover rateJ | 78% | 54% | 85% | 98% | 78% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Net investment income per share reflects a large, non-recurring dividend which amounted to $.03 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been 1.74%.
D Net realized and unrealized gain (loss) per share reflects proceeds received from litigation which amounted to $.01 per share. Excluding these litigation proceeds, the total return would have been .12%.
E Total distributions of $.37 per share is comprised of distributions from net investment income of $.136 and distributions from net realized gain of $.235 per share.
F Amount represents less than $.005 per share.
G Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
H Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
I Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
J Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the financial statements.
Notes to Financial Statements
For the period ended February 29, 2020
1. Organization.
Wireless Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the Trust) and is authorized to issue an unlimited number of shares. Share transactions on the Statement of Changes in Net Assets may contain exchanges between affiliated funds. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries.
Effective January 1, 2020:
Investment advisers Fidelity Investments Money Management, Inc., FMR Co., Inc., and Fidelity SelectCo, LLC, merged with and into Fidelity Management & Research Company. In connection with the merger transactions, the resulting, merged investment adviser was then redomiciled from Massachusetts to Delaware, changed its corporate structure from a corporation to a limited liability company, and changed its name to "Fidelity Management & Research Company LLC".
Fidelity Investments Institutional Operations Company, Inc. converted from a Massachusetts corporation to a Massachusetts LLC, and changed its name to "Fidelity Investments Institutional Operations Company LLC".
2. Investments in Fidelity Central Funds.
The Fund invests in Fidelity Central Funds, which are open-end investment companies generally available only to other investment companies and accounts managed by the investment adviser and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by the investment adviser. Annualized expenses of the Money Market Central Funds as of their most recent shareholder report date ranged from less than .005% to .01%.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) website at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC website or upon request.
3. Significant Accounting Policies.
The Fund is an investment company and applies the accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946 Financial Services – Investments Companies. The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:
Investment Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Board of Trustees (the Board) has delegated the day to day responsibility for the valuation of the Fund's investments to the Fair Value Committee (the Committee) established by the Fund's investment adviser. In accordance with valuation policies and procedures approved by the Board, the Fund attempts to obtain prices from one or more third party pricing vendors or brokers to value its investments. When current market prices, quotations or currency exchange rates are not readily available or reliable, investments will be fair valued in good faith by the Committee, in accordance with procedures adopted by the Board. Factors used in determining fair value vary by investment type and may include market or investment specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The Committee oversees the Fund's valuation policies and procedures and reports to the Board on the Committee's activities and fair value determinations. The Board monitors the appropriateness of the procedures used in valuing the Fund's investments and ratifies the fair value determinations of the Committee.
The Fund categorizes the inputs to valuation techniques used to 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)
Valuation techniques used to value the Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by a third party pricing vendor on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-Traded Funds (ETFs) and certain indexes as well as quoted prices for similar securities may be used and would be categorized as Level 2 in the hierarchy. For equity securities, including restricted 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.
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value (NAV) each business day and are categorized as Level 1 in the hierarchy.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level as of February 29, 2020 is included at the end of the Fund's Schedule of Investments.
Foreign Currency. The Fund may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rates at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and include proceeds received from litigation. Dividend income is recorded 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. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Income and capital gain distributions from Fidelity Central Funds, if any, are recorded on the ex-dividend date. Certain distributions received by the Fund represent a return of capital or capital gain. The Fund determines the components of these distributions subsequent to the ex-dividend date, based upon receipt of tax filings or other correspondence relating to the underlying investment. These distributions are recorded as a reduction of cost of investments and/or as a realized gain. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for U.S. Federal income taxes is required. As of February 29, 2020, the Fund did not have any unrecognized tax benefits in the financial statements; nor is the Fund aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. The Fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are declared and recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. In addition, the Fund claimed a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Capital accounts are not adjusted for temporary book-tax differences which will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions and losses deferred due to wash sales and excise tax regulations.
As of period end, the cost and unrealized appreciation (depreciation) in securities, and derivatives if applicable, for federal income tax purposes were as follows:
| Gross unrealized appreciation | $78,092,637 |
| Gross unrealized depreciation | (27,844,778) |
| Net unrealized appreciation (depreciation) | $50,247,859 |
| Tax Cost | $316,140,917 |
The tax-based components of distributable earnings as of period end were as follows:
| Undistributed ordinary income | $5,760,458 |
| Undistributed long-term capital gain | $14,423,025 |
| Net unrealized appreciation (depreciation) on securities and other investments | $50,231,763 |
The tax character of distributions paid was as follows:
| February 29, 2020 | February 28, 2019 | |
| Ordinary Income | $5,890,403 | $ 4,622,795 |
| Long-term Capital Gains | 3,831,929 | 27,069,430 |
| Total | $9,722,332 | $ 31,692,225 |
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, are noted in the table below.
| Purchases ($) | Sales ($) | |
| Wireless Portfolio | 299,897,951 | 229,599,192 |
5. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity Management & Research Company LLC (the investment adviser) and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and an annualized group fee rate that averaged .24% during the period. The group fee rate is based upon the monthly average net assets of a group of registered investment companies with which the investment adviser has management contracts. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the reporting period, the total annual management fee rate was .54% of the Fund's average net assets.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company LLC (FIIOC), an affiliate of the investment adviser, is the Fund's transfer, dividend disbursing and shareholder servicing agent. FIIOC receives account fees and asset-based fees that vary according to account size and type of account. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, the transfer agent fees were equivalent to an annual rate of .19% of average net assets.
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of the investment adviser, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for each month. Prior to April 1, 2019, FSC had a separate agreement with the Fund for administration of the security lending program, based on the number and duration of lending transactions. For the period, the total fees paid for accounting and administration of securities lending were equivalent to the following annual rates:
| % of Average Net Assets | |
| Wireless Portfolio | .04 |
Brokerage Commissions. A portion of portfolio transactions were placed with brokerage firms which are affiliates of the investment adviser. Brokerage commissions are included in net realized gain (loss) and change in net unrealized appreciation (depreciation) in the Statement of Operations. The commissions paid to these affiliated firms were as follows:
| Amount | |
| Wireless Portfolio | $9,284 |
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the fund, along with other registered investment companies having management contracts with Fidelity Management & Research Company LLC (FMR), or other affiliated entities of FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the fund to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. Activity in this program during the period for which loans were outstanding was as follows:
| Borrower or Lender | Average Loan Balance | Weighted Average Interest Rate | Interest Expense | |
| Wireless Portfolio | Borrower | $9,182,500 | 1.90% | $2,906 |
Interfund Trades. Funds may purchase from or sell securities to other Fidelity Funds under procedures adopted by the Board. The procedures have been designed to ensure these interfund trades are executed in accordance with Rule 17a-7 of the 1940 Act. Interfund trades are included within the respective purchases and sales amounts shown in the Purchases and Sales of Investments note.
6. Committed Line of Credit.
Certain Funds participate with other funds managed by the investment adviser or an affiliate in a $4.25 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The participating funds have agreed to pay commitment fees on their pro-rata portion of the line of credit, which are reflected in Miscellaneous expenses on the Statement of Operations, and are as follows:
| Amount | |
| Wireless Portfolio | $692 |
During the period, there were no borrowings on this line of credit.
7. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. For equity securities, lending agents are used, including National Financial Services (NFS), an affiliate of the Fund. Pursuant to a securities lending agreement, NFS will receive a fee, which is capped at 9.9% of daily lending revenue, for its services as lending agent. The Fund may lend securities to certain qualified borrowers, including NFS. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. The Fund or borrower may terminate the loan at any time, and if the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, the Fund may apply collateral received from the borrower against the obligation. The Fund may experience delays and costs in recovering the securities loaned. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Total fees paid by the Fund to NFS, as lending agent, amounted to $4,567. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. During the period, there were no securities loaned to NFS.
8. Expense Reductions.
Commissions paid to certain brokers with whom the investment adviser, or its affiliates, places trades on behalf of the Fund include an amount in addition to trade execution, which may be rebated back to the Fund to offset certain expenses. This amount totaled $13,243 for the period.
In addition, during the period the investment adviser or an affiliate reimbursed and/or waived a portion of operating expenses in the amount of $1,614.
9. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
10. Coronavirus (COVID-19) Pandemic.
An outbreak of COVID-19 first detected in China during December 2019 has since spread globally and was declared a pandemic by the World Health Organization during March 2020. Developments that disrupt global economies and financial markets, such as the COVID-19 pandemic, may magnify factors that affect the Fund's performance.
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of Fidelity Select Portfolios and Shareholders of Telecommunications Portfolio and Wireless Portfolio
Opinions on the Financial Statements
We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of Telecommunications Portfolio and Wireless Portfolio(two of the funds constituting Fidelity Select Portfolios, hereafter collectively referred to as the “Funds”) as of February 29, 2020, the related statements of operations for the year ended February 29, 2020, the statements of changes in net assets for each of the two years in the period ended February 29, 2020, including the related notes, and the financial highlights for each of the periods indicated therein (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of each of the Funds as of February 29, 2020, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period ended February 29, 2020 and each of the financial highlights for each of the periods indicated therein in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinions
These financial statements are the responsibility of the Funds' management. Our responsibility is to express an opinion on the Funds' financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Funds in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of February 29, 2020 by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinions.
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 13, 2020
We have served as the auditor of one or more investment companies in the Fidelity group of funds since 1932.
Trustees and Officers
The Trustees, Members of the Advisory Board (if any), and officers of the trust and funds, as applicable, are listed below. The Board of Trustees governs each fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee each fund's activities, review contractual arrangements with companies that provide services to each fund, oversee management of the risks associated with such activities and contractual arrangements, and review each fund's performance. Except for Michael E. Wiley, each of the Trustees oversees 302 funds. Mr. Wiley oversees 199 funds.
The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust. Each Trustee who is not an interested person (as defined in the 1940 Act) of the trust and the funds is referred to herein as an Independent Trustee. Each Independent Trustee shall retire not later than the last day of the calendar year in which his or her 75th birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. Officers and Advisory Board Members hold office without limit in time, except that any officer or Advisory Board Member may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years.
Each fund's Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-800-544-8544 if you’re an individual investing directly with Fidelity, call 1-800-835-5092 if you’re a plan sponsor or participant with Fidelity as your recordkeeper or call 1-877-208-0098 on institutional accounts or if you’re an advisor or invest through one.
Experience, Skills, Attributes, and Qualifications of the Trustees. The Governance and Nominating Committee has adopted a statement of policy that describes the experience, qualifications, attributes, and skills that are necessary and desirable for potential Independent Trustee candidates (Statement of Policy). The Board believes that each Trustee satisfied at the time he or she was initially elected or appointed a Trustee, and continues to satisfy, the standards contemplated by the Statement of Policy. The Governance and Nominating Committee also engages professional search firms to help identify potential Independent Trustee candidates who have the experience, qualifications, attributes, and skills consistent with the Statement of Policy. From time to time, additional criteria based on the composition and skills of the current Independent Trustees, as well as experience or skills that may be appropriate in light of future changes to board composition, business conditions, and regulatory or other developments, have also been considered by the professional search firms and the Governance and Nominating Committee. In addition, the Board takes into account the Trustees' commitment and participation in Board and committee meetings, as well as their leadership of standing and ad hoc committees throughout their tenure.
In determining that a particular Trustee was and continues to be qualified to serve as a Trustee, the Board has considered a variety of criteria, none of which, in isolation, was controlling. The Board believes that, collectively, the Trustees have balanced and diverse experience, qualifications, attributes, and skills, which allow the Board to operate effectively in governing each fund and protecting the interests of shareholders. Information about the specific experience, skills, attributes, and qualifications of each Trustee, which in each case led to the Board's conclusion that the Trustee should serve (or continue to serve) as a trustee of the funds, is provided below.
Board Structure and Oversight Function. James C. Curvey is an interested person and currently serves as Chairman. The Trustees have determined that an interested Chairman is appropriate and benefits shareholders because an interested Chairman has a personal and professional stake in the quality and continuity of services provided to the funds. Independent Trustees exercise their informed business judgment to appoint an individual of their choosing to serve as Chairman, regardless of whether the Trustee happens to be independent or a member of management. The Independent Trustees have determined that they can act independently and effectively without having an Independent Trustee serve as Chairman and that a key structural component for assuring that they are in a position to do so is for the Independent Trustees to constitute a substantial majority for the Board. The Independent Trustees also regularly meet in executive session. Ned C. Lautenbach serves as Chairman of the Independent Trustees and as such (i) acts as a liaison between the Independent Trustees and management with respect to matters important to the Independent Trustees and (ii) with management prepares agendas for Board meetings.
Fidelity® funds are overseen by different Boards of Trustees. The funds' Board oversees Fidelity's high income and certain equity funds, and other Boards oversee Fidelity's investment-grade bond, money market, asset allocation, and other equity funds. The asset allocation funds may invest in Fidelity® funds overseen by the funds' Board. The use of separate Boards, each with its own committee structure, allows the Trustees of each group of Fidelity® funds to focus on the unique issues of the funds they oversee, including common research, investment, and operational issues. On occasion, the separate Boards establish joint committees to address issues of overlapping consequences for the Fidelity® funds overseen by each Board.
The Trustees operate using a system of committees to facilitate the timely and efficient consideration of all matters of importance to the Trustees, each fund, and fund shareholders and to facilitate compliance with legal and regulatory requirements and oversight of the funds' activities and associated risks. The Board, acting through its committees, has charged FMR and its affiliates with (i) identifying events or circumstances the occurrence of which could have demonstrably adverse effects on the funds' business and/or reputation; (ii) implementing processes and controls to lessen the possibility that such events or circumstances occur or to mitigate the effects of such events or circumstances if they do occur; and (iii) creating and maintaining a system designed to evaluate continuously business and market conditions in order to facilitate the identification and implementation processes described in (i) and (ii) above. Because the day-to-day operations and activities of the funds are carried out by or through FMR, its affiliates, and other service providers, the funds' exposure to risks is mitigated but not eliminated by the processes overseen by the Trustees. While each of the Board's committees has responsibility for overseeing different aspects of the funds' activities, oversight is exercised primarily through the Operations, Audit, and Compliance Committees. Appropriate personnel, including but not limited to the funds' Chief Compliance Officer (CCO), FMR's internal auditor, the independent accountants, the funds' Treasurer and portfolio management personnel, make periodic reports to the Board's committees, as appropriate, including an annual review of Fidelity's risk management program for the Fidelity® funds. The responsibilities of each standing committee, including their oversight responsibilities, are described further under "Standing Committees of the Trustees."
Interested Trustees*:
Correspondence intended for a Trustee who is an interested person may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210.
Name, Year of Birth; Principal Occupations and Other Relevant Experience+
James C. Curvey (1935)
Year of Election or Appointment: 2018
Trustee
Chairman of the Board of Trustees
Mr. Curvey also serves as Trustee of other Fidelity® funds. Mr. Curvey is Vice Chairman (2007-present) and Director of FMR LLC (diversified financial services company). In addition, Mr. Curvey is an Overseer Emeritus for the Boston Symphony Orchestra, a Director of Artis-Naples, and a Trustee of Brewster Academy in Wolfeboro, New Hampshire. Previously, Mr. Curvey served as a Director of Fidelity Research & Analysis Co. (investment adviser firm, 2009-2018), Director of Fidelity Investments Money Management, Inc. (investment adviser firm, 2009-2014) and a Director of FMR and FMR Co., Inc. (investment adviser firms, 2007-2014).
* Determined to be an “Interested Trustee” by virtue of, among other things, his or her affiliation with the trust or various entities under common control with FMR.
+ The information includes the Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to the Trustee's qualifications to serve as a Trustee, which led to the conclusion that the Trustee should serve as a Trustee for each fund.
Independent Trustees:
Correspondence intended for an Independent Trustee may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.
Name, Year of Birth; Principal Occupations and Other Relevant Experience+
Dennis J. Dirks (1948)
Year of Election or Appointment: 2018
Trustee
Mr. Dirks also serves as Trustee of other Fidelity® funds. Prior to his retirement in May 2003, Mr. Dirks served as Chief Operating Officer and as a member of the Board of The Depository Trust & Clearing Corporation (financial markets infrastructure), President, Chief Operating Officer and a member of the Board of The Depository Trust Company (DTC), President and a member of the Board of the National Securities Clearing Corporation (NSCC), Chief Executive Officer and a member of the Board of the Government Securities Clearing Corporation and Chief Executive Officer and a member of the Board of the Mortgage-Backed Securities Clearing Corporation. Mr. Dirks currently serves as a member of the Finance Committee (2016-present) and Board (2017-present) and is Treasurer (2018-present) of the Asolo Repertory Theatre.
Donald F. Donahue (1950)
Year of Election or Appointment: 2018
Trustee
Mr. Donahue also serves as Trustee of other Fidelity® funds. Mr. Donahue serves as President and Chief Executive Officer of Miranda Partners, LLC (risk consulting for the financial services industry, 2012-present). Previously, Mr. Donahue served as Chief Executive Officer (2006-2012), Chief Operating Officer (2003-2006) and Managing Director, Customer Marketing and Development (1999-2003) of The Depository Trust & Clearing Corporation (financial markets infrastructure). Mr. Donahue currently serves as a member (2007-present) and Co-Chairman (2016-present) of the Board of United Way of New York, a member of the Board of NYC Leadership Academy (2012-present) and a member of the Board of Advisors of Ripple Labs, Inc. (financial services, 2015-present). Mr. Donahue previously served as a member of the Advisory Board of certain Fidelity® funds (2015-2018).
Alan J. Lacy (1953)
Year of Election or Appointment: 2018
Trustee
Mr. Lacy also serves as Trustee of other Fidelity® funds. Previously, Mr. Lacy served as Senior Adviser (2007-2014) of Oak Hill Capital Partners, L.P. (private equity), Chief Executive Officer (2005) and Vice Chairman (2005-2006) of Sears Holdings Corporation (retail), Chief Executive Officer and Chairman of the Board of Sears, Roebuck and Co. (retail, 2000-2005) and Chairman (2014-2017) and a member of the Board (2010-2017) of Dave & Buster’s Entertainment, Inc. (restaurant and entertainment complexes). Mr. Lacy currently serves as a member of the Board of Bristol-Myers Squibb Company (global pharmaceuticals, 2008-present), Trustee of the California Chapter of The Nature Conservancy (2015-present) and a member of the Board of the Center for Advanced Study in the Behavioral Sciences at Stanford University (2015-present).
Ned C. Lautenbach (1944)
Year of Election or Appointment: 2018
Trustee
Chairman of the Independent Trustees
Mr. Lautenbach also serves as Trustee of other Fidelity® funds. Mr. Lautenbach currently serves as Chair of the Board of Governors, State University System of Florida (2013-present) and is a member of the Council on Foreign Relations (1994-present). He is also a member and has in the past served as Chairman of the Board of Directors of Artis-Naples (2012-present). Previously, Mr. Lautenbach served as a member and then Lead Director of the Board of Directors of Eaton Corporation (diversified industrial, 1997-2016). He was also a Partner at Clayton, Dubilier & Rice, LLC (private equity investment, 1998-2010); as well as Director of Sony Corporation (2006-2007). In addition, Mr. Lautenbach had a 30-year career with IBM (technology company), during which time he served as Senior Vice President and as a member of the Corporate Executive Committee (1968-1998).
Joseph Mauriello (1944)
Year of Election or Appointment: 2018
Trustee
Mr. Mauriello also serves as Trustee of other Fidelity® funds. Prior to his retirement in January 2006, Mr. Mauriello served in numerous senior management positions including Deputy Chairman and Chief Operating Officer (2004-2005), and Vice Chairman of Financial Services (2002-2004) of KPMG LLP US (professional services, 1965-2005). Mr. Mauriello currently serves as a member of the Independent Directors Council Governing Council (2015-present). Previously, Mr. Mauriello served as a member of the Board of XL Group plc. (global insurance and re-insurance, 2006-2018).
Cornelia M. Small (1944)
Year of Election or Appointment: 2018
Trustee
Ms. Small also serves as Trustee of other Fidelity® funds. Previously, Ms. Small served as Chief Investment Officer, Director of Global Equity Investments and a member of Scudder, Stevens & Clark and Scudder Kemper Investments. Ms. Small previously served as a member of the Board (2009-2019) and Chair of the Investment Committee (2010-2019) of the Teagle Foundation and a member of the Investment Committee of the Berkshire Taconic Community Foundation (2008-2019).
Garnett A. Smith (1947)
Year of Election or Appointment: 2013
Trustee
Mr. Smith also serves as Trustee of other Fidelity® funds. Prior to his retirement, Mr. Smith served as Chairman and Chief Executive Officer (1990-1997) and President (1986-1990) of Inbrand Corp. (manufacturer of personal absorbent products). Prior to his employment with Inbrand Corp., he was employed by a retail fabric chain and North Carolina National Bank (now Bank of America). Mr. Smith previously served as a member of the Advisory Board of certain Fidelity® funds (2012-2013).
David M. Thomas (1949)
Year of Election or Appointment: 2018
Trustee
Mr. Thomas also serves as Trustee of other Fidelity® funds. Previously, Mr. Thomas served as Executive Chairman (2005-2006) and Chairman and Chief Executive Officer (2000-2005) of IMS Health, Inc. (pharmaceutical and healthcare information solutions). Mr. Thomas currently serves as Non-Executive Chairman of the Board of Fortune Brands Home and Security (home and security products, 2011-present), and a member of the Board (2004-present) and Presiding Director (2013-present) of Interpublic Group of Companies, Inc. (marketing communication).
Michael E. Wiley (1950)
Year of Election or Appointment: 2008
Trustee
Mr. Wiley also serves as Trustee or a member of the Advisory Board of other Fidelity® funds. Previously, Mr. Wiley served as Chairman, President and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004). Mr. Wiley currently serves as a member of the Board of High Point Resources (exploration and production, 2005-present). Previously, Mr. Wiley served as a member of the Board of Andeavor Corporation (independent oil refiner and marketer, 2005-2018) and a member of the Board of Andeavor Logistics LP (natural resources logistics, 2015-2018).
+ The information includes the Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to the Trustee's qualifications to serve as a Trustee, which led to the conclusion that the Trustee should serve as a Trustee for each fund.
Advisory Board Members and Officers:
Correspondence intended for a Member of the Advisory Board (if any) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235. Correspondence intended for an officer or Peter S. Lynch may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210. Officers appear below in alphabetical order.
Name, Year of Birth; Principal Occupation
Vicki L. Fuller (1957)
Year of Election or Appointment: 2018
Member of the Advisory Board
Ms. Fuller also serves as a member of the Advisory Board of other Fidelity® funds. Previously, Ms. Fuller served as Chief Investment Officer of the New York State Common Retirement Fund (2012-2018) and held a variety of positions at AllianceBernstein L.P. (global asset management, 1985-2012), including Managing Director (2006-2012) and Senior Vice President and Senior Portfolio Manager (2001-2006). Ms. Fuller currently serves as a member of the Board, Audit Committee and Nominating and Governance Committee of The Williams Companies, Inc. (natural gas infrastructure, 2018-present) and as a member of the Board of Treliant, LLC (consulting, 2019-present).
Patricia L. Kampling (1959)
Year of Election or Appointment: 2020
Member of the Advisory Board
Ms. Kampling also serves as Member of the Advisory Board of other Fidelity® funds. Prior to her retirement, Ms. Kampling served as Chairman of the Board and Chief Executive Officer (2012-2019), President and Chief Operating Officer (2011-2012) and Executive Vice President and Chief Financial Officer (2010-2011) of Alliant Energy Corporation. Ms. Kampling currently serves as a member of the Board, Compensation Committee and Executive Committee and as Chair of the Audit Committee of Briggs & Stratton Corporation (manufacturing, 2011-present) and as a member of the Board, Audit, Finance and Risk Committee and Safety, Environmental, Technology and Operations Committee of American Water Works Company, Inc. (utilities company, 2019-present). In addition, Ms. Kampling currently serves as a member of the Board of the Nature Conservancy, Wisconsin Chapter (2019-present). Previously, Ms. Kampling served as a member of the Board of Interstate Power and Light Company (2012-2019) and Wisconsin Power and Light Company (2012-2019) (each a subsidiary of Alliant Energy Corporation) and as a member of the Board and Workforce Development Committee of the Business Roundtable (2018-2019).
Peter S. Lynch (1944)
Year of Election or Appointment: 2018
Member of the Advisory Board
Mr. Lynch also serves as Member of the Advisory Board of other Fidelity® funds. Mr. Lynch is Vice Chairman and a Director of Fidelity Management & Research Company LLC (investment adviser firm). In addition, Mr. Lynch serves as a Trustee of Boston College and as the Chairman of the Inner-City Scholarship Fund. Previously, Mr. Lynch served as Vice Chairman and a Director of FMR Co., Inc. (investment adviser firm) and on the Special Olympics International Board of Directors (1997-2006).
Susan Tomasky (1953)
Year of Election or Appointment: 2020
Member of the Advisory Board
Ms. Tomasky also serves as Member of the Advisory Board of other Fidelity® funds. Prior to her retirement, Ms. Tomasky served in various executive officer positions at American Electric Power Company, Inc. (1998-2011), including most recently as President of AEP Transmission (2007-2011). Ms. Tomasky currently serves as a member of the Board and Sustainability Committee and as Chair of the Audit Committee of Marathon Petroleum Corporation (2018-present) and as a member of the Board, Corporate Governance Committee and Organization and Compensation Committee and as Chair of the Audit Committee of Public Service Enterprise Group, Inc. (utilities company, 2012-present). In addition, Ms. Tomasky currently serves as a member of the Board of the Columbus Regional Airport Authority (2007-present), as a member of the Board of the Royal Shakespeare Company – America (2009-present), as a member of the Board of the Columbus Association for the Performing Arts (2011-present) and as a member of the Board of Kenyon College (2016-present). Previously, Ms. Tomasky served as a member of the Board (2011-2019) and as Lead Independent Director (2015-2018) of Andeavor Corporation (previously Tesoro Corporation) (independent oil refiner and marketer) and as a member of the Board of Summit Midstream Partners LP (energy, 2012-2018).
Elizabeth Paige Baumann (1968)
Year of Election or Appointment: 2017
Anti-Money Laundering (AML) Officer
Ms. Baumann also serves as AML Officer of other funds. She is Chief AML Officer (2012-present) and Senior Vice President (2014-present) of FMR LLC (diversified financial services company) and is an employee of Fidelity Investments. Previously, Ms. Baumann served as AML Officer of certain funds (2017-2019), as AML Officer of the funds (2012-2016), and Vice President (2007-2014) and Deputy Anti-Money Laundering Officer (2007-2012) of FMR LLC.
Craig S. Brown (1977)
Year of Election or Appointment: 2019
Assistant Treasurer
Mr. Brown also serves as Assistant Treasurer of other funds. Mr. Brown is an employee of Fidelity Investments (2013-present).
