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 811-3114
Fidelity Select Portfolios
(Exact name of registrant as specified in charter)
245 Summer St., Boston, Massachusetts 02210
(Address of principal executive offices) (Zip code)
Marc Bryant, 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 |
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Date of reporting period: | February 29, 2016 |
Item 1.
Reports to Stockholders
Fidelity® Select Portfolios® Banking Portfolio Brokerage and Investment Management Portfolio Consumer Finance Portfolio Financial Services Portfolio Insurance Portfolio Annual Report February 29, 2016 |
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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. © 2016 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-Q. Forms N-Q are available on the SEC’s web site at http://www.sec.gov. A fund's Forms N-Q 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.advisor.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.
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, 2016 | Past 1 year | Past 5 years | Past 10 years |
| Banking Portfolio | (12.57)% | 5.86% | (0.63)% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Banking Portfolio on February 28, 2006.
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 | ||
| $9,385 | Banking Portfolio | |
| $18,666 | S&P 500® Index | |
Banking Portfolio
Management's Discussion of Fund Performance
Market Recap: The S&P 500® index returned -6.19% for the year ending February 29, 2016. Largely range-bound for the first half of the period, U.S. stocks suffered a steep, late-summer decline on concern about an economic slowdown in China. The market recovered in October, lifted by the U.S. Federal Reserve’s decision to delay raising near-term interest rates until mid-December. Investors also drew courage from a rate cut in China and economic stimulus in Europe. But continued oil-price weakness and U.S.-dollar strength, plus fresh worries about China and the Middle East, pushed the S&P 500® to its worst January since 2009, followed by a volatile but ultimately flattish February. Overall, growth-oriented and larger-cap stocks fared better than value and smaller-cap complements. In this environment, the tech-heavy Nasdaq Composite Index® returned -7.07% for the 12 months; the Russell 2000® Index, -14.97%. Few sectors within the broad-market S&P 500® gained ground, with a wide gap separating leaders from laggards. Despite increased competition among wireless carriers, telecommunication services (+8%) led the way, followed by the more defensive utilities sector (+6%). Rising wages and low inflation buoyed consumer staples (+4%), less so consumer discretionary (0%). Meanwhile, energy (-24%) foundered amid commodity weakness that also hurt materials (-17%). The financials sector (-12%) struggled as well.Comments from Portfolio Manager John Sheehy: For the year, the fund returned -12.57%, considerably lagging the MSCI U.S. IMI Banks 25/50 Index, which returned -8.64%, as well as the S&P 500® index. Bank stocks suffered from considerable market volatility, a slowing U.S. economy and sharply lower commodity prices, all of which spurred fear that credit conditions might deteriorate and hamper banks’ profits. Versus the MSCI benchmark, stock selection was a noteworthy negative, especially in regional banks and diversified banks. An out-of-benchmark stake in consumer finance also hurt. At the stock level, our largest relative detractor by a wide margin was a sizable overweighting in CIT Group, a provider of financing and leasing, primarily to middle-market companies. The synergies expected from a recent acquisition were slow to appear, and the company’s economic sensitivity was a drawback in a period of slowing global growth. OneMain Holdings, a small out-of-benchmark position in consumer finance, also worked against us, as did asset manager Blackstone Group, another out-of-benchmark holding. Regions Financial and SunTrust Banks – both top-10 holdings at period end – are two regional banks based in the southern United States that were hurt by their energy exposure. Conversely, the fund’s top relative contributor was Commerce Bancshares, a Kansas City-based regional bank that I liked for its high-quality management, as well as its steady earnings and dividend growth. Another contributor in this category – smaller, high-quality regional banks – was Camden National, headquartered in Maine. Timely positioning in Wilshire Bancorp, a Korean-American bank based in California, also helped.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, 2016
| % of fund's net assets | % of fund's net assets 6 months ago | |
| Wells Fargo & Co. | 11.0 | 11.3 |
| U.S. Bancorp | 8.0 | 7.4 |
| Bank of America Corp. | 5.3 | 5.9 |
| JPMorgan Chase & Co. | 5.1 | 5.1 |
| Citigroup, Inc. | 5.0 | 5.1 |
| SunTrust Banks, Inc. | 4.9 | 5.0 |
| M&T Bank Corp. | 4.3 | 3.1 |
| Capital One Financial Corp. | 3.8 | 4.0 |
| Regions Financial Corp. | 3.7 | 4.2 |
| Huntington Bancshares, Inc. | 3.4 | 2.3 |
| 54.5 |
Top Industries (% of fund's net assets)
| As of February 29, 2016 | ||
| Banks | 84.5% | |
| Consumer Finance | 7.5% | |
| Capital Markets | 2.2% | |
| Thrifts & Mortgage Finance | 1.6% | |
| Insurance | 1.1% | |
| All Others* | 3.1% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
| As of August 31, 2015 | ||
| Banks | 82.7% | |
| Consumer Finance | 8.3% | |
| Thrifts & Mortgage Finance | 3.6% | |
| Trading Companies & Distributors | 1.5% | |
| Capital Markets | 1.3% | |
| All Others* | 2.6% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
Banking Portfolio
Investments February 29, 2016
Showing Percentage of Net Assets
| Common Stocks - 98.1% | |||
| Shares | Value | ||
| Banks - 84.1% | |||
| Diversified Banks - 37.0% | |||
| Bank of America Corp. | 2,395,100 | $29,986,652 | |
| Citigroup, Inc. | 729,300 | 28,333,305 | |
| Comerica, Inc. | 322,100 | 10,880,538 | |
| JPMorgan Chase & Co. | 516,700 | 29,090,210 | |
| Lloyds Banking Group PLC | 3,711,600 | 3,724,685 | |
| U.S. Bancorp | 1,171,900 | 45,141,588 | |
| Wells Fargo & Co. | 1,319,292 | 61,901,181 | |
| 209,058,159 | |||
| Regional Banks - 47.1% | |||
| 1st Source Corp. | 310,360 | 9,450,462 | |
| Bank of the Ozarks, Inc. | 438,400 | 16,589,056 | |
| Camden National Corp. | 136,684 | 5,304,706 | |
| Central Valley Community Bancorp | 236,015 | 2,848,701 | |
| CIT Group, Inc. | 238,700 | 7,115,647 | |
| Commerce Bancshares, Inc. | 306,754 | 13,030,910 | |
| Community Bank System, Inc. | 134,100 | 4,965,723 | |
| Community Trust Bancorp, Inc. | 121,850 | 4,108,782 | |
| CVB Financial Corp. | 575,000 | 8,929,750 | |
| First Citizen Bancshares, Inc. | 37,000 | 8,662,810 | |
| Hilltop Holdings, Inc. (a) | 415,300 | 6,927,204 | |
| Huntington Bancshares, Inc. | 2,202,900 | 19,275,375 | |
| M&T Bank Corp. | 238,000 | 24,406,900 | |
| PacWest Bancorp | 400,336 | 12,882,812 | |
| PNC Financial Services Group, Inc. | 82,041 | 6,670,754 | |
| Preferred Bank, Los Angeles | 181,100 | 5,170,405 | |
| Prosperity Bancshares, Inc. | 451,400 | 18,259,130 | |
| Regions Financial Corp. | 2,745,800 | 20,648,416 | |
| SunTrust Banks, Inc. | 834,700 | 27,695,346 | |
| SVB Financial Group (a) | 130,900 | 11,630,465 | |
| UMB Financial Corp. | 161,500 | 7,931,265 | |
| WesBanco, Inc. | 238,000 | 6,728,260 | |
| Wilshire Bancorp, Inc. | 1,327,900 | 13,066,536 | |
| Zions Bancorporation | 191,800 | 4,089,176 | |
| 266,388,591 | |||
| TOTAL BANKS | 475,446,750 | ||
| Capital Markets - 2.2% | |||
| Asset Management & Custody Banks - 1.2% | |||
| Northern Trust Corp. | 48,800 | 2,897,744 | |
| The Blackstone Group LP | 153,500 | 3,986,395 | |
| 6,884,139 | |||
| Investment Banking & Brokerage - 1.0% | |||
| Goldman Sachs Group, Inc. | 37,800 | 5,652,234 | |
| TOTAL CAPITAL MARKETS | 12,536,373 | ||
| Consumer Finance - 7.5% | |||
| Consumer Finance - 7.5% | |||
| American Express Co. | 33,500 | 1,861,930 | |
| Capital One Financial Corp. | 324,500 | 21,329,385 | |
| Discover Financial Services | 296,000 | 13,740,320 | |
| OneMain Holdings, Inc. (a) | 107,100 | 2,417,247 | |
| SLM Corp. (a) | 540,000 | 3,153,600 | |
| 42,502,482 | |||
| Diversified Financial Services - 0.5% | |||
| Specialized Finance - 0.5% | |||
| Element Financial Corp. (b) | 241,100 | 2,553,557 | |
| Insurance - 1.1% | |||
| Property & Casualty Insurance - 1.1% | |||
| First American Financial Corp. | 84,100 | 3,114,223 | |
| FNF Group | 93,100 | 3,070,438 | |
| 6,184,661 | |||
| Thrifts & Mortgage Finance - 1.6% | |||
| Thrifts & Mortgage Finance - 1.6% | |||
| Essent Group Ltd. (a) | 210,400 | 4,050,200 | |
| Meridian Bancorp, Inc. | 370,265 | 5,105,954 | |
| 9,156,154 | |||
| Trading Companies & Distributors - 1.1% | |||
| Trading Companies & Distributors - 1.1% | |||
| AerCap Holdings NV (a) | 171,300 | 6,120,549 | |
| TOTAL COMMON STOCKS | |||
| (Cost $569,530,380) | 554,500,526 | ||
| Nonconvertible Preferred Stocks - 0.4% | |||
| Banks - 0.4% | |||
| Diversified Banks - 0.4% | |||
| Banco ABC Brasil SA | |||
| (Cost $3,210,960) | 957,593 | 2,098,547 | |
| Money Market Funds - 1.8% | |||
| Fidelity Cash Central Fund, 0.40% (c) | 7,027,252 | 7,027,252 | |
| Fidelity Securities Lending Cash Central Fund, 0.44% (c)(d) | 3,281,160 | 3,281,160 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $10,308,412) | 10,308,412 | ||
| TOTAL INVESTMENT PORTFOLIO - 100.3% | |||
| (Cost $583,049,752) | 566,907,485 | ||
| NET OTHER ASSETS (LIABILITIES) - (0.3)% | (1,428,625) | ||
| NET ASSETS - 100% | $565,478,860 |
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 | $22,415 |
| Fidelity Securities Lending Cash Central Fund | 12,083 |
| Total | $34,498 |
Investment Valuation
The following is a summary of the inputs used, as of February 29, 2016, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used 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 | $554,500,526 | $550,775,841 | $3,724,685 | $-- |
| Nonconvertible Preferred Stocks | 2,098,547 | 2,098,547 | -- | -- |
| Money Market Funds | 10,308,412 | 10,308,412 | -- | -- |
| Total Investments in Securities: | $566,907,485 | $563,182,800 | $3,724,685 | $-- |
See accompanying notes which are an integral part of the financial statements.
Banking Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2016 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $3,127,084) — See accompanying schedule: Unaffiliated issuers (cost $572,741,340) | $556,599,073 | |
| Fidelity Central Funds (cost $10,308,412) | 10,308,412 | |
| Total Investments (cost $583,049,752) | $566,907,485 | |
| Receivable for investments sold | 4,938,812 | |
| Receivable for fund shares sold | 252,751 | |
| Dividends receivable | 904,270 | |
| Distributions receivable from Fidelity Central Funds | 1,832 | |
| Prepaid expenses | 2,436 | |
| Other receivables | 4,830 | |
| Total assets | 573,012,416 | |
| Liabilities | ||
| Payable for investments purchased | $1,196,848 | |
| Payable for fund shares redeemed | 2,642,428 | |
| Accrued management fee | 261,218 | |
| Other affiliated payables | 115,600 | |
| Other payables and accrued expenses | 36,302 | |
| Collateral on securities loaned, at value | 3,281,160 | |
| Total liabilities | 7,533,556 | |
| Net Assets | $565,478,860 | |
| Net Assets consist of: | ||
| Paid in capital | $601,408,015 | |
| Undistributed net investment income | 556 | |
| Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (19,786,695) | |
| Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (16,143,016) | |
| Net Assets, for 26,059,323 shares outstanding | $565,478,860 | |
| Net Asset Value, offering price and redemption price per share ($565,478,860 ÷ 26,059,323 shares) | $21.70 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 29, 2016 | ||
| Investment Income | ||
| Dividends | $13,265,119 | |
| Interest | 22 | |
| Income from Fidelity Central Funds | 34,498 | |
| Total income | 13,299,639 | |
| Expenses | ||
| Management fee | $3,550,348 | |
| Transfer agent fees | 1,214,111 | |
| Accounting and security lending fees | 236,090 | |
| Custodian fees and expenses | 19,822 | |
| Independent trustees' compensation | 11,884 | |
| Registration fees | 51,242 | |
| Audit | 43,320 | |
| Legal | 9,373 | |
| Miscellaneous | 8,506 | |
| Total expenses before reductions | 5,144,696 | |
| Expense reductions | (54,161) | 5,090,535 |
| Net investment income (loss) | 8,209,104 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | (4,178,291) | |
| Foreign currency transactions | 46,709 | |
| Total net realized gain (loss) | (4,131,582) | |
| Change in net unrealized appreciation (depreciation) on: Investment securities | (99,278,421) | |
| Assets and liabilities in foreign currencies | 14 | |
| Total change in net unrealized appreciation (depreciation) | (99,278,407) | |
| Net gain (loss) | (103,409,989) | |
| Net increase (decrease) in net assets resulting from operations | $(95,200,885) |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 29, 2016 | Year ended February 28, 2015 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $8,209,104 | $7,605,170 |
| Net realized gain (loss) | (4,131,582) | 43,412,342 |
| Change in net unrealized appreciation (depreciation) | (99,278,407) | (23,730,282) |
| Net increase (decrease) in net assets resulting from operations | (95,200,885) | 27,287,230 |
| Distributions to shareholders from net investment income | (7,291,678) | (8,667,459) |
| Distributions to shareholders from net realized gain | (28,052,619) | (28,732,272) |
| Total distributions | (35,344,297) | (37,399,731) |
| Share transactions | ||
| Proceeds from sales of shares | 275,436,278 | 218,322,401 |
| Reinvestment of distributions | 34,051,334 | 36,509,291 |
| Cost of shares redeemed | (198,124,823) | (470,086,598) |
| Net increase (decrease) in net assets resulting from share transactions | 111,362,789 | (215,254,906) |
| Redemption fees | 25,889 | 22,561 |
| Total increase (decrease) in net assets | (19,156,504) | (225,344,846) |
| Net Assets | ||
| Beginning of period | 584,635,364 | 809,980,210 |
| End of period (including undistributed net investment income of $556 and undistributed net investment income of $955,180, respectively) | $565,478,860 | $584,635,364 |
| Other Information | ||
| Shares | ||
| Sold | 10,264,504 | 8,234,396 |
| Issued in reinvestment of distributions | 1,335,122 | 1,431,983 |
| Redeemed | (7,822,984) | (18,407,235) |
| Net increase (decrease) | 3,776,642 | (8,740,856) |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Banking Portfolio
| Years ended February 28, | 2016 A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $26.24 | $26.11 | $20.58 | $17.83 | $18.92 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .33 | .30 | .29 | .26 | .09 |
| Net realized and unrealized gain (loss) | (3.43) | 1.04 | 5.97 | 2.73 | (1.11) |
| Total from investment operations | (3.10) | 1.34 | 6.26 | 2.99 | (1.02) |
| Distributions from net investment income | (.28) | (.34) | (.20) | (.24) | (.07) |
| Distributions from net realized gain | (1.16) | (.87) | (.53) | – | – |
| Total distributions | (1.44) | (1.21) | (.73) | (.24) | (.07) |
| Redemption fees added to paid in capitalB,C | – | – | – | – | – |
| Net asset value, end of period | $21.70 | $26.24 | $26.11 | $20.58 | $17.83 |
| Total ReturnD | (12.57)% | 5.30% | 30.48% | 16.86% | (5.31)% |
| Ratios to Average Net AssetsE,F | |||||
| Expenses before reductions | .79% | .80% | .81% | .85% | .88% |
| Expenses net of fee waivers, if any | .79% | .80% | .81% | .85% | .88% |
| Expenses net of all reductions | .79% | .79% | .80% | .83% | .87% |
| Net investment income (loss) | 1.27% | 1.14% | 1.22% | 1.37% | .55% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $565,479 | $584,635 | $809,980 | $530,562 | $429,747 |
| Portfolio turnover rateG | 63% | 65% | 91% | 69% | 91% |
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, 2016 | Past 1 year | Past 5 years | Past 10 years |
| Brokerage and Investment Management Portfolio | (22.23)% | 2.97% | 1.05% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Brokerage and Investment Management Portfolio on February 28, 2006.
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 | ||
| $11,103 | Brokerage and Investment Management Portfolio | |
| $18,666 | S&P 500® Index | |
Brokerage and Investment Management Portfolio
Management's Discussion of Fund Performance
Market Recap: The S&P 500® index returned -6.19% for the year ending February 29, 2016. Largely range-bound for the first half of the period, U.S. stocks suffered a steep, late-summer decline on concern about an economic slowdown in China. The market recovered in October, lifted by the U.S. Federal Reserve’s decision to delay raising near-term interest rates until mid-December. Investors also drew courage from a rate cut in China and economic stimulus in Europe. But continued oil-price weakness and U.S.-dollar strength, plus fresh worries about China and the Middle East, pushed the S&P 500® to its worst January since 2009, followed by a volatile but ultimately flattish February. Overall, growth-oriented and larger-cap stocks fared better than value and smaller-cap complements. In this environment, the tech-heavy Nasdaq Composite Index® returned -7.07% for the 12 months; the Russell 2000® Index, -14.97%. Few sectors within the broad-market S&P 500® gained ground, with a wide gap separating leaders from laggards. Despite increased competition among wireless carriers, telecommunication services (+8%) led the way, followed by the more defensive utilities sector (+6%). Rising wages and low inflation buoyed consumer staples (+4%), less so consumer discretionary (0%). Meanwhile, energy (-24%) foundered amid commodity weakness that also hurt materials (-17%). The financials sector (-12%) struggled as well.Comments from Daniel Dittler, who became Portfolio Manager on February 1, 2016: For the year, the fund returned -22.23%, beating the -24.78% return of its benchmark, the MSCI U.S. IMI Capital Markets 25/50 Index, as sliding stock prices and heightened market volatility pressured the industry, especially in the first two months of 2016. Both the fund and benchmark lagged the S&P 500® by a wide margin. Security selection in investment banking & brokerage and an out-of-index stake in the specialized finance group helped the fund versus the industry benchmark, while picks in the asset management & custody banks segment hurt. Top individual contributors included Investment Technology Group (ITG), an electronic trading platform and top holding at period end, which rebounded after settling an investigation with the Securities and Exchange Commission. In specialized finance, an out-of-index stake in Nasdaq stood out as the stock-exchange operator’s service-oriented businesses helped drive an increase in fourth-quarter revenue that lifted the stock. By contrast, a late-period investment in money manager Legg Mason – another top holding at period end – hindered relative performance as the share price was cut almost in half. A sizable investment in Artisan Partners Asset Management also fell sharply due to the company’s asset capacity constraints.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, 2016
| % of fund's net assets | % of fund's net assets 6 months ago | |
| BlackRock, Inc. Class A | 9.1 | 6.1 |
| Invesco Ltd. | 8.6 | 6.8 |
| E*TRADE Financial Corp. | 6.4 | 6.8 |
| Investment Technology Group, Inc. | 5.3 | 0.0 |
| Legg Mason, Inc. | 5.1 | 1.3 |
| Bank of New York Mellon Corp. | 5.1 | 0.8 |
| Morgan Stanley | 5.1 | 0.0 |
| Virtu Financial, Inc. Class A | 4.6 | 0.0 |
| Franklin Resources, Inc. | 3.7 | 0.8 |
| Affiliated Managers Group, Inc. | 3.6 | 6.2 |
| 56.6 |
Top Industries (% of fund's net assets)
| As of February 29, 2016 | ||
| Capital Markets | 87.2% | |
| Diversified Financial Services | 6.0% | |
| Consumer Finance | 1.0% | |
| All Others* | 5.8% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
| As of August 31, 2015 | ||
| Capital Markets | 88.9% | |
| Banks | 5.2% | |
| Diversified Financial Services | 2.7% | |
| Insurance | 1.0% | |
| All Others* | 2.2% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
Percentages shown as 0.0% may reflect amounts less than 0.05%.
Brokerage and Investment Management Portfolio
Investments February 29, 2016
Showing Percentage of Net Assets
| Common Stocks - 94.2% | |||
| Shares | Value | ||
| Capital Markets - 87.2% | |||
| Asset Management & Custody Banks - 57.8% | |||
| Affiliated Managers Group, Inc. (a) | 80,800 | $11,206,152 | |
| Apollo Global Management LLC Class A | 448,700 | 6,977,285 | |
| Bank of New York Mellon Corp. | 447,147 | 15,824,532 | |
| BlackRock, Inc. Class A | 90,200 | 28,138,792 | |
| Cohen & Steers, Inc. | 152,300 | 4,739,576 | |
| Diamond Hill Investment Group, Inc. | 50,000 | 8,450,000 | |
| Franklin Resources, Inc. | 317,800 | 11,393,130 | |
| GAMCO Investors, Inc. Class A | 44,757 | 1,554,858 | |
| Invesco Ltd. | 1,000,000 | 26,740,000 | |
| Legg Mason, Inc. | 560,542 | 16,009,080 | |
| Northern Trust Corp. | 173,400 | 10,296,492 | |
| NorthStar Asset Management Group, Inc. | 618,800 | 6,763,484 | |
| Och-Ziff Capital Management Group LLC Class A | 473,700 | 2,084,280 | |
| State Street Corp. | 129,700 | 7,104,966 | |
| T. Rowe Price Group, Inc. | 133,800 | 9,246,918 | |
| Virtus Investment Partners, Inc. | 104,271 | 9,573,121 | |
| WisdomTree Investments, Inc. (b) | 280,600 | 3,325,110 | |
| 179,427,776 | |||
| Investment Banking & Brokerage - 29.4% | |||
| BGC Partners, Inc. Class A | 1,207,300 | 10,431,072 | |
| E*TRADE Financial Corp. (a) | 845,300 | 19,830,738 | |
| Goldman Sachs Group, Inc. | 52,600 | 7,865,278 | |
| Interactive Brokers Group, Inc. | 126,400 | 4,319,088 | |
| Investment Technology Group, Inc. | 899,600 | 16,480,672 | |
| Morgan Stanley | 639,100 | 15,785,770 | |
| TD Ameritrade Holding Corp. | 82,000 | 2,343,560 | |
| Virtu Financial, Inc. Class A | 635,200 | 14,171,312 | |
| 91,227,490 | |||
| TOTAL CAPITAL MARKETS | 270,655,266 | ||
| Consumer Finance - 1.0% | |||
| Consumer Finance - 1.0% | |||
| OneMain Holdings, Inc. (a) | 140,500 | 3,171,085 | |
| Diversified Financial Services - 6.0% | |||
| Specialized Finance - 6.0% | |||
| CBOE Holdings, Inc. | 24,400 | 1,525,000 | |
| CME Group, Inc. | 62,600 | 5,724,144 | |
| Markit Ltd. (a) | 136,500 | 3,797,430 | |
| The NASDAQ OMX Group, Inc. | 119,400 | 7,556,826 | |
| 18,603,400 | |||
| TOTAL COMMON STOCKS | |||
| (Cost $308,802,540) | 292,429,751 | ||
| Money Market Funds - 3.8% | |||
| Fidelity Cash Central Fund, 0.40% (c) | 9,261,163 | 9,261,163 | |
| Fidelity Securities Lending Cash Central Fund, 0.44% (c)(d) | 2,699,900 | 2,699,900 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $11,961,063) | 11,961,063 | ||
| TOTAL INVESTMENT PORTFOLIO - 98.0% | |||
| (Cost $320,763,603) | 304,390,814 | ||
| NET OTHER ASSETS (LIABILITIES) - 2.0% | 6,179,271 | ||
| NET ASSETS - 100% | $310,570,085 |
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 | $23,119 |
| Fidelity Securities Lending Cash Central Fund | 5,348 |
| Total | $28,467 |
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, 2016 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $2,611,740) — See accompanying schedule: Unaffiliated issuers (cost $308,802,540) | $292,429,751 | |
| Fidelity Central Funds (cost $11,961,063) | 11,961,063 | |
| Total Investments (cost $320,763,603) | $304,390,814 | |
| Receivable for investments sold | 13,935,279 | |
| Receivable for fund shares sold | 89,077 | |
| Dividends receivable | 688,912 | |
| Distributions receivable from Fidelity Central Funds | 3,286 | |
| Prepaid expenses | 1,953 | |
| Other receivables | 23,895 | |
| Total assets | 319,133,216 | |
| Liabilities | ||
| Payable for investments purchased | $5,352,488 | |
| Payable for fund shares redeemed | 251,998 | |
| Accrued management fee | 141,203 | |
| Other affiliated payables | 69,073 | |
| Other payables and accrued expenses | 48,469 | |
| Collateral on securities loaned, at value | 2,699,900 | |
| Total liabilities | 8,563,131 | |
| Net Assets | $310,570,085 | |
| Net Assets consist of: | ||
| Paid in capital | $335,023,555 | |
| Distributions in excess of net investment income | (14,596) | |
| Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (8,066,085) | |
| Net unrealized appreciation (depreciation) on investments | (16,372,789) | |
| Net Assets, for 5,682,794 shares outstanding | $310,570,085 | |
| Net Asset Value, offering price and redemption price per share ($310,570,085 ÷ 5,682,794 shares) | $54.65 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 29, 2016 | ||
| Investment Income | ||
| Dividends | $8,732,586 | |
| Income from Fidelity Central Funds | 28,467 | |
| Total income | 8,761,053 | |
| Expenses | ||
| Management fee | $2,659,279 | |
| Transfer agent fees | 926,173 | |
| Accounting and security lending fees | 184,708 | |
| Custodian fees and expenses | 7,253 | |
| Independent trustees' compensation | 8,761 | |
| Registration fees | 20,756 | |
| Audit | 41,794 | |
| Legal | 7,798 | |
| Interest | 314 | |
| Miscellaneous | 7,129 | |
| Total expenses before reductions | 3,863,965 | |
| Expense reductions | (55,320) | 3,808,645 |
| Net investment income (loss) | 4,952,408 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 12,751,273 | |
| Foreign currency transactions | 8,357 | |
| Total net realized gain (loss) | 12,759,630 | |
| Change in net unrealized appreciation (depreciation) on investment securities | (125,830,585) | |
| Net gain (loss) | (113,070,955) | |
| Net increase (decrease) in net assets resulting from operations | $(108,118,547) |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 29, 2016 | Year ended February 28, 2015 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $4,952,408 | $8,290,929 |
| Net realized gain (loss) | 12,759,630 | 17,201,741 |
| Change in net unrealized appreciation (depreciation) | (125,830,585) | 15,368,811 |
| Net increase (decrease) in net assets resulting from operations | (108,118,547) | 40,861,481 |
| Distributions to shareholders from net investment income | (4,622,816) | (6,687,809) |
| Distributions to shareholders from net realized gain | (21,141,799) | (13,758,502) |
| Total distributions | (25,764,615) | (20,446,311) |
| Share transactions | ||
| Proceeds from sales of shares | 46,082,867 | 44,436,800 |
| Reinvestment of distributions | 24,647,782 | 19,563,162 |
| Cost of shares redeemed | (204,236,777) | (340,693,447) |
| Net increase (decrease) in net assets resulting from share transactions | (133,506,128) | (276,693,485) |
| Redemption fees | 6,244 | 9,496 |
| Total increase (decrease) in net assets | (267,383,046) | (256,268,819) |
| Net Assets | ||
| Beginning of period | 577,953,131 | 834,221,950 |
| End of period (including distributions in excess of net investment income of $14,596 and undistributed net investment income of $684,052, respectively) | $310,570,085 | $577,953,131 |
| Other Information | ||
| Shares | ||
| Sold | 640,049 | 606,214 |
| Issued in reinvestment of distributions | 382,319 | 261,782 |
| Redeemed | (3,068,358) | (4,726,727) |
| Net increase (decrease) | (2,045,990) | (3,858,731) |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Brokerage and Investment Management Portfolio
| Years ended February 28, | 2016 A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $74.78 | $71.99 | $55.99 | $47.28 | $54.11 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .72 | .96 | .99 | 1.31 | .26 |
| Net realized and unrealized gain (loss) | (16.77) | 4.39 | 15.41 | 8.52 | (6.56) |
| Total from investment operations | (16.05) | 5.35 | 16.40 | 9.83 | (6.30) |
| Distributions from net investment income | (.74) | (.83) | (.39) | (1.12) | (.53) |
| Distributions from net realized gain | (3.34) | (1.73) | (.02) | – | – |
| Total distributions | (4.08) | (2.56) | (.40)C | (1.12) | (.53) |
| Redemption fees added to paid in capitalB,D | – | – | – | – | – |
| Net asset value, end of period | $54.65 | $74.78 | $71.99 | $55.99 | $47.28 |
| Total ReturnE | (22.23)% | 7.43% | 29.29% | 21.08% | (11.51)% |
| Ratios to Average Net AssetsF,G | |||||
| Expenses before reductions | .79% | .79% | .82% | .87% | .89% |
| Expenses net of fee waivers, if any | .79% | .79% | .82% | .87% | .89% |
| Expenses net of all reductions | .78% | .79% | .80% | .78% | .85% |
| Net investment income (loss) | 1.02% | 1.32% | 1.52% | 2.72% | .57% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $310,570 | $577,953 | $834,222 | $604,773 | $413,228 |
| Portfolio turnover rateH | 67% | 31% | 182% | 308% | 294% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Total distributions of $.40 per share is comprised of distributions from net investment income of $.388 and distributions from net realized gain of $.016 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.
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, 2016 | Past 1 year | Past 5 years | Past 10 years |
| Consumer Finance Portfolio | (14.01)% | 8.91% | (6.83)% |
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, 2006.
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 | ||
| $4,931 | Consumer Finance Portfolio | |
| $18,666 | S&P 500® Index | |
Consumer Finance Portfolio
Management's Discussion of Fund Performance
Market Recap: The S&P 500® index returned -6.19% for the year ending February 29, 2016. Largely range-bound for the first half of the period, U.S. stocks suffered a steep, late-summer decline on concern about an economic slowdown in China. The market recovered in October, lifted by the U.S. Federal Reserve’s decision to delay raising near-term interest rates until mid-December. Investors also drew courage from a rate cut in China and economic stimulus in Europe. But continued oil-price weakness and U.S.-dollar strength, plus fresh worries about China and the Middle East, pushed the S&P 500® to its worst January since 2009, followed by a volatile but ultimately flattish February. Overall, growth-oriented and larger-cap stocks fared better than value and smaller-cap complements. In this environment, the tech-heavy Nasdaq Composite Index® returned -7.07% for the 12 months; the Russell 2000® Index, -14.97%. Few sectors within the broad-market S&P 500® gained ground, with a wide gap separating leaders from laggards. Despite increased competition among wireless carriers, telecommunication services (+8%) led the way, followed by the more defensive utilities sector (+6%). Rising wages and low inflation buoyed consumer staples (+4%), less so consumer discretionary (0%). Meanwhile, energy (-24%) foundered amid commodity weakness that also hurt materials (-17%). The financials sector (-12%) struggled as well.Comments from Portfolio Manager Shilpa Mehra: For the year, the fund returned -14.01%, topping the -16.11% return of the S&P® Consumer Finance Index, but lagging the S&P 500® by a wide margin. Consumer finance stocks trailed the S&P 500® largely because of worries that credit losses would increase. An overweighting in data processing & outsourced services and positioning in consumer finance helped the fund’s result versus the industry index, whereas stocks picks and an underweighting in thrifts & mortgage finance hurt. Individual contributors included non-index positions in card processors Total System Services (TSYS) and Global Payments. TSYS shares gained from increased credit card issuance and transaction volumes. Global Payments benefited because recent acquisitions helped enhance its earnings growth and cash flows. Also, within the data processing & outsourced services segment, Visa saw its stock lifted by favorable secular tailwinds and the proposed acquisition of Visa Europe. Visa was the fund’s largest holding in absolute terms this period. Conversely, untimely positioning in Astoria Financial and negligible exposure to Flagstar Bancorp – two thrifts and index members – hampered the fund’s relative result as both stocks climbed in anticipation of higher interest rates. The fund lost ground from not owning Astoria when an activist investor’s involvement spurred an added gain, and then holding it later when the stock declined. Flagstar’s shares also benefited from rising mortgage volumes.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 Finance Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 29, 2016
| % of fund's net assets | % of fund's net assets 6 months ago | |
| Visa, Inc. Class A | 8.1 | 9.6 |
| MasterCard, Inc. Class A | 6.7 | 6.5 |
| Annaly Capital Management, Inc. | 5.9 | 1.5 |
| Synchrony Financial | 5.5 | 0.0 |
| Capital One Financial Corp. | 4.7 | 5.7 |
| Ally Financial, Inc. | 4.7 | 4.5 |
| American Capital Agency Corp. | 4.5 | 3.8 |
| Discover Financial Services | 4.4 | 2.4 |
| TFS Financial Corp. | 3.9 | 3.6 |
| New York Community Bancorp, Inc. | 3.6 | 3.0 |
| 52.0 |
Top Industries (% of fund's net assets)
| As of February 29, 2016 | ||
| Consumer Finance | 36.6% | |
| IT Services | 25.2% | |
| Real Estate Investment Trusts | 18.7% | |
| Thrifts & Mortgage Finance | 18.1% | |
| Professional Services | 1.0% | |
| All Others* | 0.4% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
| As of August 31, 2015 | ||
| Consumer Finance | 34.8% | |
| IT Services | 29.3% | |
| Thrifts & Mortgage Finance | 20.0% | |
| Real Estate Investment Trusts | 12.0% | |
| Diversified Financial Services | 2.2% | |
| All Others* | 1.7% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
Percentages shown as 0.0% may reflect amounts less than 0.05%.
Consumer Finance Portfolio
Investments February 29, 2016
Showing Percentage of Net Assets
| Common Stocks - 100.2% | |||
| Shares | Value | ||
| Consumer Finance - 36.6% | |||
| Consumer Finance - 36.6% | |||
| Ally Financial, Inc. (a) | 229,500 | $4,034,610 | |
| American Express Co. | 45,200 | 2,512,216 | |
| Capital One Financial Corp. | 62,100 | 4,081,833 | |
| Cash America International, Inc. | 11,919 | 401,551 | |
| Credit Acceptance Corp. (a)(b) | 11,075 | 2,182,550 | |
| Discover Financial Services | 82,400 | 3,825,008 | |
| First Cash Financial Services, Inc. | 10,900 | 459,653 | |
| Navient Corp. | 268,400 | 2,906,772 | |
| Nelnet, Inc. Class A | 24,800 | 932,480 | |
| OneMain Holdings, Inc. (a) | 88,100 | 1,988,417 | |
| Santander Consumer U.S.A. Holdings, Inc. (a) | 179,600 | 1,840,900 | |
| SLM Corp. (a) | 311,500 | 1,819,160 | |
| Synchrony Financial (a) | 176,200 | 4,748,590 | |
| 31,733,740 | |||
| Diversified Financial Services - 0.6% | |||
| Specialized Finance - 0.6% | |||
| Element Financial Corp. | 44,000 | 466,016 | |
| IT Services - 25.2% | |||
| Data Processing & Outsourced Services - 25.2% | |||
| Alliance Data Systems Corp. (a) | 2,200 | 462,286 | |
| Blackhawk Network Holdings, Inc. (a) | 45,800 | 1,549,872 | |
| Euronet Worldwide, Inc. (a) | 10,100 | 661,954 | |
| EVERTEC, Inc. | 5,800 | 69,020 | |
| First Data Corp. Class A (a) | 24,500 | 306,250 | |
| Fiserv, Inc. (a) | 6,200 | 592,906 | |
| FleetCor Technologies, Inc. (a) | 6,200 | 791,678 | |
| Global Payments, Inc. | 47,200 | 2,876,840 | |
| MasterCard, Inc. Class A | 67,300 | 5,849,716 | |
| Total System Services, Inc. | 17,400 | 758,292 | |
| Vantiv, Inc. (a) | 6,500 | 338,260 | |
| Visa, Inc. Class A | 97,536 | 7,060,630 | |
| Worldline SA (a)(c) | 22,500 | 508,747 | |
| 21,826,451 | |||
| Professional Services - 1.0% | |||
| Research & Consulting Services - 1.0% | |||
| Equifax, Inc. | 8,500 | 891,480 | |
| Real Estate Investment Trusts - 18.7% | |||
| Mortgage REITs - 18.7% | |||
| Altisource Residential Corp. Class B | 30,800 | 288,904 | |
| American Capital Agency Corp. | 216,600 | 3,913,962 | |
| Annaly Capital Management, Inc. | 504,600 | 5,111,598 | |
| Capstead Mortgage Corp. | 37,300 | 362,183 | |
| Chimera Investment Corp. | 131,280 | 1,710,578 | |
| Hatteras Financial Corp. | 41,700 | 573,375 | |
| Invesco Mortgage Capital, Inc. | 52,057 | 588,765 | |
| MFA Financial, Inc. | 200,400 | 1,364,724 | |
| New Residential Investment Corp. | 107,850 | 1,262,924 | |
| PennyMac Mortgage Investment Trust | 31,100 | 409,276 | |
| Redwood Trust, Inc. | 51,800 | 615,902 | |
| 16,202,191 | |||
| Thrifts & Mortgage Finance - 18.1% | |||
| Thrifts & Mortgage Finance - 18.1% | |||
| Astoria Financial Corp. | 38,600 | 574,754 | |
| BofI Holding, Inc. (a)(b) | 28,200 | 522,546 | |
| Capitol Federal Financial, Inc. | 31,000 | 389,670 | |
| EverBank Financial Corp. | 46,400 | 604,128 | |
| Flagstar Bancorp, Inc. (a) | 300 | 5,760 | |
| Kearny Financial Corp. | 47,800 | 572,166 | |
| Meridian Bancorp, Inc. | 73,900 | 1,019,081 | |
| MGIC Investment Corp. (a) | 201,228 | 1,376,400 | |
| Nationstar Mortgage Holdings, Inc. (a) | 62,900 | 743,478 | |
| New York Community Bancorp, Inc. | 207,900 | 3,145,527 | |
| Northfield Bancorp, Inc. | 200 | 3,142 | |
| Ocwen Financial Corp. (a)(b) | 47,800 | 181,162 | |
| PHH Corp. (a) | 18,000 | 163,260 | |
| Provident Financial Services, Inc. | 8,000 | 148,720 | |
| Radian Group, Inc. | 117,765 | 1,271,862 | |
| TFS Financial Corp. | 197,800 | 3,342,820 | |
| Washington Federal, Inc. | 41,600 | 881,504 | |
| WSFS Financial Corp. | 22,700 | 687,810 | |
| 15,633,790 | |||
| TOTAL COMMON STOCKS | |||
| (Cost $85,053,853) | 86,753,668 | ||
| Money Market Funds - 3.8% | |||
| Fidelity Cash Central Fund, 0.40% (d) | 329,299 | 329,299 | |
| Fidelity Securities Lending Cash Central Fund, 0.44% (d)(e) | 2,983,560 | 2,983,560 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $3,312,859) | 3,312,859 | ||
| TOTAL INVESTMENT PORTFOLIO - 104.0% | |||
| (Cost $88,366,712) | 90,066,527 | ||
| NET OTHER ASSETS (LIABILITIES) - (4.0)% | (3,423,589) | ||
| NET ASSETS - 100% | $86,642,938 |
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 $508,747 or 0.6% 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 | $709 |
| Fidelity Securities Lending Cash Central Fund | 100,632 |
| Total | $101,341 |
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.
Consumer Finance Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2016 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $2,824,255) — See accompanying schedule: Unaffiliated issuers (cost $85,053,853) | $86,753,668 | |
| Fidelity Central Funds (cost $3,312,859) | 3,312,859 | |
| Total Investments (cost $88,366,712) | $90,066,527 | |
| Receivable for fund shares sold | 20,547 | |
| Dividends receivable | 63,732 | |
| Distributions receivable from Fidelity Central Funds | 19,361 | |
| Prepaid expenses | 441 | |
| Other receivables | 19 | |
| Total assets | 90,170,627 | |
| Liabilities | ||
| Payable for investments purchased | $211,379 | |
| Payable for fund shares redeemed | 236,709 | |
| Accrued management fee | 38,848 | |
| Other affiliated payables | 23,983 | |
| Other payables and accrued expenses | 33,210 | |
| Collateral on securities loaned, at value | 2,983,560 | |
| Total liabilities | 3,527,689 | |
| Net Assets | $86,642,938 | |
| Net Assets consist of: | ||
| Paid in capital | $95,016,153 | |
| Undistributed net investment income | 206,127 | |
| Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (10,279,157) | |
| Net unrealized appreciation (depreciation) on investments | 1,699,815 | |
| Net Assets, for 7,921,900 shares outstanding | $86,642,938 | |
| Net Asset Value, offering price and redemption price per share ($86,642,938 ÷ 7,921,900 shares) | $10.94 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 29, 2016 | ||
| Investment Income | ||
| Dividends | $2,737,620 | |
| Income from Fidelity Central Funds | 101,341 | |
| Total income | 2,838,961 | |
| Expenses | ||
| Management fee | $641,187 | |
| Transfer agent fees | 294,553 | |
| Accounting and security lending fees | 47,040 | |
| Custodian fees and expenses | 4,618 | |
| Independent trustees' compensation | 2,224 | |
| Registration fees | 17,839 | |
| Audit | 41,578 | |
| Legal | 2,446 | |
| Miscellaneous | 1,730 | |
| Total expenses before reductions | 1,053,215 | |
| Expense reductions | (8,072) | 1,045,143 |
| Net investment income (loss) | 1,793,818 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 9,920,803 | |
| Foreign currency transactions | (504) | |
| Total net realized gain (loss) | 9,920,299 | |
| Change in net unrealized appreciation (depreciation) on investment securities | (26,199,612) | |
| Net gain (loss) | (16,279,313) | |
| Net increase (decrease) in net assets resulting from operations | $(14,485,495) |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 29, 2016 | Year ended February 28, 2015 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $1,793,818 | $2,397,831 |
| Net realized gain (loss) | 9,920,299 | 33,581,035 |
| Change in net unrealized appreciation (depreciation) | (26,199,612) | (24,753,049) |
| Net increase (decrease) in net assets resulting from operations | (14,485,495) | 11,225,817 |
| Distributions to shareholders from net investment income | (1,629,098) | (2,831,537) |
| Distributions to shareholders from net realized gain | (9,545,636) | (32,268,529) |
| Total distributions | (11,174,734) | (35,100,066) |
| Share transactions | ||
| Proceeds from sales of shares | 18,405,416 | 25,556,687 |
| Reinvestment of distributions | 10,808,940 | 34,016,855 |
| Cost of shares redeemed | (51,481,295) | (151,354,434) |
| Net increase (decrease) in net assets resulting from share transactions | (22,266,939) | (91,780,892) |
| Redemption fees | 1,416 | 2,139 |
| Total increase (decrease) in net assets | (47,925,752) | (115,653,002) |
| Net Assets | ||
| Beginning of period | 134,568,690 | 250,221,692 |
| End of period (including undistributed net investment income of $206,127 and undistributed net investment income of $39,403, respectively) | $86,642,938 | $134,568,690 |
| Other Information | ||
| Shares | ||
| Sold | 1,360,055 | 1,651,346 |
| Issued in reinvestment of distributions | 831,451 | 2,357,659 |
| Redeemed | (3,874,342) | (9,885,257) |
| Net increase (decrease) | (1,682,836) | (5,876,252) |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Consumer Finance Portfolio
| Years ended February 28, | 2016 A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $14.01 | $16.16 | $15.37 | $12.62 | $11.97 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .20 | .22 | .34 | .28 | .22 |
| Net realized and unrealized gain (loss) | (1.99) | .95 | 3.18 | 2.72 | .64 |
| Total from investment operations | (1.79) | 1.17 | 3.52 | 3.00 | .86 |
| Distributions from net investment income | (.20) | (.30) | (.40) | (.24) | (.20) |
| Distributions from net realized gain | (1.08) | (3.03) | (2.33) | (.01) | (.01) |
| Total distributions | (1.28) | (3.32)C | (2.73) | (.25) | (.21) |
| Redemption fees added to paid in capitalB,D | – | – | – | – | – |
| Net asset value, end of period | $10.94 | $14.01 | $16.16 | $15.37 | $12.62 |
| Total ReturnE | (14.01)% | 7.69% | 24.31% | 23.92% | 7.41% |
| Ratios to Average Net AssetsF,G | |||||
| Expenses before reductions | .90% | .88% | .85% | .89% | .95% |
| Expenses net of fee waivers, if any | .89% | .88% | .85% | .89% | .95% |
| Expenses net of all reductions | .89% | .88% | .83% | .86% | .94% |
| Net investment income (loss) | 1.53% | 1.45% | 2.07% | 1.98% | 1.96% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $86,643 | $134,569 | $250,222 | $303,556 | $166,391 |
| Portfolio turnover rateH | 48% | 71% | 89% | 79% | 113% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Total distributions of $3.32 per share is comprised of distributions from net investment income of $.296 and distributions from net realized gain of $3.026 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.
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, 2016 | Past 1 year | Past 5 years | Past 10 years |
| Financial Services Portfolio | (14.18)% | 4.85% | (1.79)% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Financial Services Portfolio on February 28, 2006.
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 | ||
| $8,351 | Financial Services Portfolio | |
| $18,666 | S&P 500® Index | |
Financial Services Portfolio
Management's Discussion of Fund Performance
Market Recap: The S&P 500® index returned -6.19% for the year ending February 29, 2016. Largely range-bound for the first half of the period, U.S. stocks suffered a steep, late-summer decline on concern about an economic slowdown in China. The market recovered in October, lifted by the U.S. Federal Reserve’s decision to delay raising near-term interest rates until mid-December. Investors also drew courage from a rate cut in China and economic stimulus in Europe. But continued oil-price weakness and U.S.-dollar strength, plus fresh worries about China and the Middle East, pushed the S&P 500® to its worst January since 2009, followed by a volatile but ultimately flattish February. Overall, growth-oriented and larger-cap stocks fared better than value and smaller-cap complements. In this environment, the tech-heavy Nasdaq Composite Index® returned -7.07% for the 12 months; the Russell 2000® Index, -14.97%. Few sectors within the broad-market S&P 500® gained ground, with a wide gap separating leaders from laggards. Despite increased competition among wireless carriers, telecommunication services (+8%) led the way, followed by the more defensive utilities sector (+6%). Rising wages and low inflation buoyed consumer staples (+4%), less so consumer discretionary (0%). Meanwhile, energy (-24%) foundered amid commodity weakness that also hurt materials (-17%). The financials sector (-12%) struggled as well.Comments from Portfolio Manager Christopher Lee: For the year, the fund returned –14.18%, lagging the -10.52% return of the MSCI U.S. IMI Financials 25/50 Index. Shifting expectations on interest rates, concern about the strength of the global economic recovery, plunging energy prices and declining stock and high-yield bond prices weighed heavily on the sector, which lagged the S&P 500®. The fund’s lack of exposure to retail real estate investment trusts (REITs) and picks among asset management & custody banks, diversified REITs, mortgage REITs and diversified banks hampered relative performance. Individual detractors included NorthStar Realty Finance, a diversified REIT pressured by its high debt, and Altisource Residential, a mortgage REIT hurt by a change in strategy. Elsewhere, shares of subprime lender OneMain Holdings lost about half their value because of growing concern that defaults and delinquencies would increase industry-wide. Exposure to the out-of-index data processing & outsourced services segment, as well as positioning in healthcare REITs and investment banking & brokerage aided relative performance. Standouts included Public Storage, a U.S-focused self-storage provider and specialized REIT that benefited from improved domestic economic growth and a lack of new industry supply. Top holding Chubb, a property & casualty insurer, also helped, gaining from a competitor’s $28 billion buyout offer last summer.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.
Financial Services Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 29, 2016
| % of fund's net assets | % of fund's net assets 6 months ago | |
| Berkshire Hathaway, Inc. Class B | 5.5 | 4.9 |
| Bank of America Corp. | 5.0 | 5.6 |
| JPMorgan Chase & Co. | 4.9 | 5.6 |
| Citigroup, Inc. | 4.5 | 5.5 |
| Chubb Ltd. | 3.9 | 2.7 |
| U.S. Bancorp | 3.7 | 4.1 |
| American Tower Corp. | 3.4 | 3.3 |
| Wells Fargo & Co. | 3.3 | 3.7 |
| Capital One Financial Corp. | 3.2 | 3.6 |
| Allstate Corp. | 2.6 | 2.4 |
| 40.0 |
Top Industries (% of fund's net assets)
| As of February 29, 2016 | ||
| Banks | 27.4% | |
| Real Estate Investment Trusts | 17.3% | |
| Insurance | 16.4% | |
| Diversified Financial Services | 7.8% | |
| Capital Markets | 7.7% | |
| All Others* | 23.4% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
| As of August 31, 2015 | ||
| Banks | 32.0% | |
| Real Estate Investment Trusts | 13.9% | |
| Insurance | 12.4% | |
| Capital Markets | 10.9% | |
| Diversified Financial Services | 8.8% | |
| All Others* | 22.0% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
Financial Services Portfolio
Investments February 29, 2016
Showing Percentage of Net Assets
| Common Stocks - 93.8% | |||
| Shares | Value | ||
| Banks - 27.4% | |||
| Diversified Banks - 22.3% | |||
| Bank of America Corp. | 4,156,017 | $52,033,333 | |
| Citigroup, Inc. | 1,210,280 | 47,019,378 | |
| Comerica, Inc. | 279,600 | 9,444,888 | |
| JPMorgan Chase & Co. | 907,310 | 51,081,553 | |
| U.S. Bancorp | 998,184 | 38,450,048 | |
| Wells Fargo & Co. | 748,601 | 35,124,359 | |
| 233,153,559 | |||
| Regional Banks - 5.1% | |||
| CoBiz, Inc. | 426,665 | 4,629,315 | |
| Huntington Bancshares, Inc. | 1,029,800 | 9,010,750 | |
| M&T Bank Corp. | 151,600 | 15,546,580 | |
| Popular, Inc. | 338,000 | 8,957,000 | |
| SunTrust Banks, Inc. | 457,700 | 15,186,486 | |
| 53,330,131 | |||
| TOTAL BANKS | 286,483,690 | ||
| Capital Markets - 7.7% | |||
| Asset Management & Custody Banks - 4.9% | |||
| Affiliated Managers Group, Inc. (a) | 59,483 | 8,249,697 | |
| Artisan Partners Asset Management, Inc. | 226,900 | 6,439,422 | |
| Invesco Ltd. | 457,710 | 12,239,165 | |
| Northern Trust Corp. | 204,200 | 12,125,396 | |
| Oaktree Capital Group LLC Class A | 214,700 | 9,854,730 | |
| The Blackstone Group LP | 72,204 | 1,875,138 | |
| 50,783,548 | |||
| Investment Banking & Brokerage - 2.8% | |||
| E*TRADE Financial Corp. (a) | 408,344 | 9,579,750 | |
| Goldman Sachs Group, Inc. | 131,500 | 19,663,195 | |
| 29,242,945 | |||
| TOTAL CAPITAL MARKETS | 80,026,493 | ||
| Consumer Finance - 6.4% | |||
| Consumer Finance - 6.4% | |||
| American Express Co. | 228,900 | 12,722,262 | |
| Capital One Financial Corp. | 499,116 | 32,806,895 | |
| OneMain Holdings, Inc. (a) | 297,413 | 6,712,611 | |
| Synchrony Financial (a) | 527,000 | 14,202,650 | |
| 66,444,418 | |||
| Diversified Consumer Services - 1.2% | |||
| Specialized Consumer Services - 1.2% | |||
| H&R Block, Inc. | 374,272 | 12,306,063 | |
| Diversified Financial Services - 7.8% | |||
| Multi-Sector Holdings - 5.5% | |||
| Berkshire Hathaway, Inc. Class B (a) | 429,690 | 57,651,507 | |
| Specialized Finance - 2.3% | |||
| IntercontinentalExchange, Inc. | 100,647 | 24,000,284 | |
| TOTAL DIVERSIFIED FINANCIAL SERVICES | 81,651,791 | ||
| Insurance - 16.4% | |||
| Insurance Brokers - 4.1% | |||
| Brown & Brown, Inc. | 549,300 | 17,747,883 | |
| Marsh & McLennan Companies, Inc. | 431,064 | 24,592,201 | |
| 42,340,084 | |||
| Life & Health Insurance - 2.1% | |||
| Torchmark Corp. | 419,000 | 21,461,180 | |
| Property & Casualty Insurance - 10.2% | |||
| Allied World Assurance Co. Holdings AG | 471,300 | 15,265,407 | |
| Allstate Corp. | 431,000 | 27,351,260 | |
| Chubb Ltd. | 349,490 | 40,376,580 | |
| FNF Group | 726,000 | 23,943,480 | |
| 106,936,727 | |||
| TOTAL INSURANCE | 170,737,991 | ||
| IT Services - 5.7% | |||
| Data Processing & Outsourced Services - 5.7% | |||
| MasterCard, Inc. Class A | 171,600 | 14,915,472 | |
| PayPal Holdings, Inc. (a) | 185,000 | 7,055,900 | |
| The Western Union Co. | 686,572 | 12,536,805 | |
| Visa, Inc. Class A | 340,300 | 24,634,317 | |
| 59,142,494 | |||
| Professional Services - 0.5% | |||
| Research & Consulting Services - 0.5% | |||
| Verisk Analytics, Inc. (a) | 79,400 | 5,783,496 | |
| Real Estate Investment Trusts - 17.3% | |||
| Health Care REIT's - 2.1% | |||
| Ventas, Inc. | 397,000 | 22,100,990 | |
| Mortgage REITs - 2.8% | |||
| Altisource Residential Corp. Class B | 686,600 | 6,440,308 | |
| American Capital Agency Corp. | 411,900 | 7,443,033 | |
| Redwood Trust, Inc. | 778,086 | 9,251,443 | |
| Two Harbors Investment Corp. | 786,100 | 6,092,275 | |
| 29,227,059 | |||
| Office REITs - 1.8% | |||
| Boston Properties, Inc. | 164,800 | 18,810,272 | |
| Residential REITs - 4.0% | |||
| American Campus Communities, Inc. | 183,100 | 8,014,287 | |
| Equity Residential (SBI) | 204,200 | 15,210,858 | |
| Essex Property Trust, Inc. | 36,600 | 7,659,648 | |
| UDR, Inc. | 310,100 | 10,645,733 | |
| 41,530,526 | |||
| Specialized REITs - 6.6% | |||
| American Tower Corp. | 385,672 | 35,558,958 | |
| Outfront Media, Inc. | 340,329 | 6,959,728 | |
| Public Storage | 104,300 | 26,021,807 | |
| 68,540,493 | |||
| TOTAL REAL ESTATE INVESTMENT TRUSTS | 180,209,340 | ||
| Real Estate Management & Development - 1.7% | |||
| Real Estate Services - 1.7% | |||
| CBRE Group, Inc. (a) | 188,631 | 4,793,114 | |
| Realogy Holdings Corp. (a) | 411,900 | 13,168,443 | |
| 17,961,557 | |||
| Thrifts & Mortgage Finance - 0.6% | |||
| Thrifts & Mortgage Finance - 0.6% | |||
| MGIC Investment Corp. (a) | 593,000 | 4,056,120 | |
| Radian Group, Inc. | 196,500 | 2,122,200 | |
| 6,178,320 | |||
| Trading Companies & Distributors - 1.1% | |||
| Trading Companies & Distributors - 1.1% | |||
| AerCap Holdings NV (a) | 335,400 | 11,983,842 | |
| TOTAL COMMON STOCKS | |||
| (Cost $987,002,826) | 978,909,495 | ||
| Money Market Funds - 5.4% | |||
| Fidelity Cash Central Fund, 0.40% (b) | |||
| (Cost $56,415,150) | 56,415,150 | 56,415,150 | |
| TOTAL INVESTMENT PORTFOLIO - 99.2% | |||
| (Cost $1,043,417,976) | 1,035,324,645 | ||
| NET OTHER ASSETS (LIABILITIES) - 0.8% | 8,248,931 | ||
| NET ASSETS - 100% | $1,043,573,576 |
Legend
(a) Non-income producing
(b) 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 | $104,227 |
| Fidelity Securities Lending Cash Central Fund | 31,466 |
| Total | $135,693 |
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.
Financial Services Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2016 | ||
| Assets | ||
| Investment in securities, at value — See accompanying schedule: Unaffiliated issuers (cost $987,002,826) | $978,909,495 | |
| Fidelity Central Funds (cost $56,415,150) | 56,415,150 | |
| Total Investments (cost $1,043,417,976) | $1,035,324,645 | |
| Receivable for investments sold | 11,762,796 | |
| Receivable for fund shares sold | 264,810 | |
| Dividends receivable | 1,019,145 | |
| Distributions receivable from Fidelity Central Funds | 16,157 | |
| Prepaid expenses | 4,831 | |
| Other receivables | 14,299 | |
| Total assets | 1,048,406,683 | |
| Liabilities | ||
| Payable for investments purchased | $3,360,626 | |
| Payable for fund shares redeemed | 757,617 | |
| Accrued management fee | 481,181 | |
| Other affiliated payables | 190,601 | |
| Other payables and accrued expenses | 43,082 | |
| Total liabilities | 4,833,107 | |
| Net Assets | $1,043,573,576 | |
| Net Assets consist of: | ||
| Paid in capital | $1,075,953,206 | |
| Distributions in excess of net investment income | (1,045,722) | |
| Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (23,239,693) | |
| Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (8,094,215) | |
| Net Assets, for 13,914,240 shares outstanding | $1,043,573,576 | |
| Net Asset Value, offering price and redemption price per share ($1,043,573,576 ÷ 13,914,240 shares) | $75.00 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 29, 2016 | ||
| Investment Income | ||
| Dividends | $23,001,403 | |
| Income from Fidelity Central Funds | 135,693 | |
| Total income | 23,137,096 | |
| Expenses | ||
| Management fee | $7,197,945 | |
| Transfer agent fees | 2,214,038 | |
| Accounting and security lending fees | 419,203 | |
| Custodian fees and expenses | 19,569 | |
| Independent trustees' compensation | 24,399 | |
| Registration fees | 57,542 | |
| Audit | 48,202 | |
| Legal | 17,085 | |
| Miscellaneous | 15,004 | |
| Total expenses before reductions | 10,012,987 | |
| Expense reductions | (101,786) | 9,911,201 |
| Net investment income (loss) | 13,225,895 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | (9,029,365) | |
| Foreign currency transactions | 230,126 | |
| Total net realized gain (loss) | (8,799,239) | |
| Change in net unrealized appreciation (depreciation) on: Investment securities | (195,194,326) | |
| Assets and liabilities in foreign currencies | (176) | |
| Total change in net unrealized appreciation (depreciation) | (195,194,502) | |
| Net gain (loss) | (203,993,741) | |
| Net increase (decrease) in net assets resulting from operations | $(190,767,846) |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 29, 2016 | Year ended February 28, 2015 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $13,225,895 | $11,683,837 |
| Net realized gain (loss) | (8,799,239) | 23,337,403 |
| Change in net unrealized appreciation (depreciation) | (195,194,502) | 97,277,423 |
| Net increase (decrease) in net assets resulting from operations | (190,767,846) | 132,298,663 |
| Distributions to shareholders from net investment income | (11,432,858) | (13,087,799) |
| Distributions to shareholders from net realized gain | (8,681,321) | (11,512,848) |
| Total distributions | (20,114,179) | (24,600,647) |
| Share transactions | ||
| Proceeds from sales of shares | 127,816,905 | 1,131,831,200 |
| Reinvestment of distributions | 19,783,396 | 24,263,067 |
| Cost of shares redeemed | (278,642,814) | (657,834,771) |
| Net increase (decrease) in net assets resulting from share transactions | (131,042,513) | 498,259,496 |
| Redemption fees | 8,557 | 7,756 |
| Total increase (decrease) in net assets | (341,915,981) | 605,965,268 |
| Net Assets | ||
| Beginning of period | 1,385,489,557 | 779,524,289 |
| End of period (including distributions in excess of net investment income of $1,045,722 and distributions in excess of net investment income of $1,448,929, respectively) | $1,043,573,576 | $1,385,489,557 |
| Other Information | ||
| Shares | ||
| Sold | 1,462,721 | 13,593,841 |
| Issued in reinvestment of distributions | 239,886 | 273,356 |
| Redeemed | (3,384,258) | (7,906,401) |
| Net increase (decrease) | (1,681,651) | 5,960,796 |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Financial Services Portfolio
| Years ended February 28, | 2016 A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $88.84 | $80.90 | $65.56 | $57.57 | $62.81 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .87 | .84 | 1.06 | .99 | .21 |
| Net realized and unrealized gain (loss) | (13.34) | 8.75 | 15.03 | 7.75 | (5.31) |
| Total from investment operations | (12.47) | 9.59 | 16.09 | 8.74 | (5.10) |
| Distributions from net investment income | (.78) | (.89) | (.75) | (.75) | (.14) |
| Distributions from net realized gain | (.59) | (.76) | – | – | – |
| Total distributions | (1.37) | (1.65) | (.75) | (.75) | (.14) |
| Redemption fees added to paid in capitalB,C | – | – | – | – | – |
| Net asset value, end of period | $75.00 | $88.84 | $80.90 | $65.56 | $57.57 |
| Total ReturnD | (14.18)% | 11.87% | 24.56% | 15.26% | (8.07)% |
| Ratios to Average Net AssetsE,F | |||||
| Expenses before reductions | .76% | .78% | .83% | .87% | .90% |
| Expenses net of fee waivers, if any | .76% | .78% | .83% | .87% | .90% |
| Expenses net of all reductions | .75% | .78% | .81% | .78% | .84% |
| Net investment income (loss) | 1.01% | .99% | 1.43% | 1.66% | .39% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $1,043,574 | $1,385,490 | $779,524 | $616,059 | $439,012 |
| Portfolio turnover rateG | 55% | 42%H | 197% | 271% | 384% |
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.
H 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, 2016 | Past 1 year | Past 5 years | Past 10 years |
| Insurance Portfolio | (2.54)% | 10.30% | 3.60% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Insurance Portfolio on February 28, 2006.
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 | ||
| $14,240 | Insurance Portfolio | |
| $18,666 | S&P 500® Index | |
Insurance Portfolio
Management's Discussion of Fund Performance
Market Recap: The S&P 500® index returned -6.19% for the year ending February 29, 2016. Largely range-bound for the first half of the period, U.S. stocks suffered a steep, late-summer decline on concern about an economic slowdown in China. The market recovered in October, lifted by the U.S. Federal Reserve’s decision to delay raising near-term interest rates until mid-December. Investors also drew courage from a rate cut in China and economic stimulus in Europe. But continued oil-price weakness and U.S.-dollar strength, plus fresh worries about China and the Middle East, pushed the S&P 500® to its worst January since 2009, followed by a volatile but ultimately flattish February. Overall, growth-oriented and larger-cap stocks fared better than value and smaller-cap complements. In this environment, the tech-heavy Nasdaq Composite Index® returned -7.07% for the 12 months; the Russell 2000® Index, -14.97%. Few sectors within the broad-market S&P 500® gained ground, with a wide gap separating leaders from laggards. Despite increased competition among wireless carriers, telecommunication services (+8%) led the way, followed by the more defensive utilities sector (+6%). Rising wages and low inflation buoyed consumer staples (+4%), less so consumer discretionary (0%). Meanwhile, energy (-24%) foundered amid commodity weakness that also hurt materials (-17%). The financials sector (-12%) struggled as well.Comments from Portfolio Manager Peter Deutsche: For the year, the fund returned -2.54%, versus the -1.83% return of its industry benchmark, the MSCI U.S. IMI Insurance 25/50 Index. The insurance industry benchmark was dragged lower by the life & health insurance group, but still outperformed the S&P 500®, thanks to solid gains from the property & casualty (P&C) insurance and reinsurance segments. The fund’s stock picks and an underweighting in P&C, however, cost the fund ground versus the MSCI benchmark. In particular, not owning some mid-cap index components, including Cincinnati Financial, detracted, as an investor flight to safety and merger-and-acquisition speculation drove share price gains. An underweighting in reinsurance also had a negative impact versus the benchmark, as the stocks there rallied. In addition, an overweighting in life & health insurance and poor picks in several segments including multi-line insurance hurt relative return. By contrast, security selection in the life & health insurance group aided relative performance. The fund gained the most from being underexposed to life insurer Lincoln National, which saw its stock pressured by declining equity markets, continued-low interest rates and risks related to its energy exposure.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, 2016
| % of fund's net assets | % of fund's net assets 6 months ago | |
| Chubb Ltd. | 10.4 | 6.5 |
| American International Group, Inc. | 10.1 | 12.1 |
| MetLife, Inc. | 6.6 | 8.0 |
| AFLAC, Inc. | 5.4 | 5.1 |
| Marsh & McLennan Companies, Inc. | 5.4 | 5.0 |
| The Travelers Companies, Inc. | 5.3 | 4.8 |
| Pricoa Global Funding I | 4.6 | 5.5 |
| Allstate Corp. | 4.2 | 4.2 |
| Aon PLC | 3.3 | 2.6 |
| Principal Financial Group, Inc. | 2.8 | 2.9 |
| 58.1 |
Top Industries (% of fund's net assets)
| As of February 29, 2016 | ||
| Insurance | 91.2% | |
| Diversified Financial Services | 2.5% | |
| Capital Markets | 1.3% | |
| Consumer Finance | 0.3% | |
| Banks | 0.2% | |
| All Others* | 4.5% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
| As of August 31, 2015 | ||
| Insurance | 92.8% | |
| Diversified Financial Services | 2.1% | |
| Thrifts & Mortgage Finance | 0.7% | |
| Capital Markets | 0.4% | |
| All Others* | 4.0% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
Insurance Portfolio
Investments February 29, 2016
Showing Percentage of Net Assets
| Common Stocks - 95.5% | |||
| Shares | Value | ||
| Banks - 0.2% | |||
| Regional Banks - 0.2% | |||
| Hilltop Holdings, Inc. (a) | 500 | $8,340 | |
| Huntington Bancshares, Inc. | 126,800 | 1,109,500 | |
| 1,117,840 | |||
| Capital Markets - 1.3% | |||
| Asset Management & Custody Banks - 1.3% | |||
| Apollo Global Management LLC Class A | 153,444 | 2,386,054 | |
| Ares Management LP | 285,549 | 3,398,033 | |
| 5,784,087 | |||
| Consumer Finance - 0.3% | |||
| Consumer Finance - 0.3% | |||
| J.G. Wentworth Co. (a)(b) | 179,100 | 227,457 | |
| OneMain Holdings, Inc. (a) | 51,100 | 1,153,327 | |
| 1,380,784 | |||
| Diversified Financial Services - 2.5% | |||
| Multi-Sector Holdings - 2.5% | |||
| Berkshire Hathaway, Inc. Class B (a) | 85,700 | 11,498,369 | |
| Hotels, Restaurants & Leisure - 0.0% | |||
| Restaurants - 0.0% | |||
| J. Alexanders Holdings, Inc. (a) | 3,678 | 38,178 | |
| Insurance - 91.2% | |||
| Insurance Brokers - 14.6% | |||
| Aon PLC | 161,700 | 15,408,393 | |
| Arthur J. Gallagher & Co. | 194,100 | 7,734,885 | |
| Brown & Brown, Inc. | 330,500 | 10,678,455 | |
| Marsh & McLennan Companies, Inc. | 433,600 | 24,736,880 | |
| Willis Group Holdings PLC | 76,828 | 8,706,149 | |
| 67,264,762 | |||
| Life & Health Insurance - 25.9% | |||
| AFLAC, Inc. | 419,500 | 24,968,640 | |
| CNO Financial Group, Inc. | 206,300 | 3,595,809 | |
| FBL Financial Group, Inc. Class A | 300 | 17,253 | |
| Genworth Financial, Inc. Class A (a) | 749,300 | 1,588,516 | |
| Japan Post Holdings Co. Ltd. (a) | 20,300 | 258,523 | |
| Lincoln National Corp. | 53,300 | 1,947,049 | |
| MetLife, Inc. | 769,275 | 30,432,519 | |
| Phoenix Companies, Inc. (a) | 33,458 | 1,234,600 | |
| Pricoa Global Funding I | 318,089 | 21,022,502 | |
| Primerica, Inc. | 50,700 | 2,139,033 | |
| Principal Financial Group, Inc. | 346,800 | 13,112,508 | |
| StanCorp Financial Group, Inc. | 35,300 | 4,055,970 | |
| Torchmark Corp. | 112,200 | 5,746,884 | |
| Unum Group | 314,961 | 8,985,837 | |
| 119,105,643 | |||
| Multi-Line Insurance - 14.3% | |||
| American International Group, Inc. | 926,900 | 46,530,380 | |
| Assurant, Inc. | 53,600 | 3,810,960 | |
| Hartford Financial Services Group, Inc. | 259,500 | 10,930,140 | |
| Loews Corp. | 101,300 | 3,682,255 | |
| Zurich Insurance Group AG | 3,737 | 791,538 | |
| 65,745,273 | |||
| Property & Casualty Insurance - 32.8% | |||
| Allied World Assurance Co. Holdings AG | 261,400 | 8,466,746 | |
| Allstate Corp. | 307,200 | 19,494,912 | |
| AmTrust Financial Services, Inc. | 74,800 | 1,828,860 | |
| Arch Capital Group Ltd. (a) | 10,300 | 699,782 | |
| Argo Group International Holdings, Ltd. | 15,710 | 875,518 | |
| Aspen Insurance Holdings Ltd. | 33,000 | 1,474,770 | |
| Assured Guaranty Ltd. | 119,000 | 2,952,390 | |
| Axis Capital Holdings Ltd. | 16,200 | 870,102 | |
| Beazley PLC | 20,596 | 102,999 | |
| Chubb Ltd. | 413,805 | 47,806,893 | |
| Employers Holdings, Inc. | 800 | 22,208 | |
| esure Group PLC | 174,900 | 605,178 | |
| First American Financial Corp. | 71,400 | 2,643,942 | |
| FNF Group | 123,600 | 4,076,328 | |
| FNFV Group (a) | 21,299 | 216,611 | |
| Hanover Insurance Group, Inc. | 50,000 | 4,147,500 | |
| Hiscox Ltd. | 143,820 | 1,947,711 | |
| Markel Corp. (a) | 9,000 | 7,710,390 | |
| MBIA, Inc. (a)(b) | 96,000 | 658,560 | |
| Mercury General Corp. | 200 | 10,516 | |
| ProAssurance Corp. | 60,900 | 3,002,979 | |
| Progressive Corp. | 198,700 | 6,342,504 | |
| Selective Insurance Group, Inc. | 23,900 | 802,562 | |
| The Travelers Companies, Inc. | 226,700 | 24,374,784 | |
| W.R. Berkley Corp. | 25,000 | 1,287,500 | |
| White Mountains Insurance Group Ltd. | 400 | 306,744 | |
| XL Group PLC Class A | 236,300 | 8,123,994 | |
| 150,852,983 | |||
| Reinsurance - 3.6% | |||
| Alleghany Corp. (a) | 4,125 | 1,913,918 | |
| Everest Re Group Ltd. | 3,200 | 595,616 | |
| Maiden Holdings Ltd. | 700 | 8,379 | |
| Muenchener Rueckversicherungs AG | 8,400 | 1,658,993 | |
| PartnerRe Ltd. | 16,100 | 2,258,347 | |
| Reinsurance Group of America, Inc. | 85,533 | 7,706,523 | |
| Validus Holdings Ltd. | 50,500 | 2,267,955 | |
| 16,409,731 | |||
| TOTAL INSURANCE | 419,378,392 | ||
| TOTAL COMMON STOCKS | |||
| (Cost $378,991,810) | 439,197,650 | ||
| Money Market Funds - 4.1% | |||
| Fidelity Cash Central Fund, 0.40% (c) | 18,409,320 | 18,409,320 | |
| Fidelity Securities Lending Cash Central Fund, 0.44% (c)(d) | 620,775 | 620,775 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $19,030,095) | 19,030,095 | ||
| TOTAL INVESTMENT PORTFOLIO - 99.6% | |||
| (Cost $398,021,905) | 458,227,745 | ||
| NET OTHER ASSETS (LIABILITIES) - 0.4% | 1,626,540 | ||
| NET ASSETS - 100% | $459,854,285 |
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 | $35,773 |
| Fidelity Securities Lending Cash Central Fund | 12,929 |
| Total | $48,702 |
Investment Valuation
The following is a summary of the inputs used, as of February 29, 2016, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used 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 | $439,197,650 | $438,147,589 | $1,050,061 | $-- |
| Money Market Funds | 19,030,095 | 19,030,095 | -- | -- |
| Total Investments in Securities: | $458,227,745 | $457,177,684 | $1,050,061 | $-- |
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 | 78.8% |
| Switzerland | 12.4% |
| United Kingdom | 3.4% |
| Bermuda | 3.1% |
| Ireland | 1.8% |
| Others (Individually Less Than 1%) | 0.5% |
| 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, 2016 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $614,403) — See accompanying schedule: Unaffiliated issuers (cost $378,991,810) | $439,197,650 | |
| Fidelity Central Funds (cost $19,030,095) | 19,030,095 | |
| Total Investments (cost $398,021,905) | $458,227,745 | |
| Receivable for investments sold | 918,375 | |
| Receivable for fund shares sold | 1,400,886 | |
| Dividends receivable | 883,301 | |
| Distributions receivable from Fidelity Central Funds | 6,582 | |
| Prepaid expenses | 1,463 | |
| Other receivables | 1,463 | |
| Total assets | 461,439,815 | |
| Liabilities | ||
| Payable for fund shares redeemed | 630,634 | |
| Accrued management fee | 208,252 | |
| Other affiliated payables | 88,693 | |
| Other payables and accrued expenses | 37,176 | |
| Collateral on securities loaned, at value | 620,775 | |
| Total liabilities | 1,585,530 | |
| Net Assets | $459,854,285 | |
| Net Assets consist of: | ||
| Paid in capital | $391,778,380 | |
| Undistributed net investment income | 1,074,249 | |
| Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 6,795,840 | |
| Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 60,205,816 | |
| Net Assets, for 7,282,421 shares outstanding | $459,854,285 | |
| Net Asset Value, offering price and redemption price per share ($459,854,285 ÷ 7,282,421 shares) | $63.15 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 29, 2016 | ||
| Investment Income | ||
| Dividends | $9,326,922 | |
| Interest | 39 | |
| Income from Fidelity Central Funds | 48,702 | |
| Total income | 9,375,663 | |
| Expenses | ||
| Management fee | $2,429,940 | |
| Transfer agent fees | 840,028 | |
| Accounting and security lending fees | 172,587 | |
| Custodian fees and expenses | 9,046 | |
| Independent trustees' compensation | 8,076 | |
| Registration fees | 39,336 | |
| Audit | 40,934 | |
| Legal | 5,051 | |
| Miscellaneous | 4,669 | |
| Total expenses before reductions | 3,549,667 | |
| Expense reductions | (22,491) | 3,527,176 |
| Net investment income (loss) | 5,848,487 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 15,991,696 | |
| Foreign currency transactions | 10,797 | |
| Total net realized gain (loss) | 16,002,493 | |
| Change in net unrealized appreciation (depreciation) on: Investment securities | (40,489,504) | |
| Assets and liabilities in foreign currencies | 424 | |
| Total change in net unrealized appreciation (depreciation) | (40,489,080) | |
| Net gain (loss) | (24,486,587) | |
| Net increase (decrease) in net assets resulting from operations | $(18,638,100) |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 29, 2016 | Year ended February 28, 2015 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $5,848,487 | $5,759,496 |
| Net realized gain (loss) | 16,002,493 | 22,107,850 |
| Change in net unrealized appreciation (depreciation) | (40,489,080) | 21,060,837 |
| Net increase (decrease) in net assets resulting from operations | (18,638,100) | 48,928,183 |
| Distributions to shareholders from net investment income | (5,125,338) | (5,518,736) |
| Distributions to shareholders from net realized gain | (9,186,244) | (37,396,850) |
| Total distributions | (14,311,582) | (42,915,586) |
| Share transactions | ||
| Proceeds from sales of shares | 203,320,374 | 86,312,878 |
| Reinvestment of distributions | 13,796,466 | 41,742,628 |
| Cost of shares redeemed | (126,141,777) | (162,737,537) |
| Net increase (decrease) in net assets resulting from share transactions | 90,975,063 | (34,682,031) |
| Redemption fees | 10,703 | 5,876 |
| Total increase (decrease) in net assets | 58,036,084 | (28,663,558) |
| Net Assets | ||
| Beginning of period | 401,818,201 | 430,481,759 |
| End of period (including undistributed net investment income of $1,074,249 and undistributed net investment income of $646,580, respectively) | $459,854,285 | $401,818,201 |
| Other Information | ||
| Shares | ||
| Sold | 2,959,417 | 1,299,698 |
| Issued in reinvestment of distributions | 208,292 | 650,226 |
| Redeemed | (1,894,230) | (2,455,227) |
| Net increase (decrease) | 1,273,479 | (505,303) |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Insurance Portfolio
| Years ended February 28, | 2016 A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $66.87 | $66.08 | $56.81 | $47.56 | $50.04 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .89 | .96 | .75 | .68 | .43 |
| Net realized and unrealized gain (loss) | (2.50) | 7.13 | 13.75 | 10.06 | (2.52) |
| Total from investment operations | (1.61) | 8.09 | 14.50 | 10.74 | (2.09) |
| Distributions from net investment income | (.74) | (.96) | (.61) | (.52) | (.39) |
| Distributions from net realized gain | (1.37) | (6.34) | (4.62) | (.97) | – |
| Total distributions | (2.11) | (7.30) | (5.23) | (1.49) | (.39) |
| Redemption fees added to paid in capitalB,C | – | – | – | – | – |
| Net asset value, end of period | $63.15 | $66.87 | $66.08 | $56.81 | $47.56 |
| Total ReturnD | (2.54)% | 13.01% | 25.82% | 22.91% | (4.13)% |
| Ratios to Average Net AssetsE,F | |||||
| Expenses before reductions | .80% | .81% | .83% | .87% | .89% |
| Expenses net of fee waivers, if any | .80% | .81% | .83% | .87% | .89% |
| Expenses net of all reductions | .80% | .81% | .82% | .85% | .88% |
| Net investment income (loss) | 1.32% | 1.44% | 1.17% | 1.35% | .94% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $459,854 | $401,818 | $430,482 | $307,071 | $270,776 |
| Portfolio turnover rateG | 25% | 26% | 126% | 157% | 153% |
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.
Notes to Financial Statements
For the period ended February 29, 2016
1. Organization.
Banking Portfolio, Brokerage and Investment Management Portfolio, Consumer Finance Portfolio, Financial Services Portfolio, and Insurance Portfolio (the Funds) are 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 are non-diversified with the exception of Financial Services Portfolio and Banking Portfolio. 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.
2. Investments in Fidelity Central Funds.
The Funds may 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 Fidelity Investments Money Management, Inc. (FIMM), an affiliate of the investment adviser. Annualized expenses of the Money Market Central Funds as of their most recent shareholder report date are less than .005%.
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.
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 Fidelity SelectCo, LLC (SelectCo) Fair Value Committee (the Committee). 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. Utilizing these techniques may result in transfers between Level 1 and Level 2. 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, 2016 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 may 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. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. Subsequent to ex-dividend date the Funds determine the components of these distributions, based upon receipt of tax filings or other correspondence relating to the underlying investment. 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 Brokerage and Investment Management Portfolio, independent Trustees may elect 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 are included in the accompanying Statement of Assets and Liabilities.
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, 2016, 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), partnership, deferred trustees compensation, capital loss carryforwards and losses due to deferred due to wash sales and excise tax regulations.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows for each Fund:
| Tax cost | Gross unrealized appreciation | Gross unrealized depreciation | Net unrealized appreciation (depreciation) on securities | |
| Banking Portfolio | $588,626,098 | $45,326,994 | $(67,045,607) | $(21,718,613) |
| Brokerage and Investment Management Portfolio | 322,397,901 | 18,675,224 | (36,682,311) | (18,007,087) |
| Consumer Finance Portfolio | 88,928,910 | 13,295,903 | (12,158,286) | 1,137,617 |
| Financial Services Portfolio | 1,052,462,608 | 66,374,961 | (83,512,924) | (17,137,963) |
| Insurance Portfolio | 400,270,098 | 78,320,933 | (20,363,286) | 57,957,647 |
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 | |
| Banking Portfolio | $– | $– | $– | $(21,718,613) |
| Brokerage and Investment Management Portfolio | – | – | – | (18,007,087) |
| Consumer Finance Portfolio | 206,234 | 2,131,955 | (11,848,914) | 1,137,617 |
| Financial Services Portfolio | – | – | – | (17,138,847) |
| Insurance Portfolio | 1,074,250 | 9,044,034 | – | 57,957,623 |
Due to large subscriptions in a prior period, $11,848,914 of capital losses that will be available to offset future capital gains of the Consumer Finance Portfolio will be limited to approximately $5,418,625 per year.
Certain of the Funds intend to elect to defer to the next fiscal year capital losses recognized during the period November 1, 2015 to February 29, 2016. Loss deferrals were as follows:
| Capital losses | |
| Banking Portfolio | $(14,210,349) |
| Brokerage and Investment Management Portfolio | (6,431,788) |
| Financial Services Portfolio | (14,195,062) |
Financial Services Portfolio intends to elect to defer to its next fiscal year $1,045,568 of ordinary losses recognized during the period January 1, 2016 to February 29, 2016.
The tax character of distributions paid was as follows:
| February 29, 2016 | |||
| Ordinary Income | Long-term Capital Gains | Total | |
| Banking Portfolio | $9,401,634 | $25,942,663 | $35,344,297 |
| Brokerage and Investment Management Portfolio | 4,622,816 | 21,141,799 | 25,764,615 |
| Consumer Finance Portfolio | 1,629,098 | 9,545,636 | 11,174,734 |
| Financial Services Portfolio | 11,432,858 | 8,681,321 | 20,114,179 |
| Insurance Portfolio | 5,262,347 | 9,049,235 | 14,311,582 |
| February 28, 2015 | |||
| Ordinary Income | Long-term Capital Gains | Total | |
| Banking Portfolio | $17,722,180 | $19,677,551 | $37,399,731 |
| Brokerage and Investment Management Portfolio | 12,494,854 | 7,951,457 | 20,446,311 |
| Consumer Finance Portfolio | 2,831,537 | 32,268,529 | 35,100,066 |
| Financial Services Portfolio | 17,091,611 | 7,509,036 | 24,600,647 |
| Insurance Portfolio | 20,370,490 | 22,545,096 | 42,915,586 |
Trading (Redemption) Fees. Shares held by investors in the Funds less than 30 days may be subject to a redemption fee equal to .75% of the NAV of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Funds and accounted for as an addition to paid in capital.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, are noted in the table below.
| Purchases ($) | Sales ($) | |
| Banking Portfolio | 478,167,263 | 399,377,275 |
| Brokerage and Investment Management Portfolio | 311,271,525 | 463,200,054 |
| Consumer Finance Portfolio | 55,421,261 | 87,428,819 |
| Financial Services Portfolio | 693,914,791 | 822,221,285 |
| Insurance Portfolio | 176,950,045 | 107,298,489 |
5. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity SelectCo, 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 average net assets of all the mutual funds advised by Fidelity Management & Research Company (FMR) and the investment adviser. 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% | .25% | .55% |
| Brokerage and Investment Management Portfolio | .30% | .25% | .55% |
| Consumer Finance Portfolio | .30% | .25% | .55% |
| Financial Services Portfolio | .30% | .25% | .55% |
| Insurance Portfolio | .30% | .25% | .55% |
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (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 | .19% |
| Brokerage and Investment Management Portfolio | .19% |
| Consumer Finance Portfolio | .25% |
| Financial Services Portfolio | .17% |
| Insurance Portfolio | .19% |
Accounting and Security Lending Fees. FSC maintains each Fund's accounting records. The accounting fee is based on the level of average net assets for each month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. Certain Funds placed a portion of their portfolio transactions 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 | $12,824 |
| Brokerage and Investment Management Portfolio | 6,371 |
| Consumer Finance Portfolio | 2,115 |
| Financial Services Portfolio | 11,836 |
| Insurance Portfolio | 1,774 |
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Funds, along with other registered investment companies having management contracts with FMR or other affiliated entities of FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. Each applicable fund's 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 | |
| Brokerage and Investment Management Portfolio | Borrower | $5,315,167 | .36% | $314 |
Interfund Trades. The 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:
| Banking Portfolio | $921 |
| Brokerage and Investment Management Portfolio | 761 |
| Consumer Finance Portfolio | 182 |
| Financial Services Portfolio | 1,938 |
| Insurance Portfolio | 617 |
During the period, the Funds did not borrow on this line of credit.
7. Security Lending.
Certain Funds lend portfolio securities through a lending agent from time to time in order to earn additional income. 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. Security lending activity was as follows:
| Total Security Lending Income | |
| Banking Portfolio | $12,083 |
| Brokerage and Investment Management Portfolio | 5,348 |
| Consumer Finance Portfolio | 100,632 |
| Financial Services Portfolio | 31,466 |
| Insurance Portfolio | 12,929 |
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 reduction | Custody expense reduction | |
| Banking Portfolio | $33,760 | $32 |
| Brokerage and Investment Management Portfolio | 36,083 | – |
| Consumer Finance Portfolio | 2,075 | – |
| Financial Services Portfolio | 68,946 | 45 |
| Insurance Portfolio | 9,015 | 10 |
In addition, during the period the investment adviser reimbursed and/or waived a portion of operating expenses as follows:
| Amount | |
| Banking Portfolio | $20,369 |
| Brokerage and Investment Management Portfolio | 19,237 |
| Consumer Finance Portfolio | 5,997 |
| Financial Services Portfolio | 32,795 |
| Insurance Portfolio | 13,466 |
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.
At the end of the period, the following mutual funds managed by the investment adviser or its affiliates were the owners of record of 10% or more of the total outstanding shares of the following Funds.
| VIP FundsManager 50% Portfolio | VIP FundsManager 60% Portfolio | Strategic Advisers Core Fund | |
| Banking Portfolio | 13% | 22% | – |
| Financial Services Portfolio | 12% | 20% | 34% |
| Insurance Portfolio | 16% | 16% | – |
Mutual funds managed by the investment adviser or its affiliates, in aggregate, were the owners of record of more than 20% of the total outstanding shares of the following Funds.
| % of shares held | |
| Banking Portfolio | 43% |
| Financial Services Portfolio | 70% |
| Insurance Portfolio | 38% |
Report of Independent Registered Public Accounting Firm
To the 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:
In our opinion, the accompanying statements of assets and liabilities, including the schedules of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Banking Portfolio, Brokerage and Investment Management Portfolio, Consumer Finance Portfolio, Financial Services Portfolio and Insurance Portfolio (each a fund of Fidelity Select Portfolios) (the "Funds") at February 29, 2016, 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 then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Funds' management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at February 29, 2016 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 15, 2016
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. Each of the Trustees oversees 75 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. Brian B. Hogan 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. Michael E. Wiley 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 sector portfolios. Other Boards oversee Fidelity's equity and high income funds, and Fidelity's investment grade bond, money market, and asset allocation funds. 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 SelectCo 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 SelectCo, 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 and Audit Committees. Appropriate personnel, including but not limited to the funds' Chief Compliance Officer (CCO), SelectCo's internal auditor, the independent accountants, the funds' Treasurer and portfolio management personnel, make periodic reports to the Board's committees, as appropriate. 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+
Brian B. Hogan (1964)
Year of Election or Appointment: 2014
Trustee
Chairman of the Board of Trustees
Mr. Hogan also serves as Trustee or Vice President of other funds. Mr. Hogan serves as a Director of FMR Investment Management (U.K.) Limited (investment adviser firm, 2015-present) and Fidelity SelectCo, LLC (investment adviser firm, 2014-present) and President of the Equity Division of FMR (investment adviser firm, 2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager.
* 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 SelectCo.
+ 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+
David A. Rosow (1942)
Year of Election or Appointment: 2013
Trustee
Mr. Rosow also serves as Trustee of other Fidelity® funds. Prior to his retirement in 2006, Mr. Rosow was the Chief Executive Officer, owner and operator of a number of private companies, which encompassed oil refining, drilling and marketing of petroleum products (including specialty petroleum products), the recreation industry, and real estate development. Mr. Rosow currently serves as a Director of Oxbow Carbon LLC (upgraders, marketers, and distributors of petroleum byproducts of the oil refining process, 2015-present) and Oxbridge Academy of the Palm Beaches (2015-present). Previously, Mr. Rosow served on the Fairfield Country Day School Board for 27 years, including as its President for 3 years, stepping down in 2006, as Lead Director and Chairman of the Audit Committee of Hudson United Bancorp (1996-2006), Chairman of the Board of Westport Bank and Trust (1992-1996), and as a Director of TD Banknorth (2006-2007). In addition, Mr. Rosow served as a member (2008-2014) and President (2009-2014) of the Town Council of Palm Beach, Florida. Mr. Rosow also served as a Member of the Advisory Board of other Fidelity® funds (2012-2013).
Garnett A. Smith (1947)
Year of Election or Appointment: 2013
Trustee
Mr. Smith also serves as Trustee of other Fidelity® funds. Prior to Mr. Smith's retirement, he served as Chairman and Chief Executive Officer of Inbrand Corp. (manufacturer of personal absorbent products, 1990-1997). He also served as President (1986-1990) of Inbrand Corp. Prior to his employment with Inbrand Corp., he was employed by a retail fabric chain and North Carolina National Bank. In addition, Mr. Smith served as a Member of the Advisory Board of other Fidelity® funds (2012-2013) and as a board member of the Jackson Hole Land Trust (2009-2012).
Michael E. Wiley (1950)
Year of Election or Appointment: 2008
Trustee
Chairman of the Independent Trustees
Mr. Wiley also serves as Trustee of other Fidelity® funds. Mr. Wiley serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), a Director of Tesoro Logistics LP (natural resources logistics, 2015-present), and a Director of Bill Barrett Corporation (exploration and production, 2005-present). In addition, Mr. Wiley also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a Trustee of other Fidelity® funds (2008-2013), as a Director of Asia Pacific Exploration Consolidated (international oil and gas exploration and production, 2008-2013), as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-2010), as a Senior Energy Advisor of Katzenbach Partners, LLC (consulting, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production, 2001-2005).
+ 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:
Except for Anthony R. Rochte, correspondence intended for an officer may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210. Correspondence intended for Mr. Rochte may be sent to SelectCo, 1225 17th Street, Denver, Colorado 80202-5541. Officers appear below in alphabetical order.
Name, Year of Birth; Principal Occupation
Donald F. Donahue (1950)
Year of Election or Appointment: 2015
Member of the Advisory Board
Mr. Donahue also serves as a Member of the Advisory Board of other Fidelity® funds. Mr. Donahue is President and Chief Executive Officer of Miranda Partners, LLC (risk consulting for the financial services industry, 2012-present) and a consultant for the Institute for Defense Analyses (national security, 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 serves as a Member and Treasurer of the Board of Directors of United Way of New York (2012-present), Member of the Board of Directors of NYC Leadership Academy (2012-present) and Physicians for Human Rights (2013-present), and Member of the Board of Advisors of Ripple Labs, Inc. (financial services, 2015-present). He also served as Chairman (2010-2012) and Member of the Board of Directors (2012-2013) of Omgeo, LLC (financial services) and Member of the Board of Directors of XBRL US (financial services non-profit, 2009-2012) and the International Securities Services Association (2009-2012).
Christopher S. Bartel (1971)
Year of Election or Appointment: 2009
Vice President
Mr. Bartel also serves as Vice President of other funds. Mr. Bartel serves as a Director of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2016-present) and Fidelity Management & Research (Hong Kong) (investment adviser firm, 2012-present) and Head of Global Equity Research (2010-present). Previously, Mr. Bartel served as a Director, President, and Chief Executive Officer of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2012-2016), Senior Vice President of Equity Research (2009-2010), Managing Director of Research (2006-2009), and an analyst and portfolio manager (2000-2006).
Marc R. Bryant (1966)
Year of Election or Appointment: 2013
Secretary and Chief Legal Officer (CLO)
Mr. Bryant also serves as Secretary and CLO of other funds. Mr. Bryant serves as CLO, Secretary, and Senior Vice President of Fidelity Management & Research Company (investment adviser firm, 2015-present) and FMR Co., Inc. (investment adviser firm, 2015-present); Secretary of Fidelity SelectCo, LLC (investment adviser firm, 2015-present) and Fidelity Investments Money Management, Inc. (investment adviser firm, 2015-present); and CLO of Fidelity Management & Research (Hong Kong) Limited and FMR Investment Management (U.K.) Limited (investment adviser firms, 2015-present) and Fidelity Management & Research (Japan) Limited (investment adviser firm, 2016-present). He is Senior Vice President and Deputy General Counsel of FMR LLC (diversified financial services company). Previously, Mr. Bryant served as Secretary and CLO of Fidelity Rutland Square Trust II (2010-2014) and Assistant Secretary of Fidelity's Fixed Income and Asset Allocation Funds (2013-2015). Prior to joining Fidelity Investments, Mr. Bryant served as a Senior Vice President and the Head of Global Retail Legal for AllianceBernstein L.P. (2006-2010), and as the General Counsel for ProFund Advisors LLC (2001-2006).
William C. Coffey (1969)
Year of Election or Appointment: 2009
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 Vice President and Associate General Counsel of FMR LLC (2005-2009).
Jonathan Davis (1968)
Year of Election or Appointment: 2010
Assistant Treasurer
Mr. Davis also serves as Assistant Treasurer of other funds, 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).
Adrien E. Deberghes (1967)
Year of Election or Appointment: 2013
President and Treasurer
Mr. Deberghes also serves as an officer of other funds. He is an employee of Fidelity Investments (2008-present). Prior to joining Fidelity Investments, Mr. Deberghes was Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005). Previously, Mr. Deberghes served in other fund officer roles.
Joseph DeSantis (1959)
Year of Election or Appointment: 2015
Vice President
Mr. DeSantis also serves as Vice President of other funds. Mr. DeSantis serves as Group Chief Investment Officer, Equities (2010-present) and is an employee of Fidelity Investments.
Stephanie J. Dorsey (1969)
Year of Election or Appointment: 2010
Assistant Treasurer
Ms. Dorsey also serves as an officer of other funds. She is an employee of Fidelity Investments (2008-present) and has served in other fund officer roles. Prior to joining Fidelity Investments, Ms. Dorsey served as Treasurer (2004-2008) of the JPMorgan Mutual Funds and Vice President (2004-2008) of JPMorgan Chase Bank.
Howard J. Galligan III (1966)
Year of Election or Appointment: 2014
Chief Financial Officer
Mr. Galligan also serves as Chief Financial Officer of other funds. Mr. Galligan serves as President of Fidelity Pricing and Cash Management Services (FPCMS) (2014-present) and as a Director of Strategic Advisers, Inc. (investment adviser firm, 2008-present). Previously, Mr. Galligan served as Chief Administrative Officer of Asset Management (2011-2014) and Chief Operating Officer and Senior Vice President of Investment Support for Strategic Advisers, Inc. (2003-2011).
Scott C. Goebel (1968)
Year of Election or Appointment: 2015
Vice President
Mr. Goebel serves as Vice President of other funds and is an employee of Fidelity Investments (2001-present). Previously, Mr. Goebel served as Secretary of Fidelity SelectCo, LLC (investment adviser firm, 2013-2015), Fidelity Investments Money Management, Inc. (FIMM) (investment adviser firm, 2010-2015), and Fidelity Research and Analysis Company (FRAC) (investment adviser firm, 2010-2015); General Counsel, Secretary, and Senior Vice President of Fidelity Management & Research Company (investment adviser firm, 2008-2015) and FMR Co., Inc. (investment adviser firm, 2008-2015); Assistant Secretary of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2008-2015) and Fidelity Management & Research (U.K.) Inc. (investment adviser firm, 2008-2015); Chief Legal Officer (CLO) of Fidelity Management & Research (Hong Kong) Limited (investment adviser firm, 2008-2015); Secretary and CLO of certain Fidelity® funds (2008-2015); Assistant Secretary of FIMM (2008-2010), FRAC (2008-2010), and certain funds (2007-2008); and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007).
James D. Gryglewicz (1972)
Year of Election or Appointment: 2014
Chief Compliance Officer
Mr. Gryglewicz also serves as Chief Compliance Officer of other funds. Mr. Gryglewicz serves as Compliance Officer of Strategic Advisers, Inc. (investment adviser firm, 2015-present) and Fidelity SelectCo, LLC (investment adviser firm, 2014-present), Senior Vice President of Asset Management Compliance (2009-present), and is an employee of Fidelity Investments (2004-present).
Brian B. Hogan (1964)
Year of Election or Appointment: 2009
Vice President
Mr. Hogan also serves as Trustee or Vice President of other funds. Mr. Hogan serves as a Director of FMR Investment Management (U.K.) Limited (investment adviser firm, 2015-present) and Fidelity SelectCo, LLC (investment adviser firm, 2014-present) and President of the Equity Division of FMR (investment adviser firm, 2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager.
Chris Maher (1972)
Year of Election or Appointment: 2013
Assistant Treasurer
Mr. Maher serves as Assistant Treasurer of other funds. Mr. Maher is Vice President of Valuation Oversight and is an employee of Fidelity Investments. Previously, Mr. Maher served as 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).
John F. Papandrea (1972)
Year of Election or Appointment: 2016
Anti-Money Laundering (AML) Officer
Mr. Papandrea also serves as AML Officer of other funds. Mr. Papandrea is Vice President of FMR LLC (diversified financial services company, 2008-present) and is an employee of Fidelity Investments (2005-present).
Kenneth B. Robins (1969)
Year of Election or Appointment: 2013
Deputy Treasurer
Mr. Robins also serves as an officer of other funds. Mr. Robins serves as Executive Vice President of Fidelity Investments Money Management, Inc. (FIMM) (investment adviser firm, 2013-present) and is an employee of Fidelity Investments (2004-present). Previously, Mr. Robins served in other fund officer roles.
Anthony R. Rochte (1968)
Year of Election or Appointment: 2013
Vice President
Mr. Rochte also serves as Vice President of other funds. Mr. Rochte serves as President of Fidelity SelectCo, LLC (investment adviser firm, 2012-present) and is an employee of Fidelity Investments (2012-present). Prior to joining Fidelity Investments, Mr. Rochte served as Senior Managing Director and head of State Street Global Advisors' North American Intermediary Business Group (2006-2012).
Stacie M. Smith (1974)
Year of Election or Appointment: 2013
Assistant Treasurer
Ms. Smith also serves as an officer of other funds. She 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 (1996-2009). Previously, Ms. Smith served as Deputy Treasurer of certain Fidelity funds (2013-2016).
Renee Stagnone (1975)
Year of Election or Appointment: 2013
Deputy Treasurer
Ms. Stagnone also serves as an officer of other funds. Ms. Stagnone is an employee of Fidelity Investments (1997-present). Previously, Ms. Stagnone served as Deputy Treasurer of certain Fidelity funds (2013-2016).
Joseph F. Zambello (1957)
Year of Election or Appointment: 2011
Deputy Treasurer
Mr. Zambello also serves as Deputy Treasurer of other funds. Mr. Zambello is an employee of Fidelity Investments (1991-present). Previously, Mr. Zambello served as Deputy Treasurer of certain Fidelity funds (2011-2016), Vice President of the Program Management Group of FMR (investment adviser firm, 2009-2011), and Vice President of the Transfer Agent Oversight Group (2005-2009).
Shareholder Expense Example
As a shareholder of a Fund, you incur two types of costs: (1) transaction costs, including redemption fees 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, 2015 to February 29, 2016).
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. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. 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. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. 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, 2015 | Ending Account Value February 29, 2016 | Expenses Paid During Period-B September 1, 2015 to February 29, 2016 | |
| Banking Portfolio | .79% | |||
| Actual | $1,000.00 | $859.10 | $3.65 | |
| Hypothetical-C | $1,000.00 | $1,020.93 | $3.97 | |
| Brokerage and Investment Management Portfolio | .80% | |||
| Actual | $1,000.00 | $838.70 | $3.66 | |
| Hypothetical-C | $1,000.00 | $1,020.89 | $4.02 | |
| Consumer Finance Portfolio | .91% | |||
| Actual | $1,000.00 | $862.00 | $4.21 | |
| Hypothetical-C | $1,000.00 | $1,020.34 | $4.57 | |
| Financial Services Portfolio | .76% | |||
| Actual | $1,000.00 | $903.20 | $3.60 | |
| Hypothetical-C | $1,000.00 | $1,021.08 | $3.82 | |
| Insurance Portfolio | .80% | |||
| Actual | $1,000.00 | $962.70 | $3.90 | |
| 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 | |
| Financial Services Portfolio | 04/18/16 | 04/15/16 | – | – |
| Brokerage and Investment Management Portfolio | 04/18/16 | 04/15/16 | – | – |
| Insurance Portfolio | 04/18/16 | 04/15/16 | $0.144 | $1.212 |
| Consumer Finance Portfolio | 04/18/16 | 04/15/16 | $0.027 | $0.280 |
| Banking Portfolio | 04/18/16 | 04/15/16 | – | – |
The funds hereby designate as capital gain dividend the amounts noted below for the taxable year ended February 29, 2016, or, if subsequently determined to be different, the net capital gain of such year:
| Financial Services Portfolio | $9,550,634 |
| Brokerage and Investment Management Portfolio | $20,495,026 |
| Insurance Portfolio | $15,628,077 |
| Consumer Finance Portfolio | $4,577,040 |
| Banking Portfolio | $13,028,776 |
A percentage of the dividends distributed during the fiscal year for the following funds qualify for the dividends–received deduction for corporate shareholders:
| April 2015 | December 2015 | |
| Financial Services Portfolio | – | 100% |
| Brokerage and Investment Management Portfolio | 94% | 100% |
| Insurance Portfolio | 100% | 100% |
| Consumer Finance Portfolio | 93% | 51% |
| Banking 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 2015 | December 2015 | |
| Financial Services Portfolio | – | 100% |
| Brokerage and Investment Management Portfolio | 100% | 100% |
| Insurance Portfolio | 100% | 100% |
| Consumer Finance Portfolio | 94% | 57% |
| Banking Portfolio | 100% | 100% |
The funds will notify shareholders in January 2017 of amounts for use in preparing 2016 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
Each year, the Board of Trustees, including the Independent Trustees (together, the Board), votes on the renewal of the management contract with Fidelity SelectCo, LLC (SelectCo), an affiliate of Fidelity Management & Research Company (FMR), and the sub-advisory agreements with affiliates of FMR (together, the Advisory Contracts) for each fund. 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.
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 each fund's Advisory Contracts, including the services and support provided to each fund and its shareholders. The Board has established four standing committees (Committees) — Operations, Audit, Fair Valuation, and Governance and Nominating — 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 Operations Committee, of which all of the Independent Trustees are members, meets regularly throughout the year and considers, among other matters, information specifically related to the annual consideration of the renewal of each fund's Advisory Contracts. The Board, acting directly and through its Committees, requests and receives information concerning the annual consideration of the renewal of each fund's Advisory Contracts. The Board also meets as needed to consider 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 ad hoc joint committees to discuss certain matters relevant to all of the Fidelity funds.
At its January 2016 meeting, the Board unanimously determined to renew each 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 to be provided to each fund and its shareholders (including the investment performance of each fund); (ii) the competitiveness of each fund's management fee and total expense ratio relative to peer funds; (iii) the total costs of the services to be provided by and the profits to be realized by Fidelity from its relationships with each fund; and (iv) the extent to which, if any, economies of scale exist and would be realized as each fund grows, and whether any economies of scale are appropriately shared with fund shareholders.
In considering whether to renew the Advisory Contracts for each 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 each 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 each fund have a broad range of investment choices available to them, including a wide choice among funds offered by Fidelity's competitors, and that each 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 that fund, which is part of the Fidelity family of funds.
Nature, Extent, and Quality of Services Provided. The Board considered the staffing of SelectCo and the sub-advisers (together with SelectCo, the Investment Advisers) as it relates to the funds, including the backgrounds of investment personnel of SelectCo, and also considered the funds' investment objectives, strategies, and related investment philosophies. 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 each 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 reviewed the general qualifications and capabilities of the investment staff of the Investment Advisers, including their 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 each 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, each 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 or convenience of the Fidelity funds as investment vehicles. These services include 24-hour access to account information and market information through telephone representatives and over the Internet, investor education materials and asset allocation tools, and the expanded availability of Fidelity Investor Centers.The Board noted that in 2014 the ad hoc Committee on Transfer Agency Fees was formed by it and the boards of certain other Fidelity funds to review the variety of transfer agency services and fee structures throughout the mutual fund industry compared to Fidelity's.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 investment research 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 making other enhancements to meet client needs; (iv) reducing management fees and total expenses for certain index funds; (v) continuing to launch dedicated lower cost underlying funds to meet portfolio construction needs related to expanding underlying fund options for Fidelity funds of funds, specifically for the Freedom Fund product lines; (vi) rationalizing product lines and gaining increased efficiencies through fund mergers; (vii) continuing to develop, acquire and implement systems and technology to improve services to the funds and shareholders, strengthen information security, and increase efficiency; (viii) implementing investment enhancements to further strengthen Fidelity's target date product line to increase investors' probability of success in achieving their goals; (ix) modifying the eligibility criteria for certain share classes to accommodate roll-over assets from employer-sponsored retirement plans; (x) launching a new Class W of the Freedom Index Funds to attract and retain Fidelity record-kept retirement plan assets; and (xi) implementing changes to Fidelity's money market fund product line in response to recent regulatory reforms.Investment Performance. The Board considered whether each 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 with representatives of the Investment Advisers about fund investment performance that occur at Board meetings throughout the year. 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 each fund, for different time periods, measured against a securities market index ("benchmark index"). In its evaluation of fund investment performance at meetings throughout the year, the Board gave particular attention to information indicating underperformance of certain Fidelity funds for specific time periods and discussed with the Investment Advisers the reasons for such underperformance. Each of Banking Portfolio, Brokerage and Investment Management Portfolio, and Financial Services Portfolio underperformed its benchmark for the one-, three-, and five-year periods ended June 30, 2015, and as a result, the Board will continue to discuss with SelectCo the steps it is taking to address each such fund's performance.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. Depending on the circumstances, the Independent Trustees may be satisfied with a fund's performance notwithstanding that it lags its benchmark index for certain periods.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 each fund and an appropriate benchmark index for the most recent one-, three-, and five-year periods ended June 30, 2015.Based on its review, the Board concluded that the nature, extent, and quality of services provided to each fund under the Advisory Contracts should benefit the shareholders of each fund.Competitiveness of Management Fee and Total Expense Ratio. The Board considered each fund's management fee and total expense ratio compared to "mapped groups" of competitive funds and classes created for the purpose of facilitating the Trustees' analysis of the competitiveness of management fees and total expenses. Fidelity creates "mapped groups" by combining similar Lipper investment objective categories that have comparable investment mandates. For this purpose, all sector focused equity funds are grouped in the same mapped group. Combining Lipper investment objective categories aids the Board's management fee and total expense ratio comparisons by broadening the competitive group used for comparison.Management Fee. The Board considered two proprietary management fee comparisons for the 12-month periods ended June 30 shown in basis points (BP) in the charts below. The group of Lipper funds used by the Board for management fee comparisons is referred to below as the "Total Mapped Group." The Total Mapped Group comparison focuses on a fund's standing in terms of gross management fees before expense reimbursements or caps relative to the total universe of funds with comparable investment mandates (i.e., sector equities), regardless of whether their management fee structures also are comparable. Funds with comparable management fee structures have similar management fee contractual arrangements (e.g., flat rate charged for advisory services, all-inclusive fee rate, etc.). "TMG %" represents the percentage of funds in the Total Mapped Group that had management fees that were lower than a fund's. For example, a hypothetical TMG % of 20% would mean that 80% of the funds in the Total Mapped Group had higher, and 20% had lower, management fees than a fund. The funds' actual TMG %s and the number of funds in the Total Mapped Group are in the charts below. The "Asset-Size Peer Group" (ASPG) comparison focuses on a fund's standing relative to a subset of non-Fidelity funds within the Total Mapped Group that are similar in size and management fee structure. For example, if a fund is in the first quartile of the ASPG, the fund's management fee ranks in the least expensive or lowest 25% of funds in the ASPG. The ASPG represents at least 15% of the funds in the Total Mapped Group with comparable asset size and management fee structures, subject to a minimum of 50 funds (or all funds in the Total Mapped Group if fewer than 50). Additional information, such as the ASPG quartile in which a fund's management fee rate ranked, is also included in the charts and considered by the Board.Banking Portfolio
Brokerage and Investment Management Portfolio
Consumer Finance Portfolio
Financial Services Portfolio
Insurance Portfolio
SELFIN-ANN-0416
1.813663.111
Fidelity® Select Portfolios® Telecommunications Portfolio Wireless Portfolio Annual Report February 29, 2016 |
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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 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. © 2016 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-Q. Forms N-Q are available on the SEC’s web site at http://www.sec.gov. A fund's Forms N-Q 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.advisor.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.
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, 2016 | Past 1 year | Past 5 years | Past 10 years |
| Telecommunications Portfolio�� | 0.49% | 8.34% | 6.05% |
$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, 2006.
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 | ||
| $17,990 | Telecommunications Portfolio | |
| $18,666 | S&P 500® Index | |
Telecommunications Portfolio
Management's Discussion of Fund Performance
Market Recap: The S&P 500® index returned -6.19% for the year ending February 29, 2016. Largely range-bound for the first half of the period, U.S. stocks suffered a steep, late-summer decline on concern about an economic slowdown in China. The market recovered in October, lifted by the U.S. Federal Reserve’s decision to delay raising near-term interest rates until mid-December. Investors also drew courage from a rate cut in China and economic stimulus in Europe. But continued oil-price weakness and U.S.-dollar strength, plus fresh worries about China and the Middle East, pushed the S&P 500® to its worst January since 2009, followed by a volatile but ultimately flattish February. Overall, growth-oriented and larger-cap stocks fared better than value and smaller-cap complements. In this environment, the tech-heavy Nasdaq Composite Index® returned -7.07% for the 12 months; the Russell 2000® Index, -14.97%. Few sectors within the broad-market S&P 500® gained ground, with a wide gap separating leaders from laggards. Despite increased competition among wireless carriers, telecommunication services (+8%) led the way, followed by the more defensive utilities sector (+6%). Rising wages and low inflation buoyed consumer staples (+4%), less so consumer discretionary (0%). Meanwhile, energy (-24%) foundered amid commodity weakness that also hurt materials (-17%). The financials sector(-12%) struggled as well.Comments from Portfolio Manager Matthew Drukker: For the year, the fund’s share classes (excluding sales charges, if applicable) posted mixed results, lagging the 3.42% gain of the sector benchmark, the MSCI U.S. IMI Telecommunications Services 25/50 Index, by about 3 to 4 percentage points, but significantly outpacing the return of the broad-based S&P 500®. Underweighting strong-performing small-cap stocks, several of which benefited from acquisitions, hurt relative performance. In addition, stock picking in most industry groups detracted – especially alternative carriers, Internet software & services and wireless telecommunication services. The most significant individual detractor was Shenandoah Telecom, a wireless affiliate of Sprint, which we significantly underweighted. It hurt the fund when Shenandoah announced an accretive acquisition of Shentel, a neighboring regional service provider, in August. Conversely, stock selection in the cable & satellite group aided results versus the benchmark, as did lighter-than index stakes in wireline-only companies. An out-of-index stake in broadcast-satellite service provider DIRECTV was the fund’s top contributor. The stock proved to be a solid relative performer in the run-up to the company’s acquisition by AT&T in July.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, 2016
| % of fund's net assets | % of fund's net assets 6 months ago | |
| AT&T, Inc. | 22.2 | 24.0 |
| Verizon Communications, Inc. | 12.5 | 16.6 |
| American Tower Corp. | 6.2 | 4.2 |
| T-Mobile U.S., Inc. | 4.7 | 4.5 |
| Cogent Communications Group, Inc. | 4.6 | 3.9 |
| CenturyLink, Inc. | 4.4 | 3.2 |
| Level 3 Communications, Inc. | 4.3 | 4.5 |
| SBA Communications Corp. Class A | 3.9 | 4.2 |
| Telephone & Data Systems, Inc. | 2.8 | 3.0 |
| Frontier Communications Corp. | 2.4 | 2.8 |
| 68.0 |
Top Industries (% of fund's net assets)
| As of February 29, 2016 | ||
| Diversified Telecommunication Services | 69.1% | |
| Wireless Telecommunication Services | 12.4% | |
| Media | 7.8% | |
| Real Estate Investment Trusts | 7.2% | |
| Communications Equipment | 1.4% | |
| All Others* | 2.1% | |
| As of August 31, 2015 | ||
| Diversified Telecommunication Services | 70.2% | |
| Wireless Telecommunication Services | 19.1% | |
| Real Estate Investment Trusts | 5.2% | |
| Media | 2.1% | |
| Internet Software & Services | 1.0% | |
| All Others* | 2.4% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
Telecommunications Portfolio
Investments February 29, 2016
Showing Percentage of Net Assets
| Common Stocks - 98.7% | |||
| Shares | Value | ||
| Communications Equipment - 1.4% | |||
| Communications Equipment - 1.4% | |||
| NetScout Systems, Inc. (a) | 78,100 | $1,614,327 | |
| Qualcomm, Inc. | 52,600 | 2,671,554 | |
| Ruckus Wireless, Inc. (a) | 639,300 | 6,188,424 | |
| 10,474,305 | |||
| Diversified Telecommunication Services - 69.1% | |||
| Alternative Carriers - 18.1% | |||
| 8x8, Inc. (a) | 1,107,486 | 12,880,062 | |
| Cogent Communications Group, Inc. | 902,968 | 33,138,926 | |
| Globalstar, Inc. (a)(b) | 4,734,500 | 7,385,820 | |
| Iliad SA | 13,933 | 3,427,759 | |
| inContact, Inc. (a) | 984,723 | 9,128,382 | |
| Iridium Communications, Inc. (a)(b) | 756,676 | 5,243,765 | |
| Level 3 Communications, Inc. (a) | 638,467 | 30,997,573 | |
| Lumos Networks Corp. (a) | 922,878 | 11,351,399 | |
| Vonage Holdings Corp. (a) | 1,243,171 | 6,675,828 | |
| Zayo Group Holdings, Inc. (a) | 449,000 | 10,632,320 | |
| 130,861,834 | |||
| Integrated Telecommunication Services - 51.0% | |||
| AT&T, Inc. | 4,359,320 | 161,076,874 | |
| Atlantic Tele-Network, Inc. | 175,300 | 12,611,082 | |
| Bezeq The Israel Telecommunication Corp. Ltd. | 1,252,300 | 2,811,201 | |
| CenturyLink, Inc. | 1,039,578 | 31,800,691 | |
| Cincinnati Bell, Inc. (a) | 1,425,238 | 4,931,323 | |
| Consolidated Communications Holdings, Inc. | 336,498 | 7,870,688 | |
| FairPoint Communications, Inc. (a) | 253,100 | 3,804,093 | |
| Frontier Communications Corp. (b) | 3,158,783 | 17,089,016 | |
| General Communications, Inc. Class A (a) | 280,894 | 5,362,266 | |
| IDT Corp. Class B | 246,381 | 3,210,344 | |
| SBA Communications Corp. Class A (a) | 301,156 | 28,576,693 | |
| Verizon Communications, Inc. | 1,788,197 | 90,715,234 | |
| Windstream Holdings, Inc. (b) | 3,480 | 26,170 | |
| 369,885,675 | |||
| TOTAL DIVERSIFIED TELECOMMUNICATION SERVICES | 500,747,509 | ||
| Internet Software & Services - 0.8% | |||
| Internet Software & Services - 0.8% | |||
| Akamai Technologies, Inc. (a) | 400 | 21,588 | |
| Gogo, Inc. (a)(b) | 445,000 | 4,841,600 | |
| Rackspace Hosting, Inc. (a) | 44,500 | 958,085 | |
| 5,821,273 | |||
| Media - 7.8% | |||
| Cable & Satellite - 6.9% | |||
| Altice NV Class A (a) | 439,232 | 6,331,096 | |
| Cablevision Systems Corp. - NY Group Class A | 117,800 | 3,832,034 | |
| Charter Communications, Inc. Class A (a)(b) | 37,700 | 6,769,412 | |
| Comcast Corp. Class A | 185,300 | 10,697,369 | |
| Liberty Global PLC Class C (a) | 87,636 | 3,151,391 | |
| Megacable Holdings S.A.B. de CV unit | 595,800 | 2,299,729 | |
| Time Warner Cable, Inc. | 87,800 | 16,757,508 | |
| 49,838,539 | |||
| Movies & Entertainment - 0.9% | |||
| Twenty-First Century Fox, Inc. Class A | 244,400 | 6,603,688 | |
| TOTAL MEDIA | 56,442,227 | ||
| Real Estate Investment Trusts - 7.2% | |||
| Specialized REITs - 7.2% | |||
| American Tower Corp. | 490,290 | 45,204,738 | |
| Communications Sales & Leasing, Inc. | 213,400 | 4,022,590 | |
| Crown Castle International Corp. | 19,200 | 1,660,800 | |
| CyrusOne, Inc. | 32,100 | 1,272,444 | |
| 52,160,572 | |||
| Wireless Telecommunication Services - 12.4% | |||
| Wireless Telecommunication Services - 12.4% | |||
| Bharti Infratel Ltd. | 709,844 | 3,712,878 | |
| KDDI Corp. | 198,400 | 5,068,723 | |
| Leap Wireless International, Inc. rights (a) | 400 | 1,032 | |
| Millicom International Cellular SA (a) | 38,000 | 1,828,560 | |
| Shenandoah Telecommunications Co. | 270,352 | 6,531,704 | |
| Sprint Corp. (a)(b) | 3,260,785 | 11,217,100 | |
| T-Mobile U.S., Inc. (a) | 924,497 | 34,298,839 | |
| Telephone & Data Systems, Inc. | 747,564 | 19,974,910 | |
| U.S. Cellular Corp. (a) | 169,000 | 6,996,600 | |
| 89,630,346 | |||
| TOTAL COMMON STOCKS | |||
| (Cost $641,573,230) | 715,276,232 | ||
| Nonconvertible Preferred Stocks - 0.0% | |||
| Diversified Telecommunication Services - 0.0% | |||
| Integrated Telecommunication Services - 0.0% | |||
| Telefonica Brasil SA sponsored ADR | |||
| (Cost $5,221) | 500 | 4,790 | |
| Money Market Funds - 8.2% | |||
| Fidelity Cash Central Fund, 0.40% (c) | 14,840,160 | 14,840,160 | |
| Fidelity Securities Lending Cash Central Fund, 0.44% (c)(d) | 44,767,150 | 44,767,150 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $59,607,310) | 59,607,310 | ||
| TOTAL INVESTMENT PORTFOLIO - 106.9% | |||
| (Cost $701,185,761) | 774,888,332 | ||
| NET OTHER ASSETS (LIABILITIES) - (6.9)% | (49,779,351) | ||
| NET ASSETS - 100% | $725,108,981 |
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 | $17,909 |
| Fidelity Securities Lending Cash Central Fund | 418,984 |
| Total | $436,893 |
Investment Valuation
The following is a summary of the inputs used, as of February 29, 2016, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used 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 | $715,276,232 | $710,206,477 | $5,068,723 | $1,032 |
| Nonconvertible Preferred Stocks | 4,790 | 4,790 | -- | -- |
| Money Market Funds | 59,607,310 | 59,607,310 | -- | -- |
| Total Investments in Securities: | $774,888,332 | $769,818,577 | $5,068,723 | $1,032 |
See accompanying notes which are an integral part of the financial statements.
Telecommunications Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2016 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $43,307,801) — See accompanying schedule: Unaffiliated issuers (cost $641,578,451) | $715,281,022 | |
| Fidelity Central Funds (cost $59,607,310) | 59,607,310 | |
| Total Investments (cost $701,185,761) | $774,888,332 | |
| Receivable for investments sold | 188,405 | |
| Receivable for fund shares sold | 5,959,697 | |
| Dividends receivable | 80,741 | |
| Distributions receivable from Fidelity Central Funds | 46,183 | |
| Prepaid expenses | 1,516 | |
| Other receivables | 8,250 | |
| Total assets | 781,173,124 | |
| Liabilities | ||
| Payable to custodian bank | $188,406 | |
| Payable for investments purchased | 10,114,861 | |
| Payable for fund shares redeemed | 526,677 | |
| Accrued management fee | 302,918 | |
| Distribution and service plan fees payable | 11,978 | |
| Other affiliated payables | 111,583 | |
| Other payables and accrued expenses | 40,570 | |
| Collateral on securities loaned, at value | 44,767,150 | |
| Total liabilities | 56,064,143 | |
| Net Assets | $725,108,981 | |
| Net Assets consist of: | ||
| Paid in capital | $660,326,554 | |
| Undistributed net investment income | 1,545,938 | |
| Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (10,462,529) | |
| Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 73,699,018 | |
| Net Assets | $725,108,981 | |
| Calculation of Maximum Offering Price | ||
| Class A: | ||
| Net Asset Value and redemption price per share ($13,031,522 ÷ 209,111.8 shares) | $62.32 | |
| Maximum offering price per share (100/94.25 of $62.32) | $66.12 | |
| Class T: | ||
| Net Asset Value and redemption price per share ($8,279,755 ÷ 133,642.9 shares) | $61.95 | |
| Maximum offering price per share (100/96.50 of $61.95) | $64.20 | |
| Class B: | ||
| Net Asset Value and offering price per share ($265,271 ÷ 4,241.4 shares)(a) | $62.54 | |
| Class C: | ||
| Net Asset Value and offering price per share ($7,735,013 ÷ 124,557.3 shares)(a) | $62.10 | |
| Telecommunications: | ||
| Net Asset Value, offering price and redemption price per share ($689,600,429 ÷ 11,019,025.0 shares) | $62.58 | |
| Class I: | ||
| Net Asset Value, offering price and redemption price per share ($6,196,991 ÷ 99,222.3 shares) | $62.46 |
(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, 2016 | ||
| Investment Income | ||
| Dividends | $11,648,548 | |
| Interest | 26 | |
| Income from Fidelity Central Funds | 436,893 | |
| Total income | 12,085,467 | |
| Expenses | ||
| Management fee | $2,684,686 | |
| Transfer agent fees | 937,198 | |
| Distribution and service plan fees | 138,393 | |
| Accounting and security lending fees | 194,114 | |
| Custodian fees and expenses | 21,329 | |
| Independent trustees' compensation | 8,658 | |
| Registration fees | 93,120 | |
| Audit | 54,687 | |
| Legal | 5,468 | |
| Interest | 121 | |
| Miscellaneous | 4,950 | |
| Total expenses before reductions | 4,142,724 | |
| Expense reductions | (44,040) | 4,098,684 |
| Net investment income (loss) | 7,986,783 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | (82,853) | |
| Foreign currency transactions | (5,146) | |
| Total net realized gain (loss) | (87,999) | |
| Change in net unrealized appreciation (depreciation) on: Investment securities | 9,808,309 | |
| Assets and liabilities in foreign currencies | (749) | |
| Total change in net unrealized appreciation (depreciation) | 9,807,560 | |
| Net gain (loss) | 9,719,561 | |
| Net increase (decrease) in net assets resulting from operations | $17,706,344 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 29, 2016 | Year ended February 28, 2015 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $7,986,783 | $6,193,869 |
| Net realized gain (loss) | (87,999) | 7,829,307 |
| Change in net unrealized appreciation (depreciation) | 9,807,560 | 28,387,304 |
| Net increase (decrease) in net assets resulting from operations | 17,706,344 | 42,410,480 |
| Distributions to shareholders from net investment income | (6,674,056) | (13,679,321) |
| Distributions to shareholders from net realized gain | (4,168,398) | – |
| Total distributions | (10,842,454) | (13,679,321) |
| Share transactions - net increase (decrease) | 345,924,755 | (19,703,086) |
| Redemption fees | 10,972 | 3,706 |
| Total increase (decrease) in net assets | 352,799,617 | 9,031,779 |
| Net Assets | ||
| Beginning of period | 372,309,364 | 363,277,585 |
| End of period (including undistributed net investment income of $1,545,938 and undistributed net investment income of $262,486, respectively) | $725,108,981 | $372,309,364 |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Telecommunications Portfolio Class A
| Years ended February 28, | 2016 A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $63.26 | $58.71 | $51.58 | $46.12 | $46.93 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .81 | .76 | 1.76C | .99 | .56 |
| Net realized and unrealized gain (loss) | (.76)D | 5.83 | 6.48 | 5.43 | (.86) |
| Total from investment operations | .05 | 6.59 | 8.24 | 6.42 | (.30) |
| Distributions from net investment income | (.54) | (2.04) | (1.11) | (.96) | (.51) |
| Distributions from net realized gain | (.45) | – | (.01) | – | – |
| Total distributions | (.99) | (2.04) | (1.11)E | (.96) | (.51) |
| Redemption fees added to paid in capitalB,F | – | – | – | – | – |
| Net asset value, end of period | $62.32 | $63.26 | $58.71 | $51.58 | $46.12 |
| Total ReturnG,H | .16% | 11.54% | 16.00% | 13.97% | (.54)% |
| Ratios to Average Net AssetsI,J | |||||
| Expenses before reductions | 1.15% | 1.15% | 1.18% | 1.18% | 1.20% |
| Expenses net of fee waivers, if any | 1.15% | 1.15% | 1.18% | 1.18% | 1.20% |
| Expenses net of all reductions | 1.15% | 1.15% | 1.15% | 1.17% | 1.18% |
| Net investment income (loss) | 1.33% | 1.26% | 3.08%C | 2.01% | 1.21% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $13,032 | $11,052 | $7,712 | $6,449 | $4,677 |
| Portfolio turnover rateK | 51% | 94%L | 111% | 76% | 72% |
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 $.95 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been 1.43%.
D 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.
E Total distributions of $1.11 per share is comprised of distributions from net investment income of $1.106 and distributions from net realized gain of $.005 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.
Financial Highlights — Telecommunications Portfolio Class T
| Years ended February 28, | 2016 A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $63.04 | $58.50 | $51.41 | $46.01 | $46.81 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .61 | .57 | 1.59C | .85 | .42 |
| Net realized and unrealized gain (loss) | (.76)D | 5.81 | 6.44 | 5.39 | (.84) |
| Total from investment operations | (.15) | 6.38 | 8.03 | 6.24 | (.42) |
| Distributions from net investment income | (.49) | (1.84) | (.94) | (.84) | (.38) |
| Distributions from net realized gain | (.45) | – | (.01) | – | – |
| Total distributions | (.94) | (1.84) | (.94)E | (.84) | (.38) |
| Redemption fees added to paid in capitalB,F | – | – | – | – | – |
| Net asset value, end of period | $61.95 | $63.04 | $58.50 | $51.41 | $46.01 |
| Total ReturnG,H | (.16)% | 11.19% | 15.64% | 13.61% | (.82)% |
| Ratios to Average Net AssetsI,J | |||||
| Expenses before reductions | 1.47% | 1.47% | 1.48% | 1.48% | 1.49% |
| Expenses net of fee waivers, if any | 1.47% | 1.47% | 1.48% | 1.48% | 1.49% |
| Expenses net of all reductions | 1.46% | 1.46% | 1.45% | 1.46% | 1.47% |
| Net investment income (loss) | 1.01% | .94% | 2.78%C | 1.72% | .92% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $8,280 | $5,095 | $4,344 | $4,237 | $2,702 |
| Portfolio turnover rateK | 51% | 94%L | 111% | 76% | 72% |
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 $.94 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been 1.13%.
D 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.
E Total distributions of $.94 per share is comprised of distributions from net investment income of $.939 and distributions from net realized gain of $.005 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.
Financial Highlights — Telecommunications Portfolio Class B
| Years ended February 28, | 2016 A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $63.45 | $58.77 | $51.63 | $46.14 | $46.93 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .34 | .29 | 1.33C | .62 | .21 |
| Net realized and unrealized gain (loss) | (.76)D | 5.84 | 6.48 | 5.42 | (.83) |
| Total from investment operations | (.42) | 6.13 | 7.81 | 6.04 | (.62) |
| Distributions from net investment income | (.04) | (1.45) | (.66) | (.55) | (.17) |
| Distributions from net realized gain | (.45) | – | (.01) | – | – |
| Total distributions | (.49) | (1.45) | (.67) | (.55) | (.17) |
| Redemption fees added to paid in capitalB,E | – | – | – | – | – |
| Net asset value, end of period | $62.54 | $63.45 | $58.77 | $51.63 | $46.14 |
| Total ReturnF,G | (.63)% | 10.67% | 15.13% | 13.11% | (1.29)% |
| Ratios to Average Net AssetsH,I | |||||
| Expenses before reductions | 1.93% | 1.93% | 1.93% | 1.93% | 1.95% |
| Expenses net of fee waivers, if any | 1.93% | 1.93% | 1.93% | 1.93% | 1.95% |
| Expenses net of all reductions | 1.92% | 1.92% | 1.91% | 1.92% | 1.93% |
| Net investment income (loss) | .56% | .49% | 2.32%C | 1.26% | .47% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $265 | $409 | $546 | $576 | $596 |
| Portfolio turnover rateJ | 51% | 94%K | 111% | 76% | 72% |
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 $.95 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .67%.
D 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.
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 contingent deferred sales charge.
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.
Financial Highlights — Telecommunications Portfolio Class C
| Years ended February 28, | 2016 A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $63.04 | $58.54 | $51.47 | $46.02 | $46.89 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .36 | .34 | 1.36C | .63 | .22 |
| Net realized and unrealized gain (loss) | (.75)D | 5.80 | 6.46 | 5.41 | (.84) |
| Total from investment operations | (.39) | 6.14 | 7.82 | 6.04 | (.62) |
| Distributions from net investment income | (.10) | (1.64) | (.74) | (.59) | (.25) |
| Distributions from net realized gain | (.45) | – | (.01) | – | – |
| Total distributions | (.55) | (1.64) | (.75) | (.59) | (.25) |
| Redemption fees added to paid in capitalB,E | – | – | – | – | – |
| Net asset value, end of period | $62.10 | $63.04 | $58.54 | $51.47 | $46.02 |
| Total ReturnF,G | (.57)% | 10.75% | 15.20% | 13.14% | (1.27)% |
| Ratios to Average Net AssetsH,I | |||||
| Expenses before reductions | 1.89% | 1.85% | 1.88% | 1.90% | 1.93% |
| Expenses net of fee waivers, if any | 1.89% | 1.85% | 1.88% | 1.90% | 1.93% |
| Expenses net of all reductions | 1.88% | 1.85% | 1.85% | 1.89% | 1.91% |
| Net investment income (loss) | .60% | .56% | 2.38%C | 1.29% | .48% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $7,735 | $7,074 | $5,523 | $4,353 | $3,514 |
| Portfolio turnover rateJ | 51% | 94%K | 111% | 76% | 72% |
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 $.94 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .73%.
D 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.
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 contingent deferred sales charge.
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.
Financial Highlights — Telecommunications Portfolio
| Years ended February 28, | 2016 A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $63.54 | $58.94 | $51.75 | $46.26 | $47.07 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | 1.02 | .96 | 1.96C | 1.15 | .70 |
| Net realized and unrealized gain (loss) | (.77)D | 5.85 | 6.51 | 5.43 | (.86) |
| Total from investment operations | .25 | 6.81 | 8.47 | 6.58 | (.16) |
| Distributions from net investment income | (.76) | (2.21) | (1.28) | (1.09) | (.65) |
| Distributions from net realized gain | (.45) | – | (.01) | – | – |
| Total distributions | (1.21) | (2.21) | (1.28)E | (1.09) | (.65) |
| Redemption fees added to paid in capitalB,F | – | – | – | – | – |
| Net asset value, end of period | $62.58 | $63.54 | $58.94 | $51.75 | $46.26 |
| Total ReturnG | .49% | 11.90% | 16.40% | 14.30% | (.23)% |
| Ratios to Average Net AssetsH,I | |||||
| Expenses before reductions | .82% | .83% | .85% | .87% | .90% |
| Expenses net of fee waivers, if any | .81% | .83% | .85% | .87% | .90% |
| Expenses net of all reductions | .81% | .82% | .82% | .85% | .88% |
| Net investment income (loss) | 1.67% | 1.58% | 3.41%C | 2.33% | 1.52% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $689,600 | $346,174 | $343,548 | $377,841 | $342,262 |
| Portfolio turnover rateJ | 51% | 94%K | 111% | 76% | 72% |
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 $.95 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been 1.76%.
D 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.
E Total distributions of $1.28 per share is comprised of distributions from net investment income of $1.275 and distributions from net realized gain of $.005 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.
Financial Highlights — Telecommunications Portfolio Class I
| Years ended February 28, | 2016 A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $63.38 | $58.80 | $51.65 | $46.20 | $47.02 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | 1.02 | .94 | 1.93C | 1.17 | .70 |
| Net realized and unrealized gain (loss) | (.76)D | 5.83 | 6.48 | 5.42 | (.88) |
| Total from investment operations | .26 | 6.77 | 8.41 | 6.59 | (.18) |
| Distributions from net investment income | (.73) | (2.19) | (1.25) | (1.14) | (.64) |
| Distributions from net realized gain | (.45) | – | (.01) | – | – |
| Total distributions | (1.18) | (2.19) | (1.26) | (1.14) | (.64) |
| Redemption fees added to paid in capitalB,E | – | – | – | – | – |
| Net asset value, end of period | $62.46 | $63.38 | $58.80 | $51.65 | $46.20 |
| Total ReturnF | .51% | 11.85% | 16.30% | 14.33% | (.26)% |
| Ratios to Average Net AssetsG,H | |||||
| Expenses before reductions | .82% | .86% | .91% | .85% | .89% |
| Expenses net of fee waivers, if any | .82% | .86% | .91% | .85% | .89% |
| Expenses net of all reductions | .81% | .85% | .88% | .83% | .87% |
| Net investment income (loss) | 1.67% | 1.55% | 3.35%C | 2.35% | 1.52% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $6,197 | $2,505 | $1,604 | $2,641 | $1,022 |
| Portfolio turnover rateI | 51% | 94%J | 111% | 76% | 72% |
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 $.95 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been 1.70%.
D 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.
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.
Notes to Financial Statements
For the period ended February 29, 2016
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 T, Class C, Telecommunications and Class I(formerly Institutional Class) shares, each of which, along with Class B shares, has equal rights as to assets and voting privileges. Class B shares are closed to new accounts and additional purchases, except for exchanges and reinvestments. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after maximum a holding period of seven years from the initial date of purchase.
During the period, the Board of Trustees approved the conversion of all existing Class B shares into Class A shares, effective on or about July 1, 2016, regardless of the length of times shares have been held.
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 Fidelity Investments Money Management, Inc. (FIMM), an affiliate of the investment adviser. Annualized expenses of the Money Market Central Funds as of their most recent shareholder report date are less than .005%.
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 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 Fidelity SelectCo, LLC (SelectCo) Fair Value Committee (the Committee). 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. Utilizing these techniques may result in transfers between Level 1 and Level 2. 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, 2016, 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 may 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. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. Subsequent to ex-dividend date the Fund determines the components of these distributions, based upon receipt of tax filings or other correspondence relating to the underlying investment. 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.
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, 2016, 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 dividends 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 transaction, deferred trustees compensation, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
| Gross unrealized appreciation | $87,574,989 |
| Gross unrealized depreciation | (19,550,843) |
| Net unrealized appreciation (depreciation) on securities | $68,024,146 |
| Tax Cost | $706,864,186 |
The tax-based components of distributable earnings as of period end were as follows:
| Undistributed ordinary income | $1,546,307 |
| Net unrealized appreciation (depreciation) on securities and other investments | $68,020,593 |
The Fund elected to defer to its next fiscal year approximately $4,784,105 of capital losses recognized during the period November 1, 2015 to February 29, 2016.
The tax character of distributions paid was as follows:
| February 29, 2016 | February 28, 2015 | |
| Ordinary Income | $7,554,050 | $ 13,679,321 |
| Long-term Capital Gains | 3,288,404 | – |
| Total | $10,842,454 | $ 13,679,321 |
Trading (Redemption) Fees. Shares held by investors in the Fund less than 30 days may be subject to a redemption fee equal to .75% of the NAV of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Fund and accounted for as an addition to paid in capital.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $593,783,140 and $248,822,719, respectively.
5. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity SelectCo, 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 .25% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by Fidelity Management & Research Company (FMR) and the investment adviser. 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 .55% 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 Corporation (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% | $28,965 | $521 |
| Class T | .25% | .25% | 30,284 | – |
| Class B | .75% | .25% | 3,185 | 2,389 |
| Class C | .75% | .25% | 75,959 | 16,767 |
| $138,393 | $19,677 |
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 T 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 T, Class B, and Class C redemptions. The deferred sales charges range from 5.00% to 1.00% for Class B shares, 1.00% for Class C shares, 1.00% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained by FDC | |
| Class A | $12,523 |
| Class T | 2,208 |
| Class B(a) | 54 |
| Class C(a) | 607 |
| $15,392 |
(a) When Class B and 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, Inc., (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. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements.
For the period, transfer agent fees for each class were as follows:
| Amount | % of Class-Level Average Net Assets | |
| Class A | $31,945 | .28 |
| Class T | 20,483 | .34 |
| Class B | 963 | .30 |
| Class C | 19,956 | .26 |
| Telecommunications | 857,974 | .19 |
| Class I | 5,877 | .19 |
| $937,198 |
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. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions 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 $19,509 for the period.
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other registered investment companies having management contracts with FMR or other affiliated entities of FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. The Fund's 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 |
| Borrower | $5,833,500 | .37% | $121 |
Interfund Trades. The Fund 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.
The Fund participates 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 Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $636 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, the Fund did not borrow on this line of credit.
7. Security Lending.
The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. 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. 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. Total security lending income during the period amounted to $418,984.
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 $30,812 for the period.
In addition, during the period the investment adviser reimbursed and/or waived a portion of fund-level operating expenses in the amount of $3,782 and a portion of class-level operating expenses as follows:
| Amount | |
| Class A | $152 |
| Class T | 11 |
| Class B | 1 |
| Class C | 135 |
| Telecommunications | 9,106 |
| Class I | 41 |
| $9,446 |
9. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
| Year ended February 29, 2016 | Year ended February 28, 2015 | |
| From net investment income | ||
| Class A | $101,836 | $309,863 |
| Class T | 64,003 | 143,116 |
| Class B | 172 | 12,248 |
| Class C | 12,147 | 161,299 |
| Telecommunications | 6,462,442 | 12,985,170 |
| Class I | 33,456 | 67,625 |
| Total | $6,674,056 | $13,679,321 |
| From net realized gain | ||
| Class A | $85,263 | $– |
| Class T | 59,140 | – |
| Class B | 2,151 | – |
| Class C | 53,589 | – |
| Telecommunications | 3,948,074 | – |
| Class I | 20,181 | – |
| Total | $4,168,398 | $– |
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, 2016 | Year ended February 28, 2015 | Year ended February 29, 2016 | Year ended February 28, 2015 | |
| Class A | ||||
| Shares sold | 91,221 | 79,279 | $5,573,645 | $4,786,534 |
| Reinvestment of distributions | 3,029 | 5,091 | 178,902 | 297,550 |
| Shares redeemed | (59,841) | (41,031) | (3,630,540) | (2,466,354) |
| Net increase (decrease) | 34,409 | 43,339 | $2,122,007 | $2,617,730 |
| Class T | ||||
| Shares sold | 70,704 | 20,637 | $4,245,232 | $1,237,395 |
| Reinvestment of distributions | 2,087 | 2,409 | 122,479 | 139,987 |
| Shares redeemed | (19,976) | (16,465) | (1,205,139) | (994,017) |
| Net increase (decrease) | 52,815 | 6,581 | $3,162,572 | $383,365 |
| Class B | ||||
| Shares sold | 129 | 45 | $7,453 | $2,624 |
| Reinvestment of distributions | 39 | 197 | 2,323 | 11,445 |
| Shares redeemed | (2,377) | (3,091) | (146,261) | (186,477) |
| Net increase (decrease) | (2,209) | (2,849) | $(136,485) | $(172,408) |
| Class C | ||||
| Shares sold | 48,243 | 28,734 | $2,966,823 | $1,731,696 |
| Reinvestment of distributions | 861 | 2,043 | 50,662 | 118,683 |
| Shares redeemed | (36,747) | (12,919) | (2,199,789) | (773,747) |
| Net increase (decrease) | 12,357 | 17,858 | $817,696 | $1,076,632 |
| Telecommunications | ||||
| Shares sold | 6,996,236 | 3,400,370 | $423,896,658 | $205,982,254 |
| Reinvestment of distributions | 169,238 | 212,695 | 10,035,177 | 12,494,070 |
| Shares redeemed | (1,594,679) | (3,993,893)(a) | (97,516,561) | (242,841,980)(a) |
| Net increase (decrease) | 5,570,795 | (380,828) | $336,415,274 | $(24,365,656) |
| Class I | ||||
| Shares sold | 91,633 | 29,046 | $5,507,038 | $1,764,278 |
| Reinvestment of distributions | 779 | 956 | 46,233 | 56,138 |
| Shares redeemed | (32,720) | (17,754) | (2,009,580) | (1,063,165) |
| Net increase (decrease) | 59,692 | 12,248 | $3,543,691 | $757,251 |
(a) Amount includes in-kind redemptions.
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.
At the end of the period, Fidelity VIP Funds Manager 50% Portfolio and Fidelity VIP Funds Manager 60% Portfolio were the owners of record of approximately 13% and 17%, respectively of the total outstanding shares of the Fund. Mutual funds managed by the investment adviser or its affiliates were the owners of record, in the aggregate, of approximately 43% of the total outstanding shares of the Fund.
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, 2016 | Past 1 year | Past 5 years | Past 10 years |
| Wireless Portfolio | (11.07)% | 5.67% | 5.59% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Wireless Portfolio on February 28, 2006.
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 | ||
| $17,222 | Wireless Portfolio | |
| $18,666 | S&P 500® Index | |
Wireless Portfolio
Management's Discussion of Fund Performance
Market Recap: The S&P 500® index returned -6.19% for the year ending February 29, 2016. Largely range-bound for the first half of the period, U.S. stocks suffered a steep, late-summer decline on concern about an economic slowdown in China. The market recovered in October, lifted by the U.S. Federal Reserve’s decision to delay raising near-term interest rates until mid-December. Investors also drew courage from a rate cut in China and economic stimulus in Europe. But continued oil-price weakness and U.S.-dollar strength, plus fresh worries about China and the Middle East, pushed the S&P 500® to its worst January since 2009, followed by a volatile but ultimately flattish February. Overall, growth-oriented and larger-cap stocks fared better than value and smaller-cap complements. In this environment, the tech-heavy Nasdaq Composite Index® returned -7.07% for the 12 months; the Russell 2000® Index, -14.97%. Few sectors within the broad-market S&P 500® gained ground, with a wide gap separating leaders from laggards. Despite increased competition among wireless carriers, telecommunication services (+8%) led the way, followed by the more defensive utilities sector (+6%). Rising wages and low inflation buoyed consumer staples (+4%), less so consumer discretionary (0%). Meanwhile, energy (-24%) foundered amid commodity weakness that also hurt materials (-17%). The financials sector(-12%) struggled as well.Comments from Lead Portfolio Manager Kyle Weaver: For the year, the fund returned -11.07%, considerably trailing the -9.34% return of its benchmark, the S&P® Custom Wireless Index. The wireless benchmark, as well as the fund, trailed the broad-market S&P 500® index amid considerable market volatility. Versus the custom index, a sizable underweighting and stock selection in integrated telecommunication services hampered performance. Overweighting two index groups that underperformed – semiconductors and technology hardware, storage & peripherals – also worked against us. At the stock level, the fund’s relative result suffered partly because investors preferred defensive stocks, including legacy telecom carriers AT&T and Verizon Communications, which the fund underweighted. In semiconductors, Marvell Technology Group and Micron Technology, the latter of which we bought during the period, were hurt by lackluster PC demand and tepid sales of smartphones. Overweighting smartphone maker Apple also detracted. We moved to an underweighting in Apple by period end, although it remained by far the fund’s largest holding. Conversely, out-of-benchmark exposure to the Internet software & services group helped 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 December 1, 2015, Harlan Carere was named Co-Manager of the fund.Wireless Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 29, 2016
| % of fund's net assets | % of fund's net assets 6 months ago | |
| Apple, Inc. | 14.5 | 24.9 |
| American Tower Corp. | 7.7 | 7.8 |
| Qualcomm, Inc. | 6.2 | 6.0 |
| AT&T, Inc. | 4.9 | 3.9 |
| BT Group PLC sponsored ADR | 4.7 | 3.6 |
| Vodafone Group PLC sponsored ADR | 4.7 | 4.9 |
| Verizon Communications, Inc. | 4.3 | 3.9 |
| Crown Castle International Corp. | 3.7 | 3.6 |
| NXP Semiconductors NV | 3.5 | 0.0 |
| Alphabet, Inc. Class C | 3.2 | 3.6 |
| 57.4 |
Top Industries (% of fund's net assets)
| As of February 29, 2016 | ||
| Diversified Telecommunication Services | 27.1% | |
| Technology Hardware, Storage & Peripherals | 14.9% | |
| Wireless Telecommunication Services | 14.1% | |
| Real Estate Investment Trusts | 11.4% | |
| Communications Equipment | 11.2% | |
| All Others* | 21.3% | |
| As of August 31, 2015 | ||
| Technology Hardware, Storage & Peripherals | 25.2% | |
| Diversified Telecommunication Services | 18.3% | |
| Wireless Telecommunication Services | 14.9% | |
| Communications Equipment | 11.8% | |
| Real Estate Investment Trusts | 11.4% | |
| All Others* | 18.4% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
Percentages shown as 0.0% may reflect amounts less than 0.05%.
Wireless Portfolio
Investments February 29, 2016
Showing Percentage of Net Assets
| Common Stocks - 99.8% | |||
| Shares | Value | ||
| Communications Equipment - 11.2% | |||
| Communications Equipment - 11.2% | |||
| CommScope Holding Co., Inc. (a) | 84,300 | $2,123,517 | |
| Harris Corp. | 30,400 | 2,371,808 | |
| Motorola Solutions, Inc. | 10,968 | 806,038 | |
| NETGEAR, Inc. (a) | 14,900 | 588,699 | |
| Nokia Corp. sponsored ADR | 285,200 | 1,719,756 | |
| Qualcomm, Inc. | 252,450 | 12,821,936 | |
| Ruckus Wireless, Inc. (a) | 179,500 | 1,737,560 | |
| Telefonaktiebolaget LM Ericsson (B Shares) sponsored ADR | 1,900 | 17,433 | |
| ViaSat, Inc. (a) | 14,800 | 1,080,548 | |
| 23,267,295 | |||
| Diversified Financial Services - 0.7% | |||
| Other Diversified Financial Services - 0.7% | |||
| Broadcom Ltd. | 11,367 | 1,522,837 | |
| Diversified Telecommunication Services - 27.1% | |||
| Alternative Carriers - 1.5% | |||
| Iliad SA | 2,494 | 613,567 | |
| inContact, Inc. (a) | 271,300 | 2,514,951 | |
| 3,128,518 | |||
| Integrated Telecommunication Services - 25.6% | |||
| AT&T, Inc. | 273,900 | 10,120,605 | |
| BT Group PLC sponsored ADR (b) | 292,100 | 9,878,822 | |
| Cellnex Telecom Sau | 48,870 | 785,221 | |
| Chunghwa Telecom Co. Ltd. sponsored ADR | 77,700 | 2,439,003 | |
| Deutsche Telekom AG | 37,000 | 618,899 | |
| Euskaltel, S.A. | 89,000 | 976,900 | |
| Manitoba Telecom Services, Inc. (b) | 31,100 | 775,316 | |
| Nippon Telegraph & Telephone Corp. sponsored ADR | 49,000 | 2,092,790 | |
| Orange SA | 373,500 | 6,469,182 | |
| SBA Communications Corp. Class A (a) | 51,100 | 4,848,879 | |
| Telecom Italia SpA (a) | 2,394,900 | 2,327,119 | |
| Telefonica SA sponsored ADR | 19,194 | 190,788 | |
| TELUS Corp. | 93,200 | 2,714,717 | |
| Verizon Communications, Inc. | 175,397 | 8,897,890 | |
| 53,136,131 | |||
| TOTAL DIVERSIFIED TELECOMMUNICATION SERVICES | 56,264,649 | ||
| Internet & Catalog Retail - 0.6% | |||
| Internet Retail - 0.6% | |||
| Netflix, Inc. (a) | 12,100 | 1,130,261 | |
| Internet Software & Services - 5.6% | |||
| Internet Software & Services - 5.6% | |||
| Alphabet, Inc. Class C | 9,452 | 6,595,322 | |
| Endurance International Group Holdings, Inc. (a)(b) | 342,701 | 3,851,959 | |
| GoDaddy, Inc. (a) | 37,400 | 1,172,490 | |
| 11,619,771 | |||
| Media - 4.5% | |||
| Cable & Satellite - 4.5% | |||
| Altice NV: | |||
| Class A (a) | 65,000 | 936,911 | |
| Class B (a) | 227,266 | 3,340,095 | |
| Cablevision Systems Corp. - NY Group Class A | 74,300 | 2,416,979 | |
| NOS SGPS SA | 90,000 | 625,525 | |
| Numericable Group SA | 56,050 | 2,053,909 | |
| 9,373,419 | |||
| Real Estate Investment Trusts - 11.4% | |||
| Specialized REITs - 11.4% | |||
| American Tower Corp. | 171,592 | 15,820,782 | |
| Crown Castle International Corp. | 89,300 | 7,724,450 | |
| 23,545,232 | |||
| Semiconductors & Semiconductor Equipment - 9.7% | |||
| Semiconductors - 9.7% | |||
| Marvell Technology Group Ltd. | 338,500 | 3,232,675 | |
| Maxim Integrated Products, Inc. | 17,000 | 575,620 | |
| Micron Technology, Inc. (a) | 63,100 | 670,753 | |
| NXP Semiconductors NV (a) | 101,200 | 7,209,488 | |
| Qorvo, Inc. (a) | 104,025 | 4,689,447 | |
| Skyworks Solutions, Inc. | 56,500 | 3,754,425 | |
| 20,132,408 | |||
| Software - 0.0% | |||
| Application Software - 0.0% | |||
| RingCentral, Inc. (a) | 4,700 | 86,950 | |
| Synchronoss Technologies, Inc. (a) | 36 | 1,008 | |
| 87,958 | |||
| Technology Hardware, Storage & Peripherals - 14.9% | |||
| Technology Hardware, Storage & Peripherals - 14.9% | |||
| Apple, Inc. | 312,300 | 30,196,286 | |
| BlackBerry Ltd. (a) | 96,500 | 753,171 | |
| 30,949,457 | |||
| Wireless Telecommunication Services - 14.1% | |||
| Wireless Telecommunication Services - 14.1% | |||
| America Movil S.A.B. de CV Series L sponsored ADR | 109,100 | 1,479,396 | |
| China Mobile Ltd. sponsored ADR | 74,300 | 3,974,307 | |
| Leap Wireless International, Inc. rights (a) | 16,600 | 42,828 | |
| NTT DOCOMO, Inc. sponsored ADR | 1,300 | 30,290 | |
| Rogers Communications, Inc. Class B (non-vtg.) | 119,400 | 4,419,477 | |
| Spok Holdings, Inc. | 12,000 | 212,640 | |
| Sprint Corp. (a) | 28,033 | 96,434 | |
| T-Mobile U.S., Inc. (a) | 170,475 | 6,324,623 | |
| Telephone & Data Systems, Inc. | 76,914 | 2,055,142 | |
| Telesites S.A.B. de C.V. (a) | 5,555 | 3,003 | |
| U.S. Cellular Corp. (a) | 20,800 | 861,120 | |
| Vodafone Group PLC sponsored ADR | 321,481 | 9,773,022 | |
| 29,272,282 | |||
| TOTAL COMMON STOCKS | |||
| (Cost $197,304,905) | 207,165,569 | ||
| Money Market Funds - 4.8% | |||
| Fidelity Cash Central Fund, 0.40% (c) | 932,856 | 932,856 | |
| Fidelity Securities Lending Cash Central Fund, 0.44% (c)(d) | 8,917,962 | 8,917,962 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $9,850,818) | 9,850,818 | ||
| TOTAL INVESTMENT PORTFOLIO - 104.6% | |||
| (Cost $207,155,723) | 217,016,387 | ||
| NET OTHER ASSETS (LIABILITIES) - (4.6)% | (9,524,507) | ||
| NET ASSETS - 100% | $207,491,880 |
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 | $4,186 |
| Fidelity Securities Lending Cash Central Fund | 243,928 |
| Total | $248,114 |
Investment Valuation
The following is a summary of the inputs used, as of February 29, 2016, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used 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 | $207,165,569 | $197,707,541 | $9,415,200 | $42,828 |
| Money Market Funds | 9,850,818 | 9,850,818 | -- | -- |
| Total Investments in Securities: | $217,016,387 | $207,558,359 | $9,415,200 | $42,828 |
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% |
| United Kingdom | 9.4% |
| Netherlands | 5.5% |
| France | 4.4% |
| Canada | 4.2% |
| Hong Kong | 1.9% |
| Bermuda | 1.5% |
| Taiwan | 1.2% |
| Italy | 1.1% |
| Japan | 1.0% |
| Spain | 1.0% |
| Others (Individually Less Than 1%) | 2.8% |
| 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, 2016 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $8,723,639) — See accompanying schedule: Unaffiliated issuers (cost $197,304,905) | $207,165,569 | |
| Fidelity Central Funds (cost $9,850,818) | 9,850,818 | |
| Total Investments (cost $207,155,723) | $217,016,387 | |
| Foreign currency held at value (cost $145,137) | 145,137 | |
| Receivable for investments sold | 1,795,466 | |
| Receivable for fund shares sold | 59,834 | |
| Dividends receivable | 140,966 | |
| Distributions receivable from Fidelity Central Funds | 4,843 | |
| Prepaid expenses | 865 | |
| Other receivables | 14,458 | |
| Total assets | 219,177,956 | |
| Liabilities | ||
| Payable for investments purchased | $2,321,539 | |
| Payable for fund shares redeemed | 268,231 | |
| Accrued management fee | 92,908 | |
| Other affiliated payables | 48,322 | |
| Other payables and accrued expenses | 37,114 | |
| Collateral on securities loaned, at value | 8,917,962 | |
| Total liabilities | 11,686,076 | |
| Net Assets | $207,491,880 | |
| Net Assets consist of: | ||
| Paid in capital | $204,101,952 | |
| Undistributed net investment income | 8 | |
| Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (6,469,314) | |
| Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 9,859,234 | |
| Net Assets, for 26,421,337 shares outstanding | $207,491,880 | |
| Net Asset Value, offering price and redemption price per share ($207,491,880 ÷ 26,421,337 shares) | $7.85 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 29, 2016 | ||
| Investment Income | ||
| Dividends | $4,784,662 | |
| Income from Fidelity Central Funds | 248,114 | |
| Total income | 5,032,776 | |
| Expenses | ||
| Management fee | $1,319,398 | |
| Transfer agent fees | 552,525 | |
| Accounting and security lending fees | 95,925 | |
| Custodian fees and expenses | 32,193 | |
| Independent trustees' compensation | 4,477 | |
| Registration fees | 23,649 | |
| Audit | 45,959 | |
| Legal | 3,108 | |
| Interest | 174 | |
| Miscellaneous | 3,088 | |
| Total expenses before reductions | 2,080,496 | |
| Expense reductions | (21,272) | 2,059,224 |
| Net investment income (loss) | 2,973,552 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 7,852,137 | |
| Foreign currency transactions | 59,699 | |
| Total net realized gain (loss) | 7,911,836 | |
| Change in net unrealized appreciation (depreciation) on: Investment securities | (38,702,711) | |
| Assets and liabilities in foreign currencies | (1,228) | |
| Total change in net unrealized appreciation (depreciation) | (38,703,939) | |
| Net gain (loss) | (30,792,103) | |
| Net increase (decrease) in net assets resulting from operations | $(27,818,551) |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 29, 2016 | Year ended February 28, 2015 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $2,973,552 | $4,843,498 |
| Net realized gain (loss) | 7,911,836 | 14,989,507 |
| Change in net unrealized appreciation (depreciation) | (38,703,939) | (621,646) |
| Net increase (decrease) in net assets resulting from operations | (27,818,551) | 19,211,359 |
| Distributions to shareholders from net investment income | (3,117,139) | (16,759,973) |
| Distributions to shareholders from net realized gain | (15,155,187) | (28,888,507) |
| Total distributions | (18,272,326) | (45,648,480) |
| Share transactions | ||
| Proceeds from sales of shares | 21,142,366 | 42,710,221 |
| Reinvestment of distributions | 17,548,853 | 44,098,611 |
| Cost of shares redeemed | (55,558,448) | (79,982,116) |
| Net increase (decrease) in net assets resulting from share transactions | (16,867,229) | 6,826,716 |
| Redemption fees | 1,108 | 2,631 |
| Total increase (decrease) in net assets | (62,956,998) | (19,607,774) |
| Net Assets | ||
| Beginning of period | 270,448,878 | 290,056,652 |
| End of period (including undistributed net investment income of $8 and undistributed net investment income of $385,053, respectively) | $207,491,880 | $270,448,878 |
| Other Information | ||
| Shares | ||
| Sold | 2,374,555 | 4,509,142 |
| Issued in reinvestment of distributions | 2,018,445 | 4,839,668 |
| Redeemed | (6,310,996) | (8,448,923) |
| Net increase (decrease) | (1,917,996) | 899,887 |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Wireless Portfolio
| Years ended February 28, | 2016 A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $9.54 | $10.57 | $8.60 | $7.68 | $8.29 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .11 | .17 | .56C | .12 | .10D |
| Net realized and unrealized gain (loss) | (1.11) | .48 | 1.51 | .94 | (.33) |
| Total from investment operations | (1.00) | .65 | 2.07 | 1.06 | (.23) |
| Distributions from net investment income | (.12) | (.62) | (.10) | (.14) | (.08) |
| Distributions from net realized gain | (.57) | (1.06) | – | – | (.30) |
| Total distributions | (.69) | (1.68) | (.10) | (.14) | (.38) |
| Redemption fees added to paid in capitalB,E | – | – | – | – | – |
| Net asset value, end of period | $7.85 | $9.54 | $10.57 | $8.60 | $7.68 |
| Total ReturnF | (11.07)% | 7.55% | 24.11% | 13.89% | (2.55)% |
| Ratios to Average Net AssetsG,H | |||||
| Expenses before reductions | .86% | .86% | .88% | .90% | .90% |
| Expenses net of fee waivers, if any | .86% | .86% | .88% | .90% | .90% |
| Expenses net of all reductions | .85% | .85% | .86% | .87% | .89% |
| Net investment income (loss) | 1.23% | 1.76% | 5.91%C | 1.50% | 1.23%D |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $207,492 | $270,449 | $290,057 | $253,794 | $262,696 |
| Portfolio turnover rateI | 78% | 48% | 120% | 100% | 114% |
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 1.23%.
D 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 .90%.
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, 2016
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.
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 Fidelity Investments Money Management, Inc. (FIMM), an affiliate of the investment adviser. Annualized expenses of the Money Market Central Funds as of their most recent shareholder report date are less than .005%.
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 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 Fidelity SelectCo, LLC (SelectCo) Fair Value Committee (the Committee). 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. Utilizing these techniques may result in transfers between Level 1 and Level 2. 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, 2016, 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 may 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. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. Subsequent to ex-dividend date the Fund determines the components of these distributions, based upon receipt of tax filings or other correspondence relating to the underlying investment. 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, 2016, 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.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
| Gross unrealized appreciation | $27,961,937 |
| Gross unrealized depreciation | (20,526,253) |
| Net unrealized appreciation (depreciation) on securities | $7,435,684 |
| Tax Cost | $209,580,703 |
The tax-based components of distributable earnings as of period end were as follows:
| Net unrealized appreciation (depreciation) on securities and other investments | $7,434,263 |
The Fund intends to elect to defer to its next fiscal year $4,044,333 of capital losses recognized during the period November 1, 2015 to February 29, 2016.
The tax character of distributions paid was as follows:
| February 29, 2016 | February 28, 2015 | |
| Ordinary Income | $6,200,375 | $ 19,922,070 |
| Long-term Capital Gains | 12,071,951 | 25,726,410 |
| Total | $18,272,326 | $ 45,648,480 |
Trading (Redemption) Fees. Shares held by investors in the Fund less than 30 days may be subject to a redemption fee equal to .75% of the NAV of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Fund and accounted for as an addition to paid in capital.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $185,083,754 and $215,553,935, respectively.
5. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity SelectCo, 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 .25% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by Fidelity Management & Research Company (FMR) and the investment adviser. 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 .55% of the Fund's average net assets.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (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 .23% 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. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions 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 $3,105 for the period.
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other registered investment companies having management contracts with FMR or other affiliated entities of FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. The Fund's 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 |
| Borrower | $6,204,000 | .34% | $174 |
Interfund Trades. The Fund 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.
The Fund participates 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 Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $360 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, the Fund did not borrow on this line of credit.
7. Security Lending.
The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. 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. 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. Total security lending income during the period amounted to $243,928.
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 $13,009 for the period.
In addition, during the period the investment adviser reimbursed and/or waived a portion of operating expenses in the amount of $8,263.
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.
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Select Portfolios and the Shareholders of Telecommunications Portfolio and Wireless Portfolio:
In our opinion, the accompanying statements of assets and liabilities, including the schedules of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Telecommunications Portfolio and Wireless Portfolio (each a fund of Fidelity Select Portfolios) (the "Funds") at February 29, 2016, 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 then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Funds' management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at February 29, 2016 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 19, 2016
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. Each of the Trustees oversees 75 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. Brian B. Hogan 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. Michael E. Wiley 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 sector portfolios. Other Boards oversee Fidelity's equity and high income funds, and Fidelity's investment grade bond, money market, and asset allocation funds. 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 SelectCo 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 SelectCo, 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 and Audit Committees. Appropriate personnel, including but not limited to the funds' Chief Compliance Officer (CCO), SelectCo's internal auditor, the independent accountants, the funds' Treasurer and portfolio management personnel, make periodic reports to the Board's committees, as appropriate. 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+
Brian B. Hogan (1964)
Year of Election or Appointment: 2014
Trustee
Chairman of the Board of Trustees
Mr. Hogan also serves as Trustee or Vice President of other funds. Mr. Hogan serves as a Director of FMR Investment Management (U.K.) Limited (investment adviser firm, 2015-present) and Fidelity SelectCo, LLC (investment adviser firm, 2014-present) and President of the Equity Division of FMR (investment adviser firm, 2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager.
* 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 SelectCo.
+ 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+
David A. Rosow (1942)
Year of Election or Appointment: 2013
Trustee
Mr. Rosow also serves as Trustee of other Fidelity® funds. Prior to his retirement in 2006, Mr. Rosow was the Chief Executive Officer, owner and operator of a number of private companies, which encompassed oil refining, drilling and marketing of petroleum products (including specialty petroleum products), the recreation industry, and real estate development. Mr. Rosow currently serves as a Director of Oxbow Carbon LLC (upgraders, marketers, and distributors of petroleum byproducts of the oil refining process, 2015-present) and Oxbridge Academy of the Palm Beaches (2015-present). Previously, Mr. Rosow served on the Fairfield Country Day School Board for 27 years, including as its President for 3 years, stepping down in 2006, as Lead Director and Chairman of the Audit Committee of Hudson United Bancorp (1996-2006), Chairman of the Board of Westport Bank and Trust (1992-1996), and as a Director of TD Banknorth (2006-2007). In addition, Mr. Rosow served as a member (2008-2014) and President (2009-2014) of the Town Council of Palm Beach, Florida. Mr. Rosow also served as a Member of the Advisory Board of other Fidelity® funds (2012-2013).