John J. Burke III (1964)
Year of Election or Appointment: 2018
Chief Financial Officer
Mr. Burke also serves as Chief Financial Officer of other funds. Mr. Burke serves as Head of Investment Operations for Fidelity Fund and Investment Operations (2018-present) and is an employee of Fidelity Investments (1998-present). Previously Mr. Burke served as head of Asset Management Investment Operations (2012-2018).
William C. Coffey (1969)
Year of Election or Appointment: 2019
Assistant Secretary
Mr. Coffey also serves as Assistant Secretary of other funds. He is Senior Vice President and Deputy General Counsel of FMR LLC (diversified financial services company, 2010-present), and is an employee of Fidelity Investments. Previously, Mr. Coffey served as Secretary and CLO of certain funds (2018-2019); CLO, Secretary, and Senior Vice President of Fidelity Management & Research Company and FMR Co., Inc. (investment adviser firms, 2018-2019); Secretary of Fidelity SelectCo, LLC and Fidelity Investments Money Management, Inc. (investment adviser firms, 2018-2019); CLO of Fidelity Management & Research (Hong Kong) Limited, FMR Investment Management (UK) Limited, and Fidelity Management & Research (Japan) Limited (investment adviser firms, 2018-2019); and Assistant Secretary of certain funds (2009-2018).
Timothy M. Cohen (1969)
Year of Election or Appointment: 2018
Vice President
Mr. Cohen also serves as Vice President of other funds. Mr. Cohen serves as Co-Head of Equity (2018-present), a Director of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2016-present), and is an employee of Fidelity Investments. Previously, Mr. Cohen served as Executive Vice President of Fidelity SelectCo, LLC (2019), Head of Global Equity Research (2016-2018), Chief Investment Officer - Equity and a Director of Fidelity Management & Research (U.K.) Inc. (investment adviser firm, 2013-2015) and as a Director of Fidelity Management & Research (Hong Kong) Limited (investment adviser firm, 2017).
Jonathan Davis (1968)
Year of Election or Appointment: 2010
Assistant Treasurer
Mr. Davis also serves as Assistant Treasurer of other funds. Mr. Davis serves as Assistant Treasurer of FMR Capital, Inc. (2017-present) and is an employee of Fidelity Investments. Previously, Mr. Davis served as Vice President and Associate General Counsel of FMR LLC (diversified financial services company, 2003-2010).
Laura M. Del Prato (1964)
Year of Election or Appointment: 2018
Assistant Treasurer
Ms. Del Prato also serves as an officer of other funds. Ms. Del Prato is an employee of Fidelity Investments (2017-present). Prior to joining Fidelity Investments, Ms. Del Prato served as a Managing Director and Treasurer of the JPMorgan Mutual Funds (2014-2017). Prior to JPMorgan, Ms. Del Prato served as a partner at Cohen Fund Audit Services (accounting firm, 2012-2013) and KPMG LLP (accounting firm, 2004-2012).
Colm A. Hogan (1973)
Year of Election or Appointment: 2020
Assistant Treasurer
Mr. Hogan also serves as an officer of other funds. Mr. Hogan serves as Assistant Treasurer of FMR Capital, Inc. (2017-present) and is an employee of Fidelity Investments (2005-present). Previously, Mr. Hogan served as Deputy Treasurer of certain Fidelity® funds (2016-2020) and Assistant Treasurer of certain Fidelity® funds (2016-2018).
Pamela R. Holding (1964)
Year of Election or Appointment: 2018
Vice President
Ms. Holding also serves as Vice President of other funds. Ms. Holding serves as Co-Head of Equity (2018-present) and is an employee of Fidelity Investments (2013-present). Previously, Ms. Holding served as Executive Vice President of Fidelity SelectCo, LLC (2019) and as Chief Investment Officer of Fidelity Institutional Asset Management (2013-2018).
Cynthia Lo Bessette (1969)
Year of Election or Appointment: 2019
Secretary and Chief Legal Officer (CLO)
Ms. Lo Bessette also serves as an officer of other funds. Ms. Lo Bessette serves as CLO, Secretary, and Senior Vice President of Fidelity Management & Research Company LLC (investment adviser firm, 2019-present); and CLO of Fidelity Management & Research (Hong Kong) Limited, FMR Investment Management (UK) Limited, and Fidelity Management & Research (Japan) Limited (investment adviser firms, 2019-present). She is a Senior Vice President and Deputy General Counsel of FMR LLC (diversified financial services company, 2019-present), and is an employee of Fidelity Investments. Previously, Ms. Lo Bessette served as CLO, Secretary, and Senior Vice President of FMR Co., Inc. (investment adviser firm, 2019); Secretary of Fidelity SelectCo, LLC and Fidelity Investments Money Management, Inc. (investment adviser firms, 2019). Prior to joining Fidelity Investments, Ms. Lo Bessette was Executive Vice President, General Counsel (2016-2019) and Senior Vice President, Deputy General Counsel (2015-2016) of OppenheimerFunds (investment management company) and Deputy Chief Legal Officer (2013-2015) of Jennison Associates LLC (investment adviser firm).
Chris Maher (1972)
Year of Election or Appointment: 2020
Deputy Treasurer
Mr. Maher also serves as an officer of other funds. Mr. Maher serves as Assistant Treasurer of FMR Capital, Inc. (2017-present), and is an employee of Fidelity Investments (2008-present). Previously, Mr. Maher served as Assistant Treasurer of certain funds (2013-2020); Vice President of Asset Management Compliance (2013), Vice President of the Program Management Group of FMR (investment adviser firm, 2010-2013), and Vice President of Valuation Oversight (2008-2010).
Kenneth B. Robins (1969)
Year of Election or Appointment: 2018
Chief Compliance Officer
Mr. Robins also serves as an officer of other funds. Mr. Robins serves as Compliance Officer of Fidelity Management & Research Company LLC (investment adviser firm, 2016-present) and is an employee of Fidelity Investments (2004-present). Previously, Mr. Robins served as Compliance Officer of FMR Co., Inc. (investment adviser firm, 2016-2019), as Executive Vice President of Fidelity Investments Money Management, Inc. (investment adviser firm, 2013-2016) and served in other fund officer roles.
Stacie M. Smith (1974)
Year of Election or Appointment: 2018
President and Treasurer
Ms. Smith also serves as an officer of other funds. Ms. Smith serves as Assistant Treasurer of FMR Capital, Inc. (2017-present), is an employee of Fidelity Investments (2009-present), and has served in other fund officer roles. Prior to joining Fidelity Investments, Ms. Smith served as Senior Audit Manager of Ernst & Young LLP (accounting firm, 1996-2009). Previously, Ms. Smith served as Assistant Treasurer (2013-2019) and Deputy Treasurer (2013-2016) of certain Fidelity® funds.
Marc L. Spector (1972)
Year of Election or Appointment: 2017
Assistant Treasurer
Mr. Spector also serves as an officer of other funds. Mr. Spector serves as Assistant Treasurer of FMR Capital, Inc. (2017-present) and is an employee of Fidelity Investments (2016-present). Prior to joining Fidelity Investments, Mr. Spector served as Director at the Siegfried Group (accounting firm, 2013-2016), and prior to Siegfried Group as audit senior manager at Deloitte & Touche LLP (accounting firm, 2005-2013).
Jim Wegmann (1979)
Year of Election or Appointment: 2019
Assistant Treasurer
Mr. Wegmann also serves as Assistant Treasurer of other funds. Mr. Wegmann is an employee of Fidelity Investments (2011-present).
Shareholder Expense Example
As a shareholder of a Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments or redemption proceeds, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (September 1, 2019 to February 29, 2020).
Actual Expenses
The first line of the accompanying table for each Class of each fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a Class of the fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. In addition, each Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each Class of each fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. In addition, each Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Annualized Expense Ratio-A | Beginning Account Value September 1, 2019 | Ending Account Value February 29, 2020 | Expenses Paid During Period-B September 1, 2019 to February 29, 2020 |
|
| Telecommunications Portfolio | ||||
| Class A | 1.16% | |||
| Actual | $1,000.00 | $1,054.10 | $5.92 | |
| Hypothetical-C | $1,000.00 | $1,019.10 | $5.82 | |
| Class M | 1.44% | |||
| Actual | $1,000.00 | $1,052.60 | $7.35 | |
| Hypothetical-C | $1,000.00 | $1,017.70 | $7.22 | |
| Class C | 1.87% | |||
| Actual | $1,000.00 | $1,050.40 | $9.53 | |
| Hypothetical-C | $1,000.00 | $1,015.56 | $9.37 | |
| Telecommunications | .82% | |||
| Actual | $1,000.00 | $1,055.70 | $4.19 | |
| Hypothetical-C | $1,000.00 | $1,020.79 | $4.12 | |
| Class I | .79% | |||
| Actual | $1,000.00 | $1,056.10 | $4.04 | |
| Hypothetical-C | $1,000.00 | $1,020.93 | $3.97 | |
| Class Z | .66% | |||
| Actual | $1,000.00 | $1,056.50 | $3.37 | |
| Hypothetical-C | $1,000.00 | $1,021.58 | $3.32 | |
| Wireless Portfolio | .81% | |||
| Actual | $1,000.00 | $1,099.60 | $4.23 | |
| Hypothetical-C | $1,000.00 | $1,020.84 | $4.07 |
A Annualized expense ratio reflects expenses net of applicable fee waivers.
B Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
C 5% return per year before expenses
Distributions (Unaudited)
The Board of Trustees of each fund voted to pay to shareholders of record at the opening of business on record date, the following distributions per share derived from capital gains realized from sales of portfolio securities and dividends derived from net investment income:
| Pay Date | Record Date | Dividends | Capital Gains | |
| Telecommunications Portfolio | ||||
| Class A | 04/09/20 | 04/08/20 | $0.142 | $0.861 |
| Class M | 04/09/20 | 04/08/20 | $0.101 | $0.861 |
| Class C | 04/09/20 | 04/08/20 | $0.068 | $0.861 |
| Telecommunications | 04/09/20 | 04/08/20 | $0.182 | $0.861 |
| Class I | 04/09/20 | 04/08/20 | $0.183 | $0.861 |
| Class Z | 04/09/20 | 04/08/20 | $0.196 | $0.861 |
| Wireless Portfolio | ||||
| Wireless | 04/09/20 | 04/08/20 | $0.011 | $0.636 |
The funds hereby designate as capital gain dividend the amounts noted below for the taxable year ended February 29, 2020, or, if subsequently determined to be different, the net capital gain of such year.
| Telecommunications Portfolio | $6,273,061 |
| Wireless Portfolio | $18,254,954 |
A percentage of the dividends distributed during the fiscal year for the following funds qualify for the dividends–received deduction for corporate shareholders:
| April 2019 | December 2019 | |
| Telecommunications Portfolio | ||
| Class A | 100% | 100% |
| Class M | 100% | 100% |
| Class C | 100% | 100% |
| Telecommunications | 100% | 100% |
| Class I | 100% | 100% |
| Class Z | 100% | 100% |
| Wireless Portfolio | ||
| Wireless | – | 51% |
A percentage of the dividends distributed during the fiscal year for the following funds may be taken into account as a dividend for purposes of the maximum rate under section 1(h)(11) of the Internal Revenue Code.
| April 2019 | December 2019 | |
| Telecommunications Portfolio | ||
| Class A | 100% | 100% |
| Class M | 100% | 100% |
| Class C | 100% | 100% |
| Telecommunications | 100% | 100% |
| Class I | 100% | 100% |
| Class Z | 100% | 100% |
| Wireless Portfolio | ||
| Wireless | – | 77% |
A percentage of the dividends distributed during the fiscal year for the following funds qualify as a section 199A dividend:
| Wireless Portfolio | April 2019 | December 2019 |
| Wireless | – | 5% |
The funds will notify shareholders in January 2021 of amounts for use in preparing 2020 income tax returns.
Board Approval of Investment Advisory Contracts and Management Fees
Telecommunications Portfolio
Wireless Portfolio
Telecommunications Portfolio
Wireless Portfolio
Telecommunications Portfolio
Wireless Portfolio
Liquidity Risk Management Program
The Securities and Exchange Commission adopted Rule 22e-4 under the Investment Company Act of 1940 (the Liquidity Rule) to promote effective liquidity risk management throughout the open-end investment company industry, thereby reducing the risk that funds will be unable to meet their redemption obligations and mitigating dilution of the interests of fund shareholders.
The Funds have adopted and implemented a liquidity risk management program pursuant to the Liquidity Rule (the Program) effective December 1, 2018. The Program is reasonably designed to assess and manage each Fund’s liquidity risk and to comply with the requirements of the Liquidity Rule. Each Fund’s Board of Trustees (the Board) has designated each Fund’s investment adviser as administrator of the Program. The Fidelity advisers have established a Liquidity Risk Management Committee (the LRM Committee) to manage the Program for each of the Fidelity Funds. The LRM Committee monitors the adequacy and effectiveness of implementation of the Program and on a periodic basis assesses each Fund’s liquidity risk based on a variety of factors including (1) the Fund’s investment strategy, (2) portfolio liquidity and cash flow projections during normal and reasonably foreseeable stressed conditions, (3) shareholder redemptions, (4) borrowings and other funding sources and (5) in the case of exchange-traded funds, certain additional factors including the effect of the Fund’s prices and spreads, market participants, and basket compositions on the overall liquidity of the Fund’s portfolio, as applicable.
In accordance with the Program, each of the Fund’s portfolio investments is classified into one of four liquidity categories described below based on a determination of a reasonable expectation for how long it would take to convert the investment to cash (or sell or dispose of the investment) without significantly changing its market value.
- Highly liquid investments – cash or convertible to cash within three business days or less
- Moderately liquid investments – convertible to cash in three to seven calendar days
- Less liquid investments – can be sold or disposed of, but not settled, within seven calendar days
- Illiquid investments – cannot not be sold or disposed of within seven calendar days
Liquidity classification determinations take into account a variety of factors including various market, trading and investment-specific considerations, as well as market depth, and generally utilize analysis from a third-party liquidity metrics service.
The Liquidity Rule places a 15% limit on a fund’s illiquid investments and requires funds that do not primarily hold assets that are highly liquid investments to determine and maintain a minimum percentage of the fund’s net assets to be invested in highly liquid investments (highly liquid investment minimum or HLIM). The Program includes provisions reasonably designed to comply with the 15% limit on illiquid investments and for determining, periodically reviewing and complying with the HLIM requirement as applicable.
At a recent meeting of the Fund’s Board of Trustees, the LRM Committee provided a written report to the Board pertaining to the operation, adequacy, and effectiveness of implementation of the Program for the annual period from December 1, 2018 through November 30, 2019. The report concluded that the Program has been implemented and is operating effectively and is reasonably designed to assess and manage the Fund’s liquidity risk.
SELTS-ANN-0420
1.846050.113
Fidelity® Select Portfolios®
Consumer Staples Sector
Consumer Staples Portfolio
February 29, 2020
Includes Fidelity and Fidelity Advisor share classes
See the inside front cover for important information about access to your fund’s shareholder reports.
Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of a fund’s shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports from the fund or from your financial intermediary, such as a financial advisor, broker-dealer or bank. Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from a fund electronically, by contacting your financial intermediary. For Fidelity customers, visit Fidelity's web site or call Fidelity using the contact information listed below.
You may elect to receive all future reports in paper free of charge. If you wish to continue receiving paper copies of your shareholder reports, you may contact your financial intermediary or, if you are a Fidelity customer, visit Fidelity’s website, or call Fidelity at the applicable toll-free number listed below. Your election to receive reports in paper will apply to all funds held with the fund complex/your financial intermediary.
| Account Type | Website | Phone Number |
| Brokerage, Mutual Fund, or Annuity Contracts: | fidelity.com/mailpreferences | 1-800-343-3548 |
| Employer Provided Retirement Accounts: | netbenefits.fidelity.com/preferences (choose 'no' under Required Disclosures to continue to print) | 1-800-343-0860 |
| Advisor Sold Accounts Serviced Through Your Financial Intermediary: | Contact Your Financial Intermediary | Your Financial Intermediary's phone number |
| Advisor Sold Accounts Serviced by Fidelity: | institutional.fidelity.com | 1-877-208-0098 |
Contents
|
Board Approval of Investment Advisory Contracts and Management Fees | |
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov.
You may also call 1-800-544-8544 if you’re an individual investing directly with Fidelity, call 1-800-835-5092 if you’re a plan sponsor or participant with Fidelity as your recordkeeper or call 1-877-208-0098 on institutional accounts or if you’re an advisor or invest through one to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third-party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company. © 2020 FMR LLC. All rights reserved.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the Fund. This report is not authorized for distribution to prospective investors in the Fund unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-PORT. Forms N-PORT are available on the SEC’s web site at http://www.sec.gov. A fund's Forms N-PORT may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330.
For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com, http://www.institutional.fidelity.com, or http://www.401k.com, as applicable.
NOT FDIC INSURED •MAY LOSE VALUE •NO BANK GUARANTEE
Neither the Fund nor Fidelity Distributors Corporation is a bank.
Note to shareholders:
(No Action is Required by You)
As part of a regular review of its organizational structure, Fidelity has decided to merge certain entities to streamline operations, increase efficiency, simplify reporting, and reduce legal, compliance, and accounting complexity and costs. In separate events, Fidelity has merged four of its investment advisers and two of its broker-dealers.
Effective on or about January 1, 2020, following any required regulatory notices and approvals:
Investment advisers Fidelity Investments Money Management, Inc., FMR Co., Inc., and Fidelity SelectCo, LLC, merged with and into Fidelity Management & Research Company. In connection with the merger transactions, the resulting, merged investment adviser was then redomiciled from Massachusetts to Delaware, changed its corporate structure from a corporation to a limited liability company, and changed its name to “Fidelity Management & Research Company LLC”.
Broker-dealer Fidelity Distributors Corporation merged with and into Fidelity Investments Institutional Services Company, Inc. (“FIISC”). FIISC was then redomiciled from Massachusetts to Delaware, changed its corporate structure from a corporation to a limited liability company, and changed its name to “Fidelity Distributors Company LLC”.
These mergers are not expected to affect fund shareholders or Fidelity clients, nor are they expected to result in any changes to the day-to-day management of Fidelity’s brokerage services, the Fidelity funds, their investment policies and practices, their portfolio management teams, or the funds’ expenses.
Early in 2020, the outbreak and spread of a new coronavirus emerged as a public health emergency that had a major influence on financial markets, primarily based on its impact on the global economy and corporate earnings. The virus causes a respiratory disease known as COVID-19. On March 11, the World Health Organization declared the COVID-19 outbreak a pandemic, citing sustained risk of further global spread.
In the weeks following the end of this reporting period, as the crisis worsened, we witnessed an escalating human tragedy with wide-scale social and economic consequences from coronavirus-containment measures. The outbreak of COVID-19 prompted a number of measures to limit the spread, including travel and border restrictions, quarantines, and restrictions on large gatherings. In turn, these resulted in lower consumer activity, diminished demand for a wide range of products and services, disruption in manufacturing and supply chains, and – given the wide variability in outcomes regarding the outbreak – significant market uncertainty and volatility. Amid the turmoil, the U.S. government took unprecedented action – in concert with the U.S. Federal Reserve and central banks around the world – to help support consumers, businesses, and the broader economy, and to limit disruption to the financial system.
The situation continues to unfold, and the extent and duration of its impact on financial markets and the economy remain highly uncertain. Extreme events such as the coronavirus crisis are “exogenous shocks” that can have significant adverse effects on mutual funds and their investments. Although multiple asset classes may be affected by market disruption, the duration and impact may not be the same for all types of assets.
Fidelity is committed to helping you stay informed amid news about COVID-19 and during increased market volatility, and we’re taking extra steps to be responsive to customer needs. We encourage you to visit our websites, where we offer ongoing updates, commentary, and analysis on the markets and our funds.
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The hypothetical investment and the average annual total returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund’s total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
| For the periods ended February 29, 2020 | Past 1 year | Past 5 years | Past 10 years |
| Class A (incl. 5.75% sales charge) | 0.06% | 1.15% | 8.14% |
| Class M (incl. 3.50% sales charge) | 2.17% | 1.35% | 8.09% |
| Class C (incl. contingent deferred sales charge) | 4.39% | 1.60% | 7.97% |
| Consumer Staples Portfolio | 6.48% | 2.65% | 9.08% |
| Class I | 6.48% | 2.64% | 9.06% |
| Class Z | 6.61% | 2.67% | 9.08% |
Class C shares' contingent deferred sales charges included in the past one year, past five years and past ten years total return figures are 1%, 0% and 0%, respectively.
The initial offering of Class Z shares took place on October 2, 2018. Returns prior to October 2, 2018, are those of Class I.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Consumer Staples Portfolio, a class of the fund, on February 28, 2010.
The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
| Period Ending Values | ||
|
| $23,848 | Consumer Staples Portfolio |
|
| $32,918 | S&P 500® Index |
Management's Discussion of Fund Performance
Market Recap: U.S. stocks stalled to begin the new year and declined in late February, as the outbreak and spread of the new coronavirus threatened to hamper global economic growth and corporate earnings. For the 12 months ending February 29, 2020, the U.S. equity bellwether S&P 500® index gained 8.19%. The period began with equities rising amid upbeat company earnings and signs the U.S. Federal Reserve may pause on rates. The uptrend extended until May, when the index dipped as trade talks between the U.S. and China broke down. The bull market roared back to record a series of highs in July, when the Fed cut interest rates for the first time since 2008. Volatility intensified in August, as the Treasury yield curve inverted, which some investors viewed as a sign the U.S. economy could be heading for recession. But the market proved resilient, hitting a new high on October 30, when the Fed lowered rates for the third time in 2019, and moving higher through December 31. Following a roughly flat January, stocks sank in late February, after a surge in coronavirus cases outside China created considerable uncertainty and pushed investors to safer asset classes. By sector, information technology (+27%) led the way by a wide margin, followed by utilities and communication services (+13% each). In contrast, energy (-25%) was by far the weakest category, struggling due to sluggish oil prices. Other notable laggards included materials and industrials (-2% each). Comments from Co-Portfolio Managers Nicola Stafford and Ben Shuleva: For the fiscal year, the fund’s share classes (excluding sales charges, if applicable) gained roughly 5% to 7%, trailing the 7.19% advance of the MSCI U.S. IMI Consumer Staples 25/50 Index, as well as the broad-based S&P 500. Consumer staples, a traditionally defensive sector, lagged the broader market amid the largely “risk on” investment backdrop the past 12 months. Versus the MSCI sector index, the fund’s overweighting in consumer packaged foods maker Treehouse Foods (-37%) detracted most, as the company was hampered by sluggish sales and higher expenses. It also hurt to overweight Altria Group (-18%), one of the world’s largest cigarette makers. A sizable fund holding, Altria struggled due to federal scrutiny of e-cigarettes, specifically because of its investment in Juul Labs. I’ll also note that our foreign holdings detracted overall, due in part to currency fluctuation. Conversely, the top relative contributor was timely positioning in drug retailer Walgreens Boots Alliance, which we sold by period end. The stock fell amid declining prescription reimbursement, lower-cost generics and increased competition. Another notable contributor was JBS, a Brazil-based protein producer. The fund’s non-index stake gained about 82% before we eliminated it.The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Note to shareholders: On November 1, 2019, Nicola Stafford became sole portfolio manager of the fund, succeeding James McElligott. On December 31, 2019, Ben Shuleva assumed co-management responsibilities for the fund, joining Nicola Stafford. The two will manage the fund together until June 30, 2020, when Ben will assume sole management of the fund.Investment Summary (Unaudited)
Top Ten Stocks as of February 29, 2020
| % of fund's net assets | |
| Procter & Gamble Co. | 12.4 |
| The Coca-Cola Co. | 10.2 |
| PepsiCo, Inc. | 8.0 |
| Mondelez International, Inc. | 6.4 |
| Altria Group, Inc. | 5.4 |
| Walmart, Inc. | 4.9 |
| Monster Beverage Corp. | 4.4 |
| Spectrum Brands Holdings, Inc. | 3.6 |
| Kroger Co. | 3.5 |
| Philip Morris International, Inc. | 2.8 |
| 61.6 |
Top Industries (% of fund's net assets)
| As of February 29, 2020 | ||
| Beverages | 29.4% | |
| Household Products | 20.3% | |
| Food Products | 18.9% | |
| Food & Staples Retailing | 12.2% | |
| Tobacco | 8.2% | |
| All Others* | 11.0% | |
* Includes short-term investments and net other assets (liabilities).