Garnett A. Smith (1947)
Year of Election or Appointment: 2013
Trustee
Mr. Smith also serves as Trustee of other Fidelity® funds. Prior to Mr. Smith's retirement, he served as Chairman and Chief Executive Officer of Inbrand Corp. (manufacturer of personal absorbent products, 1990-1997). He also served as President (1986-1990) of Inbrand Corp. Prior to his employment with Inbrand Corp., he was employed by a retail fabric chain and North Carolina National Bank. In addition, Mr. Smith served as a Member of the Advisory Board of other Fidelity® funds (2012-2013) and as a board member of the Jackson Hole Land Trust (2009-2012).
Michael E. Wiley (1950)
Year of Election or Appointment: 2008
Trustee
Chairman of the Independent Trustees
Mr. Wiley also serves as Trustee of other Fidelity® funds. Mr. Wiley serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), a Director of Tesoro Logistics LP (natural resources logistics, 2015-present), and a Director of Bill Barrett Corporation (exploration and production, 2005-present). In addition, Mr. Wiley also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a Trustee of other Fidelity® funds (2008-2013), as a Director of Asia Pacific Exploration Consolidated (international oil and gas exploration and production, 2008-2013), as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-2010), as a Senior Energy Advisor of Katzenbach Partners, LLC (consulting, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production, 2001-2005).
+ 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:
Except for Anthony R. Rochte, correspondence intended for an officer may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210. Correspondence intended for Mr. Rochte may be sent to SelectCo, 1225 17th Street, Denver, Colorado 80202-5541. Officers appear below in alphabetical order.
Name, Year of Birth; Principal Occupation
Donald F. Donahue (1950)
Year of Election or Appointment: 2015
Member of the Advisory Board
Mr. Donahue also serves as a Member of the Advisory Board of other Fidelity® funds. Mr. Donahue is President and Chief Executive Officer of Miranda Partners, LLC (risk consulting for the financial services industry, 2012-present) and a consultant for the Institute for Defense Analyses (national security, 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 serves as a Member and Treasurer of the Board of Directors of United Way of New York (2012-present), Member of the Board of Directors of NYC Leadership Academy (2012-present) and Physicians for Human Rights (2013-present), and Member of the Board of Advisors of Ripple Labs, Inc. (financial services, 2015-present). He also served as Chairman (2010-2012) and Member of the Board of Directors (2012-2013) of Omgeo, LLC (financial services) and Member of the Board of Directors of XBRL US (financial services non-profit, 2009-2012) and the International Securities Services Association (2009-2012).
Christopher S. Bartel (1971)
Year of Election or Appointment: 2009
Vice President
Mr. Bartel also serves as Vice President of other funds. Mr. Bartel serves as a Director of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2016-present) and Fidelity Management & Research (Hong Kong) (investment adviser firm, 2012-present) and Head of Global Equity Research (2010-present). Previously, Mr. Bartel served as a Director, President, and Chief Executive Officer of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2012-2016), Senior Vice President of Equity Research (2009-2010), Managing Director of Research (2006-2009), and an analyst and portfolio manager (2000-2006).
Marc R. Bryant (1966)
Year of Election or Appointment: 2013
Secretary and Chief Legal Officer (CLO)
Mr. Bryant also serves as Secretary and CLO of other funds. Mr. Bryant serves as CLO, Secretary, and Senior Vice President of Fidelity Management & Research Company (investment adviser firm, 2015-present) and FMR Co., Inc. (investment adviser firm, 2015-present); Secretary of Fidelity SelectCo, LLC (investment adviser firm, 2015-present) and Fidelity Investments Money Management, Inc. (investment adviser firm, 2015-present); and CLO of Fidelity Management & Research (Hong Kong) Limited and FMR Investment Management (U.K.) Limited (investment adviser firms, 2015-present) and Fidelity Management & Research (Japan) Limited (investment adviser firm, 2016-present). He is Senior Vice President and Deputy General Counsel of FMR LLC (diversified financial services company). Previously, Mr. Bryant served as Secretary and CLO of Fidelity Rutland Square Trust II (2010-2014) and Assistant Secretary of Fidelity's Fixed Income and Asset Allocation Funds (2013-2015). Prior to joining Fidelity Investments, Mr. Bryant served as a Senior Vice President and the Head of Global Retail Legal for AllianceBernstein L.P. (2006-2010), and as the General Counsel for ProFund Advisors LLC (2001-2006).
William C. Coffey (1969)
Year of Election or Appointment: 2009
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 Vice President and Associate General Counsel of FMR LLC (2005-2009).
Jonathan Davis (1968)
Year of Election or Appointment: 2010
Assistant Treasurer
Mr. Davis also serves as Assistant Treasurer of other funds, 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).
Adrien E. Deberghes (1967)
Year of Election or Appointment: 2013
President and Treasurer
Mr. Deberghes also serves as an officer of other funds. He is an employee of Fidelity Investments (2008-present). Prior to joining Fidelity Investments, Mr. Deberghes was Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005). Previously, Mr. Deberghes served in other fund officer roles.
Joseph DeSantis (1959)
Year of Election or Appointment: 2015
Vice President
Mr. DeSantis also serves as Vice President of other funds. Mr. DeSantis serves as Group Chief Investment Officer, Equities (2010-present) and is an employee of Fidelity Investments.
Stephanie J. Dorsey (1969)
Year of Election or Appointment: 2010
Assistant Treasurer
Ms. Dorsey also serves as an officer of other funds. She is an employee of Fidelity Investments (2008-present) and has served in other fund officer roles. Prior to joining Fidelity Investments, Ms. Dorsey served as Treasurer (2004-2008) of the JPMorgan Mutual Funds and Vice President (2004-2008) of JPMorgan Chase Bank.
Howard J. Galligan III (1966)
Year of Election or Appointment: 2014
Chief Financial Officer
Mr. Galligan also serves as Chief Financial Officer of other funds. Mr. Galligan serves as President of Fidelity Pricing and Cash Management Services (FPCMS) (2014-present) and as a Director of Strategic Advisers, Inc. (investment adviser firm, 2008-present). Previously, Mr. Galligan served as Chief Administrative Officer of Asset Management (2011-2014) and Chief Operating Officer and Senior Vice President of Investment Support for Strategic Advisers, Inc. (2003-2011).
Scott C. Goebel (1968)
Year of Election or Appointment: 2015
Vice President
Mr. Goebel serves as Vice President of other funds and is an employee of Fidelity Investments (2001-present). Previously, Mr. Goebel served as Secretary of Fidelity SelectCo, LLC (investment adviser firm, 2013-2015), Fidelity Investments Money Management, Inc. (FIMM) (investment adviser firm, 2010-2015), and Fidelity Research and Analysis Company (FRAC) (investment adviser firm, 2010-2015); General Counsel, Secretary, and Senior Vice President of Fidelity Management & Research Company (investment adviser firm, 2008-2015) and FMR Co., Inc. (investment adviser firm, 2008-2015); Assistant Secretary of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2008-2015) and Fidelity Management & Research (U.K.) Inc. (investment adviser firm, 2008-2015); Chief Legal Officer (CLO) of Fidelity Management & Research (Hong Kong) Limited (investment adviser firm, 2008-2015); Secretary and CLO of certain Fidelity® funds (2008-2015); Assistant Secretary of FIMM (2008-2010), FRAC (2008-2010), and certain funds (2007-2008); and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007).
James D. Gryglewicz (1972)
Year of Election or Appointment: 2014
Chief Compliance Officer
Mr. Gryglewicz also serves as Chief Compliance Officer of other funds. Mr. Gryglewicz serves as Compliance Officer of Strategic Advisers, Inc. (investment adviser firm, 2015-present) and Fidelity SelectCo, LLC (investment adviser firm, 2014-present), Senior Vice President of Asset Management Compliance (2009-present), and is an employee of Fidelity Investments (2004-present).
Brian B. Hogan (1964)
Year of Election or Appointment: 2009
Vice President
Mr. Hogan also serves as Trustee or Vice President of other funds. Mr. Hogan serves as a Director of FMR Investment Management (U.K.) Limited (investment adviser firm, 2015-present) and Fidelity SelectCo, LLC (investment adviser firm, 2014-present) and President of the Equity Division of FMR (investment adviser firm, 2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager.
Chris Maher (1972)
Year of Election or Appointment: 2013
Assistant Treasurer
Mr. Maher serves as Assistant Treasurer of other funds. Mr. Maher is Vice President of Valuation Oversight and is an employee of Fidelity Investments. Previously, Mr. Maher served as 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).
John F. Papandrea (1972)
Year of Election or Appointment: 2016
Anti-Money Laundering (AML) Officer
Mr. Papandrea also serves as AML Officer of other funds. Mr. Papandrea is Vice President of FMR LLC (diversified financial services company, 2008-present) and is an employee of Fidelity Investments (2005-present).
Kenneth B. Robins (1969)
Year of Election or Appointment: 2013
Deputy Treasurer
Mr. Robins also serves as an officer of other funds. Mr. Robins serves as Executive Vice President of Fidelity Investments Money Management, Inc. (FIMM) (investment adviser firm, 2013-present) and is an employee of Fidelity Investments (2004-present). Previously, Mr. Robins served in other fund officer roles.
Anthony R. Rochte (1968)
Year of Election or Appointment: 2013
Vice President
Mr. Rochte also serves as Vice President of other funds. Mr. Rochte serves as President of Fidelity SelectCo, LLC (investment adviser firm, 2012-present) and is an employee of Fidelity Investments (2012-present). Prior to joining Fidelity Investments, Mr. Rochte served as Senior Managing Director and head of State Street Global Advisors' North American Intermediary Business Group (2006-2012).
Stacie M. Smith (1974)
Year of Election or Appointment: 2013
Assistant Treasurer
Ms. Smith also serves as an officer of other funds. She 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 (1996-2009). Previously, Ms. Smith served as Deputy Treasurer of certain Fidelity funds (2013-2016).
Renee Stagnone (1975)
Year of Election or Appointment: 2013
Deputy Treasurer
Ms. Stagnone also serves as an officer of other funds. Ms. Stagnone is an employee of Fidelity Investments (1997-present). Previously, Ms. Stagnone served as Deputy Treasurer of certain Fidelity funds (2013-2016).
Joseph F. Zambello (1957)
Year of Election or Appointment: 2011
Deputy Treasurer
Mr. Zambello also serves as Deputy Treasurer of other funds. Mr. Zambello is an employee of Fidelity Investments (1991-present). Previously, Mr. Zambello served as Deputy Treasurer of certain Fidelity funds (2011-2016), Vice President of the Program Management Group of FMR (investment adviser firm, 2009-2011), and Vice President of the Transfer Agent Oversight Group (2005-2009).
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, redemption fees 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, 2015 to February 29, 2016).
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. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. 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. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. 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, 2015 | Ending Account Value February 29, 2016 | Expenses Paid During Period-B September 1, 2015 to February 29, 2016 | |
| Telecommunications Portfolio | ||||
| Class A | 1.14% | |||
| Actual | $1,000.00 | $1,067.60 | $5.86 | |
| Hypothetical-C | $1,000.00 | $1,019.19 | $5.72 | |
| Class T | 1.45% | |||
| Actual | $1,000.00 | $1,065.90 | $7.45 | |
| Hypothetical-C | $1,000.00 | $1,017.65 | $7.27 | |
| Class B | 1.91% | |||
| Actual | $1,000.00 | $1,063.30 | $9.80 | |
| Hypothetical-C | $1,000.00 | $1,015.37 | $9.57 | |
| Class C | 1.86% | |||
| Actual | $1,000.00 | $1,063.70 | $9.54 | |
| Hypothetical-C | $1,000.00 | $1,015.61 | $9.32 | |
| Telecommunications | .80% | |||
| Actual | $1,000.00 | $1,069.20 | $4.12 | |
| Hypothetical-C | $1,000.00 | $1,020.89 | $4.02 | |
| Class I | .78% | |||
| Actual | $1,000.00 | $1,069.50 | $4.01 | |
| Hypothetical-C | $1,000.00 | $1,020.98 | $3.92 | |
| Wireless Portfolio | .86% | |||
| Actual | $1,000.00 | $951.30 | $4.17 | |
| Hypothetical-C | $1,000.00 | $1,020.59 | $4.32 |
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)
Telecommunications Portfolio hereby designates as a capital gain dividend with respect to the taxable year ended February 29, 2016, $3,283,851, or, if subsequently determined to be different, the net capital gain of such year.
Telecommunications Portfolio designates 100% of the dividends distributed during the fiscal year as qualifying for the dividends–received deduction for corporate shareholders.
Telecommunications Portfolio designates 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.
Wireless Portfolio hereby designates as a capital gain dividend with respect to the taxable year ended February 29, 2016, $9,605,652, or, if subsequently determined to be different, the net capital gain of such year.
Wireless Portfolio designates 28% and 46% of the dividends distributed in April and December, respectively during the fiscal year as qualifying for the dividends–received deduction for corporate shareholders.
Wireless Portfolio designates 10% and 67% of the dividends distributed in April and December, 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 funds will notify shareholders in January 2017 of amounts for use in preparing 2016 income tax returns.
Board Approval of Investment Advisory Contracts and Management Fees
Telecommunications Portfolio
Wireless Portfolio
Each year, the Board of Trustees, including the Independent Trustees (together, the Board), votes on the renewal of the management contract with Fidelity SelectCo, LLC (SelectCo), an affiliate of Fidelity Management & Research Company (FMR), and the sub-advisory agreements with affiliates of FMR (together, the Advisory Contracts) for each fund. 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.
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 each fund's Advisory Contracts, including the services and support provided to each fund and its shareholders. The Board has established four standing committees (Committees) — Operations, Audit, Fair Valuation, and Governance and Nominating — 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 Operations Committee, of which all of the Independent Trustees are members, meets regularly throughout the year and considers, among other matters, information specifically related to the annual consideration of the renewal of each fund's Advisory Contracts. The Board, acting directly and through its Committees, requests and receives information concerning the annual consideration of the renewal of each fund's Advisory Contracts. The Board also meets as needed to consider 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 ad hoc joint committees to discuss certain matters relevant to all of the Fidelity funds.
At its January 2016 meeting, the Board unanimously determined to renew each 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 to be provided to each fund and its shareholders (including the investment performance of each fund); (ii) the competitiveness of each fund's management fee and total expense ratio relative to peer funds; (iii) the total costs of the services to be provided by and the profits to be realized by Fidelity from its relationships with each fund; and (iv) the extent to which, if any, economies of scale exist and would be realized as each fund grows, and whether any economies of scale are appropriately shared with fund shareholders.
In considering whether to renew the Advisory Contracts for each 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 each 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 each fund have a broad range of investment choices available to them, including a wide choice among funds offered by Fidelity's competitors, and that each 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 that fund, which is part of the Fidelity family of funds.
Nature, Extent, and Quality of Services Provided. The Board considered the staffing of SelectCo and the sub-advisers (together with SelectCo, the Investment Advisers) as it relates to the funds, including the backgrounds of investment personnel of SelectCo, and also considered the funds' investment objectives, strategies, and related investment philosophies. 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 each 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 reviewed the general qualifications and capabilities of the investment staff of the Investment Advisers, including their 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 each 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, each 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 or convenience of the Fidelity funds as investment vehicles. These services include 24-hour access to account information and market information through telephone representatives and over the Internet, investor education materials and asset allocation tools, and the expanded availability of Fidelity Investor Centers.The Board noted that in 2014 the ad hoc Committee on Transfer Agency Fees was formed by it and the boards of certain other Fidelity funds to review the variety of transfer agency services and fee structures throughout the mutual fund industry compared to Fidelity's.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 investment research 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 making other enhancements to meet client needs; (iv) reducing management fees and total expenses for certain index funds; (v) continuing to launch dedicated lower cost underlying funds to meet portfolio construction needs related to expanding underlying fund options for Fidelity funds of funds, specifically for the Freedom Fund product lines; (vi) rationalizing product lines and gaining increased efficiencies through fund mergers; (vii) continuing to develop, acquire and implement systems and technology to improve services to the funds and shareholders, strengthen information security, and increase efficiency; (viii) implementing investment enhancements to further strengthen Fidelity's target date product line to increase investors' probability of success in achieving their goals; (ix) modifying the eligibility criteria for certain share classes to accommodate roll-over assets from employer-sponsored retirement plans; (x) launching a new Class W of the Freedom Index Funds to attract and retain Fidelity record-kept retirement plan assets; and (xi) implementing changes to Fidelity's money market fund product line in response to recent regulatory reforms.Investment Performance. The Board considered whether each 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 with representatives of the Investment Advisers about fund investment performance that occur at Board meetings throughout the year. 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 each fund, for different time periods, measured against a securities market index ("benchmark index"). In its evaluation of fund investment performance at meetings throughout the year, the Board gave particular attention to information indicating underperformance of certain Fidelity funds for specific time periods and discussed with the Investment Advisers the reasons for such 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. Depending on the circumstances, the Independent Trustees may be satisfied with a fund's performance notwithstanding that it lags its benchmark index for certain periods.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 each fund and an appropriate benchmark index for the most recent one-, three-, and five-year periods ended June 30, 2015.Based on its review, the Board concluded that the nature, extent, and quality of services provided to each fund under the Advisory Contracts should benefit the shareholders of each fund.Competitiveness of Management Fee and Total Expense Ratio. The Board considered each fund's management fee and total expense ratio compared to "mapped groups" of competitive funds and classes created for the purpose of facilitating the Trustees' analysis of the competitiveness of management fees and total expenses. Fidelity creates "mapped groups" by combining similar Lipper investment objective categories that have comparable investment mandates. For this purpose, all sector focused equity funds are grouped in the same mapped group. Combining Lipper investment objective categories aids the Board's management fee and total expense ratio comparisons by broadening the competitive group used for comparison.Management Fee. The Board considered two proprietary management fee comparisons for the 12-month periods ended June 30 shown in basis points (BP) in the charts below. The group of Lipper funds used by the Board for management fee comparisons is referred to below as the "Total Mapped Group." The Total Mapped Group comparison focuses on a fund's standing in terms of gross management fees before expense reimbursements or caps relative to the total universe of funds with comparable investment mandates (i.e., sector equities), regardless of whether their management fee structures also are comparable. Funds with comparable management fee structures have similar management fee contractual arrangements (e.g., flat rate charged for advisory services, all-inclusive fee rate, etc.). "TMG %" represents the percentage of funds in the Total Mapped Group that had management fees that were lower than a fund's. For example, a hypothetical TMG % of 20% would mean that 80% of the funds in the Total Mapped Group had higher, and 20% had lower, management fees than a fund. The funds' actual TMG %s and the number of funds in the Total Mapped Group are in the charts below. The "Asset-Size Peer Group" (ASPG) comparison focuses on a fund's standing relative to a subset of non-Fidelity funds within the Total Mapped Group that are similar in size and management fee structure. For example, if a fund is in the first quartile of the ASPG, the fund's management fee ranks in the least expensive or lowest 25% of funds in the ASPG. The ASPG represents at least 15% of the funds in the Total Mapped Group with comparable asset size and management fee structures, subject to a minimum of 50 funds (or all funds in the Total Mapped Group if fewer than 50). Additional information, such as the ASPG quartile in which a fund's management fee rate ranked, is also included in the charts and considered by the Board.Telecommunications Portfolio
Wireless Portfolio
SELTS-ANN-0416
1.846050.109
Fidelity Advisor Focus Funds® Fidelity Advisor® Consumer Staples Fund Fidelity Advisor® Gold Fund Fidelity Advisor® Materials Fund Fidelity Advisor® Telecommunications Fund Annual Report February 29, 2016 Each Advisor fund listed above is a class of the Fidelity® Select Portfolios® |
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Contents
Fidelity Advisor® Consumer Staples Fund | |
Fidelity Advisor® Gold Fund | |
Fidelity Advisor® Materials Fund | |
Fidelity Advisor® Telecommunications Fund | |
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 1-877-208-0098 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. © 2016 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-Q. Forms N-Q are available on the SEC’s web site at http://www.sec.gov. A fund's Forms N-Q 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.advisor.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.
Fidelity Advisor® Consumer Staples Fund
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.
Returns reflect the conversion of Class B shares to Class A shares after a maximum of seven years.
Average Annual Total Returns
| For the periods ended February 29, 2016 | Past 1 year | Past 5 years | Past 10 years |
| Class A (incl. 5.75% sales charge) | (9.06)% | 10.64% | 9.61% |
| Class T (incl. 3.50% sales charge) | (7.15)% | 10.85% | 9.58% |
| Class B (incl. contingent deferred sales charge) | (8.69)% | 10.81% | 9.64% |
| Class C (incl. contingent deferred sales charge) | (5.11)% | 11.12% | 9.50% |
Class A shares bear a 0.25% 12b-1 fee. The initial offering of Class A shares took place on December 12, 2006. Returns prior to December 12, 2006, are those of Consumer Staples Portfolio, the original class of the fund, which has no 12b-1 fee. Had Class A's 12b-1 fee been reflected, returns prior to December 12, 2006, would have been lower.
Class T shares bear a 0.50% 12b-1 fee. The initial offering of Class T shares took place on December 12, 2006. Returns prior to December 12, 2006, are those of Consumer Staples Portfolio, the original class of the fund, which has no 12b-1 fee. Had Class T's 12b-1 fee been reflected, returns prior to December 12, 2006, would have been lower.
Class B shares bear a 1.00% 12b-1 fee. The initial offering of Class B shares took place on December 12, 2006. Returns prior to December 12, 2006, are those of Consumer Staples Portfolio, the original class of the fund, which has no 12b-1 fee. Had Class B's 12b-1 fee been reflected, returns prior to December 12, 2006, would have been lower.
Class C shares bear a 1.00% 12b-1 fee. The initial offering of Class C shares took place on December 12, 2006. Returns prior to December 12, 2006, are those of Consumer Staples Portfolio, the original class of the fund, which has no 12b-1 fee. Had Class C's 12b-1 fee been reflected, returns prior to December 12, 2006 would have been lower.
Class B shares' contingent deferred sales charges included in the past one year, past five years and past ten years total return figures are 5%, 2% and 0%, respectively.
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.
Prior to October 1, 2006, the fund was named Food and Agriculture 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 Fidelity Advisor® Consumer Staples Fund - Class A on February 28, 2006, and the current 5.75% sales charge was paid.
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.
See above for additional information regarding the performance of Class A.
| Period Ending Values | ||
| $25,043 | Fidelity Advisor® Consumer Staples Fund - Class A | |
| $18,666 | S&P 500® Index | |
Fidelity Advisor® Consumer Staples Fund
Management's Discussion of Fund Performance
Market Recap: The S&P 500® index returned -6.19% for the year ending February 29, 2016. Largely range-bound for the first half of the period, U.S. stocks suffered a steep, late-summer decline on concern about an economic slowdown in China. The market recovered in October, lifted by the U.S. Federal Reserve's decision to delay raising near-term interest rates until mid-December. Investors also drew courage from a rate cut in China and economic stimulus in Europe. But continued oil-price weakness and U.S.-dollar strength, plus fresh worries about China and the Middle East, pushed the S&P 500® to its worst January since 2009, followed by a volatile but ultimately flattish February. Overall, growth-oriented and larger-cap stocks fared better than value and smaller-cap complements. In this environment, the tech-heavy Nasdaq Composite Index® returned -7.07% for the 12 months; the Russell 2000® Index, -14.97%. Few sectors within the broad-market S&P 500® gained ground, with a wide gap separating leaders from laggards. Despite increased competition among wireless carriers, telecommunication services (+8%) led the way, followed by the more defensive utilities sector (+6%). Rising wages and low inflation buoyed consumer staples (+4%), less so consumer discretionary (0%). Meanwhile, energy (-24%) foundered amid commodity weakness that also hurt materials (-17%). The financials sector (-12%) struggled as well.Comments from Portfolio Manager Robert Lee: For the year, the fund’s share classes (excluding sales charges, if applicable) posted in the range of -3.25% to -4.25%, underperforming the 3.43% gain of the MSCI U.S. IMI Consumer Staples 25/50 Index but outpacing the broader market, as investors were attracted to the relative earnings stability of companies in the sector. The fund's underperformance versus the sector benchmark largely was driven by unsuccessful stock selection within the packaged foods & meats, as well as the tobacco industries. Here, our large, overweighted position in Mead Johnson Nutrition was the biggest individual detractor. Avoiding Kraft Foods also hurt, especially after the company announced in March it would merge with competitor H.J. Heinz. Picks among tobacco stocks were another sore spot. This included a non-index stake in U.K.-based British American Tobacco, one of the fund's biggest positions, which was adversely affected by currency fluctuations. Conversely, stock choices among food retail names contributed to the fund's relative results. We liquidated the fund's position in organic-groceries chain Whole Foods early in the period, which proved favorable when the stock subsequently declined on concern that growing competition in the natural/organic food retailing space would siphon away the chain's customers.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 Staples Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 29, 2016
| % of fund's net assets | % of fund's net assets 6 months ago | |
| Procter & Gamble Co. | 13.5 | 9.7 |
| British American Tobacco PLC sponsored ADR | 10.8 | 11.1 |
| CVS Health Corp. | 9.3 | 10.5 |
| Kroger Co. | 6.1 | 5.9 |
| Reynolds American, Inc. | 5.1 | 2.1 |
| Walgreens Boots Alliance, Inc. | 5.1 | 0.0 |
| PepsiCo, Inc. | 4.5 | 9.6 |
| Altria Group, Inc. | 4.1 | 4.4 |
| The Coca-Cola Co. | 3.9 | 3.3 |
| Mead Johnson Nutrition Co. Class A | 3.8 | 4.7 |
| 66.2 |
Top Industries (% of fund's net assets)
| As of February 29, 2016 | ||
| Food & Staples Retailing | 25.2% | |
| Tobacco | 23.3% | |
| Household Products | 16.7% | |
| Beverages | 15.7% | |
| Food Products | 11.2% | |
| All Others* | 7.9% | |
| As of August 31, 2015 | ||
| Food & Staples Retailing | 23.6% | |
| Beverages | 23.5% | |
| Tobacco | 20.0% | |
| Household Products | 13.7% | |
| Food Products | 13.3% | |
| All Others* | 5.9% | |
* Includes short-term investments and net other assets (liabilities).
Percentages shown as 0.0% may reflect amounts less than 0.05%.
Consumer Staples Portfolio
Investments February 29, 2016
Showing Percentage of Net Assets
| Common Stocks - 96.2% | |||
| Shares | Value | ||
| Beverages - 15.6% | |||
| Brewers - 1.0% | |||
| Anheuser-Busch InBev SA NV | 274,890 | $30,753,781 | |
| Distillers & Vintners - 1.3% | |||
| Kweichow Moutai Co. Ltd. | 215,185 | 7,056,059 | |
| Pernod Ricard SA | 107,500 | 11,473,364 | |
| Remy Cointreau SA (a) | 291,476 | 20,198,134 | |
| 38,727,557 | |||
| Soft Drinks - 13.3% | |||
| Coca-Cola Bottling Co. Consolidated | 146,959 | 25,676,676 | |
| Coca-Cola Central Japan Co. Ltd. | 360,900 | 6,237,019 | |
| Coca-Cola FEMSA S.A.B. de CV sponsored ADR (a) | 58,029 | 4,262,230 | |
| Coca-Cola Icecek Sanayi A/S | 990,162 | 11,039,831 | |
| Embotelladora Andina SA ADR | 461,227 | 7,056,773 | |
| Fomento Economico Mexicano S.A.B. de CV sponsored ADR | 69,487 | 6,503,288 | |
| Monster Beverage Corp. | 724,200 | 90,887,100 | |
| PepsiCo, Inc. | 1,400,018 | 136,949,761 | |
| The Coca-Cola Co. | 2,784,918 | 120,113,513 | |
| 408,726,191 | |||
| TOTAL BEVERAGES | 478,207,529 | ||
| Chemicals - 0.0% | |||
| Specialty Chemicals - 0.0% | |||
| Senomyx, Inc. (a)(b) | 24,378 | 80,935 | |
| Food & Staples Retailing - 25.2% | |||
| Drug Retail - 14.6% | |||
| CVS Health Corp. | 2,934,403 | 285,135,940 | |
| Drogasil SA | 439,700 | 5,038,064 | |
| Walgreens Boots Alliance, Inc. | 1,976,324 | 156,011,017 | |
| 446,185,021 | |||
| Food Distributors - 0.8% | |||
| Chefs' Warehouse Holdings (b) | 556,306 | 10,497,494 | |
| United Natural Foods, Inc. (b) | 422,881 | 13,050,108 | |
| 23,547,602 | |||
| Food Retail - 7.4% | |||
| China Resources Beer Holdings Co. Ltd. | 3,126,000 | 5,063,943 | |
| Kroger Co. | 4,664,142 | 186,145,907 | |
| Sprouts Farmers Market LLC (a)(b) | 1,238,229 | 35,264,762 | |
| 226,474,612 | |||
| Hypermarkets & Super Centers - 2.4% | |||
| Wal-Mart Stores, Inc. | 1,131,756 | 75,080,693 | |
| TOTAL FOOD & STAPLES RETAILING | 771,287,928 | ||
| Food Products - 11.2% | |||
| Agricultural Products - 2.1% | |||
| Archer Daniels Midland Co. | 433,500 | 15,155,160 | |
| Bunge Ltd. | 851,888 | 42,355,871 | |
| SLC Agricola SA | 1,290,200 | 5,911,937 | |
| 63,422,968 | |||
| Packaged Foods & Meats - 9.1% | |||
| Amplify Snack Brands, Inc. (a) | 768,695 | 7,909,872 | |
| Blue Buffalo Pet Products, Inc. (a)(b) | 835,176 | 15,283,721 | |
| Dean Foods Co. (a) | 103,700 | 2,000,373 | |
| Mead Johnson Nutrition Co. Class A | 1,597,216 | 117,810,652 | |
| Mondelez International, Inc. | 1,087,700 | 44,084,481 | |
| Nestle SA | 316,427 | 22,128,053 | |
| The Hain Celestial Group, Inc. (b) | 811,146 | 29,988,068 | |
| TreeHouse Foods, Inc. (b) | 392,300 | 33,117,966 | |
| Ulker Biskuvi Sanayi A/S | 1,010,525 | 6,148,043 | |
| 278,471,229 | |||
| TOTAL FOOD PRODUCTS | 341,894,197 | ||
| Health Care Providers & Services - 0.2% | |||
| Health Care Services - 0.2% | |||
| Diplomat Pharmacy, Inc. (a)(b) | 187,148 | 6,666,212 | |
| Hotels, Restaurants & Leisure - 1.4% | |||
| Restaurants - 1.4% | |||
| ARAMARK Holdings Corp. | 1,386,728 | 43,570,994 | |
| Household Durables - 0.1% | |||
| Household Appliances - 0.1% | |||
| SodaStream International Ltd. (a)(b) | 199,014 | 2,971,279 | |
| Household Products - 16.7% | |||
| Household Products - 16.7% | |||
| Colgate-Palmolive Co. | 1,331,288 | 87,385,744 | |
| Procter & Gamble Co. | 5,136,165 | 412,382,687 | |
| Spectrum Brands Holdings, Inc. | 115,182 | 11,030,980 | |
| 510,799,411 | |||
| Personal Products - 2.0% | |||
| Personal Products - 2.0% | |||
| Avon Products, Inc. | 4,764,857 | 18,154,105 | |
| Coty, Inc. Class A (a) | 468,600 | 13,345,728 | |
| Herbalife Ltd. (b) | 416,610 | 22,809,398 | |
| Nu Skin Enterprises, Inc. Class A (a) | 164,617 | 5,019,172 | |
| 59,328,403 | |||
| Pharmaceuticals - 0.5% | |||
| Pharmaceuticals - 0.5% | |||
| Perrigo Co. PLC | 120,400 | 15,200,500 | |
| Tobacco - 23.3% | |||
| Tobacco - 23.3% | |||
| Altria Group, Inc. | 2,016,445 | 124,152,519 | |
| British American Tobacco PLC sponsored ADR | 3,056,665 | 332,076,086 | |
| ITC Ltd. | 1,820,070 | 7,889,505 | |
| Philip Morris International, Inc. | 1,023,368 | 93,157,189 | |
| Reynolds American, Inc. | 3,097,923 | 156,228,257 | |
| 713,503,556 | |||
| TOTAL COMMON STOCKS | |||
| (Cost $2,340,678,069) | 2,943,510,944 | ||
| Nonconvertible Preferred Stocks - 0.1% | |||
| Beverages - 0.1% | |||
| Brewers - 0.1% | |||
| Ambev SA sponsored ADR | |||
| (Cost $2,103,197) | 673,710 | 2,923,901 | |
| Money Market Funds - 6.3% | |||
| Fidelity Cash Central Fund, 0.40% (c) | 119,575,339 | 119,575,339 | |
| Fidelity Securities Lending Cash Central Fund, 0.44% (c)(d) | 73,454,129 | 73,454,129 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $193,029,468) | 193,029,468 | ||
| TOTAL INVESTMENT PORTFOLIO - 102.6% | |||
| (Cost $2,535,810,734) | 3,139,464,313 | ||
| NET OTHER ASSETS (LIABILITIES) - (2.6)% | (78,388,262) | ||
| NET ASSETS - 100% | $3,061,076,051 |
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 | $137,366 |
| Fidelity Securities Lending Cash Central Fund | 418,728 |
| Total | $556,094 |
Investment Valuation
The following is a summary of the inputs used, as of February 29, 2016, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used 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 | $2,943,510,944 | $2,884,392,091 | $59,118,853 | $-- |
| Nonconvertible Preferred Stocks | 2,923,901 | 2,923,901 | -- | -- |
| Money Market Funds | 193,029,468 | 193,029,468 | -- | -- |
| Total Investments in Securities: | $3,139,464,313 | $3,080,345,460 | $59,118,853 | $-- |
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 | 81.1% |
| United Kingdom | 10.8% |
| Bermuda | 1.4% |
| France | 1.1% |
| Belgium | 1.0% |
| Others (Individually Less Than 1%) | 4.6% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Consumer Staples Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2016 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $71,635,431) — See accompanying schedule: Unaffiliated issuers (cost $2,342,781,266) | $2,946,434,845 | |
| Fidelity Central Funds (cost $193,029,468) | 193,029,468 | |
| Total Investments (cost $2,535,810,734) | $3,139,464,313 | |
| Foreign currency held at value (cost $1,525,904) | 1,525,904 | |
| Receivable for investments sold | 13,029,113 | |
| Receivable for fund shares sold | 7,827,178 | |
| Dividends receivable | 2,535,125 | |
| Distributions receivable from Fidelity Central Funds | 152,307 | |
| Prepaid expenses | 9,801 | |
| Other receivables | 72,038 | |
| Total assets | 3,164,615,779 | |
| Liabilities | ||
| Payable to custodian bank | $91,399 | |
| Payable for investments purchased | 23,993,842 | |
| Payable for fund shares redeemed | 3,653,512 | |
| Accrued management fee | 1,365,702 | |
| Distribution and service plan fees payable | 335,864 | |
| Other affiliated payables | 503,947 | |
| Other payables and accrued expenses | 141,333 | |
| Collateral on securities loaned, at value | 73,454,129 | |
| Total liabilities | 103,539,728 | |
| Net Assets | $3,061,076,051 | |
| Net Assets consist of: | ||
| Paid in capital | $2,445,977,747 | |
| Undistributed net investment income | 4,626,720 | |
| Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 6,866,226 | |
| Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 603,605,358 | |
| Net Assets | $3,061,076,051 | |
| Calculation of Maximum Offering Price | ||
| Class A: | ||
| Net Asset Value and redemption price per share ($470,248,537 ÷ 5,237,976 shares) | $89.78 | |
| Maximum offering price per share (100/94.25 of $89.78) | $95.26 | |
| Class T: | ||
| Net Asset Value and redemption price per share ($76,586,170 ÷ 859,512 shares) | $89.10 | |
| Maximum offering price per share (100/96.50 of $89.10) | $92.33 | |
| Class B: | ||
| Net Asset Value and offering price per share ($6,845,981 ÷ 76,905 shares)(a) | $89.02 | |
| Class C: | ||
| Net Asset Value and offering price per share ($250,575,964 ÷ 2,855,078 shares)(a) | $87.77 | |
| Consumer Staples: | ||
| Net Asset Value, offering price and redemption price per share ($2,039,983,007 ÷ 22,545,184 shares) | $90.48 | |
| Class I: | ||
| Net Asset Value, offering price and redemption price per share ($216,836,392 ÷ 2,400,129 shares) | $90.34 |
(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 financial statements.
Statement of Operations
| Year ended February 29, 2016 | ||
| Investment Income | ||
| Dividends | $70,666,443 | |
| Interest | 10 | |
| Income from Fidelity Central Funds | 556,094 | |
| Total income | 71,222,547 | |
| Expenses | ||
| Management fee | $15,733,851 | |
| Transfer agent fees | 5,181,819 | |
| Distribution and service plan fees | 3,849,484 | |
| Accounting and security lending fees | 855,113 | |
| Custodian fees and expenses | 85,731 | |
| Independent trustees' compensation | 52,708 | |
| Registration fees | 237,118 | |
| Audit | 62,434 | |
| Legal | 31,224 | |
| Miscellaneous | 30,356 | |
| Total expenses before reductions | 26,119,838 | |
| Expense reductions | (195,238) | 25,924,600 |
| Net investment income (loss) | 45,297,947 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 141,076,507 | |
| Foreign currency transactions | 134,972 | |
| Total net realized gain (loss) | 141,211,479 | |
| Change in net unrealized appreciation (depreciation) on: Investment securities (net of decrease in deferred foreign taxes of $18,850) | (292,105,987) | |
| Assets and liabilities in foreign currencies | (22,552) | |
| Total change in net unrealized appreciation (depreciation) | (292,128,539) | |
| Net gain (loss) | (150,917,060) | |
| Net increase (decrease) in net assets resulting from operations | $(105,619,113) |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 29, 2016 | Year ended February 28, 2015 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $45,297,947 | $40,432,818 |
| Net realized gain (loss) | 141,211,479 | 155,658,969 |
| Change in net unrealized appreciation (depreciation) | (292,128,539) | 315,382,310 |
| Net increase (decrease) in net assets resulting from operations | (105,619,113) | 511,474,097 |
| Distributions to shareholders from net investment income | (42,428,021) | (39,618,532) |
| Distributions to shareholders from net realized gain | (202,474,580) | (102,399,285) |
| Total distributions | (244,902,601) | (142,017,817) |
| Share transactions - net increase (decrease) | 299,448,347 | 686,786,861 |
| Redemption fees | 52,041 | 51,833 |
| Total increase (decrease) in net assets | (51,021,326) | 1,056,294,974 |
| Net Assets | ||
| Beginning of period | 3,112,097,377 | 2,055,802,403 |
| End of period (including undistributed net investment income of $4,626,720 and undistributed net investment income of $5,947,947, respectively) | $3,061,076,051 | $3,112,097,377 |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Consumer Staples Portfolio Class A
| Years ended February 28, | 2016A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $101.33 | $87.93 | $85.67 | $74.90 | $67.65 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | 1.34 | 1.37 | 1.43 | 1.26 | 1.22 |
| Net realized and unrealized gain (loss) | (4.86) | 17.28 | 7.51 | 11.73 | 8.73 |
| Total from investment operations | (3.52) | 18.65 | 8.94 | 12.99 | 9.95 |
| Distributions from net investment income | (1.31) | (1.28) | (1.44) | (1.08) | (1.06) |
| Distributions from net realized gain | (6.72) | (3.98) | (5.24) | (1.14) | (1.64) |
| Total distributions | (8.03) | (5.25)C | (6.68) | (2.22) | (2.70) |
| Redemption fees added to paid in capitalB,D | – | – | – | – | – |
| Net asset value, end of period | $89.78 | $101.33 | $87.93 | $85.67 | $74.90 |
| Total ReturnE,F | (3.51)% | 21.95% | 10.53% | 17.60% | 15.00% |
| Ratios to Average Net AssetsG,H | |||||
| Expenses before reductions | 1.04% | 1.05% | 1.06% | 1.08% | 1.10% |
| Expenses net of fee waivers, if any | 1.04% | 1.05% | 1.06% | 1.08% | 1.10% |
| Expenses net of all reductions | 1.04% | 1.05% | 1.06% | 1.08% | 1.09% |
| Net investment income (loss) | 1.45% | 1.45% | 1.61% | 1.58% | 1.74% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $470,249 | $414,151 | $329,459 | $277,329 | $205,851 |
| Portfolio turnover rateI | 63% | 42%J | 31% | 28% | 35% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Total distributions of $5.25 per share is comprised of distributions from net investment income of $1.275 and distributions from net realized gain of $3.976 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.
Financial Highlights — Consumer Staples Portfolio Class T
| Years ended February 28, | 2016A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $100.61 | $87.37 | $85.18 | $74.49 | $67.30 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | 1.08 | 1.10 | 1.18 | 1.03 | 1.01 |
| Net realized and unrealized gain (loss) | (4.83) | 17.15 | 7.46 | 11.68 | 8.68 |
| Total from investment operations | (3.75) | 18.25 | 8.64 | 12.71 | 9.69 |
| Distributions from net investment income | (1.04) | (1.04) | (1.21) | (.88) | (.86) |
| Distributions from net realized gain | (6.72) | (3.98) | (5.24) | (1.14) | (1.64) |
| Total distributions | (7.76) | (5.01)C | (6.45) | (2.02) | (2.50) |
| Redemption fees added to paid in capitalB,D | – | – | – | – | – |
| Net asset value, end of period | $89.10 | $100.61 | $87.37 | $85.18 | $74.49 |
| Total ReturnE,F | (3.78)% | 21.60% | 10.23% | 17.29% | 14.67% |
| Ratios to Average Net AssetsG,H | |||||
| Expenses before reductions | 1.32% | 1.32% | 1.33% | 1.36% | 1.38% |
| Expenses net of fee waivers, if any | 1.32% | 1.32% | 1.33% | 1.36% | 1.38% |
| Expenses net of all reductions | 1.31% | 1.32% | 1.33% | 1.35% | 1.38% |
| Net investment income (loss) | 1.17% | 1.18% | 1.34% | 1.30% | 1.45% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $76,586 | $81,489 | $61,421 | $52,024 | $39,047 |
| Portfolio turnover rateI | 63% | 42%J | 31% | 28% | 35% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Total distributions of $5.01 per share is comprised of distributions from net investment income of $1.036 and distributions from net realized gain of $3.976 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.
Financial Highlights — Consumer Staples Portfolio Class B
| Years ended February 28, | 2016 A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $100.13 | $86.90 | $84.72 | $74.01 | $66.83 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .63 | .63 | .71 | .61 | .64 |
| Net realized and unrealized gain (loss) | (4.81) | 17.06 | 7.40 | 11.61 | 8.61 |
| Total from investment operations | (4.18) | 17.69 | 8.11 | 12.22 | 9.25 |
| Distributions from net investment income | (.21) | (.48) | (.69) | (.37) | (.43) |
| Distributions from net realized gain | (6.72) | (3.98) | (5.24) | (1.14) | (1.64) |
| Total distributions | (6.93) | (4.46) | (5.93) | (1.51) | (2.07) |
| Redemption fees added to paid in capitalB,C | – | – | – | – | – |
| Net asset value, end of period | $89.02 | $100.13 | $86.90 | $84.72 | $74.01 |
| Total ReturnD,E | (4.25)% | 21.01% | 9.63% | 16.68% | 14.06% |
| Ratios to Average Net AssetsF,G | |||||
| Expenses before reductions | 1.81% | 1.82% | 1.86% | 1.89% | 1.91% |
| Expenses net of fee waivers, if any | 1.80% | 1.82% | 1.86% | 1.89% | 1.91% |
| Expenses net of all reductions | 1.80% | 1.82% | 1.86% | 1.88% | 1.90% |
| Net investment income (loss) | .68% | .68% | .81% | .78% | .93% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $6,846 | $15,799 | $17,388 | $18,548 | $19,330 |
| Portfolio turnover rateH | 63% | 42%I | 31% | 28% | 35% |
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 Total returns do not include the effect of the contingent deferred sales charge.
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.
Financial Highlights — Consumer Staples Portfolio Class C
| Years ended February 28, | 2016A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $99.27 | $86.32 | $84.28 | $73.75 | $66.71 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .63 | .65 | .75 | .65 | .68 |
| Net realized and unrealized gain (loss) | (4.75) | 16.93 | 7.36 | 11.55 | 8.59 |
| Total from investment operations | (4.12) | 17.58 | 8.11 | 12.20 | 9.27 |
| Distributions from net investment income | (.65) | (.65) | (.84) | (.53) | (.59) |
| Distributions from net realized gain | (6.72) | (3.98) | (5.24) | (1.14) | (1.64) |
| Total distributions | (7.38)C | (4.63) | (6.07)D | (1.67) | (2.23) |
| Redemption fees added to paid in capitalB,E | – | – | – | – | – |
| Net asset value, end of period | $87.77 | $99.27 | $86.32 | $84.28 | $73.75 |
| Total ReturnF,G | (4.23)% | 21.03% | 9.70% | 16.73% | 14.14% |
| Ratios to Average Net AssetsH,I | |||||
| Expenses before reductions | 1.80% | 1.80% | 1.82% | 1.83% | 1.85% |
| Expenses net of fee waivers, if any | 1.80% | 1.80% | 1.82% | 1.83% | 1.85% |
| Expenses net of all reductions | 1.79% | 1.80% | 1.81% | 1.82% | 1.84% |
| Net investment income (loss) | .69% | .70% | .85% | .83% | .99% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $250,576 | $228,151 | $164,669 | $134,966 | $102,321 |
| Portfolio turnover rateJ | 63% | 42%K | 31% | 28% | 35% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C 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.
D Total distributions of $6.07 per share is comprised of distributions from net investment income of $.837 and distributions from net realized gain of $5.237 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 contingent deferred sales charge.
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.
Financial Highlights — Consumer Staples Portfolio
| Years ended February 28, | 2016 A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $102.03 | $88.51 | $86.17 | $75.29 | $67.98 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | 1.61 | 1.64 | 1.69 | 1.48 | 1.42 |
| Net realized and unrealized gain (loss) | (4.89) | 17.40 | 7.55 | 11.82 | 8.76 |
| Total from investment operations | (3.28) | 19.04 | 9.24 | 13.30 | 10.18 |
| Distributions from net investment income | (1.55) | (1.54) | (1.66) | (1.28) | (1.24) |
| Distributions from net realized gain | (6.72) | (3.98) | (5.24) | (1.14) | (1.64) |
| Total distributions | (8.27) | (5.52) | (6.90) | (2.42) | (2.87)C |
| Redemption fees added to paid in capitalB,D | – | – | – | – | – |
| Net asset value, end of period | $90.48 | $102.03 | $88.51 | $86.17 | $75.29 |
| Total ReturnE | (3.25)% | 22.27% | 10.82% | 17.94% | 15.30% |
| Ratios to Average Net AssetsF,G | |||||
| Expenses before reductions | .77% | .77% | .79% | .81% | .83% |
| Expenses net of fee waivers, if any | .77% | .77% | .79% | .81% | .83% |
| Expenses net of all reductions | .76% | .77% | .79% | .80% | .82% |
| Net investment income (loss) | 1.72% | 1.73% | 1.88% | 1.85% | 2.01% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $2,039,983 | $2,173,970 | $1,328,594 | $1,425,055 | $1,202,440 |
| Portfolio turnover rateH | 63% | 42%I | 31% | 28% | 35% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Total distributions of $2.87 per share is comprised of distributions from net investment income of $1.236 and distributions from net realized gain of $1.637 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.
Financial Highlights — Consumer Staples Portfolio Class I
| Years ended February 28, | 2016A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $101.91 | $88.33 | $85.92 | $75.14 | $67.84 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | 1.60 | 1.59 | 1.66 | 1.45 | 1.39 |
| Net realized and unrealized gain (loss) | (4.89) | 17.40 | 7.53 | 11.79 | 8.73 |
| Total from investment operations | (3.29) | 18.99 | 9.19 | 13.24 | 10.12 |
| Distributions from net investment income | (1.55) | (1.44) | (1.54) | (1.32) | (1.19) |
| Distributions from net realized gain | (6.72) | (3.98) | (5.24) | (1.14) | (1.64) |
| Total distributions | (8.28)C | (5.41)D | (6.78) | (2.46) | (2.82)E |
| Redemption fees added to paid in capitalB,F | – | – | – | – | – |
| Net asset value, end of period | $90.34 | $101.91 | $88.33 | $85.92 | $75.14 |
| Total ReturnG | (3.26)% | 22.26% | 10.80% | 17.90% | 15.24% |
| Ratios to Average Net AssetsH,I | |||||
| Expenses before reductions | .78% | .80% | .82% | .85% | .87% |
| Expenses net of fee waivers, if any | .77% | .80% | .82% | .85% | .87% |
| Expenses net of all reductions | .77% | .80% | .82% | .84% | .87% |
| Net investment income (loss) | 1.71% | 1.70% | 1.85% | 1.81% | 1.96% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $216,836 | $198,538 | $154,271 | $378,731 | $163,544 |
| Portfolio turnover rateJ | 63% | 42%K | 31% | 28% | 35% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C 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.
D Total distributions of $5.41 per share is comprised of distributions from net investment income of $1.436 and distributions from net realized gain of $3.976 per share.
E Total distributions of $2.82 per share is comprised of distributions from net investment income of $1.186 and distributions from net realized gain of $1.637 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.
Notes to Financial Statements
For the period ended February 29, 2016
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 T, Class C, Consumer Staples and Class I (formerly Institutional Class) shares, each of which, along with Class B shares, has equal rights as to assets and voting privileges. Class B shares are closed to new accounts and additional purchases, except for exchanges and reinvestments. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a maximum holding period of seven years from the initial date of purchase.
During the period, the Board of Trustees approved the conversion of all existing Class B shares into Class A shares, effective on or about July 1, 2016, regardless of the length of times shares have been held.
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 Fidelity Investments Money Management, Inc. (FIMM), an affiliate of the investment adviser. Annualized expenses of the Money Market Central Funds as of their most recent shareholder report date are less than .005%.
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 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 Fidelity SelectCo, LLC (SelectCo) Fair Value Committee (the Committee). 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. Utilizing these techniques may result in transfers between Level 1 and Level 2. 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, 2016 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 may 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. 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), independent Trustees may elect 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 are included in the accompanying Statement of Assets and Liabilities.
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, 2016, 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 dividends 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.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
| Gross unrealized appreciation | $692,134,097 |
| Gross unrealized depreciation | (101,955,004) |
| Net unrealized appreciation (depreciation) on securities | $590,179,093 |
| Tax Cost | $2,549,285,220 |
The tax-based components of distributable earnings as of period end were as follows:
| Undistributed ordinary income | $4,689,383 |
| Undistributed long-term capital gain | $20,340,712 |
| Net unrealized appreciation (depreciation) on securities and other investments | $590,130,872 |
The tax character of distributions paid was as follows:
| February 29, 2016 | February 28, 2015 | |
| Ordinary Income | $74,502,566 | $ 43,895,099 |
| Long-term Capital Gains | 170,400,035 | 98,122,718 |
| Total | $244,902,601 | $ 142,017,817 |
Trading (Redemption) Fees. Shares held by investors in the Fund less than 30 days may be subject to a redemption fee equal to .75% of the NAV of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Fund and accounted for as an addition to paid in capital.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $1,808,424,320 and $1,779,392,270, respectively.
5. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity SelectCo, 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 .25% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by Fidelity Management & Research Company (FMR) and the investment adviser. 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 .55% 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 Corporation (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% | $1,045,882 | $– |
| Class T | .25% | .25% | 375,890 | – |
| Class B | .75% | .25% | 112,537 | 84,403 |
| Class C | .75% | .25% | 2,315,175 | 557,247 |
| $3,849,484 | $641,650 |
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 T 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 T, Class B, and Class C redemptions. The deferred sales charges range from 5.00% to 1.00% for Class B shares, 1.00% for Class C shares, 1.00% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained by FDC | |
| Class A | $336,934 |
| Class T | 43,845 |
| Class B(a) | 2,345 |
| Class C(a) | 32,125 |
| $415,249 |
(a) When Class B and 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, Inc., (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. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements.
For the period, transfer agent fees for each class were as follows:
| Amount | % of Class-Level Average Net Assets | |
| Class A | $829,869 | .20 |
| Class T | 169,721 | .23 |
| Class B | 24,522 | .22 |
| Class C | 467,790 | .20 |
| Consumer Staples | 3,352,990 | .17 |
| Class I | 336,927 | .18 |
| $ 5,181,819 |
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. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions 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 $15,509 for the period.
Interfund Trades. The Fund 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.
The Fund participates 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 Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $4,139 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, the Fund did not borrow on this line of credit.
7. Security Lending.
The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. 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. 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. Total security lending income during the period amounted to $418,728.
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 $115,438 for the period.
In addition, through arrangements with the Fund's custodian, credits realized as a result of certain uninvested cash balances were used to reduce the Fund's expense. During the period, these credits reduced the Fund's custody expense by $120.
In addition, during the period the investment adviser reimbursed and/or waived a portion of fund-level operating expenses in the amount of $21,509 and a portion of class-level operating expenses as follows:
| Amount | |
| Class A | $7,870 |
| Class T | 1,516 |
| Class B | 395 |
| Class C | 4,058 |
| Consumer Staples | 37,669 |
| Class I | 6,663 |
| $58,171 |
9. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
| Years ended February 29, | 2016 | 2015 |
| From net investment income | ||
| Class A | $5,892,374 | $4,812,004 |
| Class T | 832,225 | 776,331 |
| Class B | 21,356 | 83,556 |
| Class C | 1,681,417 | 1,335,126 |
| Consumer Staples | 30,907,531 | 29,856,743 |
| Class I | 3,093,118 | 2,754,772 |
| Total | $42,428,021 | $39,618,532 |
| From net realized gain | ||
| Class A | $29,492,766 | $14,768,867 |
| Class T | 5,430,950 | 2,841,831 |
| Class B | 809,700 | 743,976 |
| Class C | 16,753,262 | 7,778,566 |
| Consumer Staples | 136,504,977 | 65,408,817 |
| Class I | 13,482,925 | 10,857,228 |
| Total | $202,474,580 | $102,399,285 |
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, 2016 | Year ended February 28, 2015 | Year ended February 29, 2016 | Year ended February 28, 2015 | |
| Class A | ||||
| Shares sold | 1,973,363 | 1,066,097 | $181,606,150 | $101,322,941 |
| Reinvestment of distributions | 372,764 | 205,710 | 34,290,264 | 18,829,531 |
| Shares redeemed | (1,195,463) | (931,333) | (110,798,612) | (86,559,239) |
| Net increase (decrease) | 1,150,664 | 340,474 | $105,097,802 | $33,593,233 |
| Class T | ||||
| Shares sold | 197,944 | 215,514 | $18,205,532 | $20,203,421 |
| Reinvestment of distributions | 66,110 | 38,102 | 6,055,600 | 3,463,287 |
| Shares redeemed | (214,470) | (146,712) | (19,884,944) | (13,666,581) |
| Net increase (decrease) | 49,584 | 106,904 | $4,376,188 | $10,000,127 |
| Class B | ||||
| Shares sold | 4,002 | 7,270 | $364,996 | $675,777 |
| Reinvestment of distributions | 8,400 | 8,161 | 777,774 | 730,673 |
| Shares redeemed | (93,279) | (57,733) | (8,496,255) | (5,359,510) |
| Net increase (decrease) | (80,877) | (42,302) | $(7,353,485) | $(3,953,060) |
| Class C | ||||
| Shares sold | 926,964 | 636,469 | $84,032,895 | $59,593,472 |
| Reinvestment of distributions | 181,545 | 86,847 | 16,369,686 | 7,772,854 |
| Shares redeemed | (551,638) | (332,705) | (49,873,026) | (30,479,924) |
| Net increase (decrease) | 556,871 | 390,611 | $50,529,555 | $36,886,402 |
| Consumer Staples | ||||
| Shares sold | 5,277,258 | 8,889,529 | $487,809,315 | $838,041,591 |
| Reinvestment of distributions | 1,736,133 | 985,926 | 161,200,153 | 91,713,079 |
| Shares redeemed | (5,774,399) | (3,580,043) | (543,103,364) | (340,719,360) |
| Net increase (decrease) | 1,238,992 | 6,295,412 | $105,906,104 | $589,035,310 |
| Class I | ||||
| Shares sold | 1,318,941 | 3,870,748(a) | $121,982,188 | $354,438,000(a) |
| Reinvestment of distributions | 148,325 | 135,150 | 13,734,363 | 12,187,732 |
| Shares redeemed | (1,015,396) | (3,804,175)(b) | (94,824,368) | (345,400,883)(b) |
| Net increase (decrease) | 451,870 | 201,723 | $40,892,183 | $21,224,849 |
(a) Amount includes in-kind exchanges.
(b) Amount includes in-kind redemptions.
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.
Mutual funds managed by the investment adviser or its affiliates were the owners of record, in the aggregate, of approximately 26% of the total outstanding shares of the Fund.
Fidelity Advisor® Gold Fund
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.
Returns reflect the conversion of Class B shares to Class A shares after a maximum of seven years.
Average Annual Total Returns
| For the periods ended February 29, 2016 | Past 1 year | Past 5 years | Past 10 years |
| Class A (incl. 5.75% sales charge) | (7.88)% | (19.18)% | (3.37)% |
| Class T (incl. 3.50% sales charge) | (5.99)% | (19.03)% | (3.38)% |
| Class B (incl. contingent deferred sales charge) | (7.86)% | (19.14)% | (3.31)% |
| Class C (incl. contingent deferred sales charge) | (3.99)% | (18.83)% | (3.47)% |
Class A shares bear a 0.25% 12b-1 fee. The initial offering of Class A shares took place on December 12, 2006. Returns prior to December 12, 2006, are those of Gold Portfolio, the original class of the fund, which has no 12b-1 fee. Had Class A's 12b-1 fee been reflected, returns prior to December 12, 2006, would have been lower.
Class T shares bear a 0.50% 12b-1 fee. The initial offering of Class T shares took place on December 12, 2006. Returns prior to December 12, 2006, are those of Gold Portfolio, the original class of the fund, which has no 12b-1 fee. Had Class T's 12b-1 fee been reflected, returns prior to December 12, 2006, would have been lower.
Class B shares bear a 1.00% 12b-1 fee. The initial offering of Class B shares took place on December 12, 2006. Returns prior to December 12, 2006, are those of Gold Portfolio, the original class of the fund, which has no 12b-1 fee. Had Class B's 12b-1 fee been reflected, returns prior to December 12, 2006, would have been lower.
Class C shares bear a 1.00% 12b-1 fee. The initial offering of Class C shares took place on December 12, 2006. Returns prior to December 12, 2006, are those of Gold Portfolio, the original class of the fund, which has no 12b-1 fee. Had Class C's 12b-1 fee been reflected, returns prior to December 12, 2006, would have been lower.
Class B shares' contingent deferred sales charges included in the past one year, past five years and past ten years total return figures are 5%, 2% and 0%, respectively.
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.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Fidelity Advisor® Gold Fund - Class A on February 28, 2006, and the current 5.75% sales charge was paid.
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.
See above for additional information regarding the performance of Class A.
| Period Ending Values | ||
| $7,098 | Fidelity Advisor® Gold Fund - Class A | |
| $18,666 | S&P 500® Index | |
Fidelity Advisor® Gold Fund
Management's Discussion of Fund Performance
Market Recap: The S&P 500® index returned -6.19% for the year ending February 29, 2016. Largely range-bound for the first half of the period, U.S. stocks suffered a steep, late-summer decline on concern about an economic slowdown in China. The market recovered in October, lifted by the U.S. Federal Reserve's decision to delay raising near-term interest rates until mid-December. Investors also drew courage from a rate cut in China and economic stimulus in Europe. But continued oil-price weakness and U.S.-dollar strength, plus fresh worries about China and the Middle East, pushed the S&P 500® to its worst January since 2009, followed by a volatile but ultimately flattish February. Overall, growth-oriented and larger-cap stocks fared better than value and smaller-cap complements. In this environment, the tech-heavy Nasdaq Composite Index® returned -7.07% for the 12 months; the Russell 2000® Index, -14.97%. Few sectors within the broad-market S&P 500® gained ground, with a wide gap separating leaders from laggards. Despite increased competition among wireless carriers, telecommunication services (+8%) led the way, followed by the more defensive utilities sector (+6%). Rising wages and low inflation buoyed consumer staples (+4%), less so consumer discretionary (0%). Meanwhile, energy (-24%) foundered amid commodity weakness that also hurt materials (-17%). The financials sector (-12%) struggled as well.Comments from Portfolio Manager S. Joseph Wickwire II, CFA: For the year, the fund's share classes (excluding sales charges, if applicable) posted a modestly negative return that straddled the -2.37% result of the S&P® Global BMI Gold Capped Index and solidly outperformed the broadly based S&P 500® index. The fund outdistanced the -11.96% return of the global MSCI ACWI (All Country World Index) Index, an additional comparison used given the fund's global mandate. For most of the period, gold stocks were overcome by market concerns about the supposedly imminent interest rate hikes that investors believed the U.S. Federal Reserve was on a pathway to deliver. The gold price rebounded from its December lows after the Fed increased the fed funds rate by a quarter percentage point. Versus the industry benchmark, performance was helped by overweighting outperforming stocks such as Detour Gold, Randgold Resources, Torex Gold Resources, Premier Gold Mines, OceanaGold and Guyana Goldfields. Underweighting underperforming names such as Goldcorp and Compania de Minas Buenaventura also boosted results. A roughly 11% exposure, on average, to gold and silver bullion buoyed performance as well, especially in the period's extreme downturns. Lastly, the fund's foreign holdings helped, despite headwinds from a rising U.S. dollar. Conversely, we were hurt by underweightings in stocks that outperformed. Relative detractors included Sibanye Gold, Centamin, Harmony Gold Mining, Polyus Gold International and Zijin Mining Group. I sold Centamin and Polyus from the fund by period end. To a lesser extent, we also were hurt by overweightings in companies that underperformed, including B2Gold, Eldorado Gold and Argonaut Gold.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.
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, 2016
| % of fund's net assets | % of fund's net assets 6 months ago | |
| Gold Bullion | 11.0 | 5.2 |
| Randgold Resources Ltd. sponsored ADR | 7.9 | 7.8 |
| Newcrest Mining Ltd. | 5.8 | 5.6 |
| Newmont Mining Corp. | 5.8 | 4.5 |
| Goldcorp, Inc. | 5.7 | 8.0 |
| Franco-Nevada Corp. | 5.6 | 6.3 |
| Agnico Eagle Mines Ltd. (Canada) | 4.9 | 5.6 |
| Barrick Gold Corp. | 4.1 | 3.2 |
| Silver Bullion | 3.8 | 5.3 |
| AngloGold Ashanti Ltd. sponsored ADR | 3.2 | 3.0 |
| 57.8 |
Top Industries (% of fund's net assets)
| As of February 29, 2016 | ||
| Gold | 81.2% | |
| Commodities & Related Investments* | 14.8% | |
| Precious Metals & Minerals | 1.0% | |
| Silver | 0.7% | |
| Construction Materials | 0.2% | |
| Diversified Metals & Mining | 0.1% | |
| All Others* | 2.0% | |
* Includes gold bullion and/or silver bullion.
| As of August 31, 2015 | ||
| Gold | 87.1% | |
| Commodities & Related Investments* | 10.5 % | |
| Precious Metals & Minerals | 1.1% | |
| Silver | 0.7% | |
| Diversified Metals & Mining | 0.2% | |
| 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, 2016 | ||
| Canada | 49.6% | |
| United States of America* | 25.3% | |
| Australia | 7.9% | |
| Bailiwick of Jersey | 7.9% | |
| South Africa | 6.7% | |
| China | 0.8% | |
| United Kingdom | 0.7% | |
| Cayman Islands | 0.6% | |
| Peru | 0.5% | |
Percentages are based on country or territory of incorporation and are adjusted for the effect of futures contracts, if applicable.
| As of August 31, 2015 | ||
| Canada | 57.9% | |
| United States of America* | 18.7% | |
| Bailiwick of Jersey | 8.4% | |
| Australia | 7.4% | |
| South Africa | 5.6% | |
| United Kingdom | 0.7% | |
| Peru | 0.7% | |
| Cayman Islands | 0.4% | |
| China | 0.2% | |
Percentages are based on country or territory of incorporation and are adjusted for the effect of futures contracts, if applicable.
Gold Portfolio
Consolidated Investments February 29, 2016
Showing Percentage of Net Assets
| Common Stocks - 83.2% | |||
| Shares | Value | ||
| Australia - 7.9% | |||
| Metals & Mining - 7.9% | |||
| Gold - 7.9% | |||
| Evolution Mining Ltd. | 352,543 | $440,348 | |
| Medusa Mining Ltd. (a)(b) | 1,228,595 | 539,299 | |
| Newcrest Mining Ltd. (b) | 5,814,753 | 72,999,912 | |
| Northern Star Resources Ltd. | 4,351,118 | 12,111,881 | |
| Perseus Mining Ltd.: | |||
| (Australia) (b) | 1,717,134 | 453,474 | |
| (Canada) (b) | 1,300,000 | 350,702 | |
| Regis Resources Ltd. | 2,107,191 | 3,880,340 | |
| Resolute Mng Ltd. (b) | 2,390,161 | 955,347 | |
| Saracen Mineral Holdings Ltd. (b) | 8,462,787 | 5,889,306 | |
| Silver Lake Resources Ltd. (a)(b) | 4,145,985 | 961,739 | |
| St Barbara Ltd. (b) | 650,000 | 869,883 | |
| 99,452,231 | |||
| Bailiwick of Jersey - 7.9% | |||
| Metals & Mining - 7.9% | |||
| Gold - 7.9% | |||
| Randgold Resources Ltd. sponsored ADR (a) | 1,088,395 | 99,316,044 | |
| Bermuda - 0.0% | |||
| Metals & Mining - 0.0% | |||
| Steel - 0.0% | |||
| African Minerals Ltd. (a)(b) | 1,718,700 | 24 | |
| Canada - 49.6% | |||
| Metals & Mining - 49.6% | |||
| Diversified Metals & Mining - 0.1% | |||
| Ivanhoe Mines Ltd. (b) | 3,101,200 | 1,558,622 | |
| True Gold Mining, Inc. (b) | 171,000 | 48,027 | |
| 1,606,649 | |||
| Gold - 47.8% | |||
| Agnico Eagle Mines Ltd. (Canada) | 1,741,501 | 61,280,756 | |
| Alacer Gold Corp. (b) | 1,656,963 | 3,318,825 | |
| Alamos Gold, Inc. | 2,232,987 | 10,232,461 | |
| Argonaut Gold, Inc. (b) | 5,673,162 | 6,876,560 | |
| B2Gold Corp. (b) | 28,725,793 | 32,059,089 | |
| Barrick Gold Corp. | 3,737,469 | 51,932,311 | |
| Centerra Gold, Inc. | 483,300 | 2,657,614 | |
| Continental Gold, Inc. (b)(c) | 7,063,900 | 7,779,166 | |
| Detour Gold Corp. (b) | 1,623,100 | 25,564,125 | |
| Detour Gold Corp. (b)(d) | 785,900 | 12,378,070 | |
| Eldorado Gold Corp. | 8,859,235 | 26,518,774 | |
| Franco-Nevada Corp. | 1,169,000 | 69,768,477 | |
| Goldcorp, Inc. (a) | 4,963,800 | 71,320,231 | |
| Guyana Goldfields, Inc. (b) | 4,281,800 | 13,766,319 | |
| Guyana Goldfields, Inc. (b)(d) | 155,000 | 498,337 | |
| IAMGOLD Corp. (a)(b) | 837,100 | 2,029,333 | |
| Integra Gold Corp. (b) | 35,000 | 10,218 | |
| Kinross Gold Corp. (b) | 1,998,891 | 5,850,413 | |
| Kirkland Lake Gold, Inc. (b) | 1,512,400 | 9,132,526 | |
| Klondex Mines Ltd. (b) | 96,000 | 256,142 | |
| Lake Shore Gold Corp. (b) | 2,661,600 | 3,580,275 | |
| New Gold, Inc. (b) | 8,862,675 | 30,000,777 | |
| Novagold Resources, Inc. (a)(b) | 1,559,100 | 7,720,599 | |
| OceanaGold Corp. | 9,214,832 | 25,471,893 | |
| Osisko Gold Royalties Ltd. | 473,793 | 4,892,009 | |
| Pilot Gold, Inc. (b) | 1,418,150 | 461,187 | |
| Premier Gold Mines Ltd. (b)(c) | 10,803,622 | 25,711,502 | |
| Pretium Resources, Inc. (a)(b) | 1,077,052 | 5,031,019 | |
| Pretium Resources, Inc. (b)(d) | 225,000 | 1,050,998 | |
| Primero Mining Corp. (a)(b) | 2,287,100 | 3,752,670 | |
| Richmont Mines, Inc. (b) | 92,800 | 433,478 | |
| Sandstorm Gold Ltd. (b) | 578,875 | 1,724,217 | |
| Seabridge Gold, Inc. (a)(b) | 853,207 | 7,858,036 | |
| SEMAFO, Inc. (b) | 4,307,900 | 15,283,016 | |
| Teranga Gold Corp. (a)(b) | 85,000 | 35,809 | |
| Teranga Gold Corp. CDI unit (b) | 3,338,072 | 1,358,053 | |
| Torex Gold Resources, Inc. (b) | 24,995,500 | 33,253,437 | |
| Yamana Gold, Inc. | 6,445,920 | 18,246,765 | |
| 599,095,487 | |||
| Precious Metals & Minerals - 1.0% | |||
| Gold Standard Ventures Corp. (b) | 2,175,400 | 2,009,793 | |
| Tahoe Resources, Inc. | 1,138,582 | 10,527,466 | |
| 12,537,259 | |||
| Silver - 0.7% | |||
| MAG Silver Corp. (b) | 414,200 | 2,948,075 | |
| Silver Wheaton Corp. | 395,200 | 6,233,236 | |
| 9,181,311 | |||
| TOTAL METALS & MINING | 622,420,706 | ||
| Cayman Islands - 0.6% | |||
| Metals & Mining - 0.6% | |||
| Gold - 0.6% | |||
| Endeavour Mining Corp. (b) | 828,840 | 7,436,894 | |
| China - 0.8% | |||
| Metals & Mining - 0.8% | |||
| Gold - 0.8% | |||
| Zijin Mining Group Co. Ltd. (H Shares) | 32,876,000 | 9,848,366 | |
| Peru - 0.5% | |||
| Metals & Mining - 0.5% | |||
| Gold - 0.5% | |||
| Compania de Minas Buenaventura SA sponsored ADR (b) | 1,072,228 | 5,597,030 | |
| South Africa - 6.7% | |||
| Metals & Mining - 6.7% | |||
| Gold - 6.7% | |||
| AngloGold Ashanti Ltd. sponsored ADR (b) | 3,119,908 | 40,621,202 | |
| Gold Fields Ltd. sponsored ADR | 4,726,126 | 20,180,558 | |
| Harmony Gold Mining Co. Ltd. (b) | 1,484,000 | 4,807,735 | |
| Harmony Gold Mining Co. Ltd. sponsored ADR (a)(b) | 1,812,900 | 5,910,054 | |
| Sibanye Gold Ltd. ADR | 865,006 | 12,430,136 | |
| 83,949,685 | |||
| United Kingdom - 0.7% | |||
| Metals & Mining - 0.7% | |||
| Gold - 0.7% | |||
| Acacia Mining PLC | 2,657,994 | 9,182,231 | |
| United States of America - 8.5% | |||
| Construction Materials - 0.2% | |||
| Construction Materials - 0.2% | |||
| Eagle Materials, Inc. | 50,500 | 3,051,212 | |
| Metals & Mining - 8.3% | |||
| Gold - 8.3% | |||
| McEwen Mining, Inc. (a) | 579,110 | 1,059,771 | |
| Newmont Mining Corp. | 2,795,900 | 72,218,097 | |
| Royal Gold, Inc. | 656,513 | 30,442,508 | |
| 103,720,376 | |||
| TOTAL UNITED STATES OF AMERICA | 106,771,588 | ||
| TOTAL COMMON STOCKS | |||
| (Cost $1,235,860,010) | 1,043,974,799 | ||
| Troy Ounces | |||
| Commodities - 14.8% | |||
| Gold Bullion(b) | 111,510 | 138,222,221 | |
| Silver Bullion(b) | 3,162,000 | 47,146,052 | |
| TOTAL COMMODITIES | |||
| (Cost $196,019,406) | 185,368,273 | ||
| Shares | |||
| Money Market Funds - 4.5% | |||
| Fidelity Cash Central Fund, 0.40% (e) | 35,782,221 | 35,782,221 | |
| Fidelity Securities Lending Cash Central Fund, 0.44% (e)(f) | 19,998,096 | 19,998,096 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $55,780,317) | 55,780,317 | ||
| TOTAL INVESTMENT PORTFOLIO - 102.5% | |||
| (Cost $1,487,659,733) | 1,285,123,389 | ||
| NET OTHER ASSETS (LIABILITIES) - (2.5)% | (30,961,190) | ||
| NET ASSETS - 100% | $1,254,162,199 |
Legend
(a) Security or a portion of the security is on loan at period end.
(b) Non-income producing
(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 $13,927,405 or 1.1% 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 | $24,524 |
| Fidelity Securities Lending Cash Central Fund | 260,688 |
| Total | $285,212 |
Consolidated Subsidiary
| Value, beginning of period | Purchases | Sales Proceeds | Dividend Income | Value, end of period | |
| Fidelity Select Gold Cayman Ltd. | $116,684,748 | $115,940,297 | $42,608,630 | $-- | $185,320,085 |
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 | Value, end of period |
| Continental Gold, Inc. (formerly Continental Gold Ltd.) | $7,850,572 | $2,894,378 | $-- | $-- | $7,779,166 |
| Endeavour Mining Corp. | 3,968,035 | 11,431 | -- | -- | -- |
| Premier Gold Mines Ltd. | 20,747,454 | 1,036,932 | 421,766 | -- | 25,711,502 |
| Total | $32,566,061 | $3,942,741 | $421,766 | $-- | $33,490,668 |
Investment Valuation
The following is a summary of the inputs used, as of February 29, 2016, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used 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 | $1,043,974,799 | $966,167,128 | $77,807,647 | $24 |
| Commodities | 185,368,273 | 185,368,273 | -- | -- |
| Money Market Funds | 55,780,317 | 55,780,317 | -- | -- |
| Total Investments in Securities: | $1,285,123,389 | $1,207,315,718 | $77,807,647 | $24 |
The following is a summary of transfers between Level 1 and Level 2 for the period ended February 29, 2016. Transfers are assumed to have occurred at the beginning of the period, and are primarily attributable to the valuation techniques used for foreign equity securities, as discussed in the accompanying Notes to Consolidated Financial Statements:
| Transfers | Total |
| Level 1 to Level 2 | $69,980,874 |
| Level 2 to Level 1 | $0 |
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, 2016 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $19,733,536) — See accompanying schedule: Unaffiliated issuers (cost $1,178,084,778) | $1,010,484,131 | |
| Fidelity Central Funds (cost $55,780,317) | 55,780,317 | |
| Commodities (cost $196,019,406) | 185,368,273 | |
| Other affiliated issuers (cost $57,775,232) | 33,490,668 | |
| Total Investments (cost $1,487,659,733) | $1,285,123,389 | |
| Receivable for investments sold | 6,797,261 | |
| Receivable for fund shares sold | 5,565,691 | |
| Dividends receivable | 509,903 | |
| Distributions receivable from Fidelity Central Funds | 34,747 | |
| Prepaid expenses | 2,927 | |
| Other receivables | 62,068 | |
| Total assets | 1,298,095,986 | |
| Liabilities | ||
| Payable for investments purchased | $18,108,935 | |
| Payable for fund shares redeemed | 4,873,656 | |
| Accrued management fee | 506,531 | |
| Distribution and service plan fees payable | 54,799 | |
| Other affiliated payables | 249,139 | |
| Other payables and accrued expenses | 142,631 | |
| Collateral on securities loaned, at value | 19,998,096 | |
| Total liabilities | 43,933,787 | |
| Net Assets | $1,254,162,199 | |
| Net Assets consist of: | ||
| Paid in capital | $2,708,861,690 | |
| Accumulated net investment loss | (13,704) | |
| Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (1,252,131,751) | |
| Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (202,554,036) | |
| Net Assets | $1,254,162,199 | |
| Calculation of Maximum Offering Price | ||
| Class A: | ||
| Net Asset Value and redemption price per share ($53,509,144 ÷ 3,023,298 shares) | $17.70 | |
| Maximum offering price per share (100/94.25 of $17.70) | $18.78 | |
| Class T: | ||
| Net Asset Value and redemption price per share ($17,719,589 ÷ 1,019,901 shares) | $17.37 | |
| Maximum offering price per share (100/96.50 of $17.37) | $18.00 | |
| Class B: | ||
| Net Asset Value and offering price per share ($1,387,809 ÷ 82,864 shares)(a) | $16.75 | |
| Class C: | ||
| Net Asset Value and offering price per share ($52,732,246 ÷ 3,160,888 shares)(a) | $16.68 | |
| Gold: | ||
| Net Asset Value, offering price and redemption price per share ($1,076,206,149 ÷ 59,384,404 shares) | $18.12 | |
| Class I: | ||
| Net Asset Value, offering price and redemption price per share ($52,607,262 ÷ 2,901,278 shares) | $18.13 |
(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, 2016 | ||
| Investment Income | ||
| Dividends | $7,600,661 | |
| Income from Fidelity Central Funds | 285,212 | |
| Income before foreign taxes withheld | 7,885,873 | |
| Less foreign taxes withheld | (825,677) | |
| Total income | 7,060,196 | |
| Expenses | ||
| Management fee | $5,414,585 | |
| Transfer agent fees | 2,620,065 | |
| Distribution and service plan fees | 541,896 | |
| Accounting and security lending fees | 443,034 | |
| Custodian fees and expenses | 282,703 | |
| Independent trustees' compensation | 16,899 | |
| Registration fees | 124,224 | |
| Audit | 68,140 | |
| Legal | 10,887 | |
| Miscellaneous | 13,130 | |
| Total expenses before reductions | 9,535,563 | |
| Expense reductions | (362,326) | 9,173,237 |
| Net investment income (loss) | (2,113,041) | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investments: | ||
| Unaffiliated issuers | (155,210,150) | |
| Other affiliated issuers | (648,863) | |
| Commodities | (7,003,431) | |
| Foreign currency transactions | 1,660,481 | |
| Total net realized gain (loss) | (161,201,963) | |
| Change in net unrealized appreciation (depreciation) on: Investments | 155,642,129 | |
| Assets and liabilities in foreign currencies | (18,709) | |
| Commodities | 2,764,458 | |
| Total change in net unrealized appreciation (depreciation) | 158,387,878 | |
| Net gain (loss) | (2,814,085) | |
| Net increase (decrease) in net assets resulting from operations | $(4,927,126) |
See accompanying notes which are an integral part of the consolidated financial statements.
Consolidated Statement of Changes in Net Assets
| Year ended February 29, 2016 | Year ended February 28, 2015 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $(2,113,041) | $(3,405,899) |
| Net realized gain (loss) | (161,201,963) | (231,533,739) |
| Change in net unrealized appreciation (depreciation) | 158,387,878 | (19,537,556) |
| Net increase (decrease) in net assets resulting from operations | (4,927,126) | (254,477,194) |
| Share transactions - net increase (decrease) | 137,310,705 | (124,744,949) |
| Redemption fees | 180,108 | 222,335 |
| Total increase (decrease) in net assets | 132,563,687 | (378,999,808) |
| Net Assets | ||
| Beginning of period | 1,121,598,512 | 1,500,598,320 |
| End of period (including accumulated net investment loss of $13,704 and accumulated net investment loss of $19,281, respectively) | $1,254,162,199 | $1,121,598,512 |
See accompanying notes which are an integral part of the consolidated financial statements.
Consolidated Financial Highlights — Gold Portfolio Class A
| Years ended February 28, | 2016 A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $18.11 | $22.01 | $30.25 | $45.37 | $50.92 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | (.06) | (.10) | –C | .07 | (.13) |
| Net realized and unrealized gain (loss) | (.35) | (3.80) | (8.25) | (15.19) | (2.83) |
| Total from investment operations | (.41) | (3.90) | (8.25) | (15.12) | (2.96) |
| Distributions from net realized gain | – | – | – | – | (2.59) |
| Total distributions | – | – | – | – | (2.59) |
| Redemption fees added to paid in capitalB | –C | –C | .01 | –C | –C |
| Net asset value, end of period | $17.70 | $18.11 | $22.01 | $30.25 | $45.37 |
| Total ReturnD,E | (2.26)% | (17.72)% | (27.24)% | (33.33)% | (6.24)% |
| Ratios to Average Net AssetsF,G | |||||
| Expenses before reductions | 1.23% | 1.23% | 1.21% | 1.18% | 1.14% |
| Expenses net of fee waivers, if any | 1.20% | 1.19% | 1.19% | 1.17% | 1.14% |
| Expenses net of all reductions | 1.20% | 1.19% | 1.18% | 1.17% | 1.14% |
| Net investment income (loss) | (.44)% | (.51)% | - %H | .18% | (.28)% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $53,509 | $46,898 | $60,270 | $101,202 | $152,969 |
| Portfolio turnover rateI | 20% | 20% | 56% | 18% | 22% |
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 Total returns do not include the effect of the sales charges.
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 represents less than .005%.
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.