Schedule of Investments February 29, 2020
Showing Percentage of Net Assets
| Common Stocks - 98.8% | |||
| Shares | Value | ||
| Beverages - 29.4% | |||
| Brewers - 1.2% | |||
| Anheuser-Busch InBev SA NV | 139,300 | $8,048,898 | |
| Beijing Yanjing Brewery Co. Ltd. (A Shares) | 6,079,840 | 5,086,859 | |
| Budweiser Brewing Co. APAC Ltd. (a)(b) | 1,050,300 | 3,152,921 | |
| 16,288,678 | |||
| Distillers & Vintners - 3.5% | |||
| Constellation Brands, Inc. Class A (sub. vtg.) | 157,600 | 27,167,088 | |
| Diageo PLC | 581,100 | 20,733,404 | |
| 47,900,492 | |||
| Soft Drinks - 24.7% | |||
| Coca-Cola European Partners PLC | 173,453 | 8,839,165 | |
| Keurig Dr. Pepper, Inc. (c) | 746,800 | 20,820,784 | |
| Monster Beverage Corp. (a) | 960,202 | 59,926,207 | |
| PepsiCo, Inc. | 837,300 | 110,548,719 | |
| The Coca-Cola Co. | 2,628,418 | 140,594,079 | |
| 340,728,954 | |||
| TOTAL BEVERAGES | 404,918,124 | ||
| Food & Staples Retailing - 12.2% | |||
| Food Distributors - 1.5% | |||
| U.S. Foods Holding Corp. (a) | 588,916 | 19,811,134 | |
| Food Retail - 3.5% | |||
| Kroger Co. | 1,716,770 | 48,292,740 | |
| Hypermarkets & Super Centers - 7.2% | |||
| Costco Wholesale Corp. | 113,200 | 31,825,048 | |
| Walmart, Inc. | 626,600 | 67,472,288 | |
| 99,297,336 | |||
| TOTAL FOOD & STAPLES RETAILING | 167,401,210 | ||
| Food Products - 18.9% | |||
| Agricultural Products - 0.7% | |||
| Darling International, Inc. (a) | 381,800 | 9,812,260 | |
| Packaged Foods & Meats - 18.2% | |||
| Conagra Brands, Inc. | 598,800 | 15,981,972 | |
| Danone SA | 313,091 | 22,097,498 | |
| Freshpet, Inc. (a) | 292,700 | 19,452,842 | |
| General Mills, Inc. | 359,300 | 17,605,700 | |
| Mondelez International, Inc. | 1,667,058 | 88,020,662 | |
| Nomad Foods Ltd. (a) | 582,200 | 10,747,412 | |
| The J.M. Smucker Co. | 193,600 | 19,938,864 | |
| The Kraft Heinz Co. | 867,900 | 21,497,883 | |
| TreeHouse Foods, Inc. (a) | 313,859 | 11,961,166 | |
| Tyson Foods, Inc. Class A | 343,900 | 23,326,737 | |
| 250,630,736 | |||
| TOTAL FOOD PRODUCTS | 260,442,996 | ||
| Hotels, Restaurants & Leisure - 0.8% | |||
| Restaurants - 0.8% | |||
| Compass Group PLC | 498,800 | 10,989,785 | |
| Household Products - 20.3% | |||
| Household Products - 20.3% | |||
| Colgate-Palmolive Co. | 225,980 | 15,269,469 | |
| Energizer Holdings, Inc. (c) | 406,000 | 17,453,940 | |
| Essity AB Class B | 718,600 | 21,664,285 | |
| Procter & Gamble Co. | 1,506,050 | 170,530,041 | |
| Reckitt Benckiser Group PLC | 35,659 | 2,634,945 | |
| Reynolds Consumer Products, Inc. (a) | 46,223 | 1,333,534 | |
| Spectrum Brands Holdings, Inc. (c) | 934,576 | 50,364,301 | |
| 279,250,515 | |||
| Internet & Direct Marketing Retail - 0.5% | |||
| Internet & Direct Marketing Retail - 0.5% | |||
| Ocado Group PLC (a) | 346,800 | 4,804,301 | |
| The Honest Co., Inc. (a)(d)(e) | 212,235 | 2,725,097 | |
| 7,529,398 | |||
| Multiline Retail - 1.5% | |||
| General Merchandise Stores - 1.5% | |||
| Dollar General Corp. | 34,100 | 5,125,230 | |
| Dollar Tree, Inc. (a) | 180,800 | 15,011,824 | |
| 20,137,054 | |||
| Personal Products - 7.0% | |||
| Personal Products - 7.0% | |||
| Coty, Inc. Class A | 2,437,477 | 22,497,913 | |
| Edgewell Personal Care Co. (a) | 874,091 | 26,537,403 | |
| Estee Lauder Companies, Inc. Class A | 25,839 | 4,744,040 | |
| Ontex Group NV | 660,627 | 9,984,391 | |
| Unilever NV | 621,130 | 32,793,976 | |
| 96,557,723 | |||
| Tobacco - 8.2% | |||
| Tobacco - 8.2% | |||
| Altria Group, Inc. | 1,856,645 | 74,952,759 | |
| Philip Morris International, Inc. | 470,891 | 38,551,846 | |
| 113,504,605 | |||
| TOTAL COMMON STOCKS | |||
| (Cost $1,222,680,124) | 1,360,731,410 | ||
| Money Market Funds - 3.5% | |||
| Fidelity Cash Central Fund 1.60% (f) | 14,428,686 | 14,431,572 | |
| Fidelity Securities Lending Cash Central Fund 1.60% (f)(g) | 33,482,630 | 33,485,978 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $47,917,550) | 47,917,550 | ||
| TOTAL INVESTMENT IN SECURITIES - 102.3% | |||
| (Cost $1,270,597,674) | 1,408,648,960 | ||
| NET OTHER ASSETS (LIABILITIES) - (2.3)% | (31,719,837) | ||
| NET ASSETS - 100% | $1,376,929,123 |
Legend
(a) Non-income producing
(b) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the end of the period, the value of these securities amounted to $3,152,921 or 0.2% of net assets.
(c) Security or a portion of the security is on loan at period end.
(d) Restricted securities (including private placements) - Investment in securities not registered under the Securities Act of 1933 (excluding 144A issues). At the end of the period, the value of restricted securities (excluding 144A issues) amounted to $2,725,097 or 0.2% of net assets.
(e) Level 3 security
(f) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request.
(g) Investment made with cash collateral received from securities on loan.
Additional information on each restricted holding is as follows:
| Security | Acquisition Date | Acquisition Cost |
| The Honest Co., Inc. | 8/28/18 | $2,381,277 |
Affiliated Central Funds
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:
| Fund | Income earned |
| Fidelity Cash Central Fund | $216,666 |
| Fidelity Securities Lending Cash Central Fund | 657,014 |
| Total | $873,680 |
Amounts in the income column in the above table include any capital gain distributions from underlying funds, which are presented in the corresponding line-item in the Statement of Operations, if applicable. Amount for Fidelity Securities Lending Cash Central Fund represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities.
Investment Valuation
The following is a summary of the inputs used, as of February 29, 2020, 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 below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.
| Valuation Inputs at Reporting Date: | ||||
| Description | Total | Level 1 | Level 2 | Level 3 |
| Investments in Securities: | ||||
| Common Stocks | $1,360,731,410 | $1,224,254,830 | $133,751,483 | $2,725,097 |
| Money Market Funds | 47,917,550 | 47,917,550 | -- | -- |
| Total Investments in Securities: | $1,408,648,960 | $1,272,172,380 | $133,751,483 | $2,725,097 |
Other Information
Distribution of investments by country or territory of incorporation, as a percentage of Total Net Assets, is as follows (Unaudited):
| United States of America | 88.3% |
| United Kingdom | 3.4% |
| Netherlands | 2.4% |
| France | 1.6% |
| Sweden | 1.6% |
| Belgium | 1.3% |
| Others (Individually Less Than 1%) | 1.4% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Financial Statements
Statement of Assets and Liabilities
| February 29, 2020 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $31,995,239) — See accompanying schedule: Unaffiliated issuers (cost $1,222,680,124) | $1,360,731,410 | |
| Fidelity Central Funds (cost $47,917,550) | 47,917,550 | |
| Total Investment in Securities (cost $1,270,597,674) | $1,408,648,960 | |
| Receivable for investments sold | 4,610,567 | |
| Receivable for fund shares sold | 2,453,221 | |
| Dividends receivable | 2,855,671 | |
| Distributions receivable from Fidelity Central Funds | 28,703 | |
| Prepaid expenses | 15,013 | |
| Other receivables | 231,416 | |
| Total assets | 1,418,843,551 | |
| Liabilities | ||
| Payable for fund shares redeemed | $7,019,100 | |
| Accrued management fee | 678,093 | |
| Distribution and service plan fees payable | 189,043 | |
| Other affiliated payables | 256,642 | |
| Other payables and accrued expenses | 285,675 | |
| Collateral on securities loaned | 33,485,875 | |
| Total liabilities | 41,914,428 | |
| Net Assets | $1,376,929,123 | |
| Net Assets consist of: | ||
| Paid in capital | $1,230,266,710 | |
| Total accumulated earnings (loss) | 146,662,413 | |
| Net Assets | $1,376,929,123 | |
| Net Asset Value and Maximum Offering Price | ||
| Class A: | ||
| Net Asset Value and redemption price per share ($239,067,053 ÷ 3,004,398 shares)(a) | $79.57 | |
| Maximum offering price per share (100/94.25 of $79.57) | $84.42 | |
| Class M: | ||
| Net Asset Value and redemption price per share ($55,953,656 ÷ 710,599 shares)(a) | $78.74 | |
| Maximum offering price per share (100/96.50 of $78.74) | $81.60 | |
| Class C: | ||
| Net Asset Value and offering price per share ($117,327,573 ÷ 1,518,440 shares)(a) | $77.27 | |
| Consumer Staples: | ||
| Net Asset Value, offering price and redemption price per share ($773,437,278 ÷ 9,617,298 shares) | $80.42 | |
| Class I: | ||
| Net Asset Value, offering price and redemption price per share ($149,514,426 ÷ 1,863,644 shares) | $80.23 | |
| Class Z: | ||
| Net Asset Value, offering price and redemption price per share ($41,629,137 ÷ 519,449 shares) | $80.14 |
(a) Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 29, 2020 | ||
| Investment Income | ||
| Dividends | $39,627,401 | |
| Income from Fidelity Central Funds (including $657,014 from security lending) | 873,680 | |
| Total income | 40,501,081 | |
| Expenses | ||
| Management fee | $8,010,696 | |
| Transfer agent fees | 2,696,158 | |
| Distribution and service plan fees | 2,270,325 | |
| Accounting and security lending fees | 469,558 | |
| Custodian fees and expenses | 36,780 | |
| Independent trustees' fees and expenses | 8,073 | |
| Registration fees | 133,051 | |
| Audit | 61,128 | |
| Legal | 4,213 | |
| Interest | 3,379 | |
| Miscellaneous | 12,918 | |
| Total expenses before reductions | 13,706,279 | |
| Expense reductions | (57,727) | |
| Total expenses after reductions | 13,648,552 | |
| Net investment income (loss) | 26,852,529 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 53,491,907 | |
| Fidelity Central Funds | 801 | |
| Foreign currency transactions | (1,939) | |
| Total net realized gain (loss) | 53,490,769 | |
| Change in net unrealized appreciation (depreciation) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 13,961,536 | |
| Assets and liabilities in foreign currencies | 140 | |
| Total change in net unrealized appreciation (depreciation) | 13,961,676 | |
| Net gain (loss) | 67,452,445 | |
| Net increase (decrease) in net assets resulting from operations | $94,304,974 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 29, 2020 | Year ended February 28, 2019 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $26,852,529 | $44,496,210 |
| Net realized gain (loss) | 53,490,769 | 98,024,548 |
| Change in net unrealized appreciation (depreciation) | 13,961,676 | (167,507,828) |
| Net increase (decrease) in net assets resulting from operations | 94,304,974 | (24,987,070) |
| Distributions to shareholders | (40,720,449) | (212,172,340) |
| Share transactions - net increase (decrease) | (101,581,970) | (530,026,269) |
| Total increase (decrease) in net assets | (47,997,445) | (767,185,679) |
| Net Assets | ||
| Beginning of period | 1,424,926,568 | 2,192,112,247 |
| End of period | $1,376,929,123 | $1,424,926,568 |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights
Consumer Staples Portfolio Class A
| Years ended February 28, | 2020 A | 2019 | 2018 | 2017 | 2016 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $76.88 | $87.07 | $96.18 | $89.78 | $101.33 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | 1.40 | 2.08C | 1.54 | 1.28 | 1.34 |
| Net realized and unrealized gain (loss) | 3.54 | (2.64) | (2.80) | 9.12 | (4.86) |
| Total from investment operations | 4.94 | (.56) | (1.26) | 10.40 | (3.52) |
| Distributions from net investment income | (1.35) | (2.11) | (1.55) | (1.37) | (1.31) |
| Distributions from net realized gain | (.90) | (7.53) | (6.30) | (2.64) | (6.72) |
| Total distributions | (2.25) | (9.63)D | (7.85) | (4.00)E | (8.03) |
| Redemption fees added to paid in capitalB | – | – | – | –F | –F |
| Net asset value, end of period | $79.57 | $76.88 | $87.07 | $96.18 | $89.78 |
| Total ReturnG,H | 6.17% | (.32)% | (1.68)% | 11.91% | (3.51)% |
| Ratios to Average Net AssetsI,J | |||||
| Expenses before reductions | 1.04% | 1.05% | 1.05% | 1.04% | 1.04% |
| Expenses net of fee waivers, if any | 1.04% | 1.05% | 1.05% | 1.04% | 1.04% |
| Expenses net of all reductions | 1.04% | 1.04% | 1.04% | 1.03% | 1.04% |
| Net investment income (loss) | 1.67% | 2.65%C | 1.60% | 1.37% | 1.45% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $239,067 | $232,020 | $317,366 | $522,014 | $470,249 |
| Portfolio turnover rateK | 40% | 41%L | 76% | 56%L | 63% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Net investment income per share reflects a large, non-recurring dividend which amounted to $.69 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been 1.78%.
D Total distributions of $9.63 per share is comprised of distributions from net investment income of $2.105 and distributions from net realized gain of $7.525 per share.
E Total distributions of $4.00 per share is comprised of distributions from net investment income of $1.365 and distributions from net realized gain of $2.636 per share.
F Amount represents less than $.005 per share.
G Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
H Total returns do not include the effect of the sales charges.
I Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
J Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
K Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
L Portfolio turnover rate excludes securities received or delivered in-kind.
See accompanying notes which are an integral part of the financial statements.
Consumer Staples Portfolio Class M
| Years ended February 28, | 2020 A | 2019 | 2018 | 2017 | 2016 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $76.13 | $86.30 | $95.42 | $89.10 | $100.61 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | 1.16 | 1.85C | 1.27 | 1.01 | 1.08 |
| Net realized and unrealized gain (loss) | 3.50 | (2.61) | (2.78) | 9.07 | (4.83) |
| Total from investment operations | 4.66 | (.76) | (1.51) | 10.08 | (3.75) |
| Distributions from net investment income | (1.15) | (1.88) | (1.31) | (1.12) | (1.04) |
| Distributions from net realized gain | (.90) | (7.53) | (6.30) | (2.64) | (6.72) |
| Total distributions | (2.05) | (9.41) | (7.61) | (3.76) | (7.76) |
| Redemption fees added to paid in capitalB | – | – | – | –D | –D |
| Net asset value, end of period | $78.74 | $76.13 | $86.30 | $95.42 | $89.10 |
| Total ReturnE,F | 5.88% | (.59)% | (1.94)% | 11.61% | (3.78)% |
| Ratios to Average Net AssetsG,H | |||||
| Expenses before reductions | 1.31% | 1.33% | 1.32% | 1.32% | 1.32% |
| Expenses net of fee waivers, if any | 1.31% | 1.32% | 1.32% | 1.32% | 1.32% |
| Expenses net of all reductions | 1.31% | 1.31% | 1.31% | 1.31% | 1.31% |
| Net investment income (loss) | 1.40% | 2.37%C | 1.33% | 1.09% | 1.17% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $55,954 | $60,069 | $76,572 | $89,925 | $76,586 |
| Portfolio turnover rateI | 40% | 41%J | 76% | 56%J | 63% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Net investment income per share reflects a large, non-recurring dividend which amounted to $.68 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been 1.50%.
D Amount represents less than $.005 per share.
E Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
F Total returns do not include the effect of the sales charges.
G Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
I Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
J Portfolio turnover rate excludes securities received or delivered in-kind.
See accompanying notes which are an integral part of the financial statements.
Consumer Staples Portfolio Class C
| Years ended February 28, | 2020 A | 2019 | 2018 | 2017 | 2016 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $74.79 | $84.85 | $93.89 | $87.77 | $99.27 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .75 | 1.46C | .81 | .56 | .63 |
| Net realized and unrealized gain (loss) | 3.44 | (2.57) | (2.73) | 8.92 | (4.75) |
| Total from investment operations | 4.19 | (1.11) | (1.92) | 9.48 | (4.12) |
| Distributions from net investment income | (.81) | (1.43) | (.82) | (.73) | (.65) |
| Distributions from net realized gain | (.90) | (7.53) | (6.30) | (2.64) | (6.72) |
| Total distributions | (1.71) | (8.95)D | (7.12) | (3.36)E | (7.38)F |
| Redemption fees added to paid in capitalB | – | – | – | –G | –G |
| Net asset value, end of period | $77.27 | $74.79 | $84.85 | $93.89 | $87.77 |
| Total ReturnH,I | 5.39% | (1.05)% | (2.41)% | 11.07% | (4.23)% |
| Ratios to Average Net AssetsJ,K | |||||
| Expenses before reductions | 1.79% | 1.79% | 1.79% | 1.80% | 1.80% |
| Expenses net of fee waivers, if any | 1.79% | 1.79% | 1.79% | 1.79% | 1.80% |
| Expenses net of all reductions | 1.79% | 1.78% | 1.78% | 1.79% | 1.79% |
| Net investment income (loss) | .92% | 1.91%C | .86% | .61% | .69% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $117,328 | $150,822 | $228,874 | $308,350 | $250,576 |
| Portfolio turnover rateL | 40% | 41%M | 76% | 56%M | 63% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Net investment income per share reflects a large, non-recurring dividend which amounted to $.67 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been 1.04%.
D Total distributions of $8.95 per share is comprised of distributions from net investment income of $1.427 and distributions from net realized gain of $7.525 per share.
E Total distributions of $3.36 per share is comprised of distributions from net investment income of $.726 and distributions from net realized gain of $2.636 per share.
F Total distributions of $7.38 per share is comprised of distributions from net investment income of $.651 and distributions from net realized gain of $6.724 per share.
G Amount represents less than $.005 per share.
H Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
I Total returns do not include the effect of the contingent deferred sales charge.
J Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
K Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
L Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
M Portfolio turnover rate excludes securities received or delivered in-kind.
See accompanying notes which are an integral part of the financial statements.
Consumer Staples Portfolio
| Years ended February 28, | 2020 A | 2019 | 2018 | 2017 | 2016 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $77.63 | $87.85 | $97.01 | $90.48 | $102.03 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | 1.66 | 2.34C | 1.82 | 1.56 | 1.61 |
| Net realized and unrealized gain (loss) | 3.59 | (2.67) | (2.82) | 9.20 | (4.89) |
| Total from investment operations | 5.25 | (.33) | (1.00) | 10.76 | (3.28) |
| Distributions from net investment income | (1.55) | (2.36) | (1.86) | (1.60) | (1.55) |
| Distributions from net realized gain | (.90) | (7.53) | (6.30) | (2.64) | (6.72) |
| Total distributions | (2.46)D | (9.89) | (8.16) | (4.23)E | (8.27) |
| Redemption fees added to paid in capitalB | – | – | – | –F | –F |
| Net asset value, end of period | $80.42 | $77.63 | $87.85 | $97.01 | $90.48 |
| Total ReturnG | 6.48% | (.03)% | (1.40)% | 12.24% | (3.25)% |
| Ratios to Average Net AssetsH,I | |||||
| Expenses before reductions | .75% | .77% | .76% | .76% | .77% |
| Expenses net of fee waivers, if any | .75% | .76% | .76% | .76% | .77% |
| Expenses net of all reductions | .75% | .75% | .76% | .76% | .76% |
| Net investment income (loss) | 1.96% | 2.94%C | 1.89% | 1.64% | 1.72% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $773,437 | $814,350 | $1,328,696 | $1,665,604 | $2,039,983 |
| Portfolio turnover rateJ | 40% | 41%K | 76% | 56%K | 63% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Net investment income per share reflects a large, non-recurring dividend which amounted to $.69 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been 2.07%.
D Total distributions of $2.46 per share is comprised of distributions from net investment income of $1.552 and distributions from net realized gain of $.903 per share.
E Total distributions of $4.23 per share is comprised of distributions from net investment income of $1.596 and distributions from net realized gain of $2.636 per share.
F Amount represents less than $.005 per share.
G Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
H Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
J Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
K Portfolio turnover rate excludes securities received or delivered in-kind.
See accompanying notes which are an integral part of the financial statements.
Consumer Staples Portfolio Class I
| Years ended February 28, | 2020 A | 2019 | 2018 | 2017 | 2016 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $77.45 | $87.68 | $96.82 | $90.34 | $101.91 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | 1.65 | 2.33C | 1.81 | 1.54 | 1.60 |
| Net realized and unrealized gain (loss) | 3.58 | (2.68) | (2.82) | 9.19 | (4.89) |
| Total from investment operations | 5.23 | (.35) | (1.01) | 10.73 | (3.29) |
| Distributions from net investment income | (1.55) | (2.36) | (1.83) | (1.61) | (1.55) |
| Distributions from net realized gain | (.90) | (7.53) | (6.30) | (2.64) | (6.72) |
| Total distributions | (2.45) | (9.88)D | (8.13) | (4.25) | (8.28)E |
| Redemption fees added to paid in capitalB | – | – | – | –F | –F |
| Net asset value, end of period | $80.23 | $77.45 | $87.68 | $96.82 | $90.34 |
| Total ReturnG | 6.48% | (.04)% | (1.41)% | 12.22% | (3.26)% |
| Ratios to Average Net AssetsH,I | |||||
| Expenses before reductions | .76% | .77% | .78% | .78% | .78% |
| Expenses net of fee waivers, if any | .76% | .77% | .78% | .78% | .77% |
| Expenses net of all reductions | .76% | .76% | .77% | .77% | .77% |
| Net investment income (loss) | 1.95% | 2.93%C | 1.88% | 1.63% | 1.71% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $149,514 | $159,614 | $240,605 | $275,616 | $216,836 |
| Portfolio turnover rateJ | 40% | 41%K | 76% | 56%K | 63% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Net investment income per share reflects a large, non-recurring dividend which amounted to $.69 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been 2.06%.
D Total distributions of $9.88 per share is comprised of distributions from net investment income of $2.357 and distributions from net realized gain of $7.525 per share.
E Total distributions of $8.28 per share is comprised of distributions from net investment income of $1.553 and distributions from net realized gain of $6.724 per share.
F Amount represents less than $.005 per share.
G Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
H Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
J Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
K Portfolio turnover rate excludes securities received or delivered in-kind.
See accompanying notes which are an integral part of the financial statements.
Consumer Staples Portfolio Class Z
| Years ended February 28, | 2020 A | 2019 B |
| Selected Per–Share Data | ||
| Net asset value, beginning of period | $77.36 | $81.61 |
| Income from Investment Operations | ||
| Net investment income (loss)C | 1.78 | .05D |
| Net realized and unrealized gain (loss) | 3.56 | .33E |
| Total from investment operations | 5.34 | .38 |
| Distributions from net investment income | (1.66) | (2.23) |
| Distributions from net realized gain | (.90) | (2.40) |
| Total distributions | (2.56) | (4.63) |
| Redemption fees added to paid in capitalC | – | – |
| Net asset value, end of period | $80.14 | $77.36 |
| Total ReturnF,G | 6.61% | .79% |
| Ratios to Average Net AssetsH,I | ||
| Expenses before reductions | .63% | .63%J |
| Expenses net of fee waivers, if any | .63% | .62%J |
| Expenses net of all reductions | .62% | .61%J |
| Net investment income (loss) | 2.08% | .16%D,J |
| Supplemental Data | ||
| Net assets, end of period (000 omitted) | $41,629 | $8,052 |
| Portfolio turnover rateK | 40% | 41%L |
A For the year ended February 29.
B For the period October 2, 2018 (commencement of sale of shares) to February 28, 2019.
C Calculated based on average shares outstanding during the period.
D Net investment income per share reflects a large, non-recurring dividend which amounted to $.26 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been (.69) %.
E The amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchases of shares in relation to fluctuating market values of the investments of the Fund.
F Total returns for periods of less than one year are not annualized.
G Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
H Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
J Annualized
K Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
L Portfolio turnover rate excludes securities received or delivered in-kind.
See accompanying notes which are an integral part of the financial statements.
Notes to Financial Statements
For the period ended February 29, 2020
1. Organization.
Consumer Staples Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the Trust) and is authorized to issue an unlimited number of shares. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries. The Fund offers Class A, Class M, Class C, Consumer Staples, Class I and Class Z shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. Effective March 1, 2019, Class C shares will automatically convert to Class A shares after a holding period of ten years from the initial date of purchase, with certain exceptions.
Effective January 1, 2020:
Investment advisers Fidelity Investments Money Management, Inc., FMR Co., Inc., and Fidelity SelectCo, LLC, merged with and into Fidelity Management & Research Company. In connection with the merger transactions, the resulting, merged investment adviser was then redomiciled from Massachusetts to Delaware, changed its corporate structure from a corporation to a limited liability company, and changed its name to "Fidelity Management & Research Company LLC".
Broker-dealer Fidelity Distributors Corporation merged with and into Fidelity Investments Institutional Services Company, Inc. ("FIISC"). FIISC was then redomiciled from Massachusetts to Delaware, changed its corporate structure from a corporation to a limited liability company, and changed its name to "Fidelity Distributors Company LLC".
Fidelity Investments Institutional Operations Company, Inc. converted from a Massachusetts corporation to a Massachusetts LLC, and changed its name to "Fidelity Investments Institutional Operations Company LLC".
2. Investments in Fidelity Central Funds.
The Fund invests in Fidelity Central Funds, which are open-end investment companies generally available only to other investment companies and accounts managed by the investment adviser and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by the investment adviser. Annualized expenses of the Money Market Central Funds as of their most recent shareholder report date ranged from less than .005% to .01%.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) website at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC website or upon request.
3. Significant Accounting Policies.
The Fund is an investment company and applies the accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946 Financial Services – Investments Companies. The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:
Investment Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Board of Trustees (the Board) has delegated the day to day responsibility for the valuation of the Fund's investments to the Fair Value Committee (the Committee) established by the Fund's investment adviser. In accordance with valuation policies and procedures approved by the Board, the Fund attempts to obtain prices from one or more third party pricing vendors or brokers to value its investments. When current market prices, quotations or currency exchange rates are not readily available or reliable, investments will be fair valued in good faith by the Committee, in accordance with procedures adopted by the Board. Factors used in determining fair value vary by investment type and may include market or investment specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The Committee oversees the Fund's valuation policies and procedures and reports to the Board on the Committee's activities and fair value determinations. The Board monitors the appropriateness of the procedures used in valuing the Fund's investments and ratifies the fair value determinations of the Committee.
The Fund categorizes the inputs to valuation techniques used to 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)
Valuation techniques used to value the Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by a third party pricing vendor on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-Traded Funds (ETFs) and certain indexes as well as quoted prices for similar securities may be used and would be categorized as Level 2 in the hierarchy. For equity securities, including restricted 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.
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value (NAV) each business day and are categorized as Level 1 in the hierarchy.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level as of February 29, 2020 is included at the end of the Fund's Schedule of Investments.
Foreign Currency. The Fund may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rates at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and include proceeds received from litigation. Dividend income is recorded 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. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Income and capital gain distributions from Fidelity Central Funds, if any, are recorded on the ex-dividend date. Certain distributions received by the Fund represent a return of capital or capital gain. The Fund determines the components of these distributions subsequent to the ex-dividend date, based upon receipt of tax filings or other correspondence relating to the underlying investment. These distributions are recorded as a reduction of cost of investments and/or as a realized gain. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Class Allocations and Expenses. Investment income, realized and unrealized capital gains and losses, common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated daily on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions may also differ by class. For the reporting period, the allocated portion of income and expenses to each class as a percent of its average net assets may vary due to the timing of recording these transactions in relation to fluctuating net assets of the classes. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Deferred Trustee Compensation. Under a Deferred Compensation Plan (the Plan) for the Fund, certain independent Trustees have elected to defer receipt of a portion of their annual compensation. Deferred amounts are invested in a cross-section of Fidelity funds, are marked-to-market and remain in the Fund until distributed in accordance with the Plan. The investment of deferred amounts and the offsetting payable to the Trustees of $231,416 are included in the accompanying Statement of Assets and Liabilities in other receivables and other payables and accrued expenses, respectively.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for U.S. Federal income taxes is required. As of February 29, 2020, the Fund did not have any unrecognized tax benefits in the financial statements; nor is the Fund aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. The Fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are declared and recorded on the ex-dividend date. Income and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. In addition, the Fund claimed a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Capital accounts are not adjusted for temporary book-tax differences which will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, deferred trustees compensation and losses deferred due to wash sales and excise tax regulations.
As of period end, the cost and unrealized appreciation (depreciation) in securities, and derivatives if applicable, for federal income tax purposes were as follows:
| Gross unrealized appreciation | $255,129,398 |
| Gross unrealized depreciation | (127,395,441) |
| Net unrealized appreciation (depreciation) | $127,733,957 |
| Tax Cost | $1,280,915,003 |
The tax-based components of distributable earnings as of period end were as follows:
| Undistributed ordinary income | $7,431,999 |
| Undistributed long-term capital gain | $11,727,023 |
| Net unrealized appreciation (depreciation) on securities and other investments | $127,734,804 |
The tax character of distributions paid was as follows:
| February 29, 2020 | February 28, 2019 | |
| Ordinary Income | $25,010,228 | $ 42,628,113 |
| Long-term Capital Gains | 15,710,221 | 169,544,227 |
| Total | $40,720,449 | $ 212,172,340 |
Restricted Securities. The Fund may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities is included at the end of the Fund's Schedule of Investments.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities are noted in the table below.
| Purchases ($) | Sales ($) | |
| Consumer Staples Portfolio | 582,853,180 | 709,780,047 |
5. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity Management & Research Company LLC (the investment adviser) and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and an annualized group fee rate that averaged .24% during the period. The group fee rate is based upon the monthly average net assets of a group of registered investment companies with which the investment adviser has management contracts. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the reporting period, the total annual management fee rate was .54% of the Fund's average net assets.
Distribution and Service Plan Fees. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Company LLC (FDC), an affiliate of the investment adviser, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the Fund and providing shareholder support services. For the period, the Distribution and Service Fee rates, total fees and amounts retained by FDC were as follows:
| Distribution Fee | Service Fee | Total Fees | Retained by FDC | |
| Class A | -% | .25% | $637,952 | $6,210 |
| Class M | .25% | .25% | 309,762 | 136 |
| Class C | .75% | .25% | 1,322,611 | 97,593 |
| $2,270,325 | $103,939 |
Sales Load. FDC may receive a front-end sales charge of up to 5.75% for selling Class A shares and 3.50% for selling Class M shares, some of which is paid to financial intermediaries for selling shares of the Fund. Depending on the holding period, FDC may receive contingent deferred sales charges levied on Class A, Class M and Class C redemptions. The deferred sales charges are 1.00% for Class C shares, 1.00% for certain purchases of Class A shares and .25% for certain purchases of Class M shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained by FDC | |
| Class A | $92,356 |
| Class M | 15,181 |
| Class C(a) | 6,408 |
| $113,945 |
(a) When Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company LLC (FIIOC), an affiliate of the investment adviser, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the Fund, except for Class Z. FIIOC receives an asset-based fee of Class Z's average net assets. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. Effective February 1, 2020, the Board approved to change the fee for Class Z from .046% to .044%.
For the period, transfer agent fees for each class were as follows:
| Amount | % of Class-Level Average Net Assets | |
| Class A | $531,625 | .21 |
| Class M | 142,630 | .23 |
| Class C | 274,250 | .21 |
| Consumer Staples | 1,432,631 | .17 |
| Class I | 302,678 | .18 |
| Class Z | 12,344 | .04 |
| $2,696,158 |
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of the investment adviser, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for each month. Prior to April 1, 2019, FSC had a separate agreement with the Fund for administration of the security lending program, based on the number and duration of lending transactions. For the period, the total fees paid for accounting and administration of securities lending were equivalent to the following annual rates:
| % of Average Net Assets | |
| Consumer Staples Portfolio | .03 |
Brokerage Commissions. A portion of portfolio transactions were placed with brokerage firms which are affiliates of the investment adviser. Brokerage commissions are included in net realized gain (loss) and change in net unrealized appreciation (depreciation) in the Statement of Operations. The commissions paid to these affiliated firms were as follows:
| Amount | |
| Consumer Staples Portfolio | $20,532 |
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the fund, along with other registered investment companies having management contracts with Fidelity Management & Research Company LLC (FMR), or other affiliated entities of FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the fund to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. Activity in this program during the period for which loans were outstanding was as follows:
| Borrower or Lender | Average Loan Balance | Weighted Average Interest Rate | Interest Expense | |
| Consumer Staples Portfolio | Borrower | $5,407,455 | 2.04% | $3,379 |
Interfund Trades. Funds may purchase from or sell securities to other Fidelity Funds under procedures adopted by the Board. The procedures have been designed to ensure these interfund trades are executed in accordance with Rule 17a-7 of the 1940 Act. Interfund trades are included within the respective purchases and sales amounts shown in the Purchases and Sales of Investments note.
Prior Fiscal Year Affiliated Redemptions In-Kind. During the prior period, 3,404,232 shares of the Fund were redeemed in-kind for investments and cash with a value of $278,330,010. The Fund had a net realized gain of $70,956,466 on investments delivered through in-kind redemptions. The amount of the in-kind redemptions is included in share transactions in the accompanying Statement of Changes in Net Assets as well as the Notes to Financial Statements. The Fund recognized no gain or loss for federal income tax purposes.
Other. During the period, the investment advisor reimbursed the Fund for certain losses in the amount of $1,573.
6. Committed Line of Credit.
Certain Funds participate with other funds managed by the investment adviser or an affiliate in a $4.25 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The participating funds have agreed to pay commitment fees on their pro-rata portion of the line of credit, which are reflected in Miscellaneous expenses on the Statement of Operations, and are as follows:
| Amount | |
| Consumer Staples Portfolio | $3,748 |
During the period, there were no borrowings on this line of credit.
7. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. For equity securities, lending agents are used, including National Financial Services (NFS), an affiliate of the Fund. Pursuant to a securities lending agreement, NFS will receive a fee, which is capped at 9.9% of daily lending revenue, for its services as lending agent. The Fund may lend securities to certain qualified borrowers, including NFS. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. The Fund or borrower may terminate the loan at any time, and if the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, the Fund may apply collateral received from the borrower against the obligation. The Fund may experience delays and costs in recovering the securities loaned. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. At period end, there were no security loans outstanding with NFS, as affiliated borrower. Total fees paid by the Fund to NFS, as lending agent, amounted to $5,021. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds, and includes $58 from securities loaned to NFS, as affiliated borrower.
8. Expense Reductions.
Commissions paid to certain brokers with whom the investment adviser, or its affiliates, places trades on behalf of the Fund include an amount in addition to trade execution, which may be rebated back to the Fund to offset certain expenses. This amount totaled $41,427 for the period.
In addition, during the period the investment adviser or an affiliate reimbursed and/or waived a portion of fund-level operating expenses in the amount of $8,729.
In addition, during the period the investment adviser or an affiliate reimbursed the Fund $7,571 for an operational error which is included in the accompanying Statement of Operations.
9. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
| Year ended February 29, 2020 | Year ended February 28, 2019(a) |
|
| Distributions to shareholders | ||
| Class A | $6,696,405 | $31,532,315 |
| Class M | 1,461,199 | 7,789,847 |
| Class C | 2,610,802 | 21,174,166 |
| Consumer Staples | 23,815,786 | 126,567,988 |
| Class I | 4,878,027 | 24,805,720 |
| Class Z | 1,258,230 | 302,304 |
| Total | $40,720,449 | $212,172,340 |
(a) Distributions for Class Z are for the period October 2, 2018 (commencement of sale of shares) to February 28, 2019.
10. Share Transactions.
Share transactions for each class were as follows and may contain automatic conversions between classes or exchanges between affiliated funds:
| Shares | Shares | Dollars | Dollars | |
| Year ended February 29, 2020 | Year ended February 28, 2019(a) | Year ended February 29, 2020 | Year ended February 28, 2019(a) | |
| Class A | ||||
| Shares sold | 673,280 | 449,932 | $55,409,168 | $35,089,323 |
| Reinvestment of distributions | 74,433 | 398,204 | 6,499,464 | 30,796,418 |
| Shares redeemed | (761,324) | (1,475,083) | (63,492,568) | (115,548,253) |
| Net increase (decrease) | (13,611) | (626,947) | $(1,583,936) | $(49,662,512) |
| Class M | ||||
| Shares sold | 96,558 | 79,651 | $8,040,205 | $6,204,264 |
| Reinvestment of distributions | 16,736 | 101,114 | 1,447,176 | 7,739,839 |
| Shares redeemed | (191,768) | (278,973) | (15,887,658) | (21,711,204) |
| Net increase (decrease) | (78,474) | (98,208) | $(6,400,277) | $(7,767,101) |
| Class C | ||||
| Shares sold | 172,528 | 207,723 | $14,091,994 | $15,770,092 |
| Reinvestment of distributions | 29,580 | 267,367 | 2,512,849 | 20,225,054 |
| Shares redeemed | (700,216) | (1,155,923) | (55,637,531) | (88,087,579) |
| Net increase (decrease) | (498,108) | (680,833) | $(39,032,688) | $(52,092,433) |
| Consumer Staples | ||||
| Shares sold | 1,681,521 | 1,329,875 | $142,087,479 | $104,789,246 |
| Reinvestment of distributions | 246,658 | 1,509,435 | 21,760,149 | 118,306,244 |
| Shares redeemed | (2,801,634) | (7,473,301)(b) | (236,743,124) | (599,358,298)(b) |
| Net increase (decrease) | (873,455) | (4,633,991) | $(72,895,496) | $(376,262,808) |
| Class I | ||||
| Shares sold | 1,013,976 | 973,629 | $85,980,860 | $76,737,622 |
| Reinvestment of distributions | 50,832 | 293,006 | 4,473,725 | 22,761,304 |
| Shares redeemed | (1,262,032) | (1,949,992) | (106,844,142) | (151,953,970) |
| Net increase (decrease) | (197,224) | (683,357) | $(16,389,557) | $(52,455,044) |
| Class Z | ||||
| Shares sold | 503,808 | 110,114 | $42,214,998 | $8,671,440 |
| Reinvestment of distributions | 13,623 | 3,266 | 1,197,347 | 238,969 |
| Shares redeemed | (102,066) | (9,296) | (8,692,361) | (696,780) |
| Net increase (decrease) | 415,365 | 104,084 | $34,719,984 | $8,213,629 |
(a) Share transactions for Class Z are for the period October 2, 2018 (commencement of sale of shares) to February 28, 2019.
(b) Amount includes in-kind redemptions (see the Prior Year Affiliated Redemptions In-Kind note for additional details).
11. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
12. Coronavirus (COVID-19) Pandemic.
An outbreak of COVID-19 first detected in China during December 2019 has since spread globally and was declared a pandemic by the World Health Organization during March 2020. Developments that disrupt global economies and financial markets, such as the COVID-19 pandemic, may magnify factors that affect the Fund's performance.
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of Fidelity Select Portfolios and Shareholders of Consumer Staples Portfolio
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Consumer Staples Portfolio (one of the funds constituting Fidelity Select Portfolios, referred to hereafter as the “Fund”) as of February 29, 2020, the related statement of operations for the year ended February 29, 2020, the statement of changes in net assets for each of the two years in the period ended February 29, 2020, including the related notes, and the financial highlights for each of the periods indicated therein (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of February 29, 2020, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended February 29, 2020 and the financial highlights for each of the periods indicated therein in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of February 29, 2020 by correspondence with the custodian and issuers of privately offered securities. We believe that our audits provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 13, 2020
We have served as the auditor of one or more investment companies in the Fidelity group of funds since 1932.
Trustees and Officers
The Trustees, Members of the Advisory Board (if any), and officers of the trust and fund, as applicable, are listed below. The Board of Trustees governs the fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee the fund's activities, review contractual arrangements with companies that provide services to the fund, oversee management of the risks associated with such activities and contractual arrangements, and review the fund's performance. Except for Michael E. Wiley, each of the Trustees oversees 302 funds. Mr. Wiley oversees 199 funds.
The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust. Each Trustee who is not an interested person (as defined in the 1940 Act) of the trust and the fund is referred to herein as an Independent Trustee. Each Independent Trustee shall retire not later than the last day of the calendar year in which his or her 75th birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. Officers and Advisory Board Members hold office without limit in time, except that any officer or Advisory Board Member may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years.
The fund's Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-800-544-8544 if you’re an individual investing directly with Fidelity, call 1-800-835-5092 if you’re a plan sponsor or participant with Fidelity as your recordkeeper or call 1-877-208-0098 on institutional accounts or if you’re an advisor or invest through one.
Experience, Skills, Attributes, and Qualifications of the Trustees. The Governance and Nominating Committee has adopted a statement of policy that describes the experience, qualifications, attributes, and skills that are necessary and desirable for potential Independent Trustee candidates (Statement of Policy). The Board believes that each Trustee satisfied at the time he or she was initially elected or appointed a Trustee, and continues to satisfy, the standards contemplated by the Statement of Policy. The Governance and Nominating Committee also engages professional search firms to help identify potential Independent Trustee candidates who have the experience, qualifications, attributes, and skills consistent with the Statement of Policy. From time to time, additional criteria based on the composition and skills of the current Independent Trustees, as well as experience or skills that may be appropriate in light of future changes to board composition, business conditions, and regulatory or other developments, have also been considered by the professional search firms and the Governance and Nominating Committee. In addition, the Board takes into account the Trustees' commitment and participation in Board and committee meetings, as well as their leadership of standing and ad hoc committees throughout their tenure.
In determining that a particular Trustee was and continues to be qualified to serve as a Trustee, the Board has considered a variety of criteria, none of which, in isolation, was controlling. The Board believes that, collectively, the Trustees have balanced and diverse experience, qualifications, attributes, and skills, which allow the Board to operate effectively in governing the fund and protecting the interests of shareholders. Information about the specific experience, skills, attributes, and qualifications of each Trustee, which in each case led to the Board's conclusion that the Trustee should serve (or continue to serve) as a trustee of the fund, is provided below.
Board Structure and Oversight Function. James C. Curvey is an interested person and currently serves as Chairman. The Trustees have determined that an interested Chairman is appropriate and benefits shareholders because an interested Chairman has a personal and professional stake in the quality and continuity of services provided to the fund. Independent Trustees exercise their informed business judgment to appoint an individual of their choosing to serve as Chairman, regardless of whether the Trustee happens to be independent or a member of management. The Independent Trustees have determined that they can act independently and effectively without having an Independent Trustee serve as Chairman and that a key structural component for assuring that they are in a position to do so is for the Independent Trustees to constitute a substantial majority for the Board. The Independent Trustees also regularly meet in executive session. Ned C. Lautenbach serves as Chairman of the Independent Trustees and as such (i) acts as a liaison between the Independent Trustees and management with respect to matters important to the Independent Trustees and (ii) with management prepares agendas for Board meetings.
Fidelity® funds are overseen by different Boards of Trustees. The fund's Board oversees Fidelity's high income and certain equity funds, and other Boards oversee Fidelity's investment-grade bond, money market, asset allocation, and other equity funds. The asset allocation funds may invest in Fidelity® funds overseen by the fund's Board. The use of separate Boards, each with its own committee structure, allows the Trustees of each group of Fidelity® funds to focus on the unique issues of the funds they oversee, including common research, investment, and operational issues. On occasion, the separate Boards establish joint committees to address issues of overlapping consequences for the Fidelity® funds overseen by each Board.
The Trustees operate using a system of committees to facilitate the timely and efficient consideration of all matters of importance to the Trustees, the fund, and fund shareholders and to facilitate compliance with legal and regulatory requirements and oversight of the fund's activities and associated risks. The Board, acting through its committees, has charged FMR and its affiliates with (i) identifying events or circumstances the occurrence of which could have demonstrably adverse effects on the fund's business and/or reputation; (ii) implementing processes and controls to lessen the possibility that such events or circumstances occur or to mitigate the effects of such events or circumstances if they do occur; and (iii) creating and maintaining a system designed to evaluate continuously business and market conditions in order to facilitate the identification and implementation processes described in (i) and (ii) above. Because the day-to-day operations and activities of the fund are carried out by or through FMR, its affiliates, and other service providers, the fund's exposure to risks is mitigated but not eliminated by the processes overseen by the Trustees. While each of the Board's committees has responsibility for overseeing different aspects of the fund's activities, oversight is exercised primarily through the Operations, Audit, and Compliance Committees. Appropriate personnel, including but not limited to the fund's Chief Compliance Officer (CCO), FMR's internal auditor, the independent accountants, the fund's Treasurer and portfolio management personnel, make periodic reports to the Board's committees, as appropriate, including an annual review of Fidelity's risk management program for the Fidelity® funds. The responsibilities of each standing committee, including their oversight responsibilities, are described further under "Standing Committees of the Trustees."
Interested Trustees*:
Correspondence intended for a Trustee who is an interested person may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210.
Name, Year of Birth; Principal Occupations and Other Relevant Experience+
James C. Curvey (1935)
Year of Election or Appointment: 2018
Trustee
Chairman of the Board of Trustees
Mr. Curvey also serves as Trustee of other Fidelity® funds. Mr. Curvey is Vice Chairman (2007-present) and Director of FMR LLC (diversified financial services company). In addition, Mr. Curvey is an Overseer Emeritus for the Boston Symphony Orchestra, a Director of Artis-Naples, and a Trustee of Brewster Academy in Wolfeboro, New Hampshire. Previously, Mr. Curvey served as a Director of Fidelity Research & Analysis Co. (investment adviser firm, 2009-2018), Director of Fidelity Investments Money Management, Inc. (investment adviser firm, 2009-2014) and a Director of FMR and FMR Co., Inc. (investment adviser firms, 2007-2014).
* Determined to be an “Interested Trustee” by virtue of, among other things, his or her affiliation with the trust or various entities under common control with FMR.
+ The information includes the Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to the Trustee's qualifications to serve as a Trustee, which led to the conclusion that the Trustee should serve as a Trustee for the fund.
Independent Trustees:
Correspondence intended for an Independent Trustee may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.
Name, Year of Birth; Principal Occupations and Other Relevant Experience+
Dennis J. Dirks (1948)
Year of Election or Appointment: 2018
Trustee
Mr. Dirks also serves as Trustee of other Fidelity® funds. Prior to his retirement in May 2003, Mr. Dirks served as Chief Operating Officer and as a member of the Board of The Depository Trust & Clearing Corporation (financial markets infrastructure), President, Chief Operating Officer and a member of the Board of The Depository Trust Company (DTC), President and a member of the Board of the National Securities Clearing Corporation (NSCC), Chief Executive Officer and a member of the Board of the Government Securities Clearing Corporation and Chief Executive Officer and a member of the Board of the Mortgage-Backed Securities Clearing Corporation. Mr. Dirks currently serves as a member of the Finance Committee (2016-present) and Board (2017-present) and is Treasurer (2018-present) of the Asolo Repertory Theatre.
Donald F. Donahue (1950)
Year of Election or Appointment: 2018
Trustee
Mr. Donahue also serves as Trustee of other Fidelity® funds. Mr. Donahue serves as President and Chief Executive Officer of Miranda Partners, LLC (risk consulting for the financial services industry, 2012-present). Previously, Mr. Donahue served as Chief Executive Officer (2006-2012), Chief Operating Officer (2003-2006) and Managing Director, Customer Marketing and Development (1999-2003) of The Depository Trust & Clearing Corporation (financial markets infrastructure). Mr. Donahue currently serves as a member (2007-present) and Co-Chairman (2016-present) of the Board of United Way of New York, a member of the Board of NYC Leadership Academy (2012-present) and a member of the Board of Advisors of Ripple Labs, Inc. (financial services, 2015-present). Mr. Donahue previously served as a member of the Advisory Board of certain Fidelity® funds (2015-2018).
Alan J. Lacy (1953)
Year of Election or Appointment: 2018
Trustee
Mr. Lacy also serves as Trustee of other Fidelity® funds. Previously, Mr. Lacy served as Senior Adviser (2007-2014) of Oak Hill Capital Partners, L.P. (private equity), Chief Executive Officer (2005) and Vice Chairman (2005-2006) of Sears Holdings Corporation (retail), Chief Executive Officer and Chairman of the Board of Sears, Roebuck and Co. (retail, 2000-2005) and Chairman (2014-2017) and a member of the Board (2010-2017) of Dave & Buster’s Entertainment, Inc. (restaurant and entertainment complexes). Mr. Lacy currently serves as a member of the Board of Bristol-Myers Squibb Company (global pharmaceuticals, 2008-present), Trustee of the California Chapter of The Nature Conservancy (2015-present) and a member of the Board of the Center for Advanced Study in the Behavioral Sciences at Stanford University (2015-present).
Ned C. Lautenbach (1944)
Year of Election or Appointment: 2018
Trustee
Chairman of the Independent Trustees
Mr. Lautenbach also serves as Trustee of other Fidelity® funds. Mr. Lautenbach currently serves as Chair of the Board of Governors, State University System of Florida (2013-present) and is a member of the Council on Foreign Relations (1994-present). He is also a member and has in the past served as Chairman of the Board of Directors of Artis-Naples (2012-present). Previously, Mr. Lautenbach served as a member and then Lead Director of the Board of Directors of Eaton Corporation (diversified industrial, 1997-2016). He was also a Partner at Clayton, Dubilier & Rice, LLC (private equity investment, 1998-2010); as well as Director of Sony Corporation (2006-2007). In addition, Mr. Lautenbach had a 30-year career with IBM (technology company), during which time he served as Senior Vice President and as a member of the Corporate Executive Committee (1968-1998).
Joseph Mauriello (1944)
Year of Election or Appointment: 2018
Trustee
Mr. Mauriello also serves as Trustee of other Fidelity® funds. Prior to his retirement in January 2006, Mr. Mauriello served in numerous senior management positions including Deputy Chairman and Chief Operating Officer (2004-2005), and Vice Chairman of Financial Services (2002-2004) of KPMG LLP US (professional services, 1965-2005). Mr. Mauriello currently serves as a member of the Independent Directors Council Governing Council (2015-present). Previously, Mr. Mauriello served as a member of the Board of XL Group plc. (global insurance and re-insurance, 2006-2018).
Cornelia M. Small (1944)
Year of Election or Appointment: 2018
Trustee
Ms. Small also serves as Trustee of other Fidelity® funds. Previously, Ms. Small served as Chief Investment Officer, Director of Global Equity Investments and a member of Scudder, Stevens & Clark and Scudder Kemper Investments. Ms. Small previously served as a member of the Board (2009-2019) and Chair of the Investment Committee (2010-2019) of the Teagle Foundation and a member of the Investment Committee of the Berkshire Taconic Community Foundation (2008-2019).
Garnett A. Smith (1947)
Year of Election or Appointment: 2013
Trustee
Mr. Smith also serves as Trustee of other Fidelity® funds. Prior to his retirement, Mr. Smith served as Chairman and Chief Executive Officer (1990-1997) and President (1986-1990) of Inbrand Corp. (manufacturer of personal absorbent products). Prior to his employment with Inbrand Corp., he was employed by a retail fabric chain and North Carolina National Bank (now Bank of America). Mr. Smith previously served as a member of the Advisory Board of certain Fidelity® funds (2012-2013).
David M. Thomas (1949)
Year of Election or Appointment: 2018
Trustee
Mr. Thomas also serves as Trustee of other Fidelity® funds. Previously, Mr. Thomas served as Executive Chairman (2005-2006) and Chairman and Chief Executive Officer (2000-2005) of IMS Health, Inc. (pharmaceutical and healthcare information solutions). Mr. Thomas currently serves as Non-Executive Chairman of the Board of Fortune Brands Home and Security (home and security products, 2011-present), and a member of the Board (2004-present) and Presiding Director (2013-present) of Interpublic Group of Companies, Inc. (marketing communication).
Michael E. Wiley (1950)
Year of Election or Appointment: 2008
Trustee
Mr. Wiley also serves as Trustee or a member of the Advisory Board of other Fidelity® funds. Previously, Mr. Wiley served as Chairman, President and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004). Mr. Wiley currently serves as a member of the Board of High Point Resources (exploration and production, 2005-present). Previously, Mr. Wiley served as a member of the Board of Andeavor Corporation (independent oil refiner and marketer, 2005-2018) and a member of the Board of Andeavor Logistics LP (natural resources logistics, 2015-2018).
+ The information includes the Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to the Trustee's qualifications to serve as a Trustee, which led to the conclusion that the Trustee should serve as a Trustee for the fund.
Advisory Board Members and Officers:
Correspondence intended for a Member of the Advisory Board (if any) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235. Correspondence intended for an officer or Peter S. Lynch may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210. Officers appear below in alphabetical order.
Name, Year of Birth; Principal Occupation
Vicki L. Fuller (1957)
Year of Election or Appointment: 2018
Member of the Advisory Board
Ms. Fuller also serves as a member of the Advisory Board of other Fidelity® funds. Previously, Ms. Fuller served as Chief Investment Officer of the New York State Common Retirement Fund (2012-2018) and held a variety of positions at AllianceBernstein L.P. (global asset management, 1985-2012), including Managing Director (2006-2012) and Senior Vice President and Senior Portfolio Manager (2001-2006). Ms. Fuller currently serves as a member of the Board, Audit Committee and Nominating and Governance Committee of The Williams Companies, Inc. (natural gas infrastructure, 2018-present) and as a member of the Board of Treliant, LLC (consulting, 2019-present).
Patricia L. Kampling (1959)
Year of Election or Appointment: 2020
Member of the Advisory Board
Ms. Kampling also serves as Member of the Advisory Board of other Fidelity® funds. Prior to her retirement, Ms. Kampling served as Chairman of the Board and Chief Executive Officer (2012-2019), President and Chief Operating Officer (2011-2012) and Executive Vice President and Chief Financial Officer (2010-2011) of Alliant Energy Corporation. Ms. Kampling currently serves as a member of the Board, Compensation Committee and Executive Committee and as Chair of the Audit Committee of Briggs & Stratton Corporation (manufacturing, 2011-present) and as a member of the Board, Audit, Finance and Risk Committee and Safety, Environmental, Technology and Operations Committee of American Water Works Company, Inc. (utilities company, 2019-present). In addition, Ms. Kampling currently serves as a member of the Board of the Nature Conservancy, Wisconsin Chapter (2019-present). Previously, Ms. Kampling served as a member of the Board of Interstate Power and Light Company (2012-2019) and Wisconsin Power and Light Company (2012-2019) (each a subsidiary of Alliant Energy Corporation) and as a member of the Board and Workforce Development Committee of the Business Roundtable (2018-2019).
Peter S. Lynch (1944)
Year of Election or Appointment: 2018
Member of the Advisory Board
Mr. Lynch also serves as Member of the Advisory Board of other Fidelity® funds. Mr. Lynch is Vice Chairman and a Director of Fidelity Management & Research Company LLC (investment adviser firm). In addition, Mr. Lynch serves as a Trustee of Boston College and as the Chairman of the Inner-City Scholarship Fund. Previously, Mr. Lynch served as Vice Chairman and a Director of FMR Co., Inc. (investment adviser firm) and on the Special Olympics International Board of Directors (1997-2006).