Consolidated Financial Highlights — Gold Portfolio Class T
| Years ended February 28, | 2016 A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $17.83 | $21.73 | $29.95 | $45.04 | $50.68 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | (.11) | (.15) | (.06) | (.03) | (.27) |
| Net realized and unrealized gain (loss) | (.35) | (3.75) | (8.17) | (15.06) | (2.80) |
| Total from investment operations | (.46) | (3.90) | (8.23) | (15.09) | (3.07) |
| Distributions from net realized gain | – | – | – | – | (2.57) |
| Total distributions | – | – | – | – | (2.57) |
| Redemption fees added to paid in capitalB | –C | –C | .01 | –C | –C |
| Net asset value, end of period | $17.37 | $17.83 | $21.73 | $29.95 | $45.04 |
| Total ReturnD,E | (2.58)% | (17.95)% | (27.45)% | (33.50)% | (6.49)% |
| Ratios to Average Net AssetsF,G | |||||
| Expenses before reductions | 1.52% | 1.50% | 1.49% | 1.45% | 1.43% |
| Expenses net of fee waivers, if any | 1.48% | 1.46% | 1.47% | 1.44% | 1.42% |
| Expenses net of all reductions | 1.48% | 1.46% | 1.46% | 1.44% | 1.42% |
| Net investment income (loss) | (.72)% | (.79)% | (.28)% | (.09)% | (.57)% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $17,720 | $16,200 | $18,402 | $24,913 | $40,664 |
| Portfolio turnover rateH | 20% | 20% | 56% | 18% | 22% |
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 Total returns do not include the effect of the sales charges.
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.
Consolidated Financial Highlights — Gold Portfolio Class B
| Years ended February 28, | 2016 A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $17.27 | $21.14 | $29.27 | $44.24 | $50.02 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | (.17) | (.24) | (.16) | (.21) | (.49) |
| Net realized and unrealized gain (loss) | (.35) | (3.63) | (7.98) | (14.76) | (2.76) |
| Total from investment operations | (.52) | (3.87) | (8.14) | (14.97) | (3.25) |
| Distributions from net realized gain | – | – | – | – | (2.53) |
| Total distributions | – | – | – | – | (2.53) |
| Redemption fees added to paid in capitalB | –C | –C | .01 | –C | –C |
| Net asset value, end of period | $16.75 | $17.27 | $21.14 | $29.27 | $44.24 |
| Total ReturnD,E | (3.01)% | (18.31)% | (27.78)% | (33.84)% | (6.95)% |
| Ratios to Average Net AssetsF,G | |||||
| Expenses before reductions | 1.98% | 1.97% | 1.95% | 1.93% | 1.90% |
| Expenses net of fee waivers, if any | 1.94% | 1.93% | 1.93% | 1.92% | 1.90% |
| Expenses net of all reductions | 1.94% | 1.93% | 1.93% | 1.91% | 1.90% |
| Net investment income (loss) | (1.18)% | (1.26)% | (.75)% | (.57)% | (1.04)% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $1,388 | $2,461 | $4,373 | $9,423 | $20,894 |
| Portfolio turnover rateH | 20% | 20% | 56% | 18% | 22% |
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 Total returns do not include the effect of the contingent deferred sales charge.
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.
Consolidated Financial Highlights — Gold Portfolio Class C
| Years ended February 28, | 2016 A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $17.20 | $21.06 | $29.15 | $44.05 | $49.81 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | (.16) | (.23) | (.16) | (.20) | (.47) |
| Net realized and unrealized gain (loss) | (.36) | (3.63) | (7.94) | (14.70) | (2.76) |
| Total from investment operations | (.52) | (3.86) | (8.10) | (14.90) | (3.23) |
| Distributions from net realized gain | – | – | – | – | (2.53) |
| Total distributions | – | – | – | – | (2.53) |
| Redemption fees added to paid in capitalB | –C | –C | .01 | –C | –C |
| Net asset value, end of period | $16.68 | $17.20 | $21.06 | $29.15 | $44.05 |
| Total ReturnD,E | (3.02)% | (18.33)% | (27.75)% | (33.83)% | (6.93)% |
| Ratios to Average Net AssetsF,G | |||||
| Expenses before reductions | 1.97% | 1.96% | 1.96% | 1.93% | 1.87% |
| Expenses net of fee waivers, if any | 1.93% | 1.92% | 1.94% | 1.92% | 1.87% |
| Expenses net of all reductions | 1.93% | 1.92% | 1.93% | 1.91% | 1.87% |
| Net investment income (loss) | (1.17)% | (1.25)% | (.76)% | (.57)% | (1.01)% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $52,732 | $39,429 | $33,811 | $37,787 | $67,996 |
| Portfolio turnover rateH | 20% | 20% | 56% | 18% | 22% |
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 Total returns do not include the effect of the contingent deferred sales charge.
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.
Consolidated Financial Highlights — Gold Portfolio
| Years ended February 28, | 2016 A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $18.50 | $22.41 | $30.72 | $45.96 | $51.44 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | (.03) | (.04) | .06 | .16 | (.02) |
| Net realized and unrealized gain (loss) | (.35) | (3.87) | (8.38) | (15.40) | (2.85) |
| Total from investment operations | (.38) | (3.91) | (8.32) | (15.24) | (2.87) |
| Distributions from net realized gain | – | – | – | – | (2.61) |
| Total distributions | – | – | – | – | (2.61) |
| Redemption fees added to paid in capitalB | –C | –C | .01 | –C | –C |
| Net asset value, end of period | $18.12 | $18.50 | $22.41 | $30.72 | $45.96 |
| Total ReturnD | (2.05)% | (17.45)% | (27.05)% | (33.16)% | (6.00)% |
| Ratios to Average Net AssetsE,F | |||||
| Expenses before reductions | .97% | .94% | .94% | .93% | .89% |
| Expenses net of fee waivers, if any | .93% | .90% | .92% | .92% | .89% |
| Expenses net of all reductions | .93% | .90% | .91% | .92% | .89% |
| Net investment income (loss) | (.17)% | (.22)% | .27% | .43% | (.03)% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $1,076,206 | $992,944 | $1,275,913 | $2,301,019 | $3,924,440 |
| Portfolio turnover rateG | 20% | 20% | 56% | 18% | 22% |
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 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.
G 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.
Consolidated Financial Highlights — Gold Portfolio Class I
| Years ended February 28, | 2016 A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $18.50 | $22.41 | $30.69 | $45.87 | $51.32 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | (.02) | (.04) | .07 | .20 | .02 |
| Net realized and unrealized gain (loss) | (.35) | (3.87) | (8.36) | (15.38) | (2.85) |
| Total from investment operations | (.37) | (3.91) | (8.29) | (15.18) | (2.83) |
| Distributions from net realized gain | – | – | – | – | (2.62) |
| Total distributions | – | – | – | – | (2.62) |
| Redemption fees added to paid in capitalB | –C | –C | .01 | –C | –C |
| Net asset value, end of period | $18.13 | $18.50 | $22.41 | $30.69 | $45.87 |
| Total ReturnD | (2.00)% | (17.45)% | (26.98)% | (33.09)% | (5.94)% |
| Ratios to Average Net AssetsE,F | |||||
| Expenses before reductions | .92% | .90% | .87% | .84% | .82% |
| Expenses net of fee waivers, if any | .88% | .86% | .85% | .83% | .81% |
| Expenses net of all reductions | .88% | .86% | .84% | .82% | .81% |
| Net investment income (loss) | (.12)% | (.18)% | .34% | .52% | .04% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $52,607 | $23,667 | $107,830 | $128,262 | $168,548 |
| Portfolio turnover rateG | 20% | 20% | 56% | 18% | 22% |
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 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.
G 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, 2016
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 T, Class C, Gold and Class I (formerly Institutional Class) shares, each of which, along with Class B shares, has equal rights as to assets and voting privileges. Class B shares are closed to new accounts and additional purchases, except for exchanges and reinvestments. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a maximum holding period of seven years from the initial date of purchase. The Fund's investments in emerging markets can be subject to social, economic, regulatory, and political uncertainties and can be extremely volatile.
During the period, the Board of Trustees approved the conversion of all existing Class B shares into Class A shares, effective on or about July 1, 2016, regardless of the length of times shares have been held.
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 $185,320,085 in the Subsidiary, representing 14.8% 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 Fidelity Investments Money Management, Inc. (FIMM), an affiliate of the investment adviser. Annualized expenses of the Money Market Central Funds as of their most recent shareholder report date are less than .005%.
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 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 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 Fidelity SelectCo, LLC (SelectCo) Fair Value Committee (the Committee). 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. Utilizing these techniques may result in transfers between Level 1 and Level 2. 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, 2016, including information on transfers between Levels 1 and 2, 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 may 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. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. Subsequent to ex-dividend date the Fund determines the components of these distributions, based upon receipt of tax filings or other correspondence relating to the underlying investment. 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), independent Trustees may elect 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 are included in the accompanying Statement of Assets and Liabilities.
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, 2016, 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 dividends 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 corporation, deferred trustees compensation, capital loss carryforwards and losses deferred due to wash sales.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end on an unconsolidated basis were as follows:
| Gross unrealized appreciation | $175,385,332 |
| Gross unrealized depreciation | (530,042,755) |
| Net unrealized appreciation (depreciation) on securities | $(354,657,423) |
| Tax Cost | $1,639,732,624 |
The tax-based components of distributable earnings as of period end were as follows:
| Undistributed ordinary income | $16,636,474 |
| Capital loss carryforward | $(1,152,602,929) |
| Net unrealized appreciation (depreciation) on securities and other investments | $(354,660,525) |
Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. Under the Regulated Investment Company Modernization Act of 2010 (the Act), the Fund is permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period and such capital losses are required to be used prior to any losses that expire. 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 | $(137,035,055) |
| Long-term | (1,015,567,874) |
| Total capital loss carryforward | $(1,152,602,929) |
Trading (Redemption) Fees. Shares held by investors in the Fund less than 30 days may be subject to a redemption fee equal to .75% of the NAV of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Fund and accounted for as an addition to paid in capital.
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, aggregated $308,152,319 and $183,244,812, respectively.
6. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity SelectCo, 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 .25% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by Fidelity Management & Research Company (FMR) and the investment adviser. The group fee rate decreases as assets under management increase and increases as assets under management decrease.
FMR, either through itself or through an affiliate provides investment management related services to the Subsidiary for which the Subsidiary pays a monthly management fee at the annual rate of .30% of its net assets. Under the management contract with the subsidiary, FMR pays all other expenses of the Subsidiary, except custodian fees.
For the reporting period, the total consolidated annual management fee rate which includes the management fee of the Fund and the Subsidiary was .58% of the Fund's average net assets.
During the period, the investment adviser waived a portion of the Fund's management fee representing the amount of the management fee paid by the Subsidiary to FMR as described in the Expense Reductions note.
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 Corporation (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% | $97,126 | $– |
| Class T | .25% | .25% | 67,784 | – |
| Class B | .75% | .25% | 15,769 | 11,827 |
| Class C | .75% | .25% | 361,217 | 94,153 |
| $541,896 | $105,980 |
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 T 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 T, Class B, and Class C redemptions. The deferred sales charges range from 5.00% to 1.00% for Class B shares, 1.00% for Class C shares, 1.00% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained by FDC | |
| Class A | $30,057 |
| Class T | 7,972 |
| Class B(a) | 1,554 |
| Class C(a) | 9,782 |
| $49,365 |
(a) When Class B and 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, Inc., (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. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements.
For the period, transfer agent fees for each class were as follows:
| Amount | % of Class-Level Average Net Assets | |
| Class A | $115,271 | .30 |
| Class T | 45,054 | .33 |
| Class B | 4,675 | .30 |
| Class C | 101,686 | .28 |
| Gold | 2,293,659 | .28 |
| Class I | 59,720 | .24 |
| $ 2,620,065 |
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. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions 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 $6,119 for the period.
Interfund Trades. The Fund 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.
The Fund participates 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 Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $1,237 and is reflected in Miscellaneous expenses on the Consolidated Statement of Operations. During the period, the Fund did not borrow on this line of credit.
8. Security Lending.
The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. 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. Total security lending income during the period amounted to $260,688.
9. Expense Reductions.
The investment adviser has contractually agreed to waive the Fund's management fee in an amount equal to the management fee paid by the Subsidiary to FMR. During the period, this waiver reduced the Fund's management fee by $318,965.
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 $11,135 for the period.
In addition, during the period the investment adviser reimbursed and/or waived a portion of fund-level operating expenses in the amount of $6,985 and a portion of class-level operating expenses as follows:
| Amount | |
| Class A | $99 |
| Class T | 28 |
| Class B | 4 |
| Class C | 395 |
| Gold | 23,242 |
| Class I | 1,473 |
| $ 25,241 |
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, 2016 | Year ended February 28, 2015 | Year ended February 29, 2016 | Year ended February 28, 2015 | |
| Class A | ||||
| Shares sold | 1,535,243 | 1,014,651 | $23,173,408 | $20,366,842 |
| Shares redeemed | (1,100,912) | (1,163,476) | (16,009,093) | (22,763,258) |
| Net increase (decrease) | 434,331 | (148,825) | $7,164,315 | $(2,396,416) |
| Class T | ||||
| Shares sold | 373,972 | 317,888 | $5,610,984 | $6,202,712 |
| Shares redeemed | (262,516) | (256,267) | (3,867,307) | (4,926,125) |
| Net increase (decrease) | 111,456 | 61,621 | $1,743,677 | $1,276,587 |
| Class B | ||||
| Shares sold | 6,237 | 6,743 | $87,905 | $129,320 |
| Shares redeemed | (65,868) | (71,044) | (948,946) | (1,326,720) |
| Net increase (decrease) | (59,631) | (64,301) | $(861,041) | $(1,197,400) |
| Class C | ||||
| Shares sold | 1,382,064 | 1,131,151 | $19,834,455 | $21,162,781 |
| Shares redeemed | (513,567) | (444,470) | (7,072,215) | (8,210,673) |
| Net increase (decrease) | 868,497 | 686,681 | $12,762,240 | $12,952,108 |
| Gold | ||||
| Shares sold | 25,445,576 | 22,066,731 | $393,817,498 | $446,680,830 |
| Shares redeemed | (19,739,546) | (25,311,740) | (303,052,757) | (508,417,315) |
| Net increase (decrease) | 5,706,030 | (3,245,009) | $90,764,741 | $(61,736,485) |
| Class I | ||||
| Shares sold | 2,727,491 | 1,547,691 | $42,106,104 | $33,198,070 |
| Shares redeemed | (1,105,474) | (5,080,368) | (16,369,331) | (106,841,413) |
| Net increase (decrease) | 1,622,017 | (3,532,677) | $25,736,773 | $(73,643,343) |
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.
Fidelity Advisor® Materials Fund
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.
Returns reflect the conversion of Class B shares to Class A shares after a maximum of seven years.
Average Annual Total Returns
| For the periods ended February 29, 2016 | Past 1 year | Past 5 years | Past 10 years |
| Class A (incl. 5.75% sales charge) | (24.61)% | 0.35% | 6.26% |
| Class T (incl. 3.50% sales charge) | (23.06)% | 0.52% | 6.21% |
| Class B (incl. contingent deferred sales charge) | (24.58)% | 0.38% | 6.29% |
| Class C (incl. contingent deferred sales charge) | (21.39)% | 0.78% | 6.12% |
Class A shares bear a 0.25% 12b-1 fee. The initial offering of Class A shares took place on December 12, 2006. Returns prior to December 12, 2006, are those of Materials Portfolio, the original class of the fund, which has no 12b-1 fee. Had Class A's 12b-1 fee been reflected, returns prior to December 12, 2006, would have been lower.
Class T shares bear a 0.50% 12b-1 fee. The initial offering of Class T shares took place on December 12, 2006. Returns prior to December 12, 2006, are those of Materials Portfolio, the original class of the fund, which has no 12b-1 fee. Had Class T's 12b-1 fee been reflected, returns prior to December 12, 2006, would have been lower.
Class B shares bear a 1.00% 12b-1 fee. The initial offering of Class B shares took place on December 12, 2006. Returns prior to December 12, 2006, are those of Materials Portfolio, the original class of the fund, which has no 12b-1 fee. Had Class B's 12b-1 fee been reflected, returns prior to December 12, 2006, would have been lower.
Class C shares bear a 1.00% 12b-1 fee. The initial offering of Class C shares took place on December 12, 2006. Returns prior to December 12, 2006, are those of Materials Portfolio, the original class of the fund, which has no 12b-1 fee. Had Class C's 12b-1 fee been reflected, returns prior to December 12, 2006, would have been lower.
Class B shares' contingent deferred sales charges included in the past one year, past five years and past ten years total return figures are 5%, 2% and 0%, respectively.
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.
Prior to October 1, 2006, the fund was named Industrial Materials 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 Fidelity Advisor® Materials Fund - Class A on February 28, 2006, and the current 5.75% sales charge was paid.
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.
See above for additional information regarding the performance of Class A.
| Period Ending Values | ||
| $18,353 | Fidelity Advisor® Materials Fund - Class A | |
| $18,666 | S&P 500® Index | |
Fidelity Advisor® Materials Fund
Management's Discussion of Fund Performance
Market Recap: The S&P 500® index returned -6.19% for the year ending February 29, 2016. Largely range-bound for the first half of the period, U.S. stocks suffered a steep, late-summer decline on concern about an economic slowdown in China. The market recovered in October, lifted by the U.S. Federal Reserve’s decision to delay raising near-term interest rates until mid-December. Investors also drew courage from a rate cut in China and economic stimulus in Europe. But continued oil-price weakness and U.S.-dollar strength, plus fresh worries about China and the Middle East, pushed the S&P 500® to its worst January since 2009, followed by a volatile but ultimately flattish February. Overall, growth-oriented and larger-cap stocks fared better than value and smaller-cap complements. In this environment, the tech-heavy Nasdaq Composite Index® returned -7.07% for the 12 months; the Russell 2000® Index, -14.97%. Few sectors within the broad-market S&P 500® gained ground, with a wide gap separating leaders from laggards. Despite increased competition among wireless carriers, telecommunication services (+8%) led the way, followed by the more defensive utilities sector (+6%). Rising wages and low inflation buoyed consumer staples (+4%), less so consumer discretionary (0%). Meanwhile, energy (-24%) foundered amid commodity weakness that also hurt materials (-17%). The financials sector (-12%) struggled as well.Comments from Portfolio Manager Tobias Welo: For the year, the fund’s share classes (excluding sales charges, if applicable) trailed the -17.90% return of the MSCI U.S. IMI Materials 25/50 Index. Materials stocks also lagged the S&P 500® index, weighed down by weak-performing categories such as diversified metals & mining and fertilizers & agricultural chemicals. Versus the MSCI index, stock selection and a sizable overweighting in paper-packaging stocks detracted from the fund’s results, as did our picks in construction materials and diversified chemicals, and an underweighting in industrial gases. Paper-packaging stock WestRock was by far our biggest detractor, as well as the fund’s third-largest holding at period end and a sizable overweighting. Fundamentals for the firm’s chemicals segment weakened as a result of lower oil prices, which hampered the stock. Another detractor versus the index was a large underweighting in index heavyweight Dow Chemical, which managed a modest gain this period. Not owning index component Airgas in November, when the company received a buyout bid from France-based industrial gases provider Air Liquide, also worked against us. Conversely, underweighting diversified metals & mining, the weakest group in the MSCI index, and avoiding aluminum shares bolstered relative results. The fund’s top relative contributor was Freeport-McMoRan, an index name that returned -64%. I sold our token stake in this natural resources provider in February 2015, just before the period began. Our overweighted stake in specialty chemicals contributor Cytec Industries also contributed. The company makes composites and other materials for aerospace and industrial customers. I established this position in March, and the stock had a nice move in July, after the company announced it had entered into a merger agreement with Brussels-based Solvay, a global chemical company. I liquidated our stake in Cytec soon after to pursue opportunities I thought had more upside.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.
Materials Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 29, 2016
| % of fund's net assets | % of fund's net assets 6 months ago | |
| E.I. du Pont de Nemours & Co. | 14.6 | 9.4 |
| Eastman Chemical Co. | 8.9 | 8.0 |
| WestRock Co. | 8.5 | 9.2 |
| Monsanto Co. | 7.3 | 9.6 |
| LyondellBasell Industries NV Class A | 6.2 | 7.2 |
| Graphic Packaging Holding Co. | 5.3 | 3.8 |
| Ecolab, Inc. | 5.2 | 6.4 |
| The Dow Chemical Co. | 4.9 | 0.0 |
| PPG Industries, Inc. | 4.9 | 4.9 |
| Eagle Materials, Inc. | 4.8 | 4.6 |
| 70.6 |
Top Industries (% of fund's net assets)
| As of February 29, 2016 | ||
| Chemicals | 71.1% | |
| Containers & Packaging | 19.4% | |
| Construction Materials | 4.8% | |
| Metals & Mining | 1.8% | |
| Building Products | 1.1% | |
| All Others* | 1.8% | |
| As of August 31, 2015 | ||
| Chemicals | 63.5% | |
| Containers & Packaging | 21.6% | |
| Metals & Mining | 5.2% | |
| Construction Materials | 4.6% | |
| Paper & Forest Products | 1.5% | |
| All Others* | 3.6% | |
* Includes short-term investments and net other assets (liabilities).
Percentages shown as 0.0% may reflect amounts less than 0.05%.
Materials Portfolio
Investments February 29, 2016
Showing Percentage of Net Assets
| Common Stocks - 98.3% | |||
| Shares | Value | ||
| Building Products - 1.1% | |||
| Building Products - 1.1% | |||
| GCP Applied Technologies, Inc. (a) | 797,440 | $14,138,611 | |
| Chemicals - 71.1% | |||
| Commodity Chemicals - 7.3% | |||
| LyondellBasell Industries NV Class A | 1,016,696 | 81,549,186 | |
| Orion Engineered Carbons SA | 1,134,534 | 14,578,762 | |
| 96,127,948 | |||
| Diversified Chemicals - 28.6% | |||
| E.I. du Pont de Nemours & Co. | 3,171,200 | 193,030,945 | |
| Eastman Chemical Co. | 1,824,548 | 117,044,754 | |
| Olin Corp. | 140,600 | 2,131,496 | |
| The Dow Chemical Co. | 1,343,300 | 65,297,813 | |
| 377,505,008 | |||
| Fertilizers & Agricultural Chemicals - 11.8% | |||
| Agrium, Inc. | 146,500 | 12,615,458 | |
| CF Industries Holdings, Inc. | 903,610 | 32,945,621 | |
| Monsanto Co. | 1,071,630 | 96,435,984 | |
| Potash Corp. of Saskatchewan, Inc. | 833,300 | 14,122,372 | |
| 156,119,435 | |||
| Specialty Chemicals - 23.4% | |||
| Ashland, Inc. | 476,300 | 45,386,627 | |
| Ecolab, Inc. | 664,424 | 68,136,681 | |
| Frutarom Industries Ltd. | 270,296 | 13,977,842 | |
| NewMarket Corp. | 58,129 | 21,225,223 | |
| PPG Industries, Inc. | 669,400 | 64,617,182 | |
| Valspar Corp. | 621,100 | 48,594,864 | |
| W.R. Grace & Co. (a) | 699,640 | 48,093,254 | |
| 310,031,673 | |||
| TOTAL CHEMICALS | 939,784,064 | ||
| Construction Materials - 4.8% | |||
| Construction Materials - 4.8% | |||
| Eagle Materials, Inc. | 1,052,715 | 63,605,040 | |
| Containers & Packaging - 19.4% | |||
| Metal & Glass Containers - 4.3% | |||
| Ball Corp. | 855,170 | 56,637,909 | |
| Paper Packaging - 15.1% | |||
| Graphic Packaging Holding Co. | 5,639,795 | 69,538,672 | |
| Sealed Air Corp. | 380,400 | 17,395,692 | |
| WestRock Co. | 3,342,919 | 112,890,375 | |
| 199,824,739 | |||
| TOTAL CONTAINERS & PACKAGING | 256,462,648 | ||
| Energy Equipment & Services - 0.1% | |||
| Oil & Gas Equipment & Services - 0.1% | |||
| Aspen Aerogels, Inc. (a) | 340,453 | 1,242,653 | |
| Metals & Mining - 1.8% | |||
| Diversified Metals & Mining - 1.8% | |||
| Compass Minerals International, Inc. | 340,800 | 23,119,872 | |
| TOTAL COMMON STOCKS | |||
| (Cost $1,255,329,095) | 1,298,352,888 | ||
| Money Market Funds - 1.5% | |||
| Fidelity Cash Central Fund, 0.40% (b) | |||
| (Cost $19,504,253) | 19,504,253 | 19,504,253 | |
| TOTAL INVESTMENT PORTFOLIO - 99.8% | |||
| (Cost $1,274,833,348) | 1,317,857,141 | ||
| NET OTHER ASSETS (LIABILITIES) - 0.2% | 3,053,922 | ||
| NET ASSETS - 100% | $1,320,911,063 |
Legend
(a) Non-income producing
(b) 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 | $38,726 |
| Fidelity Securities Lending Cash Central Fund | 89,068 |
| Total | $127,794 |
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 | Value, end of period |
| Aspen Aerogels, Inc. | $10,127,522 | $-- | $7,035,841 | $-- | $-- |
| Total | $10,127,522 | $-- | $7,035,841 | $-- | $-- |
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 | 89.7% |
| Netherlands | 6.2% |
| Canada | 2.0% |
| Luxembourg | 1.1% |
| Israel | 1.0% |
| 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, 2016 | ||
| Assets | ||
| Investment in securities, at value — See accompanying schedule: Unaffiliated issuers (cost $1,255,329,095) | $1,298,352,888 | |
| Fidelity Central Funds (cost $19,504,253) | 19,504,253 | |
| Total Investments (cost $1,274,833,348) | $1,317,857,141 | |
| Receivable for investments sold | 26,728,214 | |
| Receivable for fund shares sold | 2,004,012 | |
| Dividends receivable | 2,889,783 | |
| Distributions receivable from Fidelity Central Funds | 1,712 | |
| Prepaid expenses | 6,204 | |
| Other receivables | 54,626 | |
| Total assets | 1,349,541,692 | |
| Liabilities | ||
| Payable for investments purchased | $24,989,520 | |
| Payable for fund shares redeemed | 2,558,256 | |
| Accrued management fee | 592,501 | |
| Distribution and service plan fees payable | 110,741 | |
| Other affiliated payables | 287,993 | |
| Other payables and accrued expenses | 91,618 | |
| Total liabilities | 28,630,629 | |
| Net Assets | $1,320,911,063 | |
| Net Assets consist of: | ||
| Paid in capital | $1,314,144,629 | |
| Distributions in excess of net investment income | (45,053) | |
| Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (36,212,306) | |
| Net unrealized appreciation (depreciation) on investments | 43,023,793 | |
| Net Assets | $1,320,911,063 | |
| Calculation of Maximum Offering Price | ||
| Class A: | ||
| Net Asset Value and redemption price per share ($202,746,868 ÷ 3,221,442 shares) | $62.94 | |
| Maximum offering price per share (100/94.25 of $62.94) | $66.78 | |
| Class T: | ||
| Net Asset Value and redemption price per share ($30,117,887 ÷ 481,737 shares) | $62.52 | |
| Maximum offering price per share (100/96.50 of $62.52) | $64.79 | |
| Class B: | ||
| Net Asset Value and offering price per share ($3,021,034 ÷ 49,306 shares)(a) | $61.27 | |
| Class C: | ||
| Net Asset Value and offering price per share ($66,895,988 ÷ 1,095,101 shares)(a) | $61.09 | |
| Materials: | ||
| Net Asset Value, offering price and redemption price per share ($711,984,554 ÷ 11,265,515 shares) | $63.20 | |
| Class I: | ||
| Net Asset Value, offering price and redemption price per share ($306,144,732 ÷ 4,853,795 shares) | $63.07 |
(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, 2016 | ||
| Investment Income | ||
| Dividends | $36,704,710 | |
| Interest | 36 | |
| Income from Fidelity Central Funds | 127,794 | |
| Total income | 36,832,540 | |
| Expenses | ||
| Management fee | $9,399,943 | |
| Transfer agent fees | 3,633,828 | |
| Distribution and service plan fees | 1,795,819 | |
| Accounting and security lending fees | 530,288 | |
| Custodian fees and expenses | 34,030 | |
| Independent trustees' compensation | 32,246 | |
| Registration fees | 133,878 | |
| Audit | 55,040 | |
| Legal | 20,722 | |
| Miscellaneous | 23,598 | |
| Total expenses before reductions | 15,659,392 | |
| Expense reductions | (116,230) | 15,543,162 |
| Net investment income (loss) | 21,289,378 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | (352,968) | |
| Other affiliated issuers | 596,307 | |
| Foreign currency transactions | (63,699) | |
| Total net realized gain (loss) | 179,640 | |
| Change in net unrealized appreciation (depreciation) on investment securities | (394,277,283) | |
| Net gain (loss) | (394,097,643) | |
| Net increase (decrease) in net assets resulting from operations | $(372,808,265) |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 29, 2016 | Year ended February 28, 2015 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $21,289,378 | $16,415,183 |
| Net realized gain (loss) | 179,640 | 140,995,843 |
| Change in net unrealized appreciation (depreciation) | (394,277,283) | (115,351,730) |
| Net increase (decrease) in net assets resulting from operations | (372,808,265) | 42,059,296 |
| Distributions to shareholders from net investment income | (15,036,509) | (14,132,791) |
| Distributions to shareholders from net realized gain | (20,008,646) | (176,045,519) |
| Total distributions | (35,045,155) | (190,178,310) |
| Share transactions - net increase (decrease) | (326,507,843) | 139,840,860 |
| Redemption fees | 36,485 | 59,111 |
| Total increase (decrease) in net assets | (734,324,778) | (8,219,043) |
| Net Assets | ||
| Beginning of period | 2,055,235,841 | 2,063,454,884 |
| End of period (including distributions in excess of net investment income of $45,053 and distributions in excess of net investment income of $33,066, respectively) | $1,320,911,063 | $2,055,235,841 |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Materials Portfolio Class A
| Years ended February 28, | 2016 A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $80.43 | $86.46 | $73.44 | $69.23 | $69.96 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .79 | .51 | .36 | .70 | .40 |
| Net realized and unrealized gain (loss) | (16.80) | 1.05 | 14.56 | 5.69 | (.35) |
| Total from investment operations | (16.01) | 1.56 | 14.92 | 6.39 | .05 |
| Distributions from net investment income | (.58) | (.43) | (.30) | (.63) | (.40) |
| Distributions from net realized gain | (.91) | (7.17) | (1.60) | (1.55) | (.38) |
| Total distributions | (1.48)C | (7.59)D | (1.90) | (2.18) | (.78) |
| Redemption fees added to paid in capitalB,E | – | – | – | – | – |
| Net asset value, end of period | $62.94 | $80.43 | $86.46 | $73.44 | $69.23 |
| Total ReturnF,G | (20.01)% | 2.20% | 20.46% | 9.40% | .21% |
| Ratios to Average Net AssetsH,I | |||||
| Expenses before reductions | 1.06% | 1.06% | 1.10% | 1.13% | 1.13% |
| Expenses net of fee waivers, if any | 1.06% | 1.06% | 1.10% | 1.13% | 1.13% |
| Expenses net of all reductions | 1.06% | 1.06% | 1.09% | 1.12% | 1.13% |
| Net investment income (loss) | 1.09% | .61% | .45% | 1.02% | .61% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $202,747 | $319,740 | $336,777 | $219,627 | $157,781 |
| Portfolio turnover rateJ | 64% | 76%K | 53% | 61% | 94% |
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 Total distributions of $7.59 per share is comprised of distributions from net investment income of $.425 and distributions from net realized gain of $7.167 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.
Financial Highlights — Materials Portfolio Class T
| Years ended February 28, | 2016 A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $79.95 | $85.99 | $73.05 | $68.91 | $69.68 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .56 | .25 | .12 | .50 | .21 |
| Net realized and unrealized gain (loss) | (16.69) | 1.06 | 14.48 | 5.66 | (.35) |
| Total from investment operations | (16.13) | 1.31 | 14.60 | 6.16 | (.14) |
| Distributions from net investment income | (.40) | (.18) | (.06) | (.46) | (.25) |
| Distributions from net realized gain | (.91) | (7.17) | (1.60) | (1.55) | (.38) |
| Total distributions | (1.30)C | (7.35) | (1.66) | (2.02)D | (.63) |
| Redemption fees added to paid in capitalB,E | – | – | – | – | – |
| Net asset value, end of period | $62.52 | $79.95 | $85.99 | $73.05 | $68.91 |
| Total ReturnF,G | (20.27)% | 1.90% | 20.10% | 9.10% | (.09)% |
| Ratios to Average Net AssetsH,I | |||||
| Expenses before reductions | 1.38% | 1.37% | 1.40% | 1.42% | 1.42% |
| Expenses net of fee waivers, if any | 1.37% | 1.37% | 1.40% | 1.42% | 1.42% |
| Expenses net of all reductions | 1.37% | 1.37% | 1.39% | 1.41% | 1.41% |
| Net investment income (loss) | .77% | .31% | .15% | .73% | .33% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $30,118 | $45,252 | $45,223 | $37,860 | $28,290 |
| Portfolio turnover rateJ | 64% | 76%K | 53% | 61% | 94% |
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 Total distributions of $2.02 per share is comprised of distributions from net investment income of $.463 and distributions from net realized gain of $1.552 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.
Financial Highlights — Materials Portfolio Class B
| Years ended February 28, | 2016 A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $78.31 | $84.63 | $72.21 | $68.13 | $68.95 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .19 | (.18) | (.28) | .16 | (.11) |
| Net realized and unrealized gain (loss) | (16.32) | 1.03 | 14.28 | 5.57 | (.33) |
| Total from investment operations | (16.13) | .85 | 14.00 | 5.73 | (.44) |
| Distributions from net investment income | – | – | – | (.10) | – |
| Distributions from net realized gain | (.91) | (7.17) | (1.58) | (1.55) | (.38) |
| Total distributions | (.91) | (7.17) | (1.58) | (1.65) | (.38) |
| Redemption fees added to paid in capitalB,C | – | – | – | – | – |
| Net asset value, end of period | $61.27 | $78.31 | $84.63 | $72.21 | $68.13 |
| Total ReturnD,E | (20.67)% | 1.35% | 19.50% | 8.55% | (.57)% |
| Ratios to Average Net AssetsF,G | |||||
| Expenses before reductions | 1.88% | 1.89% | 1.90% | 1.92% | 1.91% |
| Expenses net of fee waivers, if any | 1.88% | 1.89% | 1.90% | 1.92% | 1.91% |
| Expenses net of all reductions | 1.87% | 1.89% | 1.90% | 1.91% | 1.91% |
| Net investment income (loss) | .27% | (.22)% | (.36)% | .24% | (.17)% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $3,021 | $6,487 | $8,671 | $10,218 | $11,040 |
| Portfolio turnover rateH | 64% | 76%I | 53% | 61% | 94% |
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 Total returns do not include the effect of the contingent deferred sales charge.
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.
Financial Highlights — Materials Portfolio Class C
| Years ended February 28, | 2016 A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $78.12 | $84.38 | $71.96 | $67.98 | $68.78 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .24 | (.12) | (.23) | .18 | (.10) |
| Net realized and unrealized gain (loss) | (16.28) | 1.03 | 14.23 | 5.55 | (.32) |
| Total from investment operations | (16.04) | .91 | 14.00 | 5.73 | (.42) |
| Distributions from net investment income | (.08) | – | – | (.20) | – |
| Distributions from net realized gain | (.91) | (7.17) | (1.58) | (1.55) | (.38) |
| Total distributions | (.99) | (7.17) | (1.58) | (1.75) | (.38) |
| Redemption fees added to paid in capitalB,C | – | – | – | – | – |
| Net asset value, end of period | $61.09 | $78.12 | $84.38 | $71.96 | $67.98 |
| Total ReturnD,E | (20.61)% | 1.43% | 19.56% | 8.58% | (.55)% |
| Ratios to Average Net AssetsF,G | |||||
| Expenses before reductions | 1.81% | 1.82% | 1.85% | 1.89% | 1.89% |
| Expenses net of fee waivers, if any | 1.81% | 1.82% | 1.85% | 1.89% | 1.89% |
| Expenses net of all reductions | 1.81% | 1.82% | 1.84% | 1.88% | 1.89% |
| Net investment income (loss) | .34% | (.14)% | (.30)% | .26% | (.15)% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $66,896 | $107,697 | $106,879 | $75,007 | $58,296 |
| Portfolio turnover rateH | 64% | 76%I | 53% | 61% | 94% |
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 Total returns do not include the effect of the contingent deferred sales charge.
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.
Financial Highlights — Materials Portfolio
| Years ended February 28, | 2016 A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $80.77 | $86.81 | $73.68 | $69.41 | $70.11 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .98 | .73 | .58 | .90 | .60 |
| Net realized and unrealized gain (loss) | (16.89) | 1.05 | 14.63 | 5.71 | (.37) |
| Total from investment operations | (15.91) | 1.78 | 15.21 | 6.61 | .23 |
| Distributions from net investment income | (.76) | (.65) | (.48) | (.79) | (.55) |
| Distributions from net realized gain | (.91) | (7.17) | (1.60) | (1.55) | (.38) |
| Total distributions | (1.66)C | (7.82) | (2.08) | (2.34) | (.93) |
| Redemption fees added to paid in capitalB,D | – | – | – | – | – |
| Net asset value, end of period | $63.20 | $80.77 | $86.81 | $73.68 | $69.41 |
| Total ReturnE | (19.81)% | 2.46% | 20.80% | 9.71% | .49% |
| Ratios to Average Net AssetsF,G | |||||
| Expenses before reductions | .81% | .80% | .82% | .85% | .85% |
| Expenses net of fee waivers, if any | .81% | .80% | .82% | .85% | .85% |
| Expenses net of all reductions | .80% | .80% | .82% | .84% | .84% |
| Net investment income (loss) | 1.34% | .87% | .73% | 1.30% | .90% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $711,985 | $1,107,689 | $1,231,942 | $1,146,782 | $1,089,619 |
| Portfolio turnover rateH | 64% | 76%I | 53% | 61% | 94% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C 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.
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.
Financial Highlights — Materials Portfolio Class I
| Years ended February 28, | 2016 A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $80.60 | $86.66 | $73.57 | $69.35 | $70.05 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | 1.00 | .74 | .59 | .90 | .60 |
| Net realized and unrealized gain (loss) | (16.86) | 1.05 | 14.60 | 5.70 | (.36) |
| Total from investment operations | (15.86) | 1.79 | 15.19 | 6.60 | .24 |
| Distributions from net investment income | (.77) | (.68) | (.50) | (.83) | (.56) |
| Distributions from net realized gain | (.91) | (7.17) | (1.60) | (1.55) | (.38) |
| Total distributions | (1.67)C | (7.85) | (2.10) | (2.38) | (.94) |
| Redemption fees added to paid in capitalB,D | – | – | – | – | – |
| Net asset value, end of period | $63.07 | $80.60 | $86.66 | $73.57 | $69.35 |
| Total ReturnE | (19.79)% | 2.49% | 20.81% | 9.71% | .50% |
| Ratios to Average Net AssetsF,G | |||||
| Expenses before reductions | .78% | .78% | .81% | .85% | .84% |
| Expenses net of fee waivers, if any | .78% | .78% | .81% | .85% | .84% |
| Expenses net of all reductions | .78% | .78% | .81% | .84% | .83% |
| Net investment income (loss) | 1.37% | .89% | .74% | 1.30% | .91% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $306,145 | $468,371 | $333,963 | $246,696 | $89,299 |
| Portfolio turnover rateH | 64% | 76%I | 53% | 61% | 94% |
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.
Notes to Financial Statements
For the period ended February 29, 2016
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 T, Class C, Materials and Class I (formerly Institutional Class) shares, each of which, along with Class B shares, has equal rights as to assets and voting privileges. Class B shares are closed to new accounts and additional purchases, except for exchanges and reinvestments. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a maximum holding period of seven years from the initial date of purchase.
During the period, the Board of Trustees approved the conversion of all existing Class B shares into Class A shares, effective on or about July 1, 2016, regardless of the length of times shares have been held.
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 Fidelity Investments Money Management, Inc. (FIMM), an affiliate of the investment adviser. Annualized expenses of the Money Market Central Funds as of their most recent shareholder report date are less than .005%.
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 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 Fidelity SelectCo, LLC (SelectCo) Fair Value Committee (the Committee). 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. Utilizing these techniques may result in transfers between Level 1 and Level 2. 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 may 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. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. Subsequent to ex-dividend date the Fund determines the components of these distributions, based upon receipt of tax filings or other correspondence relating to the underlying investment. 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), independent Trustees may elect 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 are included in the accompanying Statement of Assets and Liabilities.
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, 2016, 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 dividends 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, passive foreign investment companies (PFIC), original issue discount, deferred trustees compensation, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
| Gross unrealized appreciation | $171,131,096 |
| Gross unrealized depreciation | (136,462,813) |
| Net unrealized appreciation (depreciation) on securities | $34,668,283 |
| Tax Cost | $1,283,188,858 |
The tax-based components of distributable earnings as of period end were as follows:
| Net unrealized appreciation (depreciation) on securities and other investments | $34,668,283 |
The Fund intends to elect to defer to its next fiscal year $26,553,392 of capital losses recognized during the period November 1, 2015 to February 29, 2016.
Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. Under the Regulated Investment Company Modernization Act of 2010 (the Act), the Fund is permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period and such capital losses are required to be used prior to any losses that expire. The capital loss carryforward information presented below, including any applicable limitation, is estimated as of fiscal period end and is subject to adjustment.
| Fiscal year of expiration | |
| 2017 | $(199,630) |
| 2018 | (1,022,988) |
| 2019 | (80,787) |
| Total with expiration | $(1,303,405) |
The Fund acquired $1,303,405 of capital loss carryforwards as part of a merger in a prior period. The losses acquired that will be available to offset future capital gains of the Fund will be limited to approximately $611,309 per year.
The tax character of distributions paid was as follows:
| February 29, 2016 | February 28, 2015 | |
| Ordinary Income | $15,036,509 | $ 14,132,791 |
| Long-term Capital Gains | 20,008,646 | 176,045,519 |
| Total | $35,045,155 | $ 190,178,310 |
Trading (Redemption) Fees. Shares held by investors in the Fund less than 30 days may be subject to a redemption fee equal to .75% of the NAV of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Fund and accounted for as an addition to paid in capital.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $1,081,563,958 and $1,425,677,892, respectively.
5. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity SelectCo, 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 .25% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by Fidelity Management & Research Company (FMR) and the investment adviser. 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 .55% 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 Corporation (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% | $669,561 | $– |
| Class T | .25% | .25% | 187,278 | – |
| Class B | .75% | .25% | 45,667 | 34,250 |
| Class C | .75% | .25% | 893,313 | 121,122 |
| $1,795,819 | $155,372 |
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 T 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 T, Class B, and Class C redemptions. The deferred sales charges range from 5.00% to 1.00% for Class B shares, 1.00% for Class C shares, 1.00% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained by FDC | |
| Class A | $63,199 |
| Class T | 4,994 |
| Class B(a) | 3,199 |
| Class C(a) | 13,325 |
| $84,717 |
(a) When Class B and 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, Inc., (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. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements.
For the period, transfer agent fees for each class were as follows:
| Amount | % of Class-Level Average Net Assets | |
| Class A | $584,630 | .22 |
| Class T | 105,698 | .28 |
| Class B | 13,231 | .29 |
| Class C | 198,202 | .22 |
| Materials | 1,969,720 | .22 |
| Class I | 762,347 | .19 |
| $ 3,633,828 |
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. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions 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 $18,365 for the period.
Interfund Trades. The Fund 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.
The Fund participates 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 Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $2,641 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, the Fund did not borrow on this line of credit.
7. Security Lending.
The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. 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. At period end, there were no security loans outstanding. 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. Total security lending income during the period amounted to $89,068.
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 $57,488 for the period.
In addition, during the period the investment adviser reimbursed and/or waived a portion of fund-level operating expenses in the amount of $13,331 and a portion of class-level operating expenses as follows:
| Amount | |
| Class A | $6,876 |
| Class T | 846 |
| Class B | 22 |
| Class C | 2,309 |
| Materials | 27,233 |
| Class I | 8,125 |
| $45,411 |
9. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
| Year ended February 29, 2016 | Year ended February 28, 2015 | |
| From net investment income | ||
| Class A | $1,939,569 | $1,638,100 |
| Class T | 197,484 | 99,020 |
| Class C | 96,966 | – |
| Materials | 8,906,972 | 8,803,568 |
| Class I | 3,895,518 | 3,592,103 |
| Total | $15,036,509 | $14,132,791 |
| From net realized gain | ||
| Class A | $3,076,815 | $27,780,861 |
| Class T | 454,774 | 3,863,168 |
| Class B | 50,258 | 628,830 |
| Class C | 1,065,857 | 9,676,799 |
| Materials | 10,731,466 | 98,020,822 |
| Class I | 4,629,476 | 36,075,039 |
| Total | $20,008,646 | $176,045,519 |
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, 2016 | Year ended February 28, 2015 | Year ended February 29, 2016 | Year ended February 28, 2015 | |
| Class A | ||||
| Shares sold | 820,014 | 1,287,549 | $59,881,537 | $107,992,682 |
| Reinvestment of distributions | 70,909 | 350,058 | 4,729,990 | 27,494,344 |
| Shares redeemed | (1,644,717) | (1,557,532) | (118,125,615) | (130,043,911) |
| Net increase (decrease) | (753,794) | 80,075 | $(53,514,088) | $5,443,115 |
| Class T | ||||
| Shares sold | 84,811 | 122,029 | $5,963,121 | $10,167,521 |
| Reinvestment of distributions | 9,611 | 48,608 | 637,500 | 3,794,851 |
| Shares redeemed | (178,706) | (130,511) | (12,734,979) | (10,688,592) |
| Net increase (decrease) | (84,284) | 40,126 | $(6,134,358) | $3,273,780 |
| Class B | ||||
| Shares sold | 1,827 | 2,935 | $136,913 | $242,184 |
| Reinvestment of distributions | 717 | 7,683 | 46,833 | 590,123 |
| Shares redeemed | (36,076) | (30,247) | (2,579,948) | (2,465,575) |
| Net increase (decrease) | (33,532) | (19,629) | $(2,396,202) | $(1,633,268) |
| Class C | ||||
| Shares sold | 141,291 | 367,698 | $10,125,628 | $30,096,831 |
| Reinvestment of distributions | 16,060 | 110,883 | 1,043,658 | 8,472,087 |
| Shares redeemed | (440,847) | (366,676) | (30,549,327) | (29,116,038) |
| Net increase (decrease) | (283,496) | 111,905 | $(19,380,041) | $9,452,880 |
| Materials | ||||
| Shares sold | 1,388,149 | 2,411,814 | $101,563,248 | $202,615,605 |
| Reinvestment of distributions | 273,187 | 1,274,428 | 18,281,510 | 100,536,677 |
| Shares redeemed | (4,109,408) | (4,164,314) | (297,748,381) | (345,204,286) |
| Net increase (decrease) | (2,448,072) | (478,072) | $(177,903,623) | $(42,052,004) |
| Class I | ||||
| Shares sold | 1,480,820 | 4,739,071(a) | $107,996,943 | $400,864,210(a) |
| Reinvestment of distributions | 118,643 | 464,747 | 7,923,047 | 36,366,289 |
| Shares redeemed | (2,556,391) | (3,246,644)(b) | (183,099,521) | (271,874,142)(b) |
| Net increase (decrease) | (956,928) | 1,957,174 | $(67,179,531) | $165,356,357 |
(a) Amount includes in-kind exchanges.
(b) Amount includes in-kind redemptions.
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.
Fidelity Advisor® Telecommunications Fund
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.
Returns reflect the conversion of Class B shares to Class A shares after a maximum of seven years.
Average Annual Total Returns
| For the periods ended February 29, 2016 | Past 1 year | Past 5 years | Past 10 years |
| Class A (incl. 5.75% sales charge) | (5.60)% | 6.72% | 5.14% |
| Class T (incl. 3.50% sales charge) | (3.65)% | 6.90% | 5.10% |
| Class B (incl. contingent deferred sales charge) | (5.55)% | 6.87% | 5.20% |
| Class C (incl. contingent deferred sales charge) | (1.55)% | 7.22% | 5.05% |
Class A shares bear a 0.25% 12b-1 fee. The initial offering of Class A shares took place on December 12, 2006. Returns prior to December 12, 2006, are those of Telecommunications Portfolio, the original class of the fund, which has no 12b-1 fee. Had Class A's 12b-1 fee been reflected, returns prior to December 12, 2006, would have been lower.
Class T shares bear a 0.50% 12b-1 fee. The initial offering of Class T shares took place on December 12, 2006. Returns prior to December 12, 2006, are those of Telecommunications Portfolio, the original class of the fund, which has no 12b-1 fee. Had Class T's 12b-1 fee been reflected, returns prior to December 12, 2006, would have been lower.
Class B shares bear a 1.00% 12b-1 fee. The initial offering of Class B shares took place on December 12, 2006. Returns prior to December 12, 2006, are those of Telecommunications Portfolio, the original class of the fund, which has no 12b-1 fee. Had Class B's 12b-1 fee been reflected, returns prior to December 12,2006, would have been lower.
Class C shares bear a 1.00% 12b-1 fee. The initial offering of Class C shares took place on December 12, 2006. Returns prior to December 12, 2006, are those of Telecommunications Portfolio, the original class of the fund, which has no 12b-1 fee. Had Class C's 12b-1 fee been reflected, returns prior to December 12, 2006, would have been lower.
Class B shares' contingent deferred sales charges included in the past one year, past five years and past ten years total return figures are 5%, 2% and 0%, respectively.
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.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Fidelity Advisor® Telecommunications Fund - Class A on February 28, 2006, and the current 5.75% sales charge was paid.
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.
See above for additional information regarding the performance of Class A.
| Period Ending Values | ||
| $16,500 | Fidelity Advisor® Telecommunications Fund - Class A | |
| $18,666 | S&P 500® Index | |
Fidelity Advisor® Telecommunications Fund
Management's Discussion of Fund Performance
Market Recap: The S&P 500® index returned -6.19% for the year ending February 29, 2016. Largely range-bound for the first half of the period, U.S. stocks suffered a steep, late-summer decline on concern about an economic slowdown in China. The market recovered in October, lifted by the U.S. Federal Reserve’s decision to delay raising near-term interest rates until mid-December. Investors also drew courage from a rate cut in China and economic stimulus in Europe. But continued oil-price weakness and U.S.-dollar strength, plus fresh worries about China and the Middle East, pushed the S&P 500® to its worst January since 2009, followed by a volatile but ultimately flattish February. Overall, growth-oriented and larger-cap stocks fared better than value and smaller-cap complements. In this environment, the tech-heavy Nasdaq Composite Index® returned -7.07% for the 12 months; the Russell 2000® Index, -14.97%. Few sectors within the broad-market S&P 500® gained ground, with a wide gap separating leaders from laggards. Despite increased competition among wireless carriers, telecommunication services (+8%) led the way, followed by the more defensive utilities sector (+6%). Rising wages and low inflation buoyed consumer staples (+4%), less so consumer discretionary (0%). Meanwhile, energy (-24%) foundered amid commodity weakness that also hurt materials (-17%). The financials sector(-12%) struggled as well.Comments from Portfolio Manager Matthew Drukker: For the year, the fund’s share classes (excluding sales charges, if applicable) posted mixed results, lagging the 3.42% gain of the sector benchmark, the MSCI U.S. IMI Telecommunications Services 25/50 Index, by about 3 to 4 percentage points, but significantly outpacing the return of the broad-based S&P 500®. Underweighting strong-performing small-cap stocks, several of which benefited from acquisitions, hurt relative performance. In addition, stock picking in most industry groups detracted – especially alternative carriers, Internet software & services and wireless telecommunication services. The most significant individual detractor was Shenandoah Telecom, a wireless affiliate of Sprint, which we significantly underweighted. It hurt the fund when Shenandoah announced an accretive acquisition of Shentel, a neighboring regional service provider, in August. Conversely, stock selection in the cable & satellite group aided results versus the benchmark, as did lighter-than index stakes in wireline-only companies. An out-of-index stake in broadcast-satellite service provider DIRECTV was the fund’s top contributor. The stock proved to be a solid relative performer in the run-up to the company’s acquisition by AT&T in July.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, 2016
| % of fund's net assets | % of fund's net assets 6 months ago | |
| AT&T, Inc. | 22.2 | 24.0 |
| Verizon Communications, Inc. | 12.5 | 16.6 |
| American Tower Corp. | 6.2 | 4.2 |
| T-Mobile U.S., Inc. | 4.7 | 4.5 |
| Cogent Communications Group, Inc. | 4.6 | 3.9 |
| CenturyLink, Inc. | 4.4 | 3.2 |
| Level 3 Communications, Inc. | 4.3 | 4.5 |
| SBA Communications Corp. Class A | 3.9 | 4.2 |
| Telephone & Data Systems, Inc. | 2.8 | 3.0 |
| Frontier Communications Corp. | 2.4 | 2.8 |
| 68.0 |
Top Industries (% of fund's net assets)
| As of February 29, 2016 | ||
| Diversified Telecommunication Services | 69.1% | |
| Wireless Telecommunication Services | 12.4% | |
| Media | 7.8% | |
| Real Estate Investment Trusts | 7.2% | |
| Communications Equipment | 1.4% | |
| All Others* | 2.1% | |
| As of August 31, 2015 | ||
| Diversified Telecommunication Services | 70.2% | |
| Wireless Telecommunication Services | 19.1% | |
| Real Estate Investment Trusts | 5.2% | |
| Media | 2.1% | |
| Internet Software & Services | 1.0% | |
| All Others* | 2.4% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
Telecommunications Portfolio
Investments February 29, 2016
Showing Percentage of Net Assets
| Common Stocks - 98.7% | |||
| Shares | Value | ||
| Communications Equipment - 1.4% | |||
| Communications Equipment - 1.4% | |||
| NetScout Systems, Inc. (a) | 78,100 | $1,614,327 | |
| Qualcomm, Inc. | 52,600 | 2,671,554 | |
| Ruckus Wireless, Inc. (a) | 639,300 | 6,188,424 | |
| 10,474,305 | |||
| Diversified Telecommunication Services - 69.1% | |||
| Alternative Carriers - 18.1% | |||
| 8x8, Inc. (a) | 1,107,486 | 12,880,062 | |
| Cogent Communications Group, Inc. | 902,968 | 33,138,926 | |
| Globalstar, Inc. (a)(b) | 4,734,500 | 7,385,820 | |
| Iliad SA | 13,933 | 3,427,759 | |
| inContact, Inc. (a) | 984,723 | 9,128,382 | |
| Iridium Communications, Inc. (a)(b) | 756,676 | 5,243,765 | |
| Level 3 Communications, Inc. (a) | 638,467 | 30,997,573 | |
| Lumos Networks Corp. (a) | 922,878 | 11,351,399 | |
| Vonage Holdings Corp. (a) | 1,243,171 | 6,675,828 | |
| Zayo Group Holdings, Inc. (a) | 449,000 | 10,632,320 | |
| 130,861,834 | |||
| Integrated Telecommunication Services - 51.0% | |||
| AT&T, Inc. | 4,359,320 | 161,076,874 | |
| Atlantic Tele-Network, Inc. | 175,300 | 12,611,082 | |
| Bezeq The Israel Telecommunication Corp. Ltd. | 1,252,300 | 2,811,201 | |
| CenturyLink, Inc. | 1,039,578 | 31,800,691 | |
| Cincinnati Bell, Inc. (a) | 1,425,238 | 4,931,323 | |
| Consolidated Communications Holdings, Inc. | 336,498 | 7,870,688 | |
| FairPoint Communications, Inc. (a) | 253,100 | 3,804,093 | |
| Frontier Communications Corp. (b) | 3,158,783 | 17,089,016 | |
| General Communications, Inc. Class A (a) | 280,894 | 5,362,266 | |
| IDT Corp. Class B | 246,381 | 3,210,344 | |
| SBA Communications Corp. Class A (a) | 301,156 | 28,576,693 | |
| Verizon Communications, Inc. | 1,788,197 | 90,715,234 | |
| Windstream Holdings, Inc. (b) | 3,480 | 26,170 | |
| 369,885,675 | |||
| TOTAL DIVERSIFIED TELECOMMUNICATION SERVICES | 500,747,509 | ||
| Internet Software & Services - 0.8% | |||
| Internet Software & Services - 0.8% | |||
| Akamai Technologies, Inc. (a) | 400 | 21,588 | |
| Gogo, Inc. (a)(b) | 445,000 | 4,841,600 | |
| Rackspace Hosting, Inc. (a) | 44,500 | 958,085 | |
| 5,821,273 | |||
| Media - 7.8% | |||
| Cable & Satellite - 6.9% | |||
| Altice NV Class A (a) | 439,232 | 6,331,096 | |
| Cablevision Systems Corp. - NY Group Class A | 117,800 | 3,832,034 | |
| Charter Communications, Inc. Class A (a)(b) | 37,700 | 6,769,412 | |
| Comcast Corp. Class A | 185,300 | 10,697,369 | |
| Liberty Global PLC Class C (a) | 87,636 | 3,151,391 | |
| Megacable Holdings S.A.B. de CV unit | 595,800 | 2,299,729 | |
| Time Warner Cable, Inc. | 87,800 | 16,757,508 | |
| 49,838,539 | |||
| Movies & Entertainment - 0.9% | |||
| Twenty-First Century Fox, Inc. Class A | 244,400 | 6,603,688 | |
| TOTAL MEDIA | 56,442,227 | ||
| Real Estate Investment Trusts - 7.2% | |||
| Specialized REITs - 7.2% | |||
| American Tower Corp. | 490,290 | 45,204,738 | |
| Communications Sales & Leasing, Inc. | 213,400 | 4,022,590 | |
| Crown Castle International Corp. | 19,200 | 1,660,800 | |
| CyrusOne, Inc. | 32,100 | 1,272,444 | |
| 52,160,572 | |||
| Wireless Telecommunication Services - 12.4% | |||
| Wireless Telecommunication Services - 12.4% | |||
| Bharti Infratel Ltd. | 709,844 | 3,712,878 | |
| KDDI Corp. | 198,400 | 5,068,723 | |
| Leap Wireless International, Inc. rights (a) | 400 | 1,032 | |
| Millicom International Cellular SA (a) | 38,000 | 1,828,560 | |
| Shenandoah Telecommunications Co. | 270,352 | 6,531,704 | |
| Sprint Corp. (a)(b) | 3,260,785 | 11,217,100 | |
| T-Mobile U.S., Inc. (a) | 924,497 | 34,298,839 | |
| Telephone & Data Systems, Inc. | 747,564 | 19,974,910 | |
| U.S. Cellular Corp. (a) | 169,000 | 6,996,600 | |
| 89,630,346 | |||
| TOTAL COMMON STOCKS | |||
| (Cost $641,573,230) | 715,276,232 | ||
| Nonconvertible Preferred Stocks - 0.0% | |||
| Diversified Telecommunication Services - 0.0% | |||
| Integrated Telecommunication Services - 0.0% | |||
| Telefonica Brasil SA sponsored ADR | |||
| (Cost $5,221) | 500 | 4,790 | |
| Money Market Funds - 8.2% | |||
| Fidelity Cash Central Fund, 0.40% (c) | 14,840,160 | 14,840,160 | |
| Fidelity Securities Lending Cash Central Fund, 0.44% (c)(d) | 44,767,150 | 44,767,150 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $59,607,310) | 59,607,310 | ||
| TOTAL INVESTMENT PORTFOLIO - 106.9% | |||
| (Cost $701,185,761) | 774,888,332 | ||
| NET OTHER ASSETS (LIABILITIES) - (6.9)% | (49,779,351) | ||
| NET ASSETS - 100% | $725,108,981 |
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 | $17,909 |
| Fidelity Securities Lending Cash Central Fund | 418,984 |
| Total | $436,893 |
Investment Valuation
The following is a summary of the inputs used, as of February 29, 2016, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used 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 | $715,276,232 | $710,206,477 | $5,068,723 | $1,032 |
| Nonconvertible Preferred Stocks | 4,790 | 4,790 | -- | -- |
| Money Market Funds | 59,607,310 | 59,607,310 | -- | -- |
| Total Investments in Securities: | $774,888,332 | $769,818,577 | $5,068,723 | $1,032 |
See accompanying notes which are an integral part of the financial statements.
Telecommunications Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2016 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $43,307,801) — See accompanying schedule: Unaffiliated issuers (cost $641,578,451) | $715,281,022 | |
| Fidelity Central Funds (cost $59,607,310) | 59,607,310 | |
| Total Investments (cost $701,185,761) | $774,888,332 | |
| Receivable for investments sold | 188,405 | |
| Receivable for fund shares sold | 5,959,697 | |
| Dividends receivable | 80,741 | |
| Distributions receivable from Fidelity Central Funds | 46,183 | |
| Prepaid expenses | 1,516 | |
| Other receivables | 8,250 | |
| Total assets | 781,173,124 | |
| Liabilities | ||
| Payable to custodian bank | $188,406 | |
| Payable for investments purchased | 10,114,861 | |
| Payable for fund shares redeemed | 526,677 | |
| Accrued management fee | 302,918 | |
| Distribution and service plan fees payable | 11,978 | |
| Other affiliated payables | 111,583 | |
| Other payables and accrued expenses | 40,570 | |
| Collateral on securities loaned, at value | 44,767,150 | |
| Total liabilities | 56,064,143 | |
| Net Assets | $725,108,981 | |
| Net Assets consist of: | ||
| Paid in capital | $660,326,554 | |
| Undistributed net investment income | 1,545,938 | |
| Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (10,462,529) | |
| Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 73,699,018 | |
| Net Assets | $725,108,981 | |
| Calculation of Maximum Offering Price | ||
| Class A: | ||
| Net Asset Value and redemption price per share ($13,031,522 ÷ 209,111.8 shares) | $62.32 | |
| Maximum offering price per share (100/94.25 of $62.32) | $66.12 | |
| Class T: | ||
| Net Asset Value and redemption price per share ($8,279,755 ÷ 133,642.9 shares) | $61.95 | |
| Maximum offering price per share (100/96.50 of $61.95) | $64.20 | |
| Class B: | ||
| Net Asset Value and offering price per share ($265,271 ÷ 4,241.4 shares)(a) | $62.54 | |
| Class C: | ||
| Net Asset Value and offering price per share ($7,735,013 ÷ 124,557.3 shares)(a) | $62.10 | |
| Telecommunications: | ||
| Net Asset Value, offering price and redemption price per share ($689,600,429 ÷ 11,019,025.0 shares) | $62.58 | |
| Class I: | ||
| Net Asset Value, offering price and redemption price per share ($6,196,991 ÷ 99,222.3 shares) | $62.46 |
(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, 2016 | ||
| Investment Income | ||
| Dividends | $11,648,548 | |
| Interest | 26 | |
| Income from Fidelity Central Funds | 436,893 | |
| Total income | 12,085,467 | |
| Expenses | ||
| Management fee | $2,684,686 | |
| Transfer agent fees | 937,198 | |
| Distribution and service plan fees | 138,393 | |
| Accounting and security lending fees | 194,114 | |
| Custodian fees and expenses | 21,329 | |
| Independent trustees' compensation | 8,658 | |
| Registration fees | 93,120 | |
| Audit | 54,687 | |
| Legal | 5,468 | |
| Interest | 121 | |
| Miscellaneous | 4,950 | |
| Total expenses before reductions | 4,142,724 | |
| Expense reductions | (44,040) | 4,098,684 |
| Net investment income (loss) | 7,986,783 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | (82,853) | |
| Foreign currency transactions | (5,146) | |
| Total net realized gain (loss) | (87,999) | |
| Change in net unrealized appreciation (depreciation) on: Investment securities | 9,808,309 | |
| Assets and liabilities in foreign currencies | (749) | |
| Total change in net unrealized appreciation (depreciation) | 9,807,560 | |
| Net gain (loss) | 9,719,561 | |
| Net increase (decrease) in net assets resulting from operations | $17,706,344 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 29, 2016 | Year ended February 28, 2015 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $7,986,783 | $6,193,869 |
| Net realized gain (loss) | (87,999) | 7,829,307 |
| Change in net unrealized appreciation (depreciation) | 9,807,560 | 28,387,304 |
| Net increase (decrease) in net assets resulting from operations | 17,706,344 | 42,410,480 |
| Distributions to shareholders from net investment income | (6,674,056) | (13,679,321) |
| Distributions to shareholders from net realized gain | (4,168,398) | – |
| Total distributions | (10,842,454) | (13,679,321) |
| Share transactions - net increase (decrease) | 345,924,755 | (19,703,086) |
| Redemption fees | 10,972 | 3,706 |
| Total increase (decrease) in net assets | 352,799,617 | 9,031,779 |
| Net Assets | ||
| Beginning of period | 372,309,364 | 363,277,585 |
| End of period (including undistributed net investment income of $1,545,938 and undistributed net investment income of $262,486, respectively) | $725,108,981 | $372,309,364 |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Telecommunications Portfolio Class A
| Years ended February 28, | 2016 A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $63.26 | $58.71 | $51.58 | $46.12 | $46.93 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .81 | .76 | 1.76C | .99 | .56 |
| Net realized and unrealized gain (loss) | (.76)D | 5.83 | 6.48 | 5.43 | (.86) |
| Total from investment operations | .05 | 6.59 | 8.24 | 6.42 | (.30) |
| Distributions from net investment income | (.54) | (2.04) | (1.11) | (.96) | (.51) |
| Distributions from net realized gain | (.45) | – | (.01) | – | – |
| Total distributions | (.99) | (2.04) | (1.11)E | (.96) | (.51) |
| Redemption fees added to paid in capitalB,F | – | – | – | – | – |
| Net asset value, end of period | $62.32 | $63.26 | $58.71 | $51.58 | $46.12 |
| Total ReturnG,H | .16% | 11.54% | 16.00% | 13.97% | (.54)% |
| Ratios to Average Net AssetsI,J | |||||
| Expenses before reductions | 1.15% | 1.15% | 1.18% | 1.18% | 1.20% |
| Expenses net of fee waivers, if any | 1.15% | 1.15% | 1.18% | 1.18% | 1.20% |
| Expenses net of all reductions | 1.15% | 1.15% | 1.15% | 1.17% | 1.18% |
| Net investment income (loss) | 1.33% | 1.26% | 3.08%C | 2.01% | 1.21% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $13,032 | $11,052 | $7,712 | $6,449 | $4,677 |
| Portfolio turnover rateK | 51% | 94%L | 111% | 76% | 72% |
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 $.95 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been 1.43%.
D 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.
E Total distributions of $1.11 per share is comprised of distributions from net investment income of $1.106 and distributions from net realized gain of $.005 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.
Financial Highlights — Telecommunications Portfolio Class T
| Years ended February 28, | 2016 A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $63.04 | $58.50 | $51.41 | $46.01 | $46.81 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .61 | .57 | 1.59C | .85 | .42 |
| Net realized and unrealized gain (loss) | (.76)D | 5.81 | 6.44 | 5.39 | (.84) |
| Total from investment operations | (.15) | 6.38 | 8.03 | 6.24 | (.42) |
| Distributions from net investment income | (.49) | (1.84) | (.94) | (.84) | (.38) |
| Distributions from net realized gain | (.45) | – | (.01) | – | – |
| Total distributions | (.94) | (1.84) | (.94)E | (.84) | (.38) |
| Redemption fees added to paid in capitalB,F | – | – | – | – | – |
| Net asset value, end of period | $61.95 | $63.04 | $58.50 | $51.41 | $46.01 |
| Total ReturnG,H | (.16)% | 11.19% | 15.64% | 13.61% | (.82)% |
| Ratios to Average Net AssetsI,J | |||||
| Expenses before reductions | 1.47% | 1.47% | 1.48% | 1.48% | 1.49% |
| Expenses net of fee waivers, if any | 1.47% | 1.47% | 1.48% | 1.48% | 1.49% |
| Expenses net of all reductions | 1.46% | 1.46% | 1.45% | 1.46% | 1.47% |
| Net investment income (loss) | 1.01% | .94% | 2.78%C | 1.72% | .92% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $8,280 | $5,095 | $4,344 | $4,237 | $2,702 |
| Portfolio turnover rateK | 51% | 94%L | 111% | 76% | 72% |
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 $.94 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been 1.13%.
D 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.
E Total distributions of $.94 per share is comprised of distributions from net investment income of $.939 and distributions from net realized gain of $.005 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.
Financial Highlights — Telecommunications Portfolio Class B
| Years ended February 28, | 2016 A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $63.45 | $58.77 | $51.63 | $46.14 | $46.93 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .34 | .29 | 1.33C | .62 | .21 |
| Net realized and unrealized gain (loss) | (.76)D | 5.84 | 6.48 | 5.42 | (.83) |
| Total from investment operations | (.42) | 6.13 | 7.81 | 6.04 | (.62) |
| Distributions from net investment income | (.04) | (1.45) | (.66) | (.55) | (.17) |
| Distributions from net realized gain | (.45) | – | (.01) | – | – |
| Total distributions | (.49) | (1.45) | (.67) | (.55) | (.17) |
| Redemption fees added to paid in capitalB,E | – | – | – | – | – |
| Net asset value, end of period | $62.54 | $63.45 | $58.77 | $51.63 | $46.14 |
| Total ReturnF,G | (.63)% | 10.67% | 15.13% | 13.11% | (1.29)% |
| Ratios to Average Net AssetsH,I | |||||
| Expenses before reductions | 1.93% | 1.93% | 1.93% | 1.93% | 1.95% |
| Expenses net of fee waivers, if any | 1.93% | 1.93% | 1.93% | 1.93% | 1.95% |
| Expenses net of all reductions | 1.92% | 1.92% | 1.91% | 1.92% | 1.93% |
| Net investment income (loss) | .56% | .49% | 2.32%C | 1.26% | .47% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $265 | $409 | $546 | $576 | $596 |
| Portfolio turnover rateJ | 51% | 94%K | 111% | 76% | 72% |
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 $.95 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .67%.
D 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.
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 contingent deferred sales charge.
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.
Financial Highlights — Telecommunications Portfolio Class C
| Years ended February 28, | 2016 A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $63.04 | $58.54 | $51.47 | $46.02 | $46.89 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .36 | .34 | 1.36C | .63 | .22 |
| Net realized and unrealized gain (loss) | (.75)D | 5.80 | 6.46 | 5.41 | (.84) |
| Total from investment operations | (.39) | 6.14 | 7.82 | 6.04 | (.62) |
| Distributions from net investment income | (.10) | (1.64) | (.74) | (.59) | (.25) |
| Distributions from net realized gain | (.45) | – | (.01) | – | – |
| Total distributions | (.55) | (1.64) | (.75) | (.59) | (.25) |
| Redemption fees added to paid in capitalB,E | – | – | – | – | – |
| Net asset value, end of period | $62.10 | $63.04 | $58.54 | $51.47 | $46.02 |
| Total ReturnF,G | (.57)% | 10.75% | 15.20% | 13.14% | (1.27)% |
| Ratios to Average Net AssetsH,I | |||||
| Expenses before reductions | 1.89% | 1.85% | 1.88% | 1.90% | 1.93% |
| Expenses net of fee waivers, if any | 1.89% | 1.85% | 1.88% | 1.90% | 1.93% |
| Expenses net of all reductions | 1.88% | 1.85% | 1.85% | 1.89% | 1.91% |
| Net investment income (loss) | .60% | .56% | 2.38%C | 1.29% | .48% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $7,735 | $7,074 | $5,523 | $4,353 | $3,514 |
| Portfolio turnover rateJ | 51% | 94%K | 111% | 76% | 72% |
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 $.94 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .73%.
D 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.
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 contingent deferred sales charge.
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.
Financial Highlights — Telecommunications Portfolio
| Years ended February 28, | 2016 A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $63.54 | $58.94 | $51.75 | $46.26 | $47.07 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | 1.02 | .96 | 1.96C | 1.15 | .70 |
| Net realized and unrealized gain (loss) | (.77)D | 5.85 | 6.51 | 5.43 | (.86) |
| Total from investment operations | .25 | 6.81 | 8.47 | 6.58 | (.16) |
| Distributions from net investment income | (.76) | (2.21) | (1.28) | (1.09) | (.65) |
| Distributions from net realized gain | (.45) | – | (.01) | – | – |
| Total distributions | (1.21) | (2.21) | (1.28)E | (1.09) | (.65) |
| Redemption fees added to paid in capitalB,F | – | – | – | – | – |
| Net asset value, end of period | $62.58 | $63.54 | $58.94 | $51.75 | $46.26 |
| Total ReturnG | .49% | 11.90% | 16.40% | 14.30% | (.23)% |
| Ratios to Average Net AssetsH,I | |||||
| Expenses before reductions | .82% | .83% | .85% | .87% | .90% |
| Expenses net of fee waivers, if any | .81% | .83% | .85% | .87% | .90% |
| Expenses net of all reductions | .81% | .82% | .82% | .85% | .88% |
| Net investment income (loss) | 1.67% | 1.58% | 3.41%C | 2.33% | 1.52% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $689,600 | $346,174 | $343,548 | $377,841 | $342,262 |
| Portfolio turnover rateJ | 51% | 94%K | 111% | 76% | 72% |
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 $.95 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been 1.76%.
D 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.
E Total distributions of $1.28 per share is comprised of distributions from net investment income of $1.275 and distributions from net realized gain of $.005 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.
Financial Highlights — Telecommunications Portfolio Class I
| Years ended February 28, | 2016 A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $63.38 | $58.80 | $51.65 | $46.20 | $47.02 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | 1.02 | .94 | 1.93C | 1.17 | .70 |
| Net realized and unrealized gain (loss) | (.76)D | 5.83 | 6.48 | 5.42 | (.88) |
| Total from investment operations | .26 | 6.77 | 8.41 | 6.59 | (.18) |
| Distributions from net investment income | (.73) | (2.19) | (1.25) | (1.14) | (.64) |
| Distributions from net realized gain | (.45) | – | (.01) | – | – |
| Total distributions | (1.18) | (2.19) | (1.26) | (1.14) | (.64) |
| Redemption fees added to paid in capitalB,E | – | – | – | – | – |
| Net asset value, end of period | $62.46 | $63.38 | $58.80 | $51.65 | $46.20 |
| Total ReturnF | .51% | 11.85% | 16.30% | 14.33% | (.26)% |
| Ratios to Average Net AssetsG,H | |||||
| Expenses before reductions | .82% | .86% | .91% | .85% | .89% |
| Expenses net of fee waivers, if any | .82% | .86% | .91% | .85% | .89% |
| Expenses net of all reductions | .81% | .85% | .88% | .83% | .87% |
| Net investment income (loss) | 1.67% | 1.55% | 3.35%C | 2.35% | 1.52% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $6,197 | $2,505 | $1,604 | $2,641 | $1,022 |
| Portfolio turnover rateI | 51% | 94%J | 111% | 76% | 72% |
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 $.95 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been 1.70%.
D 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.
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.
Notes to Financial Statements
For the period ended February 29, 2016
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 T, Class C, Telecommunications and Class I(formerly Institutional Class) shares, each of which, along with Class B shares, has equal rights as to assets and voting privileges. Class B shares are closed to new accounts and additional purchases, except for exchanges and reinvestments. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after maximum a holding period of seven years from the initial date of purchase.
During the period, the Board of Trustees approved the conversion of all existing Class B shares into Class A shares, effective on or about July 1, 2016, regardless of the length of times shares have been held.
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 Fidelity Investments Money Management, Inc. (FIMM), an affiliate of the investment adviser. Annualized expenses of the Money Market Central Funds as of their most recent shareholder report date are less than .005%.
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 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 Fidelity SelectCo, LLC (SelectCo) Fair Value Committee (the Committee). 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. Utilizing these techniques may result in transfers between Level 1 and Level 2. 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, 2016, 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 may 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. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. Subsequent to ex-dividend date the Fund determines the components of these distributions, based upon receipt of tax filings or other correspondence relating to the underlying investment. 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.
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, 2016, 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 dividends 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 transaction, deferred trustees compensation, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
| Gross unrealized appreciation | $87,574,989 |
| Gross unrealized depreciation | (19,550,843) |
| Net unrealized appreciation (depreciation) on securities | $68,024,146 |
| Tax Cost | $706,864,186 |
The tax-based components of distributable earnings as of period end were as follows:
| Undistributed ordinary income | $1,546,307 |
| Net unrealized appreciation (depreciation) on securities and other investments | $68,020,593 |
The Fund elected to defer to its next fiscal year approximately $4,784,105 of capital losses recognized during the period November 1, 2015 to February 29, 2016.
The tax character of distributions paid was as follows:
| February 29, 2016 | February 28, 2015 | |
| Ordinary Income | $7,554,050 | $ 13,679,321 |
| Long-term Capital Gains | 3,288,404 | – |
| Total | $10,842,454 | $ 13,679,321 |
Trading (Redemption) Fees. Shares held by investors in the Fund less than 30 days may be subject to a redemption fee equal to .75% of the NAV of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Fund and accounted for as an addition to paid in capital.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $593,783,140 and $248,822,719, respectively.
5. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity SelectCo, 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 .25% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by Fidelity Management & Research Company (FMR) and the investment adviser. 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 .55% 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 Corporation (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% | $28,965 | $521 |
| Class T | .25% | .25% | 30,284 | – |
| Class B | .75% | .25% | 3,185 | 2,389 |
| Class C | .75% | .25% | 75,959 | 16,767 |
| $138,393 | $19,677 |
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 T 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 T, Class B, and Class C redemptions. The deferred sales charges range from 5.00% to 1.00% for Class B shares, 1.00% for Class C shares, 1.00% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained by FDC | |
| Class A | $12,523 |
| Class T | 2,208 |
| Class B(a) | 54 |
| Class C(a) | 607 |
| $15,392 |
(a) When Class B and 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, Inc., (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. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements.
For the period, transfer agent fees for each class were as follows:
| Amount | % of Class-Level Average Net Assets | |
| Class A | $31,945 | .28 |
| Class T | 20,483 | .34 |
| Class B | 963 | .30 |
| Class C | 19,956 | .26 |
| Telecommunications | 857,974 | .19 |
| Class I | 5,877 | .19 |
| $937,198 |
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. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions 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 $19,509 for the period.
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other registered investment companies having management contracts with FMR or other affiliated entities of FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. The Fund's 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 |
| Borrower | $5,833,500 | .37% | $121 |
Interfund Trades. The Fund 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.
The Fund participates 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 Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $636 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, the Fund did not borrow on this line of credit.
7. Security Lending.
The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. 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. 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. Total security lending income during the period amounted to $418,984.
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 $30,812 for the period.
In addition, during the period the investment adviser reimbursed and/or waived a portion of fund-level operating expenses in the amount of $3,782 and a portion of class-level operating expenses as follows:
| Amount | |
| Class A | $152 |
| Class T | 11 |
| Class B | 1 |
| Class C | 135 |
| Telecommunications | 9,106 |
| Class I | 41 |
| $9,446 |
9. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
| Year ended February 29, 2016 | Year ended February 28, 2015 | |
| From net investment income | ||
| Class A | $101,836 | $309,863 |
| Class T | 64,003 | 143,116 |
| Class B | 172 | 12,248 |
| Class C | 12,147 | 161,299 |
| Telecommunications | 6,462,442 | 12,985,170 |
| Class I | 33,456 | 67,625 |
| Total | $6,674,056 | $13,679,321 |
| From net realized gain | ||
| Class A | $85,263 | $– |
| Class T | 59,140 | – |
| Class B | 2,151 | – |
| Class C | 53,589 | – |
| Telecommunications | 3,948,074 | – |
| Class I | 20,181 | – |
| Total | $4,168,398 | $– |
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, 2016 | Year ended February 28, 2015 | Year ended February 29, 2016 | Year ended February 28, 2015 | |
| Class A | ||||
| Shares sold | 91,221 | 79,279 | $5,573,645 | $4,786,534 |
| Reinvestment of distributions | 3,029 | 5,091 | 178,902 | 297,550 |
| Shares redeemed | (59,841) | (41,031) | (3,630,540) | (2,466,354) |
| Net increase (decrease) | 34,409 | 43,339 | $2,122,007 | $2,617,730 |
| Class T | ||||
| Shares sold | 70,704 | 20,637 | $4,245,232 | $1,237,395 |
| Reinvestment of distributions | 2,087 | 2,409 | 122,479 | 139,987 |
| Shares redeemed | (19,976) | (16,465) | (1,205,139) | (994,017) |
| Net increase (decrease) | 52,815 | 6,581 | $3,162,572 | $383,365 |
| Class B | ||||
| Shares sold | 129 | 45 | $7,453 | $2,624 |
| Reinvestment of distributions | 39 | 197 | 2,323 | 11,445 |
| Shares redeemed | (2,377) | (3,091) | (146,261) | (186,477) |
| Net increase (decrease) | (2,209) | (2,849) | $(136,485) | $(172,408) |
| Class C | ||||
| Shares sold | 48,243 | 28,734 | $2,966,823 | $1,731,696 |
| Reinvestment of distributions | 861 | 2,043 | 50,662 | 118,683 |
| Shares redeemed | (36,747) | (12,919) | (2,199,789) | (773,747) |
| Net increase (decrease) | 12,357 | 17,858 | $817,696 | $1,076,632 |
| Telecommunications | ||||
| Shares sold | 6,996,236 | 3,400,370 | $423,896,658 | $205,982,254 |
| Reinvestment of distributions | 169,238 | 212,695 | 10,035,177 | 12,494,070 |
| Shares redeemed | (1,594,679) | (3,993,893)(a) | (97,516,561) | (242,841,980)(a) |
| Net increase (decrease) | 5,570,795 | (380,828) | $336,415,274 | $(24,365,656) |
| Class I | ||||
| Shares sold | 91,633 | 29,046 | $5,507,038 | $1,764,278 |
| Reinvestment of distributions | 779 | 956 | 46,233 | 56,138 |
| Shares redeemed | (32,720) | (17,754) | (2,009,580) | (1,063,165) |
| Net increase (decrease) | 59,692 | 12,248 | $3,543,691 | $757,251 |
(a) Amount includes in-kind redemptions.
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.
At the end of the period, Fidelity VIP FundsManager 50% Portfolio and Fidelity VIP FundsManager 60% Portfolio were the owners of record of approximately 13% and 17%, respectively of the total outstanding shares of the Fund. Mutual funds managed by the investment adviser or its affiliates were the owners of record, in the aggregate, of approximately 43% of the total outstanding shares of the Fund.