Susan Tomasky (1953)
Year of Election or Appointment: 2020
Member of the Advisory Board
Ms. Tomasky also serves as Member of the Advisory Board of other Fidelity® funds. Prior to her retirement, Ms. Tomasky served in various executive officer positions at American Electric Power Company, Inc. (1998-2011), including most recently as President of AEP Transmission (2007-2011). Ms. Tomasky currently serves as a member of the Board and Sustainability Committee and as Chair of the Audit Committee of Marathon Petroleum Corporation (2018-present) and as a member of the Board, Corporate Governance Committee and Organization and Compensation Committee and as Chair of the Audit Committee of Public Service Enterprise Group, Inc. (utilities company, 2012-present). In addition, Ms. Tomasky currently serves as a member of the Board of the Columbus Regional Airport Authority (2007-present), as a member of the Board of the Royal Shakespeare Company – America (2009-present), as a member of the Board of the Columbus Association for the Performing Arts (2011-present) and as a member of the Board of Kenyon College (2016-present). Previously, Ms. Tomasky served as a member of the Board (2011-2019) and as Lead Independent Director (2015-2018) of Andeavor Corporation (previously Tesoro Corporation) (independent oil refiner and marketer) and as a member of the Board of Summit Midstream Partners LP (energy, 2012-2018).
Elizabeth Paige Baumann (1968)
Year of Election or Appointment: 2017
Anti-Money Laundering (AML) Officer
Ms. Baumann also serves as AML Officer of other funds. She is Chief AML Officer (2012-present) and Senior Vice President (2014-present) of FMR LLC (diversified financial services company) and is an employee of Fidelity Investments. Previously, Ms. Baumann served as AML Officer of certain funds (2017-2019), as AML Officer of the funds (2012-2016), and Vice President (2007-2014) and Deputy Anti-Money Laundering Officer (2007-2012) of FMR LLC.
Craig S. Brown (1977)
Year of Election or Appointment: 2019
Assistant Treasurer
Mr. Brown also serves as Assistant Treasurer of other funds. Mr. Brown is an employee of Fidelity Investments (2013-present).
John J. Burke III (1964)
Year of Election or Appointment: 2018
Chief Financial Officer
Mr. Burke also serves as Chief Financial Officer of other funds. Mr. Burke serves as Head of Investment Operations for Fidelity Fund and Investment Operations (2018-present) and is an employee of Fidelity Investments (1998-present). Previously Mr. Burke served as head of Asset Management Investment Operations (2012-2018).
William C. Coffey (1969)
Year of Election or Appointment: 2019
Assistant Secretary
Mr. Coffey also serves as Assistant Secretary of other funds. He is Senior Vice President and Deputy General Counsel of FMR LLC (diversified financial services company, 2010-present), and is an employee of Fidelity Investments. Previously, Mr. Coffey served as Secretary and CLO of certain funds (2018-2019); CLO, Secretary, and Senior Vice President of Fidelity Management & Research Company and FMR Co., Inc. (investment adviser firms, 2018-2019); Secretary of Fidelity SelectCo, LLC and Fidelity Investments Money Management, Inc. (investment adviser firms, 2018-2019); CLO of Fidelity Management & Research (Hong Kong) Limited, FMR Investment Management (UK) Limited, and Fidelity Management & Research (Japan) Limited (investment adviser firms, 2018-2019); and Assistant Secretary of certain funds (2009-2018).
Timothy M. Cohen (1969)
Year of Election or Appointment: 2018
Vice President
Mr. Cohen also serves as Vice President of other funds. Mr. Cohen serves as Co-Head of Equity (2018-present), a Director of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2016-present), and is an employee of Fidelity Investments. Previously, Mr. Cohen served as Executive Vice President of Fidelity SelectCo, LLC (2019), Head of Global Equity Research (2016-2018), Chief Investment Officer - Equity and a Director of Fidelity Management & Research (U.K.) Inc. (investment adviser firm, 2013-2015) and as a Director of Fidelity Management & Research (Hong Kong) Limited (investment adviser firm, 2017).
Jonathan Davis (1968)
Year of Election or Appointment: 2010
Assistant Treasurer
Mr. Davis also serves as Assistant Treasurer of other funds. Mr. Davis serves as Assistant Treasurer of FMR Capital, Inc. (2017-present) and is an employee of Fidelity Investments. Previously, Mr. Davis served as Vice President and Associate General Counsel of FMR LLC (diversified financial services company, 2003-2010).
Laura M. Del Prato (1964)
Year of Election or Appointment: 2018
Assistant Treasurer
Ms. Del Prato also serves as an officer of other funds. Ms. Del Prato is an employee of Fidelity Investments (2017-present). Prior to joining Fidelity Investments, Ms. Del Prato served as a Managing Director and Treasurer of the JPMorgan Mutual Funds (2014-2017). Prior to JPMorgan, Ms. Del Prato served as a partner at Cohen Fund Audit Services (accounting firm, 2012-2013) and KPMG LLP (accounting firm, 2004-2012).
Colm A. Hogan (1973)
Year of Election or Appointment: 2020
Assistant Treasurer
Mr. Hogan also serves as an officer of other funds. Mr. Hogan serves as Assistant Treasurer of FMR Capital, Inc. (2017-present) and is an employee of Fidelity Investments (2005-present). Previously, Mr. Hogan served as Deputy Treasurer of certain Fidelity® funds (2016-2020) and Assistant Treasurer of certain Fidelity® funds (2016-2018).
Pamela R. Holding (1964)
Year of Election or Appointment: 2018
Vice President
Ms. Holding also serves as Vice President of other funds. Ms. Holding serves as Co-Head of Equity (2018-present) and is an employee of Fidelity Investments (2013-present). Previously, Ms. Holding served as Executive Vice President of Fidelity SelectCo, LLC (2019) and as Chief Investment Officer of Fidelity Institutional Asset Management (2013-2018).
Cynthia Lo Bessette (1969)
Year of Election or Appointment: 2019
Secretary and Chief Legal Officer (CLO)
Ms. Lo Bessette also serves as an officer of other funds. Ms. Lo Bessette serves as CLO, Secretary, and Senior Vice President of Fidelity Management & Research Company LLC (investment adviser firm, 2019-present); and CLO of Fidelity Management & Research (Hong Kong) Limited, FMR Investment Management (UK) Limited, and Fidelity Management & Research (Japan) Limited (investment adviser firms, 2019-present). She is a Senior Vice President and Deputy General Counsel of FMR LLC (diversified financial services company, 2019-present), and is an employee of Fidelity Investments. Previously, Ms. Lo Bessette served as CLO, Secretary, and Senior Vice President of FMR Co., Inc. (investment adviser firm, 2019); Secretary of Fidelity SelectCo, LLC and Fidelity Investments Money Management, Inc. (investment adviser firms, 2019). Prior to joining Fidelity Investments, Ms. Lo Bessette was Executive Vice President, General Counsel (2016-2019) and Senior Vice President, Deputy General Counsel (2015-2016) of OppenheimerFunds (investment management company) and Deputy Chief Legal Officer (2013-2015) of Jennison Associates LLC (investment adviser firm).
Chris Maher (1972)
Year of Election or Appointment: 2020
Deputy Treasurer
Mr. Maher also serves as an officer of other funds. Mr. Maher serves as Assistant Treasurer of FMR Capital, Inc. (2017-present), and is an employee of Fidelity Investments (2008-present). Previously, Mr. Maher served as Assistant Treasurer of certain funds (2013-2020); Vice President of Asset Management Compliance (2013), Vice President of the Program Management Group of FMR (investment adviser firm, 2010-2013), and Vice President of Valuation Oversight (2008-2010).
Kenneth B. Robins (1969)
Year of Election or Appointment: 2018
Chief Compliance Officer
Mr. Robins also serves as an officer of other funds. Mr. Robins serves as Compliance Officer of Fidelity Management & Research Company LLC (investment adviser firm, 2016-present) and is an employee of Fidelity Investments (2004-present). Previously, Mr. Robins served as Compliance Officer of FMR Co., Inc. (investment adviser firm, 2016-2019), as Executive Vice President of Fidelity Investments Money Management, Inc. (investment adviser firm, 2013-2016) and served in other fund officer roles.
Stacie M. Smith (1974)
Year of Election or Appointment: 2018
President and Treasurer
Ms. Smith also serves as an officer of other funds. Ms. Smith serves as Assistant Treasurer of FMR Capital, Inc. (2017-present), is an employee of Fidelity Investments (2009-present), and has served in other fund officer roles. Prior to joining Fidelity Investments, Ms. Smith served as Senior Audit Manager of Ernst & Young LLP (accounting firm, 1996-2009). Previously, Ms. Smith served as Assistant Treasurer (2013-2019) and Deputy Treasurer (2013-2016) of certain Fidelity® funds.
Marc L. Spector (1972)
Year of Election or Appointment: 2017
Assistant Treasurer
Mr. Spector also serves as an officer of other funds. Mr. Spector serves as Assistant Treasurer of FMR Capital, Inc. (2017-present) and is an employee of Fidelity Investments (2016-present). Prior to joining Fidelity Investments, Mr. Spector served as Director at the Siegfried Group (accounting firm, 2013-2016), and prior to Siegfried Group as audit senior manager at Deloitte & Touche LLP (accounting firm, 2005-2013).
Jim Wegmann (1979)
Year of Election or Appointment: 2019
Assistant Treasurer
Mr. Wegmann also serves as Assistant Treasurer of other funds. Mr. Wegmann is an employee of Fidelity Investments (2011-present).
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments or redemption proceeds, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (September 1, 2019 to February 29, 2020).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Annualized Expense Ratio-A | Beginning Account Value September 1, 2019 | Ending Account Value February 29, 2020 | Expenses Paid During Period-B September 1, 2019 to February 29, 2020 |
|
| Class A | 1.03% | |||
| Actual | $1,000.00 | $977.00 | $5.06 | |
| Hypothetical-C | $1,000.00 | $1,019.74 | $5.17 | |
| Class M | 1.31% | |||
| Actual | $1,000.00 | $975.70 | $6.44 | |
| Hypothetical-C | $1,000.00 | $1,018.35 | $6.57 | |
| Class C | 1.79% | |||
| Actual | $1,000.00 | $973.50 | $8.78 | |
| Hypothetical-C | $1,000.00 | $1,015.96 | $8.97 | |
| Consumer Staples | .74% | |||
| Actual | $1,000.00 | $978.50 | $3.64 | |
| Hypothetical-C | $1,000.00 | $1,021.18 | $3.72 | |
| Class I | .75% | |||
| Actual | $1,000.00 | $978.50 | $3.69 | |
| Hypothetical-C | $1,000.00 | $1,021.13 | $3.77 | |
| Class Z | .62% | |||
| Actual | $1,000.00 | $979.00 | $3.05 | |
| Hypothetical-C | $1,000.00 | $1,021.78 | $3.12 |
A Annualized expense ratio reflects expenses net of applicable fee waivers.
B Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
C 5% return per year before expenses
Distributions (Unaudited)
The Board of Trustees of Consumer Staples Portfolio voted to pay to shareholders of record at the opening of business on record date, the following distributions per share derived from capital gains realized from sales of portfolio securities, and dividends derived from net investment income:
| Pay Date | Record Date | Dividends | Capital Gains | |
| Consumer Staples Portfolio | ||||
| Class A | 04/09/20 | 04/08/20 | $0.074 | $1.043 |
| Class M | 04/09/20 | 04/08/20 | $0.036 | $1.043 |
| Class C | 04/09/20 | 04/08/20 | $0.000 | $1.009 |
| Consumer Staples | 04/09/20 | 04/08/20 | $0.118 | $1.043 |
| Class I | 04/09/20 | 04/08/20 | $0.113 | $1.043 |
| Class Z | 04/09/20 | 04/08/20 | $0.136 | $1.043 |
The fund hereby designates as a capital gain dividend with respect to the taxable year ended February 29, 2020 $27,437,245, or, if subsequently determined to be different, the net capital gain of such year.
Class A, Class M, Class C, Consumer Staples, Class I, and Class Z designate 100% of the dividends distributed during the fiscal year as qualifying for the dividends–received deduction for corporate shareholders.
Class A, Class M, Class C, Consumer Staples, Class I, and Class Z designate 100% of the dividends distributed during the fiscal year as amounts which may be taken into account as a dividend for the purposes of the maximum rate under section 1(h)(11) of the Internal Revenue Code.
The fund will notify shareholders in January 2021 of amounts for use in preparing 2020 income tax returns.
Board Approval of Investment Advisory Contracts and Management Fees
Consumer Staples Portfolio
Each year, the Board of Trustees, including the Independent Trustees (together, the Board), votes on the renewal of the management contract with Fidelity Management & Research Company LLC (FMR) and the sub-advisory agreements (together, the Advisory Contracts) for the fund. FMR and the sub-advisers are referred to herein as the Investment Advisers. The Board, assisted by the advice of fund counsel and Independent Trustees' counsel, requests and considers a broad range of information relevant to the renewal of the Advisory Contracts throughout the year.Approval of Amended and Restated Advisory Contracts. At its November 2019 meeting, the Board unanimously determined to approve an amended and restated management contract and sub-advisory agreements (Amended and Restated Contracts) for a stub period of January 1, 2020 through January 31, 2020 in connection with a consolidation of certain of Fidelity's advisory businesses. The Board considered that, on or about January 1, 2020, FMR Co., Inc. (FMRC) and Fidelity SelectCo, LLC (SelectCo) expected to merge with and into FMR and, after the merger, FMR expected to redomicile as a Delaware limited liability company. The Board also approved the termination of the sub-advisory agreement with FMRC upon the completion of the merger. The Board noted that the Amended and Restated Contracts will reflect the replacement of SelectCo with FMR and will take effect upon the completion of the merger. The Board noted that references to FMR in the Amended and Restated Contracts would be updated to reflect FMR's new form of organization and domicile and considered that the definition of "group assets" for purposes of the fund's group fee would be modified to avoid double-counting assets once the reorganization is complete. The Board also noted Fidelity's assurance that neither the planned consolidation nor the Amended and Restated Contracts will change the investment processes, the level or nature of services provided, the resources and personnel allocated, trading and compliance operations, or any fees paid by the fund.The Board meets regularly and, at each of its meetings, covers an extensive agenda of topics and materials and considers factors that are relevant to its annual consideration of the renewal of the fund's Advisory Contracts, including the services and support provided to the fund and its shareholders. The Board has established various standing committees (Committees), each composed of and chaired by Independent Trustees with varying backgrounds, to which the Board has assigned specific subject matter responsibilities in order to enhance effective decision-making by the Board. The Board, acting directly and through its Committees, requests and receives information concerning the annual consideration of the renewal of the fund's Advisory Contracts. The Board also meets as needed to review matters specifically related to the Board's annual consideration of the renewal of the Advisory Contracts. Members of the Board may also meet with trustees of other Fidelity funds through joint ad hoc committees to discuss certain matters relevant to all of the Fidelity funds.At its January 2020 meeting, the Board unanimously determined to renew the fund's Advisory Contracts. In reaching its determination, the Board considered all factors it believed relevant, including (i) the nature, extent, and quality of the services provided to the fund and its shareholders (including the investment performance of the fund); (ii) the competitiveness of the fund's management fee and total expense ratio relative to peer funds; (iii) the total costs of the services provided by and the profits realized by Fidelity from its relationships with the fund; and (iv) the extent to which, if any, economies of scale exist and are realized as the fund grows, and whether any economies of scale are appropriately shared with fund shareholders.In considering whether to renew the Advisory Contracts for the fund, the Board reached a determination, with the assistance of fund counsel and Independent Trustees' counsel and through the exercise of its business judgment, that the renewal of the Advisory Contracts was in the best interests of the fund and its shareholders and that the compensation payable under the Advisory Contracts was fair and reasonable. The Board's decision to renew the Advisory Contracts was not based on any single factor, but rather was based on a comprehensive consideration of all the information provided to the Board at its meetings throughout the year. The Board, in reaching its determination to renew the Advisory Contracts, was aware that shareholders of the fund have a broad range of investment choices available to them, including a wide choice among funds offered by Fidelity's competitors, and that the fund's shareholders, who have the opportunity to review and weigh the disclosure provided by the fund in its prospectus and other public disclosures, have chosen to invest in this fund, which is part of the Fidelity family of funds. Nature, Extent, and Quality of Services Provided. The Board considered Fidelity's staffing as it relates to the fund, including the backgrounds of investment personnel of Fidelity, and also considered the fund's investment objective, strategies, and related investment philosophy. The Independent Trustees also had discussions with senior management of Fidelity's investment operations and investment groups. The Board considered the structure of the investment personnel compensation program and whether this structure provides appropriate incentives to act in the best interests of the fund. Additionally, the Board considered the portfolio managers' investments, if any, in the funds that they manage. Resources Dedicated to Investment Management and Support Services. The Board and the Fund Oversight and Research Committees reviewed the general qualifications and capabilities of Fidelity's investment staff, including its size, education, experience, and resources, as well as Fidelity's approach to recruiting, training, managing, and compensating investment personnel. The Board noted that Fidelity has continued to increase the resources devoted to non-U.S. offices, including expansion of Fidelity's global investment organization. The Board also noted that Fidelity's analysts have extensive resources, tools and capabilities that allow them to conduct sophisticated quantitative and fundamental analysis, as well as credit analysis of issuers, counterparties and guarantors. Further, the Board considered that Fidelity's investment professionals have sufficient access to global information and data so as to provide competitive investment results over time, and that those professionals also have access to sophisticated tools that permit them to assess portfolio construction and risk and performance attribution characteristics continuously, as well as to transmit new information and research conclusions rapidly around the world. Additionally, in its deliberations, the Board considered Fidelity's trading, risk management, compliance, and technology and operations capabilities and resources, which are integral parts of the investment management process. Shareholder and Administrative Services. The Board considered (i) the nature, extent, quality, and cost of advisory, administrative, and shareholder services performed by the Investment Advisers and their affiliates under the Advisory Contracts and under separate agreements covering transfer agency, pricing and bookkeeping, and securities lending services for the fund; (ii) the nature and extent of the supervision of third party service providers, principally custodians, subcustodians, and pricing vendors; and (iii) the resources devoted to, and the record of compliance with, the fund's compliance policies and procedures. The Board also reviewed the allocation of fund brokerage, including allocations to brokers affiliated with the Investment Advisers, the use of brokerage commissions to pay fund expenses, and the use of "soft" commission dollars to pay for research services.The Board noted that the growth of fund assets over time across the complex allows Fidelity to reinvest in the development of services designed to enhance the value and convenience of the Fidelity funds as investment vehicles. These services include 24-hour access to account information and market information over the Internet and through telephone representatives, investor education materials and asset allocation tools, and the expanded availability of Fidelity Investor Centers.The Board noted that it and the boards of certain other Fidelity funds had formed an ad hoc Committee on Transfer Agency Fees to review the variety of transfer agency fee structures throughout the industry and Fidelity's competitive positioning with respect to industry participants. Investment in a Large Fund Family. The Board considered the benefits to shareholders of investing in a Fidelity fund, including the benefits of investing in a fund that is part of a large family of funds offering a variety of investment disciplines and providing a large variety of mutual fund investor services. The Board noted that Fidelity had taken, or had made recommendations that resulted in the Fidelity funds taking, a number of actions over the previous year that benefited particular funds, including: (i) continuing to dedicate additional resources to Fidelity's investment research process, which includes meetings with management of issuers of securities in which the funds invest, and to the support of the senior management team that oversees asset management; (ii) continuing efforts to enhance Fidelity's global research capabilities; (iii) launching new funds and ETFs with innovative structures, strategies and pricing and making other enhancements to meet client needs; (iv) launching new share classes of existing funds; (v) eliminating purchase minimums and broadening eligibility requirements for certain funds and share classes; (vi) reducing management fees and total expenses for certain target date funds and index funds; (vii) lowering expense caps for certain existing funds and classes, and converting certain voluntary expense caps to contractual caps, to reduce expenses borne by shareholders; (viii) rationalizing product lines and gaining increased efficiencies from fund mergers, liquidations, and share class consolidations; (ix) continuing to develop, acquire and implement systems and technology to improve services to the funds and shareholders, strengthen information security, and increase efficiency; and (x) continuing to implement enhancements to further strengthen Fidelity's product line to increase investors' probability of success in achieving their investment goals, including retirement income goals. Investment Performance. The Board considered whether the fund has operated in accordance with its investment objective, as well as its record of compliance with its investment restrictions and its performance history. The Board noted that there was a portfolio management change for the fund in November 2017. The Board will continue to monitor closely the fund's performance, taking into account the portfolio management change.The Board took into account discussions that occur at Board meetings throughout the year with representatives of the Investment Advisers about fund investment performance. In this regard the Board noted that as part of regularly scheduled fund reviews and other reports to the Board on fund performance, the Board considers annualized return information for the fund for different time periods, measured against an appropriate securities market index (benchmark index). In its evaluation of fund investment performance, the Board gave particular attention to information indicating changes in performance of certain Fidelity funds for specific time periods and discussed with the Investment Advisers the reasons for any overperformance or underperformance.In addition to reviewing absolute and relative fund performance, the Independent Trustees periodically consider the appropriateness of fund performance metrics in evaluating the results achieved. In general, the Independent Trustees believe that fund performance should be evaluated based on net performance (after fees and expenses) of both the highest performing and lowest performing fund share classes, where applicable, compared to appropriate benchmark indices, over appropriate time periods that may include full market cycles, taking into account relevant factors including the following: general market conditions; issuer-specific information; and fund cash flows and other factors.The Independent Trustees recognize that shareholders evaluate performance on a net basis over their own holding periods, for which one-, three-, and five-year periods are often used as a proxy. For this reason, the performance information reviewed by the Board also included net cumulative total return information for the fund and an appropriate benchmark index for the most recent one-, three-, and five-year periods ended June 30, 2019, as shown below.Consumer Staples Portfolio
Consumer Staples Portfolio
Liquidity Risk Management Program
The Securities and Exchange Commission adopted Rule 22e-4 under the Investment Company Act of 1940 (the Liquidity Rule) to promote effective liquidity risk management throughout the open-end investment company industry, thereby reducing the risk that funds will be unable to meet their redemption obligations and mitigating dilution of the interests of fund shareholders.
The Fund has adopted and implemented a liquidity risk management program pursuant to the Liquidity Rule (the Program) effective December 1, 2018. The Program is reasonably designed to assess and manage the Fund’s liquidity risk and to comply with the requirements of the Liquidity Rule. The Fund’s Board of Trustees (the Board) has designated the Fund’s investment adviser as administrator of the Program. The Fidelity advisers have established a Liquidity Risk Management Committee (the LRM Committee) to manage the Program for each of the Fidelity Funds. The LRM Committee monitors the adequacy and effectiveness of implementation of the Program and on a periodic basis assesses each Fund’s liquidity risk based on a variety of factors including (1) the Fund’s investment strategy, (2) portfolio liquidity and cash flow projections during normal and reasonably foreseeable stressed conditions, (3) shareholder redemptions, (4) borrowings and other funding sources and (5) in the case of exchange-traded funds, certain additional factors including the effect of the Fund’s prices and spreads, market participants, and basket compositions on the overall liquidity of the Fund’s portfolio, as applicable.
In accordance with the Program, each of the Fund’s portfolio investments is classified into one of four liquidity categories described below based on a determination of a reasonable expectation for how long it would take to convert the investment to cash (or sell or dispose of the investment) without significantly changing its market value.
- Highly liquid investments – cash or convertible to cash within three business days or less
- Moderately liquid investments – convertible to cash in three to seven calendar days
- Less liquid investments – can be sold or disposed of, but not settled, within seven calendar days
- Illiquid investments – cannot not be sold or disposed of within seven calendar days
Liquidity classification determinations take into account a variety of factors including various market, trading and investment-specific considerations, as well as market depth, and generally utilize analysis from a third-party liquidity metrics service.
The Liquidity Rule places a 15% limit on a fund’s illiquid investments and requires funds that do not primarily hold assets that are highly liquid investments to determine and maintain a minimum percentage of the fund’s net assets to be invested in highly liquid investments (highly liquid investment minimum or HLIM). The Program includes provisions reasonably designed to comply with the 15% limit on illiquid investments and for determining, periodically reviewing and complying with the HLIM requirement as applicable.
At a recent meeting of the Fund’s Board of Trustees, the LRM Committee provided a written report to the Board pertaining to the operation, adequacy, and effectiveness of implementation of the Program for the annual period from December 1, 2018 through November 30, 2019. The report concluded that the Program has been implemented and is operating effectively and is reasonably designed to assess and manage the Fund’s liquidity risk.
SELCS-ANN-0420
1.846042.113
Fidelity® Select Portfolios®
Utilities Sector
Utilities Portfolio
February 29, 2020
See the inside front cover for important information about access to your fund’s shareholder reports.
Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of a fund’s shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports from the fund or from your financial intermediary, such as a financial advisor, broker-dealer or bank. Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from a fund electronically, by contacting your financial intermediary. For Fidelity customers, visit Fidelity's web site or call Fidelity using the contact information listed below.
You may elect to receive all future reports in paper free of charge. If you wish to continue receiving paper copies of your shareholder reports, you may contact your financial intermediary or, if you are a Fidelity customer, visit Fidelity’s website, or call Fidelity at the applicable toll-free number listed below. Your election to receive reports in paper will apply to all funds held with the fund complex/your financial intermediary.
| Account Type | Website | Phone Number |
| Brokerage, Mutual Fund, or Annuity Contracts: | fidelity.com/mailpreferences | 1-800-343-3548 |
| Employer Provided Retirement Accounts: | netbenefits.fidelity.com/preferences (choose 'no' under Required Disclosures to continue to print) | 1-800-343-0860 |
| Advisor Sold Accounts Serviced Through Your Financial Intermediary: | Contact Your Financial Intermediary | Your Financial Intermediary's phone number |
| Advisor Sold Accounts Serviced by Fidelity: | institutional.fidelity.com | 1-877-208-0098 |
Contents
|
Board Approval of Investment Advisory Contracts and Management Fees | |
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov.
You may also call 1-800-544-8544 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third-party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company. © 2020 FMR LLC. All rights reserved.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the Fund. This report is not authorized for distribution to prospective investors in the Fund unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-PORT. Forms N-PORT are available on the SEC’s web site at http://www.sec.gov. A fund's Forms N-PORT may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330.
For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com, http://www.institutional.fidelity.com, or http://www.401k.com, as applicable.
NOT FDIC INSURED •MAY LOSE VALUE •NO BANK GUARANTEE
Neither the Fund nor Fidelity Distributors Corporation is a bank.
Note to shareholders:
(No Action is Required by You)
As part of a regular review of its organizational structure, Fidelity has decided to merge certain entities to streamline operations, increase efficiency, simplify reporting, and reduce legal, compliance, and accounting complexity and costs. In separate events, Fidelity has merged four of its investment advisers and two of its broker-dealers.
Effective on or about January 1, 2020, following any required regulatory notices and approvals:
Investment advisers Fidelity Investments Money Management, Inc., FMR Co., Inc., and Fidelity SelectCo, LLC, merged with and into Fidelity Management & Research Company. In connection with the merger transactions, the resulting, merged investment adviser was then redomiciled from Massachusetts to Delaware, changed its corporate structure from a corporation to a limited liability company, and changed its name to “Fidelity Management & Research Company LLC”.
Broker-dealer Fidelity Distributors Corporation merged with and into Fidelity Investments Institutional Services Company, Inc. (“FIISC”). FIISC was then redomiciled from Massachusetts to Delaware, changed its corporate structure from a corporation to a limited liability company, and changed its name to “Fidelity Distributors Company LLC”.
These mergers are not expected to affect fund shareholders or Fidelity clients, nor are they expected to result in any changes to the day-to-day management of Fidelity’s brokerage services, the Fidelity funds, their investment policies and practices, their portfolio management teams, or the funds’ expenses.
Early in 2020, the outbreak and spread of a new coronavirus emerged as a public health emergency that had a major influence on financial markets, primarily based on its impact on the global economy and corporate earnings. The virus causes a respiratory disease known as COVID-19. On March 11, the World Health Organization declared the COVID-19 outbreak a pandemic, citing sustained risk of further global spread.
In the weeks following the end of this reporting period, as the crisis worsened, we witnessed an escalating human tragedy with wide-scale social and economic consequences from coronavirus-containment measures. The outbreak of COVID-19 prompted a number of measures to limit the spread, including travel and border restrictions, quarantines, and restrictions on large gatherings. In turn, these resulted in lower consumer activity, diminished demand for a wide range of products and services, disruption in manufacturing and supply chains, and – given the wide variability in outcomes regarding the outbreak – significant market uncertainty and volatility. Amid the turmoil, the U.S. government took unprecedented action – in concert with the U.S. Federal Reserve and central banks around the world – to help support consumers, businesses, and the broader economy, and to limit disruption to the financial system.
The situation continues to unfold, and the extent and duration of its impact on financial markets and the economy remain highly uncertain. Extreme events such as the coronavirus crisis are “exogenous shocks” that can have significant adverse effects on mutual funds and their investments. Although multiple asset classes may be affected by market disruption, the duration and impact may not be the same for all types of assets.
Fidelity is committed to helping you stay informed amid news about COVID-19 and during increased market volatility, and we’re taking extra steps to be responsive to customer needs. We encourage you to visit our websites, where we offer ongoing updates, commentary, and analysis on the markets and our funds.
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The hypothetical investment and the average annual total returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund’s total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
| For the periods ended February 29, 2020 | Past 1 year | Past 5 years | Past 10 years |
| Utilities Portfolio | 9.34% | 9.34% | 12.19% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Utilities Portfolio on February 28, 2010.
The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
| Period Ending Values | ||
|
| $31,603 | Utilities Portfolio |
|
| $32,918 | S&P 500® Index |
Management's Discussion of Fund Performance
Market Recap: U.S. stocks stalled to begin the new year and declined in late February, as the outbreak and spread of the new coronavirus threatened to hamper global economic growth and corporate earnings. For the 12 months ending February 29, 2020, the U.S. equity bellwether S&P 500® index gained 8.19%. The period began with equities rising amid upbeat company earnings and signs the U.S. Federal Reserve may pause on rates. The uptrend extended until May, when the index dipped as trade talks between the U.S. and China broke down. The bull market roared back to record a series of highs in July, when the Fed cut interest rates for the first time since 2008. Volatility intensified in August, as the Treasury yield curve inverted, which some investors viewed as a sign the U.S. economy could be heading for recession. But the market proved resilient, hitting a new high on October 30, when the Fed lowered rates for the third time in 2019, and moving higher through December 31. Following a roughly flat January, stocks sank in late February, after a surge in coronavirus cases outside China created considerable uncertainty and pushed investors to safer asset classes. By sector, information technology (+27%) led the way by a wide margin, followed by utilities and communication services (+13% each). In contrast, energy (-25%) was by far the weakest category, struggling due to sluggish oil prices. Other notable laggards included materials and industrials (-2% each). Comments from Portfolio Manager Douglas Simmons: For the fiscal year ending February 29, 2020, the fund gained 9.34%, lagging the 10.74% advance of the sector benchmark, the MSCI U.S. IMI Utilities 25/50 Index, but outperforming the S&P 500®. Even though trade tensions and concerns about stagnant global growth weighed on the broad equity market, utilities stocks steadily posted gains the past 12 months. That said, as the Federal Reserve reduced policy interest rates in July, September and October, the valuations for high-quality, more-defensive utilities pushed higher, while more-undervalued utilities stocks that offered greater potential for dividend growth – and a focus of the fund this period – generally delivered more-muted results. Versus the sector benchmark, security selection and industry positioning detracted from the fund's relative performance. Specifically, stock picking in electric utilities and an overweighting in the independent power producers & energy traders group proved most detrimental this period. On an individual stock basis, underweighting the shares of strong-performing index component NextEra Energy (+38%) hurt most. A material overweighting in independent power producer Vistra Energy (-25%) further dampened the fund’s relative return. Conversely, the portfolio's underweighting in the weak-performing gas utilities group lifted the fund's relative result. On an individual stock basis, a notable underweighting in the shares of electric utility Duke Energy (+7%), a large index component, was the fund's top relative contributor.The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Investment Summary (Unaudited)
Top Ten Stocks as of February 29, 2020
| % of fund's net assets | |
| Dominion Energy, Inc. | 11.6 |
| Exelon Corp. | 9.7 |
| Sempra Energy | 8.5 |
| Southern Co. | 7.5 |
| Edison International | 7.1 |
| Evergy, Inc. | 6.4 |
| Duke Energy Corp. | 5.1 |
| Entergy Corp. | 5.0 |
| FirstEnergy Corp. | 4.8 |
| The AES Corp. | 3.1 |
| 68.8 |
Top Industries (% of fund's net assets)
| As of February 29, 2020 | ||
| Electric Utilities | 55.0% | |
| Multi-Utilities | 27.1% | |
| Independent Power and Renewable Electricity Producers | 14.0% | |
| Gas Utilities | 2.3% | |
| Oil, Gas & Consumable Fuels | 0.8% | |
| All Others* | 0.8% | |
* Includes short-term investments and net other assets (liabilities).
Schedule of Investments February 29, 2020
Showing Percentage of Net Assets
| Common Stocks - 99.4% | |||
| Shares | Value | ||
| Electric Utilities - 54.8% | |||
| Electric Utilities - 54.8% | |||
| Alliant Energy Corp. | 315,478 | $16,442,713 | |
| American Electric Power Co., Inc. | 426,496 | 38,069,033 | |
| Duke Energy Corp. | 687,300 | 63,025,410 | |
| Edison International | 1,327,626 | 89,203,191 | |
| Entergy Corp. | 531,762 | 62,168,295 | |
| Evergy, Inc. | 1,214,385 | 79,360,060 | |
| Exelon Corp. | 2,808,089 | 121,056,717 | |
| FirstEnergy Corp. | 1,343,192 | 59,812,340 | |
| NextEra Energy, Inc. | 142,472 | 36,011,223 | |
| PG&E Corp. (a) | 1,097,928 | 17,017,884 | |
| PNM Resources, Inc. (b) | 163,926 | 7,717,636 | |
| Southern Co. | 1,549,050 | 93,500,658 | |
| 683,385,160 | |||
| Gas Utilities - 2.3% | |||
| Gas Utilities - 2.3% | |||
| Atmos Energy Corp. | 282,048 | 29,121,456 | |
| Independent Power and Renewable Electricity Producers - 14.0% | |||
| Independent Power Producers & Energy Traders - 10.2% | |||
| Clearway Energy, Inc.: | |||
| Class A | 119,624 | 2,427,171 | |
| Class C | 1,480,587 | 31,151,550 | |
| NRG Energy, Inc. | 958,606 | 31,835,305 | |
| The AES Corp. | 2,331,115 | 38,999,554 | |
| Vistra Energy Corp. | 1,214,334 | 23,351,643 | |
| 127,765,223 | |||
| Renewable Electricity - 3.8% | |||
| Atlantica Yield PLC | 680,229 | 19,665,420 | |
| NextEra Energy Partners LP | 473,444 | 27,303,515 | |
| 46,968,935 | |||
| TOTAL INDEPENDENT POWER AND RENEWABLE ELECTRICITY PRODUCERS | 174,734,158 | ||
| Multi-Utilities - 27.1% | |||
| Multi-Utilities - 27.1% | |||
| Ameren Corp. | 482,490 | 38,116,710 | |
| CenterPoint Energy, Inc. | 1,423,401 | 32,766,691 | |
| Consolidated Edison, Inc. | 202,600 | 15,968,932 | |
| Dominion Energy, Inc. | 1,850,963 | 144,708,288 | |
| Sempra Energy | 759,384 | 106,146,696 | |
| 337,707,317 | |||
| Oil, Gas & Consumable Fuels - 0.8% | |||
| Oil & Gas Storage & Transport - 0.8% | |||
| Cheniere Energy, Inc. (a) | 194,101 | 9,955,440 | |
| Water Utilities - 0.4% | |||
| Water Utilities - 0.4% | |||
| SJW Corp. | 77,770 | 4,757,969 | |
| TOTAL COMMON STOCKS | |||
| (Cost $1,071,984,774) | 1,239,661,500 | ||
| Principal Amount | Value | ||
| Nonconvertible Bonds - 0.2% | |||
| Electric Utilities - 0.2% | |||
| Electric Utilities - 0.2% | |||
| Pacific Gas & Electric Co. 3.95% 12/1/47 (c) | |||
| (Cost $2,174,938) | 2,225,000 | 2,247,250 | |
| Shares | Value | ||
| Money Market Funds - 1.2% | |||
| Fidelity Cash Central Fund 1.60%(d) | 12,428,891 | 12,431,377 | |
| Fidelity Securities Lending Cash Central Fund 1.60% (d)(e) | 2,648,885 | 2,649,150 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $15,080,527) | 15,080,527 | ||
| TOTAL INVESTMENT IN SECURITIES - 100.8% | |||
| (Cost $1,089,240,239) | 1,256,989,277 | ||
| NET OTHER ASSETS (LIABILITIES) - (0.8)% | (9,980,205) | ||
| NET ASSETS - 100% | $1,247,009,072 |
Legend
(a) Non-income producing
(b) Security or a portion of the security is on loan at period end.
(c) Non-income producing - Security is in default.
(d) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request.
(e) Investment made with cash collateral received from securities on loan.
Affiliated Central Funds
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:
| Fund | Income earned |
| Fidelity Cash Central Fund | $361,292 |
| Fidelity Securities Lending Cash Central Fund | 2,831 |
| Total | $364,123 |
Amounts in the income column in the above table include any capital gain distributions from underlying funds, which are presented in the corresponding line-item in the Statement of Operations, if applicable. Amount for Fidelity Securities Lending Cash Central Fund represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities.
Investment Valuation
The following is a summary of the inputs used, as of February 29, 2020, 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 below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.
| Valuation Inputs at Reporting Date: | ||||
| Description | Total | Level 1 | Level 2 | Level 3 |
| Investments in Securities: | ||||
| Common Stocks | $1,239,661,500 | $1,239,661,500 | $-- | $-- |
| Nonconvertible Bonds | 2,247,250 | -- | 2,247,250 | -- |
| Money Market Funds | 15,080,527 | 15,080,527 | -- | -- |
| Total Investments in Securities: | $1,256,989,277 | $1,254,742,027 | $2,247,250 | $-- |
See accompanying notes which are an integral part of the financial statements.
Financial Statements
Statement of Assets and Liabilities
| February 29, 2020 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $2,457,576) — See accompanying schedule: Unaffiliated issuers (cost $1,074,159,712) | $1,241,908,750 | |
| Fidelity Central Funds (cost $15,080,527) | 15,080,527 | |
| Total Investment in Securities (cost $1,089,240,239) | $1,256,989,277 | |
| Receivable for investments sold | 34,375,085 | |
| Receivable for fund shares sold | 5,296,944 | |
| Dividends receivable | 6,998,636 | |
| Distributions receivable from Fidelity Central Funds | 30,330 | |
| Prepaid expenses | 5,551 | |
| Other receivables | 13,756 | |
| Total assets | 1,303,709,579 | |
| Liabilities | ||
| Payable for investments purchased | $31,745,112 | |
| Payable for fund shares redeemed | 21,433,180 | |
| Accrued management fee | 623,105 | |
| Other affiliated payables | 212,678 | |
| Other payables and accrued expenses | 37,282 | |
| Collateral on securities loaned | 2,649,150 | |
| Total liabilities | 56,700,507 | |
| Net Assets | $1,247,009,072 | |
| Net Assets consist of: | ||
| Paid in capital | $1,050,808,679 | |
| Total accumulated earnings (loss) | 196,200,393 | |
| Net Assets | $1,247,009,072 | |
| Net Asset Value, offering price and redemption price per share ($1,247,009,072 ÷ 13,673,289 shares) | $91.20 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 29, 2020 | ||
| Investment Income | ||
| Dividends | $36,809,116 | |
| Income from Fidelity Central Funds (including $2,831 from security lending) | 364,123 | |
| Total income | 37,173,239 | |
| Expenses | ||
| Management fee | $6,661,005 | |
| Transfer agent fees | 2,088,359 | |
| Accounting and security lending fees | 399,554 | |
| Custodian fees and expenses | 10,889 | |
| Independent trustees' fees and expenses | 6,504 | |
| Registration fees | 89,159 | |
| Audit | 45,188 | |
| Legal | 1,784 | |
| Interest | 5,497 | |
| Miscellaneous | 7,689 | |
| Total expenses before reductions | 9,315,628 | |
| Expense reductions | (80,485) | |
| Total expenses after reductions | 9,235,143 | |
| Net investment income (loss) | 27,938,096 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 64,075,720 | |
| Redemptions in-kind with affiliated entities | 7,538,422 | |
| Fidelity Central Funds | 7 | |
| Foreign currency transactions | 24,432 | |
| Total net realized gain (loss) | 71,638,581 | |
| Change in net unrealized appreciation (depreciation) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | (2,937,596) | |
| Assets and liabilities in foreign currencies | (242) | |
| Total change in net unrealized appreciation (depreciation) | (2,937,838) | |
| Net gain (loss) | 68,700,743 | |
| Net increase (decrease) in net assets resulting from operations | $96,638,839 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 29, 2020 | Year ended February 28, 2019 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $27,938,096 | $19,645,080 |
| Net realized gain (loss) | 71,638,581 | 65,504,258 |
| Change in net unrealized appreciation (depreciation) | (2,937,838) | 53,870,262 |
| Net increase (decrease) in net assets resulting from operations | 96,638,839 | 139,019,600 |
| Distributions to shareholders | (29,428,267) | (73,577,455) |
| Share transactions | ||
| Proceeds from sales of shares | 668,747,776 | 638,656,367 |
| Reinvestment of distributions | 27,518,824 | 68,851,242 |
| Cost of shares redeemed | (557,231,194) | (449,165,874) |
| Net increase (decrease) in net assets resulting from share transactions | 139,035,406 | 258,341,735 |
| Total increase (decrease) in net assets | 206,245,978 | 323,783,880 |
| Net Assets | ||
| Beginning of period | 1,040,763,094 | 716,979,214 |
| End of period | $1,247,009,072 | $1,040,763,094 |
| Other Information | ||
| Shares | ||
| Sold | 7,178,573 | 7,498,067 |
| Issued in reinvestment of distributions | 286,923 | 812,301 |
| Redeemed | (5,990,923) | (5,452,798) |
| Net increase (decrease) | 1,474,573 | 2,857,570 |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights
Utilities Portfolio
| Years ended February 28, | 2020 A | 2019 | 2018 | 2017 | 2016 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $85.32 | $76.75 | $77.05 | $66.88 | $72.85 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | 2.09 | 2.06 | 1.62 | 1.52 | 1.39 |
| Net realized and unrealized gain (loss) | 5.99 | 13.35 | 2.56 | 10.44 | (4.49) |
| Total from investment operations | 8.08 | 15.41 | 4.18 | 11.96 | (3.10) |
| Distributions from net investment income | (1.94) | (1.37) | (1.29) | (1.77) | (1.60) |
| Distributions from net realized gain | (.26) | (5.46) | (3.19) | (.02) | (1.27) |
| Total distributions | (2.20) | (6.84)C | (4.48) | (1.79) | (2.87) |
| Redemption fees added to paid in capitalB | – | – | –D | –D | –D |
| Net asset value, end of period | $91.20 | $85.32 | $76.75 | $77.05 | $66.88 |
| Total ReturnE | 9.34% | 20.17% | 4.99% | 18.21% | (4.19)% |
| Ratios to Average Net AssetsF,G | |||||
| Expenses before reductions | .75% | .78% | .78% | .79% | .80% |
| Expenses net of fee waivers, if any | .75% | .78% | .78% | .79% | .79% |
| Expenses net of all reductions | .74% | .76% | .77% | .78% | .78% |
| Net investment income (loss) | 2.25% | 2.45% | 2.00% | 2.09% | 2.05% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $1,247,009 | $1,040,763 | $716,979 | $696,138 | $808,235 |
| Portfolio turnover rateH | 65%I | 97%I | 66%I | 70%I | 74% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Total distributions of $6.84 per share is comprised of distributions from net investment income of $1.373 and distributions from net realized gain of $5.463 per share.
D Amount represents less than $.005 per share.
E Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
H Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
I Portfolio turnover rate excludes securities received or delivered in-kind.
See accompanying notes which are an integral part of the financial statements.
Notes to Financial Statements
For the period ended February 29, 2020
1. Organization.
Utilities Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the Trust) and is authorized to issue an unlimited number of shares. Share transactions on the Statement of Changes in Net Assets may contain exchanges between affiliated funds. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries.
Effective January 1, 2020:
Investment advisers Fidelity Investments Money Management, Inc., FMR Co., Inc., and Fidelity SelectCo, LLC, merged with and into Fidelity Management & Research Company. In connection with the merger transactions, the resulting, merged investment adviser was then redomiciled from Massachusetts to Delaware, changed its corporate structure from a corporation to a limited liability company, and changed its name to "Fidelity Management & Research Company LLC".
Fidelity Investments Institutional Operations Company, Inc. converted from a Massachusetts corporation to a Massachusetts LLC, and changed its name to "Fidelity Investments Institutional Operations Company LLC".
2. Investments in Fidelity Central Funds.
The Fund invests in Fidelity Central Funds, which are open-end investment companies generally available only to other investment companies and accounts managed by the investment adviser and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by the investment adviser. Annualized expenses of the Money Market Central Funds as of their most recent shareholder report date ranged from less than .005% to .01%.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) website at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC website or upon request.
3. Significant Accounting Policies.
The Fund is an investment company and applies the accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946 Financial Services – Investments Companies. The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:
Investment Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Board of Trustees (the Board) has delegated the day to day responsibility for the valuation of the Fund's investments to the Fair Value Committee (the Committee) established by the Fund's investment adviser. In accordance with valuation policies and procedures approved by the Board, the Fund attempts to obtain prices from one or more third party pricing vendors or brokers to value its investments. When current market prices, quotations or currency exchange rates are not readily available or reliable, investments will be fair valued in good faith by the Committee, in accordance with procedures adopted by the Board. Factors used in determining fair value vary by investment type and may include market or investment specific events, changes in interest rates and credit quality. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The Committee oversees the Fund's valuation policies and procedures and reports to the Board on the Committee's activities and fair value determinations. The Board monitors the appropriateness of the procedures used in valuing the Fund's investments and ratifies the fair value determinations of the Committee.
The Fund categorizes the inputs to valuation techniques used to 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)
Valuation techniques used to value the Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by a third party pricing vendor on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-Traded Funds (ETFs) and certain indexes as well as quoted prices for similar securities may be used and would be categorized as Level 2 in the hierarchy. For equity securities, including restricted 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.
Debt securities, including restricted securities, are valued based on evaluated prices received from third party pricing vendors or from brokers who make markets in such securities. Corporate bonds are valued by pricing vendors who utilize matrix pricing which considers yield or price of bonds of comparable quality, coupon, maturity and type or by broker-supplied prices. When independent prices are unavailable or unreliable, debt securities may be valued utilizing pricing methodologies which consider similar factors that would be used by third party pricing vendors. Debt securities are generally categorized as Level 2 in the hierarchy but may be Level 3 depending on the circumstances.
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value (NAV) each business day and are categorized as Level 1 in the hierarchy.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level as of February 29, 2020, is included at the end of Fund's Schedule of Investments.
Foreign Currency. The Fund may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rates at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and include proceeds received from litigation. Dividend income is recorded 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. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Income and capital gain distributions from Fidelity Central Funds, if any, are recorded on the ex-dividend date. Certain distributions received by the Fund represent a return of capital or capital gain. The Fund determines the components of these distributions subsequent to the ex-dividend date, based upon receipt of tax filings or other correspondence relating to the underlying investment. These distributions are recorded as a reduction of cost of investments and/or as a realized gain. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for U.S. Federal income taxes is required. As of February 29, 2020, the Fund did not have any unrecognized tax benefits in the financial statements; nor is the Fund aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. The Fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are declared and recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. In addition, the Fund claimed a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Capital accounts are not adjusted for temporary book-tax differences which will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, redemptions in kind, partnerships, losses deferred due to wash sales and excise tax regulations.
As of period end, the cost and unrealized appreciation (depreciation) in securities, and derivatives if applicable, for federal income tax purposes were as follows:
| Gross unrealized appreciation | $193,974,815 |
| Gross unrealized depreciation | (29,679,782) |
| Net unrealized appreciation (depreciation) | $164,295,033 |
| Tax Cost | $1,092,694,244 |
The tax-based components of distributable earnings as of period end were as follows:
| Undistributed ordinary income | $1,996,363 |
| Undistributed long-term capital gain | $29,909,238 |
| Net unrealized appreciation (depreciation) on securities and other investments | $164,294,791 |
The tax character of distributions paid was as follows:
| February 29, 2020 | February 28, 2019 | |
| Ordinary Income | $25,895,270 | $ 17,473,751 |
| Long-term Capital Gains | 3,532,997 | 56,103,704 |
| Total | $29,428,267 | $ 73,577,455 |
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities and in-kind transactions are noted in the table below.
| Purchases ($) | Sales ($) | |
| Utilities Portfolio | 963,908,985 | 784,340,369 |
5. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity Management & Research Company LLC (the investment adviser) and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and an annualized group fee rate that averaged .24% during the period. The group fee rate is based upon the monthly average net assets of a group of registered investment companies with which the investment adviser has management contracts. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the reporting period, the total annual management fee rate was .54% of the Fund's average net assets.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company LLC (FIIOC), an affiliate of the investment adviser, is the Fund's transfer, dividend disbursing and shareholder servicing agent. FIIOC receives account fees and asset-based fees that vary according to account size and type of account. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, the transfer agent fees were equivalent to an annual rate of .17% of average net assets.
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of the investment adviser, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for each month. Prior to April 1, 2019, FSC had a separate agreement with the Fund for administration of the security lending program, based on the number and duration of lending transactions. For the period, the total fees paid for accounting and administration of securities lending were equivalent to the following annual rates:
| % of Average Net Assets | |
| Utilities Portfolio | .03 |
Brokerage Commissions. A portion of portfolio transactions were placed with brokerage firms which are affiliates of the investment adviser. Brokerage commissions are included in net realized gain (loss) and change in net unrealized appreciation (depreciation) in the Statement of Operations. The commissions paid to these affiliated firms were as follows:
| Amount | |
| Utilities Portfolio | $31,723 |
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the fund, along with other registered investment companies having management contracts with Fidelity Management & Research Company LLC (FMR), or other affiliated entities of FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the fund to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. Activity in this program during the period for which loans were outstanding was as follows:
| Borrower or Lender | Average Loan Balance | Weighted Average Interest Rate | Interest Expense | |
| Utilities Portfolio | Borrower | $13,508,500 | 2.44% | $5,497 |
Interfund Trades. Funds may purchase from or sell securities to other Fidelity Funds under procedures adopted by the Board. The procedures have been designed to ensure these interfund trades are executed in accordance with Rule 17a-7 of the 1940 Act. Interfund trades are included within the respective purchases and sales amounts shown in the Purchases and Sales of Investments note.
Affiliated Redemptions In-Kind. During the period, 272,865 shares of the Fund were redeemed in-kind for investments cash with a value of $24,994,414. The net realized gain of $7,538,422 on investments delivered through in-kind redemptions is included in the accompanying Statement of Operations. The amount of the in-kind redemptions is included in share transactions in the accompanying Statement of Changes in Net Assets. The Fund recognized no gain or loss for federal income tax purposes.
Prior Fiscal Year Affiliated Redemptions In-Kind. During the prior period, 1,469,597 shares of the Fund were redeemed in-kind for investments and cash with a value of $117,288,521. The Fund had a net realized gain of $26,295,315 on investments delivered through in-kind redemptions. The amount of the in-kind redemptions is included in share transactions in the accompanying Statement of Changes in Net Assets. The Fund recognized no gain or loss for federal income tax purposes.
6. Committed Line of Credit.
Certain Funds participate with other funds managed by the investment adviser or an affiliate in a $4.25 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The participating funds have agreed to pay commitment fees on their pro-rata portion of the line of credit, which are reflected in Miscellaneous expenses on the Statement of Operations, and are as follows:
| Amount | |
| Utilities Portfolio | $2,993 |
During the period, there were no borrowings on this line of credit.
7. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. For equity securities, lending agents are used, including National Financial Services (NFS), an affiliate of the Fund. Pursuant to a securities lending agreement, NFS will receive a fee, which is capped at 9.9% of daily lending revenue, for its services as lending agent. The Fund may lend securities to certain qualified borrowers. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. The Fund or borrower may terminate the loan at any time, and if the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, the Fund may apply collateral received from the borrower against the obligation. The Fund may experience delays and costs in recovering the securities loaned. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Total fees paid by the Fund to NFS, as lending agent, amounted to $279. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. During the period, there were no securities loaned to NFS.
8. Expense Reductions.
Commissions paid to certain brokers with whom the investment adviser, or its affiliates, places trades on behalf of the Fund include an amount in addition to trade execution, which may be rebated back to the Fund to offset certain expenses. This amount totaled $73,484 for the period. In addition, through arrangements with the Fund's custodian and transfer agent, credits realized as a result of certain uninvested cash balances were used to reduce the Fund's expenses by $239 and $359, respectively.
In addition, during the period the investment adviser or an affiliate reimbursed and/or waived a portion of operating expenses in the amount of $6,403.
9. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
10. Coronavirus (Covid-19) Pandemic.
An outbreak of COVID-19 first detected in China during December 2019 has since spread globally and was declared a pandemic by the World Health Organization during March 2020. Developments that disrupt global economies and financial markets, such as the COVID-19 pandemic, may magnify factors that affect the Fund's performance.
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of Fidelity Select Portfolios and Shareholders of Utilities Portfolio
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Utilities Portfolio (one of the funds constituting Fidelity Select Portfolios, referred to hereafter as the “Fund”) as of February 29, 2020, the related statement of operations for the year ended February 29, 2020, the statement of changes in net assets for each of the two years in the period ended February 29, 2020, including the related notes, and the financial highlights for each of the five years in the period ended February 29, 2020 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of February 29, 2020, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended February 29, 2020 and the financial highlights for each of the five years in the period ended February 29, 2020 in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of February 29, 2020 by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 9, 2020
We have served as the auditor of one or more investment companies in the Fidelity group of funds since 1932.
Trustees and Officers
The Trustees, Members of the Advisory Board (if any), and officers of the trust and fund, as applicable, are listed below. The Board of Trustees governs the fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee the fund's activities, review contractual arrangements with companies that provide services to the fund, oversee management of the risks associated with such activities and contractual arrangements, and review the fund's performance. Except for Mr.Michael E.Wiley, each of the Trustees oversees 302 funds. Mr Wiley oversees 199 funds.
The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust. Each Trustee who is not an interested person (as defined in the 1940 Act) of the trust and the fund is referred to herein as an Independent Trustee. Each Independent Trustee shall retire not later than the last day of the calendar year in which his or her 75th birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. Officers and Advisory Board Members hold office without limit in time, except that any officer or Advisory Board Member may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years.
The fund’s Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-800-544-8544.
Experience, Skills, Attributes, and Qualifications of the Trustees. The Governance and Nominating Committee has adopted a statement of policy that describes the experience, qualifications, attributes, and skills that are necessary and desirable for potential Independent Trustee candidates (Statement of Policy). The Board believes that each Trustee satisfied at the time he or she was initially elected or appointed a Trustee, and continues to satisfy, the standards contemplated by the Statement of Policy. The Governance and Nominating Committee also engages professional search firms to help identify potential Independent Trustee candidates who have the experience, qualifications, attributes, and skills consistent with the Statement of Policy. From time to time, additional criteria based on the composition and skills of the current Independent Trustees, as well as experience or skills that may be appropriate in light of future changes to board composition, business conditions, and regulatory or other developments, have also been considered by the professional search firms and the Governance and Nominating Committee. In addition, the Board takes into account the Trustees' commitment and participation in Board and committee meetings, as well as their leadership of standing and ad hoc committees throughout their tenure.
In determining that a particular Trustee was and continues to be qualified to serve as a Trustee, the Board has considered a variety of criteria, none of which, in isolation, was controlling. The Board believes that, collectively, the Trustees have balanced and diverse experience, qualifications, attributes, and skills, which allow the Board to operate effectively in governing the fund and protecting the interests of shareholders. Information about the specific experience, skills, attributes, and qualifications of each Trustee, which in each case led to the Board's conclusion that the Trustee should serve (or continue to serve) as a trustee of the fund, is provided below.
Board Structure and Oversight Function. James C. Curvey is an interested person and currently serves as Chairman. The Trustees have determined that an interested Chairman is appropriate and benefits shareholders because an interested Chairman has a personal and professional stake in the quality and continuity of services provided to the fund. Independent Trustees exercise their informed business judgment to appoint an individual of their choosing to serve as Chairman, regardless of whether the Trustee happens to be independent or a member of management. The Independent Trustees have determined that they can act independently and effectively without having an Independent Trustee serve as Chairman and that a key structural component for assuring that they are in a position to do so is for the Independent Trustees to constitute a substantial majority for the Board. The Independent Trustees also regularly meet in executive session. Ned C. Lautenbach serves as Chairman of the Independent Trustees and as such (i) acts as a liaison between the Independent Trustees and management with respect to matters important to the Independent Trustees and (ii) with management prepares agendas for Board meetings.
Fidelity® funds are overseen by different Boards of Trustees. The fund's Board oversees Fidelity's high income and certain equity funds, and other Boards oversee Fidelity's investment-grade bond, money market, asset allocation, and other equity funds. The asset allocation funds may invest in Fidelity® funds overseen by the fund's Board. The use of separate Boards, each with its own committee structure, allows the Trustees of each group of Fidelity® funds to focus on the unique issues of the funds they oversee, including common research, investment, and operational issues. On occasion, the separate Boards establish joint committees to address issues of overlapping consequences for the Fidelity® funds overseen by each Board.
The Trustees operate using a system of committees to facilitate the timely and efficient consideration of all matters of importance to the Trustees, the fund, and fund shareholders and to facilitate compliance with legal and regulatory requirements and oversight of the fund's activities and associated risks. The Board, acting through its committees, has charged FMR and its affiliates with (i) identifying events or circumstances the occurrence of which could have demonstrably adverse effects on the fund's business and/or reputation; (ii) implementing processes and controls to lessen the possibility that such events or circumstances occur or to mitigate the effects of such events or circumstances if they do occur; and (iii) creating and maintaining a system designed to evaluate continuously business and market conditions in order to facilitate the identification and implementation processes described in (i) and (ii) above. Because the day-to-day operations and activities of the fund are carried out by or through FMR, its affiliates, and other service providers, the fund's exposure to risks is mitigated but not eliminated by the processes overseen by the Trustees. While each of the Board's committees has responsibility for overseeing different aspects of the fund's activities, oversight is exercised primarily through the Operations, Audit, and Compliance Committees. Appropriate personnel, including but not limited to the fund's Chief Compliance Officer (CCO), FMR's internal auditor, the independent accountants, the fund's Treasurer and portfolio management personnel, make periodic reports to the Board's committees, as appropriate, including an annual review of Fidelity's risk management program for the Fidelity® funds. The responsibilities of each standing committee, including their oversight responsibilities, are described further under "Standing Committees of the Trustees."
Interested Trustees*:
Correspondence intended for a Trustee who is an interested person may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210.
Name, Year of Birth; Principal Occupations and Other Relevant Experience+
James C. Curvey (1935)
Year of Election or Appointment: 2018
Trustee
Chairman of the Board of Trustees
Mr. Curvey also serves as Trustee of other Fidelity® funds. Mr. Curvey is Vice Chairman (2007-present) and Director of FMR LLC (diversified financial services company). In addition, Mr. Curvey is an Overseer Emeritus for the Boston Symphony Orchestra, a Director of Artis-Naples, and a Trustee of Brewster Academy in Wolfeboro, New Hampshire. Previously, Mr. Curvey served as a Director of Fidelity Research & Analysis Co. (investment adviser firm, 2009-2018), Director of Fidelity Investments Money Management, Inc. (investment adviser firm, 2009-2014) and a Director of FMR and FMR Co., Inc. (investment adviser firms, 2007-2014).
* Determined to be an “Interested Trustee” by virtue of, among other things, his or her affiliation with the trust or various entities under common control with FMR.
+ The information includes the Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to the Trustee's qualifications to serve as a Trustee, which led to the conclusion that the Trustee should serve as a Trustee for the fund.
Independent Trustees:
Correspondence intended for an Independent Trustee may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.
Name, Year of Birth; Principal Occupations and Other Relevant Experience+
Dennis J. Dirks (1948)
Year of Election or Appointment: 2018
Trustee
Mr. Dirks also serves as Trustee of other Fidelity® funds. Prior to his retirement in May 2003, Mr. Dirks served as Chief Operating Officer and as a member of the Board of The Depository Trust & Clearing Corporation (financial markets infrastructure), President, Chief Operating Officer and a member of the Board of The Depository Trust Company (DTC), President and a member of the Board of the National Securities Clearing Corporation (NSCC), Chief Executive Officer and a member of the Board of the Government Securities Clearing Corporation and Chief Executive Officer and a member of the Board of the Mortgage-Backed Securities Clearing Corporation. Mr. Dirks currently serves as a member of the Finance Committee (2016-present) and Board (2017-present) and is Treasurer (2018-present) of the Asolo Repertory Theatre.
Donald F. Donahue (1950)
Year of Election or Appointment: 2018
Trustee
Mr. Donahue also serves as Trustee of other Fidelity® funds. Mr. Donahue serves as President and Chief Executive Officer of Miranda Partners, LLC (risk consulting for the financial services industry, 2012-present). Previously, Mr. Donahue served as Chief Executive Officer (2006-2012), Chief Operating Officer (2003-2006) and Managing Director, Customer Marketing and Development (1999-2003) of The Depository Trust & Clearing Corporation (financial markets infrastructure). Mr. Donahue currently serves as a member (2007-present) and Co-Chairman (2016-present) of the Board of United Way of New York, a member of the Board of NYC Leadership Academy (2012-present) and a member of the Board of Advisors of Ripple Labs, Inc. (financial services, 2015-present). Mr. Donahue previously served as a member of the Advisory Board of certain Fidelity® funds (2015-2018).
Alan J. Lacy (1953)
Year of Election or Appointment: 2018
Trustee
Mr. Lacy also serves as Trustee of other Fidelity® funds. Previously, Mr. Lacy served as Senior Adviser (2007-2014) of Oak Hill Capital Partners, L.P. (private equity), Chief Executive Officer (2005) and Vice Chairman (2005-2006) of Sears Holdings Corporation (retail), Chief Executive Officer and Chairman of the Board of Sears, Roebuck and Co. (retail, 2000-2005) and Chairman (2014-2017) and a member of the Board (2010-2017) of Dave & Buster’s Entertainment, Inc. (restaurant and entertainment complexes). Mr. Lacy currently serves as a member of the Board of Bristol-Myers Squibb Company (global pharmaceuticals, 2008-present), Trustee of the California Chapter of The Nature Conservancy (2015-present) and a member of the Board of the Center for Advanced Study in the Behavioral Sciences at Stanford University (2015-present).
Ned C. Lautenbach (1944)
Year of Election or Appointment: 2018
Trustee
Chairman of the Independent Trustees
Mr. Lautenbach also serves as Trustee of other Fidelity® funds. Mr. Lautenbach currently serves as Chair of the Board of Governors, State University System of Florida (2013-present) and is a member of the Council on Foreign Relations (1994-present). He is also a member and has in the past served as Chairman of the Board of Directors of Artis-Naples (2012-present). Previously, Mr. Lautenbach served as a member and then Lead Director of the Board of Directors of Eaton Corporation (diversified industrial, 1997-2016). He was also a Partner at Clayton, Dubilier & Rice, LLC (private equity investment, 1998-2010); as well as Director of Sony Corporation (2006-2007). In addition, Mr. Lautenbach had a 30-year career with IBM (technology company), during which time he served as Senior Vice President and as a member of the Corporate Executive Committee (1968-1998).
Joseph Mauriello (1944)
Year of Election or Appointment: 2018
Trustee
Mr. Mauriello also serves as Trustee of other Fidelity® funds. Prior to his retirement in January 2006, Mr. Mauriello served in numerous senior management positions including Deputy Chairman and Chief Operating Officer (2004-2005), and Vice Chairman of Financial Services (2002-2004) of KPMG LLP US (professional services, 1965-2005). Mr. Mauriello currently serves as a member of the Independent Directors Council Governing Council (2015-present). Previously, Mr. Mauriello served as a member of the Board of XL Group plc. (global insurance and re-insurance, 2006-2018).
Cornelia M. Small (1944)
Year of Election or Appointment: 2018
Trustee
Ms. Small also serves as Trustee of other Fidelity® funds. Previously, Ms. Small served as Chief Investment Officer, Director of Global Equity Investments and a member of Scudder, Stevens & Clark and Scudder Kemper Investments. Ms. Small previously served as a member of the Board (2009-2019) and Chair of the Investment Committee (2010-2019) of the Teagle Foundation and a member of the Investment Committee of the Berkshire Taconic Community Foundation (2008-2019).
Garnett A. Smith (1947)
Year of Election or Appointment: 2013
Trustee
Mr. Smith also serves as Trustee of other Fidelity® funds. Prior to his retirement, Mr. Smith served as Chairman and Chief Executive Officer (1990-1997) and President (1986-1990) of Inbrand Corp. (manufacturer of personal absorbent products). Prior to his employment with Inbrand Corp., he was employed by a retail fabric chain and North Carolina National Bank (now Bank of America). Mr. Smith previously served as a member of the Advisory Board of certain Fidelity® funds (2012-2013).
David M. Thomas (1949)
Year of Election or Appointment: 2018
Trustee
Mr. Thomas also serves as Trustee of other Fidelity® funds. Previously, Mr. Thomas served as Executive Chairman (2005-2006) and Chairman and Chief Executive Officer (2000-2005) of IMS Health, Inc. (pharmaceutical and healthcare information solutions). Mr. Thomas currently serves as Non-Executive Chairman of the Board of Fortune Brands Home and Security (home and security products, 2011-present), and a member of the Board (2004-present) and Presiding Director (2013-present) of Interpublic Group of Companies, Inc. (marketing communication).
Michael E. Wiley (1950)
Year of Election or Appointment: 2008
Trustee
Mr. Wiley also serves as Trustee or a member of the Advisory Board of other Fidelity® funds. Previously, Mr. Wiley served as Chairman, President and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004). Mr. Wiley currently serves as a member of the Board of High Point Resources (exploration and production, 2005-present). Previously, Mr. Wiley served as a member of the Board of Andeavor Corporation (independent oil refiner and marketer, 2005-2018) and a member of the Board of Andeavor Logistics LP (natural resources logistics, 2015-2018).
+ The information includes the Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to the Trustee's qualifications to serve as a Trustee, which led to the conclusion that the Trustee should serve as a Trustee for the fund.
Advisory Board Members and Officers:
Correspondence intended for a Member of the Advisory Board (if any) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235. Correspondence intended for an officer or Peter S. Lynch may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210. Officers appear below in alphabetical order.
Name, Year of Birth; Principal Occupation
Vicki L. Fuller (1957)
Year of Election or Appointment: 2018
Member of the Advisory Board
Ms. Fuller also serves as a member of the Advisory Board of other Fidelity® funds. Previously, Ms. Fuller served as Chief Investment Officer of the New York State Common Retirement Fund (2012-2018) and held a variety of positions at AllianceBernstein L.P. (global asset management, 1985-2012), including Managing Director (2006-2012) and Senior Vice President and Senior Portfolio Manager (2001-2006). Ms. Fuller currently serves as a member of the Board, Audit Committee and Nominating and Governance Committee of The Williams Companies, Inc. (natural gas infrastructure, 2018-present) and as a member of the Board of Treliant, LLC (consulting, 2019-present).
Patricia L. Kampling (1959)
Year of Election or Appointment: 2020
Member of the Advisory Board
Ms. Kampling also serves as Member of the Advisory Board of other Fidelity® funds. Prior to her retirement, Ms. Kampling served as Chairman of the Board and Chief Executive Officer (2012-2019), President and Chief Operating Officer (2011-2012) and Executive Vice President and Chief Financial Officer (2010-2011) of Alliant Energy Corporation. Ms. Kampling currently serves as a member of the Board, Compensation Committee and Executive Committee and as Chair of the Audit Committee of Briggs & Stratton Corporation (manufacturing, 2011-present) and as a member of the Board, Audit, Finance and Risk Committee and Safety, Environmental, Technology and Operations Committee of American Water Works Company, Inc. (utilities company, 2019-present). In addition, Ms. Kampling currently serves as a member of the Board of the Nature Conservancy, Wisconsin Chapter (2019-present). Previously, Ms. Kampling served as a member of the Board of Interstate Power and Light Company (2012-2019) and Wisconsin Power and Light Company (2012-2019) (each a subsidiary of Alliant Energy Corporation) and as a member of the Board and Workforce Development Committee of the Business Roundtable (2018-2019).
Peter S. Lynch (1944)
Year of Election or Appointment: 2018
Member of the Advisory Board
Mr. Lynch also serves as Member of the Advisory Board of other Fidelity® funds. Mr. Lynch is Vice Chairman and a Director of Fidelity Management & Research Company LLC (investment adviser firm). In addition, Mr. Lynch serves as a Trustee of Boston College and as the Chairman of the Inner-City Scholarship Fund. Previously, Mr. Lynch served as Vice Chairman and a Director of FMR Co., Inc. (investment adviser firm) and on the Special Olympics International Board of Directors (1997-2006).
Susan Tomasky (1953)
Year of Election or Appointment: 2020
Member of the Advisory Board
Ms. Tomasky also serves as Member of the Advisory Board of other Fidelity® funds. Prior to her retirement, Ms. Tomasky served in various executive officer positions at American Electric Power Company, Inc. (1998-2011), including most recently as President of AEP Transmission (2007-2011). Ms. Tomasky currently serves as a member of the Board and Sustainability Committee and as Chair of the Audit Committee of Marathon Petroleum Corporation (2018-present) and as a member of the Board, Corporate Governance Committee and Organization and Compensation Committee and as Chair of the Audit Committee of Public Service Enterprise Group, Inc. (utilities company, 2012-present). In addition, Ms. Tomasky currently serves as a member of the Board of the Columbus Regional Airport Authority (2007-present), as a member of the Board of the Royal Shakespeare Company – America (2009-present), as a member of the Board of the Columbus Association for the Performing Arts (2011-present) and as a member of the Board of Kenyon College (2016-present). Previously, Ms. Tomasky served as a member of the Board (2011-2019) and as Lead Independent Director (2015-2018) of Andeavor Corporation (previously Tesoro Corporation) (independent oil refiner and marketer) and as a member of the Board of Summit Midstream Partners LP (energy, 2012-2018).
Elizabeth Paige Baumann (1968)
Year of Election or Appointment: 2017
Anti-Money Laundering (AML) Officer
Ms. Baumann also serves as AML Officer of other funds. She is Chief AML Officer (2012-present) and Senior Vice President (2014-present) of FMR LLC (diversified financial services company) and is an employee of Fidelity Investments. Previously, Ms. Baumann served as AML Officer of certain funds (2017-2019), as AML Officer of the funds (2012-2016), and Vice President (2007-2014) and Deputy Anti-Money Laundering Officer (2007-2012) of FMR LLC.
Craig S. Brown (1977)
Year of Election or Appointment: 2019
Assistant Treasurer
Mr. Brown also serves as Assistant Treasurer of other funds. Mr. Brown is an employee of Fidelity Investments (2013-present).
John J. Burke III (1964)
Year of Election or Appointment: 2018
Chief Financial Officer
Mr. Burke also serves as Chief Financial Officer of other funds. Mr. Burke serves as Head of Investment Operations for Fidelity Fund and Investment Operations (2018-present) and is an employee of Fidelity Investments (1998-present). Previously Mr. Burke served as head of Asset Management Investment Operations (2012-2018).
William C. Coffey (1969)
Year of Election or Appointment: 2019
Assistant Secretary
Mr. Coffey also serves as Assistant Secretary of other funds. He is Senior Vice President and Deputy General Counsel of FMR LLC (diversified financial services company, 2010-present), and is an employee of Fidelity Investments. Previously, Mr. Coffey served as Secretary and CLO of certain funds (2018-2019); CLO, Secretary, and Senior Vice President of Fidelity Management & Research Company and FMR Co., Inc. (investment adviser firms, 2018-2019); Secretary of Fidelity SelectCo, LLC and Fidelity Investments Money Management, Inc. (investment adviser firms, 2018-2019); CLO of Fidelity Management & Research (Hong Kong) Limited, FMR Investment Management (UK) Limited, and Fidelity Management & Research (Japan) Limited (investment adviser firms, 2018-2019); and Assistant Secretary of certain funds (2009-2018).
Timothy M. Cohen (1969)
Year of Election or Appointment: 2018
Vice President
Mr. Cohen also serves as Vice President of other funds. Mr. Cohen serves as Co-Head of Equity (2018-present), a Director of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2016-present), and is an employee of Fidelity Investments. Previously, Mr. Cohen served as Executive Vice President of Fidelity SelectCo, LLC (2019), Head of Global Equity Research (2016-2018), Chief Investment Officer - Equity and a Director of Fidelity Management & Research (U.K.) Inc. (investment adviser firm, 2013-2015) and as a Director of Fidelity Management & Research (Hong Kong) Limited (investment adviser firm, 2017).
Jonathan Davis (1968)
Year of Election or Appointment: 2010
Assistant Treasurer
Mr. Davis also serves as Assistant Treasurer of other funds. Mr. Davis serves as Assistant Treasurer of FMR Capital, Inc. (2017-present) and is an employee of Fidelity Investments. Previously, Mr. Davis served as Vice President and Associate General Counsel of FMR LLC (diversified financial services company, 2003-2010).
Laura M. Del Prato (1964)
Year of Election or Appointment: 2018
Assistant Treasurer
Ms. Del Prato also serves as an officer of other funds. Ms. Del Prato is an employee of Fidelity Investments (2017-present). Prior to joining Fidelity Investments, Ms. Del Prato served as a Managing Director and Treasurer of the JPMorgan Mutual Funds (2014-2017). Prior to JPMorgan, Ms. Del Prato served as a partner at Cohen Fund Audit Services (accounting firm, 2012-2013) and KPMG LLP (accounting firm, 2004-2012).
Colm A. Hogan (1973)
Year of Election or Appointment: 2020
Assistant Treasurer
Mr. Hogan also serves as an officer of other funds. Mr. Hogan serves as Assistant Treasurer of FMR Capital, Inc. (2017-present) and is an employee of Fidelity Investments (2005-present). Previously, Mr. Hogan served as Deputy Treasurer of certain Fidelity® funds (2016-2020) and Assistant Treasurer of certain Fidelity® funds (2016-2018).
Pamela R. Holding (1964)
Year of Election or Appointment: 2018
Vice President
Ms. Holding also serves as Vice President of other funds. Ms. Holding serves as Co-Head of Equity (2018-present) and is an employee of Fidelity Investments (2013-present). Previously, Ms. Holding served as Executive Vice President of Fidelity SelectCo, LLC (2019) and as Chief Investment Officer of Fidelity Institutional Asset Management (2013-2018).
Cynthia Lo Bessette (1969)
Year of Election or Appointment: 2019
Secretary and Chief Legal Officer (CLO)
Ms. Lo Bessette also serves as an officer of other funds. Ms. Lo Bessette serves as CLO, Secretary, and Senior Vice President of Fidelity Management & Research Company LLC (investment adviser firm, 2019-present); and CLO of Fidelity Management & Research (Hong Kong) Limited, FMR Investment Management (UK) Limited, and Fidelity Management & Research (Japan) Limited (investment adviser firms, 2019-present). She is a Senior Vice President and Deputy General Counsel of FMR LLC (diversified financial services company, 2019-present), and is an employee of Fidelity Investments. Previously, Ms. Lo Bessette served as CLO, Secretary, and Senior Vice President of FMR Co., Inc. (investment adviser firm, 2019); Secretary of Fidelity SelectCo, LLC and Fidelity Investments Money Management, Inc. (investment adviser firms, 2019). Prior to joining Fidelity Investments, Ms. Lo Bessette was Executive Vice President, General Counsel (2016-2019) and Senior Vice President, Deputy General Counsel (2015-2016) of OppenheimerFunds (investment management company) and Deputy Chief Legal Officer (2013-2015) of Jennison Associates LLC (investment adviser firm).
Chris Maher (1972)
Year of Election or Appointment: 2020
Deputy Treasurer
Mr. Maher also serves as an officer of other funds. Mr. Maher serves as Assistant Treasurer of FMR Capital, Inc. (2017-present), and is an employee of Fidelity Investments (2008-present). Previously, Mr. Maher served as Assistant Treasurer of certain funds (2013-2020); Vice President of Asset Management Compliance (2013), Vice President of the Program Management Group of FMR (investment adviser firm, 2010-2013), and Vice President of Valuation Oversight (2008-2010).
Kenneth B. Robins (1969)
Year of Election or Appointment: 2018
Chief Compliance Officer
Mr. Robins also serves as an officer of other funds. Mr. Robins serves as Compliance Officer of Fidelity Management & Research Company LLC (investment adviser firm, 2016-present) and is an employee of Fidelity Investments (2004-present). Previously, Mr. Robins served as Compliance Officer of FMR Co., Inc. (investment adviser firm, 2016-2019), as Executive Vice President of Fidelity Investments Money Management, Inc. (investment adviser firm, 2013-2016) and served in other fund officer roles.
Stacie M. Smith (1974)
Year of Election or Appointment: 2018
President and Treasurer
Ms. Smith also serves as an officer of other funds. Ms. Smith serves as Assistant Treasurer of FMR Capital, Inc. (2017-present), is an employee of Fidelity Investments (2009-present), and has served in other fund officer roles. Prior to joining Fidelity Investments, Ms. Smith served as Senior Audit Manager of Ernst & Young LLP (accounting firm, 1996-2009). Previously, Ms. Smith served as Assistant Treasurer (2013-2019) and Deputy Treasurer (2013-2016) of certain Fidelity® funds.
Marc L. Spector (1972)
Year of Election or Appointment: 2017
Assistant Treasurer
Mr. Spector also serves as an officer of other funds. Mr. Spector serves as Assistant Treasurer of FMR Capital, Inc. (2017-present) and is an employee of Fidelity Investments (2016-present). Prior to joining Fidelity Investments, Mr. Spector served as Director at the Siegfried Group (accounting firm, 2013-2016), and prior to Siegfried Group as audit senior manager at Deloitte & Touche LLP (accounting firm, 2005-2013).
Jim Wegmann (1979)
Year of Election or Appointment: 2019
Assistant Treasurer
Mr. Wegmann also serves as Assistant Treasurer of other funds. Mr. Wegmann is an employee of Fidelity Investments (2011-present).
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including and (2) ongoing costs, including management fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (September 1, 2019 to February 29, 2020).
Actual Expenses
The first line of the accompanying table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Annualized Expense Ratio-A | Beginning Account Value September 1, 2019 | Ending Account Value February 29, 2020 | Expenses Paid During Period-B September 1, 2019 to February 29, 2020 |
|
| Actual | .74% | $1,000.00 | $999.20 | $3.68 |
| Hypothetical-C | $1,000.00 | $1,021.18 | $3.72 |
A Annualized expense ratio reflects expenses net of applicable fee waivers.
B Expenses are equal to the Fund's annualized expense ratio, multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
C 5% return per year before expenses
Distributions (Unaudited)
The Board of Trustees of Utilities Portfolio voted to pay on April 9, 2020, to shareholders of record at the opening of business on April 8, 2020, a distribution of $2.339 per share derived from capital gains realized from sales of portfolio securities and a dividend of $0.157 per share from net investment income.
The fund hereby designates as a capital gain dividend with respect to the taxable year ended February 29, 2020, $37,655,107, or, if subsequently determined to be different, the net capital gain of such year.
The fund designates 100% of the dividend distributed during the fiscal year as qualifying for the dividends–received deduction for corporate shareholders.