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Select Portfolios and the Shareholders of Consumer Staples Portfolio, Gold Portfolio, Materials Portfolio and Telecommunications Portfolio:
In our opinion, the accompanying statements of assets and liabilities (consolidated statement of assets and liabilities for Gold Portfolio), including the schedules of investments (consolidated schedule of investments for Gold Portfolio), and the related statements of operations (consolidated statement of operations for Gold Portfolio) and of changes in net assets (consolidated changes in net assets for Gold Portfolio) and the financial highlights (consolidated financial highlights for Gold Portfolio) present fairly, in all material respects, the financial positions of Consumer Staples Portfolio, Gold Portfolio, Materials Portfolio and Telecommunications Portfolio (funds of Fidelity Select Portfolios) (the "Funds") at February 29, 2016, 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 then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Funds' management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at February 29, 2016 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 19, 2016
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. Each of the Trustees oversees 75 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 1-877-208-0098.
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. Brian B. Hogan 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. Michael E. Wiley 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 sector portfolios. Other Boards oversee Fidelity's equity and high income funds, and Fidelity's investment grade bond, money market, and asset allocation funds. 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 SelectCo 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 SelectCo, 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 and Audit Committees. Appropriate personnel, including but not limited to the funds' Chief Compliance Officer (CCO), SelectCo's internal auditor, the independent accountants, the funds' Treasurer and portfolio management personnel, make periodic reports to the Board's committees, as appropriate. 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+
Brian B. Hogan (1964)
Year of Election or Appointment: 2014
Trustee
Chairman of the Board of Trustees
Mr. Hogan also serves as Trustee or Vice President of other funds. Mr. Hogan serves as a Director of FMR Investment Management (U.K.) Limited (investment adviser firm, 2015-present) and Fidelity SelectCo, LLC (investment adviser firm, 2014-present) and President of the Equity Division of FMR (investment adviser firm, 2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager.
* 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 SelectCo.��
+ 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+
David A. Rosow (1942)
Year of Election or Appointment: 2013
Trustee
Mr. Rosow also serves as Trustee of other Fidelity® funds. Prior to his retirement in 2006, Mr. Rosow was the Chief Executive Officer, owner and operator of a number of private companies, which encompassed oil refining, drilling and marketing of petroleum products (including specialty petroleum products), the recreation industry, and real estate development. Mr. Rosow currently serves as a Director of Oxbow Carbon LLC (upgraders, marketers, and distributors of petroleum byproducts of the oil refining process, 2015-present) and Oxbridge Academy of the Palm Beaches (2015-present). Previously, Mr. Rosow served on the Fairfield Country Day School Board for 27 years, including as its President for 3 years, stepping down in 2006, as Lead Director and Chairman of the Audit Committee of Hudson United Bancorp (1996-2006), Chairman of the Board of Westport Bank and Trust (1992-1996), and as a Director of TD Banknorth (2006-2007). In addition, Mr. Rosow served as a member (2008-2014) and President (2009-2014) of the Town Council of Palm Beach, Florida. Mr. Rosow also served as a Member of the Advisory Board of other Fidelity® funds (2012-2013).
Garnett A. Smith (1947)
Year of Election or Appointment: 2013
Trustee
Mr. Smith also serves as Trustee of other Fidelity® funds. Prior to Mr. Smith's retirement, he served as Chairman and Chief Executive Officer of Inbrand Corp. (manufacturer of personal absorbent products, 1990-1997). He also served as President (1986-1990) of Inbrand Corp. Prior to his employment with Inbrand Corp., he was employed by a retail fabric chain and North Carolina National Bank. In addition, Mr. Smith served as a Member of the Advisory Board of other Fidelity® funds (2012-2013) and as a board member of the Jackson Hole Land Trust (2009-2012).
Michael E. Wiley (1950)
Year of Election or Appointment: 2008
Trustee
Chairman of the Independent Trustees
Mr. Wiley also serves as Trustee of other Fidelity® funds. Mr. Wiley serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), a Director of Tesoro Logistics LP (natural resources logistics, 2015-present), and a Director of Bill Barrett Corporation (exploration and production, 2005-present). In addition, Mr. Wiley also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a Trustee of other Fidelity® funds (2008-2013), as a Director of Asia Pacific Exploration Consolidated (international oil and gas exploration and production, 2008-2013), as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-2010), as a Senior Energy Advisor of Katzenbach Partners, LLC (consulting, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production, 2001-2005).
+ 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:
Except for Anthony R. Rochte, correspondence intended for an officer may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210. Correspondence intended for Mr. Rochte may be sent to SelectCo, 1225 17th Street, Denver, Colorado 80202-5541. Officers appear below in alphabetical order.
Name, Year of Birth; Principal Occupation
Donald F. Donahue (1950)
Year of Election or Appointment: 2015
Member of the Advisory Board
Mr. Donahue also serves as a Member of the Advisory Board of other Fidelity® funds. Mr. Donahue is President and Chief Executive Officer of Miranda Partners, LLC (risk consulting for the financial services industry, 2012-present) and a consultant for the Institute for Defense Analyses (national security, 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 serves as a Member and Treasurer of the Board of Directors of United Way of New York (2012-present), Member of the Board of Directors of NYC Leadership Academy (2012-present) and Physicians for Human Rights (2013-present), and Member of the Board of Advisors of Ripple Labs, Inc. (financial services, 2015-present). He also served as Chairman (2010-2012) and Member of the Board of Directors (2012-2013) of Omgeo, LLC (financial services) and Member of the Board of Directors of XBRL US (financial services non-profit, 2009-2012) and the International Securities Services Association (2009-2012).
Christopher S. Bartel (1971)
Year of Election or Appointment: 2009
Vice President
Mr. Bartel also serves as Vice President of other funds. Mr. Bartel serves as a Director of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2016-present) and Fidelity Management & Research (Hong Kong) (investment adviser firm, 2012-present) and Head of Global Equity Research (2010-present). Previously, Mr. Bartel served as a Director, President, and Chief Executive Officer of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2012-2016), Senior Vice President of Equity Research (2009-2010), Managing Director of Research (2006-2009), and an analyst and portfolio manager (2000-2006).
Marc R. Bryant (1966)
Year of Election or Appointment: 2013
Secretary and Chief Legal Officer (CLO)
Mr. Bryant also serves as Secretary and CLO of other funds. Mr. Bryant serves as CLO, Secretary, and Senior Vice President of Fidelity Management & Research Company (investment adviser firm, 2015-present) and FMR Co., Inc. (investment adviser firm, 2015-present); Secretary of Fidelity SelectCo, LLC (investment adviser firm, 2015-present) and Fidelity Investments Money Management, Inc. (investment adviser firm, 2015-present); and CLO of Fidelity Management & Research (Hong Kong) Limited and FMR Investment Management (U.K.) Limited (investment adviser firms, 2015-present) and Fidelity Management & Research (Japan) Limited (investment adviser firm, 2016-present). He is Senior Vice President and Deputy General Counsel of FMR LLC (diversified financial services company). Previously, Mr. Bryant served as Secretary and CLO of Fidelity Rutland Square Trust II (2010-2014) and Assistant Secretary of Fidelity's Fixed Income and Asset Allocation Funds (2013-2015). Prior to joining Fidelity Investments, Mr. Bryant served as a Senior Vice President and the Head of Global Retail Legal for AllianceBernstein L.P. (2006-2010), and as the General Counsel for ProFund Advisors LLC (2001-2006).
William C. Coffey (1969)
Year of Election or Appointment: 2009
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 Vice President and Associate General Counsel of FMR LLC (2005-2009).
Jonathan Davis (1968)
Year of Election or Appointment: 2010
Assistant Treasurer
Mr. Davis also serves as Assistant Treasurer of other funds, 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).
Adrien E. Deberghes (1967)
Year of Election or Appointment: 2013
President and Treasurer
Mr. Deberghes also serves as an officer of other funds. He is an employee of Fidelity Investments (2008-present). Prior to joining Fidelity Investments, Mr. Deberghes was Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005). Previously, Mr. Deberghes served in other fund officer roles.
Joseph DeSantis (1959)
Year of Election or Appointment: 2015
Vice President
Mr. DeSantis also serves as Vice President of other funds. Mr. DeSantis serves as Group Chief Investment Officer, Equities (2010-present) and is an employee of Fidelity Investments.
Stephanie J. Dorsey (1969)
Year of Election or Appointment: 2010
Assistant Treasurer
Ms. Dorsey also serves as an officer of other funds. She is an employee of Fidelity Investments (2008-present) and has served in other fund officer roles. Prior to joining Fidelity Investments, Ms. Dorsey served as Treasurer (2004-2008) of the JPMorgan Mutual Funds and Vice President (2004-2008) of JPMorgan Chase Bank.
Howard J. Galligan III (1966)
Year of Election or Appointment: 2014
Chief Financial Officer
Mr. Galligan also serves as Chief Financial Officer of other funds. Mr. Galligan serves as President of Fidelity Pricing and Cash Management Services (FPCMS) (2014-present) and as a Director of Strategic Advisers, Inc. (investment adviser firm, 2008-present). Previously, Mr. Galligan served as Chief Administrative Officer of Asset Management (2011-2014) and Chief Operating Officer and Senior Vice President of Investment Support for Strategic Advisers, Inc. (2003-2011).
Scott C. Goebel (1968)
Year of Election or Appointment: 2015
Vice President
Mr. Goebel serves as Vice President of other funds and is an employee of Fidelity Investments (2001-present). Previously, Mr. Goebel served as Secretary of Fidelity SelectCo, LLC (investment adviser firm, 2013-2015), Fidelity Investments Money Management, Inc. (FIMM) (investment adviser firm, 2010-2015), and Fidelity Research and Analysis Company (FRAC) (investment adviser firm, 2010-2015); General Counsel, Secretary, and Senior Vice President of Fidelity Management & Research Company (investment adviser firm, 2008-2015) and FMR Co., Inc. (investment adviser firm, 2008-2015); Assistant Secretary of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2008-2015) and Fidelity Management & Research (U.K.) Inc. (investment adviser firm, 2008-2015); Chief Legal Officer (CLO) of Fidelity Management & Research (Hong Kong) Limited (investment adviser firm, 2008-2015); Secretary and CLO of certain Fidelity® funds (2008-2015); Assistant Secretary of FIMM (2008-2010), FRAC (2008-2010), and certain funds (2007-2008); and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007).
James D. Gryglewicz (1972)
Year of Election or Appointment: 2014
Chief Compliance Officer
Mr. Gryglewicz also serves as Chief Compliance Officer of other funds. Mr. Gryglewicz serves as Compliance Officer of Strategic Advisers, Inc. (investment adviser firm, 2015-present) and Fidelity SelectCo, LLC (investment adviser firm, 2014-present), Senior Vice President of Asset Management Compliance (2009-present), and is an employee of Fidelity Investments (2004-present).
Brian B. Hogan (1964)
Year of Election or Appointment: 2009
Vice President
Mr. Hogan also serves as Trustee or Vice President of other funds. Mr. Hogan serves as a Director of FMR Investment Management (U.K.) Limited (investment adviser firm, 2015-present) and Fidelity SelectCo, LLC (investment adviser firm, 2014-present) and President of the Equity Division of FMR (investment adviser firm, 2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager.
Chris Maher (1972)
Year of Election or Appointment: 2013
Assistant Treasurer
Mr. Maher serves as Assistant Treasurer of other funds. Mr. Maher is Vice President of Valuation Oversight and is an employee of Fidelity Investments. Previously, Mr. Maher served as 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).
John F. Papandrea (1972)
Year of Election or Appointment: 2016
Anti-Money Laundering (AML) Officer
Mr. Papandrea also serves as AML Officer of other funds. Mr. Papandrea is Vice President of FMR LLC (diversified financial services company, 2008-present) and is an employee of Fidelity Investments (2005-present).
Kenneth B. Robins (1969)
Year of Election or Appointment: 2013
Deputy Treasurer
Mr. Robins also serves as an officer of other funds. Mr. Robins serves as Executive Vice President of Fidelity Investments Money Management, Inc. (FIMM) (investment adviser firm, 2013-present) and is an employee of Fidelity Investments (2004-present). Previously, Mr. Robins served in other fund officer roles.
Anthony R. Rochte (1968)
Year of Election or Appointment: 2013
Vice President
Mr. Rochte also serves as Vice President of other funds. Mr. Rochte serves as President of Fidelity SelectCo, LLC (investment adviser firm, 2012-present) and is an employee of Fidelity Investments (2012-present). Prior to joining Fidelity Investments, Mr. Rochte served as Senior Managing Director and head of State Street Global Advisors' North American Intermediary Business Group (2006-2012).
Stacie M. Smith (1974)
Year of Election or Appointment: 2013
Assistant Treasurer
Ms. Smith also serves as an officer of other funds. She 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 (1996-2009). Previously, Ms. Smith served as Deputy Treasurer of certain Fidelity funds (2013-2016).
Renee Stagnone (1975)
Year of Election or Appointment: 2013
Deputy Treasurer
Ms. Stagnone also serves as an officer of other funds. Ms. Stagnone is an employee of Fidelity Investments (1997-present). Previously, Ms. Stagnone served as Deputy Treasurer of certain Fidelity funds (2013-2016).
Joseph F. Zambello (1957)
Year of Election or Appointment: 2011
Deputy Treasurer
Mr. Zambello also serves as Deputy Treasurer of other funds. Mr. Zambello is an employee of Fidelity Investments (1991-present). Previously, Mr. Zambello served as Deputy Treasurer of certain Fidelity funds (2011-2016), Vice President of the Program Management Group of FMR (investment adviser firm, 2009-2011), and Vice President of the Transfer Agent Oversight Group (2005-2009).
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, redemption fees 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, 2015 to February 29, 2016).
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. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. 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. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. 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, 2015 | Ending Account Value February 29, 2016 | Expenses Paid During Period-B September 1, 2015 to February 29, 2016 | |
| Consumer Staples Portfolio | ||||
| Class A | 1.04% | |||
| Actual | $1,000.00 | $1,070.60 | $5.35 | |
| Hypothetical-C | $1,000.00 | $1,019.69 | $5.22 | |
| Class T | 1.32% | |||
| Actual | $1,000.00 | $1,068.90 | $6.79 | |
| Hypothetical-C | $1,000.00 | $1,018.30 | $6.62 | |
| Class B | 1.81% | |||
| Actual | $1,000.00 | $1,066.40 | $9.30 | |
| Hypothetical-C | $1,000.00 | $1,015.86 | $9.07 | |
| Class C | 1.79% | |||
| Actual | $1,000.00 | $1,066.50 | $9.20 | |
| Hypothetical-C | $1,000.00 | $1,015.96 | $8.97 | |
| Consumer Staples | .76% | |||
| Actual | $1,000.00 | $1,071.90 | $3.92 | |
| Hypothetical-C | $1,000.00 | $1,021.08 | $3.82 | |
| Class I | .78% | |||
| Actual | $1,000.00 | $1,072.00 | $4.02 | |
| Hypothetical-C | $1,000.00 | $1,020.98 | $3.92 | |
| Gold Portfolio | ||||
| Class A | 1.18% | |||
| Actual | $1,000.00 | $1,306.30 | $6.77 | |
| Hypothetical-C | $1,000.00 | $1,019.00 | $5.92 | |
| Class T | 1.48% | |||
| Actual | $1,000.00 | $1,304.10 | $8.48 | |
| Hypothetical-C | $1,000.00 | $1,017.50 | $7.42 | |
| Class B | 1.93% | |||
| Actual | $1,000.00 | $1,301.50 | $11.04 | |
| Hypothetical-C | $1,000.00 | $1,015.27 | $9.67 | |
| Class C | 1.92% | |||
| Actual | $1,000.00 | $1,302.10 | $10.99 | |
| Hypothetical-C | $1,000.00 | $1,015.32 | $9.62 | |
| Gold | .93% | |||
| Actual | $1,000.00 | $1,308.30 | $5.34 | |
| Hypothetical-C | $1,000.00 | $1,020.24 | $4.67 | |
| Class I | .87% | |||
| Actual | $1,000.00 | $1,308.10 | $4.99 | |
| Hypothetical-C | $1,000.00 | $1,020.54 | $4.37 | |
| Materials Portfolio | ||||
| Class A | 1.06% | |||
| Actual | $1,000.00 | $900.90 | $5.01 | |
| Hypothetical-C | $1,000.00 | $1,019.59 | $5.32 | |
| Class T | 1.38% | |||
| Actual | $1,000.00 | $899.60 | $6.52 | |
| Hypothetical-C | $1,000.00 | $1,018.00 | $6.92 | |
| Class B | 1.89% | |||
| Actual | $1,000.00 | $897.30 | $8.92 | |
| Hypothetical-C | $1,000.00 | $1,015.47 | $9.47 | |
| Class C | 1.82% | |||
| Actual | $1,000.00 | $897.70 | $8.59 | |
| Hypothetical-C | $1,000.00 | $1,015.81 | $9.12 | |
| Materials | .82% | |||
| Actual | $1,000.00 | $902.10 | $3.88 | |
| Hypothetical-C | $1,000.00 | $1,020.79 | $4.12 | |
| Class I | .78% | |||
| Actual | $1,000.00 | $902.20 | $3.69 | |
| Hypothetical-C | $1,000.00 | $1,020.98 | $3.92 | |
| Telecommunications Portfolio | ||||
| Class A | 1.14% | |||
| Actual | $1,000.00 | $1,067.60 | $5.86 | |
| Hypothetical-C | $1,000.00 | $1,019.19 | $5.72 | |
| Class T | 1.45% | |||
| Actual | $1,000.00 | $1,066.00 | $7.45 | |
| Hypothetical-C | $1,000.00 | $1,017.65 | $7.27 | |
| Class B | 1.91% | |||
| Actual | $1,000.00 | $1,063.30 | $9.80 | |
| Hypothetical-C | $1,000.00 | $1,015.37 | $9.57 | |
| Class C | 1.86% | |||
| Actual | $1,000.00 | $1,063.70 | $9.54 | |
| Hypothetical-C | $1,000.00 | $1,015.61 | $9.32 | |
| Telecommunications | .80% | |||
| Actual | $1,000.00 | $1,069.20 | $4.12 | |
| Hypothetical-C | $1,000.00 | $1,020.89 | $4.02 | |
| Class I | .78% | |||
| Actual | $1,000.00 | $1,069.50 | $4.01 | |
| 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 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:
| Consumer Staples Portfolio | Pay Date | Record Date | Dividends | Capital Gains |
| Class A | 04/18/16 | 04/15/16 | $0.122 | $0.592 |
| Class T | 04/18/16 | 04/15/16 | $0.084 | $0.592 |
| Class B | 04/18/16 | 04/15/16 | $0.000 | $0.592 |
| Class C | 04/18/16 | 04/15/16 | $0.024 | $0.592 |
| Gold Portfolio | Pay Date | Record Date | Dividends | Capital Gains |
| Class A | 04/18/16 | 04/15/16 | $0.000 | $0.209 |
| Class T | 04/18/16 | 04/15/16 | $0.000 | $0.165 |
| Class B | 04/18/16 | 04/15/16 | $0.000 | $0.000 |
| Class C | 04/18/16 | 04/15/16 | $0.000 | $0.142 |
| Materials Portfolio | Pay Date | Record Date | Dividends | Capital Gains |
| Class A | 04/18/16 | 04/15/16 | $0.000 | $0.000 |
| Class T | 04/18/16 | 04/15/16 | $0.000 | $0.000 |
| Class B | 04/18/16 | 04/15/16 | $0.000 | $0.000 |
| Class C | 04/18/16 | 04/15/16 | $0.000 | $0.000 |
| Telecommunications Portfolio | Pay Date | Record Date | Dividends | Capital Gains |
| Class A | 04/18/16 | 04/15/16 | $0.105 | $0.000 |
| Class T | 04/18/16 | 04/15/16 | $0.031 | $0.000 |
| Class B | 04/18/16 | 04/15/16 | $0.000 | $0.000 |
| Class C | 04/18/16 | 04/15/16 | $0.033 | $0.000 |
The funds hereby designate as capital gain dividend the amounts noted below for the taxable year ended February 29, 2016, or, if subsequently determined to be different, the net capital gain of such year.
| Fund | |
| Consumer Staples Portfolio | $109,949,003 |
| Materials Portfolio | $19,113,522 |
| Telecommunications Portfolio | $3,283,851 |
A percentage of the dividends distributed during the fiscal year for the following funds qualify for the dividends–received deduction for corporate shareholders:
| April 2015 | December 2015 | |
| Consumer Staples Portfolio | ||
| Class A | 37% | 78% |
| Class T | 40% | 90% |
| Class B | 48% | 100% |
| Class C | 45% | 100% |
| Gold Portfolio | ||
| Class A | 0% | 0% |
| Class T | 0% | 0% |
| Class B | 0% | 0% |
| Class C | 0% | 0% |
| Materials Portfolio | ||
| Class A | 0% | 100% |
| Class T | 0% | 100% |
| Class B | 0% | 0% |
| Class C | 0% | 100% |
| Telecommunications Portfolio | ||
| Class A | 100% | 100% |
| Class T | 0% | 100% |
| Class B | 0% | 100% |
| Class C | 0% | 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 2015 | December 2015 | |
| Consumer Staples Portfolio | ||
| Class A | 100% | 100% |
| Class T | 100% | 100% |
| Class B | 100% | 100% |
| Class C | 100% | 100% |
| Gold Portfolio | ||
| Class A | 0% | 0% |
| Class T | 0% | 0% |
| Class B | 0% | 0% |
| Class C | 0% | 0% |
| Materials Portfolio | ||
| Class A | 0% | 100% |
| Class T | 0% | 100% |
| Class B | 0% | 0% |
| Class C | 0% | 100% |
| Telecommunications Portfolio | ||
| Class A | 100% | 100% |
| Class T | 0% | 100% |
| Class B | 0% | 100% |
| Class C | 0% | 100% |
The fund will notify shareholders in January 2017 of amounts for use in preparing 2016 income tax returns.
Board Approval of Investment Advisory Contracts and Management Fees
Consumer Staples Portfolio
Gold Portfolio
Materials Portfolio
Telecommunications Portfolio
Each year, the Board of Trustees, including the Independent Trustees (together, the Board), votes on the renewal of the management contract with Fidelity SelectCo, LLC (SelectCo), an affiliate of Fidelity Management & Research Company (FMR), and the sub-advisory agreements with affiliates of FMR (together, the Advisory Contracts) for each fund. 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.
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 each fund's Advisory Contracts, including the services and support provided to each fund and its shareholders. The Board has established four standing committees (Committees) — Operations, Audit, Fair Valuation, and Governance and Nominating — 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 Operations Committee, of which all of the Independent Trustees are members, meets regularly throughout the year and considers, among other matters, information specifically related to the annual consideration of the renewal of each fund's Advisory Contracts. The Board, acting directly and through its Committees, requests and receives information concerning the annual consideration of the renewal of each fund's Advisory Contracts. The Board also meets as needed to consider 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 ad hoc joint committees to discuss certain matters relevant to all of the Fidelity funds.
At its January 2016 meeting, the Board unanimously determined to renew each 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 to be provided to each fund and its shareholders (including the investment performance of each fund); (ii) the competitiveness of each fund's management fee and total expense ratio relative to peer funds; (iii) the total costs of the services to be provided by and the profits to be realized by Fidelity from its relationships with each fund; and (iv) the extent to which, if any, economies of scale exist and would be realized as each fund grows, and whether any economies of scale are appropriately shared with fund shareholders.
In considering whether to renew the Advisory Contracts for each 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 each 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 each fund have a broad range of investment choices available to them, including a wide choice among funds offered by Fidelity's competitors, and that each 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 that fund, which is part of the Fidelity family of funds.
Nature, Extent, and Quality of Services Provided. The Board considered the staffing of SelectCo and the sub-advisers (together with SelectCo, the Investment Advisers) as it relates to the funds, including the backgrounds of investment personnel of SelectCo, and also considered the funds' investment objectives, strategies, and related investment philosophies. 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 each 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 reviewed the general qualifications and capabilities of the investment staff of the Investment Advisers, including their 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 each 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, each 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 or convenience of the Fidelity funds as investment vehicles. These services include 24-hour access to account information and market information through telephone representatives and over the Internet, investor education materials and asset allocation tools, and the expanded availability of Fidelity Investor Centers.The Board noted that in 2014 the ad hoc Committee on Transfer Agency Fees was formed by it and the boards of certain other Fidelity funds to review the variety of transfer agency services and fee structures throughout the mutual fund industry compared to Fidelity's.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 investment research 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 making other enhancements to meet client needs; (iv) reducing management fees and total expenses for certain index funds; (v) continuing to launch dedicated lower cost underlying funds to meet portfolio construction needs related to expanding underlying fund options for Fidelity funds of funds, specifically for the Freedom Fund product lines; (vi) rationalizing product lines and gaining increased efficiencies through fund mergers; (vii) continuing to develop, acquire and implement systems and technology to improve services to the funds and shareholders, strengthen information security, and increase efficiency; (viii) implementing investment enhancements to further strengthen Fidelity's target date product line to increase investors' probability of success in achieving their goals; (ix) modifying the eligibility criteria for certain share classes to accommodate roll-over assets from employer-sponsored retirement plans; (x) launching a new Class W of the Freedom Index Funds to attract and retain Fidelity record-kept retirement plan assets; and (xi) implementing changes to Fidelity's money market fund product line in response to recent regulatory reforms.Investment Performance. The Board considered whether each 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 with representatives of the Investment Advisers about fund investment performance that occur at Board meetings throughout the year. 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 each fund, for different time periods, measured against a securities market index ("benchmark index"). In its evaluation of fund investment performance at meetings throughout the year, the Board gave particular attention to information indicating underperformance of certain Fidelity funds for specific time periods and discussed with the Investment Advisers the reasons for such underperformance. Each of Consumer Staples Portfolio and Materials Portfolio underperformed its benchmark for the one-, three-, and five-year periods ended June 30, 2015, and as a result, the Board will continue to discuss with SelectCo the steps it is taking to address each such fund's performance.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. Depending on the circumstances, the Independent Trustees may be satisfied with a fund's performance notwithstanding that it lags its benchmark index for certain periods.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 each fund and an appropriate benchmark index for the most recent one-, three-, and five-year periods ended June 30, 2015.Based on its review, the Board concluded that the nature, extent, and quality of services provided to each fund under the Advisory Contracts should benefit the shareholders of each fund.Competitiveness of Management Fee and Total Expense Ratio. The Board considered each fund's management fee and total expense ratio compared to "mapped groups" of competitive funds and classes created for the purpose of facilitating the Trustees' analysis of the competitiveness of management fees and total expenses. Fidelity creates "mapped groups" by combining similar Lipper investment objective categories that have comparable investment mandates. For this purpose, all sector focused equity funds are grouped in the same mapped group. Combining Lipper investment objective categories aids the Board's management fee and total expense ratio comparisons by broadening the competitive group used for comparison.Management Fee. The Board considered two proprietary management fee comparisons for the 12-month periods ended June 30 shown in basis points (BP) in the charts below. The group of Lipper funds used by the Board for management fee comparisons is referred to below as the "Total Mapped Group." The Total Mapped Group comparison focuses on a fund's standing in terms of gross management fees before expense reimbursements or caps relative to the total universe of funds with comparable investment mandates (i.e., sector equities), regardless of whether their management fee structures also are comparable. Funds with comparable management fee structures have similar management fee contractual arrangements (e.g., flat rate charged for advisory services, all-inclusive fee rate, etc.). "TMG %" represents the percentage of funds in the Total Mapped Group that had management fees that were lower than a fund's. For example, a hypothetical TMG % of 20% would mean that 80% of the funds in the Total Mapped Group had higher, and 20% had lower, management fees than a fund. The funds' actual TMG %s and the number of funds in the Total Mapped Group are in the charts below. The "Asset-Size Peer Group" (ASPG) comparison focuses on a fund's standing relative to a subset of non-Fidelity funds within the Total Mapped Group that are similar in size and management fee structure. For example, if a fund is in the first quartile of the ASPG, the fund's management fee ranks in the least expensive or lowest 25% of funds in the ASPG. The ASPG represents at least 15% of the funds in the Total Mapped Group with comparable asset size and management fee structures, subject to a minimum of 50 funds (or all funds in the Total Mapped Group if fewer than 50). Additional information, such as the ASPG quartile in which a fund's management fee rate ranked, is also included in the charts and considered by the Board.Consumer Staples Portfolio
Gold Portfolio
Materials Portfolio
Telecommunications Portfolio
ASGMT-ANN-0416
1.845780.109
Fidelity® Select Portfolios® Chemicals Portfolio Gold Portfolio Materials Portfolio Annual Report February 29, 2016 |
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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 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. © 2016 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-Q. Forms N-Q are available on the SEC’s web site at http://www.sec.gov. A fund's Forms N-Q 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.advisor.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.
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, 2016 | Past 1 year | Past 5 years | Past 10 years |
| Chemicals Portfolio | (14.46)% | 8.43% | 10.80% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Chemicals Portfolio on February 28, 2006.
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 | ||
| $27,899 | Chemicals Portfolio | |
| $18,666 | S&P 500® Index | |
Chemicals Portfolio
Management's Discussion of Fund Performance
Market Recap: The S&P 500® index returned -6.19% for the year ending February 29, 2016. Largely range-bound for the first half of the period, U.S. stocks suffered a steep, late-summer decline on concern about an economic slowdown in China. The market recovered in October, lifted by the U.S. Federal Reserve’s decision to delay raising near-term interest rates until mid-December. Investors also drew courage from a rate cut in China and economic stimulus in Europe. But continued oil-price weakness and U.S.-dollar strength, plus fresh worries about China and the Middle East, pushed the S&P 500® to its worst January since 2009, followed by a volatile but ultimately flattish February. Overall, growth-oriented and larger-cap stocks fared better than value and smaller-cap complements. In this environment, the tech-heavy Nasdaq Composite Index® returned -7.07% for the 12 months; the Russell 2000® Index, -14.97%. Few sectors within the broad-market S&P 500® gained ground, with a wide gap separating leaders from laggards. Despite increased competition among wireless carriers, telecommunication services (+8%) led the way, followed by the more defensive utilities sector (+6%). Rising wages and low inflation buoyed consumer staples (+4%), less so consumer discretionary (0%). Meanwhile, energy (-24%) foundered amid commodity weakness that also hurt materials (-17%). The financials sector (-12%) struggled as well.Comments from Portfolio Manager Mahmoud Sharaf: For the year, the fund returned -14.46%, outpacing the -16.36% return of the MSCI U.S. IMI Chemicals 25/50 Index. Falling commodity prices and growing macroeconomic concerns challenged the industry, where performance is closely tied to these factors, and chemicals stocks finished well behind the broader market for the period. Versus the MSCI benchmark, the fund’s positioning in fertilizers & agricultural chemicals was a plus. The sub-industry was the worst-performing group in the chemicals index due in large part to the economic slowdown in China – the world's largest importer of fertilizer. Here, we avoided Mosaic, the world's leading producer of concentrated phosphate and potash crop nutrients. This stance made Mosaic the fund's largest individual contributor this period, as the stock returned about -49% the past year. Timely positioning in another fertilizers & agricultural producer, CF Industries, was another big contributor. Picks in diversified chemicals and commodity chemicals also lifted the fund’s relative result. Conversely, positioning in industrial gases and specialty gases hurt. From the latter category, our biggest relative detractor the past year was Airgas, a distributor of industrial, medical and specialty gases. The fund was underweighted the stock when it surged in November after the firm announced that it would merge into Air Liquide.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.
Chemicals Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 29, 2016
| % of fund's net assets | % of fund's net assets 6 months ago | |
| The Dow Chemical Co. | 13.3 | 13.0 |
| E.I. du Pont de Nemours & Co. | 13.1 | 12.7 |
| LyondellBasell Industries NV Class A | 7.9 | 9.7 |
| PPG Industries, Inc. | 6.4 | 3.3 |
| Ecolab, Inc. | 6.2 | 7.5 |
| Monsanto Co. | 4.8 | 7.2 |
| Eastman Chemical Co. | 4.3 | 4.9 |
| Valspar Corp. | 3.9 | 3.8 |
| Albemarle Corp. U.S. | 3.8 | 2.2 |
| Ashland, Inc. | 3.5 | 4.6 |
| 67.2 |
Top Industries (% of fund's net assets)
| As of February 29, 2016 | ||
| Chemicals | 92.4% | |
| Diversified Consumer Services | 1.5% | |
| All Others* | 6.1% | |
| As of August 31, 2015 | ||
| Chemicals | 92.5% | |
| Capital Markets | 1.0% | |
| All Others* | 6.5% | |
* Includes short-term investments and net other assets (liabilities).
Chemicals Portfolio
Investments February 29, 2016
Showing Percentage of Net Assets
| Common Stocks - 92.8% | |||
| Shares | Value | ||
| Chemicals - 91.3% | |||
| Commodity Chemicals - 11.2% | |||
| Axiall Corp. | 1,262,109 | $25,115,969 | |
| LyondellBasell Industries NV Class A | 1,024,122 | 82,144,826 | |
| Westlake Chemical Partners LP | 591,329 | 9,881,108 | |
| 117,141,903 | |||
| Diversified Chemicals - 31.3% | |||
| E.I. du Pont de Nemours & Co. | 2,254,200 | 137,213,154 | |
| Eastman Chemical Co. | 700,661 | 44,947,403 | |
| Olin Corp. | 396,076 | 6,004,512 | |
| The Dow Chemical Co. | 2,860,806 | 139,063,778 | |
| 327,228,847 | |||
| Fertilizers & Agricultural Chemicals - 6.7% | |||
| AgroFresh Solutions, Inc. (a)(b) | 560,338 | 2,740,053 | |
| CF Industries Holdings, Inc. | 442,224 | 16,123,487 | |
| Monsanto Co. | 562,159 | 50,588,688 | |
| The Scotts Miracle-Gro Co. Class A | 16,381 | 1,130,617 | |
| 70,582,845 | |||
| Industrial Gases - 5.9% | |||
| Air Products & Chemicals, Inc. | 233,708 | 30,959,299 | |
| Airgas, Inc. | 221,400 | 31,332,528 | |
| 62,291,827 | |||
| Specialty Chemicals - 36.2% | |||
| Albemarle Corp. U.S. | 702,908 | 39,517,488 | |
| Ashland, Inc. | 383,406 | 36,534,758 | |
| Celanese Corp. Class A | 124,932 | 7,538,397 | |
| Ecolab, Inc. | 637,030 | 65,327,427 | |
| International Flavors & Fragrances, Inc. | 342,135 | 35,339,124 | |
| PPG Industries, Inc. | 693,500 | 66,943,555 | |
| Quaker Chemical Corp. | 25,667 | 1,997,149 | |
| Sensient Technologies Corp. | 377,906 | 21,722,037 | |
| Sherwin-Williams Co. | 132,753 | 35,909,687 | |
| Valspar Corp. | 527,100 | 41,240,304 | |
| W.R. Grace & Co. (a) | 389,500 | 26,774,230 | |
| 378,844,156 | |||
| TOTAL CHEMICALS | 956,089,578 | ||
| Diversified Consumer Services - 1.5% | |||
| Specialized Consumer Services - 1.5% | |||
| ServiceMaster Global Holdings, Inc. (a) | 408,100 | 15,479,233 | |
| TOTAL COMMON STOCKS | |||
| (Cost $809,410,272) | 971,568,811 | ||
| Principal Amount | Value | ||
| Nonconvertible Bonds - 1.1% | |||
| Chemicals - 1.1% | |||
| Commodity Chemicals - 1.1% | |||
| Blue Cube Spinco, Inc. 9.75% 10/15/23(c) | |||
| (Cost $10,377,289) | 10,000,000 | 11,125,000 | |
| Shares | Value | ||
| Money Market Funds - 5.3% | |||
| Fidelity Cash Central Fund, 0.40% (d) | 54,296,112 | 54,296,112 | |
| Fidelity Securities Lending Cash Central Fund, 0.44% (d)(e) | 1,577,950 | 1,577,950 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $55,874,062) | 55,874,062 | ||
| TOTAL INVESTMENT PORTFOLIO - 99.2% | |||
| (Cost $875,661,623) | 1,038,567,873 | ||
| NET OTHER ASSETS (LIABILITIES) - 0.8% | 8,259,195 | ||
| NET ASSETS - 100% | $1,046,827,068 |
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 $11,125,000 or 1.1% 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 | $76,550 |
| Fidelity Securities Lending Cash Central Fund | 45,395 |
| Total | $121,945 |
Investment Valuation
The following is a summary of the inputs used, as of February 29, 2016, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used 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 | $971,568,811 | $971,568,811 | $-- | $-- |
| Nonconvertible Bonds | 11,125,000 | -- | 11,125,000 | -- |
| Money Market Funds | 55,874,062 | 55,874,062 | -- | -- |
| Total Investments in Securities: | $1,038,567,873 | $1,027,442,873 | $11,125,000 | $-- |
See accompanying notes which are an integral part of the financial statements.
Chemicals Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2016 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $1,624,458) — See accompanying schedule: Unaffiliated issuers (cost $819,787,561) | $982,693,811 | |
| Fidelity Central Funds (cost $55,874,062) | 55,874,062 | |
| Total Investments (cost $875,661,623) | $1,038,567,873 | |
| Receivable for investments sold | 5,252,725 | |
| Receivable for fund shares sold | 3,867,073 | |
| Dividends receivable | 2,275,657 | |
| Interest receivable | 406,250 | |
| Distributions receivable from Fidelity Central Funds | 13,342 | |
| Prepaid expenses | 4,522 | |
| Other receivables | 34,928 | |
| Total assets | 1,050,422,370 | |
| Liabilities | ||
| Payable for fund shares redeemed | $1,263,178 | |
| Accrued management fee | 468,845 | |
| Transfer agent fee payable | 189,122 | |
| Other affiliated payables | 28,374 | |
| Other payables and accrued expenses | 67,833 | |
| Collateral on securities loaned, at value | 1,577,950 | |
| Total liabilities | 3,595,302 | |
| Net Assets | $1,046,827,068 | |
| Net Assets consist of: | ||
| Paid in capital | $903,798,717 | |
| Distributions in excess of net investment income | (34,341) | |
| Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (19,843,558) | |
| Net unrealized appreciation (depreciation) on investments | 162,906,250 | |
| Net Assets, for 8,496,637 shares outstanding | $1,046,827,068 | |
| Net Asset Value, offering price and redemption price per share ($1,046,827,068 ÷ 8,496,637 shares) | $123.20 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 29, 2016 | ||
| Investment Income | ||
| Dividends | $26,876,750 | |
| Interest | 373,539 | |
| Income from Fidelity Central Funds | 121,945 | |
| Total income | 27,372,234 | |
| Expenses | ||
| Management fee | $6,960,720 | |
| Transfer agent fees | 2,628,109 | |
| Accounting and security lending fees | 406,668 | |
| Custodian fees and expenses | 16,396 | |
| Independent trustees' compensation | 23,961 | |
| Registration fees | 61,688 | |
| Audit | 50,071 | |
| Legal | 15,691 | |
| Interest | 1,220 | |
| Miscellaneous | 16,826 | |
| Total expenses before reductions | 10,181,350 | |
| Expense reductions | (100,547) | 10,080,803 |
| Net investment income (loss) | 17,291,431 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 19,757,816 | |
| Foreign currency transactions | (66,827) | |
| Total net realized gain (loss) | 19,690,989 | |
| Change in net unrealized appreciation (depreciation) on investment securities | (244,358,951) | |
| Net gain (loss) | (224,667,962) | |
| Net increase (decrease) in net assets resulting from operations | $(207,376,531) |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 29, 2016 | Year ended February 28, 2015 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $17,291,431 | $17,918,198 |
| Net realized gain (loss) | 19,690,989 | 94,482,226 |
| Change in net unrealized appreciation (depreciation) | (244,358,951) | 131,028 |
| Net increase (decrease) in net assets resulting from operations | (207,376,531) | 112,531,452 |
| Distributions to shareholders from net investment income | (16,089,555) | (15,536,694) |
| Distributions to shareholders from net realized gain | (64,340,740) | (47,390,610) |
| Total distributions | (80,430,295) | (62,927,304) |
| Share transactions | ||
| Proceeds from sales of shares | 213,978,441 | 895,876,330 |
| Reinvestment of distributions | 77,248,254 | 60,869,457 |
| Cost of shares redeemed | (581,672,952) | (810,770,343) |
| Net increase (decrease) in net assets resulting from share transactions | (290,446,257) | 145,975,444 |
| Redemption fees | 12,995 | 53,824 |
| Total increase (decrease) in net assets | (578,240,088) | 195,633,416 |
| Net Assets | ||
| Beginning of period | 1,625,067,156 | 1,429,433,740 |
| End of period (including distributions in excess of net investment income of $34,341 and undistributed net investment income of $3,797,390, respectively) | $1,046,827,068 | $1,625,067,156 |
| Other Information | ||
| Shares | ||
| Sold | 1,536,095 | 5,974,565 |
| Issued in reinvestment of distributions | 567,690 | 422,535 |
| Redeemed | (4,204,688) | (5,443,032) |
| Net increase (decrease) | (2,100,903) | 954,068 |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Chemicals Portfolio
| Years ended February 28, | 2016 A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $153.34 | $148.23 | $122.98 | $110.52 | $100.85 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | 1.87 | 1.64 | 1.23 | 1.84C | .76 |
| Net realized and unrealized gain (loss) | (23.41) | 9.09 | 32.11 | 15.10 | 9.52 |
| Total from investment operations | (21.54) | 10.73 | 33.34 | 16.94 | 10.28 |
| Distributions from net investment income | (1.81) | (1.42) | (1.18) | (1.55) | (.62) |
| Distributions from net realized gain | (6.80) | (4.20) | (6.92) | (2.95) | – |
| Total distributions | (8.60)D | (5.62) | (8.10) | (4.49)E | (.62) |
| Redemption fees added to paid in capitalB | –F | –F | .01 | .01 | .01 |
| Net asset value, end of period | $123.20 | $153.34 | $148.23 | $122.98 | $110.52 |
| Total ReturnG | (14.46)% | 7.52% | 27.77% | 15.61% | 10.31% |
| Ratios to Average Net AssetsH,I | |||||
| Expenses before reductions | .80% | .79% | .81% | .83% | .85% |
| Expenses net of fee waivers, if any | .80% | .79% | .81% | .83% | .85% |
| Expenses net of all reductions | .79% | .79% | .80% | .81% | .84% |
| Net investment income (loss) | 1.36% | 1.10% | .91% | 1.62%C | .77% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $1,046,827 | $1,625,067 | $1,429,434 | $1,134,777 | $861,539 |
| Portfolio turnover rateJ | 79% | 80%K | 109% | 60% | 119% |
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 $.30 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been 1.35%.
D Total distributions of $8.60 per share is comprised of distributions from net investment income of $1.806 and distributions from net realized gain of $6.795 per share.
E Total distributions of $4.49 per share is comprised of distributions from net investment income of $1.547 and distributions from net realized gain of $2.947 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.
See accompanying notes which are an integral part of the financial statements.
Notes to Financial Statements
For the period ended February 29, 2016
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.
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 Fidelity Investments Money Management, Inc. (FIMM), an affiliate of the investment adviser. Annualized expenses of the Money Market Central Funds as of their most recent shareholder report date are less than .005%.
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 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 Fidelity SelectCo, LLC (SelectCo) Fair Value Committee (the Committee). 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. Utilizing these techniques may result in transfers between Level 1 and Level 2. 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, 2016 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 may 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. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. Subsequent to ex-dividend date the Fund determines the components of these distributions, based upon receipt of tax filings or other correspondence relating to the underlying investment. 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), independent Trustees may elect 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 are included in the accompanying Statement of Assets and Liabilities.
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, 2016, 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.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
| Gross unrealized appreciation | $186,687,806 |
| Gross unrealized depreciation | (35,231,894) |
| Net unrealized appreciation (depreciation) on securities | $151,455,912 |
| Tax Cost | $887,111,961 |
The tax-based components of distributable earnings as of period end were as follows:
| Net unrealized appreciation (depreciation) on securities and other investments | $151,455,912 |
The Fund intends to elect to defer to its next fiscal year $8,393,222 of capital losses recognized during the period November 1, 2015 to February 29, 2016.
The tax character of distributions paid was as follows:
| February 29, 2016 | February 28, 2015 | |
| Ordinary Income | $16,089,555 | $ 39,145,206 |
| Long-term Capital Gains | 64,340,740 | 23,782,098 |
| Total | $80,430,295 | $ 62,927,304 |
Trading (Redemption) Fees. Shares held by investors in the Fund less than 30 days may be subject to a redemption fee equal to .75% of the NAV of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Fund and accounted for as an addition to paid in capital.
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, aggregated $972,983,237 and $1,272,805,789, respectively.
5. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity SelectCo, 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 .25% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by Fidelity Management & Research Company (FMR) and the investment adviser. 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 .55% of the Fund's average net assets.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (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 .21% 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. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions 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 $14,235 for the period.
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 (FMR) or other affiliated entities of FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. The Fund's 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 |
| Borrower | $11,552,727 | .35% | $1,220 |
Interfund Trades. The Fund 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.
The Fund participates 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 Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $1,979 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, the Fund did not borrow on this line of credit.
7. Security Lending.
The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. 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. 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. Total security lending income during the period amounted to $45,395.
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 $56,859 for the period.
In addition, during the period the investment adviser reimbursed and/or waived a portion of operating expenses in the amount of $43,688.
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.
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, 2016 | Past 1 year | Past 5 years | Past 10 years |
| Gold Portfolio | (2.05)% | (18.01)% | (2.55)% |
$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, 2006.
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 | ||
| $7,723 | Gold Portfolio | |
| $18,666 | S&P 500® Index | |
Gold Portfolio
Management's Discussion of Fund Performance
Market Recap: The S&P 500® index returned -6.19% for the year ending February 29, 2016. Largely range-bound for the first half of the period, U.S. stocks suffered a steep, late-summer decline on concern about an economic slowdown in China. The market recovered in October, lifted by the U.S. Federal Reserve's decision to delay raising near-term interest rates until mid-December. Investors also drew courage from a rate cut in China and economic stimulus in Europe. But continued oil-price weakness and U.S.-dollar strength, plus fresh worries about China and the Middle East, pushed the S&P 500® to its worst January since 2009, followed by a volatile but ultimately flattish February. Overall, growth-oriented and larger-cap stocks fared better than value and smaller-cap complements. In this environment, the tech-heavy Nasdaq Composite Index® returned -7.07% for the 12 months; the Russell 2000® Index, -14.97%. Few sectors within the broad-market S&P 500® gained ground, with a wide gap separating leaders from laggards. Despite increased competition among wireless carriers, telecommunication services (+8%) led the way, followed by the more defensive utilities sector (+6%). Rising wages and low inflation buoyed consumer staples (+4%), less so consumer discretionary (0%). Meanwhile, energy (-24%) foundered amid commodity weakness that also hurt materials (-17%). The financials sector (-12%) struggled as well.Comments from Portfolio Manager S. Joseph Wickwire II, CFA: For the year, the fund's share classes (excluding sales charges, if applicable) posted a modestly negative return that straddled the -2.37% result of the S&P® Global BMI Gold Capped Index and solidly outperformed the broadly based S&P 500® index. The fund outdistanced the -11.96% return of the global MSCI ACWI (All Country World Index) Index, an additional comparison used given the fund's global mandate. For most of the period, gold stocks were overcome by market concerns about the supposedly imminent interest rate hikes that investors believed the U.S. Federal Reserve was on a pathway to deliver. The gold price rebounded from its December lows after the Fed increased the fed funds rate by a quarter percentage point. Versus the industry benchmark, performance was helped by overweighting outperforming stocks such as Detour Gold, Randgold Resources, Torex Gold Resources, Premier Gold Mines, OceanaGold and Guyana Goldfields. Underweighting underperforming names such as Goldcorp and Compania de Minas Buenaventura also boosted results. A roughly 11% exposure, on average, to gold and silver bullion buoyed performance as well, especially in the period's extreme downturns. Lastly, the fund's foreign holdings helped, despite headwinds from a rising U.S. dollar. Conversely, we were hurt by underweightings in stocks that outperformed. Relative detractors included Sibanye Gold, Centamin, Harmony Gold Mining, Polyus Gold International and Zijin Mining Group. I sold Centamin and Polyus from the fund by period end. To a lesser extent, we also were hurt by overweightings in companies that underperformed, including B2Gold, Eldorado Gold and Argonaut Gold.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.
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, 2016
| % of fund's net assets | % of fund's net assets 6 months ago | |
| Gold Bullion | 11.0 | 5.2 |
| Randgold Resources Ltd. sponsored ADR | 7.9 | 7.8 |
| Newcrest Mining Ltd. | 5.8 | 5.6 |
| Newmont Mining Corp. | 5.8 | 4.5 |
| Goldcorp, Inc. | 5.7 | 8.0 |
| Franco-Nevada Corp. | 5.6 | 6.3 |
| Agnico Eagle Mines Ltd. (Canada) | 4.9 | 5.6 |
| Barrick Gold Corp. | 4.1 | 3.2 |
| Silver Bullion | 3.8 | 5.3 |
| AngloGold Ashanti Ltd. sponsored ADR | 3.2 | 3.0 |
| 57.8 |
Top Industries (% of fund's net assets)
| As of February 29, 2016 | ||
| Gold | 81.2% | |
| Precious Metals & Minerals | 1.0% | |
| Silver | 0.7% | |
| Construction Materials | 0.2% | |
| Diversified Metals & Mining | 0.1% | |
| All Others* | 2.0% | |
* Includes gold bullion and/or silver bullion.
| As of August 31, 2015 | ||
| Gold | 87.1% | |
| Precious Metals & Minerals | 1.1% | |
| Silver | 0.7% | |
| Diversified Metals & Mining | 0.2% | |
| 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, 2016 | ||
| Canada | 49.6% | |
| United States of America* | 25.3% | |
| Australia | 7.9% | |
| Bailiwick of Jersey | 7.9% | |
| South Africa | 6.7% | |
| China | 0.8% | |
| United Kingdom | 0.7% | |
| Cayman Islands | 0.6% | |
| Peru | 0.5% | |
Percentages are based on country or territory of incorporation and are adjusted for the effect of futures contracts, if applicable.
| As of August 31, 2015 | ||
| Canada | 57.9% | |
| United States of America* | 18.7% | |
| Bailiwick of Jersey | 8.4% | |
| Australia | 7.4% | |
| South Africa | 5.6% | |
| United Kingdom | 0.7% | |
| Peru | 0.7% | |
| Cayman Islands | 0.4% | |
| China | 0.2% | |
Percentages are based on country or territory of incorporation and are adjusted for the effect of futures contracts, if applicable.
Gold Portfolio
Consolidated Investments February 29, 2016
Showing Percentage of Net Assets
| Common Stocks - 83.2% | |||
| Shares | Value | ||
| Australia - 7.9% | |||
| Metals & Mining - 7.9% | |||
| Gold - 7.9% | |||
| Evolution Mining Ltd. | 352,543 | $440,348 | |
| Medusa Mining Ltd. (a)(b) | 1,228,595 | 539,299 | |
| Newcrest Mining Ltd. (a) | 5,814,753 | 72,999,912 | |
| Northern Star Resources Ltd. | 4,351,118 | 12,111,881 | |
| Perseus Mining Ltd.: | |||
| (Australia) (a) | 1,717,134 | 453,474 | |
| (Canada) (a) | 1,300,000 | 350,702 | |
| Regis Resources Ltd. | 2,107,191 | 3,880,340 | |
| Resolute Mng Ltd. (a) | 2,390,161 | 955,347 | |
| Saracen Mineral Holdings Ltd. (a) | 8,462,787 | 5,889,306 | |
| Silver Lake Resources Ltd. (a)(b) | 4,145,985 | 961,739 | |
| St Barbara Ltd. (a) | 650,000 | 869,883 | |
| 99,452,231 | |||
| Bailiwick of Jersey - 7.9% | |||
| Metals & Mining - 7.9% | |||
| Gold - 7.9% | |||
| Randgold Resources Ltd. sponsored ADR (b) | 1,088,395 | 99,316,044 | |
| Bermuda - 0.0% | |||
| Metals & Mining - 0.0% | |||
| Steel - 0.0% | |||
| African Minerals Ltd. (a)(b) | 1,718,700 | 24 | |
| Canada - 49.6% | |||
| Metals & Mining - 49.6% | |||
| Diversified Metals & Mining - 0.1% | |||
| Ivanhoe Mines Ltd. (a) | 3,101,200 | 1,558,622 | |
| True Gold Mining, Inc. (a) | 171,000 | 48,027 | |
| 1,606,649 | |||
| Gold - 47.8% | |||
| Agnico Eagle Mines Ltd. (Canada) | 1,741,501 | 61,280,756 | |
| Alacer Gold Corp. (a) | 1,656,963 | 3,318,825 | |
| Alamos Gold, Inc. | 2,232,987 | 10,232,461 | |
| Argonaut Gold, Inc. (a) | 5,673,162 | 6,876,560 | |
| B2Gold Corp. (a) | 28,725,793 | 32,059,089 | |
| Barrick Gold Corp. | 3,737,469 | 51,932,311 | |
| Centerra Gold, Inc. | 483,300 | 2,657,614 | |
| Continental Gold, Inc. (a)(c) | 7,063,900 | 7,779,166 | |
| Detour Gold Corp. (a) | 1,623,100 | 25,564,125 | |
| Detour Gold Corp. (a)(d) | 785,900 | 12,378,070 | |
| Eldorado Gold Corp. | 8,859,235 | 26,518,774 | |
| Franco-Nevada Corp. | 1,169,000 | 69,768,477 | |
| Goldcorp, Inc. (b) | 4,963,800 | 71,320,231 | |
| Guyana Goldfields, Inc. (a) | 4,281,800 | 13,766,319 | |
| Guyana Goldfields, Inc. (a)(d) | 155,000 | 498,337 | |
| IAMGOLD Corp. (a)(b) | 837,100 | 2,029,333 | |
| Integra Gold Corp. (a) | 35,000 | 10,218 | |
| Kinross Gold Corp. (a) | 1,998,891 | 5,850,413 | |
| Kirkland Lake Gold, Inc. (a) | 1,512,400 | 9,132,526 | |
| Klondex Mines Ltd. (a) | 96,000 | 256,142 | |
| Lake Shore Gold Corp. (a) | 2,661,600 | 3,580,275 | |
| New Gold, Inc. (a) | 8,862,675 | 30,000,777 | |
| Novagold Resources, Inc. (a)(b) | 1,559,100 | 7,720,599 | |
| OceanaGold Corp. | 9,214,832 | 25,471,893 | |
| Osisko Gold Royalties Ltd. | 473,793 | 4,892,009 | |
| Pilot Gold, Inc. (a) | 1,418,150 | 461,187 | |
| Premier Gold Mines Ltd. (a)(c) | 10,803,622 | 25,711,502 | |
| Pretium Resources, Inc. (a)(b) | 1,077,052 | 5,031,019 | |
| Pretium Resources, Inc. (a)(d) | 225,000 | 1,050,998 | |
| Primero Mining Corp. (a)(b) | 2,287,100 | 3,752,670 | |
| Richmont Mines, Inc. (a) | 92,800 | 433,478 | |
| Sandstorm Gold Ltd. (a) | 578,875 | 1,724,217 | |
| Seabridge Gold, Inc. (a)(b) | 853,207 | 7,858,036 | |
| SEMAFO, Inc. (a) | 4,307,900 | 15,283,016 | |
| Teranga Gold Corp. (a)(b) | 85,000 | 35,809 | |
| Teranga Gold Corp. CDI unit (a) | 3,338,072 | 1,358,053 | |
| Torex Gold Resources, Inc. (a) | 24,995,500 | 33,253,437 | |
| Yamana Gold, Inc. | 6,445,920 | 18,246,765 | |
| 599,095,487 | |||
| Precious Metals & Minerals - 1.0% | |||
| Gold Standard Ventures Corp. (a) | 2,175,400 | 2,009,793 | |
| Tahoe Resources, Inc. | 1,138,582 | 10,527,466 | |
| 12,537,259 | |||
| Silver - 0.7% | |||
| MAG Silver Corp. (a) | 414,200 | 2,948,075 | |
| Silver Wheaton Corp. | 395,200 | 6,233,236 | |
| 9,181,311 | |||
| TOTAL METALS & MINING | 622,420,706 | ||
| Cayman Islands - 0.6% | |||
| Metals & Mining - 0.6% | |||
| Gold - 0.6% | |||
| Endeavour Mining Corp. (a) | 828,840 | 7,436,894 | |
| China - 0.8% | |||
| Metals & Mining - 0.8% | |||
| Gold - 0.8% | |||
| Zijin Mining Group Co. Ltd. (H Shares) | 32,876,000 | 9,848,366 | |
| Peru - 0.5% | |||
| Metals & Mining - 0.5% | |||
| Gold - 0.5% | |||
| Compania de Minas Buenaventura SA sponsored ADR (a) | 1,072,228 | 5,597,030 | |
| South Africa - 6.7% | |||
| Metals & Mining - 6.7% | |||
| Gold - 6.7% | |||
| AngloGold Ashanti Ltd. sponsored ADR (a) | 3,119,908 | 40,621,202 | |
| Gold Fields Ltd. sponsored ADR | 4,726,126 | 20,180,558 | |
| Harmony Gold Mining Co. Ltd. (a) | 1,484,000 | 4,807,735 | |
| Harmony Gold Mining Co. Ltd. sponsored ADR (a)(b) | 1,812,900 | 5,910,054 | |
| Sibanye Gold Ltd. ADR | 865,006 | 12,430,136 | |
| 83,949,685 | |||
| United Kingdom - 0.7% | |||
| Metals & Mining - 0.7% | |||
| Gold - 0.7% | |||
| Acacia Mining PLC | 2,657,994 | 9,182,231 | |
| United States of America - 8.5% | |||
| Construction Materials - 0.2% | |||
| Construction Materials - 0.2% | |||
| Eagle Materials, Inc. | 50,500 | 3,051,212 | |
| Metals & Mining - 8.3% | |||
| Gold - 8.3% | |||
| McEwen Mining, Inc. (b) | 579,110 | 1,059,771 | |
| Newmont Mining Corp. | 2,795,900 | 72,218,097 | |
| Royal Gold, Inc. | 656,513 | 30,442,508 | |
| 103,720,376 | |||
| TOTAL UNITED STATES OF AMERICA | 106,771,588 | ||
| TOTAL COMMON STOCKS | |||
| (Cost $1,235,860,010) | 1,043,974,799 | ||
| Troy Ounces | |||
| Commodities - 14.8% | |||
| Gold Bullion (a) | 111,510 | 138,222,221 | |
| Silver Bullion (a) | 3,162,000 | 47,146,052 | |
| TOTAL COMMODITIES | |||
| (Cost $196,019,406) | 185,368,273 | ||
| Shares | |||
| Money Market Funds - 4.5% | |||
| Fidelity Cash Central Fund, 0.40% (e) | 35,782,221 | 35,782,221 | |
| Fidelity Securities Lending Cash Central Fund, 0.44% (e)(f) | 19,998,096 | 19,998,096 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $55,780,317) | 55,780,317 | ||
| TOTAL INVESTMENT PORTFOLIO - 102.5% | |||
| (Cost $1,487,659,733) | 1,285,123,389 | ||
| NET OTHER ASSETS (LIABILITIES) - (2.5)% | (30,961,190) | ||
| NET ASSETS - 100% | $1,254,162,199 |
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 $13,927,405 or 1.1% 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 | $24,524 |
| Fidelity Securities Lending Cash Central Fund | 260,688 |
| Total | $285,212 |
Consolidated Subsidiary
| Value, beginning of period | Purchases | Sales Proceeds | Dividend Income | Value, end of period | |
| Fidelity Select Gold Cayman Ltd. | $116,684,748 | $115,940,297 | $42,608,630 | $-- | $185,320,085 |
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 | Value, end of period |
| Continental Gold, Inc. (formerly Continental Gold Ltd.) | $7,850,572 | $2,894,378 | $-- | $-- | $7,779,166 |
| Endeavour Mining Corp. | 3,968,035 | 11,431 | -- | -- | -- |
| Premier Gold Mines Ltd. | 20,747,454 | 1,036,932 | 421,766 | -- | 25,711,502 |
| Total | $32,566,061 | $3,942,741 | $421,766 | $-- | $33,490,668 |
Investment Valuation
The following is a summary of the inputs used, as of February 29, 2016, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used 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 | $1,043,974,799 | $966,167,128 | $77,807,647 | $24 |
| Commodities | 185,368,273 | 185,368,273 | -- | -- |
| Money Market Funds | 55,780,317 | 55,780,317 | -- | -- |
| Total Investments in Securities: | $1,285,123,389 | $1,207,315,718 | $77,807,647 | $24 |
The following is a summary of transfers between Level 1 and Level 2 for the period ended February 29, 2016. Transfers are assumed to have occurred at the beginning of the period, and are primarily attributable to the valuation techniques used for foreign equity securities, as discussed in the accompanying Notes to Consolidated Financial Statements:
| Transfers | Total |
| Level 1 to Level 2 | $69,980,874 |
| Level 2 to Level 1 | $0 |
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, 2016 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $19,733,536) — See accompanying schedule: Unaffiliated issuers (cost $1,178,084,778) | $1,010,484,131 | |
| Fidelity Central Funds (cost $55,780,317) | 55,780,317 | |
| Commodities (cost $196,019,406) | 185,368,273 | |
| Other affiliated issuers (cost $57,775,232) | 33,490,668 | |
| Total Investments (cost $1,487,659,733) | $1,285,123,389 | |
| Receivable for investments sold | 6,797,261 | |
| Receivable for fund shares sold | 5,565,691 | |
| Dividends receivable | 509,903 | |
| Distributions receivable from Fidelity Central Funds | 34,747 | |
| Prepaid expenses | 2,927 | |
| Other receivables | 62,068 | |
| Total assets | 1,298,095,986 | |
| Liabilities | ||
| Payable for investments purchased | $18,108,935 | |
| Payable for fund shares redeemed | 4,873,656 | |
| Accrued management fee | 506,531 | |
| Distribution and service plan fees payable | 54,799 | |
| Other affiliated payables | 249,139 | |
| Other payables and accrued expenses | 142,631 | |
| Collateral on securities loaned, at value | 19,998,096 | |
| Total liabilities | 43,933,787 | |
| Net Assets | $1,254,162,199 | |
| Net Assets consist of: | ||
| Paid in capital | $2,708,861,690 | |
| Accumulated net investment loss | (13,704) | |
| Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (1,252,131,751) | |
| Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (202,554,036) | |
| Net Assets | $1,254,162,199 | |
| Calculation of Maximum Offering Price | ||
| Class A: | ||
| Net Asset Value and redemption price per share ($53,509,144 ÷ 3,023,298 shares) | $17.70 | |
| Maximum offering price per share (100/94.25 of $17.70) | $18.78 | |
| Class T: | ||
| Net Asset Value and redemption price per share ($17,719,589 ÷ 1,019,901 shares) | $17.37 | |
| Maximum offering price per share (100/96.50 of $17.37) | $18.00 | |
| Class B: | ||
| Net Asset Value and offering price per share ($1,387,809 ÷ 82,864 shares)(a) | $16.75 | |
| Class C: | ||
| Net Asset Value and offering price per share ($52,732,246 ÷ 3,160,888 shares)(a) | $16.68 | |
| Gold: | ||
| Net Asset Value, offering price and redemption price per share ($1,076,206,149 ÷ 59,384,404 shares) | $18.12 | |
| Class I: | ||
| Net Asset Value, offering price and redemption price per share ($52,607,262 ÷ 2,901,278 shares) | $18.13 |
(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, 2016 | ||
| Investment Income | ||
| Dividends | $7,600,661 | |
| Income from Fidelity Central Funds | 285,212 | |
| Income before foreign taxes withheld | 7,885,873 | |
| Less foreign taxes withheld | (825,677) | |
| Total income | 7,060,196 | |
| Expenses | ||
| Management fee | $5,414,585 | |
| Transfer agent fees | 2,620,065 | |
| Distribution and service plan fees | 541,896 | |
| Accounting and security lending fees | 443,034 | |
| Custodian fees and expenses | 282,703 | |
| Independent trustees' compensation | 16,899 | |
| Registration fees | 124,224 | |
| Audit | 68,140 | |
| Legal | 10,887 | |
| Miscellaneous | 13,130 | |
| Total expenses before reductions | 9,535,563 | |
| Expense reductions | (362,326) | 9,173,237 |
| Net investment income (loss) | (2,113,041) | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investments: | ||
| Unaffiliated issuers | (155,210,150) | |
| Other affiliated issuers | (648,863) | |
| Commodities | (7,003,431) | |
| Foreign currency transactions | 1,660,481 | |
| Total net realized gain (loss) | (161,201,963) | |
| Change in net unrealized appreciation (depreciation) on: Investments | 155,642,129 | |
| Assets and liabilities in foreign currencies | (18,709) | |
| Commodities | 2,764,458 | |
| Total change in net unrealized appreciation (depreciation) | 158,387,878 | |
| Net gain (loss) | (2,814,085) | |
| Net increase (decrease) in net assets resulting from operations | $(4,927,126) |
See accompanying notes which are an integral part of the consolidated financial statements.
Consolidated Statement of Changes in Net Assets
| Year ended February 29, 2016 | Year ended February 28, 2015 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $(2,113,041) | $(3,405,899) |
| Net realized gain (loss) | (161,201,963) | (231,533,739) |
| Change in net unrealized appreciation (depreciation) | 158,387,878 | (19,537,556) |
| Net increase (decrease) in net assets resulting from operations | (4,927,126) | (254,477,194) |
| Share transactions - net increase (decrease) | 137,310,705 | (124,744,949) |
| Redemption fees | 180,108 | 222,335 |
| Total increase (decrease) in net assets | 132,563,687 | (378,999,808) |
| Net Assets | ||
| Beginning of period | 1,121,598,512 | 1,500,598,320 |
| End of period (including accumulated net investment loss of $13,704 and accumulated net investment loss of $19,281, respectively) | $1,254,162,199 | $1,121,598,512 |
See accompanying notes which are an integral part of the consolidated financial statements.
Consolidated Financial Highlights — Gold Portfolio Class A
| Years ended February 28, | 2016 A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $18.11 | $22.01 | $30.25 | $45.37 | $50.92 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | (.06) | (.10) | –C | .07 | (.13) |
| Net realized and unrealized gain (loss) | (.35) | (3.80) | (8.25) | (15.19) | (2.83) |
| Total from investment operations | (.41) | (3.90) | (8.25) | (15.12) | (2.96) |
| Distributions from net realized gain | – | – | – | – | (2.59) |
| Total distributions | – | – | – | – | (2.59) |
| Redemption fees added to paid in capitalB | –C | –C | .01 | –C | –C |
| Net asset value, end of period | $17.70 | $18.11 | $22.01 | $30.25 | $45.37 |
| Total ReturnD,E | (2.26)% | (17.72)% | (27.24)% | (33.33)% | (6.24)% |
| Ratios to Average Net AssetsF,G | |||||
| Expenses before reductions | 1.23% | 1.23% | 1.21% | 1.18% | 1.14% |
| Expenses net of fee waivers, if any | 1.20% | 1.19% | 1.19% | 1.17% | 1.14% |
| Expenses net of all reductions | 1.20% | 1.19% | 1.18% | 1.17% | 1.14% |
| Net investment income (loss) | (.44)% | (.51)% | - %H | .18% | (.28)% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $53,509 | $46,898 | $60,270 | $101,202 | $152,969 |
| Portfolio turnover rateI | 20% | 20% | 56% | 18% | 22% |
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 Total returns do not include the effect of the sales charges.
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 represents less than .005%.
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.
Consolidated Financial Highlights — Gold Portfolio Class T
| Years ended February 28, | 2016 A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $17.83 | $21.73 | $29.95 | $45.04 | $50.68 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | (.11) | (.15) | (.06) | (.03) | (.27) |
| Net realized and unrealized gain (loss) | (.35) | (3.75) | (8.17) | (15.06) | (2.80) |
| Total from investment operations | (.46) | (3.90) | (8.23) | (15.09) | (3.07) |
| Distributions from net realized gain | – | – | – | – | (2.57) |
| Total distributions | – | – | – | – | (2.57) |
| Redemption fees added to paid in capitalB | –C | –C | .01 | –C | –C |
| Net asset value, end of period | $17.37 | $17.83 | $21.73 | $29.95 | $45.04 |
| Total ReturnD,E | (2.58)% | (17.95)% | (27.45)% | (33.50)% | (6.49)% |
| Ratios to Average Net AssetsF,G | |||||
| Expenses before reductions | 1.52% | 1.50% | 1.49% | 1.45% | 1.43% |
| Expenses net of fee waivers, if any | 1.48% | 1.46% | 1.47% | 1.44% | 1.42% |
| Expenses net of all reductions | 1.48% | 1.46% | 1.46% | 1.44% | 1.42% |
| Net investment income (loss) | (.72)% | (.79)% | (.28)% | (.09)% | (.57)% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $17,720 | $16,200 | $18,402 | $24,913 | $40,664 |
| Portfolio turnover rateH | 20% | 20% | 56% | 18% | 22% |
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 Total returns do not include the effect of the sales charges.
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.
Consolidated Financial Highlights — Gold Portfolio Class B
| Years ended February 28, | 2016 A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $17.27 | $21.14 | $29.27 | $44.24 | $50.02 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | (.17) | (.24) | (.16) | (.21) | (.49) |
| Net realized and unrealized gain (loss) | (.35) | (3.63) | (7.98) | (14.76) | (2.76) |
| Total from investment operations | (.52) | (3.87) | (8.14) | (14.97) | (3.25) |
| Distributions from net realized gain | – | – | – | – | (2.53) |
| Total distributions | – | – | – | – | (2.53) |
| Redemption fees added to paid in capitalB | –C | –C | .01 | –C | –C |
| Net asset value, end of period | $16.75 | $17.27 | $21.14 | $29.27 | $44.24 |
| Total ReturnD,E | (3.01)% | (18.31)% | (27.78)% | (33.84)% | (6.95)% |
| Ratios to Average Net AssetsF,G | |||||
| Expenses before reductions | 1.98% | 1.97% | 1.95% | 1.93% | 1.90% |
| Expenses net of fee waivers, if any | 1.94% | 1.93% | 1.93% | 1.92% | 1.90% |
| Expenses net of all reductions | 1.94% | 1.93% | 1.93% | 1.91% | 1.90% |
| Net investment income (loss) | (1.18)% | (1.26)% | (.75)% | (.57)% | (1.04)% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $1,388 | $2,461 | $4,373 | $9,423 | $20,894 |
| Portfolio turnover rateH | 20% | 20% | 56% | 18% | 22% |
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 Total returns do not include the effect of the contingent deferred sales charge.
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.
Consolidated Financial Highlights — Gold Portfolio Class C
| Years ended February 28, | 2016 A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $17.20 | $21.06 | $29.15 | $44.05 | $49.81 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | (.16) | (.23) | (.16) | (.20) | (.47) |
| Net realized and unrealized gain (loss) | (.36) | (3.63) | (7.94) | (14.70) | (2.76) |
| Total from investment operations | (.52) | (3.86) | (8.10) | (14.90) | (3.23) |
| Distributions from net realized gain | – | – | – | – | (2.53) |
| Total distributions | – | – | – | – | (2.53) |
| Redemption fees added to paid in capitalB | –C | –C | .01 | –C | –C |
| Net asset value, end of period | $16.68 | $17.20 | $21.06 | $29.15 | $44.05 |
| Total ReturnD,E | (3.02)% | (18.33)% | (27.75)% | (33.83)% | (6.93)% |
| Ratios to Average Net AssetsF,G | |||||
| Expenses before reductions | 1.97% | 1.96% | 1.96% | 1.93% | 1.87% |
| Expenses net of fee waivers, if any | 1.93% | 1.92% | 1.94% | 1.92% | 1.87% |
| Expenses net of all reductions | 1.93% | 1.92% | 1.93% | 1.91% | 1.87% |
| Net investment income (loss) | (1.17)% | (1.25)% | (.76)% | (.57)% | (1.01)% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $52,732 | $39,429 | $33,811 | $37,787 | $67,996 |
| Portfolio turnover rateH | 20% | 20% | 56% | 18% | 22% |
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 Total returns do not include the effect of the contingent deferred sales charge.
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.
Consolidated Financial Highlights — Gold Portfolio
| Years ended February 28, | 2016 A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $18.50 | $22.41 | $30.72 | $45.96 | $51.44 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | (.03) | (.04) | .06 | .16 | (.02) |
| Net realized and unrealized gain (loss) | (.35) | (3.87) | (8.38) | (15.40) | (2.85) |
| Total from investment operations | (.38) | (3.91) | (8.32) | (15.24) | (2.87) |
| Distributions from net realized gain | – | – | – | – | (2.61) |
| Total distributions | – | – | – | – | (2.61) |
| Redemption fees added to paid in capitalB | –C | –C | .01 | –C | –C |
| Net asset value, end of period | $18.12 | $18.50 | $22.41 | $30.72 | $45.96 |
| Total ReturnD | (2.05)% | (17.45)% | (27.05)% | (33.16)% | (6.00)% |
| Ratios to Average Net AssetsE,F | |||||
| Expenses before reductions | .97% | .94% | .94% | .93% | .89% |
| Expenses net of fee waivers, if any | .93% | .90% | .92% | .92% | .89% |
| Expenses net of all reductions | .93% | .90% | .91% | .92% | .89% |
| Net investment income (loss) | (.17)% | (.22)% | .27% | .43% | (.03)% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $1,076,206 | $992,944 | $1,275,913 | $2,301,019 | $3,924,440 |
| Portfolio turnover rateG | 20% | 20% | 56% | 18% | 22% |
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 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.
G 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.
Consolidated Financial Highlights — Gold Portfolio Class I
| Years ended February 28, | 2016 A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $18.50 | $22.41 | $30.69 | $45.87 | $51.32 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | (.02) | (.04) | .07 | .20 | .02 |
| Net realized and unrealized gain (loss) | (.35) | (3.87) | (8.36) | (15.38) | (2.85) |
| Total from investment operations | (.37) | (3.91) | (8.29) | (15.18) | (2.83) |
| Distributions from net realized gain | – | – | – | – | (2.62) |
| Total distributions | – | – | – | – | (2.62) |
| Redemption fees added to paid in capitalB | –C | –C | .01 | –C | –C |
| Net asset value, end of period | $18.13 | $18.50 | $22.41 | $30.69 | $45.87 |
| Total ReturnD | (2.00)% | (17.45)% | (26.98)% | (33.09)% | (5.94)% |
| Ratios to Average Net AssetsE,F | |||||
| Expenses before reductions | .92% | .90% | .87% | .84% | .82% |
| Expenses net of fee waivers, if any | .88% | .86% | .85% | .83% | .81% |
| Expenses net of all reductions | .88% | .86% | .84% | .82% | .81% |
| Net investment income (loss) | (.12)% | (.18)% | .34% | .52% | .04% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $52,607 | $23,667 | $107,830 | $128,262 | $168,548 |
| Portfolio turnover rateG | 20% | 20% | 56% | 18% | 22% |
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 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.
G 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, 2016
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 T, Class C, Gold and Class I (formerly Institutional Class) shares, each of which, along with Class B shares, has equal rights as to assets and voting privileges. Class B shares are closed to new accounts and additional purchases, except for exchanges and reinvestments. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a maximum holding period of seven years from the initial date of purchase. The Fund's investments in emerging markets can be subject to social, economic, regulatory, and political uncertainties and can be extremely volatile.
During the period, the Board of Trustees approved the conversion of all existing Class B shares into Class A shares, effective on or about July 1, 2016, regardless of the length of times shares have been held.
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 $185,320,085 in the Subsidiary, representing 14.8% 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 Fidelity Investments Money Management, Inc. (FIMM), an affiliate of the investment adviser. Annualized expenses of the Money Market Central Funds as of their most recent shareholder report date are less than .005%.
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 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 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 Fidelity SelectCo, LLC (SelectCo) Fair Value Committee (the Committee). 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. Utilizing these techniques may result in transfers between Level 1 and Level 2. 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, 2016, including information on transfers between Levels 1 and 2, 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 may 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. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. Subsequent to ex-dividend date the Fund determines the components of these distributions, based upon receipt of tax filings or other correspondence relating to the underlying investment. 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), independent Trustees may elect 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 are included in the accompanying Statement of Assets and Liabilities.
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, 2016, 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 dividends 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 corporation, deferred trustees compensation, capital loss carryforwards and losses deferred due to wash sales.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end on an unconsolidated basis were as follows:
| Gross unrealized appreciation | $175,385,332 |
| Gross unrealized depreciation | (530,042,755) |
| Net unrealized appreciation (depreciation) on securities | $(354,657,423) |
| Tax Cost | $1,639,732,624 |
The tax-based components of distributable earnings as of period end were as follows:
| Undistributed ordinary income | $16,636,474 |
| Capital loss carryforward | $(1,152,602,929) |
| Net unrealized appreciation (depreciation) on securities and other investments | $(354,660,525) |
Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. Under the Regulated Investment Company Modernization Act of 2010 (the Act), the Fund is permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period and such capital losses are required to be used prior to any losses that expire. 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 | $(137,035,055) |
| Long-term | (1,015,567,874) |
| Total capital loss carryforward | $(1,152,602,929) |
Trading (Redemption) Fees. Shares held by investors in the Fund less than 30 days may be subject to a redemption fee equal to .75% of the NAV of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Fund and accounted for as an addition to paid in capital.
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, aggregated $308,152,319 and $183,244,812, respectively.
6. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity SelectCo, 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 .25% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by Fidelity Management & Research Company (FMR) and the investment adviser. The group fee rate decreases as assets under management increase and increases as assets under management decrease.
FMR, either through itself or through an affiliate provides investment management related services to the Subsidiary for which the Subsidiary pays a monthly management fee at the annual rate of .30% of its net assets. Under the management contract with the subsidiary, FMR pays all other expenses of the Subsidiary, except custodian fees.
For the reporting period, the total consolidated annual management fee rate which includes the management fee of the Fund and the Subsidiary was .58% of the Fund's average net assets.
During the period, the investment adviser waived a portion of the Fund's management fee representing the amount of the management fee paid by the Subsidiary to FMR as described in the Expense Reductions note.
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 Corporation (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% | $97,126 | $– |
| Class T | .25% | .25% | 67,784 | – |
| Class B | .75% | .25% | 15,769 | 11,827 |
| Class C | .75% | .25% | 361,217 | 94,153 |
| $541,896 | $105,980 |
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 T 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 T, Class B, and Class C redemptions. The deferred sales charges range from 5.00% to 1.00% for Class B shares, 1.00% for Class C shares, 1.00% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained by FDC | |
| Class A | $30,057 |
| Class T | 7,972 |
| Class B(a) | 1,554 |
| Class C(a) | 9,782 |
| $49,365 |
(a) When Class B and 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, Inc., (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. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements.
For the period, transfer agent fees for each class were as follows:
| Amount | % of Class-Level Average Net Assets | |
| Class A | $115,271 | .30 |
| Class T | 45,054 | .33 |
| Class B | 4,675 | .30 |
| Class C | 101,686 | .28 |
| Gold | 2,293,659 | .28 |
| Class I | 59,720 | .24 |
| $ 2,620,065 |
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. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions 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 $6,119 for the period.
Interfund Trades. The Fund 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.
The Fund participates 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 Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $1,237 and is reflected in Miscellaneous expenses on the Consolidated Statement of Operations. During the period, the Fund did not borrow on this line of credit.
8. Security Lending.
The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. 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. Total security lending income during the period amounted to $260,688.
9. Expense Reductions.
The investment adviser has contractually agreed to waive the Fund's management fee in an amount equal to the management fee paid by the Subsidiary to FMR. During the period, this waiver reduced the Fund's management fee by $318,965.
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 $11,135 for the period.
In addition, during the period the investment adviser reimbursed and/or waived a portion of fund-level operating expenses in the amount of $6,985 and a portion of class-level operating expenses as follows:
| Amount | |
| Class A | $99 |
| Class T | 28 |
| Class B | 4 |
| Class C | 395 |
| Gold | 23,242 |
| Class I | 1,473 |
| $ 25,241 |
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, 2016 | Year ended February 28, 2015 | Year ended February 29, 2016 | Year ended February 28, 2015 | |
| Class A | ||||
| Shares sold | 1,535,243 | 1,014,651 | $23,173,408 | $20,366,842 |
| Shares redeemed | (1,100,912) | (1,163,476) | (16,009,093) | (22,763,258) |
| Net increase (decrease) | 434,331 | (148,825) | $7,164,315 | $(2,396,416) |
| Class T | ||||
| Shares sold | 373,972 | 317,888 | $5,610,984 | $6,202,712 |
| Shares redeemed | (262,516) | (256,267) | (3,867,307) | (4,926,125) |
| Net increase (decrease) | 111,456 | 61,621 | $1,743,677 | $1,276,587 |
| Class B | ||||
| Shares sold | 6,237 | 6,743 | $87,905 | $129,320 |
| Shares redeemed | (65,868) | (71,044) | (948,946) | (1,326,720) |
| Net increase (decrease) | (59,631) | (64,301) | $(861,041) | $(1,197,400) |
| Class C | ||||
| Shares sold | 1,382,064 | 1,131,151 | $19,834,455 | $21,162,781 |
| Shares redeemed | (513,567) | (444,470) | (7,072,215) | (8,210,673) |
| Net increase (decrease) | 868,497 | 686,681 | $12,762,240 | $12,952,108 |
| Gold | ||||
| Shares sold | 25,445,576 | 22,066,731 | $393,817,498 | $446,680,830 |
| Shares redeemed | (19,739,546) | (25,311,740) | (303,052,757) | (508,417,315) |
| Net increase (decrease) | 5,706,030 | (3,245,009) | $90,764,741 | $(61,736,485) |
| Class I | ||||
| Shares sold | 2,727,491 | 1,547,691 | $42,106,104 | $33,198,070 |
| Shares redeemed | (1,105,474) | (5,080,368) | (16,369,331) | (106,841,413) |
| Net increase (decrease) | 1,622,017 | (3,532,677) | $25,736,773 | $(73,643,343) |
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.
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, 2016 | Past 1 year | Past 5 years | Past 10 years |
| Materials Portfolio | (19.81)% | 1.82% | 7.14% |
Prior to October 1, 2006, the fund was named Industrial Materials 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 Materials Portfolio, a class of the fund, on February 28, 2006.