The fund designates 100% of the dividend distributed during the fiscal year as amounts which may be taken into account as a dividend for the purposes of the maximum rate under section 1(h)(11) of the Internal Revenue Code.
The fund will notify shareholders in January 2021 of amounts for use in preparing 2020 income tax returns.
Board Approval of Investment Advisory Contracts and Management Fees
Utilities Portfolio
Each year, the Board of Trustees, including the Independent Trustees (together, the Board), votes on the renewal of the management contract with Fidelity Management & Research Company LLC (FMR) and the sub-advisory agreements (together, the Advisory Contracts) for the fund. FMR and the sub-advisers are referred to herein as the Investment Advisers. The Board, assisted by the advice of fund counsel and Independent Trustees' counsel, requests and considers a broad range of information relevant to the renewal of the Advisory Contracts throughout the year.Approval of Amended and Restated Advisory Contracts. At its November 2019 meeting, the Board unanimously determined to approve an amended and restated management contract and sub-advisory agreements (Amended and Restated Contracts) for a stub period of January 1, 2020 through January 31, 2020 in connection with a consolidation of certain of Fidelity's advisory businesses. The Board considered that, on or about January 1, 2020, FMR Co., Inc. (FMRC) and Fidelity SelectCo, LLC (SelectCo) expected to merge with and into FMR and, after the merger, FMR expected to redomicile as a Delaware limited liability company. The Board also approved the termination of the sub-advisory agreement with FMRC upon the completion of the merger. The Board noted that the Amended and Restated Contracts will reflect the replacement of SelectCo with FMR and will take effect upon the completion of the merger. The Board noted that references to FMR in the Amended and Restated Contracts would be updated to reflect FMR's new form of organization and domicile and considered that the definition of "group assets" for purposes of the fund's group fee would be modified to avoid double-counting assets once the reorganization is complete. The Board also noted Fidelity's assurance that neither the planned consolidation nor the Amended and Restated Contracts will change the investment processes, the level or nature of services provided, the resources and personnel allocated, trading and compliance operations, or any fees paid by the fund.The Board meets regularly and, at each of its meetings, covers an extensive agenda of topics and materials and considers factors that are relevant to its annual consideration of the renewal of the fund's Advisory Contracts, including the services and support provided to the fund and its shareholders. The Board has established various standing committees (Committees), each composed of and chaired by Independent Trustees with varying backgrounds, to which the Board has assigned specific subject matter responsibilities in order to enhance effective decision-making by the Board. The Board, acting directly and through its Committees, requests and receives information concerning the annual consideration of the renewal of the fund's Advisory Contracts. The Board also meets as needed to review matters specifically related to the Board's annual consideration of the renewal of the Advisory Contracts. Members of the Board may also meet with trustees of other Fidelity funds through joint ad hoc committees to discuss certain matters relevant to all of the Fidelity funds.At its January 2020 meeting, the Board unanimously determined to renew the fund's Advisory Contracts. In reaching its determination, the Board considered all factors it believed relevant, including (i) the nature, extent, and quality of the services provided to the fund and its shareholders (including the investment performance of the fund); (ii) the competitiveness of the fund's management fee and total expense ratio relative to peer funds; (iii) the total costs of the services provided by and the profits realized by Fidelity from its relationships with the fund; and (iv) the extent to which, if any, economies of scale exist and are realized as the fund grows, and whether any economies of scale are appropriately shared with fund shareholders.In considering whether to renew the Advisory Contracts for the fund, the Board reached a determination, with the assistance of fund counsel and Independent Trustees' counsel and through the exercise of its business judgment, that the renewal of the Advisory Contracts was in the best interests of the fund and its shareholders and that the compensation payable under the Advisory Contracts was fair and reasonable. The Board's decision to renew the Advisory Contracts was not based on any single factor, but rather was based on a comprehensive consideration of all the information provided to the Board at its meetings throughout the year. The Board, in reaching its determination to renew the Advisory Contracts, was aware that shareholders of the fund have a broad range of investment choices available to them, including a wide choice among funds offered by Fidelity's competitors, and that the fund's shareholders, who have the opportunity to review and weigh the disclosure provided by the fund in its prospectus and other public disclosures, have chosen to invest in this fund, which is part of the Fidelity family of funds. Nature, Extent, and Quality of Services Provided. The Board considered Fidelity's staffing as it relates to the fund, including the backgrounds of investment personnel of Fidelity, and also considered the fund's investment objective, strategies, and related investment philosophy. The Independent Trustees also had discussions with senior management of Fidelity's investment operations and investment groups. The Board considered the structure of the investment personnel compensation program and whether this structure provides appropriate incentives to act in the best interests of the fund. Additionally, the Board considered the portfolio managers' investments, if any, in the funds that they manage. Resources Dedicated to Investment Management and Support Services. The Board and the Fund Oversight and Research Committees reviewed the general qualifications and capabilities of Fidelity's investment staff, including its size, education, experience, and resources, as well as Fidelity's approach to recruiting, training, managing, and compensating investment personnel. The Board noted that Fidelity has continued to increase the resources devoted to non-U.S. offices, including expansion of Fidelity's global investment organization. The Board also noted that Fidelity's analysts have extensive resources, tools and capabilities that allow them to conduct sophisticated quantitative and fundamental analysis, as well as credit analysis of issuers, counterparties and guarantors. Further, the Board considered that Fidelity's investment professionals have sufficient access to global information and data so as to provide competitive investment results over time, and that those professionals also have access to sophisticated tools that permit them to assess portfolio construction and risk and performance attribution characteristics continuously, as well as to transmit new information and research conclusions rapidly around the world. Additionally, in its deliberations, the Board considered Fidelity's trading, risk management, compliance, and technology and operations capabilities and resources, which are integral parts of the investment management process. Shareholder and Administrative Services. The Board considered (i) the nature, extent, quality, and cost of advisory, administrative, and shareholder services performed by the Investment Advisers and their affiliates under the Advisory Contracts and under separate agreements covering transfer agency, pricing and bookkeeping, and securities lending services for the fund; (ii) the nature and extent of the supervision of third party service providers, principally custodians, subcustodians, and pricing vendors; and (iii) the resources devoted to, and the record of compliance with, the fund's compliance policies and procedures. The Board also reviewed the allocation of fund brokerage, including allocations to brokers affiliated with the Investment Advisers, the use of brokerage commissions to pay fund expenses, and the use of "soft" commission dollars to pay for research services.The Board noted that the growth of fund assets over time across the complex allows Fidelity to reinvest in the development of services designed to enhance the value and convenience of the Fidelity funds as investment vehicles. These services include 24-hour access to account information and market information over the Internet and through telephone representatives, investor education materials and asset allocation tools, and the expanded availability of Fidelity Investor Centers.The Board noted that it and the boards of certain other Fidelity funds had formed an ad hoc Committee on Transfer Agency Fees to review the variety of transfer agency fee structures throughout the industry and Fidelity's competitive positioning with respect to industry participants. Investment in a Large Fund Family. The Board considered the benefits to shareholders of investing in a Fidelity fund, including the benefits of investing in a fund that is part of a large family of funds offering a variety of investment disciplines and providing a large variety of mutual fund investor services. The Board noted that Fidelity had taken, or had made recommendations that resulted in the Fidelity funds taking, a number of actions over the previous year that benefited particular funds, including: (i) continuing to dedicate additional resources to Fidelity's investment research process, which includes meetings with management of issuers of securities in which the funds invest, and to the support of the senior management team that oversees asset management; (ii) continuing efforts to enhance Fidelity's global research capabilities; (iii) launching new funds and ETFs with innovative structures, strategies and pricing and making other enhancements to meet client needs; (iv) launching new share classes of existing funds; (v) eliminating purchase minimums and broadening eligibility requirements for certain funds and share classes; (vi) reducing management fees and total expenses for certain target date funds and index funds; (vii) lowering expense caps for certain existing funds and classes, and converting certain voluntary expense caps to contractual caps, to reduce expenses borne by shareholders; (viii) rationalizing product lines and gaining increased efficiencies from fund mergers, liquidations, and share class consolidations; (ix) continuing to develop, acquire and implement systems and technology to improve services to the funds and shareholders, strengthen information security, and increase efficiency; and (x) continuing to implement enhancements to further strengthen Fidelity's product line to increase investors' probability of success in achieving their investment goals, including retirement income goals. Investment Performance. The Board considered whether the fund has operated in accordance with its investment objective, as well as its record of compliance with its investment restrictions and its performance history.The Board took into account discussions that occur at Board meetings throughout the year with representatives of the Investment Advisers about fund investment performance. In this regard the Board noted that as part of regularly scheduled fund reviews and other reports to the Board on fund performance, the Board considers annualized return information for the fund for different time periods, measured against an appropriate securities market index (benchmark index). In its evaluation of fund investment performance, the Board gave particular attention to information indicating changes in performance of certain Fidelity funds for specific time periods and discussed with the Investment Advisers the reasons for any overperformance or underperformance.In addition to reviewing absolute and relative fund performance, the Independent Trustees periodically consider the appropriateness of fund performance metrics in evaluating the results achieved. In general, the Independent Trustees believe that fund performance should be evaluated based on net performance (after fees and expenses) of both the highest performing and lowest performing fund share classes, where applicable, compared to appropriate benchmark indices, over appropriate time periods that may include full market cycles, taking into account relevant factors including the following: general market conditions; issuer-specific information; and fund cash flows and other factors.The Independent Trustees recognize that shareholders evaluate performance on a net basis over their own holding periods, for which one-, three-, and five-year periods are often used as a proxy. For this reason, the performance information reviewed by the Board also included net cumulative total return information for the fund and an appropriate benchmark index for the most recent one-, three-, and five-year periods ended June 30, 2019, as shown below.Utilities Portfolio
Utilities Portfolio
Liquidity Risk Management Program
The Securities and Exchange Commission adopted Rule 22e-4 under the Investment Company Act of 1940 (the Liquidity Rule) to promote effective liquidity risk management throughout the open-end investment company industry, thereby reducing the risk that funds will be unable to meet their redemption obligations and mitigating dilution of the interests of fund shareholders.
The Fund has adopted and implemented a liquidity risk management program pursuant to the Liquidity Rule (the Program) effective December 1, 2018. The Program is reasonably designed to assess and manage the Fund’s liquidity risk and to comply with the requirements of the Liquidity Rule. The Fund’s Board of Trustees (the Board) has designated the Fund’s investment adviser as administrator of the Program. The Fidelity advisers have established a Liquidity Risk Management Committee (the LRM Committee) to manage the Program for each of the Fidelity Funds. The LRM Committee monitors the adequacy and effectiveness of implementation of the Program and on a periodic basis assesses each Fund’s liquidity risk based on a variety of factors including (1) the Fund’s investment strategy, (2) portfolio liquidity and cash flow projections during normal and reasonably foreseeable stressed conditions, (3) shareholder redemptions, (4) borrowings and other funding sources and (5) in the case of exchange-traded funds, certain additional factors including the effect of the Fund’s prices and spreads, market participants, and basket compositions on the overall liquidity of the Fund’s portfolio, as applicable.
In accordance with the Program, each of the Fund’s portfolio investments is classified into one of four liquidity categories described below based on a determination of a reasonable expectation for how long it would take to convert the investment to cash (or sell or dispose of the investment) without significantly changing its market value.
- Highly liquid investments – cash or convertible to cash within three business days or less
- Moderately liquid investments – convertible to cash in three to seven calendar days
- Less liquid investments – can be sold or disposed of, but not settled, within seven calendar days
- Illiquid investments – cannot not be sold or disposed of within seven calendar days
Liquidity classification determinations take into account a variety of factors including various market, trading and investment-specific considerations, as well as market depth, and generally utilize analysis from a third-party liquidity metrics service.
The Liquidity Rule places a 15% limit on a fund’s illiquid investments and requires funds that do not primarily hold assets that are highly liquid investments to determine and maintain a minimum percentage of the fund’s net assets to be invested in highly liquid investments (highly liquid investment minimum or HLIM). The Program includes provisions reasonably designed to comply with the 15% limit on illiquid investments and for determining, periodically reviewing and complying with the HLIM requirement as applicable.
At a recent meeting of the Fund’s Board of Trustees, the LRM Committee provided a written report to the Board pertaining to the operation, adequacy, and effectiveness of implementation of the Program for the annual period from December 1, 2018 through November 30, 2019. The report concluded that the Program has been implemented and is operating effectively and is reasonably designed to assess and manage the Fund’s liquidity risk.
SELUTL-ANN-0420
1.813626.115
Item 2.
Code of Ethics
As of the end of the period, February 29, 2020, Fidelity Select Portfolios (the trust) has adopted a code of ethics, as defined in Item 2 of Form N-CSR, that applies to its President and Treasurer and its Chief Financial Officer. A copy of the code of ethics is filed as an exhibit to this Form N-CSR.
Item 3.
Audit Committee Financial Expert
The Board of Trustees of the trust has determined that Joseph Mauriello is an audit committee financial expert, as defined in Item 3 of Form N-CSR. Mr. Mauriello is independent for purposes of Item 3 of Form N-CSR.
Item 4.
Principal Accountant Fees and Services
Fees and Services
Fees and Services
The following table presents fees billed by PricewaterhouseCoopers LLP (“PwC”) in each of the last two fiscal years for services rendered to Air Transportation Portfolio, Automotive Portfolio, Banking Portfolio, Biotechnology Portfolio, Brokerage and Investment Management Portfolio, Chemicals Portfolio, Communication Services Portfolio, Communications Equipment Portfolio, Computers Portfolio, Construction and Housing Portfolio, Consumer Discretionary Portfolio, Consumer Finance Portfolio, Consumer Staples Portfolio, Defense and Aerospace Portfolio, Energy Portfolio, Energy Service Portfolio, Environment and Alternative Energy Portfolio, Financial Services Portfolio, Gold Portfolio, Health Care Portfolio, Health Care Services Portfolio, Industrials Portfolio, Insurance Portfolio, IT Services Portfolio, Leisure Portfolio, Materials Portfolio, Medical Technology and Devices Portfolio, Natural Gas Portfolio, Natural Resources Portfolio, Pharmaceuticals Portfolio, Retailing Portfolio, Semiconductors Portfolio, Software and IT Services Portfolio, Technology Portfolio, Telecommunications Portfolio, Transportation Portfolio, Utilities Portfolio and Wireless Portfolio (the “Funds”):
Services Billed by PwC
February 29, 2020 FeesA
| | Audit Fees | Audit-Related Fees | Tax Fees | All Other Fees |
| Air Transportation Portfolio | $32,000 | $2,700 | $2,600 | $1,200 |
| Automotive Portfolio | $31,800 | $2,700 | $2,600 | $1,200 |
| Banking Portfolio | $31,800 | $2,700 | $2,800 | $1,200 |
| Biotechnology Portfolio | $62,900 | $5,200 | $16,800 | $2,200 |
| Brokerage and Investment Management Portfolio | $32,000 | $2,700 | $2,800 | $1,200 |
| Chemicals Portfolio | $32,900 | $2,700 | $2,800 | $1,100 |
| Communication Services Portfolio | $37,200 | $3,100 | $2,600 | $1,300 |
| Communications Equipment Portfolio | $32,000 | $2,700 | $2,600 | $1,200 |
| Computers Portfolio | $32,500 | $2,800 | $2,600 | $1,200 |
| Construction and Housing Portfolio | $31,300 | $2,700 | $2,600 | $1,100 |
| Consumer Discretionary Portfolio | $36,500 | $2,700 | $2,800 | $1,100 |
| Consumer Finance Portfolio | $32,000 | $2,700 | $3,600 | $1,200 |
| Consumer Staples Portfolio | $39,800 | $3,200 | $2,600 | $1,300 |
| Defense and Aerospace Portfolio | $32,000 | $2,700 | $2,600 | $1,200 |
| Energy Portfolio | $37,500 | $2,800 | $3,800 | $1,200 |
| Energy Service Portfolio | $33,200 | $2,800 | $3,000 | $1,200 |
| Environment and Alternative Energy Portfolio | $31,500 | $2,700 | $2,600 | $1,100 |
| Financial Services Portfolio | $37,500 | $2,800 | $2,600 | $1,200 |
| Gold Portfolio | $55,500 | $4,900 | $6,900 | $2,100 |
| Health Care Portfolio | $48,400 | $3,100 | $2,600 | $1,300 |
| Health Care Services Portfolio | $31,800 | $2,700 | $2,600 | $1,200 |
| Industrials Portfolio | $36,500 | $2,700 | $2,600 | $1,100 |
| Insurance Portfolio | $32,000 | $2,700 | $2,800 | $1,200 |
| IT Services Portfolio | $32,300 | $2,800 | $2,600 | $1,200 |
| Leisure Portfolio | $32,000 | $2,700 | $2,800 | $1,200 |
| Materials Portfolio | $39,800 | $3,200 | $3,700 | $1,300 |
| Medical Technology and Devices Portfolio | $31,800 | $2,700 | $2,600 | $1,200 |
| Natural Gas Portfolio | $31,600 | $2,700 | $2,800 | $1,100 |
| Natural Resources Portfolio | $31,100 | $2,700 | $3,000 | $1,100 |
| Pharmaceuticals Portfolio | $32,200 | $2,700 | $2,600 | $1,100 |
| Retailing Portfolio | $32,000 | $2,700 | $2,800 | $1,200 |
| Semiconductors Portfolio | $32,300 | $2,800 | $2,600 | $1,200 |
| Software and IT Services Portfolio | $31,300 | $2,700 | $3,400 | $1,100 |
| Technology Portfolio | $40,700 | $3,000 | $2,600 | $1,300 |
| Telecommunications Portfolio | $40,000 | $3,100 | $2,600 | $1,300 |
| Transportation Portfolio | $31,800 | $2,700 | $2,600 | $1,200 |
| Utilities Portfolio | $37,000 | $2,700 | $3,400 | $1,200 |
| Wireless Portfolio | $31,100 | $2,700 | $2,600 | $1,100 |
February 28, 2019 FeesA
| | Audit Fees | Audit-Related Fees | Tax Fees | All Other Fees |
| Air Transportation Portfolio | $34,000 | $2,800 | $2,600 | $1,400 |
| Automotive Portfolio | $34,000 | $2,800 | $2,600 | $1,400 |
| Banking Portfolio | $34,000 | $2,800 | $3,700 | $1,400 |
| Biotechnology Portfolio | $65,000 | $5,300 | $32,800 | $2,600 |
| Brokerage and Investment Management Portfolio | $34,000 | $2,800 | $3,400 | $1,400 |
| Chemicals Portfolio | $33,000 | $2,800 | $2,800 | $1,400 |
| Communication Services Portfolio | $41,000 | $2,900 | $2,600 | $1,400 |
| Communications Equipment Portfolio | $34,000 | $2,800 | $2,600 | $1,400 |
| Computers Portfolio | $34,000 | $2,900 | $3,500 | $1,400 |
| Construction and Housing Portfolio | $33,000 | $2,800 | $2,600 | $1,300 |
| Consumer Discretionary Portfolio | $36,000 | $2,800 | $2,600 | $1,400 |
| Consumer Finance Portfolio | $35,000 | $2,800 | $2,600 | $1,400 |
| Consumer Staples Portfolio | $43,000 | $3,200 | $2,600 | $1,500 |
| Defense and Aerospace Portfolio | $34,000 | $2,800 | $2,600 | $1,400 |
| Energy Portfolio | $37,000 | $2,900 | $3,000 | $1,400 |
| Energy Service Portfolio | $34,000 | $2,900 | $3,000 | $1,400 |
| Environment and Alternative Energy Portfolio | $33,000 | $2,800 | $2,600 | $1,400 |
| Financial Services Portfolio | $37,000 | $2,900 | $2,600 | $1,400 |
| Gold Portfolio | $59,000 | $4,900 | $6,900 | $2,400 |
| Health Care Portfolio | $40,000 | $3,100 | $2,600 | $1,500 |
| Health Care Services Portfolio | $34,000 | $2,800 | $2,600 | $1,400 |
| Industrials Portfolio | $38,000 | $2,800 | $2,600 | $1,400 |
| Insurance Portfolio | $34,000 | $2,800 | $3,700 | $1,400 |
| IT Services Portfolio | $34,000 | $2,800 | $2,600 | $1,400 |
| Leisure Portfolio | $34,000 | $2,800 | $2,800 | $1,400 |
| Materials Portfolio | $44,000 | $3,200 | $2,600 | $1,500 |
| Medical Technology and Devices Portfolio | $34,000 | $2,800 | $2,600 | $1,400 |
| Natural Gas Portfolio | $33,000 | $2,800 | $2,800 | $1,400 |
| Natural Resources Portfolio | $33,000 | $2,700 | $2,800 | $1,300 |
| Pharmaceuticals Portfolio | $33,000 | $2,800 | $2,600 | $1,400 |
| Retailing Portfolio | $34,000 | $2,800 | $2,600 | $1,400 |
| Semiconductors Portfolio | $34,000 | $2,800 | $3,500 | $1,400 |
| Software and IT Services Portfolio | $33,000 | $2,800 | $2,600 | $1,300 |
| Technology Portfolio | $40,000 | $3,100 | $2,600 | $1,500 |
| Telecommunications Portfolio | $43,000 | $3,100 | $2,600 | $1,500 |
| Transportation Portfolio | $34,000 | $2,800 | $2,600 | $1,400 |
| Utilities Portfolio | $36,000 | $2,800 | $2,600 | $1,400 |
| Wireless Portfolio | $33,000 | $2,700 | $2,600 | $1,300 |
| | | | | |
A Amounts may reflect rounding.
The following table(s) present(s) fees billed by PwC that were required to be approved by the Audit Committee for services that relate directly to the operations and financial reporting of the Fund(s) and that are rendered on behalf of Fidelity Management & Research Company LLC (“FMR”) and entities controlling, controlled by, or under common control with FMR (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser) that provide ongoing services to the Fund(s) (“Fund Service Providers”):
Services Billed by PwC
| | February 29, 2020A | February 28, 2019A |
| Audit-Related Fees | $7,927,700 | $7,930,000 |
| Tax Fees | $28,000 | $15,000 |
| All Other Fees | $- | $- |
A Amounts may reflect rounding.
“Audit-Related Fees” represent fees billed for assurance and related services that are reasonably related to the performance of the fund audit or the review of the fund's financial statements and that are not reported under Audit Fees.
“Tax Fees” represent fees billed for tax compliance, tax advice or tax planning that relate directly to the operations and financial reporting of the fund.
“All Other Fees” represent fees billed for services provided to the fund or Fund Service Provider, a significant portion of which are assurance related, that relate directly to the operations and financial reporting of the fund, excluding those services that are reported under Audit Fees, Audit-Related Fees or Tax Fees.
Assurance services must be performed by an independent public accountant.
* * *
The aggregate non-audit fees billed by PwC for services rendered to the Fund(s), FMR (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any Fund Service Provider for each of the last two fiscal years of the Fund(s) are as follows:
| Billed By | February 29, 2020A | February 28, 2019A |
| PwC | $12,875,500 | $11,430,000 |
A Amounts may reflect rounding.
The trust's Audit Committee has considered non-audit services that were not pre-approved that were provided by PwC to Fund Service Providers to be compatible with maintaining the independence of PwC in its(their) audit of the Fund(s), taking into account representations from PwC, in accordance with Public Company Accounting Oversight Board rules, regarding its independence from the Fund(s) and its(their) related entities and FMR’s review of the appropriateness and permissibility under applicable law of such non-audit services prior to their provision to the Fund(s) Service Providers.
Audit Committee Pre-Approval Policies and Procedures
The trust’s Audit Committee must pre-approve all audit and non-audit services provided by a fund’s independent registered public accounting firm relating to the operations or financial reporting of the fund. Prior to the commencement of any audit or non-audit services to a fund, the Audit Committee reviews the services to determine whether they are appropriate and permissible under applicable law.
The Audit Committee has adopted policies and procedures to, among other purposes, provide a framework for the Committee’s consideration of non-audit services by the audit firms that audit the Fidelity funds. The policies and procedures require that any non-audit service provided by a fund audit firm to a Fidelity fund and any non-audit service provided by a fund auditor to a Fund Service Provider that relates directly to the operations and financial reporting of a Fidelity fund (“Covered Service”) are subject to approval by the Audit Committee before such service is provided.
All Covered Services must be approved in advance of provision of the service either: (i) by formal resolution of the Audit Committee, or (ii) by oral or written approval of the service by the Chair of the Audit Committee (or if the Chair is unavailable, such other member of the Audit Committee as may be designated by the Chair to act in the Chair’s absence). The approval contemplated by (ii) above is permitted where the Treasurer determines that action on such an engagement is necessary before the next meeting of the Audit Committee.
Non-audit services provided by a fund audit firm to a Fund Service Provider that do not relate directly to the operations and financial reporting of a Fidelity fund are reported to the Audit Committee periodically.
Non-Audit Services Approved Pursuant to Rule 2-01(c)(7)(i)(C) and (ii) of Regulation S-X (“De Minimis Exception”)
There were no non-audit services approved or required to be approved by the Audit Committee pursuant to the De Minimis Exception during the Fund’s(s’) last two fiscal years relating to services provided to (i) the Fund(s) or (ii) any Fund Service Provider that relate directly to the operations and financial reporting of the Fund(s).
Item 5.
Audit Committee of Listed Registrants
Not applicable.
Item 6.
Investments
(a)
Not applicable.
(b)
Not applicable.
Item 7.
Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies
Not applicable.
Item 8.
Portfolio Managers of Closed-End Management Investment Companies
Not applicable.
Item 9.
Purchase of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers
Not applicable.
Item 10.
Submission of Matters to a Vote of Security Holders
There were no material changes to the procedures by which shareholders may recommend nominees to the trust’s Board of Trustees.
Item 11.
Controls and Procedures
(a)(i) The President and Treasurer and the Chief Financial Officer have concluded that the trust’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act) provide reasonable assurances that material information relating to the trust is made known to them by the appropriate persons, based on their evaluation of these controls and procedures as of a date within 90 days of the filing date of this report.
(a)(ii) There was no change in the trust’s internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act) that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the trust’s internal control over financial reporting.
Item 12.
Disclosure of Securities Lending Activities for Closed-End Management
Investment Companies
Not applicable.
Item 13.
Exhibits
| (a) | (1) | Code of Ethics pursuant to Item 2 of Form N-CSR is filed and attached hereto as EX-99.CODE ETH. |
| (a) | (2) | |
| (a) | (3) | Not applicable. |
| (b) | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Fidelity Select Portfolios
| By: | /s/Stacie M. Smith |
| | Stacie M. Smith |
| | President and Treasurer |
| | |
| Date: | April 21, 2020 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| By: | /s/Stacie M. Smith |
| | Stacie M. Smith |
| | President and Treasurer |
| | |
| Date: | April 21, 2020 |
| By: | /s/John J. Burke III |
| | John J. Burke III |
| | Chief Financial Officer |
| | |
| Date: | April 21, 2020 |