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 | ||
| $19,923 | Materials Portfolio | |
| $18,666 | S&P 500® Index | |
Materials Portfolio
Management's Discussion of Fund Performance
Market Recap: The S&P 500® index returned -6.19% for the year ending February 29, 2016. Largely range-bound for the first half of the period, U.S. stocks suffered a steep, late-summer decline on concern about an economic slowdown in China. The market recovered in October, lifted by the U.S. Federal Reserve’s decision to delay raising near-term interest rates until mid-December. Investors also drew courage from a rate cut in China and economic stimulus in Europe. But continued oil-price weakness and U.S.-dollar strength, plus fresh worries about China and the Middle East, pushed the S&P 500® to its worst January since 2009, followed by a volatile but ultimately flattish February. Overall, growth-oriented and larger-cap stocks fared better than value and smaller-cap complements. In this environment, the tech-heavy Nasdaq Composite Index® returned -7.07% for the 12 months; the Russell 2000® Index, -14.97%. Few sectors within the broad-market S&P 500® gained ground, with a wide gap separating leaders from laggards. Despite increased competition among wireless carriers, telecommunication services (+8%) led the way, followed by the more defensive utilities sector (+6%). Rising wages and low inflation buoyed consumer staples (+4%), less so consumer discretionary (0%). Meanwhile, energy (-24%) foundered amid commodity weakness that also hurt materials (-17%). The financials sector (-12%) struggled as well.Comments from Portfolio Manager Tobias Welo: For the year, the fund’s share classes (excluding sales charges, if applicable) trailed the -17.90% return of the MSCI U.S. IMI Materials 25/50 Index. Materials stocks also lagged the S&P 500® index, weighed down by weak-performing categories such as diversified metals & mining and fertilizers & agricultural chemicals. Versus the MSCI index, stock selection and a sizable overweighting in paper-packaging stocks detracted from the fund’s results, as did our picks in construction materials and diversified chemicals, and an underweighting in industrial gases. Paper-packaging stock WestRock was by far our biggest detractor, as well as the fund’s third-largest holding at period end and a sizable overweighting. Fundamentals for the firm’s chemicals segment weakened as a result of lower oil prices, which hampered the stock. Another detractor versus the index was a large underweighting in index heavyweight Dow Chemical, which managed a modest gain this period. Not owning index component Airgas in November, when the company received a buyout bid from France-based industrial gases provider Air Liquide, also worked against us. Conversely, underweighting diversified metals & mining, the weakest group in the MSCI index, and avoiding aluminum shares bolstered relative results. The fund’s top relative contributor was Freeport-McMoRan, an index name that returned -64%. I sold our token stake in this natural resources provider in February 2015, just before the period began. Our overweighted stake in specialty chemicals contributor Cytec Industries also contributed. The company makes composites and other materials for aerospace and industrial customers. I established this position in March, and the stock had a nice move in July, after the company announced it had entered into a merger agreement with Brussels-based Solvay, a global chemical company. I liquidated our stake in Cytec soon after to pursue opportunities I thought had more upside.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.
Materials Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 29, 2016
| % of fund's net assets | % of fund's net assets 6 months ago | |
| E.I. du Pont de Nemours & Co. | 14.6 | 9.4 |
| Eastman Chemical Co. | 8.9 | 8.0 |
| WestRock Co. | 8.5 | 9.2 |
| Monsanto Co. | 7.3 | 9.6 |
| LyondellBasell Industries NV Class A | 6.2 | 7.2 |
| Graphic Packaging Holding Co. | 5.3 | 3.8 |
| Ecolab, Inc. | 5.2 | 6.4 |
| The Dow Chemical Co. | 4.9 | 0.0 |
| PPG Industries, Inc. | 4.9 | 4.9 |
| Eagle Materials, Inc. | 4.8 | 4.6 |
| 70.6 |
Top Industries (% of fund's net assets)
| As of February 29, 2016 | ||
| Chemicals | 71.1% | |
| Containers & Packaging | 19.4% | |
| Construction Materials | 4.8% | |
| Metals & Mining | 1.8% | |
| Building Products | 1.1% | |
| All Others* | 1.8% | |
| As of August 31, 2015 | ||
| Chemicals | 63.5% | |
| Containers & Packaging | 21.6% | |
| Metals & Mining | 5.2% | |
| Construction Materials | 4.6% | |
| Paper & Forest Products | 1.5% | |
| All Others* | 3.6% | |
* Includes short-term investments and net other assets (liabilities).
Percentages shown as 0.0% may reflect amounts less than 0.05%.
Materials Portfolio
Investments February 29, 2016
Showing Percentage of Net Assets
| Common Stocks - 98.3% | |||
| Shares | Value | ||
| Building Products - 1.1% | |||
| Building Products - 1.1% | |||
| GCP Applied Technologies, Inc. (a) | 797,440 | $14,138,611 | |
| Chemicals - 71.1% | |||
| Commodity Chemicals - 7.3% | |||
| LyondellBasell Industries NV Class A | 1,016,696 | 81,549,186 | |
| Orion Engineered Carbons SA | 1,134,534 | 14,578,762 | |
| 96,127,948 | |||
| Diversified Chemicals - 28.6% | |||
| E.I. du Pont de Nemours & Co. | 3,171,200 | 193,030,945 | |
| Eastman Chemical Co. | 1,824,548 | 117,044,754 | |
| Olin Corp. | 140,600 | 2,131,496 | |
| The Dow Chemical Co. | 1,343,300 | 65,297,813 | |
| 377,505,008 | |||
| Fertilizers & Agricultural Chemicals - 11.8% | |||
| Agrium, Inc. | 146,500 | 12,615,458 | |
| CF Industries Holdings, Inc. | 903,610 | 32,945,621 | |
| Monsanto Co. | 1,071,630 | 96,435,984 | |
| Potash Corp. of Saskatchewan, Inc. | 833,300 | 14,122,372 | |
| 156,119,435 | |||
| Specialty Chemicals - 23.4% | |||
| Ashland, Inc. | 476,300 | 45,386,627 | |
| Ecolab, Inc. | 664,424 | 68,136,681 | |
| Frutarom Industries Ltd. | 270,296 | 13,977,842 | |
| NewMarket Corp. | 58,129 | 21,225,223 | |
| PPG Industries, Inc. | 669,400 | 64,617,182 | |
| Valspar Corp. | 621,100 | 48,594,864 | |
| W.R. Grace & Co. (a) | 699,640 | 48,093,254 | |
| 310,031,673 | |||
| TOTAL CHEMICALS | 939,784,064 | ||
| Construction Materials - 4.8% | |||
| Construction Materials - 4.8% | |||
| Eagle Materials, Inc. | 1,052,715 | 63,605,040 | |
| Containers & Packaging - 19.4% | |||
| Metal & Glass Containers - 4.3% | |||
| Ball Corp. | 855,170 | 56,637,909 | |
| Paper Packaging - 15.1% | |||
| Graphic Packaging Holding Co. | 5,639,795 | 69,538,672 | |
| Sealed Air Corp. | 380,400 | 17,395,692 | |
| WestRock Co. | 3,342,919 | 112,890,375 | |
| 199,824,739 | |||
| TOTAL CONTAINERS & PACKAGING | 256,462,648 | ||
| Energy Equipment & Services - 0.1% | |||
| Oil & Gas Equipment & Services - 0.1% | |||
| Aspen Aerogels, Inc. (a) | 340,453 | 1,242,653 | |
| Metals & Mining - 1.8% | |||
| Diversified Metals & Mining - 1.8% | |||
| Compass Minerals International, Inc. | 340,800 | 23,119,872 | |
| TOTAL COMMON STOCKS | |||
| (Cost $1,255,329,095) | 1,298,352,888 | ||
| Money Market Funds - 1.5% | |||
| Fidelity Cash Central Fund, 0.40% (b) | |||
| (Cost $19,504,253) | 19,504,253 | 19,504,253 | |
| TOTAL INVESTMENT PORTFOLIO - 99.8% | |||
| (Cost $1,274,833,348) | 1,317,857,141 | ||
| NET OTHER ASSETS (LIABILITIES) - 0.2% | 3,053,922 | ||
| NET ASSETS - 100% | $1,320,911,063 |
Legend
(a) Non-income producing
(b) 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 | $38,726 |
| Fidelity Securities Lending Cash Central Fund | 89,068 |
| Total | $127,794 |
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 | Value, end of period |
| Aspen Aerogels, Inc. | $10,127,522 | $-- | $7,035,841 | $-- | $-- |
| Total | $10,127,522 | $-- | $7,035,841 | $-- | $-- |
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 | 89.7% |
| Netherlands | 6.2% |
| Canada | 2.0% |
| Luxembourg | 1.1% |
| Israel | 1.0% |
| 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, 2016 | ||
| Assets | ||
| Investment in securities, at value — See accompanying schedule: Unaffiliated issuers (cost $1,255,329,095) | $1,298,352,888 | |
| Fidelity Central Funds (cost $19,504,253) | 19,504,253 | |
| Total Investments (cost $1,274,833,348) | $1,317,857,141 | |
| Receivable for investments sold | 26,728,214 | |
| Receivable for fund shares sold | 2,004,012 | |
| Dividends receivable | 2,889,783 | |
| Distributions receivable from Fidelity Central Funds | 1,712 | |
| Prepaid expenses | 6,204 | |
| Other receivables | 54,626 | |
| Total assets | 1,349,541,692 | |
| Liabilities | ||
| Payable for investments purchased | $24,989,520 | |
| Payable for fund shares redeemed | 2,558,256 | |
| Accrued management fee | 592,501 | |
| Distribution and service plan fees payable | 110,741 | |
| Other affiliated payables | 287,993 | |
| Other payables and accrued expenses | 91,618 | |
| Total liabilities | 28,630,629 | |
| Net Assets | $1,320,911,063 | |
| Net Assets consist of: | ||
| Paid in capital | $1,314,144,629 | |
| Distributions in excess of net investment income | (45,053) | |
| Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (36,212,306) | |
| Net unrealized appreciation (depreciation) on investments | 43,023,793 | |
| Net Assets | $1,320,911,063 | |
| Calculation of Maximum Offering Price | ||
| Class A: | ||
| Net Asset Value and redemption price per share ($202,746,868 ÷ 3,221,442 shares) | $62.94 | |
| Maximum offering price per share (100/94.25 of $62.94) | $66.78 | |
| Class T: | ||
| Net Asset Value and redemption price per share ($30,117,887 ÷ 481,737 shares) | $62.52 | |
| Maximum offering price per share (100/96.50 of $62.52) | $64.79 | |
| Class B: | ||
| Net Asset Value and offering price per share ($3,021,034 ÷ 49,306 shares)(a) | $61.27 | |
| Class C: | ||
| Net Asset Value and offering price per share ($66,895,988 ÷ 1,095,101 shares)(a) | $61.09 | |
| Materials: | ||
| Net Asset Value, offering price and redemption price per share ($711,984,554 ÷ 11,265,515 shares) | $63.20 | |
| Class I: | ||
| Net Asset Value, offering price and redemption price per share ($306,144,732 ÷ 4,853,795 shares) | $63.07 |
(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, 2016 | ||
| Investment Income | ||
| Dividends | $36,704,710 | |
| Interest | 36 | |
| Income from Fidelity Central Funds | 127,794 | |
| Total income | 36,832,540 | |
| Expenses | ||
| Management fee | $9,399,943 | |
| Transfer agent fees | 3,633,828 | |
| Distribution and service plan fees | 1,795,819 | |
| Accounting and security lending fees | 530,288 | |
| Custodian fees and expenses | 34,030 | |
| Independent trustees' compensation | 32,246 | |
| Registration fees | 133,878 | |
| Audit | 55,040 | |
| Legal | 20,722 | |
| Miscellaneous | 23,598 | |
| Total expenses before reductions | 15,659,392 | |
| Expense reductions | (116,230) | 15,543,162 |
| Net investment income (loss) | 21,289,378 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | (352,968) | |
| Other affiliated issuers | 596,307 | |
| Foreign currency transactions | (63,699) | |
| Total net realized gain (loss) | 179,640 | |
| Change in net unrealized appreciation (depreciation) on investment securities | (394,277,283) | |
| Net gain (loss) | (394,097,643) | |
| Net increase (decrease) in net assets resulting from operations | $(372,808,265) |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 29, 2016 | Year ended February 28, 2015 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $21,289,378 | $16,415,183 |
| Net realized gain (loss) | 179,640 | 140,995,843 |
| Change in net unrealized appreciation (depreciation) | (394,277,283) | (115,351,730) |
| Net increase (decrease) in net assets resulting from operations | (372,808,265) | 42,059,296 |
| Distributions to shareholders from net investment income | (15,036,509) | (14,132,791) |
| Distributions to shareholders from net realized gain | (20,008,646) | (176,045,519) |
| Total distributions | (35,045,155) | (190,178,310) |
| Share transactions - net increase (decrease) | (326,507,843) | 139,840,860 |
| Redemption fees | 36,485 | 59,111 |
| Total increase (decrease) in net assets | (734,324,778) | (8,219,043) |
| Net Assets | ||
| Beginning of period | 2,055,235,841 | 2,063,454,884 |
| End of period (including distributions in excess of net investment income of $45,053 and distributions in excess of net investment income of $33,066, respectively) | $1,320,911,063 | $2,055,235,841 |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Materials Portfolio Class A
| Years ended February 28, | 2016 A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $80.43 | $86.46 | $73.44 | $69.23 | $69.96 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .79 | .51 | .36 | .70 | .40 |
| Net realized and unrealized gain (loss) | (16.80) | 1.05 | 14.56 | 5.69 | (.35) |
| Total from investment operations | (16.01) | 1.56 | 14.92 | 6.39 | .05 |
| Distributions from net investment income | (.58) | (.43) | (.30) | (.63) | (.40) |
| Distributions from net realized gain | (.91) | (7.17) | (1.60) | (1.55) | (.38) |
| Total distributions | (1.48)C | (7.59)D | (1.90) | (2.18) | (.78) |
| Redemption fees added to paid in capitalB,E | – | – | – | – | – |
| Net asset value, end of period | $62.94 | $80.43 | $86.46 | $73.44 | $69.23 |
| Total ReturnF,G | (20.01)% | 2.20% | 20.46% | 9.40% | .21% |
| Ratios to Average Net AssetsH,I | |||||
| Expenses before reductions | 1.06% | 1.06% | 1.10% | 1.13% | 1.13% |
| Expenses net of fee waivers, if any | 1.06% | 1.06% | 1.10% | 1.13% | 1.13% |
| Expenses net of all reductions | 1.06% | 1.06% | 1.09% | 1.12% | 1.13% |
| Net investment income (loss) | 1.09% | .61% | .45% | 1.02% | .61% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $202,747 | $319,740 | $336,777 | $219,627 | $157,781 |
| Portfolio turnover rateJ | 64% | 76%K | 53% | 61% | 94% |
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 Total distributions of $7.59 per share is comprised of distributions from net investment income of $.425 and distributions from net realized gain of $7.167 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.
Financial Highlights — Materials Portfolio Class T
| Years ended February 28, | 2016 A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $79.95 | $85.99 | $73.05 | $68.91 | $69.68 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .56 | .25 | .12 | .50 | .21 |
| Net realized and unrealized gain (loss) | (16.69) | 1.06 | 14.48 | 5.66 | (.35) |
| Total from investment operations | (16.13) | 1.31 | 14.60 | 6.16 | (.14) |
| Distributions from net investment income | (.40) | (.18) | (.06) | (.46) | (.25) |
| Distributions from net realized gain | (.91) | (7.17) | (1.60) | (1.55) | (.38) |
| Total distributions | (1.30)C | (7.35) | (1.66) | (2.02)D | (.63) |
| Redemption fees added to paid in capitalB,E | – | – | – | – | – |
| Net asset value, end of period | $62.52 | $79.95 | $85.99 | $73.05 | $68.91 |
| Total ReturnF,G | (20.27)% | 1.90% | 20.10% | 9.10% | (.09)% |
| Ratios to Average Net AssetsH,I | |||||
| Expenses before reductions | 1.38% | 1.37% | 1.40% | 1.42% | 1.42% |
| Expenses net of fee waivers, if any | 1.37% | 1.37% | 1.40% | 1.42% | 1.42% |
| Expenses net of all reductions | 1.37% | 1.37% | 1.39% | 1.41% | 1.41% |
| Net investment income (loss) | .77% | .31% | .15% | .73% | .33% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $30,118 | $45,252 | $45,223 | $37,860 | $28,290 |
| Portfolio turnover rateJ | 64% | 76%K | 53% | 61% | 94% |
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 Total distributions of $2.02 per share is comprised of distributions from net investment income of $.463 and distributions from net realized gain of $1.552 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.
Financial Highlights — Materials Portfolio Class B
| Years ended February 28, | 2016 A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $78.31 | $84.63 | $72.21 | $68.13 | $68.95 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .19 | (.18) | (.28) | .16 | (.11) |
| Net realized and unrealized gain (loss) | (16.32) | 1.03 | 14.28 | 5.57 | (.33) |
| Total from investment operations | (16.13) | .85 | 14.00 | 5.73 | (.44) |
| Distributions from net investment income | – | – | – | (.10) | – |
| Distributions from net realized gain | (.91) | (7.17) | (1.58) | (1.55) | (.38) |
| Total distributions | (.91) | (7.17) | (1.58) | (1.65) | (.38) |
| Redemption fees added to paid in capitalB,C | – | – | – | – | – |
| Net asset value, end of period | $61.27 | $78.31 | $84.63 | $72.21 | $68.13 |
| Total ReturnD,E | (20.67)% | 1.35% | 19.50% | 8.55% | (.57)% |
| Ratios to Average Net AssetsF,G | |||||
| Expenses before reductions | 1.88% | 1.89% | 1.90% | 1.92% | 1.91% |
| Expenses net of fee waivers, if any | 1.88% | 1.89% | 1.90% | 1.92% | 1.91% |
| Expenses net of all reductions | 1.87% | 1.89% | 1.90% | 1.91% | 1.91% |
| Net investment income (loss) | .27% | (.22)% | (.36)% | .24% | (.17)% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $3,021 | $6,487 | $8,671 | $10,218 | $11,040 |
| Portfolio turnover rateH | 64% | 76%I | 53% | 61% | 94% |
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 Total returns do not include the effect of the contingent deferred sales charge.
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.
Financial Highlights — Materials Portfolio Class C
| Years ended February 28, | 2016 A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $78.12 | $84.38 | $71.96 | $67.98 | $68.78 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .24 | (.12) | (.23) | .18 | (.10) |
| Net realized and unrealized gain (loss) | (16.28) | 1.03 | 14.23 | 5.55 | (.32) |
| Total from investment operations | (16.04) | .91 | 14.00 | 5.73 | (.42) |
| Distributions from net investment income | (.08) | – | – | (.20) | – |
| Distributions from net realized gain | (.91) | (7.17) | (1.58) | (1.55) | (.38) |
| Total distributions | (.99) | (7.17) | (1.58) | (1.75) | (.38) |
| Redemption fees added to paid in capitalB,C | – | – | – | – | – |
| Net asset value, end of period | $61.09 | $78.12 | $84.38 | $71.96 | $67.98 |
| Total ReturnD,E | (20.61)% | 1.43% | 19.56% | 8.58% | (.55)% |
| Ratios to Average Net AssetsF,G | |||||
| Expenses before reductions | 1.81% | 1.82% | 1.85% | 1.89% | 1.89% |
| Expenses net of fee waivers, if any | 1.81% | 1.82% | 1.85% | 1.89% | 1.89% |
| Expenses net of all reductions | 1.81% | 1.82% | 1.84% | 1.88% | 1.89% |
| Net investment income (loss) | .34% | (.14)% | (.30)% | .26% | (.15)% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $66,896 | $107,697 | $106,879 | $75,007 | $58,296 |
| Portfolio turnover rateH | 64% | 76%I | 53% | 61% | 94% |
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 Total returns do not include the effect of the contingent deferred sales charge.
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.
Financial Highlights — Materials Portfolio
| Years ended February 28, | 2016 A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $80.77 | $86.81 | $73.68 | $69.41 | $70.11 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .98 | .73 | .58 | .90 | .60 |
| Net realized and unrealized gain (loss) | (16.89) | 1.05 | 14.63 | 5.71 | (.37) |
| Total from investment operations | (15.91) | 1.78 | 15.21 | 6.61 | .23 |
| Distributions from net investment income | (.76) | (.65) | (.48) | (.79) | (.55) |
| Distributions from net realized gain | (.91) | (7.17) | (1.60) | (1.55) | (.38) |
| Total distributions | (1.66)C | (7.82) | (2.08) | (2.34) | (.93) |
| Redemption fees added to paid in capitalB,D | – | – | – | – | – |
| Net asset value, end of period | $63.20 | $80.77 | $86.81 | $73.68 | $69.41 |
| Total ReturnE | (19.81)% | 2.46% | 20.80% | 9.71% | .49% |
| Ratios to Average Net AssetsF,G | |||||
| Expenses before reductions | .81% | .80% | .82% | .85% | .85% |
| Expenses net of fee waivers, if any | .81% | .80% | .82% | .85% | .85% |
| Expenses net of all reductions | .80% | .80% | .82% | .84% | .84% |
| Net investment income (loss) | 1.34% | .87% | .73% | 1.30% | .90% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $711,985 | $1,107,689 | $1,231,942 | $1,146,782 | $1,089,619 |
| Portfolio turnover rateH | 64% | 76%I | 53% | 61% | 94% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C 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.
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.
Financial Highlights — Materials Portfolio Class I
| Years ended February 28, | 2016 A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $80.60 | $86.66 | $73.57 | $69.35 | $70.05 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | 1.00 | .74 | .59 | .90 | .60 |
| Net realized and unrealized gain (loss) | (16.86) | 1.05 | 14.60 | 5.70 | (.36) |
| Total from investment operations | (15.86) | 1.79 | 15.19 | 6.60 | .24 |
| Distributions from net investment income | (.77) | (.68) | (.50) | (.83) | (.56) |
| Distributions from net realized gain | (.91) | (7.17) | (1.60) | (1.55) | (.38) |
| Total distributions | (1.67)C | (7.85) | (2.10) | (2.38) | (.94) |
| Redemption fees added to paid in capitalB,D | – | – | – | – | – |
| Net asset value, end of period | $63.07 | $80.60 | $86.66 | $73.57 | $69.35 |
| Total ReturnE | (19.79)% | 2.49% | 20.81% | 9.71% | .50% |
| Ratios to Average Net AssetsF,G | |||||
| Expenses before reductions | .78% | .78% | .81% | .85% | .84% |
| Expenses net of fee waivers, if any | .78% | .78% | .81% | .85% | .84% |
| Expenses net of all reductions | .78% | .78% | .81% | .84% | .83% |
| Net investment income (loss) | 1.37% | .89% | .74% | 1.30% | .91% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $306,145 | $468,371 | $333,963 | $246,696 | $89,299 |
| Portfolio turnover rateH | 64% | 76%I | 53% | 61% | 94% |
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.
Notes to Financial Statements
For the period ended February 29, 2016
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 T, Class C, Materials and Class I (formerly Institutional Class) shares, each of which, along with Class B shares, has equal rights as to assets and voting privileges. Class B shares are closed to new accounts and additional purchases, except for exchanges and reinvestments. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a maximum holding period of seven years from the initial date of purchase.
During the period, the Board of Trustees approved the conversion of all existing Class B shares into Class A shares, effective on or about July 1, 2016, regardless of the length of times shares have been held.
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 Fidelity Investments Money Management, Inc. (FIMM), an affiliate of the investment adviser. Annualized expenses of the Money Market Central Funds as of their most recent shareholder report date are less than .005%.
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 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 Fidelity SelectCo, LLC (SelectCo) Fair Value Committee (the Committee). 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. Utilizing these techniques may result in transfers between Level 1 and Level 2. 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 may 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. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. Subsequent to ex-dividend date the Fund determines the components of these distributions, based upon receipt of tax filings or other correspondence relating to the underlying investment. 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), independent Trustees may elect 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 are included in the accompanying Statement of Assets and Liabilities.
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, 2016, 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 dividends 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, passive foreign investment companies (PFIC), original issue discount, deferred trustees compensation, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
| Gross unrealized appreciation | $171,131,096 |
| Gross unrealized depreciation | (136,462,813) |
| Net unrealized appreciation (depreciation) on securities | $34,668,283 |
| Tax Cost | $1,283,188,858 |
The tax-based components of distributable earnings as of period end were as follows:
| Net unrealized appreciation (depreciation) on securities and other investments | $34,668,283 |
The Fund intends to elect to defer to its next fiscal year $26,553,392 of capital losses recognized during the period November 1, 2015 to February 29, 2016.
Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. Under the Regulated Investment Company Modernization Act of 2010 (the Act), the Fund is permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period and such capital losses are required to be used prior to any losses that expire. The capital loss carryforward information presented below, including any applicable limitation, is estimated as of fiscal period end and is subject to adjustment.
| Fiscal year of expiration | |
| 2017 | $(199,630) |
| 2018 | (1,022,988) |
| 2019 | (80,787) |
| Total with expiration | $(1,303,405) |
The Fund acquired $1,303,405 of capital loss carryforwards as part of a merger in a prior period. The losses acquired that will be available to offset future capital gains of the Fund will be limited to approximately $611,309 per year.
The tax character of distributions paid was as follows:
| February 29, 2016 | February 28, 2015 | |
| Ordinary Income | $15,036,509 | $ 14,132,791 |
| Long-term Capital Gains | 20,008,646 | 176,045,519 |
| Total | $35,045,155 | $ 190,178,310 |
Trading (Redemption) Fees. Shares held by investors in the Fund less than 30 days may be subject to a redemption fee equal to .75% of the NAV of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Fund and accounted for as an addition to paid in capital.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $1,081,563,958 and $1,425,677,892, respectively.
5. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity SelectCo, 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 .25% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by Fidelity Management & Research Company (FMR) and the investment adviser. 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 .55% 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 Corporation (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% | $669,561 | $– |
| Class T | .25% | .25% | 187,278 | – |
| Class B | .75% | .25% | 45,667 | 34,250 |
| Class C | .75% | .25% | 893,313 | 121,122 |
| $1,795,819 | $155,372 |
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 T 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 T, Class B, and Class C redemptions. The deferred sales charges range from 5.00% to 1.00% for Class B shares, 1.00% for Class C shares, 1.00% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained by FDC | |
| Class A | $63,199 |
| Class T | 4,994 |
| Class B(a) | 3,199 |
| Class C(a) | 13,325 |
| $84,717 |
(a) When Class B and 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, Inc., (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. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements.
For the period, transfer agent fees for each class were as follows:
| Amount | % of Class-Level Average Net Assets | |
| Class A | $584,630 | .22 |
| Class T | 105,698 | .28 |
| Class B | 13,231 | .29 |
| Class C | 198,202 | .22 |
| Materials | 1,969,720 | .22 |
| Class I | 762,347 | .19 |
| $ 3,633,828 |
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. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions 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 $18,365 for the period.
Interfund Trades. The Fund 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.
The Fund participates 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 Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $2,641 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, the Fund did not borrow on this line of credit.
7. Security Lending.
The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. 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. At period end, there were no security loans outstanding. 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. Total security lending income during the period amounted to $89,068.
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 $57,488 for the period.
In addition, during the period the investment adviser reimbursed and/or waived a portion of fund-level operating expenses in the amount of $13,331 and a portion of class-level operating expenses as follows:
| Amount | |
| Class A | $6,876 |
| Class T | 846 |
| Class B | 22 |
| Class C | 2,309 |
| Materials | 27,233 |
| Class I | 8,125 |
| $45,411 |
9. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
| Year ended February 29, 2016 | Year ended February 28, 2015 | |
| From net investment income | ||
| Class A | $1,939,569 | $1,638,100 |
| Class T | 197,484 | 99,020 |
| Class C | 96,966 | – |
| Materials | 8,906,972 | 8,803,568 |
| Class I | 3,895,518 | 3,592,103 |
| Total | $15,036,509 | $14,132,791 |
| From net realized gain | ||
| Class A | $3,076,815 | $27,780,861 |
| Class T | 454,774 | 3,863,168 |
| Class B | 50,258 | 628,830 |
| Class C | 1,065,857 | 9,676,799 |
| Materials | 10,731,466 | 98,020,822 |
| Class I | 4,629,476 | 36,075,039 |
| Total | $20,008,646 | $176,045,519 |
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, 2016 | Year ended February 28, 2015 | Year ended February 29, 2016 | Year ended February 28, 2015 | |
| Class A | ||||
| Shares sold | 820,014 | 1,287,549 | $59,881,537 | $107,992,682 |
| Reinvestment of distributions | 70,909 | 350,058 | 4,729,990 | 27,494,344 |
| Shares redeemed | (1,644,717) | (1,557,532) | (118,125,615) | (130,043,911) |
| Net increase (decrease) | (753,794) | 80,075 | $(53,514,088) | $5,443,115 |
| Class T | ||||
| Shares sold | 84,811 | 122,029 | $5,963,121 | $10,167,521 |
| Reinvestment of distributions | 9,611 | 48,608 | 637,500 | 3,794,851 |
| Shares redeemed | (178,706) | (130,511) | (12,734,979) | (10,688,592) |
| Net increase (decrease) | (84,284) | 40,126 | $(6,134,358) | $3,273,780 |
| Class B | ||||
| Shares sold | 1,827 | 2,935 | $136,913 | $242,184 |
| Reinvestment of distributions | 717 | 7,683 | 46,833 | 590,123 |
| Shares redeemed | (36,076) | (30,247) | (2,579,948) | (2,465,575) |
| Net increase (decrease) | (33,532) | (19,629) | $(2,396,202) | $(1,633,268) |
| Class C | ||||
| Shares sold | 141,291 | 367,698 | $10,125,628 | $30,096,831 |
| Reinvestment of distributions | 16,060 | 110,883 | 1,043,658 | 8,472,087 |
| Shares redeemed | (440,847) | (366,676) | (30,549,327) | (29,116,038) |
| Net increase (decrease) | (283,496) | 111,905 | $(19,380,041) | $9,452,880 |
| Materials | ||||
| Shares sold | 1,388,149 | 2,411,814 | $101,563,248 | $202,615,605 |
| Reinvestment of distributions | 273,187 | 1,274,428 | 18,281,510 | 100,536,677 |
| Shares redeemed | (4,109,408) | (4,164,314) | (297,748,381) | (345,204,286) |
| Net increase (decrease) | (2,448,072) | (478,072) | $(177,903,623) | $(42,052,004) |
| Class I | ||||
| Shares sold | 1,480,820 | 4,739,071(a) | $107,996,943 | $400,864,210(a) |
| Reinvestment of distributions | 118,643 | 464,747 | 7,923,047 | 36,366,289 |
| Shares redeemed | (2,556,391) | (3,246,644)(b) | (183,099,521) | (271,874,142)(b) |
| Net increase (decrease) | (956,928) | 1,957,174 | $(67,179,531) | $165,356,357 |
(a) Amount includes in-kind exchanges.
(b) Amount includes in-kind redemptions.
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.
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Select Portfolios and the Shareholders of Chemicals Portfolio, Gold Portfolio and Materials Portfolio:
In our opinion, the accompanying statements of assets and liabilities (consolidated statement of assets and liabilities for Gold Portfolio), including the schedules of investments (consolidated schedule of investments for Gold Portfolio), and the related statements of operations (consolidated statement of operations for Gold Portfolio) and of changes in net assets (consolidated changes in net assets for Gold Portfolio) and the financial highlights (consolidated financial highlights for Gold Portfolio) present fairly, in all material respects, the financial positions of Chemicals Portfolios, Gold Portfolio and Materials Portfolio (funds of Fidelity Select Portfolios) (the "Funds") at February 29, 2016, 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 then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Funds' management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at February 29, 2016 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 19, 2016
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. Each of the Trustees oversees 75 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. Brian B. Hogan 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. Michael E. Wiley 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 sector portfolios. Other Boards oversee Fidelity's equity and high income funds, and Fidelity's investment grade bond, money market, and asset allocation funds. 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 SelectCo 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 SelectCo, 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 and Audit Committees. Appropriate personnel, including but not limited to the funds' Chief Compliance Officer (CCO), SelectCo's internal auditor, the independent accountants, the funds' Treasurer and portfolio management personnel, make periodic reports to the Board's committees, as appropriate. 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+
Brian B. Hogan (1964)
Year of Election or Appointment: 2014
Trustee
Chairman of the Board of Trustees
Mr. Hogan also serves as Trustee or Vice President of other funds. Mr. Hogan serves as a Director of FMR Investment Management (U.K.) Limited (investment adviser firm, 2015-present) and Fidelity SelectCo, LLC (investment adviser firm, 2014-present) and President of the Equity Division of FMR (investment adviser firm, 2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager.
* 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 SelectCo.
+ 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+
David A. Rosow (1942)
Year of Election or Appointment: 2013
Trustee
Mr. Rosow also serves as Trustee of other Fidelity® funds. Prior to his retirement in 2006, Mr. Rosow was the Chief Executive Officer, owner and operator of a number of private companies, which encompassed oil refining, drilling and marketing of petroleum products (including specialty petroleum products), the recreation industry, and real estate development. Mr. Rosow currently serves as a Director of Oxbow Carbon LLC (upgraders, marketers, and distributors of petroleum byproducts of the oil refining process, 2015-present) and Oxbridge Academy of the Palm Beaches (2015-present). Previously, Mr. Rosow served on the Fairfield Country Day School Board for 27 years, including as its President for 3 years, stepping down in 2006, as Lead Director and Chairman of the Audit Committee of Hudson United Bancorp (1996-2006), Chairman of the Board of Westport Bank and Trust (1992-1996), and as a Director of TD Banknorth (2006-2007). In addition, Mr. Rosow served as a member (2008-2014) and President (2009-2014) of the Town Council of Palm Beach, Florida. Mr. Rosow also served as a Member of the Advisory Board of other Fidelity® funds (2012-2013).
Garnett A. Smith (1947)
Year of Election or Appointment: 2013
Trustee
Mr. Smith also serves as Trustee of other Fidelity® funds. Prior to Mr. Smith's retirement, he served as Chairman and Chief Executive Officer of Inbrand Corp. (manufacturer of personal absorbent products, 1990-1997). He also served as President (1986-1990) of Inbrand Corp. Prior to his employment with Inbrand Corp., he was employed by a retail fabric chain and North Carolina National Bank. In addition, Mr. Smith served as a Member of the Advisory Board of other Fidelity® funds (2012-2013) and as a board member of the Jackson Hole Land Trust (2009-2012).
Michael E. Wiley (1950)
Year of Election or Appointment: 2008
Trustee
Chairman of the Independent Trustees
Mr. Wiley also serves as Trustee of other Fidelity® funds. Mr. Wiley serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), a Director of Tesoro Logistics LP (natural resources logistics, 2015-present), and a Director of Bill Barrett Corporation (exploration and production, 2005-present). In addition, Mr. Wiley also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a Trustee of other Fidelity® funds (2008-2013), as a Director of Asia Pacific Exploration Consolidated (international oil and gas exploration and production, 2008-2013), as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-2010), as a Senior Energy Advisor of Katzenbach Partners, LLC (consulting, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production, 2001-2005).
+ 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:
Except for Anthony R. Rochte, correspondence intended for an officer may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210. Correspondence intended for Mr. Rochte may be sent to SelectCo, 1225 17th Street, Denver, Colorado 80202-5541. Officers appear below in alphabetical order.
Name, Year of Birth; Principal Occupation
Donald F. Donahue (1950)
Year of Election or Appointment: 2015
Member of the Advisory Board
Mr. Donahue also serves as a Member of the Advisory Board of other Fidelity® funds. Mr. Donahue is President and Chief Executive Officer of Miranda Partners, LLC (risk consulting for the financial services industry, 2012-present) and a consultant for the Institute for Defense Analyses (national security, 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 serves as a Member and Treasurer of the Board of Directors of United Way of New York (2012-present), Member of the Board of Directors of NYC Leadership Academy (2012-present) and Physicians for Human Rights (2013-present), and Member of the Board of Advisors of Ripple Labs, Inc. (financial services, 2015-present). He also served as Chairman (2010-2012) and Member of the Board of Directors (2012-2013) of Omgeo, LLC (financial services) and Member of the Board of Directors of XBRL US (financial services non-profit, 2009-2012) and the International Securities Services Association (2009-2012).
Christopher S. Bartel (1971)
Year of Election or Appointment: 2009
Vice President
Mr. Bartel also serves as Vice President of other funds. Mr. Bartel serves as a Director of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2016-present) and Fidelity Management & Research (Hong Kong) (investment adviser firm, 2012-present) and Head of Global Equity Research (2010-present). Previously, Mr. Bartel served as a Director, President, and Chief Executive Officer of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2012-2016), Senior Vice President of Equity Research (2009-2010), Managing Director of Research (2006-2009), and an analyst and portfolio manager (2000-2006).
Marc R. Bryant (1966)
Year of Election or Appointment: 2013
Secretary and Chief Legal Officer (CLO)
Mr. Bryant also serves as Secretary and CLO of other funds. Mr. Bryant serves as CLO, Secretary, and Senior Vice President of Fidelity Management & Research Company (investment adviser firm, 2015-present) and FMR Co., Inc. (investment adviser firm, 2015-present); Secretary of Fidelity SelectCo, LLC (investment adviser firm, 2015-present) and Fidelity Investments Money Management, Inc. (investment adviser firm, 2015-present); and CLO of Fidelity Management & Research (Hong Kong) Limited and FMR Investment Management (U.K.) Limited (investment adviser firms, 2015-present) and Fidelity Management & Research (Japan) Limited (investment adviser firm, 2016-present). He is Senior Vice President and Deputy General Counsel of FMR LLC (diversified financial services company). Previously, Mr. Bryant served as Secretary and CLO of Fidelity Rutland Square Trust II (2010-2014) and Assistant Secretary of Fidelity's Fixed Income and Asset Allocation Funds (2013-2015). Prior to joining Fidelity Investments, Mr. Bryant served as a Senior Vice President and the Head of Global Retail Legal for AllianceBernstein L.P. (2006-2010), and as the General Counsel for ProFund Advisors LLC (2001-2006).
William C. Coffey (1969)
Year of Election or Appointment: 2009
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 Vice President and Associate General Counsel of FMR LLC (2005-2009).
Jonathan Davis (1968)
Year of Election or Appointment: 2010
Assistant Treasurer
Mr. Davis also serves as Assistant Treasurer of other funds, 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).
Adrien E. Deberghes (1967)
Year of Election or Appointment: 2013
President and Treasurer
Mr. Deberghes also serves as an officer of other funds. He is an employee of Fidelity Investments (2008-present). Prior to joining Fidelity Investments, Mr. Deberghes was Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005). Previously, Mr. Deberghes served in other fund officer roles.
Joseph DeSantis (1959)
Year of Election or Appointment: 2015
Vice President
Mr. DeSantis also serves as Vice President of other funds. Mr. DeSantis serves as Group Chief Investment Officer, Equities (2010-present) and is an employee of Fidelity Investments.
Stephanie J. Dorsey (1969)
Year of Election or Appointment: 2010
Assistant Treasurer
Ms. Dorsey also serves as an officer of other funds. She is an employee of Fidelity Investments (2008-present) and has served in other fund officer roles. Prior to joining Fidelity Investments, Ms. Dorsey served as Treasurer (2004-2008) of the JPMorgan Mutual Funds and Vice President (2004-2008) of JPMorgan Chase Bank.
Howard J. Galligan III (1966)
Year of Election or Appointment: 2014
Chief Financial Officer
Mr. Galligan also serves as Chief Financial Officer of other funds. Mr. Galligan serves as President of Fidelity Pricing and Cash Management Services (FPCMS) (2014-present) and as a Director of Strategic Advisers, Inc. (investment adviser firm, 2008-present). Previously, Mr. Galligan served as Chief Administrative Officer of Asset Management (2011-2014) and Chief Operating Officer and Senior Vice President of Investment Support for Strategic Advisers, Inc. (2003-2011).
Scott C. Goebel (1968)
Year of Election or Appointment: 2015
Vice President
Mr. Goebel serves as Vice President of other funds and is an employee of Fidelity Investments (2001-present). Previously, Mr. Goebel served as Secretary of Fidelity SelectCo, LLC (investment adviser firm, 2013-2015), Fidelity Investments Money Management, Inc. (FIMM) (investment adviser firm, 2010-2015), and Fidelity Research and Analysis Company (FRAC) (investment adviser firm, 2010-2015); General Counsel, Secretary, and Senior Vice President of Fidelity Management & Research Company (investment adviser firm, 2008-2015) and FMR Co., Inc. (investment adviser firm, 2008-2015); Assistant Secretary of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2008-2015) and Fidelity Management & Research (U.K.) Inc. (investment adviser firm, 2008-2015); Chief Legal Officer (CLO) of Fidelity Management & Research (Hong Kong) Limited (investment adviser firm, 2008-2015); Secretary and CLO of certain Fidelity® funds (2008-2015); Assistant Secretary of FIMM (2008-2010), FRAC (2008-2010), and certain funds (2007-2008); and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007).
James D. Gryglewicz (1972)
Year of Election or Appointment: 2014
Chief Compliance Officer
Mr. Gryglewicz also serves as Chief Compliance Officer of other funds. Mr. Gryglewicz serves as Compliance Officer of Strategic Advisers, Inc. (investment adviser firm, 2015-present) and Fidelity SelectCo, LLC (investment adviser firm, 2014-present), Senior Vice President of Asset Management Compliance (2009-present), and is an employee of Fidelity Investments (2004-present).
Brian B. Hogan (1964)
Year of Election or Appointment: 2009
Vice President
Mr. Hogan also serves as Trustee or Vice President of other funds. Mr. Hogan serves as a Director of FMR Investment Management (U.K.) Limited (investment adviser firm, 2015-present) and Fidelity SelectCo, LLC (investment adviser firm, 2014-present) and President of the Equity Division of FMR (investment adviser firm, 2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager.
Chris Maher (1972)
Year of Election or Appointment: 2013
Assistant Treasurer
Mr. Maher serves as Assistant Treasurer of other funds. Mr. Maher is Vice President of Valuation Oversight and is an employee of Fidelity Investments. Previously, Mr. Maher served as 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).
John F. Papandrea (1972)
Year of Election or Appointment: 2016
Anti-Money Laundering (AML) Officer
Mr. Papandrea also serves as AML Officer of other funds. Mr. Papandrea is Vice President of FMR LLC (diversified financial services company, 2008-present) and is an employee of Fidelity Investments (2005-present).
Kenneth B. Robins (1969)
Year of Election or Appointment: 2013
Deputy Treasurer
Mr. Robins also serves as an officer of other funds. Mr. Robins serves as Executive Vice President of Fidelity Investments Money Management, Inc. (FIMM) (investment adviser firm, 2013-present) and is an employee of Fidelity Investments (2004-present). Previously, Mr. Robins served in other fund officer roles.
Anthony R. Rochte (1968)
Year of Election or Appointment: 2013
Vice President
Mr. Rochte also serves as Vice President of other funds. Mr. Rochte serves as President of Fidelity SelectCo, LLC (investment adviser firm, 2012-present) and is an employee of Fidelity Investments (2012-present). Prior to joining Fidelity Investments, Mr. Rochte served as Senior Managing Director and head of State Street Global Advisors' North American Intermediary Business Group (2006-2012).
Stacie M. Smith (1974)
Year of Election or Appointment: 2013
Assistant Treasurer
Ms. Smith also serves as an officer of other funds. She 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 (1996-2009). Previously, Ms. Smith served as Deputy Treasurer of certain Fidelity funds (2013-2016).
Renee Stagnone (1975)
Year of Election or Appointment: 2013
Deputy Treasurer
Ms. Stagnone also serves as an officer of other funds. Ms. Stagnone is an employee of Fidelity Investments (1997-present). Previously, Ms. Stagnone served as Deputy Treasurer of certain Fidelity funds (2013-2016).
Joseph F. Zambello (1957)
Year of Election or Appointment: 2011
Deputy Treasurer
Mr. Zambello also serves as Deputy Treasurer of other funds. Mr. Zambello is an employee of Fidelity Investments (1991-present). Previously, Mr. Zambello served as Deputy Treasurer of certain Fidelity funds (2011-2016), Vice President of the Program Management Group of FMR (investment adviser firm, 2009-2011), and Vice President of the Transfer Agent Oversight Group (2005-2009).
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, redemption fees 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, 2015 to February 29, 2016).
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. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. 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 Class' 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. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. 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, 2015 | Ending Account Value February 29, 2016 | Expenses Paid During Period-B September 1, 2015 to February 29, 2016 | |
| Chemicals Portfolio | .80% | |||
| Actual | $1,000.00 | $1,004.80 | $3.99 | |
| Hypothetical-C | $1,000.00 | $1,020.89 | $4.02 | |
| Gold Portfolio | ||||
| Class A | 1.18% | |||
| Actual | $1,000.00 | $1,306.30 | $6.77 | |
| Hypothetical-C | $1,000.00 | $1,019.00 | $5.92 | |
| Class T | 1.48% | |||
| Actual | $1,000.00 | $1,304.10 | $8.48 | |
| Hypothetical-C | $1,000.00 | $1,017.50 | $7.42 | |
| Class B | 1.93% | |||
| Actual | $1,000.00 | $1,301.50 | $11.04 | |
| Hypothetical-C | $1,000.00 | $1,015.27 | $9.67 | |
| Class C | 1.92% | |||
| Actual | $1,000.00 | $1,302.10 | $10.99 | |
| Hypothetical-C | $1,000.00 | $1,015.32 | $9.62 | |
| Gold | .93% | |||
| Actual | $1,000.00 | $1,308.30 | $5.34 | |
| Hypothetical-C | $1,000.00 | $1,020.24 | $4.67 | |
| Class I | .87% | |||
| Actual | $1,000.00 | $1,308.10 | $4.99 | |
| Hypothetical-C | $1,000.00 | $1,020.54 | $4.37 | |
| Materials Portfolio | ||||
| Class A | 1.06% | |||
| Actual | $1,000.00 | $900.90 | $5.01 | |
| Hypothetical-C | $1,000.00 | $1,019.59 | $5.32 | |
| Class T | 1.38% | |||
| Actual | $1,000.00 | $899.60 | $6.52 | |
| Hypothetical-C | $1,000.00 | $1,018.00 | $6.92 | |
| Class B | 1.89% | |||
| Actual | $1,000.00 | $897.30 | $8.92 | |
| Hypothetical-C | $1,000.00 | $1,015.47 | $9.47 | |
| Class C | 1.82% | |||
| Actual | $1,000.00 | $897.70 | $8.59 | |
| Hypothetical-C | $1,000.00 | $1,015.81 | $9.12 | |
| Materials | .82% | |||
| Actual | $1,000.00 | $902.10 | $3.88 | |
| Hypothetical-C | $1,000.00 | $1,020.79 | $4.12 | |
| Class I | .78% | |||
| Actual | $1,000.00 | $902.20 | $3.69 | |
| 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:
| Pay Date | Record Date | Capital Gains | |
| Chemicals Portfolio | 04/18/16 | 04/15/16 | $0.000 |
| Gold Portfolio | 04/18/16 | 04/15/16 | $0.234 |
| Materials Portfolio | 04/18/16 | 04/15/16 | $0.000 |
The funds hereby designate as capital gain dividend the amounts noted below for the taxable year ended February 29, 2016, or, if subsequently determined to be different, the net capital gain of such year.
| Chemicals Portfolio | $33,205,586 |
| Materials Portfolio | $19,113,522 |
A percentage of the dividends distributed during the fiscal year for the following funds qualify for the dividends–received deduction for corporate shareholders:
| April 2015 | December 2015 | |
| Chemicals Portfolio | 100% | 100% |
| Gold Portfolio | 0% | 0% |
| Materials Portfolio | 0% | 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 2015 | December 2015 | |
| Chemicals Portfolio | 100% | 100% |
| Gold Portfolio | 0% | 0% |
| Materials Portfolio | 0% | 100% |
The funds will notify shareholders in January 2017 of amounts for use in preparing 2016 income tax returns.
Board Approval of Investment Advisory Contracts and Management Fees
Chemicals Portfolio
Gold Portfolio
Materials Portfolio
Each year, the Board of Trustees, including the Independent Trustees (together, the Board), votes on the renewal of the management contract with Fidelity SelectCo, LLC (SelectCo), an affiliate of Fidelity Management & Research Company (FMR), and the sub-advisory agreements with affiliates of FMR (together, the Advisory Contracts) for each fund. 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.
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 each fund's Advisory Contracts, including the services and support provided to each fund and its shareholders. The Board has established four standing committees (Committees) — Operations, Audit, Fair Valuation, and Governance and Nominating — 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 Operations Committee, of which all of the Independent Trustees are members, meets regularly throughout the year and considers, among other matters, information specifically related to the annual consideration of the renewal of each fund's Advisory Contracts. The Board, acting directly and through its Committees, requests and receives information concerning the annual consideration of the renewal of each fund's Advisory Contracts. The Board also meets as needed to consider 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 ad hoc joint committees to discuss certain matters relevant to all of the Fidelity funds.
At its January 2016 meeting, the Board unanimously determined to renew each 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 to be provided to each fund and its shareholders (including the investment performance of each fund); (ii) the competitiveness of each fund's management fee and total expense ratio relative to peer funds; (iii) the total costs of the services to be provided by and the profits to be realized by Fidelity from its relationships with each fund; and (iv) the extent to which, if any, economies of scale exist and would be realized as each fund grows, and whether any economies of scale are appropriately shared with fund shareholders.
In considering whether to renew the Advisory Contracts for each 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 each 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 each fund have a broad range of investment choices available to them, including a wide choice among funds offered by Fidelity's competitors, and that each 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 that fund, which is part of the Fidelity family of funds.
Nature, Extent, and Quality of Services Provided. The Board considered the staffing of SelectCo and the sub-advisers (together with SelectCo, the Investment Advisers) as it relates to the funds, including the backgrounds of investment personnel of SelectCo, and also considered the funds' investment objectives, strategies, and related investment philosophies. 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 each 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 reviewed the general qualifications and capabilities of the investment staff of the Investment Advisers, including their 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 each 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, each 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 or convenience of the Fidelity funds as investment vehicles. These services include 24-hour access to account information and market information through telephone representatives and over the Internet, investor education materials and asset allocation tools, and the expanded availability of Fidelity Investor Centers.The Board noted that in 2014 the ad hoc Committee on Transfer Agency Fees was formed by it and the boards of certain other Fidelity funds to review the variety of transfer agency services and fee structures throughout the mutual fund industry compared to Fidelity's.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 investment research 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 making other enhancements to meet client needs; (iv) reducing management fees and total expenses for certain index funds; (v) continuing to launch dedicated lower cost underlying funds to meet portfolio construction needs related to expanding underlying fund options for Fidelity funds of funds, specifically for the Freedom Fund product lines; (vi) rationalizing product lines and gaining increased efficiencies through fund mergers; (vii) continuing to develop, acquire and implement systems and technology to improve services to the funds and shareholders, strengthen information security, and increase efficiency; (viii) implementing investment enhancements to further strengthen Fidelity's target date product line to increase investors' probability of success in achieving their goals; (ix) modifying the eligibility criteria for certain share classes to accommodate roll-over assets from employer-sponsored retirement plans; (x) launching a new Class W of the Freedom Index Funds to attract and retain Fidelity record-kept retirement plan assets; and (xi) implementing changes to Fidelity's money market fund product line in response to recent regulatory reforms.Investment Performance. The Board considered whether each 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 with representatives of the Investment Advisers about fund investment performance that occur at Board meetings throughout the year. 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 each fund, for different time periods, measured against a securities market index ("benchmark index"). In its evaluation of fund investment performance at meetings throughout the year, the Board gave particular attention to information indicating underperformance of certain Fidelity funds for specific time periods and discussed with the Investment Advisers the reasons for such underperformance. Materials Portfolio underperformed its benchmark for the one-, three-, and five-year periods ended June 30, 2015, and as a result, the Board will continue to discuss with SelectCo the steps it is taking to address the fund's performance.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. Depending on the circumstances, the Independent Trustees may be satisfied with a fund's performance notwithstanding that it lags its benchmark index for certain periods.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 each fund and an appropriate benchmark index for the most recent one-, three-, and five-year periods ended June 30, 2015.Based on its review, the Board concluded that the nature, extent, and quality of services provided to each fund under the Advisory Contracts should benefit the shareholders of each fund.Competitiveness of Management Fee and Total Expense Ratio. The Board considered each fund's management fee and total expense ratio compared to "mapped groups" of competitive funds and classes created for the purpose of facilitating the Trustees' analysis of the competitiveness of management fees and total expenses. Fidelity creates "mapped groups" by combining similar Lipper investment objective categories that have comparable investment mandates. For this purpose, all sector focused equity funds are grouped in the same mapped group. Combining Lipper investment objective categories aids the Board's management fee and total expense ratio comparisons by broadening the competitive group used for comparison.Management Fee. The Board considered two proprietary management fee comparisons for the 12-month periods ended June 30 shown in basis points (BP) in the charts below. The group of Lipper funds used by the Board for management fee comparisons is referred to below as the "Total Mapped Group." The Total Mapped Group comparison focuses on a fund's standing in terms of gross management fees before expense reimbursements or caps relative to the total universe of funds with comparable investment mandates (i.e., sector equities), regardless of whether their management fee structures also are comparable. Funds with comparable management fee structures have similar management fee contractual arrangements (e.g., flat rate charged for advisory services, all-inclusive fee rate, etc.). "TMG %" represents the percentage of funds in the Total Mapped Group that had management fees that were lower than a fund's. For example, a hypothetical TMG % of 20% would mean that 80% of the funds in the Total Mapped Group had higher, and 20% had lower, management fees than a fund. The funds' actual TMG %s and the number of funds in the Total Mapped Group are in the charts below. The "Asset-Size Peer Group" (ASPG) comparison focuses on a fund's standing relative to a subset of non-Fidelity funds within the Total Mapped Group that are similar in size and management fee structure. For example, if a fund is in the first quartile of the ASPG, the fund's management fee ranks in the least expensive or lowest 25% of funds in the ASPG. The ASPG represents at least 15% of the funds in the Total Mapped Group with comparable asset size and management fee structures, subject to a minimum of 50 funds (or all funds in the Total Mapped Group if fewer than 50). Additional information, such as the ASPG quartile in which a fund's management fee rate ranked, is also included in the charts and considered by the Board.Chemicals Portfolio
Gold Portfolio
Materials Portfolio
SELMT-ANN-0416
1.846032.109
Fidelity® Select Portfolios® Energy Portfolio Energy Service Portfolio Natural Gas Portfolio Natural Resources Portfolio Annual Report February 29, 2016 |
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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. © 2016 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-Q. Forms N-Q are available on the SEC’s web site at http://www.sec.gov. A fund's Forms N-Q 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.advisor.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.
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, 2016 | Past 1 year | Past 5 years | Past 10 years |
| Energy Portfolio | (27.61)% | (7.11)% | 0.13% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Energy Portfolio on February 28, 2006.
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 | ||
| $10,130 | Energy Portfolio | |
| $18,666 | S&P 500® Index | |
Energy Portfolio
Management's Discussion of Fund Performance
Market Recap: The S&P 500® index returned -6.19% for the year ending February 29, 2016. Largely range-bound for the first half of the period, U.S. stocks suffered a steep, late-summer decline on concern about an economic slowdown in China. The market recovered in October, lifted by the U.S. Federal Reserve’s decision to delay raising near-term interest rates until mid-December. Investors also drew courage from a rate cut in China and economic stimulus in Europe. But continued oil-price weakness and U.S.-dollar strength, plus fresh worries about China and the Middle East, pushed the S&P 500® to its worst January since 2009, followed by a volatile but ultimately flattish February. Overall, growth-oriented and larger-cap stocks fared better than value and smaller-cap complements. In this environment, the tech-heavy Nasdaq Composite Index® returned -7.07% for the 12 months; the Russell 2000® Index, -14.97%. Few sectors within the broad-market S&P 500® gained ground, with a wide gap separating leaders from laggards. Despite increased competition among wireless carriers, telecommunication services (+8%) led the way, followed by the more defensive utilities sector (+6%). Rising wages and low inflation buoyed consumer staples (+4%), less so consumer discretionary (0%). Meanwhile, energy (-24%) foundered amid commodity weakness that also hurt materials (-17%). The financials sector (-12%) struggled as well.Comments from Portfolio Manager John Dowd: For the year, the fund returned -27.61%, in line with the -27.62% return of its industry benchmark, the MSCI U.S. IMI Energy 25/50 Index, but well behind the S&P 500® index. It was a prolonged painful environment for energy stocks. The persistent oversupply of crude oil has led to a massive global inventory overhang that was reflected in per-barrel prices and energy stocks in general. Crude oil fell to near 13-year lows of less than $27 per barrel in both January and February. Relative to the MSCI benchmark, we had excellent stock selection among oil & gas exploration & production (E&P) names, but a sizable overweighting in this weak-performing segment cooled results somewhat. A significant underweighting in the benchmark dominant integrated oil & gas subindustry – the top performer this period – also crimped the fund's result. Among individual stocks, an underweighting in pipeline operator Kinder Morgan was by far the fund's largest contributor versus the index. The stock returned -54% hurt by weakening pipeline demand and a leveraged balance sheet. We also were helped by underweighting E&P ConocoPhillips, which returned -46% for the period. Refiner Valero Energy was another plus, as its share price was flat for the period, outperforming the benchmark. Conversely, the fund's biggest relative detractor was our significant underweighting in outperformer Exxon Mobil, often seen as a defensive play in a down market. An out-of-index stake in Canadian E&P Encana also hurt, as did refiner Phillips 66.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.
Energy Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 29, 2016
| % of fund's net assets | % of fund's net assets 6 months ago | |
| Schlumberger Ltd. | 9.2 | 8.4 |
| Exxon Mobil Corp. | 7.9 | 13.8 |
| EOG Resources, Inc. | 6.6 | 6.2 |
| Valero Energy Corp. | 5.6 | 4.8 |
| Noble Energy, Inc. | 4.3 | 2.9 |
| Baker Hughes, Inc. | 3.8 | 2.6 |
| Cimarex Energy Co. | 3.8 | 4.1 |
| Pioneer Natural Resources Co. | 3.5 | 2.9 |
| Diamondback Energy, Inc. | 3.5 | 2.3 |
| Hess Corp. | 3.4 | 1.1 |
| 51.6 |
Top Industries (% of fund's net assets)
| As of February 29, 2016 | ||
| Oil, Gas & Consumable Fuels | 75.9% | |
| Energy Equipment & Services | 19.7% | |
| Chemicals | 1.9% | |
| Independent Power and Renewable Electricity Producers | 1.0% | |
| Semiconductors & Semiconductor Equipment | 0.3% | |
| All Others* | 1.2% | |
| As of August 31, 2015 | ||
| Oil, Gas & Consumable Fuels | 80.7% | |
| Energy Equipment & Services | 16.5% | |
| Independent Power and Renewable Electricity Producers | 1.0% | |
| Chemicals | 0.6% | |
| All Others* | 1.2% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
Energy Portfolio
Investments February 29, 2016
Showing Percentage of Net Assets
| Common Stocks - 98.8% | |||
| Shares | Value | ||
| Chemicals - 1.9% | |||
| Commodity Chemicals - 1.6% | |||
| LyondellBasell Industries NV Class A | 379,600 | $30,447,716 | |
| Diversified Chemicals - 0.3% | |||
| The Dow Chemical Co. | 116,800 | 5,677,648 | |
| TOTAL CHEMICALS | 36,125,364 | ||
| Energy Equipment & Services - 19.7% | |||
| Oil & Gas Drilling - 0.5% | |||
| Nabors Industries Ltd. | 798,800 | 5,719,408 | |
| Odfjell Drilling A/S (a) | 1,539,580 | 935,867 | |
| Xtreme Drilling & Coil Services Corp. (a) | 2,252,600 | 2,563,935 | |
| 9,219,210 | |||
| Oil & Gas Equipment & Services - 19.2% | |||
| Baker Hughes, Inc. | 1,723,000 | 73,865,010 | |
| Bristow Group, Inc. | 70,000 | 1,064,700 | |
| Cameron International Corp. (a) | 837,300 | 54,893,388 | |
| Dril-Quip, Inc. (a) | 366,453 | 19,880,075 | |
| Frank's International NV | 1,651,200 | 22,935,168 | |
| Oceaneering International, Inc. | 566,227 | 15,639,190 | |
| Schlumberger Ltd. | 2,461,981 | 176,573,278 | |
| Tesco Corp. | 579,600 | 4,196,304 | |
| Total Energy Services, Inc. | 100,500 | 976,774 | |
| 370,023,887 | |||
| TOTAL ENERGY EQUIPMENT & SERVICES | 379,243,097 | ||
| Independent Power and Renewable Electricity Producers - 1.0% | |||
| Independent Power Producers & Energy Traders - 0.1% | |||
| NRG Yield, Inc. Class C (b) | 238,100 | 3,111,967 | |
| Renewable Electricity - 0.9% | |||
| NextEra Energy Partners LP | 656,700 | 17,034,798 | |
| TOTAL INDEPENDENT POWER AND RENEWABLE ELECTRICITY PRODUCERS | 20,146,765 | ||
| Oil, Gas & Consumable Fuels - 75.9% | |||
| Coal & Consumable Fuels - 0.2% | |||
| CONSOL Energy, Inc. (b) | 465,785 | 4,019,725 | |
| Integrated Oil & Gas - 13.3% | |||
| Chevron Corp. | 751,023 | 62,665,359 | |
| Exxon Mobil Corp. | 1,906,548 | 152,809,822 | |
| Occidental Petroleum Corp. | 608,900 | 41,904,498 | |
| 257,379,679 | |||
| Oil & Gas Exploration & Production - 46.8% | |||
| Anadarko Petroleum Corp. | 1,490,815 | 56,576,429 | |
| Apache Corp. | 705,200 | 26,995,056 | |
| ARC Resources Ltd. (b) | 149,700 | 1,986,042 | |
| Bankers Petroleum Ltd. (a) | 811,300 | 545,664 | |
| Black Stone Minerals LP | 249,959 | 3,106,990 | |
| Cabot Oil & Gas Corp. | 1,246,100 | 25,083,993 | |
| California Resources Corp. | 57,236 | 32,172 | |
| Canadian Natural Resources Ltd. | 103,200 | 2,157,055 | |
| Carrizo Oil & Gas, Inc. (a)(b) | 395,000 | 8,492,500 | |
| Cimarex Energy Co. | 872,445 | 73,311,553 | |
| Concho Resources, Inc. (a) | 475,500 | 42,909,120 | |
| ConocoPhillips Co. | 1,245,200 | 42,125,116 | |
| Diamondback Energy, Inc. | 939,600 | 66,946,500 | |
| EOG Resources, Inc. | 1,972,564 | 127,703,793 | |
| EQT Corp. | 246,700 | 13,751,058 | |
| Evolution Petroleum Corp. | 109,743 | 474,090 | |
| Gran Tierra Energy, Inc. (Canada) (a) | 1,013,200 | 2,396,334 | |
| Gulfport Energy Corp. (a) | 274,000 | 6,576,000 | |
| Hess Corp. | 1,518,200 | 66,193,520 | |
| Memorial Resource Development Corp. (a) | 1,807,510 | 17,478,622 | |
| Murphy Oil Corp. | 268,900 | 4,619,702 | |
| Newfield Exploration Co. (a) | 1,976,900 | 53,830,987 | |
| Noble Energy, Inc. | 2,834,688 | 83,623,296 | |
| Parsley Energy, Inc. Class A (a) | 1,037,000 | 19,060,060 | |
| PDC Energy, Inc. (a) | 927,151 | 46,459,537 | |
| Pioneer Natural Resources Co. | 565,699 | 68,183,700 | |
| Rice Energy, Inc. (a) | 323,400 | 2,962,344 | |
| RSP Permian, Inc. (a) | 617,700 | 14,769,207 | |
| Seven Generations Energy Ltd. (a) | 1,110,200 | 12,743,094 | |
| Synergy Resources Corp. (a)(b) | 1,663,120 | 10,394,500 | |
| TAG Oil Ltd. (a) | 883,775 | 372,322 | |
| 901,860,356 | |||
| Oil & Gas Refining & Marketing - 7.4% | |||
| Keyera Corp. (b) | 692,800 | 19,206,894 | |
| Valero Energy Corp. | 1,803,081 | 108,329,106 | |
| Western Refining, Inc. | 222,792 | 5,941,863 | |
| World Fuel Services Corp. | 192,015 | 8,988,222 | |
| 142,466,085 | |||
| Oil & Gas Storage & Transport - 8.2% | |||
| Buckeye Partners LP | 12,700 | 817,372 | |
| Cheniere Energy Partners LP Holdings LLC | 469,970 | 7,881,397 | |
| Cheniere Energy, Inc. (a) | 372,700 | 13,324,025 | |
| Columbia Pipeline Group, Inc. | 703,400 | 12,766,710 | |
| Enterprise Products Partners LP | 734,823 | 17,172,814 | |
| Gener8 Maritime, Inc. (a) | 202,900 | 1,260,009 | |
| Golar LNG Ltd. (b) | 429,700 | 7,876,401 | |
| Kinder Morgan, Inc. | 3,362,500 | 60,827,625 | |
| Magellan Midstream Partners LP | 153,819 | 10,395,088 | |
| Phillips 66 Partners LP | 39,533 | 2,382,654 | |
| Plains All American Pipeline LP | 285,500 | 6,115,410 | |
| Rice Midstream Partners LP | 336,900 | 4,463,925 | |
| Shell Midstream Partners LP | 352,900 | 12,545,595 | |
| 157,829,025 | |||
| TOTAL OIL, GAS & CONSUMABLE FUELS | 1,463,554,870 | ||
| Semiconductors & Semiconductor Equipment - 0.3% | |||
| Semiconductor Equipment - 0.3% | |||
| SolarEdge Technologies, Inc. | 241,400 | 5,907,058 | |
| TOTAL COMMON STOCKS | |||
| (Cost $2,079,689,895) | 1,904,977,154 | ||
| Money Market Funds - 2.4% | |||
| Fidelity Cash Central Fund, 0.40% (c) | 20,598,318 | 20,598,318 | |
| Fidelity Securities Lending Cash Central Fund, 0.44% (c)(d) | 26,229,950 | 26,229,950 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $46,828,268) | 46,828,268 | ||
| TOTAL INVESTMENT PORTFOLIO - 101.2% | |||
| (Cost $2,126,518,163) | 1,951,805,422 | ||
| NET OTHER ASSETS (LIABILITIES) - (1.2)% | (22,908,145) | ||
| NET ASSETS - 100% | $1,928,897,277 |
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 | $62,261 |
| Fidelity Securities Lending Cash Central Fund | 206,517 |
| Total | $268,778 |
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 | 84.8% |
| Curacao | 9.2% |
| Netherlands | 2.8% |
| Canada | 2.3% |
| Others (Individually Less Than 1%) | 0.9% |
| 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, 2016 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $25,819,087) — See accompanying schedule: Unaffiliated issuers (cost $2,079,689,895) | $1,904,977,154 | |
| Fidelity Central Funds (cost $46,828,268) | 46,828,268 | |
| Total Investments (cost $2,126,518,163) | $1,951,805,422 | |
| Receivable for investments sold | 10,746,798 | |
| Receivable for fund shares sold | 3,718,766 | |
| Dividends receivable | 5,462,816 | |
| Distributions receivable from Fidelity Central Funds | 47,423 | |
| Prepaid expenses | 6,943 | |
| Other receivables | 73,500 | |
| Total assets | 1,971,861,668 | |
| Liabilities | ||
| Payable for investments purchased | $13,782,070 | |
| Payable for fund shares redeemed | 1,640,888 | |
| Accrued management fee | 834,333 | |
| Other affiliated payables | 362,075 | |
| Other payables and accrued expenses | 115,075 | |
| Collateral on securities loaned, at value | 26,229,950 | |
| Total liabilities | 42,964,391 | |
| Net Assets | $1,928,897,277 | |
| Net Assets consist of: | ||
| Paid in capital | $2,523,838,762 | |
| Undistributed net investment income | 1,074,244 | |
| Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (421,303,238) | |
| Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (174,712,491) | |
| Net Assets, for 59,112,005 shares outstanding | $1,928,897,277 | |
| Net Asset Value, offering price and redemption price per share ($1,928,897,277 ÷ 59,112,005 shares) | $32.63 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 29, 2016 | ||
| Investment Income | ||
| Dividends | $36,465,854 | |
| Interest | 16 | |
| Income from Fidelity Central Funds | 268,778 | |
| Total income | 36,734,648 | |
| Expenses | ||
| Management fee | $11,031,483 | |
| Transfer agent fees | 4,222,892 | |
| Accounting and security lending fees | 617,097 | |
| Custodian fees and expenses | 33,201 | |
| Independent trustees' compensation | 36,999 | |
| Registration fees | 141,646 | |
| Audit | 52,717 | |
| Legal | 22,411 | |
| Interest | 428 | |
| Miscellaneous | 26,184 | |
| Total expenses before reductions | 16,185,058 | |
| Expense reductions | (247,508) | 15,937,550 |
| Net investment income (loss) | 20,797,098 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | (357,325,653) | |
| Foreign currency transactions | 154,670 | |
| Total net realized gain (loss) | (357,170,983) | |
| Change in net unrealized appreciation (depreciation) on: Investment securities | (283,522,814) | |
| Assets and liabilities in foreign currencies | 897 | |
| Total change in net unrealized appreciation (depreciation) | (283,521,917) | |
| Net gain (loss) | (640,692,900) | |
| Net increase (decrease) in net assets resulting from operations | $(619,895,802) |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 29, 2016 | Year ended February 28, 2015 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $20,797,098 | $19,529,338 |
| Net realized gain (loss) | (357,170,983) | 47,922,508 |
| Change in net unrealized appreciation (depreciation) | (283,521,917) | (322,616,881) |
| Net increase (decrease) in net assets resulting from operations | (619,895,802) | (255,165,035) |
| Distributions to shareholders from net investment income | (19,169,416) | (18,840,374) |
| Distributions to shareholders from net realized gain | (3,157,395) | (163,093,871) |
| Total distributions | (22,326,811) | (181,934,245) |
| Share transactions | ||
| Proceeds from sales of shares | 938,319,380 | 1,520,395,410 |
| Reinvestment of distributions | 21,542,390 | 175,944,918 |
| Cost of shares redeemed | (568,659,411) | (1,075,346,718) |
| Net increase (decrease) in net assets resulting from share transactions | 391,202,359 | 620,993,610 |
| Redemption fees | 89,143 | 126,447 |
| Total increase (decrease) in net assets | (250,931,111) | 184,020,777 |
| Net Assets | ||
| Beginning of period | 2,179,828,388 | 1,995,807,611 |
| End of period (including undistributed net investment income of $1,074,244 and undistributed net investment income of $995,458, respectively) | $1,928,897,277 | $2,179,828,388 |
| Other Information | ||
| Shares | ||
| Sold | 24,842,688 | 28,386,672 |
| Issued in reinvestment of distributions | 595,063 | 3,458,398 |
| Redeemed | (14,091,258) | (19,558,503) |
| Net increase (decrease) | 11,346,493 | 12,286,567 |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Energy Portfolio
| Years ended February 28, | 2016 A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $45.64 | $56.25 | $54.81 | $55.14 | $60.22 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .42 | .46 | .44 | .53 | .41 |
| Net realized and unrealized gain (loss) | (12.98) | (6.37) | 7.86 | (.04) | (5.06) |
| Total from investment operations | (12.56) | (5.91) | 8.30 | .49 | (4.65) |
| Distributions from net investment income | (.39) | (.46) | (.46) | (.47) | (.40) |
| Distributions from net realized gain | (.07) | (4.23) | (6.40) | (.35) | (.03) |
| Total distributions | (.45)C | (4.70)D | (6.86) | (.82) | (.43) |
| Redemption fees added to paid in capitalB,E | – | – | – | – | – |
| Net asset value, end of period | $32.63 | $45.64 | $56.25 | $54.81 | $55.14 |
| Total ReturnF | (27.61)% | (11.25)% | 15.43% | 1.00% | (7.68)% |
| Ratios to Average Net AssetsG,H | |||||
| Expenses before reductions | .80% | .79% | .80% | .82% | .83% |
| Expenses net of fee waivers, if any | .80% | .79% | .80% | .82% | .83% |
| Expenses net of all reductions | .79% | .79% | .80% | .81% | .82% |
| Net investment income (loss) | 1.03% | .85% | .76% | 1.04% | .77% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $1,928,897 | $2,179,828 | $1,995,808 | $2,126,992 | $2,504,448 |
| Portfolio turnover rateI | 79% | 73%J | 98% | 80% | 90% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C 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.
D Total distributions of $4.70 per share is comprised of distributions from net investment income of $.463 and distributions from net realized gain of $4.233 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, 2016 | Past 1 year | Past 5 years | Past 10 years |
| Energy Service Portfolio | (30.30)% | (12.75)% | (3.15)% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Energy Service Portfolio on February 28, 2006.
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 | ||
| $7,261 | Energy Service Portfolio | |
| $18,666 | S&P 500® Index | |
Energy Service Portfolio
Management's Discussion of Fund Performance
Market Recap: The S&P 500® index returned -6.19% for the year ending February 29, 2016. Largely range-bound for the first half of the period, U.S. stocks suffered a steep, late-summer decline on concern about an economic slowdown in China. The market recovered in October, lifted by the U.S. Federal Reserve’s decision to delay raising near-term interest rates until mid-December. Investors also drew courage from a rate cut in China and economic stimulus in Europe. But continued oil-price weakness and U.S.-dollar strength, plus fresh worries about China and the Middle East, pushed the S&P 500® to its worst January since 2009, followed by a volatile but ultimately flattish February. Overall, growth-oriented and larger-cap stocks fared better than value and smaller-cap complements. In this environment, the tech-heavy Nasdaq Composite Index® returned -7.07% for the 12 months; the Russell 2000® Index, -14.97%. Few sectors within the broad-market S&P 500® gained ground, with a wide gap separating leaders from laggards. Despite increased competition among wireless carriers, telecommunication services (+8%) led the way, followed by the more defensive utilities sector (+6%). Rising wages and low inflation buoyed consumer staples (+4%), less so consumer discretionary (0%). Meanwhile, energy (-24%) foundered amid commodity weakness that also hurt materials (-17%). The financials sector (-12%) struggled as well.Comments from Portfolio Manager Ben Shuleva: For the year, the fund returned -30.30%, ahead of the -31.43% result of its industry benchmark, the MSCI U.S. IMI Energy Equipment & Services 25/50 Index, but lagging the S&P 500®. Energy service stocks were hard hit by the continued collapse of crude oil prices that caused its client exploration & production companies (E&Ps) to cut costs and pare drilling activity. Relative to the MSCI benchmark, stock selection drove outperformance, with the vast majority of the fund's largest contributors coming from companies I chose to avoid or underweight. My core philosophy is to own what I think are higher-quality businesses that have less competition, and many of the fund's top relative contributors did not fit my criteria. Bristow Group, a helicopter company that serves offshore oil companies, was our biggest individual relative contributor this period. It paid to avoid this stock, which lost about three-quarters of its value for the year, hurt by the company's balance sheet woes and competitive issues in the tough environment. Underweighting land driller Unit and offshore driller Ensco also proved beneficial, as E&Ps firms halted unprofitable exploration projects. Conversely, the fund was hurt by an overweighting in well construction firm C&J Energy Services and out-of-index stakes in offshore driller Ocean Rig and BW Offshore, a maker of floating production storage and offloading facilities. Ocean Rig was sold from the fund 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.
Energy Service Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 29, 2016
| % of fund's net assets | % of fund's net assets 6 months ago | |
| Schlumberger Ltd. | 22.4 | 20.9 |
| Baker Hughes, Inc. | 19.8 | 20.3 |
| Dril-Quip, Inc. | 6.8 | 8.5 |
| Nabors Industries Ltd. | 4.9 | 3.2 |
| Tesco Corp. | 4.2 | 0.0 |
| Halliburton Co. | 4.1 | 2.3 |
| Oceaneering International, Inc. | 3.9 | 5.0 |
| Frank's International NV | 3.9 | 3.9 |
| National Oilwell Varco, Inc. | 3.8 | 4.5 |
| FMC Technologies, Inc. | 2.6 | 3.3 |
| 76.4 |
Top Industries (% of fund's net assets)
| As of February 29, 2016 | ||
| Energy Equipment & Services | 95.2% | |
| Oil, Gas & Consumable Fuels | 4.4% | |
| Construction & Engineering | 0.2% | |
| All Others* | 0.2% | |
| As of August 31, 2015 | ||
| Energy Equipment & Services | 93.6% | |
| Oil, Gas & Consumable Fuels | 4.5% | |
| Construction & Engineering | 0.2% | |
| All Others* | 1.7% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
Percentages shown as 0.0% may reflect amounts less than 0.05%.
Energy Service Portfolio
Investments February 29, 2016
Showing Percentage of Net Assets
| Common Stocks - 99.8% | |||
| Shares | Value | ||
| Construction & Engineering - 0.2% | |||
| Construction & Engineering - 0.2% | |||
| Enterprise Group, Inc. (a)(b) | 5,565,237 | $966,615 | |
| Energy Equipment & Services - 95.2% | |||
| Oil & Gas Drilling - 12.5% | |||
| Atwood Oceanics, Inc. (c) | 195,400 | 1,344,352 | |
| Ensco PLC Class A | 468,900 | 4,065,363 | |
| Independence Contract Drilling, Inc. (a) | 891,253 | 3,431,324 | |
| Nabors Industries Ltd. | 2,963,900 | 21,221,524 | |
| Odfjell Drilling A/S (a)(c) | 6,705,592 | 4,076,137 | |
| Rowan Companies PLC | 370,300 | 4,932,396 | |
| Transocean Partners LLC | 369,400 | 3,158,370 | |
| Trinidad Drilling Ltd. | 5,292,700 | 5,828,620 | |
| Xtreme Drilling & Coil Services Corp. (a)(b) | 5,585,217 | 6,357,158 | |
| 54,415,244 | |||
| Oil & Gas Equipment & Services - 82.7% | |||
| Baker Hughes, Inc. | 2,013,422 | 86,315,401 | |
| BW Offshore Ltd. (c) | 9,215,465 | 1,302,502 | |
| C&J Energy Services Ltd. (a)(c) | 1,277,900 | 1,316,237 | |
| Cameron International Corp. (a) | 30,688 | 2,011,905 | |
| Core Laboratories NV | 300 | 31,482 | |
| Dril-Quip, Inc. (a) | 546,300 | 29,636,775 | |
| Exterran Corp. (a) | 177,500 | 2,421,100 | |
| FMC Technologies, Inc. (a) | 460,162 | 11,287,774 | |
| Forbes Energy Services Ltd. (a)(b) | 2,190,141 | 644,120 | |
| Forum Energy Technologies, Inc. (a) | 413,500 | 4,862,760 | |
| Frank's International NV (c) | 1,224,486 | 17,008,111 | |
| Gulfmark Offshore, Inc. Class A (a)(c) | 592,417 | 2,126,777 | |
| Halliburton Co. | 550,134 | 17,758,326 | |
| Hornbeck Offshore Services, Inc. (a) | 4,100 | 35,219 | |
| McCoy Global, Inc. | 1,050,250 | 1,614,575 | |
| National Oilwell Varco, Inc. (c) | 562,162 | 16,454,482 | |
| Oceaneering International, Inc. | 618,682 | 17,087,997 | |
| Oil States International, Inc. (a) | 85,700 | 2,237,627 | |
| RigNet, Inc. (a)(c) | 287,300 | 3,792,360 | |
| Schlumberger Ltd. | 1,362,811 | 97,740,805 | |
| Spectrum ASA | 2,102,708 | 5,919,718 | |
| Superior Drilling Products, Inc. (a)(b) | 1,224,772 | 2,449,544 | |
| Tenaris SA sponsored ADR | 85,200 | 1,842,876 | |
| Tesco Corp. (b) | 2,531,938 | 18,331,231 | |
| TETRA Technologies, Inc. (a) | 1,539,285 | 7,757,996 | |
| Weatherford International Ltd. (a) | 1,242,666 | 7,953,062 | |
| 359,940,762 | |||
| TOTAL ENERGY EQUIPMENT & SERVICES | 414,356,006 | ||
| Machinery - 0.0% | |||
| Industrial Machinery - 0.0% | |||
| Energy Recovery, Inc. (a) | 21,800 | 158,268 | |
| Oil, Gas & Consumable Fuels - 4.4% | |||
| Coal & Consumable Fuels - 0.0% | |||
| Foresight Energy LP (c) | 15,100 | 30,502 | |
| Oil & Gas Exploration & Production - 2.4% | |||
| Black Stone Minerals LP | 353,486 | 4,393,831 | |
| Devon Energy Corp. | 95,400 | 1,877,472 | |
| Encana Corp. | 915,700 | 3,959,235 | |
| 10,230,538 | |||
| Oil & Gas Storage & Transport - 2.0% | |||
| Golar LNG Ltd. | 79,833 | 1,463,339 | |
| StealthGas, Inc. (a)(b) | 2,333,989 | 7,258,706 | |
| 8,722,045 | |||
| TOTAL OIL, GAS & CONSUMABLE FUELS | 18,983,085 | ||
| TOTAL COMMON STOCKS | |||
| (Cost $612,510,427) | 434,463,974 | ||
| Money Market Funds - 3.9% | |||
| Fidelity Cash Central Fund, 0.40% (d) | 563,365 | 563,365 | |
| Fidelity Securities Lending Cash Central Fund, 0.44% (d)(e) | 16,618,180 | 16,618,180 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $17,181,545) | 17,181,545 | ||
| TOTAL INVESTMENT PORTFOLIO - 103.7% | |||
| (Cost $629,691,972) | 451,645,519 | ||
| NET OTHER ASSETS (LIABILITIES) - (3.7)% | (16,270,330) | ||
| NET ASSETS - 100% | $435,375,189 |
Legend
(a) Non-income producing
(b) Affiliated company
(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 | $11,081 |
| Fidelity Securities Lending Cash Central Fund | 230,582 |
| Total | $241,663 |
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 | Value, end of period |
| Enterprise Group, Inc. | $3,949,532 | $355,875 | $-- | $-- | $966,615 |
| Forbes Energy Services Ltd. | 2,125,731 | 250,064 | -- | -- | 644,120 |
| StealthGas, Inc. | 15,003,472 | 213,048 | 905,086 | -- | 7,258,706 |
| Superior Drilling Products, Inc. | 3,836,772 | 309 | 96,117 | -- | 2,449,544 |
| Tesco Corp. | -- | 18,924,470 | -- | 53,465 | 18,331,231 |
| Vantage Drilling Co. | 6,688,897 | -- | 3,453,627 | -- | -- |
| Xtreme Drilling & Coil Services Corp. | 8,025,914 | 81,608 | -- | -- | 6,357,158 |
| Total | $39,630,318 | $19,825,374 | $4,454,830 | $53,465 | $36,007,374 |
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 | 50.4% |
| Curacao | 22.4% |
| Canada | 8.6% |
| Bermuda | 6.7% |
| Netherlands | 3.9% |
| Marshall Islands | 2.4% |
| United Kingdom | 2.0% |
| Ireland | 1.8% |
| Norway | 1.4% |
| Others (Individually Less Than 1%) | 0.4% |
| 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, 2016 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $16,708,124) — See accompanying schedule: Unaffiliated issuers (cost $534,598,823) | $398,456,600 | |
| Fidelity Central Funds (cost $17,181,545) | 17,181,545 | |
| Other affiliated issuers (cost $77,911,604) | 36,007,374 | |
| Total Investments (cost $629,691,972) | $451,645,519 | |
| Receivable for investments sold | 861,540 | |
| Receivable for fund shares sold | 499,866 | |
| Dividends receivable | 1,324,621 | |
| Distributions receivable from Fidelity Central Funds | 24,562 | |
| Prepaid expenses | 2,148 | |
| Other receivables | 23,527 | |
| Total assets | 454,381,783 | |
| Liabilities | ||
| Payable for investments purchased | $1,644,532 | |
| Payable for fund shares redeemed | 366,096 | |
| Accrued management fee | 194,388 | |
| Other affiliated payables | 109,887 | |
| Other payables and accrued expenses | 73,511 | |
| Collateral on securities loaned, at value | 16,618,180 | |
| Total liabilities | 19,006,594 | |
| Net Assets | $435,375,189 | |
| Net Assets consist of: | ||
| Paid in capital | $628,098,720 | |
| Undistributed net investment income | 66,706 | |
| Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (14,740,715) | |
| Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (178,049,522) | |
| Net Assets, for 11,597,546 shares outstanding | $435,375,189 | |
| Net Asset Value, offering price and redemption price per share ($435,375,189 ÷ 11,597,546 shares) | $37.54 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 29, 2016 | ||
| Investment Income | ||
| Dividends (including $53,465 earned from other affiliated issuers) | $10,044,808 | |
| Income from Fidelity Central Funds | 241,663 | |
| Total income | 10,286,471 | |
| Expenses | ||
| Management fee | $3,235,310 | |
| Transfer agent fees | 1,393,967 | |
| Accounting and security lending fees | 220,542 | |
| Custodian fees and expenses | 34,230 | |
| Independent trustees' compensation | 11,028 | |
| Registration fees | 43,650 | |
| Audit | 48,063 | |
| Legal | 7,620 | |
| Interest | 1,771 | |
| Miscellaneous | 10,506 | |
| Total expenses before reductions | 5,006,687 | |
| Expense reductions | (186,683) | 4,820,004 |
| Net investment income (loss) | 5,466,467 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 33,724,067 | |
| Other affiliated issuers | (22,132,933) | |
| Foreign currency transactions | 27,247 | |
| Total net realized gain (loss) | 11,618,381 | |
| Change in net unrealized appreciation (depreciation) on: Investment securities | (215,579,240) | |
| Assets and liabilities in foreign currencies | (320) | |
| Total change in net unrealized appreciation (depreciation) | (215,579,560) | |
| Net gain (loss) | (203,961,179) | |
| Net increase (decrease) in net assets resulting from operations | $(198,494,712) |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 29, 2016 | Year ended February 28, 2015 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $5,466,467 | $5,553,521 |
| Net realized gain (loss) | 11,618,381 | 54,432,568 |
| Change in net unrealized appreciation (depreciation) | (215,579,560) | (324,497,383) |
| Net increase (decrease) in net assets resulting from operations | (198,494,712) | (264,511,294) |
| Distributions to shareholders from net investment income | (4,585,495) | (4,379,828) |
| Distributions to shareholders from net realized gain | – | (101,072,498) |
| Total distributions | (4,585,495) | (105,452,326) |
| Share transactions | ||
| Proceeds from sales of shares | 192,822,217 | 353,836,305 |
| Reinvestment of distributions | 4,345,896 | 100,638,770 |
| Cost of shares redeemed | (257,558,829) | (433,748,150) |
| Net increase (decrease) in net assets resulting from share transactions | (60,390,716) | 20,726,925 |
| Redemption fees | 43,210 | 60,047 |
| Total increase (decrease) in net assets | (263,427,713) | (349,176,648) |
| Net Assets | ||
| Beginning of period | 698,802,902 | 1,047,979,550 |
| End of period (including undistributed net investment income of $66,706 and distributions in excess of net investment income of $17,766, respectively) | $435,375,189 | $698,802,902 |
| Other Information | ||
| Shares | ||
| Sold | 3,908,817 | 4,746,273 |
| Issued in reinvestment of distributions | 97,628 | 1,536,295 |
| Redeemed | (5,268,324) | (5,590,642) |
| Net increase (decrease) | (1,261,879) | 691,926 |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Energy Service Portfolio
| Years ended February 28, | 2016 A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $54.34 | $86.13 | $74.01 | $73.01 | $85.88 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .45 | .45 | .21 | –C | (.09) |
| Net realized and unrealized gain (loss) | (16.85) | (23.10) | 12.09 | 1.00 | (12.79) |
| Total from investment operations | (16.40) | (22.65) | 12.30 | 1.00 | (12.88) |
| Distributions from net investment income | (.40) | (.39) | (.18) | – | – |
| Distributions from net realized gain | – | (8.75) | – | – | – |
| Total distributions | (.40) | (9.14) | (.18) | – | – |
| Redemption fees added to paid in capitalB | –C | –C | –C | –C | .01 |
| Net asset value, end of period | $37.54 | $54.34 | $86.13 | $74.01 | $73.01 |
| Total ReturnD | (30.30)% | (27.82)% | 16.62% | 1.37% | (14.99)% |
| Ratios to Average Net AssetsE,F | |||||
| Expenses before reductions | .85% | .79% | .80% | .82% | .82% |
| Expenses net of fee waivers, if any | .84% | .79% | .80% | .82% | .82% |
| Expenses net of all reductions | .81% | .79% | .80% | .81% | .81% |
| Net investment income (loss) | .92% | .56% | .26% | .01% | (.12)% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $435,375 | $698,803 | $1,047,980 | $1,236,403 | $1,382,288 |
| Portfolio turnover rateG | 58% | 55% | 34% | 49% | 74% |
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.
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, 2016 | Past 1 year | Past 5 years | Past 10 years |
| Natural Gas Portfolio | (43.29)% | (12.16)% | (4.77)% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Natural Gas Portfolio on February 28, 2006.
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 | ||
| $6,134 | Natural Gas Portfolio | |
| $18,666 | S&P 500® Index | |
Natural Gas Portfolio
Management's Discussion of Fund Performance
Market Recap: The S&P 500® index returned -6.19% for the year ending February 29, 2016. Largely range-bound for the first half of the period, U.S. stocks suffered a steep, late-summer decline on concern about an economic slowdown in China. The market recovered in October, lifted by the U.S. Federal Reserve’s decision to delay raising near-term interest rates until mid-December. Investors also drew courage from a rate cut in China and economic stimulus in Europe. But continued oil-price weakness and U.S.-dollar strength, plus fresh worries about China and the Middle East, pushed the S&P 500® to its worst January since 2009, followed by a volatile but ultimately flattish February. Overall, growth-oriented and larger-cap stocks fared better than value and smaller-cap complements. In this environment, the tech-heavy Nasdaq Composite Index® returned -7.07% for the 12 months; the Russell 2000® Index, -14.97%. Few sectors within the broad-market S&P 500® gained ground, with a wide gap separating leaders from laggards. Despite increased competition among wireless carriers, telecommunication services (+8%) led the way, followed by the more defensive utilities sector (+6%). Rising wages and low inflation buoyed consumer staples (+4%), less so consumer discretionary (0%). Meanwhile, energy (-24%) foundered amid commodity weakness that also hurt materials (-17%). The financials sector (-12%) struggled as well.Comments from Portfolio Manager Ted Davis: For the year, the fund returned -43.29%, trailing the -35.59% return of its industry benchmark, the S&P® Custom Natural Gas Index. It also lagged the S&P 500® index. Natural gas stocks were hurt by the continued collapse of energy prices, as persistent oversupply and weak demand sent crude oil to its lowest price in nearly 13 years. The spot price of natural gas also fell for the period, hitting its lowest mark in more than two decades along the way. Relative to the S&P® industry benchmark, both stock selection and industry allocation detracted from fund performance, especially in the oil & gas exploration & production (E&P) subindustry, which was highly correlated to weak commodity prices. Here, Devon Energy, Encana, Marathon Oil and new holding Whiting Petroleum were among the fund's biggest detractors. An underweighting in the strong-performing gas utilities segment also detracted, along with the fund's non-U.S. holdings, which were hurt by the impact of a rising dollar. On the plus side, underweighting pipeline operator Williams Companies proved additive, as the firm's share price dropped sharply on concern over the financial woes of client Chesapeake Energy. A stake in oil-field equipment maker Cameron International helped, as well, as the stock spiked in August on a merger offer from Schlumberger.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 Gas Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 29, 2016
| % of fund's net assets | % of fund's net assets 6 months ago | |
| Baker Hughes, Inc. | 12.1 | 11.3 |
| Devon Energy Corp. | 7.9 | 8.6 |
| Encana Corp. | 7.3 | 6.6 |
| Schlumberger Ltd. | 7.3 | 5.9 |
| Boardwalk Pipeline Partners, LP | 5.8 | 5.5 |
| Marathon Oil Corp. | 5.0 | 4.3 |
| Noble Energy, Inc. | 4.2 | 0.0 |
| Hess Corp. | 3.8 | 4.4 |
| Atmos Energy Corp. | 3.6 | 4.1 |
| Anadarko Petroleum Corp. | 3.1 | 2.6 |
| 60.1 |
Top Industries (% of fund's net assets)
| As of February 29, 2016 | ||
| Oil, Gas & Consumable Fuels | 61.6% | |
| Energy Equipment & Services | 30.3% | |
| Gas Utilities | 6.9% | |
| All Others* | 1.2% | |
| As of August 31, 2015 | ||
| Oil, Gas & Consumable Fuels | 62.6% | |
| Energy Equipment & Services | 29.6% | |
| Gas Utilities | 6.3% | |
| All Others* | 1.5% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
Percentages shown as 0.0% may reflect amounts less than 0.05%.
Natural Gas Portfolio
Investments February 29, 2016
Showing Percentage of Net Assets
| Common Stocks - 98.8% | |||
| Shares | Value | ||
| Energy Equipment & Services - 30.3% | |||
| Oil & Gas Drilling - 1.8% | |||
| Archer (a) | 471,159 | $144,556 | |
| Patterson-UTI Energy, Inc. | 292,300 | 4,542,342 | |
| 4,686,898 | |||
| Oil & Gas Equipment & Services - 28.5% | |||
| Baker Hughes, Inc. | 720,400 | 30,883,548 | |
| Cameron International Corp. (a) | 24,700 | 1,619,332 | |
| Era Group, Inc. (a) | 235,900 | 2,174,998 | |
| Exterran Corp. (a) | 246,200 | 3,358,168 | |
| Forum Energy Technologies, Inc. (a) | 203,700 | 2,395,512 | |
| National Oilwell Varco, Inc. | 212,900 | 6,231,583 | |
| Oil States International, Inc. (a) | 120,100 | 3,135,811 | |
| Schlumberger Ltd. | 260,800 | 18,704,576 | |
| Weatherford International Ltd. (a) | 684,500 | 4,380,800 | |
| 72,884,328 | |||
| TOTAL ENERGY EQUIPMENT & SERVICES | 77,571,226 | ||
| Gas Utilities - 6.9% | |||
| Gas Utilities - 6.9% | |||
| Atmos Energy Corp. | 135,220 | 9,385,620 | |
| New Jersey Resources Corp. | 72,800 | 2,520,336 | |
| Southwest Gas Corp. | 96,000 | 5,856,000 | |
| 17,761,956 | |||
| Oil, Gas & Consumable Fuels - 61.6% | |||
| Oil & Gas Exploration & Production - 54.7% | |||
| Advantage Oil & Gas Ltd. (a) | 935,100 | 4,754,980 | |
| Anadarko Petroleum Corp. | 207,800 | 7,886,010 | |
| Bellatrix Exploration Ltd. (a)(b) | 146,400 | 167,716 | |
| Cabot Oil & Gas Corp. | 99,124 | 1,995,366 | |
| Cimarex Energy Co. | 89,600 | 7,529,088 | |
| Crescent Point Energy Corp. (b) | 403,900 | 4,922,625 | |
| Crew Energy, Inc. (a) | 2,862,800 | 6,770,850 | |
| Crown Point Energy, Inc. (a)(c) | 181,658 | 8,056 | |
| Devon Energy Corp. | 1,022,446 | 20,121,737 | |
| Encana Corp. | 4,345,100 | 18,787,018 | |
| EQT Corp. | 109,300 | 6,092,382 | |
| Gulfport Energy Corp. (a) | 159,500 | 3,828,000 | |
| Hess Corp. | 224,100 | 9,770,760 | |
| Lekoil Ltd. (a)(b) | 5,574,900 | 1,163,914 | |
| Marathon Oil Corp. | 1,551,900 | 12,741,099 | |
| Noble Energy, Inc. | 366,200 | 10,802,900 | |
| Northern Blizzard Resources, Inc. (b) | 1,838,600 | 4,892,062 | |
| Oasis Petroleum, Inc. (a)(b) | 224,000 | 1,207,360 | |
| Savannah Petroleum PLC (a) | 2,400,000 | 789,179 | |
| Southwestern Energy Co. (a)(b) | 839,500 | 4,852,310 | |
| Surge Energy, Inc. (b) | 4,169,400 | 6,594,616 | |
| Whiting Petroleum Corp. (a)(b) | 1,071,400 | 4,296,314 | |
| 139,974,342 | |||
| Oil & Gas Storage & Transport - 6.9% | |||
| Boardwalk Pipeline Partners, LP | 1,199,200 | 14,894,064 | |
| Teekay Tankers Ltd. | 658,400 | 2,706,024 | |
| 17,600,088 | |||
| TOTAL OIL, GAS & CONSUMABLE FUELS | 157,574,430 | ||
| TOTAL COMMON STOCKS | |||
| (Cost $502,550,447) | 252,907,612 | ||
| Money Market Funds - 11.1% | |||
| Fidelity Cash Central Fund, 0.40% (d) | 5,224,316 | 5,224,316 | |
| Fidelity Securities Lending Cash Central Fund, 0.44% (d)(e) | 23,157,993 | 23,157,993 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $28,382,309) | 28,382,309 | ||
| TOTAL INVESTMENT PORTFOLIO - 109.9% | |||
| (Cost $530,932,756) | 281,289,921 | ||
| NET OTHER ASSETS (LIABILITIES) - (9.9)% | (25,299,730) | ||
| NET ASSETS - 100% | $255,990,191 |
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 $8,056 or 0.0% 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 | $14,538 |
| Fidelity Securities Lending Cash Central Fund | 359,183 |
| Total | $373,721 |
Investment Valuation
The following is a summary of the inputs used, as of February 29, 2016, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used 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 | $252,907,612 | $252,118,433 | $-- | $789,179 |
| Money Market Funds | 28,382,309 | 28,382,309 | -- | -- |
| Total Investments in Securities: | $281,289,921 | $280,500,742 | $-- | $789,179 |
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% |
| Canada | 18.3% |
| Curacao | 7.3% |
| Ireland | 1.7% |
| Marshall Islands | 1.1% |
| Others (Individually Less Than 1%) | 0.7% |
| 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, 2016 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $21,955,158) — See accompanying schedule: Unaffiliated issuers (cost $502,550,447) | $252,907,612 | |
| Fidelity Central Funds (cost $28,382,309) | 28,382,309 | |
| Total Investments (cost $530,932,756) | $281,289,921 | |
| Receivable for investments sold | 4,462,390 | |
| Receivable for fund shares sold | 457,188 | |
| Dividends receivable | 552,683 | |
| Distributions receivable from Fidelity Central Funds | 38,510 | |
| Prepaid expenses | 1,410 | |
| Other receivables | 17,911 | |
| Total assets | 286,820,013 | |
| Liabilities | ||
| Payable for investments purchased | $7,153,122 | |
| Payable for fund shares redeemed | 280,956 | |
| Accrued management fee | 116,186 | |
| Other affiliated payables | 71,153 | |
| Other payables and accrued expenses | 50,412 | |
| Collateral on securities loaned, at value | 23,157,993 | |
| Total liabilities | 30,829,822 | |
| Net Assets | $255,990,191 | |
| Net Assets consist of: | ||
| Paid in capital | $937,332,548 | |
| Distributions in excess of net investment income | (2,307,905) | |
| Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (429,391,706) | |
| Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (249,642,746) | |
| Net Assets, for 14,355,845 shares outstanding | $255,990,191 | |
| Net Asset Value, offering price and redemption price per share ($255,990,191 ÷ 14,355,845 shares) | $17.83 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 29, 2016 | ||
| Investment Income | ||
| Dividends | $7,399,814 | |
| Interest | 612,149 | |
| Income from Fidelity Central Funds | 373,721 | |
| Total income | 8,385,684 | |
| Expenses | ||
| Management fee | $2,163,552 | |
| Transfer agent fees | 1,063,597 | |
| Accounting and security lending fees | 158,031 | |
| Custodian fees and expenses | 14,278 | |
| Independent trustees' compensation | 7,114 | |
| Registration fees | 45,553 | |
| Audit | 43,614 | |
| Legal | 5,312 | |
| Miscellaneous | 8,928 | |
| Total expenses before reductions | 3,509,979 | |
| Expense reductions | (34,453) | 3,475,526 |
| Net investment income (loss) | 4,910,158 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | (90,278,050) | |
| Foreign currency transactions | (16,415) | |
| Total net realized gain (loss) | (90,294,465) | |
| Change in net unrealized appreciation (depreciation) on: Investment securities | (114,967,972) | |
| Assets and liabilities in foreign currencies | (2,000) | |
| Total change in net unrealized appreciation (depreciation) | (114,969,972) | |
| Net gain (loss) | (205,264,437) | |
| Net increase (decrease) in net assets resulting from operations | $(200,354,279) |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 29, 2016 | Year ended February 28, 2015 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $4,910,158 | $7,540,116 |
| Net realized gain (loss) | (90,294,465) | 41,606,525 |
| Change in net unrealized appreciation (depreciation) | (114,969,972) | (189,411,049) |
| Net increase (decrease) in net assets resulting from operations | (200,354,279) | (140,264,408) |
| Distributions to shareholders from net investment income | (5,529,387) | (6,843,809) |
| Distributions to shareholders from net realized gain | – | (835,212) |
| Total distributions | (5,529,387) | (7,679,021) |
| Share transactions | ||
| Proceeds from sales of shares | 114,790,165 | 658,709,839 |
| Reinvestment of distributions | 5,201,186 | 7,250,312 |
| Cost of shares redeemed | (188,439,341) | (828,307,919) |
| Net increase (decrease) in net assets resulting from share transactions | (68,447,990) | (162,347,768) |
| Redemption fees | 37,159 | 61,977 |
| Total increase (decrease) in net assets | (274,294,497) | (310,229,220) |
| Net Assets | ||
| Beginning of period | 530,284,688 | 840,513,908 |
| End of period (including distributions in excess of net investment income of $2,307,905 and distributions in excess of net investment income of $137,121, respectively) | $255,990,191 | $530,284,688 |
| Other Information | ||
| Shares | ||
| Sold | 4,431,127 | 15,534,332 |
| Issued in reinvestment of distributions | 253,143 | 209,792 |
| Redeemed | (6,872,469) | (20,662,742) |
| Net increase (decrease) | (2,188,199) | (4,918,618) |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Natural Gas Portfolio
| Years ended February 28, | 2016 A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $32.05 | $39.16 | $32.86 | $32.91 | $36.50 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .33 | .34 | .35 | .30 | .26 |
| Net realized and unrealized gain (loss) | (14.16) | (7.03) | 6.61 | (.03)C | (3.56) |
| Total from investment operations | (13.83) | (6.69) | 6.96 | .27 | (3.30) |
| Distributions from net investment income | (.39) | (.38) | (.33) | (.27) | (.29) |
| Distributions from net realized gain | – | (.04) | (.32) | (.05) | – |
| Total distributions | (.39) | (.42) | (.66)D | (.32) | (.29) |
| Redemption fees added to paid in capitalB,E | – | – | – | – | – |
| Net asset value, end of period | $17.83 | $32.05 | $39.16 | $32.86 | $32.91 |
| Total ReturnF | (43.29)% | (17.15)% | 21.28% | .86%C | (9.03)% |
| Ratios to Average Net AssetsG,H | |||||
| Expenses before reductions | .89% | .82% | .84% | .87% | .86% |
| Expenses net of fee waivers, if any | .88% | .82% | .84% | .87% | .86% |
| Expenses net of all reductions | .88% | .82% | .84% | .86% | .86% |
| Net investment income (loss) | 1.24% | .84% | .98% | .96% | .81% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $255,990 | $530,285 | $840,514 | $650,073 | $743,680 |
| Portfolio turnover rateI | 62% | 147%J | 135% | 107% | 63% |
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 $.03 per share. Excluding these litigation proceeds, the total return would have been 0.75%.
D Total distributions of $.66 per share is comprised of distributions from net investment income of $.332 and distributions from net realized gain of $.324 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.
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, 2016 | Past 1 year | Past 5 years | Past 10 years |
| Natural Resources Portfolio | (30.22)% | (9.05)% | 0.40% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Natural Resources Portfolio on February 28, 2006.
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 | ||
| $10,403 | Natural Resources Portfolio | |
| $18,666 | S&P 500® Index | |
Natural Resources Portfolio
Management's Discussion of Fund Performance
Market Recap: The S&P 500® index returned -6.19% for the year ending February 29, 2016. Largely range-bound for the first half of the period, U.S. stocks suffered a steep, late-summer decline on concern about an economic slowdown in China. The market recovered in October, lifted by the U.S. Federal Reserve’s decision to delay raising near-term interest rates until mid-December. Investors also drew courage from a rate cut in China and economic stimulus in Europe. But continued oil-price weakness and U.S.-dollar strength, plus fresh worries about China and the Middle East, pushed the S&P 500® to its worst January since 2009, followed by a volatile but ultimately flattish February. Overall, growth-oriented and larger-cap stocks fared better than value and smaller-cap complements. In this environment, the tech-heavy Nasdaq Composite Index® returned -7.07% for the 12 months; the Russell 2000® Index, -14.97%. Few sectors within the broad-market S&P 500® gained ground, with a wide gap separating leaders from laggards. Despite increased competition among wireless carriers, telecommunication services (+8%) led the way, followed by the more defensive utilities sector (+6%). Rising wages and low inflation buoyed consumer staples (+4%), less so consumer discretionary (0%). Meanwhile, energy (-24%) foundered amid commodity weakness that also hurt materials (-17%). The financials sector (-12%) struggled as well.Comments from Portfolio Manager John Dowd: For the year, the fund returned -30.22%, lagging the -28.51% return of its benchmark, the S&P® North American Natural Resources Sector Index, and falling short of the broadly based S&P 500®. It was a difficult period for natural resources, and especially energy-related stocks, which were crushed by collapsing crude oil prices. Relative to the S&P® industry index, we had excellent stock selection among oil & gas exploration & production (E&P) names, but a sizable overweighting in this weak-performing segment cooled results somewhat. A significant underweighting in the benchmark dominant integrated oil & gas subindustry also crimped results. Lastly, the fund's foreign holdings detracted, hurt by the impact of a rising dollar. Among individual stocks, underweightings in pipeline operators Kinder Morgan and Williams Companies both helped. Kinder returned -54% this period, hurt by weakening pipeline demand and a leveraged balance sheet. Shares of Williams Companies fell sharply on concern over the financial woes of client Chesapeake Energy. Williams was sold from the fund by period end. Refiner Valero Energy was another positive, as its share price was flat for the period, outperforming the benchmark. Conversely, the fund's biggest relative detractor was avoiding benchmark stalwart Exxon Mobil and underweighting Chevron, as both outperformed this period. An overweighting in Canadian E&P Encana 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.
Natural Resources Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 29, 2016
| % of fund's net assets | % of fund's net assets 6 months ago | |
| Schlumberger Ltd. | 10.0 | 9.1 |
| EOG Resources, Inc. | 7.1 | 6.7 |
| Valero Energy Corp. | 6.2 | 5.5 |
| Noble Energy, Inc. | 4.1 | 3.4 |
| Cimarex Energy Co. | 4.0 | 4.4 |
| Baker Hughes, Inc. | 3.8 | 2.1 |
| Diamondback Energy, Inc. | 3.3 | 2.1 |
| Hess Corp. | 2.9 | 0.9 |
| Newfield Exploration Co. | 2.9 | 4.0 |
| Pioneer Natural Resources Co. | 2.8 | 2.2 |
| 47.1 |
Top Industries (% of fund's net assets)
| As of February 29, 2016 | ||
| Oil, Gas & Consumable Fuels | 64.8% | |
| Energy Equipment & Services | 20.9% | |
| Containers & Packaging | 6.2% | |
| Metals & Mining | 4.0% | |
| Chemicals | 2.1% | |
| All Others* | 2.0% | |
| As of August 31, 2015 | ||
| Oil, Gas & Consumable Fuels | 67.8% | |
| Energy Equipment & Services | 16.8% | |
| Containers & Packaging | 7.7% | |
| Metals & Mining | 5.0% | |
| Independent Power and Renewable Electricity Producers | 1.3% | |
| All Others* | 1.4% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
Natural Resources Portfolio
Investments February 29, 2016
Showing Percentage of Net Assets
| Common Stocks - 99.3% | |||
| Shares | Value | ||
| Chemicals - 2.1% | |||
| Commodity Chemicals - 1.5% | |||
| LyondellBasell Industries NV Class A | 87,800 | $7,042,438 | |
| Diversified Chemicals - 0.6% | |||
| Eastman Chemical Co. | 40,400 | 2,591,660 | |
| TOTAL CHEMICALS | 9,634,098 | ||
| Containers & Packaging - 6.2% | |||
| Metal & Glass Containers - 2.2% | |||
| Ball Corp. | 122,900 | 8,139,667 | |
| Berry Plastics Group, Inc. (a) | 66,900 | 2,082,597 | |
| 10,222,264 | |||
| Paper Packaging - 4.0% | |||
| Graphic Packaging Holding Co. | 295,500 | 3,643,515 | |
| Packaging Corp. of America | 81,400 | 3,947,900 | |
| Sealed Air Corp. | 94,700 | 4,330,631 | |
| WestRock Co. | 190,000 | 6,416,300 | |
| 18,338,346 | |||
| TOTAL CONTAINERS & PACKAGING | 28,560,610 | ||
| Energy Equipment & Services - 20.9% | |||
| Oil & Gas Drilling - 0.7% | |||
| Nabors Industries Ltd. | 197,400 | 1,413,384 | |
| Odfjell Drilling A/S (a) | 701,200 | 426,239 | |
| Xtreme Drilling & Coil Services Corp. (a) | 1,009,400 | 1,148,911 | |
| 2,988,534 | |||
| Oil & Gas Equipment & Services - 20.2% | |||
| Baker Hughes, Inc. | 411,200 | 17,628,144 | |
| Bristow Group, Inc. | 20,600 | 313,326 | |
| Cameron International Corp. (a) | 187,700 | 12,305,612 | |
| Dril-Quip, Inc. (a) | 109,425 | 5,936,306 | |
| Frank's International NV | 284,900 | 3,957,261 | |
| Oceaneering International, Inc. | 187,200 | 5,170,464 | |
| Schlumberger Ltd. | 647,292 | 46,423,782 | |
| Tesco Corp. | 145,700 | 1,054,868 | |
| Total Energy Services, Inc. | 84,100 | 817,380 | |
| 93,607,143 | |||
| TOTAL ENERGY EQUIPMENT & SERVICES | 96,595,677 | ||
| Independent Power and Renewable Electricity Producers - 1.0% | |||
| Independent Power Producers & Energy Traders - 0.2% | |||
| NRG Yield, Inc. Class C (b) | 69,800 | 912,286 | |
| Renewable Electricity - 0.8% | |||
| NextEra Energy Partners LP | 148,000 | 3,839,120 | |
| TOTAL INDEPENDENT POWER AND RENEWABLE ELECTRICITY PRODUCERS | 4,751,406 | ||
| Metals & Mining - 4.0% | |||
| Gold - 4.0% | |||
| B2Gold Corp. (a) | 784,500 | 875,532 | |
| Franco-Nevada Corp. | 105,400 | 6,290,503 | |
| Randgold Resources Ltd. sponsored ADR | 125,580 | 11,459,175 | |
| 18,625,210 | |||
| Oil, Gas & Consumable Fuels - 64.8% | |||
| Coal & Consumable Fuels - 0.2% | |||
| CONSOL Energy, Inc. (b) | 113,700 | 981,231 | |
| Integrated Oil & Gas - 1.2% | |||
| Chevron Corp. | 13,200 | 1,101,408 | |
| Occidental Petroleum Corp. | 65,800 | 4,528,356 | |
| 5,629,764 | |||
| Oil & Gas Exploration & Production - 46.6% | |||
| Anadarko Petroleum Corp. | 311,300 | 11,813,835 | |
| Apache Corp. | 170,200 | 6,515,256 | |
| Bankers Petroleum Ltd. (a) | 411,800 | 276,968 | |
| Black Stone Minerals LP | 60,258 | 749,007 | |
| Cabot Oil & Gas Corp. | 275,100 | 5,537,763 | |
| California Resources Corp. | 6,185 | 3,477 | |
| Canadian Natural Resources Ltd. | 351,300 | 7,342,767 | |
| Carrizo Oil & Gas, Inc. (a)(b) | 99,800 | 2,145,700 | |
| Cimarex Energy Co. | 222,800 | 18,721,884 | |
| Concho Resources, Inc. (a) | 131,100 | 11,830,464 | |
| ConocoPhillips Co. | 189,100 | 6,397,253 | |
| Continental Resources, Inc. (a)(b) | 76,300 | 1,768,634 | |
| Diamondback Energy, Inc. | 217,000 | 15,461,250 | |
| EOG Resources, Inc. | 504,600 | 32,667,804 | |
| Evolution Petroleum Corp. | 78,400 | 338,688 | |
| Gran Tierra Energy, Inc. (Canada) (a) | 259,200 | 613,038 | |
| Gulfport Energy Corp. (a) | 64,050 | 1,537,200 | |
| Hess Corp. | 313,000 | 13,646,800 | |
| Memorial Resource Development Corp. (a) | 467,700 | 4,522,659 | |
| Murphy Oil Corp. | 58,900 | 1,011,902 | |
| Newfield Exploration Co. (a) | 488,500 | 13,301,855 | |
| Noble Energy, Inc. | 646,700 | 19,077,650 | |
| Parsley Energy, Inc. Class A (a) | 221,500 | 4,071,170 | |
| PDC Energy, Inc. (a) | 246,000 | 12,327,060 | |
| Pioneer Natural Resources Co. | 108,400 | 13,065,452 | |
| Rice Energy, Inc. (a) | 95,500 | 874,780 | |
| RSP Permian, Inc. (a) | 148,300 | 3,545,853 | |
| Seven Generations Energy Ltd. (a) | 279,100 | 3,203,565 | |
| Synergy Resources Corp. (a)(b) | 467,600 | 2,922,500 | |
| TAG Oil Ltd. (a) | 615,100 | 259,133 | |
| 215,551,367 | |||
| Oil & Gas Refining & Marketing - 8.1% | |||
| Keyera Corp. (b) | 161,700 | 4,482,902 | |
| Valero Energy Corp. | 481,400 | 28,922,512 | |
| Western Refining, Inc. | 54,600 | 1,456,182 | |
| World Fuel Services Corp. | 59,900 | 2,803,919 | |
| 37,665,515 | |||
| Oil & Gas Storage & Transport - 8.7% | |||
| Cheniere Energy Partners LP Holdings LLC | 125,500 | 2,104,635 | |
| Cheniere Energy, Inc. (a) | 87,300 | 3,120,975 | |
| Columbia Pipeline Group, Inc. | 163,200 | 2,962,080 | |
| Enterprise Products Partners LP | 150,500 | 3,517,185 | |
| Gener8 Maritime, Inc. (a) | 59,600 | 370,116 | |
| Golar LNG Ltd. (b) | 167,000 | 3,061,110 | |
| Kinder Morgan, Inc. | 704,400 | 12,742,596 | |
| Magellan Midstream Partners LP | 67,200 | 4,541,376 | |
| Phillips 66 Partners LP | 32,300 | 1,946,721 | |
| Plains All American Pipeline LP | 71,500 | 1,531,530 | |
| Rice Midstream Partners LP | 92,500 | 1,225,625 | |
| Shell Midstream Partners LP | 87,700 | 3,117,735 | |
| 40,241,684 | |||
| TOTAL OIL, GAS & CONSUMABLE FUELS | 300,069,561 | ||
| Semiconductors & Semiconductor Equipment - 0.3% | |||
| Semiconductor Equipment - 0.3% | |||
| SolarEdge Technologies, Inc. | 60,100 | 1,470,647 | |
| TOTAL COMMON STOCKS | |||
| (Cost $526,275,001) | 459,707,209 | ||
| Money Market Funds - 3.5% | |||
| Fidelity Cash Central Fund, 0.40% (c) | 3,240,456 | 3,240,456 | |
| Fidelity Securities Lending Cash Central Fund, 0.44% (c)(d) | 13,081,890 | 13,081,890 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $16,322,346) | 16,322,346 | ||
| TOTAL INVESTMENT PORTFOLIO - 102.8% | |||
| (Cost $542,597,347) | 476,029,555 | ||
| NET OTHER ASSETS (LIABILITIES) - (2.8)% | (13,160,233) | ||
| NET ASSETS - 100% | $462,869,322 |
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 | $7,913 |
| Fidelity Securities Lending Cash Central Fund | 119,114 |
| Total | $127,027 |
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 | 78.3% |
| Curacao | 10.0% |
| Canada | 5.7% |
| Bailiwick of Jersey | 2.5% |
| Netherlands | 2.3% |
| Bermuda | 1.1% |
| Others (Individually Less Than 1%) | 0.1% |
| 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, 2016 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $13,043,948) — See accompanying schedule: Unaffiliated issuers (cost $526,275,001) | $459,707,209 | |
| Fidelity Central Funds (cost $16,322,346) | 16,322,346 | |
| Total Investments (cost $542,597,347) | $476,029,555 | |
| Receivable for investments sold | 2,588,992 | |
| Receivable for fund shares sold | 690,236 | |
| Dividends receivable | 918,856 | |
| Distributions receivable from Fidelity Central Funds | 15,303 | |
| Prepaid expenses | 2,205 | |
| Other receivables | 25,557 | |
| Total assets | 480,270,704 | |
| Liabilities | ||
| Payable for investments purchased | $3,206,086 | |
| Payable for fund shares redeemed | 719,451 | |
| Accrued management fee | 209,356 | |
| Other affiliated payables | 128,350 | |
| Other payables and accrued expenses | 56,249 | |
| Collateral on securities loaned, at value | 13,081,890 | |
| Total liabilities | 17,401,382 | |
| Net Assets | $462,869,322 | |
| Net Assets consist of: | ||
| Paid in capital | $726,221,376 | |
| Distributions in excess of net investment income | (178,509) | |
| Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (196,605,931) | |
| Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (66,567,614) | |
| Net Assets, for 21,229,802 shares outstanding | $462,869,322 | |
| Net Asset Value, offering price and redemption price per share ($462,869,322 ÷ 21,229,802 shares) | $21.80 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 29, 2016 | ||
| Investment Income | ||
| Dividends | $9,268,006 | |
| Income from Fidelity Central Funds | 127,027 | |
| Total income | 9,395,033 | |
| Expenses | ||
| Management fee | $3,411,829 | |
| Transfer agent fees | 1,599,244 | |
| Accounting and security lending fees | 230,840 | |
| Custodian fees and expenses | 22,875 | |
| Independent trustees' compensation | 11,738 | |
| Registration fees | 33,925 | |
| Audit | 46,598 | |
| Legal | 7,632 | |
| Miscellaneous | 9,807 | |
| Total expenses before reductions | 5,374,488 | |
| Expense reductions | (85,148) | 5,289,340 |
| Net investment income (loss) | 4,105,693 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | (160,436,248) | |
| Foreign currency transactions | 54,582 | |
| Total net realized gain (loss) | (160,381,666) | |
| Change in net unrealized appreciation (depreciation) on: Investment securities | (56,067,142) | |
| Assets and liabilities in foreign currencies | 151 | |
| Total change in net unrealized appreciation (depreciation) | (56,066,991) | |
| Net gain (loss) | (216,448,657) | |
| Net increase (decrease) in net assets resulting from operations | $(212,342,964) |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 29, 2016 | Year ended February 28, 2015 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $4,105,693 | $5,084,685 |
| Net realized gain (loss) | (160,381,666) | 12,413,402 |
| Change in net unrealized appreciation (depreciation) | (56,066,991) | (119,536,233) |
| Net increase (decrease) in net assets resulting from operations | (212,342,964) | (102,038,146) |
| Distributions to shareholders from net investment income | (3,939,288) | (3,492,100) |
| Distributions to shareholders from net realized gain | – | (43,304,505) |
| Total distributions | (3,939,288) | (46,796,605) |
| Share transactions | ||
| Proceeds from sales of shares | 117,724,498 | 224,332,908 |
| Reinvestment of distributions | 3,714,770 | 44,616,027 |
| Cost of shares redeemed | (203,387,401) | (308,452,835) |
| Net increase (decrease) in net assets resulting from share transactions | (81,948,133) | (39,503,900) |
| Redemption fees | 21,844 | 22,379 |
| Total increase (decrease) in net assets | (298,208,541) | (188,316,272) |
| Net Assets | ||
| Beginning of period | 761,077,863 | 949,394,135 |
| End of period (including distributions in excess of net investment income of $178,509 and distributions in excess of net investment income of $15,782, respectively) | $462,869,322 | $761,077,863 |
| Other Information | ||
| Shares | ||
| Sold | 4,300,582 | 6,084,348 |
| Issued in reinvestment of distributions | 161,442 | 1,408,837 |
| Redeemed | (7,401,435) | (8,407,605) |
| Net increase (decrease) | (2,939,411) | (914,420) |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Natural Resources Portfolio
| Years ended February 28, | 2016 A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $31.49 | $37.85 | $34.10 | $35.36 | $39.07 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .18 | .21 | .20 | .28 | .20 |
| Net realized and unrealized gain (loss) | (9.69) | (4.55) | 4.52 | (1.45) | (3.59) |
| Total from investment operations | (9.51) | (4.34) | 4.72 | (1.17) | (3.39) |
| Distributions from net investment income | (.18) | (.15) | (.10) | (.09) | (.26) |
| Distributions from net realized gain | – | (1.87) | (.88) | – | (.06) |
| Total distributions | (.18) | (2.02) | (.97)C | (.09) | (.32) |
| Redemption fees added to paid in capitalB,D | – | – | – | – | – |
| Net asset value, end of period | $21.80 | $31.49 | $37.85 | $34.10 | $35.36 |
| Total ReturnE | (30.22)% | (11.45)% | 13.97% | (3.30)% | (8.63)% |
| Ratios to Average Net AssetsF,G | |||||
| Expenses before reductions | .86% | .82% | .84% | .86% | .84% |
| Expenses net of fee waivers, if any | .86% | .82% | .84% | .85% | .84% |
| Expenses net of all reductions | .85% | .82% | .83% | .84% | .84% |
| Net investment income (loss) | .66% | .55% | .54% | .89% | .58% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $462,869 | $761,078 | $949,394 | $1,054,528 | $1,430,581 |
| Portfolio turnover rateH | 78% | 87% | 99% | 76% | 88% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Total distributions of $.97 per share is comprised of distributions from net investment income of $.095 and distributions from net realized gain of $.877 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, 2016
1. Organization.
Energy Portfolio, Energy Service Portfolio, Natural Gas Portfolio, and Natural Resources Portfolio (the Funds) are funds of Fidelity Select Portfolios (the Trust). Energy Portfolio, Energy Service Portfolio and Natural Gas Portfolio are non-diversified 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 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. Certain Funds' investments in emerging markets can be subject to social, economic, regulatory, and political uncertainties and can be extremely volatile.
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 Fidelity Investments Money Management, Inc. (FIMM), an affiliate of the investment adviser. Annualized expenses of the Money Market Central Funds as of their most recent shareholder report date are less than .005%.
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.
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 Fidelity SelectCo, LLC (SelectCo) Fair Value Committee (the Committee). 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. Utilizing these techniques may result in transfers between Level 1 and Level 2. 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, 2016 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 may 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. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. Subsequent to ex-dividend date the Funds determine the components of these distributions, based upon receipt of tax filings or other correspondence relating to the underlying investment. 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 the Funds, independent Trustees may elect 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 are included in the accompanying Statement of Assets and Liabilities.
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, 2016, 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, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows for each Fund:
| Tax cost | Gross unrealized appreciation | Gross unrealized depreciation | Net unrealized appreciation (depreciation) on securities | |
| Energy Portfolio | $2,198,910,617 | $118,750,950 | $(365,856,145) | $(247,105,195) |
| Energy Service Portfolio | 634,809,420 | 52,046,342 | (235,210,243) | (183,163,901) |
| Natural Gas Portfolio | 534,805,409 | 5,085,029 | (258,600,517) | (253,515,488) |
| Natural Resources Portfolio | 561,601,988 | 27,921,442 | (113,493,875) | (85,572,433) |
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 | $5,354,640 | $(352,034,708) | $(247,104,945) |
| Energy Service Portfolio | 88,562 | (9,623,267) | (183,166,970) |
| Natural Gas Portfolio | 804,955 | (425,910,532) | (253,515,399) |
| Natural Resources Portfolio | 2,241,193 | (179,672,394) | (85,572,255) |
Capital loss carryforwards are only available to offset future capital gains of the Funds to the extent provided by regulations and may be limited. Under the Regulated Investment Company Modernization Act of 2010 (the Act), the Funds are permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period and such capital losses are required to be used prior to any losses that expire. The capital loss carryforward information presented below, including any applicable limitation, is estimated as of fiscal period end and is subject to adjustment.
| Fiscal year of expiration | |||
| 2018 | 2019 | Total with expiration | |
| Natural Gas Portfolio | $(60,545,261) | $(215,752,708) | $(276,297,969) |
| No expiration | ||||
| Short-term | Long-term | Total no expiration | Total capital loss carryfoward | |
| Energy Portfolio | $(228,355,906) | $(123,678,802) | $(352,034,708) | $(352,034,708) |
| Energy Service Portfolio | (9,623,267) | (–) | (9,623,267) | (9,623,267) |
| Natural Gas Portfolio | (84,706,662) | (64,905,901) | (149,612,563) | (425,910,532) |
| Natural Resources Portfolio | (83,072,909) | (96,599,485) | (179,672,394) | (179,672,394) |
The tax character of distributions paid was as follows:
| February 29, 2016 | |||
| Ordinary Income | Long-term Capital Gains | Total | |
| Energy Portfolio | $19,169,416 | $3,157,395 | $22,326,811 |
| Energy Service Portfolio | 4,585,495 | – | 4,585,495 |
| Natural Gas Portfolio | 5,529,387 | – | 5,529,387 |
| Natural Resources Portfolio | 3,939,288 | – | 3,939,288 |
| February 28, 2015 | |||
| Ordinary Income | Long-term Capital Gains | Total | |
| Energy Portfolio | $18,840,374 | $163,093,871 | $181,934,245 |
| Energy Service Portfolio | 4,379,828 | 101,072,498 | 105,452,326 |
| Natural Gas Portfolio | 7,679,021 | – | 7,679,021 |
| Natural Resources Portfolio | 8,283,443 | 38,513,162 | 46,796,605 |
Trading (Redemption) Fees. Shares held by investors in the Funds less than 30 days may be subject to a redemption fee equal to .75% of the NAV of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Funds and accounted for as an addition to paid in capital.
Restricted Securities. The Funds may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities is included at the end of each applicable Fund's Schedule of Investments.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, are noted in the table below.
| Purchases ($) | Sales ($) | |
| Energy Portfolio | 2,005,707,912 | 1,580,074,590 |
| Energy Service Portfolio | 340,984,275 | 376,651,444 |
| Natural Gas Portfolio | 242,454,752 | 298,900,892 |
| Natural Resources Portfolio | 484,659,952 | 565,933,564 |
5. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity SelectCo, 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 average net assets of all the mutual funds advised by Fidelity Management & Research Company (FMR) and the investment adviser. 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% | .25% | .55% |
| Energy Service Portfolio | .30% | .25% | .55% |
| Natural Gas Portfolio | .30% | .25% | .55% |
| Natural Resources Portfolio | .30% | .25% | .55% |
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (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 | .21% |
| Energy Service Portfolio | .24% |
| Natural Gas Portfolio | .27% |
| Natural Resources Portfolio | .26% |
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. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. Certain Funds placed a portion of their portfolio transactions 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 | $39,269 |
| Energy Service Portfolio | 16,051 |
| Natural Gas Portfolio | 9,446 |
| Natural Resources Portfolio | 10,213 |
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Funds, along with other registered investment companies having management contracts with Fidelity Management & Research Company (FMR) or other affiliated entities of FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. Each applicable fund's 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 | $5,947,000 | .37% | $428 |
| Energy Service Portfolio | Borrower | $3,484,231 | .36% | $913 |
Interfund Trades. The Fund 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:
| Energy Portfolio | $2,948 |
| Energy Service Portfolio | 913 |
| Natural Gas Portfolio | 649 |
| Natural Resources Portfolio | 969 |
During the period, the Funds did not borrow on this line of credit.
7. Security Lending.
Certain Funds lend portfolio securities through a lending agent from time to time in order to earn additional income. 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. Security lending activity was as follows:
| Total Security Lending Income | |
| Energy Portfolio | $206,517 |
| Energy Service Portfolio | 230,582 |
| Natural Gas Portfolio | 359,183 |
| Natural Resources Portfolio | 119,114 |
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. At period end, there were no bank borrowings outstanding. Each applicable Fund's activity in this program during the period for which loans were outstanding was as follows:
| Average Loan Balance | Weighted Average Interest Rate | Interest Expense | |
| Energy Service Portfolio | $3,490,929 | .63% | $858 |
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, 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 reduction | Custody expense reduction | |
| Energy Portfolio | $181,523 | $77 |
| Energy Service Portfolio | 157,971 | – |
| Natural Gas Portfolio | 13,838 | – |
| Natural Resources Portfolio | 58,386 | – |
In addition, during the period the investment adviser reimbursed and/or waived a portion of operating expenses as follows:
| Amount | |
| Energy Portfolio | $65,908 |
| Energy Service Portfolio | 28,712 |
| Natural Gas Portfolio | 20,615 |
| Natural Resources Portfolio | 26,762 |
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.
At the end of the period, the following mutual fund managed by the investment adviser or its affiliates was the owner of record of 10% or more of the total outstanding shares of the following Fund:
| Strategic Advisers Core Fund | |
| Energy Portfolio | 10% |
Mutual Funds managed by the investment adviser or its affiliates, in aggregate, were the owners of record of more than 20% of the total outstanding shares of the following Fund:
| % of Shares held | |
| Energy Portfolio | 30% |
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Select Portfolios and the Shareholders of Energy Portfolio, Energy Service Portfolio, Natural Gas Portfolio and Natural Resources Portfolio:
In our opinion, the accompanying statements of assets and liabilities, including the schedules of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Energy Portfolio, Energy Service Portfolio, Natural Gas Portfolio and Natural Resources Portfolio (each a fund of Fidelity Select Portfolios) (the "Funds") at February 29, 2016, 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 then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Funds' management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at February 29, 2016 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 13, 2016
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. Each of the Trustees oversees 75 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. Brian B. Hogan 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. Michael E. Wiley 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 sector portfolios. Other Boards oversee Fidelity's equity and high income funds, and Fidelity's investment grade bond, money market, and asset allocation funds. 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 SelectCo 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 SelectCo, 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 and Audit Committees. Appropriate personnel, including but not limited to the funds' Chief Compliance Officer (CCO), SelectCo's internal auditor, the independent accountants, the funds' Treasurer and portfolio management personnel, make periodic reports to the Board's committees, as appropriate. 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+
Brian B. Hogan (1964)
Year of Election or Appointment: 2014
Trustee
Chairman of the Board of Trustees
Mr. Hogan also serves as Trustee or Vice President of other funds. Mr. Hogan serves as a Director of FMR Investment Management (U.K.) Limited (investment adviser firm, 2015-present) and Fidelity SelectCo, LLC (investment adviser firm, 2014-present) and President of the Equity Division of FMR (investment adviser firm, 2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager.
* 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 SelectCo.
+ 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+
David A. Rosow (1942)
Year of Election or Appointment: 2013
Trustee
Mr. Rosow also serves as Trustee of other Fidelity® funds. Prior to his retirement in 2006, Mr. Rosow was the Chief Executive Officer, owner and operator of a number of private companies, which encompassed oil refining, drilling and marketing of petroleum products (including specialty petroleum products), the recreation industry, and real estate development. Mr. Rosow currently serves as a Director of Oxbow Carbon LLC (upgraders, marketers, and distributors of petroleum byproducts of the oil refining process, 2015-present) and Oxbridge Academy of the Palm Beaches (2015-present). Previously, Mr. Rosow served on the Fairfield Country Day School Board for 27 years, including as its President for 3 years, stepping down in 2006, as Lead Director and Chairman of the Audit Committee of Hudson United Bancorp (1996-2006), Chairman of the Board of Westport Bank and Trust (1992-1996), and as a Director of TD Banknorth (2006-2007). In addition, Mr. Rosow served as a member (2008-2014) and President (2009-2014) of the Town Council of Palm Beach, Florida. Mr. Rosow also served as a Member of the Advisory Board of other Fidelity® funds (2012-2013).
Garnett A. Smith (1947)
Year of Election or Appointment: 2013
Trustee
Mr. Smith also serves as Trustee of other Fidelity® funds. Prior to Mr. Smith's retirement, he served as Chairman and Chief Executive Officer of Inbrand Corp. (manufacturer of personal absorbent products, 1990-1997). He also served as President (1986-1990) of Inbrand Corp. Prior to his employment with Inbrand Corp., he was employed by a retail fabric chain and North Carolina National Bank. In addition, Mr. Smith served as a Member of the Advisory Board of other Fidelity® funds (2012-2013) and as a board member of the Jackson Hole Land Trust (2009-2012).
Michael E. Wiley (1950)
Year of Election or Appointment: 2008
Trustee
Chairman of the Independent Trustees
Mr. Wiley also serves as Trustee of other Fidelity® funds. Mr. Wiley serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), a Director of Tesoro Logistics LP (natural resources logistics, 2015-present), and a Director of Bill Barrett Corporation (exploration and production, 2005-present). In addition, Mr. Wiley also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a Trustee of other Fidelity® funds (2008-2013), as a Director of Asia Pacific Exploration Consolidated (international oil and gas exploration and production, 2008-2013), as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-2010), as a Senior Energy Advisor of Katzenbach Partners, LLC (consulting, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production, 2001-2005).
+ 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:
Except for Anthony R. Rochte, correspondence intended for an officer may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210. Correspondence intended for Mr. Rochte may be sent to SelectCo, 1225 17th Street, Denver, Colorado 80202-5541. Officers appear below in alphabetical order.
Name, Year of Birth; Principal Occupation
Donald F. Donahue (1950)
Year of Election or Appointment: 2015
Member of the Advisory Board
Mr. Donahue also serves as a Member of the Advisory Board of other Fidelity® funds. Mr. Donahue is President and Chief Executive Officer of Miranda Partners, LLC (risk consulting for the financial services industry, 2012-present) and a consultant for the Institute for Defense Analyses (national security, 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 serves as a Member and Treasurer of the Board of Directors of United Way of New York (2012-present), Member of the Board of Directors of NYC Leadership Academy (2012-present) and Physicians for Human Rights (2013-present), and Member of the Board of Advisors of Ripple Labs, Inc. (financial services, 2015-present). He also served as Chairman (2010-2012) and Member of the Board of Directors (2012-2013) of Omgeo, LLC (financial services) and Member of the Board of Directors of XBRL US (financial services non-profit, 2009-2012) and the International Securities Services Association (2009-2012).
Christopher S. Bartel (1971)
Year of Election or Appointment: 2009
Vice President
Mr. Bartel also serves as Vice President of other funds. Mr. Bartel serves as a Director of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2016-present) and Fidelity Management & Research (Hong Kong) (investment adviser firm, 2012-present) and Head of Global Equity Research (2010-present). Previously, Mr. Bartel served as a Director, President, and Chief Executive Officer of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2012-2016), Senior Vice President of Equity Research (2009-2010), Managing Director of Research (2006-2009), and an analyst and portfolio manager (2000-2006).
Marc R. Bryant (1966)
Year of Election or Appointment: 2013
Secretary and Chief Legal Officer (CLO)
Mr. Bryant also serves as Secretary and CLO of other funds. Mr. Bryant serves as CLO, Secretary, and Senior Vice President of Fidelity Management & Research Company (investment adviser firm, 2015-present) and FMR Co., Inc. (investment adviser firm, 2015-present); Secretary of Fidelity SelectCo, LLC (investment adviser firm, 2015-present) and Fidelity Investments Money Management, Inc. (investment adviser firm, 2015-present); and CLO of Fidelity Management & Research (Hong Kong) Limited and FMR Investment Management (U.K.) Limited (investment adviser firms, 2015-present) and Fidelity Management & Research (Japan) Limited (investment adviser firm, 2016-present). He is Senior Vice President and Deputy General Counsel of FMR LLC (diversified financial services company). Previously, Mr. Bryant served as Secretary and CLO of Fidelity Rutland Square Trust II (2010-2014) and Assistant Secretary of Fidelity's Fixed Income and Asset Allocation Funds (2013-2015). Prior to joining Fidelity Investments, Mr. Bryant served as a Senior Vice President and the Head of Global Retail Legal for AllianceBernstein L.P. (2006-2010), and as the General Counsel for ProFund Advisors LLC (2001-2006).
William C. Coffey (1969)
Year of Election or Appointment: 2009
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 Vice President and Associate General Counsel of FMR LLC (2005-2009).
Jonathan Davis (1968)
Year of Election or Appointment: 2010
Assistant Treasurer
Mr. Davis also serves as Assistant Treasurer of other funds, 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).
Adrien E. Deberghes (1967)
Year of Election or Appointment: 2013
President and Treasurer
Mr. Deberghes also serves as an officer of other funds. He is an employee of Fidelity Investments (2008-present). Prior to joining Fidelity Investments, Mr. Deberghes was Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005). Previously, Mr. Deberghes served in other fund officer roles.
Joseph DeSantis (1959)
Year of Election or Appointment: 2015
Vice President
Mr. DeSantis also serves as Vice President of other funds. Mr. DeSantis serves as Group Chief Investment Officer, Equities (2010-present) and is an employee of Fidelity Investments.
Stephanie J. Dorsey (1969)
Year of Election or Appointment: 2010
Assistant Treasurer
Ms. Dorsey also serves as an officer of other funds. She is an employee of Fidelity Investments (2008-present) and has served in other fund officer roles. Prior to joining Fidelity Investments, Ms. Dorsey served as Treasurer (2004-2008) of the JPMorgan Mutual Funds and Vice President (2004-2008) of JPMorgan Chase Bank.
Howard J. Galligan III (1966)
Year of Election or Appointment: 2014
Chief Financial Officer
Mr. Galligan also serves as Chief Financial Officer of other funds. Mr. Galligan serves as President of Fidelity Pricing and Cash Management Services (FPCMS) (2014-present) and as a Director of Strategic Advisers, Inc. (investment adviser firm, 2008-present). Previously, Mr. Galligan served as Chief Administrative Officer of Asset Management (2011-2014) and Chief Operating Officer and Senior Vice President of Investment Support for Strategic Advisers, Inc. (2003-2011).
Scott C. Goebel (1968)
Year of Election or Appointment: 2015
Vice President
Mr. Goebel serves as Vice President of other funds and is an employee of Fidelity Investments (2001-present). Previously, Mr. Goebel served as Secretary of Fidelity SelectCo, LLC (investment adviser firm, 2013-2015), Fidelity Investments Money Management, Inc. (FIMM) (investment adviser firm, 2010-2015), and Fidelity Research and Analysis Company (FRAC) (investment adviser firm, 2010-2015); General Counsel, Secretary, and Senior Vice President of Fidelity Management & Research Company (investment adviser firm, 2008-2015) and FMR Co., Inc. (investment adviser firm, 2008-2015); Assistant Secretary of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2008-2015) and Fidelity Management & Research (U.K.) Inc. (investment adviser firm, 2008-2015); Chief Legal Officer (CLO) of Fidelity Management & Research (Hong Kong) Limited (investment adviser firm, 2008-2015); Secretary and CLO of certain Fidelity® funds (2008-2015); Assistant Secretary of FIMM (2008-2010), FRAC (2008-2010), and certain funds (2007-2008); and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007).
James D. Gryglewicz (1972)
Year of Election or Appointment: 2014
Chief Compliance Officer
Mr. Gryglewicz also serves as Chief Compliance Officer of other funds. Mr. Gryglewicz serves as Compliance Officer of Strategic Advisers, Inc. (investment adviser firm, 2015-present) and Fidelity SelectCo, LLC (investment adviser firm, 2014-present), Senior Vice President of Asset Management Compliance (2009-present), and is an employee of Fidelity Investments (2004-present).
Brian B. Hogan (1964)
Year of Election or Appointment: 2009
Vice President
Mr. Hogan also serves as Trustee or Vice President of other funds. Mr. Hogan serves as a Director of FMR Investment Management (U.K.) Limited (investment adviser firm, 2015-present) and Fidelity SelectCo, LLC (investment adviser firm, 2014-present) and President of the Equity Division of FMR (investment adviser firm, 2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager.
Chris Maher (1972)
Year of Election or Appointment: 2013
Assistant Treasurer
Mr. Maher serves as Assistant Treasurer of other funds. Mr. Maher is Vice President of Valuation Oversight and is an employee of Fidelity Investments. Previously, Mr. Maher served as 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).
John F. Papandrea (1972)
Year of Election or Appointment: 2016
Anti-Money Laundering (AML) Officer
Mr. Papandrea also serves as AML Officer of other funds. Mr. Papandrea is Vice President of FMR LLC (diversified financial services company, 2008-present) and is an employee of Fidelity Investments (2005-present).
Kenneth B. Robins (1969)
Year of Election or Appointment: 2013
Deputy Treasurer
Mr. Robins also serves as an officer of other funds. Mr. Robins serves as Executive Vice President of Fidelity Investments Money Management, Inc. (FIMM) (investment adviser firm, 2013-present) and is an employee of Fidelity Investments (2004-present). Previously, Mr. Robins served in other fund officer roles.
Anthony R. Rochte (1968)
Year of Election or Appointment: 2013
Vice President
Mr. Rochte also serves as Vice President of other funds. Mr. Rochte serves as President of Fidelity SelectCo, LLC (investment adviser firm, 2012-present) and is an employee of Fidelity Investments (2012-present). Prior to joining Fidelity Investments, Mr. Rochte served as Senior Managing Director and head of State Street Global Advisors' North American Intermediary Business Group (2006-2012).
Stacie M. Smith (1974)
Year of Election or Appointment: 2013
Assistant Treasurer
Ms. Smith also serves as an officer of other funds. She 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 (1996-2009). Previously, Ms. Smith served as Deputy Treasurer of certain Fidelity funds (2013-2016).
Renee Stagnone (1975)
Year of Election or Appointment: 2013
Deputy Treasurer
Ms. Stagnone also serves as an officer of other funds. Ms. Stagnone is an employee of Fidelity Investments (1997-present). Previously, Ms. Stagnone served as Deputy Treasurer of certain Fidelity funds (2013-2016).
Joseph F. Zambello (1957)
Year of Election or Appointment: 2011
Deputy Treasurer
Mr. Zambello also serves as Deputy Treasurer of other funds. Mr. Zambello is an employee of Fidelity Investments (1991-present). Previously, Mr. Zambello served as Deputy Treasurer of certain Fidelity funds (2011-2016), Vice President of the Program Management Group of FMR (investment adviser firm, 2009-2011), and Vice President of the Transfer Agent Oversight Group (2005-2009).
Shareholder Expense Example
As a shareholder of a Fund, you incur two types of costs: (1) transaction costs, including redemption fees 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, 2015 to February 29, 2016).
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. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. 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. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. 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, 2015 | Ending Account Value February 29, 2016 | Expenses Paid During Period-B September 1, 2015 to February 29, 2016 | |
| Energy Portfolio | .80% | |||
| Actual | $1,000.00 | $839.50 | $3.66 | |
| Hypothetical-C | $1,000.00 | $1,020.89 | $4.02 | |
| Energy Service Portfolio | .86% | |||
| Actual | $1,000.00 | $784.80 | $3.82 | |
| Hypothetical-C | $1,000.00 | $1,020.59 | $4.32 | |
| Natural Gas Portfolio | .91% | |||
| Actual | $1,000.00 | $710.30 | $3.87 | |
| Hypothetical-C | $1,000.00 | $1,020.34 | $4.57 | |
| Natural Resources Portfolio | .88% | |||
| Actual | $1,000.00 | $820.50 | $3.98 | |
| Hypothetical-C | $1,000.00 | $1,020.49 | $4.42 |
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 | |
| Select Energy Portfolio | 04/11/16 | 04/08/16 | $0.039 | $0.053 |
| Select Energy Service Portfolio | 04/11/16 | 04/08/16 | $0.009 | $0.000 |
| Select Natural Gas Portfolio | 04/11/16 | 04/08/16 | $0.029 | $0.027 |
| Select Natural Resources Portfolio | 04/11/16 | 04/08/16 | $0.008 | $0.081 |
A percentage of the dividends distributed during the fiscal year for the following funds qualifies for the dividends–received deduction for corporate shareholders:
| Select Energy Portfolio | |
| April 10th, 2015 | 100% |
| December 18th, 2015 | 100% |
| Select Energy Service Portfolio | |
| December 4th, 2015 | 78% |
| December 28th, 2015 | 78% |
| Select Natural Gas Portfolio | |
| April 10th, 2015 | 100% |
| December 18th, 2015 | 89% |
| December 28th, 2015 | 89% |
| Select Natural Resources Portfolio | |
| December 18th, 2015 | 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.
| Select Energy Portfolio | |
| April 10th, 2015 | 100% |
| December 18th, 2015 | 100% |
| Select Energy Service Portfolio | |
| December 4th, 2015 | 100% |
| December 28th, 2015 | 100% |
| Select Natural Gas Portfolio | |
| April 10th, 2015 | 100% |
| December 18th, 2015 | 100% |
| December 28th, 2015 | 100% |
| Select Natural Resources Portfolio | |
| December 18th, 2015 | 100% |
The funds will notify shareholders in January 2017 of amounts for use in preparing 2016 income tax returns.
Board Approval of Investment Advisory Contracts and Management Fees
Energy Portfolio
Energy Service Portfolio
Natural Gas Portfolio
Natural Resources Portfolio
Each year, the Board of Trustees, including the Independent Trustees (together, the Board), votes on the renewal of the management contract with Fidelity SelectCo, LLC (SelectCo), an affiliate of Fidelity Management & Research Company (FMR), and the sub-advisory agreements with affiliates of FMR (together, the Advisory Contracts) for each fund. 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.
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 each fund's Advisory Contracts, including the services and support provided to each fund and its shareholders. The Board has established four standing committees (Committees) — Operations, Audit, Fair Valuation, and Governance and Nominating — 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 Operations Committee, of which all of the Independent Trustees are members, meets regularly throughout the year and considers, among other matters, information specifically related to the annual consideration of the renewal of each fund's Advisory Contracts. The Board, acting directly and through its Committees, requests and receives information concerning the annual consideration of the renewal of each fund's Advisory Contracts. The Board also meets as needed to consider 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 ad hoc joint committees to discuss certain matters relevant to all of the Fidelity funds.
At its January 2016 meeting, the Board unanimously determined to renew each 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 to be provided to each fund and its shareholders (including the investment performance of each fund); (ii) the competitiveness of each fund's management fee and total expense ratio relative to peer funds; (iii) the total costs of the services to be provided by and the profits to be realized by Fidelity from its relationships with each fund; and (iv) the extent to which, if any, economies of scale exist and would be realized as each fund grows, and whether any economies of scale are appropriately shared with fund shareholders.
In considering whether to renew the Advisory Contracts for each 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 each 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 each fund have a broad range of investment choices available to them, including a wide choice among funds offered by Fidelity's competitors, and that each 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 that fund, which is part of the Fidelity family of funds.
Nature, Extent, and Quality of Services Provided. The Board considered the staffing of SelectCo and the sub-advisers (together with SelectCo, the Investment Advisers) as it relates to the funds, including the backgrounds of investment personnel of SelectCo, and also considered the funds' investment objectives, strategies, and related investment philosophies. 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 each 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 reviewed the general qualifications and capabilities of the investment staff of the Investment Advisers, including their 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 each 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, each 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 or convenience of the Fidelity funds as investment vehicles. These services include 24-hour access to account information and market information through telephone representatives and over the Internet, investor education materials and asset allocation tools, and the expanded availability of Fidelity Investor Centers.The Board noted that in 2014 the ad hoc Committee on Transfer Agency Fees was formed by it and the boards of certain other Fidelity funds to review the variety of transfer agency services and fee structures throughout the mutual fund industry compared to Fidelity's.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 investment research 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 making other enhancements to meet client needs; (iv) reducing management fees and total expenses for certain index funds; (v) continuing to launch dedicated lower cost underlying funds to meet portfolio construction needs related to expanding underlying fund options for Fidelity funds of funds, specifically for the Freedom Fund product lines; (vi) rationalizing product lines and gaining increased efficiencies through fund mergers; (vii) continuing to develop, acquire and implement systems and technology to improve services to the funds and shareholders, strengthen information security, and increase efficiency; (viii) implementing investment enhancements to further strengthen Fidelity's target date product line to increase investors' probability of success in achieving their goals; (ix) modifying the eligibility criteria for certain share classes to accommodate roll-over assets from employer-sponsored retirement plans; (x) launching a new Class W of the Freedom Index Funds to attract and retain Fidelity record-kept retirement plan assets; and (xi) implementing changes to Fidelity's money market fund product line in response to recent regulatory reforms.Investment Performance. The Board considered whether each 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 with representatives of the Investment Advisers about fund investment performance that occur at Board meetings throughout the year. 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 each fund, for different time periods, measured against a securities market index ("benchmark index"). In its evaluation of fund investment performance at meetings throughout the year, the Board gave particular attention to information indicating underperformance of certain Fidelity funds for specific time periods and discussed with the Investment Advisers the reasons for such underperformance. Each of Energy Service Portfolio and Natural Gas Portfolio underperformed its benchmark for the one-, three-, and five-year periods ended June 30, 2015, and as a result, the Board will continue to discuss with SelectCo the steps it has taken and is taking to address each such fund's performance.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. Depending on the circumstances, the Independent Trustees may be satisfied with a fund's performance notwithstanding that it lags its benchmark index for certain periods.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 each fund and an appropriate benchmark index for the most recent one-, three-, and five-year periods ended June 30, 2015.Based on its review, the Board concluded that the nature, extent, and quality of services provided to each fund under the Advisory Contracts should benefit the shareholders of each fund.Competitiveness of Management Fee and Total Expense Ratio. The Board considered each fund's management fee and total expense ratio compared to "mapped groups" of competitive funds and classes created for the purpose of facilitating the Trustees' analysis of the competitiveness of management fees and total expenses. Fidelity creates "mapped groups" by combining similar Lipper investment objective categories that have comparable investment mandates. For this purpose, all sector focused equity funds are grouped in the same mapped group. Combining Lipper investment objective categories aids the Board's management fee and total expense ratio comparisons by broadening the competitive group used for comparison.Management Fee. The Board considered two proprietary management fee comparisons for the 12-month periods ended June 30 shown in basis points (BP) in the charts below. The group of Lipper funds used by the Board for management fee comparisons is referred to below as the "Total Mapped Group." The Total Mapped Group comparison focuses on a fund's standing in terms of gross management fees before expense reimbursements or caps relative to the total universe of funds with comparable investment mandates (i.e., sector equities), regardless of whether their management fee structures also are comparable. Funds with comparable management fee structures have similar management fee contractual arrangements (e.g., flat rate charged for advisory services, all-inclusive fee rate, etc.). "TMG %" represents the percentage of funds in the Total Mapped Group that had management fees that were lower than a fund's. For example, a hypothetical TMG % of 20% would mean that 80% of the funds in the Total Mapped Group had higher, and 20% had lower, management fees than a fund. The funds' actual TMG %s and the number of funds in the Total Mapped Group are in the charts below. The "Asset-Size Peer Group" (ASPG) comparison focuses on a fund's standing relative to a subset of non-Fidelity funds within the Total Mapped Group that are similar in size and management fee structure. For example, if a fund is in the first quartile of the ASPG, the fund's management fee ranks in the least expensive or lowest 25% of funds in the ASPG. The ASPG represents at least 15% of the funds in the Total Mapped Group with comparable asset size and management fee structures, subject to a minimum of 50 funds (or all funds in the Total Mapped Group if fewer than 50). Additional information, such as the ASPG quartile in which a fund's management fee rate ranked, is also included in the charts and considered by the Board.Energy Portfolio
Energy Service Portfolio
Natural Gas Portfolio
Natural Resources Portfolio
SELNR-ANN-0416
1.813649.111
Fidelity® Select Portfolios® Utilities Portfolio Annual Report February 29, 2016 |
|
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. © 2016 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-Q. Forms N-Q are available on the SEC’s web site at http://www.sec.gov. A fund's Forms N-Q 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.advisor.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.
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, 2016 | Past 1 year | Past 5 years | Past 10 years |
| Utilities Portfolio | (4.19)% | 9.68% | 6.69% |
Prior to October 1, 2006, 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 Utilities Portfolio on February 28, 2006.
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 | ||
| $19,112 | Utilities Portfolio | |
| $18,666 | S&P 500® Index | |
Management's Discussion of Fund Performance
Market Recap: The S&P 500® index returned -6.19% for the year ending February 29, 2016. Largely range-bound for the first half of the period, U.S. stocks suffered a steep, late-summer decline on concern about an economic slowdown in China. The market recovered in October, lifted by the U.S. Federal Reserve’s decision to delay raising near-term interest rates until mid-December. Investors also drew courage from a rate cut in China and economic stimulus in Europe. But continued oil-price weakness and U.S.-dollar strength, plus fresh worries about China and the Middle East, pushed the S&P 500® to its worst January since 2009, followed by a volatile but ultimately flattish February. Overall, growth-oriented and larger-cap stocks fared better than value and smaller-cap complements. In this environment, the tech-heavy Nasdaq Composite Index® returned -7.07% for the 12 months; the Russell 2000® Index, -14.97%. Few sectors within the broad-market S&P 500® gained ground, with a wide gap separating leaders from laggards. Despite increased competition among wireless carriers, telecommunication services (+8%) led the way, followed by the more defensive utilities sector (+6%). Rising wages and low inflation buoyed consumer staples (+4%), less so consumer discretionary (0%). Meanwhile, energy (-24%) foundered amid commodity weakness that also hurt materials (-17%). The financials sector (-12%) struggled as well.Comments from Portfolio Manager Douglas Simmons: For the year, the fund returned -4.19%, significantly lagging the 5.54% gain of the sector benchmark MSCI U.S. IMI Utilities 25/50 Index, but outperforming the broad-based S&P 500®. Following an early-2015 correction, utilities stocks stagnated for much of the past 12 months, as investors showed a strong preference for growth-oriented stocks. A combination of unfavorable stock picks and industry allocations caused the fund’s underperformance of the MSCI index. An overweighting in the independent power producers & energy traders segment – led by the fund’s sizable positions in Calpine, Dynegy and NRG Energy – hampered relative performance most. I believed this group would see price advantages due to limited supply, based partly on the reduced number of coal-fired power plants amid new environmental regulations. We experienced one of the mildest winters on record, however, which resulted in reduced power prices and lower returns for these stocks, dampening the short-term outlook for the group. On the upside, our top individual contributor was Florida-based NextEra Energy, the fund’s largest holding. The company’s regulated business operations helped stabilize NextEra’s revenue and cash flow, which proved appealing to defensive investors during the volatile 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.
Investment Summary (Unaudited)
Top Ten Stocks as of February 29, 2016
| % of fund's net assets | % of fund's net assets 6 months ago | |
| NextEra Energy, Inc. | 15.9 | 16.0 |
| Exelon Corp. | 11.4 | 13.3 |
| Sempra Energy | 10.7 | 10.6 |
| Dominion Resources, Inc. | 7.7 | 9.3 |
| PG&E Corp. | 4.9 | 4.7 |
| Avangrid, Inc. | 4.5 | 0.0 |
| Edison International | 4.2 | 4.9 |
| DTE Energy Co. | 4.1 | 2.8 |
| PPL Corp. | 4.0 | 4.9 |
| FirstEnergy Corp. | 3.5 | 3.0 |
| 70.9 |
Top Industries (% of fund's net assets)
| As of February 29, 2016 | ||
| Electric Utilities | 43.5% | |
| Multi-Utilities | 36.6% | |
| Independent Power and Renewable Electricity Producers | 7.3% | |
| Media | 3.3% | |
| Real Estate Investment Trusts | 1.8% | |
| All Others* | 7.5% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
| As of August 31, 2015 | ||
| Electric Utilities | 47.7% | |
| Multi-Utilities | 31.4% | |
| Independent Power and Renewable Electricity Producers | 10.8% | |
| Diversified Telecommunication Services | 3.2% | |
| Real Estate Investment Trusts | 2.9% | |
| All Others* | 4.0% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
Percentages shown as 0.0% may reflect amounts less than 0.05%.
Investments February 29, 2016
Showing Percentage of Net Assets
| Common Stocks - 96.6% | |||
| Shares | Value | ||
| Diversified Telecommunication Services - 1.2% | |||
| Integrated Telecommunication Services - 1.2% | |||
| AT&T, Inc. | 260,700 | $9,632,865 | |
| Electric Utilities - 43.5% | |||
| Electric Utilities - 43.5% | |||
| Edison International | 493,112 | 33,610,514 | |
| Exelon Corp. | 2,927,372 | 92,182,944 | |
| FirstEnergy Corp. | 853,800 | 28,576,686 | |
| ITC Holdings Corp. | 431,949 | 17,550,088 | |
| NextEra Energy, Inc. | 1,141,885 | 128,827,465 | |
| OGE Energy Corp. | 330,485 | 8,222,467 | |
| PNM Resources, Inc. | 328,466 | 10,484,635 | |
| PPL Corp. | 918,842 | 32,150,282 | |
| 351,605,081 | |||
| Independent Power and Renewable Electricity Producers - 7.3% | |||
| Independent Power Producers & Energy Traders - 5.3% | |||
| Calpine Corp. (a) | 1,862,587 | 23,394,093 | |
| Dynegy, Inc. (a) | 747,737 | 7,537,189 | |
| NRG Energy, Inc. | 461,555 | 4,975,563 | |
| NRG Yield, Inc. Class C (b) | 420,070 | 5,490,315 | |
| The AES Corp. | 138,700 | 1,359,260 | |
| 42,756,420 | |||
| Renewable Electricity - 2.0% | |||
| NextEra Energy Partners LP | 435,700 | 11,302,058 | |
| Pattern Energy Group, Inc. (b) | 286,200 | 4,859,676 | |
| 16,161,734 | |||
| TOTAL INDEPENDENT POWER AND RENEWABLE ELECTRICITY PRODUCERS | 58,918,154 | ||
| Media - 3.3% | |||
| Cable & Satellite - 3.3% | |||
| Comcast Corp. Class A | 463,900 | 26,780,947 | |
| Multi-Utilities - 36.6% | |||
| Multi-Utilities - 36.6% | |||
| Avangrid, Inc. | 933,200 | 36,198,828 | |
| Black Hills Corp. (b) | 193,350 | 10,829,534 | |
| CenterPoint Energy, Inc. | 371,400 | 6,919,182 | |
| Dominion Resources, Inc. | 894,312 | 62,530,295 | |
| DTE Energy Co. | 398,870 | 33,552,944 | |
| NiSource, Inc. | 941,423 | 20,221,766 | |
| PG&E Corp. | 692,337 | 39,276,278 | |
| Sempra Energy | 898,251 | 86,690,204 | |
| 296,219,031 | |||
| Oil, Gas & Consumable Fuels - 1.1% | |||
| Oil & Gas Storage & Transport - 1.1% | |||
| Cheniere Energy Partners LP Holdings LLC | 325,042 | 5,450,954 | |
| Cheniere Energy, Inc. (a) | 89,200 | 3,188,900 | |
| 8,639,854 | |||
| Real Estate Investment Trusts - 1.8% | |||
| Specialized REITs - 1.8% | |||
| Crown Castle International Corp. | 167,300 | 14,471,450 | |
| Semiconductors & Semiconductor Equipment - 1.8% | |||
| Semiconductors - 1.8% | |||
| First Solar, Inc. (a) | 201,000 | 14,445,870 | |
| TOTAL COMMON STOCKS | |||
| (Cost $718,351,064) | 780,713,252 | ||
| Money Market Funds - 5.9% | |||
| Fidelity Cash Central Fund, 0.40% (c) | 32,042,288 | 32,042,288 | |
| Fidelity Securities Lending Cash Central Fund, 0.44% (c)(d) | 15,409,288 | 15,409,288 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $47,451,576) | 47,451,576 | ||
| TOTAL INVESTMENT PORTFOLIO - 102.5% | |||
| (Cost $765,802,640) | 828,164,828 | ||
| NET OTHER ASSETS (LIABILITIES) - (2.5)% | (19,930,019) | ||
| NET ASSETS - 100% | $808,234,809 |
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 | $25,807 |
| Fidelity Securities Lending Cash Central Fund | 38,198 |
| Total | $64,005 |
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.
Financial Statements
Statement of Assets and Liabilities
| February 29, 2016 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $15,448,034) — See accompanying schedule: Unaffiliated issuers (cost $718,351,064) | $780,713,252 | |
| Fidelity Central Funds (cost $47,451,576) | 47,451,576 | |
| Total Investments (cost $765,802,640) | $828,164,828 | |
| Receivable for fund shares sold | 4,543,575 | |
| Dividends receivable | 2,491,830 | |
| Distributions receivable from Fidelity Central Funds | 18,162 | |
| Prepaid expenses | 2,497 | |
| Other receivables | 11,446 | |
| Total assets | 835,232,338 | |
| Liabilities | ||
| Payable for investments purchased | $10,283,554 | |
| Payable for fund shares redeemed | 786,983 | |
| Accrued management fee | 349,467 | |
| Other affiliated payables | 132,010 | |
| Other payables and accrued expenses | 36,227 | |
| Collateral on securities loaned, at value | 15,409,288 | |
| Total liabilities | 26,997,529 | |
| Net Assets | $808,234,809 | |
| Net Assets consist of: | ||
| Paid in capital | $769,526,046 | |
| Undistributed net investment income | 465,990 | |
| Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (24,119,415) | |
| Net unrealized appreciation (depreciation) on investments | 62,362,188 | |
| Net Assets, for 12,084,715 shares outstanding | $808,234,809 | |
| Net Asset Value, offering price and redemption price per share ($808,234,809 ÷ 12,084,715 shares) | $66.88 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 29, 2016 | ||
| Investment Income | ||
| Dividends | $21,331,160 | |
| Interest | 9 | |
| Income from Fidelity Central Funds | 64,005 | |
| Total income | 21,395,174 | |
| Expenses | ||
| Management fee | $4,147,069 | |
| Transfer agent fees | 1,461,857 | |
| Accounting and security lending fees | 266,050 | |
| Custodian fees and expenses | 12,301 | |
| Independent trustees' compensation | 14,212 | |
| Registration fees | 56,382 | |
| Audit | 43,806 | |
| Legal | 9,503 | |
| Interest | 749 | |
| Miscellaneous | 9,789 | |
| Total expenses before reductions | 6,021,718 | |
| Expense reductions | (117,369) | 5,904,349 |
| Net investment income (loss) | 15,490,825 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | (17,238,778) | |
| Foreign currency transactions | 6,800 | |
| Total net realized gain (loss) | (17,231,978) | |
| Change in net unrealized appreciation (depreciation) on investment securities | (35,538,823) | |
| Net gain (loss) | (52,770,801) | |
| Net increase (decrease) in net assets resulting from operations | $(37,279,976) |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 29, 2016 | Year ended February 28, 2015 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $15,490,825 | $17,788,106 |
| Net realized gain (loss) | (17,231,978) | 58,182,417 |
| Change in net unrealized appreciation (depreciation) | (35,538,823) | 6,622,534 |
| Net increase (decrease) in net assets resulting from operations | (37,279,976) | 82,593,057 |
| Distributions to shareholders from net investment income | (16,976,039) | (14,727,703) |
| Distributions to shareholders from net realized gain | (15,323,860) | (53,286,789) |
| Total distributions | (32,299,899) | (68,014,492) |
| Share transactions | ||
| Proceeds from sales of shares | 267,435,100 | 882,547,504 |
| Reinvestment of distributions | 30,970,351 | 65,214,543 |
| Cost of shares redeemed | (409,036,642) | (669,930,558) |
| Net increase (decrease) in net assets resulting from share transactions | (110,631,191) | 277,831,489 |
| Redemption fees | 19,963 | 83,359 |
| Total increase (decrease) in net assets | (180,191,103) | 292,493,413 |
| Net Assets | ||
| Beginning of period | 988,425,912 | 695,932,499 |
| End of period (including undistributed net investment income of $465,990 and undistributed net investment income of $3,403,986, respectively) | $808,234,809 | $988,425,912 |
| Other Information | ||
| Shares | ||
| Sold | 4,003,368 | 11,876,954 |
| Issued in reinvestment of distributions | 462,133 | 894,827 |
| Redeemed | (5,948,943) | (9,055,975) |
| Net increase (decrease) | (1,483,442) | 3,715,806 |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Utilities Portfolio
| Years ended February 28, | 2016 A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $72.85 | $70.64 | $61.04 | $52.56 | $50.28 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | 1.39 | 1.41 | 1.49 | 1.41 | 1.43 |
| Net realized and unrealized gain (loss) | (4.49) | 6.40 | 9.80 | 7.70 | 1.99 |
| Total from investment operations | (3.10) | 7.81 | 11.29 | 9.11 | 3.42 |
| Distributions from net investment income | (1.60) | (1.20) | (1.07) | (.63) | (1.14) |
| Distributions from net realized gain | (1.27) | (4.42) | (.62) | – | – |
| Total distributions | (2.87) | (5.61)C | (1.69) | (.63) | (1.14) |
| Redemption fees added to paid in capitalB | –D | .01 | –D | –D | –D |
| Net asset value, end of period | $66.88 | $72.85 | $70.64 | $61.04 | $52.56 |
| Total ReturnE | (4.19)% | 11.22% | 18.71% | 17.46% | 6.85% |
| Ratios to Average Net AssetsF,G | |||||
| Expenses before reductions | .80% | .80% | .82% | .83% | .86% |
| Expenses net of fee waivers, if any | .79% | .80% | .82% | .83% | .86% |
| Expenses net of all reductions | .78% | .80% | .80% | .79% | .84% |
| Net investment income (loss) | 2.05% | 1.89% | 2.28% | 2.49% | 2.78% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $808,235 | $988,426 | $695,932 | $532,382 | $518,969 |
| Portfolio turnover rateH | 74% | 129%I | 160% | 158% | 202% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Total distributions of $5.61 per share is comprised of distributions from net investment income of $1.199 and distributions from net realized gain of $4.415 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 Amounts do not include the activity of the Underlying 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, 2016
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.
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 Fidelity Investments Money Management, Inc. (FIMM), an affiliate of the investment adviser. Annualized expenses of the Money Market Central Funds as of their most recent shareholder report date are less than .005%.
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 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 Fidelity SelectCo, LLC (SelectCo) Fair Value Committee (the Committee). 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. Utilizing these techniques may result in transfers between Level 1 and Level 2. 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.
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 may 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. Distributions received on securities that represent a return of capital or capital gainare recorded as a reduction of cost of investments and/or as a realized gain. Subsequent to ex-dividend date the Fund determines the components of these distributions, based upon receipt of tax filings or other correspondence relating to the underlying investment. 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.
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, 2016, 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 capital loss carry forwards.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
| Gross unrealized appreciation | $93,001,189 |
| Gross unrealized depreciation | (35,211,173) |
| Net unrealized appreciation (depreciation) on securities | $57,790,016 |
| Tax Cost | $770,374,812 |
The tax-based components of distributable earnings as of period end were as follows:
| Undistributed ordinary income | $466,592 |
| Capital loss carryforward | $(19,547,244) |
| Net unrealized appreciation (depreciation) on securities and other investments | $57,790,016 |
Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. Under the Regulated Investment Company Modernization Act of 2010 (the Act), the Fund is permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period and such capital losses are required to be used prior to any losses that expire. 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 | $(19,547,244) |
The tax character of distributions paid was as follows:
| February 29, 2016 | February 28, 2015 | |
| Ordinary Income | $20,537,132 | $ 33,469,958 |
| Long-term Capital Gains | 11,762,767 | 34,544,534 |
| Total | $32,299,899 | $ 68,014,492 |
Trading (Redemption) Fees. Shares held by investors in the Fund less than 30 days may be subject to a redemption fee equal to .75% of the NAV of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Fund and accounted for as an addition to paid in capital.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $556,743,004 and $682,704,888, respectively.
5. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity SelectCo, 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 .25% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by Fidelity Management & Research Company (FMR) and the investment adviser. 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 .55% of the Fund's average net assets.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (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. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions 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 $15,187 for the period.
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 (FMR) or other affiliated entities of FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. The Fund's 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 |
| Borrower | $6,393,417 | .35% | $749 |
Interfund Trades. The 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.
The Fund participates 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 Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $1,200 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, the Fund did not borrow on this line of credit.
7. Security Lending.
The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. 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. 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. Total security lending income during the period amounted to $38,198.
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 $93,825 for the period.
In addition, during the period the investment adviser reimbursed and/or waived a portion of operating expenses in the amount of $23,544.
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.
Mutual funds managed by the investment adviser or its affiliates were the owner of record, in the aggregate, of approximately 25% of the total outstanding shares of the Fund.
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Select Portfolios and Shareholders of Utilities Portfolio:
In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Utilities Portfolio (a fund of Fidelity Select Portfolios) at February 29, 2016, 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 then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Utilities Portfolio’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at February 29, 2016 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 13, 2016
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. Each of the Trustees oversees 75 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. Brian B. Hogan 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. Michael E. Wiley 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 sector portfolios. Other Boards oversee Fidelity's equity and high income funds, and Fidelity's investment grade bond, money market, and asset allocation funds. 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 SelectCo 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 SelectCo, 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 and Audit Committees. Appropriate personnel, including but not limited to the fund's Chief Compliance Officer (CCO), SelectCo's internal auditor, the independent accountants, the fund's Treasurer and portfolio management personnel, make periodic reports to the Board's committees, as appropriate. 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+
Brian B. Hogan (1964)
Year of Election or Appointment: 2014
Trustee
Chairman of the Board of Trustees
Mr. Hogan also serves as Trustee or Vice President of other funds. Mr. Hogan serves as a Director of FMR Investment Management (U.K.) Limited (investment adviser firm, 2015-present) and Fidelity SelectCo, LLC (investment adviser firm, 2014-present) and President of the Equity Division of FMR (investment adviser firm, 2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager.
* 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 SelectCo.
+ 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+
David A. Rosow (1942)
Year of Election or Appointment: 2013
Trustee
Mr. Rosow also serves as Trustee of other Fidelity® funds. Prior to his retirement in 2006, Mr. Rosow was the Chief Executive Officer, owner and operator of a number of private companies, which encompassed oil refining, drilling and marketing of petroleum products (including specialty petroleum products), the recreation industry, and real estate development. Mr. Rosow currently serves as a Director of Oxbow Carbon LLC (upgraders, marketers, and distributors of petroleum byproducts of the oil refining process, 2015-present) and Oxbridge Academy of the Palm Beaches (2015-present). Previously, Mr. Rosow served on the Fairfield Country Day School Board for 27 years, including as its President for 3 years, stepping down in 2006, as Lead Director and Chairman of the Audit Committee of Hudson United Bancorp (1996-2006), Chairman of the Board of Westport Bank and Trust (1992-1996), and as a Director of TD Banknorth (2006-2007). In addition, Mr. Rosow served as a member (2008-2014) and President (2009-2014) of the Town Council of Palm Beach, Florida. Mr. Rosow also served as a Member of the Advisory Board of other Fidelity® funds (2012-2013).
Garnett A. Smith (1947)
Year of Election or Appointment: 2013
Trustee
Mr. Smith also serves as Trustee of other Fidelity® funds. Prior to Mr. Smith's retirement, he served as Chairman and Chief Executive Officer of Inbrand Corp. (manufacturer of personal absorbent products, 1990-1997). He also served as President (1986-1990) of Inbrand Corp. Prior to his employment with Inbrand Corp., he was employed by a retail fabric chain and North Carolina National Bank. In addition, Mr. Smith served as a Member of the Advisory Board of other Fidelity® funds (2012-2013) and as a board member of the Jackson Hole Land Trust (2009-2012).
Michael E. Wiley (1950)
Year of Election or Appointment: 2008
Trustee
Chairman of the Independent Trustees
Mr. Wiley also serves as Trustee of other Fidelity® funds. Mr. Wiley serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), a Director of Tesoro Logistics LP (natural resources logistics, 2015-present), and a Director of Bill Barrett Corporation (exploration and production, 2005-present). In addition, Mr. Wiley also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a Trustee of other Fidelity® funds (2008-2013), as a Director of Asia Pacific Exploration Consolidated (international oil and gas exploration and production, 2008-2013), as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-2010), as a Senior Energy Advisor of Katzenbach Partners, LLC (consulting, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production, 2001-2005).
+ 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:
Except for Anthony R. Rochte, correspondence intended for an officer may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210. Correspondence intended for Mr. Rochte may be sent to SelectCo, 1225 17th Street, Denver, Colorado 80202-5541. Officers appear below in alphabetical order.
Name, Year of Birth; Principal Occupation
Donald F. Donahue (1950)
Year of Election or Appointment: 2015
Member of the Advisory Board
Mr. Donahue also serves as a Member of the Advisory Board of other Fidelity® funds. Mr. Donahue is President and Chief Executive Officer of Miranda Partners, LLC (risk consulting for the financial services industry, 2012-present) and a consultant for the Institute for Defense Analyses (national security, 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 serves as a Member and Treasurer of the Board of Directors of United Way of New York (2012-present), Member of the Board of Directors of NYC Leadership Academy (2012-present) and Physicians for Human Rights (2013-present), and Member of the Board of Advisors of Ripple Labs, Inc. (financial services, 2015-present). He also served as Chairman (2010-2012) and Member of the Board of Directors (2012-2013) of Omgeo, LLC (financial services) and Member of the Board of Directors of XBRL US (financial services non-profit, 2009-2012) and the International Securities Services Association (2009-2012).
Christopher S. Bartel (1971)
Year of Election or Appointment: 2009
Vice President
Mr. Bartel also serves as Vice President of other funds. Mr. Bartel serves as a Director of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2016-present) and Fidelity Management & Research (Hong Kong) (investment adviser firm, 2012-present) and Head of Global Equity Research (2010-present). Previously, Mr. Bartel served as a Director, President, and Chief Executive Officer of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2012-2016), Senior Vice President of Equity Research (2009-2010), Managing Director of Research (2006-2009), and an analyst and portfolio manager (2000-2006).
Marc R. Bryant (1966)
Year of Election or Appointment: 2013
Secretary and Chief Legal Officer (CLO)
Mr. Bryant also serves as Secretary and CLO of other funds. Mr. Bryant serves as CLO, Secretary, and Senior Vice President of Fidelity Management & Research Company (investment adviser firm, 2015-present) and FMR Co., Inc. (investment adviser firm, 2015-present); Secretary of Fidelity SelectCo, LLC (investment adviser firm, 2015-present) and Fidelity Investments Money Management, Inc. (investment adviser firm, 2015-present); and CLO of Fidelity Management & Research (Hong Kong) Limited and FMR Investment Management (U.K.) Limited (investment adviser firms, 2015-present) and Fidelity Management & Research (Japan) Limited (investment adviser firm, 2016-present). He is Senior Vice President and Deputy General Counsel of FMR LLC (diversified financial services company). Previously, Mr. Bryant served as Secretary and CLO of Fidelity Rutland Square Trust II (2010-2014) and Assistant Secretary of Fidelity's Fixed Income and Asset Allocation Funds (2013-2015). Prior to joining Fidelity Investments, Mr. Bryant served as a Senior Vice President and the Head of Global Retail Legal for AllianceBernstein L.P. (2006-2010), and as the General Counsel for ProFund Advisors LLC (2001-2006).
William C. Coffey (1969)
Year of Election or Appointment: 2009
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 Vice President and Associate General Counsel of FMR LLC (2005-2009).
Jonathan Davis (1968)
Year of Election or Appointment: 2010
Assistant Treasurer
Mr. Davis also serves as Assistant Treasurer of other funds, 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).
Adrien E. Deberghes (1967)
Year of Election or Appointment: 2013
President and Treasurer
Mr. Deberghes also serves as an officer of other funds. He is an employee of Fidelity Investments (2008-present). Prior to joining Fidelity Investments, Mr. Deberghes was Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005). Previously, Mr. Deberghes served in other fund officer roles.
Joseph DeSantis (1959)
Year of Election or Appointment: 2015
Vice President
Mr. DeSantis also serves as Vice President of other funds. Mr. DeSantis serves as Group Chief Investment Officer, Equities (2010-present) and is an employee of Fidelity Investments.
Stephanie J. Dorsey (1969)
Year of Election or Appointment: 2010
Assistant Treasurer
Ms. Dorsey also serves as an officer of other funds. She is an employee of Fidelity Investments (2008-present) and has served in other fund officer roles. Prior to joining Fidelity Investments, Ms. Dorsey served as Treasurer (2004-2008) of the JPMorgan Mutual Funds and Vice President (2004-2008) of JPMorgan Chase Bank.
Howard J. Galligan III (1966)
Year of Election or Appointment: 2014
Chief Financial Officer
Mr. Galligan also serves as Chief Financial Officer of other funds. Mr. Galligan serves as President of Fidelity Pricing and Cash Management Services (FPCMS) (2014-present) and as a Director of Strategic Advisers, Inc. (investment adviser firm, 2008-present). Previously, Mr. Galligan served as Chief Administrative Officer of Asset Management (2011-2014) and Chief Operating Officer and Senior Vice President of Investment Support for Strategic Advisers, Inc. (2003-2011).
Scott C. Goebel (1968)
Year of Election or Appointment: 2015
Vice President
Mr. Goebel serves as Vice President of other funds and is an employee of Fidelity Investments (2001-present). Previously, Mr. Goebel served as Secretary of Fidelity SelectCo, LLC (investment adviser firm, 2013-2015), Fidelity Investments Money Management, Inc. (FIMM) (investment adviser firm, 2010-2015), and Fidelity Research and Analysis Company (FRAC) (investment adviser firm, 2010-2015); General Counsel, Secretary, and Senior Vice President of Fidelity Management & Research Company (investment adviser firm, 2008-2015) and FMR Co., Inc. (investment adviser firm, 2008-2015); Assistant Secretary of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2008-2015) and Fidelity Management & Research (U.K.) Inc. (investment adviser firm, 2008-2015); Chief Legal Officer (CLO) of Fidelity Management & Research (Hong Kong) Limited (investment adviser firm, 2008-2015); Secretary and CLO of certain Fidelity® funds (2008-2015); Assistant Secretary of FIMM (2008-2010), FRAC (2008-2010), and certain funds (2007-2008); and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007).
James D. Gryglewicz (1972)
Year of Election or Appointment: 2014
Chief Compliance Officer
Mr. Gryglewicz also serves as Chief Compliance Officer of other funds. Mr. Gryglewicz serves as Compliance Officer of Strategic Advisers, Inc. (investment adviser firm, 2015-present) and Fidelity SelectCo, LLC (investment adviser firm, 2014-present), Senior Vice President of Asset Management Compliance (2009-present), and is an employee of Fidelity Investments (2004-present).
Brian B. Hogan (1964)
Year of Election or Appointment: 2009
Vice President
Mr. Hogan also serves as Trustee or Vice President of other funds. Mr. Hogan serves as a Director of FMR Investment Management (U.K.) Limited (investment adviser firm, 2015-present) and Fidelity SelectCo, LLC (investment adviser firm, 2014-present) and President of the Equity Division of FMR (investment adviser firm, 2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager.
Chris Maher (1972)
Year of Election or Appointment: 2013
Assistant Treasurer
Mr. Maher serves as Assistant Treasurer of other funds. Mr. Maher is Vice President of Valuation Oversight and is an employee of Fidelity Investments. Previously, Mr. Maher served as 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).
John F. Papandrea (1972)
Year of Election or Appointment: 2016
Anti-Money Laundering (AML) Officer
Mr. Papandrea also serves as AML Officer of other funds. Mr. Papandrea is Vice President of FMR LLC (diversified financial services company, 2008-present) and is an employee of Fidelity Investments (2005-present).
Kenneth B. Robins (1969)
Year of Election or Appointment: 2013
Deputy Treasurer
Mr. Robins also serves as an officer of other funds. Mr. Robins serves as Executive Vice President of Fidelity Investments Money Management, Inc. (FIMM) (investment adviser firm, 2013-present) and is an employee of Fidelity Investments (2004-present). Previously, Mr. Robins served in other fund officer roles.
Anthony R. Rochte (1968)
Year of Election or Appointment: 2013
Vice President
Mr. Rochte also serves as Vice President of other funds. Mr. Rochte serves as President of Fidelity SelectCo, LLC (investment adviser firm, 2012-present) and is an employee of Fidelity Investments (2012-present). Prior to joining Fidelity Investments, Mr. Rochte served as Senior Managing Director and head of State Street Global Advisors' North American Intermediary Business Group (2006-2012).
Stacie M. Smith (1974)
Year of Election or Appointment: 2013
Assistant Treasurer
Ms. Smith also serves as an officer of other funds. She 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 (1996-2009). Previously, Ms. Smith served as Deputy Treasurer of certain Fidelity funds (2013-2016).
Renee Stagnone (1975)
Year of Election or Appointment: 2013
Deputy Treasurer
Ms. Stagnone also serves as an officer of other funds. Ms. Stagnone is an employee of Fidelity Investments (1997-present). Previously, Ms. Stagnone served as Deputy Treasurer of certain Fidelity funds (2013-2016).
Joseph F. Zambello (1957)
Year of Election or Appointment: 2011
Deputy Treasurer
Mr. Zambello also serves as Deputy Treasurer of other funds. Mr. Zambello is an employee of Fidelity Investments (1991-present). Previously, Mr. Zambello served as Deputy Treasurer of certain Fidelity funds (2011-2016), Vice President of the Program Management Group of FMR (investment adviser firm, 2009-2011), and Vice President of the Transfer Agent Oversight Group (2005-2009).
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including redemption fees 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, 2015 to February 29, 2016).
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. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. 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. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. 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, 2015 | Ending Account Value February 29, 2016 | Expenses Paid During Period-B September 1, 2015 to February 29, 2016 | |
| Actual | .79% | $1,000.00 | $1,038.00 | $4.00 |
| Hypothetical-C | $1,000.00 | $1,020.93 | $3.97 |
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 Select Utilities Portfolio voted to pay on April 11, 2016, to shareholders of record at the opening of business on April 8, 2016, a distribution of $0.019 per share derived from capital gains realized from sales of portfolio securities and a dividend of $0.059 per share from net investment income.
The fund designates 65% and 96% of the dividends distributed in April and December, respectively during the fiscal year as qualifying for the dividends-received deduction for corporate shareholders.
The fund designates 64% and 96% of the dividends distributed in April and December, respectively 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 2017 of amounts for use in preparing 2016 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 SelectCo, LLC (SelectCo), an affiliate of Fidelity Management & Research Company (FMR), and the sub-advisory agreements with affiliates of FMR (together, the Advisory Contracts) for the fund. 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.
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 four standing committees (Committees) — Operations, Audit, Fair Valuation, and Governance and Nominating — 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 Operations Committee, of which all of the Independent Trustees are members, meets regularly throughout the year and considers, among other matters, information specifically related to the annual consideration of the renewal of the fund's Advisory Contracts. 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 consider 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 ad hoc joint committees to discuss certain matters relevant to all of the Fidelity funds.
At its January 2016 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 to be 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 to be provided by and the profits to be realized by Fidelity from its relationships with the fund; and (iv) the extent to which, if any, economies of scale exist and would be 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 the staffing of SelectCo and the sub-advisers (together with SelectCo, the Investment Advisers) as it relates to the fund, including the backgrounds of investment personnel of SelectCo, 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 reviewed the general qualifications and capabilities of the investment staff of the Investment Advisers, including their 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 or convenience of the Fidelity funds as investment vehicles. These services include 24-hour access to account information and market information through telephone representatives and over the Internet, investor education materials and asset allocation tools, and the expanded availability of Fidelity Investor Centers.The Board noted that in 2014 the ad hoc Committee on Transfer Agency Fees was formed by it and the boards of certain other Fidelity funds to review the variety of transfer agency services and fee structures throughout the mutual fund industry compared to Fidelity's.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 investment research 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 making other enhancements to meet client needs; (iv) reducing management fees and total expenses for certain index funds; (v) continuing to launch dedicated lower cost underlying funds to meet portfolio construction needs related to expanding underlying fund options for Fidelity funds of funds, specifically for the Freedom Fund product lines; (vi) rationalizing product lines and gaining increased efficiencies through fund mergers; (vii) continuing to develop, acquire and implement systems and technology to improve services to the funds and shareholders, strengthen information security, and increase efficiency; (viii) implementing investment enhancements to further strengthen Fidelity's target date product line to increase investors' probability of success in achieving their goals; (ix) modifying the eligibility criteria for certain share classes to accommodate roll-over assets from employer-sponsored retirement plans; (x) launching a new Class W of the Freedom Index Funds to attract and retain Fidelity record-kept retirement plan assets; and (xi) implementing changes to Fidelity's money market fund product line in response to recent regulatory reforms.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 with representatives of the Investment Advisers about fund investment performance that occur at Board meetings throughout the year. 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 a securities market index ("benchmark index"). In its evaluation of fund investment performance at meetings throughout the year, the Board gave particular attention to information indicating underperformance of certain Fidelity funds for specific time periods and discussed with the Investment Advisers the reasons for such 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. Depending on the circumstances, the Independent Trustees may be satisfied with a fund's performance notwithstanding that it lags its benchmark index for certain periods.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, 2015.Based on its review, the Board concluded that the nature, extent, and quality of services provided to the fund under the Advisory Contracts should benefit the shareholders of the fund.Competitiveness of Management Fee and Total Expense Ratio. The Board considered the fund's management fee and total expense ratio compared to "mapped groups" of competitive funds and classes created for the purpose of facilitating the Trustees' analysis of the competitiveness of management fees and total expenses. Fidelity creates "mapped groups" by combining similar Lipper investment objective categories that have comparable investment mandates. For this purpose, all sector focused equity funds are grouped in the same mapped group. Combining Lipper investment objective categories aids the Board's management fee and total expense ratio comparisons by broadening the competitive group used for comparison.Management Fee. The Board considered two proprietary management fee comparisons for the 12-month periods ended June 30 shown in basis points (BP) in the chart below. The group of Lipper funds used by the Board for management fee comparisons is referred to below as the "Total Mapped Group." The Total Mapped Group comparison focuses on a fund's standing in terms of gross management fees before expense reimbursements or caps relative to the total universe of funds with comparable investment mandates (i.e., sector equities), regardless of whether their management fee structures also are comparable. Funds with comparable management fee structures have similar management fee contractual arrangements (e.g., flat rate charged for advisory services, all-inclusive fee rate, etc.). "TMG %" represents the percentage of funds in the Total Mapped Group that had management fees that were lower than the fund's. For example, a hypothetical TMG % of 20% would mean that 80% of the funds in the Total Mapped Group had higher, and 20% had lower, management fees than the fund. The fund's actual TMG %s and the number of funds in the Total Mapped Group are in the chart below. The "Asset-Size Peer Group" (ASPG) comparison focuses on a fund's standing relative to a subset of non-Fidelity funds within the Total Mapped Group that are similar in size and management fee structure. For example, if a fund is in the first quartile of the ASPG, the fund's management fee ranks in the least expensive or lowest 25% of funds in the ASPG. The ASPG represents at least 15% of the funds in the Total Mapped Group with comparable asset size and management fee structures, subject to a minimum of 50 funds (or all funds in the Total Mapped Group if fewer than 50). Additional information, such as the ASPG quartile in which the fund's management fee rate ranked, is also included in the chart and considered by the Board.Utilities Portfolio
SELUTL-ANN-0416
1.813626.111
Fidelity® Select Portfolios® Air Transportation Portfolio Defense and Aerospace Portfolio Environment and Alternative Energy Portfolio Industrial Equipment Portfolio Industrials Portfolio Transportation Portfolio Annual Report February 29, 2016 |
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Contents
Air Transportation Portfolio | |
Defense and Aerospace Portfolio | |
Environment and Alternative Energy Portfolio | |
Industrial Equipment 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. © 2016 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-Q. Forms N-Q are available on the SEC’s web site at http://www.sec.gov. A fund's Forms N-Q 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.advisor.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.
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, 2016 | Past 1 year | Past 5 years | Past 10 years |
| Air Transportation Portfolio | (9.24)% | 13.57% | 9.02% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Air Transportation Portfolio on February 28, 2006.
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 | ||
| $23,720 | Air Transportation Portfolio | |
| $18,666 | S&P 500® Index | |
Air Transportation Portfolio
Management's Discussion of Fund Performance
Market Recap: The S&P 500® index returned -6.19% for the year ending February 29, 2016. Largely range-bound for the first half of the period, U.S. stocks suffered a steep, late-summer decline on concern about an economic slowdown in China. The market recovered in October, lifted by the U.S. Federal Reserve’s decision to delay raising near-term interest rates until mid-December. Investors also drew courage from a rate cut in China and economic stimulus in Europe. But continued oil-price weakness and U.S.-dollar strength, plus fresh worries about China and the Middle East, pushed the S&P 500® to its worst January since 2009, followed by a volatile but ultimately flattish February. Overall, growth-oriented and larger-cap stocks fared better than value and smaller-cap complements. In this environment, the tech-heavy Nasdaq Composite Index® returned -7.07% for the 12 months; the Russell 2000® Index, -14.97%. Few sectors within the broad-market S&P 500® gained ground, with a wide gap separating leaders from laggards. Despite increased competition among wireless carriers, telecommunication services (+8%) led the way, followed by the more defensive utilities sector (+6%). Rising wages and low inflation buoyed consumer staples (+4%), less so consumer discretionary (0%). Meanwhile, energy (-24%) foundered amid commodity weakness that also hurt materials (-17%). The financials sector (-12%) struggled as well.Comments from Portfolio Manager Matthew Moulis: For the year, the fund returned -9.24%, modestly outpacing the -9.72% return of the S&P® Custom Air Transportation Index. Air transportation stocks lagged the broad S&P 500® index, hampered by weak showings in aerospace & defense and air freight & logistics, which jointly averaged 61% of the industry index this period. Versus the S&P® industry index, stock picking in air freight & logistics and out-of-benchmark exposure to industrial machinery aided fund performance. At the stock level, Allegiant Travel and Alaska Air Group merit mention. Boosting Allegiant to an overweighting after the stock sold off in April proved rewarding. As for Alaska Air, I liked that the company was competing effectively with industry heavyweight Delta Air Lines at the smaller carrier’s Seattle hub, despite Delta's recent capacity additions. I sold most of this position as the stock became more richly valued. Elsewhere, the fund benefited from a non-index stake in Global Brass & Copper Holdings, a producer of specialized metal components. Conversely, stock selection in airlines weighed on results. One negative was underweighting and ultimately selling most of our position in Dublin-based Ryanair Holdings, the fund’s biggest relative detractor. Despite various headwinds, this index name returned about 31%. Ryanair was partly responsible for the negative impact of foreign holdings on the fund’s results, against the backdrop of a somewhat stronger dollar versus the euro. Not owning strong-performing index component JetBlue earlier in the period also worked against us. I made this stock one of the fund’s largest individual overweightings by period end. I’ll also mention Park-Ohio Holdings, which has both a manufacturing and a supply-chain business. Although the latter held up well, the manufacturing business had some oil and gas exposure that hurt the stock.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, 2016
| % of fund's net assets | % of fund's net assets 6 months ago | |
| Delta Air Lines, Inc. | 9.1 | 5.1 |
| Southwest Airlines Co. | 8.0 | 6.7 |
| United Parcel Service, Inc. Class B | 7.2 | 10.1 |
| American Airlines Group, Inc. | 6.5 | 7.4 |
| The Boeing Co. | 6.2 | 9.0 |
| C.H. Robinson Worldwide, Inc. | 5.9 | 3.6 |
| Spirit AeroSystems Holdings, Inc. Class A | 5.4 | 2.6 |
| United Continental Holdings, Inc. | 5.1 | 3.8 |
| JetBlue Airways Corp. | 4.9 | 0.0 |
| FedEx Corp. | 4.5 | 4.1 |
| 62.8 |
Top Industries (% of fund's net assets)
| As of February 29, 2016 | ||
| Airlines | 47.4% | |
| Aerospace & Defense | 26.2% | |
| Air Freight & Logistics | 22.3% | |
| Machinery | 0.5% | |
| Transportation Infrastructure | 0.4% | |
| All Others* | 3.2% | |
| As of August 31, 2015 | ||
| Airlines | 40.6% | |
| Aerospace & Defense | 32.2% | |
| Air Freight & Logistics | 21.1% | |
| Machinery | 1.3% | |
| Transportation Infrastructure | 0.8% | |
| All Others* | 4.0% | |
* Includes short-term investments and net other assets (liabilities). Percentages shown as 0.0% may reflect amounts less than 0.05%.
Air Transportation Portfolio
Investments February 29, 2016
Showing Percentage of Net Assets
| Common Stocks - 96.4% | |||
| Shares | Value | ||
| Aerospace & Defense - 25.8% | |||
| Aerospace & Defense - 25.8% | |||
| BE Aerospace, Inc. | 286,500 | $12,497,130 | |
| Bombardier, Inc. Class B (sub. vtg.) (a) | 1,197,700 | 938,331 | |
| L-3 Communications Holdings, Inc. | 13,600 | 1,595,416 | |
| Moog, Inc. Class A (a) | 146,303 | 6,317,364 | |
| Rockwell Collins, Inc. | 68,900 | 6,033,573 | |
| Spirit AeroSystems Holdings, Inc. Class A (a) | 381,100 | 17,530,600 | |
| Textron, Inc. | 350,400 | 11,966,160 | |
| The Boeing Co. | 171,300 | 20,244,234 | |
| TransDigm Group, Inc. (a) | 6,100 | 1,302,838 | |
| Triumph Group, Inc. | 189,500 | 5,772,170 | |
| 84,197,816 | |||
| Air Freight & Logistics - 22.3% | |||
| Air Freight & Logistics - 22.3% | |||
| Atlas Air Worldwide Holdings, Inc. (a) | 136,800 | 4,953,528 | |
| C.H. Robinson Worldwide, Inc. | 277,100 | 19,349,893 | |
| Expeditors International of Washington, Inc. | 67,400 | 3,085,572 | |
| FedEx Corp. | 107,800 | 14,755,664 | |
| Forward Air Corp. | 12,100 | 492,712 | |
| Hub Group, Inc. Class A (a) | 57,078 | 2,107,320 | |
| Park-Ohio Holdings Corp. | 158,504 | 4,660,018 | |
| United Parcel Service, Inc. Class B | 241,300 | 23,297,515 | |
| 72,702,222 | |||
| Airlines - 47.4% | |||
| Airlines - 47.4% | |||
| Air Canada (a) | 598,400 | 3,193,236 | |
| Alaska Air Group, Inc. | 54,700 | 4,042,330 | |
| Allegiant Travel Co. | 34,800 | 5,703,024 | |
| American Airlines Group, Inc. | 518,400 | 21,254,400 | |
| Chorus Aviation, Inc. | 1,234,246 | 5,418,641 | |
| Dart Group PLC | 5,286 | 41,900 | |
| Delta Air Lines, Inc. | 616,202 | 29,725,583 | |
| Hawaiian Holdings, Inc. (a) | 175,700 | 7,558,614 | |
| JetBlue Airways Corp. (a) | 720,500 | 15,851,000 | |
| Republic Airways Holdings, Inc. (a)(b) | 235,000 | 148,027 | |
| Ryanair Holdings PLC sponsored ADR | 14,700 | 1,222,599 | |
| SkyWest, Inc. | 203,482 | 3,672,850 | |
| Southwest Airlines Co. | 617,300 | 25,895,735 | |
| Spirit Airlines, Inc. (a) | 192,700 | 9,201,425 | |
| United Continental Holdings, Inc. (a) | 287,585 | 16,467,117 | |
| WestJet Airlines Ltd. | 364,800 | 4,812,772 | |
| 154,209,253 | |||
| Machinery - 0.5% | |||
| Industrial Machinery - 0.5% | |||
| Global Brass & Copper Holdings, Inc. | 71,887 | 1,584,389 | |
| Transportation Infrastructure - 0.4% | |||
| Airport Services - 0.4% | |||
| Wesco Aircraft Holdings, Inc. (a) | 94,300 | 1,206,097 | |
| TOTAL COMMON STOCKS | |||
| (Cost $271,768,246) | 313,899,777 | ||
| Nonconvertible Preferred Stocks - 0.4% | |||
| Aerospace & Defense - 0.4% | |||
| Aerospace & Defense - 0.4% | |||
| Embraer SA sponsored ADR | |||
| (Cost $1,378,575) | 44,100 | 1,321,677 | |
| Money Market Funds - 4.1% | |||
| Fidelity Cash Central Fund, 0.40% (c) | 13,319,769 | 13,319,769 | |
| Fidelity Securities Lending Cash Central Fund, 0.44% (c)(d) | 176,200 | 176,200 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $13,495,969) | 13,495,969 | ||
| TOTAL INVESTMENT PORTFOLIO - 100.9% | |||
| (Cost $286,642,790) | 328,717,423 | ||
| NET OTHER ASSETS (LIABILITIES) - (0.9)% | (3,087,278) | ||
| NET ASSETS - 100% | $325,630,145 |
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 | $16,582 |
| Fidelity Securities Lending Cash Central Fund | 16,086 |
| Total | $32,668 |
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, 2016 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $110,988) — See accompanying schedule: Unaffiliated issuers (cost $273,146,821) | $315,221,454 | |
| Fidelity Central Funds (cost $13,495,969) | 13,495,969 | |
| Total Investments (cost $286,642,790) | $328,717,423 | |
| Receivable for fund shares sold | 747,237 | |
| Dividends receivable | 600,939 | |
| Distributions receivable from Fidelity Central Funds | 3,102 | |
| Prepaid expenses | 1,336 | |
| Other receivables | 422 | |
| Total assets | 330,070,459 | |
| Liabilities | ||
| Payable for investments purchased | $3,535,166 | |
| Payable for fund shares redeemed | 476,862 | |
| Accrued management fee | 142,970 | |
| Other affiliated payables | 74,348 | |
| Other payables and accrued expenses | 34,768 | |
| Collateral on securities loaned, at value | 176,200 | |
| Total liabilities | 4,440,314 | |
| Net Assets | $325,630,145 | |
| Net Assets consist of: | ||
| Paid in capital | $294,236,417 | |
| Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (10,680,931) | |
| Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 42,074,659 | |
| Net Assets, for 5,373,077 shares outstanding | $325,630,145 | |
| Net Asset Value, offering price and redemption price per share ($325,630,145 ÷ 5,373,077 shares) | $60.60 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 29, 2016 | ||
| Investment Income | ||
| Dividends | $4,650,032 | |
| Interest | 34 | |
| Income from Fidelity Central Funds | 32,668 | |
| Total income | 4,682,734 | |
| Expenses | ||
| Management fee | $2,342,879 | |
| Transfer agent fees | 922,044 | |
| Accounting and security lending fees | 165,211 | |
| Custodian fees and expenses | 16,216 | |
| Independent trustees' compensation | 8,471 | |
| Registration fees | 63,911 | |
| Audit | 45,094 | |
| Legal | 5,846 | |
| Interest | 191 | |
| Miscellaneous | 4,581 | |
| Total expenses before reductions | 3,574,444 | |
| Expense reductions | (36,730) | 3,537,714 |
| Net investment income (loss) | 1,145,020 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 30,507,591 | |
| Foreign currency transactions | 12,108 | |
| Total net realized gain (loss) | 30,519,699 | |
| Change in net unrealized appreciation (depreciation) on: Investment securities | (74,887,462) | |
| Assets and liabilities in foreign currencies | (112) | |
| Total change in net unrealized appreciation (depreciation) | (74,887,574) | |
| Net gain (loss) | (44,367,875) | |
| Net increase (decrease) in net assets resulting from operations | $(43,222,855) |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 29, 2016 | Year ended February 28, 2015 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $1,145,020 | $1,402,538 |
| Net realized gain (loss) | 30,519,699 | 48,127,659 |
| Change in net unrealized appreciation (depreciation) | (74,887,574) | 37,709,013 |
| Net increase (decrease) in net assets resulting from operations | (43,222,855) | 87,239,210 |
| Distributions to shareholders from net investment income | (1,079,296) | (630,886) |
| Distributions to shareholders from net realized gain | (32,093,843) | (8,759,130) |
| Total distributions | (33,173,139) | (9,390,016) |
| Share transactions | ||
| Proceeds from sales of shares | 137,284,032 | 756,163,010 |
| Reinvestment of distributions | 31,915,068 | 9,070,010 |
| Cost of shares redeemed | (483,119,513) | (478,208,807) |
| Net increase (decrease) in net assets resulting from share transactions | (313,920,413) | 287,024,213 |
| Redemption fees | 21,121 | 92,355 |
| Total increase (decrease) in net assets | (390,295,286) | 364,965,762 |
| Net Assets | ||
| Beginning of period | 715,925,431 | 350,959,669 |
| End of period (including undistributed net investment income of $0 and $404,199, respectively) | $325,630,145 | $715,925,431 |
| Other Information | ||
| Shares | ||
| Sold | 1,988,815 | 11,025,387 |
| Issued in reinvestment of distributions | 510,043 | 130,079 |
| Redeemed | (6,920,418) | (7,112,132) |
| Net increase (decrease) | (4,421,560) | 4,043,334 |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Air Transportation Portfolio
| Years ended February 28, | 2016 A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $73.09 | $61.02 | $43.97 | $38.12 | $43.05 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .18 | .20C | .12 | .21D | .05 |
| Net realized and unrealized gain (loss) | (6.82) | 13.09 | 18.28 | 6.44 | .46 |
| Total from investment operations | (6.64) | 13.29 | 18.40 | 6.65 | .51 |
| Distributions from net investment income | (.17) | (.08) | (.06) | (.15) | (.05) |
| Distributions from net realized gain | (5.68) | (1.14) | (1.30) | (.66) | (5.39) |
| Total distributions | (5.85) | (1.23)E | (1.36) | (.80)F | (5.44) |
| Redemption fees added to paid in capitalB | –G | .01 | .01 | –G | –G |
| Net asset value, end of period | $60.60 | $73.09 | $61.02 | $43.97 | $38.12 |
| Total ReturnH | (9.24)% | 21.93% | 42.26% | 17.62% | 2.01% |
| Ratios to Average Net AssetsI,J | |||||
| Expenses before reductions | .83% | .83% | .87% | .94% | .96% |
| Expenses net of fee waivers, if any | .83% | .83% | .87% | .94% | .96% |
| Expenses net of all reductions | .82% | .83% | .86% | .92% | .95% |
| Net investment income (loss) | .27% | .30%C | .22% | .54%D | .12% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $325,630 | $715,925 | $350,960 | $90,837 | $72,652 |
| Portfolio turnover rateK | 97% | 65%L | 125% | 74% | 102% |
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 $.22 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been (.04)%.
D 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 .35%.
E Total distributions of $1.23 per share is comprised of distributions from net investment income of $.084 and distributions from net realized gain of $1.144 per share.
F Total distributions of $.80 per share is comprised of distributions from net investment income of $.147 and distributions from net realized gain of $.655 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.
L Portfolio turnover rate excludes securities received or delivered in-kind.
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, 2016 | Past 1 year | Past 5 years | Past 10 years |
| Defense and Aerospace Portfolio | (11.08)% | 11.11% | 8.06% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Defense and Aerospace Portfolio on February 28, 2006.
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 | ||
| $21,716 | Defense and Aerospace Portfolio | |
| $18,666 | S&P 500® Index | |
Defense and Aerospace Portfolio
Management's Discussion of Fund Performance
Market Recap: The S&P 500® index returned -6.19% for the year ending February 29, 2016. Largely range-bound for the first half of the period, U.S. stocks suffered a steep, late-summer decline on concern about an economic slowdown in China. The market recovered in October, lifted by the U.S. Federal Reserve’s decision to delay raising near-term interest rates until mid-December. Investors also drew courage from a rate cut in China and economic stimulus in Europe. But continued oil-price weakness and U.S.-dollar strength, plus fresh worries about China and the Middle East, pushed the S&P 500® to its worst January since 2009, followed by a volatile but ultimately flattish February. Overall, growth-oriented and larger-cap stocks fared better than value and smaller-cap complements. In this environment, the tech-heavy Nasdaq Composite Index® returned -7.07% for the 12 months; the Russell 2000® Index, -14.97%. Few sectors within the broad-market S&P 500® gained ground, with a wide gap separating leaders from laggards. Despite increased competition among wireless carriers, telecommunication services (+8%) led the way, followed by the more defensive utilities sector (+6%). Rising wages and low inflation buoyed consumer staples (+4%), less so consumer discretionary (0%). Meanwhile, energy (-24%) foundered amid commodity weakness that also hurt materials (-17%). The financials sector (-12%) struggled as well.Comments from Portfolio Manager Jonathan Siegmann: For the year, the fund returned -11.08%, underperforming the -9.01% return of the MSCI U.S. IMI Aerospace & Defense 25/50 Index, while also lagging the more-diversified S&P 500® index. Decelerating demand in the commercial aerospace industry was a key factor holding back the MSCI index versus the S&P 500®. During the period, I brought the fund’s allocations to aerospace and defense to a more-neutral stance instead of overweighting the aerospace side, which had been the fund’s position for several years. A lighter stake in the weaker aerospace segment helped the fund outperform the MSCI index from the date I took over through period end. Versus the MSCI benchmark, stock picking in the fund’s primary category of aerospace and defense hampered its performance. A large underweighting in major defense contractor Lockheed Martin was our largest relative detractor, as this index component bucked the downward trend of our benchmark and posted an 11% gain during the period. Overweighting Esterline Technologies, which has a mix of aerospace and defense exposure, also hampered relative results. A sizable underweighting in aerospace supplier Precision Castparts, an outperforming index name that was acquired by Berkshire Hathaway during the period, worked against us as well. I’ll also mention Engility Holdings, one of the stocks I added to the portfolio. After I established an overweighted position here, the shares of this personnel outsourcing provider for the U.S. military and intelligence agencies fell significantly. Conversely, out-of-benchmark exposure to specialty chemicals added value. This was due to one stock: Cytec Industries, a manufacturer of specialty composites and other materials for aerospace and industrial customers. This stock had a nice move in July, after the company announced it had entered into a merger agreement with Brussels-based Solvay, a global chemical company. The position was liquidated at a profit by my predecessor soon after this announcement. Orbital ATK, the result of the February 2015 merger of Orbital Sciences and ATK, added the most value versus our industry benchmark. One major defense contractor in which the fund was overweighted for much of the period, Raytheon, also aided our results.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 September 30, 2015, Jonathan Siegmann was named Portfolio Manager of the fund, succeeding Douglas Scott.Defense and Aerospace Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 29, 2016
| % of fund's net assets | % of fund's net assets 6 months ago | |
| United Technologies Corp. | 14.5 | 14.9 |
| The Boeing Co. | 9.5 | 17.5 |
| Northrop Grumman Corp. | 8.0 | 0.0 |
| Honeywell International, Inc. | 7.7 | 4.4 |
| General Dynamics Corp. | 7.2 | 1.5 |
| Lockheed Martin Corp. | 4.8 | 0.0 |
| Rockwell Collins, Inc. | 4.8 | 6.2 |
| TransDigm Group, Inc. | 4.5 | 4.8 |
| Raytheon Co. | 4.5 | 7.9 |
| Huntington Ingalls Industries, Inc. | 4.4 | 5.0 |
| 69.9 |
Top Industries (% of fund's net assets)
| As of February 29, 2016 | ||
| Aerospace & Defense | 98.4% | |
| All Others* | 1.6% | |
| As of August 31, 2015 | ||
| Aerospace & Defense | 96.5% | |
| Leisure Products | 2.5% | |
| All Others* | 1.0% | |
* Includes short-term investments and net other assets (liabilities). Percentages shown as 0.0% may reflect amounts less than 0.05%.
Defense and Aerospace Portfolio
Investments February 29, 2016
Showing Percentage of Net Assets
| Common Stocks - 98.4% | |||
| Shares | Value | ||
| Aerospace & Defense - 98.4% | |||
| Aerospace & Defense - 98.4% | |||
| Astronics Corp. (a) | 237,400 | $7,551,694 | |
| Astronics Corp. Class B | 49,177 | 1,524,487 | |
| BWX Technologies, Inc. | 872,800 | 27,842,320 | |
| Engility Holdings, Inc. | 542,130 | 7,866,306 | |
| Esterline Technologies Corp. (a) | 185,534 | 10,391,759 | |
| General Dynamics Corp. | 466,100 | 63,515,447 | |
| HEICO Corp. | 332,547 | 19,124,778 | |
| HEICO Corp. Class A | 283,742 | 12,399,525 | |
| Hexcel Corp. | 558,900 | 23,099,337 | |
| Honeywell International, Inc. | 674,876 | 68,398,683 | |
| Huntington Ingalls Industries, Inc. | 296,174 | 38,816,564 | |
| L-3 Communications Holdings, Inc. | 71,420 | 8,378,280 | |
| Lockheed Martin Corp. | 198,000 | 42,726,420 | |
| Moog, Inc. Class A (a) | 340,358 | 14,696,658 | |
| Northrop Grumman Corp. | 370,900 | 71,294,398 | |
| Orbital ATK, Inc. | 359,280 | 30,093,293 | |
| Raytheon Co. | 323,906 | 40,115,758 | |
| Rockwell Collins, Inc. | 487,767 | 42,713,756 | |
| Safran SA | 36,000 | 2,244,409 | |
| Spirit AeroSystems Holdings, Inc. Class A (a) | 655,700 | 30,162,200 | |
| Teledyne Technologies, Inc. (a) | 340,326 | 28,988,969 | |
| Textron, Inc. | 776,631 | 26,521,949 | |
| The Boeing Co. | 712,131 | 84,159,642 | |
| TransDigm Group, Inc. (a) | 188,733 | 40,309,594 | |
| United Technologies Corp. | 1,330,101 | 128,514,359 | |
| (Cost $686,508,838) | 871,450,585 | ||
| Money Market Funds - 1.5% | |||
| Fidelity Cash Central Fund, 0.40% (b) | |||
| (Cost $13,286,276) | 13,286,276 | 13,286,276 | |
| TOTAL INVESTMENT PORTFOLIO - 99.9% | |||
| (Cost $699,795,114) | 884,736,861 | ||
| NET OTHER ASSETS (LIABILITIES) - 0.1% | 661,297 | ||
| NET ASSETS - 100% | $885,398,158 |
Legend
(a) Non-income producing
(b) 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 | $38,041 |
| Fidelity Securities Lending Cash Central Fund | 18,583 |
| Total | $56,624 |
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.
Defense and Aerospace Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2016 | ||
| Assets | ||
| Investment in securities, at value — See accompanying schedule: Unaffiliated issuers (cost $686,508,838) | $871,450,585 | |
| Fidelity Central Funds (cost $13,286,276) | 13,286,276 | |
| Total Investments (cost $699,795,114) | $884,736,861 | |
| Receivable for investments sold | 4,018,486 | |
| Receivable for fund shares sold | 942,573 | |
| Dividends receivable | 2,891,717 | |
| Distributions receivable from Fidelity Central Funds | 27 | |
| Prepaid expenses | 3,052 | |
| Other receivables | 22,355 | |
| Total assets | 892,615,071 | |
| Liabilities | ||
| Payable for investments purchased | $5,357,834 | |
| Payable for fund shares redeemed | 1,229,571 | |
| Accrued management fee | 395,108 | |
| Other affiliated payables | 174,667 | |
| Other payables and accrued expenses | 59,733 | |
| Total liabilities | 7,216,913 | |
| Net Assets | $885,398,158 | |
| Net Assets consist of: | ||
| Paid in capital | $694,698,230 | |
| Undistributed net investment income | 2,013,132 | |
| Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 3,746,138 | |
| Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 184,940,658 | |
| Net Assets, for 8,191,705 shares outstanding | $885,398,158 | |
| Net Asset Value, offering price and redemption price per share ($885,398,158 ÷ 8,191,705 shares) | $108.08 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 29, 2016 | ||
| Investment Income | ||
| Dividends | $15,485,051 | |
| Income from Fidelity Central Funds | 56,624 | |
| Total income | 15,541,675 | |
| Expenses | ||
| Management fee | $4,983,950 | |
| Transfer agent fees | 1,771,689 | |
| Accounting and security lending fees | 307,191 | |
| Custodian fees and expenses | 16,697 | |
| Independent trustees' compensation | 16,677 | |
| Registration fees | 69,168 | |
| Audit | 42,266 | |
| Legal | 9,834 | |
| Interest | 1,346 | |
| Miscellaneous | 10,238 | |
| Total expenses before reductions | 7,229,056 | |
| Expense reductions | (49,913) | 7,179,143 |
| Net investment income (loss) | 8,362,532 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 23,010,470 | |
| Foreign currency transactions | 82,115 | |
| Total net realized gain (loss) | 23,092,585 | |
| Change in net unrealized appreciation (depreciation) on: Investment securities | (146,984,647) | |
| Assets and liabilities in foreign currencies | (1,089) | |
| Total change in net unrealized appreciation (depreciation) | (146,985,736) | |
| Net gain (loss) | (123,893,151) | |
| Net increase (decrease) in net assets resulting from operations | $(115,530,619) |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 29, 2016 | Year ended February 28, 2015 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $8,362,532 | $7,695,832 |
| Net realized gain (loss) | 23,092,585 | 50,293,674 |
| Change in net unrealized appreciation (depreciation) | (146,985,736) | 37,285,780 |
| Net increase (decrease) in net assets resulting from operations | (115,530,619) | 95,275,286 |
| Distributions to shareholders from net investment income | (7,997,911) | (6,773,084) |
| Distributions to shareholders from net realized gain | (49,261,334) | (49,828,078) |
| Total distributions | (57,259,245) | (56,601,162) |
| Share transactions | ||
| Proceeds from sales of shares | 357,700,834 | 202,060,866 |
| Reinvestment of distributions | 54,856,943 | 54,381,038 |
| Cost of shares redeemed | (302,562,366) | (370,380,329) |
| Net increase (decrease) in net assets resulting from share transactions | 109,995,411 | (113,938,425) |
| Redemption fees | 36,853 | 26,928 |
| Total increase (decrease) in net assets | (62,757,600) | (75,237,373) |
| Net Assets | ||
| Beginning of period | 948,155,758 | 1,023,393,131 |
| End of period (including undistributed net investment income of $2,013,132 and undistributed net investment income of $2,197,778, respectively) | $885,398,158 | $948,155,758 |
| Other Information | ||
| Shares | ||
| Sold | 2,974,606 | 1,668,989 |
| Issued in reinvestment of distributions | 455,738 | 477,347 |
| Redeemed | (2,590,571) | (3,145,035) |
| Net increase (decrease) | 839,773 | (998,699) |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Defense and Aerospace Portfolio
| Years ended February 28, | 2016 A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $128.97 | $122.55 | $91.73 | $86.02 | $78.21 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | 1.08 | 1.06C | .77 | 1.17D | .56 |
| Net realized and unrealized gain (loss) | (14.72) | 13.14 | 36.34 | 5.94 | 7.87 |
| Total from investment operations | (13.64) | 14.20 | 37.11 | 7.11 | 8.43 |
| Distributions from net investment income | (1.01) | (.97) | (.64) | (1.21) | (.51) |
| Distributions from net realized gain | (6.24) | (6.81) | (5.65) | (.19) | (.12) |
| Total distributions | (7.25) | (7.78) | (6.29) | (1.40) | (.62)E |
| Redemption fees added to paid in capitalB,F | – | – | – | – | – |
| Net asset value, end of period | $108.08 | $128.97 | $122.55 | $91.73 | $86.02 |
| Total ReturnG | (11.08)% | 12.53% | 40.85% | 8.37% | 10.87% |
| Ratios to Average Net AssetsH,I | |||||
| Expenses before reductions | .80% | .79% | .81% | .84% | .86% |
| Expenses net of fee waivers, if any | .79% | .79% | .81% | .84% | .86% |
| Expenses net of all reductions | .79% | .79% | .81% | .83% | .86% |
| Net investment income (loss) | .92% | .90%C | .70% | 1.39%D | .72% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $885,398 | $948,156 | $1,023,393 | $606,859 | $681,154 |
| Portfolio turnover rateJ | 52% | 20% | 48% | 56% | 56% |
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 $.66 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .34%.
D Net Investment income per share reflects a large, non-recurring dividend which amounted to $.34 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .99%.
E Total distributions of $.62 per share is comprised of distributions from net investment income of $.508 and distributions from net realized gain of $.115 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.
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, 2016 | Past 1 year | Past 5 years | Past 10 years |
| Environment and Alternative Energy Portfolio | (10.63)% | 2.74% | 2.61% |
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, 2006.
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 | ||
| $12,941 | Environment and Alternative Energy Portfolio | |
| $18,666 | S&P 500® Index | |
Environment and Alternative Energy Portfolio
Management's Discussion of Fund Performance
Market Recap: The S&P 500® index returned -6.19% for the year ending February 29, 2016. Largely range-bound for the first half of the period, U.S. stocks suffered a steep, late-summer decline on concern about an economic slowdown in China. The market recovered in October, lifted by the U.S. Federal Reserve’s decision to delay raising near-term interest rates until mid-December. Investors also drew courage from a rate cut in China and economic stimulus in Europe. But continued oil-price weakness and U.S.-dollar strength, plus fresh worries about China and the Middle East, pushed the S&P 500® to its worst January since 2009, followed by a volatile but ultimately flattish February. Overall, growth-oriented and larger-cap stocks fared better than value and smaller-cap complements. In this environment, the tech-heavy Nasdaq Composite Index® returned -7.07% for the 12 months; the Russell 2000® Index, -14.97%. Few sectors within the broad-market S&P 500® gained ground, with a wide gap separating leaders from laggards. Despite increased competition among wireless carriers, telecommunication services (+8%) led the way, followed by the more defensive utilities sector (+6%). Rising wages and low inflation buoyed consumer staples (+4%), less so consumer discretionary (0%). Meanwhile, energy (-24%) foundered amid commodity weakness that also hurt materials (-17%). The financials sector (-12%) struggled as well.Comments from Portfolio Manager Kevin Walenta: For the year, the fund returned -10.63%, compared to -11.20% for the FTSE® Environmental Opportunities & Alternative Energy Index. Continued low oil prices and sluggish global growth pressured the industry index, which lagged the S&P 500® by a sizable margin. Versus the FTSE® benchmark, the fund benefited from a sizable overweighting and security selection in the strong-performing buildings products group, underexposure to the semiconductor equipment segment and stock picks in electric utilities. Top individual contributors included Lennox International, which sells reasonably priced, energy-efficient heating, ventilation and air conditioning (HVAC) units, and A.O. Smith, best known for its energy-efficient water heaters. Lennox’s stock gained from its exposure to the U.S. and takeover rumors, while A.O. Smith’s shares rose on the back of strong revenue growth in China. By contrast, an overweighting in auto parts & equipment hurt performance compared to the industry benchmark. Disappointments included auto supplier BorgWarner, which was pressured by near-term concerns related to an industry-wide drop-off in demand. In addition, not owning wind turbine company and index component Vestas Wind Systems detracted, as the stock gained from the extension of federal government subsidies.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, 2016
| % of fund's net assets | % of fund's net assets 6 months ago | |
| Honeywell International, Inc. | 12.9 | 12.1 |
| Deere & Co. | 7.7 | 7.4 |
| Delphi Automotive PLC | 6.2 | 6.7 |
| Tenneco, Inc. | 5.6 | 4.7 |
| Roper Technologies, Inc. | 4.8 | 4.6 |
| Rockwell Automation, Inc. | 4.4 | 4.6 |
| A.O. Smith Corp. | 4.2 | 3.8 |
| Lennox International, Inc. | 4.0 | 3.6 |
| Praxair, Inc. | 3.9 | 5.5 |
| Iberdrola SA | 3.8 | 3.9 |
| 57.5 |
Top Industries (% of fund's net assets)
| As of February 29, 2016 | ||
| Energy Efficiency | 49.6% | |
| Renewable & Alternative Energy | 12.0% | |
| Pollution Control | 8.9% | |
| Food Agriculture & Forestry | 8.8% | |
| Water Infrastructure & Technologies | 8.5% | |
| All Others* | 12.2% | |
| As of August 31, 2015 | ||
| Energy Efficiency | 57.1% | |
| Pollution Control | 9.3% | |
| Renewable & Alternative Energy | 8.9% | |
| Environmental Support Services | 8.8% | |
| Water Infrastructure & Technologies | 8.8% | |
| All Others* | 7.1% | |
* Includes short-term investments and net other assets (liabilities).
Environment and Alternative Energy Portfolio
Investments February 29, 2016
Showing Percentage of Net Assets
| Common Stocks - 96.7% | |||
| Shares | Value | ||
| Energy Efficiency - 49.6% | |||
| Buildings Energy Efficiency - 8.2% | |||
| A.O. Smith Corp. | 44,190 | $3,110,092 | |
| Lennox International, Inc. | 22,580 | 2,917,562 | |
| 6,027,654 | |||
| Diversified Energy Efficiency - 15.8% | |||
| Honeywell International, Inc. | 93,000 | 9,425,548 | |
| Linear Technology Corp. | 49,400 | 2,154,828 | |
| 11,580,376 | |||
| Industrial Energy Efficiency - 13.1% | |||
| EnerSys | 50,500 | 2,593,680 | |
| ON Semiconductor Corp. (a) | 46,300 | 388,457 | |
| Praxair, Inc. | 27,830 | 2,832,816 | |
| Rockwell Automation, Inc. | 31,200 | 3,247,608 | |
| Rogers Corp. (a) | 3,300 | 176,286 | |
| VMware, Inc. Class A (a)(b) | 7,400 | 373,626 | |
| 9,612,473 | |||
| Transport Energy Efficiency - 12.5% | |||
| BorgWarner, Inc. | 58,160 | 1,900,669 | |
| Delphi Automotive PLC | 68,260 | 4,551,577 | |
| Innospec, Inc. | 63,000 | 2,734,200 | |
| 9,186,446 | |||
| TOTAL ENERGY EFFICIENCY | 36,406,949 | ||
| Environmental Support Services - 6.7% | |||
| Diversified Environmental - 5.8% | |||
| 3M Co. | 13,020 | 2,042,447 | |
| Parker Hannifin Corp. | 21,900 | 2,216,280 | |
| 4,258,727 | |||
| Environmental Consultancies - 0.9% | |||
| AECOM (a) | 24,200 | 664,532 | |
| TOTAL ENVIRONMENTAL SUPPORT SERVICES | 4,923,259 | ||
| Food Agriculture & Forestry - 8.8% | |||
| Sustainable and Efficient Agriculture - 7.7% | |||
| Deere & Co. | 71,000 | 5,692,780 | |
| Sustainable Forestry and Plantations - 1.1% | |||
| Potlatch Corp. | 30,800 | 814,352 | |
| TOTAL FOOD AGRICULTURE & FORESTRY | 6,507,132 | ||
| Miscellaneous Environmental - 0.4% | |||
| Other Environmental - 0.4% | |||
| IBM Corp. | 2,100 | 275,163 | |
| Pollution Control - 8.9% | |||
| Pollution Control Solutions - 8.9% | |||
| Cummins, Inc. | 24,830 | 2,422,663 | |
| Tenneco, Inc. (a) | 89,890 | 4,091,793 | |
| 6,514,456 | |||
| Renewable & Alternative Energy - 12.0% | |||
| Other Renewables Equipment - 3.7% | |||
| Andritz AG | 56,100 | 2,693,488 | |
| Renewable Energy Developers and Independent Power Producers - 8.3% | |||
| Huaneng Renewables Corp. Ltd. (H Shares) | 106,000 | 24,531 | |
| Iberdrola SA | 437,904 | 2,821,069 | |
| IDACORP, Inc. | 22,900 | 1,624,984 | |
| Portland General Electric Co. | 30,300 | 1,152,915 | |
| Wabtec Corp. | 6,990 | 493,494 | |
| 6,116,993 | |||
| TOTAL RENEWABLE & ALTERNATIVE ENERGY | 8,810,481 | ||
| Waste Management & Technologies - 1.8% | |||
| Recycling and Value Added Waste Processing - 1.8% | |||
| Copart, Inc. (a) | 35,000 | 1,321,250 | |
| Water Infrastructure & Technologies - 8.5% | |||
| Water Infrastructure - 8.2% | |||
| Crane Co. | 15,200 | 745,560 | |
| Roper Technologies, Inc. | 21,108 | 3,544,666 | |
| Valmont Industries, Inc. | 15,750 | 1,780,538 | |
| 6,070,764 | |||
| Water Treatment Equipment - 0.3% | |||
| Danaher Corp. | 2,280 | 203,536 | |
| TOTAL WATER INFRASTRUCTURE & TECHNOLOGIES | 6,274,300 | ||
| TOTAL COMMON STOCKS | |||
| (Cost $74,408,892) | 71,032,990 | ||
| Cash Equivalents - 3.5% | |||
| Fidelity Cash Central Fund, 0.40% (c) | 2,178,699 | 2,178,699 | |
| Fidelity Securities Lending Cash Central Fund, 0.44% (c)(d) | 348,400 | 348,400 | |
| TOTAL CASH EQUIVALENTS | |||
| (Cost $2,527,099) | 2,527,099 | ||
| TOTAL INVESTMENT PORTFOLIO - 100.2% | |||
| (Cost $76,935,991) | 73,560,089 | ||
| NET OTHER ASSETS (LIABILITIES) - (0.2)% | (127,881) | ||
| NET ASSETS - 100% | $73,432,208 |
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 | $6,402 |
| Fidelity Securities Lending Cash Central Fund | 18,273 |
| Total | $24,675 |
Investment Valuation
The following is a summary of the inputs used, as of February 29, 2016, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used 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 | $71,032,990 | $68,211,921 | $2,821,069 | $-- |
| Money Market Funds | 2,527,099 | 2,527,099 | -- | -- |
| Total Investments in Securities: | $73,560,089 | $70,739,020 | $2,821,069 | $-- |
The following is a summary of transfers between Level 1 and Level 2 for the period ended February 29, 2016. Transfers are assumed to have occurred at the beginning of the period, and are primarily attributable to the valuation techniques used for foreign equity securities, as discussed in the accompanying Notes to Financial Statements:
| Transfers | Total |
| Level 1 to Level 2 | $3,330,350 |
| Level 2 to Level 1 | $0 |
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 | 86.3% |
| Bailiwick of Jersey | 6.2% |
| Spain | 3.8% |
| Austria | 3.7% |
| Others (Individually Less Than 1%) | 0.0% |
| 100.0% |
Percentages shown as 0.0% may reflect amounts less than 0.05%.
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, 2016 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $338,283) — See accompanying schedule: Unaffiliated issuers (cost $74,408,892) | $71,032,990 | |
| Fidelity Central Funds (cost $2,527,099) | 2,527,099 | |
| Total Investments (cost $76,935,991) | $73,560,089 | |
| Cash | 18,416 | |
| Receivable for fund shares sold | 188,598 | |
| Dividends receivable | 153,118 | |
| Distributions receivable from Fidelity Central Funds | 2,362 | |
| Prepaid expenses | 277 | |
| Total assets | 73,922,860 | |
| Liabilities | ||
| Payable for fund shares redeemed | $58,214 | |
| Accrued management fee | 32,826 | |
| Other affiliated payables | 19,373 | |
| Audit fees | 31,144 | |
| Other payables and accrued expenses | 695 | |
| Collateral on securities loaned, at value | 348,400 | |
| Total liabilities | 490,652 | |
| Net Assets | $73,432,208 | |
| Net Assets consist of: | ||
| Paid in capital | $77,434,021 | |
| Undistributed net investment income | 155,477 | |
| Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (779,848) | |
| Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (3,377,442) | |
| Net Assets, for 4,034,985 shares outstanding | $73,432,208 | |
| Net Asset Value, offering price and redemption price per share ($73,432,208 ÷ 4,034,985 shares) | $18.20 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 29, 2016 | ||
| Investment Income | ||
| Dividends | $1,423,618 | |
| Income from Fidelity Central Funds | 24,675 | |
| Total income | 1,448,293 | |
| Expenses | ||
| Management fee | $438,479 | |
| Transfer agent fees | 217,172 | |
| Accounting and security lending fees | 31,852 | |
| Custodian fees and expenses | 7,151 | |
| Independent trustees' compensation | 1,478 | |
| Registration fees | 17,844 | |
| Audit | 46,208 | |
| Legal | 932 | |
| Miscellaneous | 1,254 | |
| Total expenses before reductions | 762,370 | |
| Expense reductions | (2,966) | 759,404 |
| Net investment income (loss) | 688,889 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | (778,047) | |
| Foreign currency transactions | (3,677) | |
| Total net realized gain (loss) | (781,724) | |
| Change in net unrealized appreciation (depreciation) on: Investment securities | (8,882,060) | |
| Assets and liabilities in foreign currencies | (244) | |
| Total change in net unrealized appreciation (depreciation) | (8,882,304) | |
| Net gain (loss) | (9,664,028) | |
| Net increase (decrease) in net assets resulting from operations | $(8,975,139) |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 29, 2016 | Year ended February 28, 2015 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $688,889 | $688,451 |
| Net realized gain (loss) | (781,724) | 21,116,571 |
| Change in net unrealized appreciation (depreciation) | (8,882,304) | (20,169,911) |
| Net increase (decrease) in net assets resulting from operations | (8,975,139) | 1,635,111 |
| Distributions to shareholders from net investment income | (533,726) | (560,254) |
| Distributions to shareholders from net realized gain | (1,831,107) | (10,675,033) |
| Total distributions | (2,364,833) | (11,235,287) |
| Share transactions | ||
| Proceeds from sales of shares | 12,805,231 | 24,999,440 |
| Reinvestment of distributions | 2,254,180 | 10,697,844 |
| Cost of shares redeemed | (18,861,388) | (40,397,558) |
| Net increase (decrease) in net assets resulting from share transactions | (3,801,977) | (4,700,274) |
| Redemption fees | 1,482 | 4,105 |
| Total increase (decrease) in net assets | (15,140,467) | (14,296,345) |
| Net Assets | ||
| Beginning of period | 88,572,675 | 102,869,020 |
| End of period (including undistributed net investment income of $155,477 and undistributed net investment income of $43,112, respectively) | $73,432,208 | $88,572,675 |
| Other Information | ||
| Shares | ||
| Sold | 657,036 | 1,107,316 |
| Issued in reinvestment of distributions | 111,117 | 516,769 |
| Redeemed | (963,138) | (1,798,133) |
| Net increase (decrease) | (194,985) | (174,048) |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Environment and Alternative Energy Portfolio
| Years ended February 28, | 2016 A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $20.94 | $23.36 | $18.12 | $16.32 | $19.19 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .17 | .16 | .14 | .18 | .20 |
| Net realized and unrealized gain (loss) | (2.34) | .31 | 5.27 | 1.77 | (2.88) |
| Total from investment operations | (2.17) | .47 | 5.41 | 1.95 | (2.68) |
| Distributions from net investment income | (.13) | (.14) | (.17) | (.15) | (.19) |
| Distributions from net realized gain | (.44) | (2.75) | – | – | – |
| Total distributions | (.57) | (2.89) | (.17) | (.15) | (.19) |
| Redemption fees added to paid in capitalB,C | – | – | – | – | – |
| Net asset value, end of period | $18.20 | $20.94 | $23.36 | $18.12 | $16.32 |
| Total ReturnD | (10.63)% | 2.19% | 29.97% | 12.02% | (13.92)% |
| Ratios to Average Net AssetsE,F | |||||
| Expenses before reductions | .95% | .92% | .97% | .99% | 1.01% |
| Expenses net of fee waivers, if any | .95% | .92% | .97% | .99% | 1.01% |
| Expenses net of all reductions | .95% | .92% | .97% | .97% | 1.00% |
| Net investment income (loss) | .86% | .71% | .70% | 1.10% | 1.15% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $73,432 | $88,573 | $102,869 | $82,018 | $77,943 |
| Portfolio turnover rateG | 20% | 160% | 28% | 54% | 183% |
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.
Industrial 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, 2016 | Past 1 year | Past 5 years | Past 10 years |
| Industrial Equipment Portfolio | (4.20)% | 6.65% | 6.80% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Industrial Equipment Portfolio on February 28, 2006.
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 | ||
| $19,316 | Industrial Equipment Portfolio | |
| $18,666 | S&P 500® Index | |
Industrial Equipment Portfolio
Management's Discussion of Fund Performance
Market Recap: The S&P 500® index returned -6.19% for the year ending February 29, 2016. Largely range-bound for the first half of the period, U.S. stocks suffered a steep, late-summer decline on concern about an economic slowdown in China. The market recovered in October, lifted by the U.S. Federal Reserve’s decision to delay raising near-term interest rates until mid-December. Investors also drew courage from a rate cut in China and economic stimulus in Europe. But continued oil-price weakness and U.S.-dollar strength, plus fresh worries about China and the Middle East, pushed the S&P 500® to its worst January since 2009, followed by a volatile but ultimately flattish February. Overall, growth-oriented and larger-cap stocks fared better than value and smaller-cap complements. In this environment, the tech-heavy Nasdaq Composite Index® returned -7.07% for the 12 months; the Russell 2000® Index, -14.97%. Few sectors within the broad-market S&P 500® gained ground, with a wide gap separating leaders from laggards. Despite increased competition among wireless carriers, telecommunication services (+8%) led the way, followed by the more defensive utilities sector (+6%). Rising wages and low inflation buoyed consumer staples (+4%), less so consumer discretionary (0%). Meanwhile, energy (-24%) foundered amid commodity weakness that also hurt materials (-17%). The financials sector (-12%) struggled as well.Comments from Portfolio Manager Boris Shepov: For the year, the fund returned -4.20%, outpacing the -5.20% return of the MSCI U.S. IMI Capital Goods 25/50 Index. Industrial equipment stocks did a little better than the broad S&P 500®, as strength in subindustries such as industrial conglomerates and building products helped offset weakness in construction machinery & heavy trucks, among other groups. Versus the MSCI benchmark, stock selection and a sizable underweighting in industrial machinery helped most. Global Brass & Copper, a producer of specialized metal components, was largely responsible for this group’s positive impact. The firm resolved operational issues at its copper strip division and implemented pricing initiatives that drove earnings higher, leading to significant outperformance, and I sold the stock to lock in profits. Overweighting the defense side of aerospace & defense also contributed to fund results. Within this group, nuclear-submarine maintenance specialist BWX Technologies was revalued higher after its mid-2015 spin-off from Babcock & Wilcox, confirming my thesis that this high-quality business was undervalued. Lennox International, a climate-control specialist, was the third-largest contributor, riding favorable trends in U.S. construction. Overweighting commercial aircraft manufacturer Boeing through the first half of the reporting period added further value. I eventually sold this position due to concerns about the negative impact on free cash flow from declining orders. Conversely, my picks in trading companies & distributors and electrical components & equipment weighed on relative results. At the stock level, Manitowoc was our largest detractor. The company’s crane orders were negatively impacted by declining spending on oil and gas infrastructure. Shares of United Technologies also struggled, as the company had to lower guidance due to the challenging environment in China for its Otis Elevator division and slower growth in its aerospace aftermarket business. I’ll also mention United Rentals as a detractor.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: Effective April 1, 2016, Tobias Welo and Janet Glazer became Co-Portfolio Managers of the fund.Industrial Equipment Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 29, 2016
| % of fund's net assets | % of fund's net assets 6 months ago | |
| General Electric Co. | 15.6 | 12.1 |
| United Technologies Corp. | 7.3 | 8.3 |
| Danaher Corp. | 6.7 | 6.4 |
| Honeywell International, Inc. | 5.7 | 5.9 |
| General Dynamics Corp. | 5.1 | 4.1 |
| Raytheon Co. | 4.4 | 0.5 |
| Northrop Grumman Corp. | 3.8 | 3.0 |
| Ingersoll-Rand PLC | 3.3 | 3.4 |
| 3M Co. | 3.3 | 2.5 |
| BWX Technologies, Inc. | 2.7 | 3.2 |
| 57.9 |
Top Industries (% of fund's net assets)
| As of February 29, 2016 | ||
| Aerospace & Defense | 37.4% | |
| Industrial Conglomerates | 28.2% | |
| Machinery | 11.9% | |
| Electrical Equipment | 8.5% | |
| Building Products | 4.6% | |
| All Others* | 9.4% | |
| As of August 31, 2015 | ||
| Aerospace & Defense | 35.8% | |
| Industrial Conglomerates | 21.0% | |
| Machinery | 14.7% | |
| Electrical Equipment | 9.2% | |
| Trading Companies & Distributors | 5.0% | |
| All Others* | 14.3% | |
* Includes short-term investments and net other assets (liabilities).
Industrial Equipment Portfolio
Investments February 29, 2016
Showing Percentage of Net Assets
| Common Stocks - 98.3% | |||
| Shares | Value | ||
| Aerospace & Defense - 37.4% | |||
| Aerospace & Defense - 37.4% | |||
| BWX Technologies, Inc. | 135,310 | $4,316,389 | |
| General Dynamics Corp. | 58,500 | 7,971,795 | |
| Honeywell International, Inc. | 88,600 | 8,979,610 | |
| Huntington Ingalls Industries, Inc. | 17,700 | 2,319,762 | |
| Lockheed Martin Corp. | 16,800 | 3,625,272 | |
| Moog, Inc. Class A (a) | 43,900 | 1,895,602 | |
| Northrop Grumman Corp. | 31,600 | 6,074,152 | |
| Raytheon Co. | 55,900 | 6,923,215 | |
| Rockwell Collins, Inc. | 40,300 | 3,529,071 | |
| Teledyne Technologies, Inc. (a) | 21,600 | 1,839,888 | |
| United Technologies Corp. | 118,800 | 11,478,456 | |
| 58,953,212 | |||
| Building Products - 4.6% | |||
| Building Products - 4.6% | |||
| Allegion PLC | 54,600 | 3,439,800 | |
| Lennox International, Inc. | 29,800 | 3,850,458 | |
| 7,290,258 | |||
| Construction & Engineering - 2.3% | |||
| Construction & Engineering - 2.3% | |||
| AECOM (a) | 130,216 | 3,575,731 | |
| Diversified Consumer Services - 1.8% | |||
| Specialized Consumer Services - 1.8% | |||
| ServiceMaster Global Holdings, Inc. (a) | 73,400 | 2,784,062 | |
| Electrical Equipment - 8.5% | |||
| Electrical Components & Equipment - 8.5% | |||
| AMETEK, Inc. | 87,400 | 4,056,234 | |
| Eaton Corp. PLC | 75,800 | 4,298,618 | |
| EnerSys | 55,500 | 2,850,480 | |
| Regal Beloit Corp. | 41,728 | 2,277,514 | |
| 13,482,846 | |||
| Industrial Conglomerates - 28.2% | |||
| Industrial Conglomerates - 28.2% | |||
| 3M Co. | 33,400 | 5,239,458 | |
| Danaher Corp. | 118,200 | 10,551,714 | |
| General Electric Co. | 842,555 | 24,552,054 | |
| Roper Technologies, Inc. | 24,100 | 4,047,113 | |
| 44,390,339 | |||
| Machinery - 11.9% | |||
| Construction Machinery & Heavy Trucks - 4.3% | |||
| Allison Transmission Holdings, Inc. | 67,233 | 1,592,077 | |
| Manitowoc Co., Inc. (b) | 148,500 | 2,353,725 | |
| Wabtec Corp. | 38,900 | 2,746,340 | |
| 6,692,142 | |||
| Industrial Machinery - 7.6% | |||
| IDEX Corp. | 48,100 | 3,615,196 | |
| Ingersoll-Rand PLC | 95,200 | 5,289,312 | |
| Snap-On, Inc. | 21,400 | 3,095,938 | |
| 12,000,446 | |||
| TOTAL MACHINERY | 18,692,588 | ||
| Road & Rail - 1.9% | |||
| Trucking - 1.9% | |||
| J.B. Hunt Transport Services, Inc. | 39,200 | 2,990,568 | |
| Trading Companies & Distributors - 1.7% | |||
| Trading Companies & Distributors - 1.7% | |||
| United Rentals, Inc. (a) | 51,800 | 2,671,326 | |
| TOTAL COMMON STOCKS | |||
| (Cost $144,150,139) | 154,830,930 | ||
| Money Market Funds - 2.7% | |||
| Fidelity Cash Central Fund, 0.40% (c) | 2,182,928 | 2,182,928 | |
| Fidelity Securities Lending Cash Central Fund, 0.44% (c)(d) | 2,056,352 | 2,056,352 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $4,239,280) | 4,239,280 | ||
| TOTAL INVESTMENT PORTFOLIO - 101.0% | |||
| (Cost $148,389,419) | 159,070,210 | ||
| NET OTHER ASSETS (LIABILITIES) - (1.0)% | (1,568,546) | ||
| NET ASSETS - 100% | $157,501,664 |
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 | $5,846 |
| Fidelity Securities Lending Cash Central Fund | 18,826 |
| Total | $24,672 |
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.
Industrial Equipment Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2016 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $2,037,074) — See accompanying schedule: Unaffiliated issuers (cost $144,150,139) | $154,830,930 | |
| Fidelity Central Funds (cost $4,239,280) | 4,239,280 | |
| Total Investments (cost $148,389,419) | $159,070,210 | |
| Receivable for fund shares sold | 518,576 | |
| Dividends receivable | 478,915 | |
| Distributions receivable from Fidelity Central Funds | 1,256 | |
| Prepaid expenses | 399 | |
| Other receivables | 12,276 | |
| Total assets | 160,081,632 | |
| Liabilities | ||
| Payable for fund shares redeemed | $387,047 | |
| Accrued management fee | 69,505 | |
| Other affiliated payables | 29,889 | |
| Other payables and accrued expenses | 37,175 | |
| Collateral on securities loaned, at value | 2,056,352 | |
| Total liabilities | 2,579,968 | |
| Net Assets | $157,501,664 | |
| Net Assets consist of: | ||
| Paid in capital | $148,834,963 | |
| Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (2,011,072) | |
| Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 10,677,773 | |
| Net Assets, for 4,468,018 shares outstanding | $157,501,664 | |
| Net Asset Value, offering price and redemption price per share ($157,501,664 ÷ 4,468,018 shares) | $35.25 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 29, 2016 | ||
| Investment Income | ||
| Dividends | $2,692,545 | |
| Income from Fidelity Central Funds | 24,672 | |
| Total income | 2,717,217 | |
| Expenses | ||
| Management fee | $866,941 | |
| Transfer agent fees | 299,475 | |
| Accounting and security lending fees | 62,873 | |
| Custodian fees and expenses | 5,667 | |
| Independent trustees' compensation | 3,015 | |
| Registration fees | 25,956 | |
| Audit | 44,878 | |
| Legal | 2,028 | |
| Miscellaneous | 2,592 | |
| Total expenses before reductions | 1,313,425 | |
| Expense reductions | (15,228) | 1,298,197 |
| Net investment income (loss) | 1,419,020 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 26,572,059 | |
| Foreign currency transactions | 864 | |
| Total net realized gain (loss) | 26,572,923 | |
| Change in net unrealized appreciation (depreciation) on: Investment securities | (34,441,276) | |
| Assets and liabilities in foreign currencies | (1,118) | |
| Total change in net unrealized appreciation (depreciation) | (34,442,394) | |
| Net gain (loss) | (7,869,471) | |
| Net increase (decrease) in net assets resulting from operations | $(6,450,451) |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 29, 2016 | Year ended February 28, 2015 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $1,419,020 | $2,485,407 |
| Net realized gain (loss) | 26,572,923 | 46,030,365 |
| Change in net unrealized appreciation (depreciation) | (34,442,394) | (42,647,348) |
| Net increase (decrease) in net assets resulting from operations | (6,450,451) | 5,868,424 |
| Distributions to shareholders from net investment income | (940,848) | (2,406,422) |
| Distributions to shareholders from net realized gain | (10,329,487) | (57,814,171) |
| Total distributions | (11,270,335) | (60,220,593) |
| Share transactions | ||
| Proceeds from sales of shares | 73,896,865 | 24,679,677 |
| Reinvestment of distributions | 11,068,825 | 58,548,337 |
| Cost of shares redeemed | (138,056,936) | (225,953,361) |
| Net increase (decrease) in net assets resulting from share transactions | (53,091,246) | (142,725,347) |
| Redemption fees | 2,786 | 2,195 |
| Total increase (decrease) in net assets | (70,809,246) | (197,075,321) |
| Net Assets | ||
| Beginning of period | 228,310,910 | 425,386,231 |
| End of period (including undistributed net investment income of $0 and $388,654, respectively) | $157,501,664 | $228,310,910 |
| Other Information | ||
| Shares | ||
| Sold | 2,015,473 | 583,434 |
| Issued in reinvestment of distributions | 297,026 | 1,492,839 |
| Redeemed | (3,719,909) | (5,442,610) |
| Net increase (decrease) | (1,407,410) | (3,366,337) |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Industrial Equipment Portfolio
| Years ended February 28, | 2016 A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $38.86 | $46.03 | $39.59 | $36.37 | $36.16 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .33 | .32 | .37 | .45 | .28 |
| Net realized and unrealized gain (loss) | (1.87) | .75 | 9.19 | 3.22 | .29 |
| Total from investment operations | (1.54) | 1.07 | 9.56 | 3.67 | .57 |
| Distributions from net investment income | (.19) | (.36) | (.32) | (.45) | (.26) |
| Distributions from net realized gain | (1.88) | (7.88) | (2.80) | – | (.10) |
| Total distributions | (2.07) | (8.24) | (3.12) | (.45) | (.36) |
| Redemption fees added to paid in capitalB,C | – | – | – | – | – |
| Net asset value, end of period | $35.25 | $38.86 | $46.03 | $39.59 | $36.37 |
| Total ReturnD | (4.20)% | 3.36% | 24.37% | 10.19% | 1.66% |
| Ratios to Average Net AssetsE,F | |||||
| Expenses before reductions | .83% | .77% | .79% | .82% | .84% |
| Expenses net of fee waivers, if any | .83% | .77% | .78% | .82% | .84% |
| Expenses net of all reductions | .82% | .77% | .78% | .81% | .84% |
| Net investment income (loss) | .90% | .76% | .87% | 1.25% | .85% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $157,502 | $228,311 | $425,386 | $369,951 | $351,674 |
| Portfolio turnover rateG | 72%H | 53% | 100% | 69% | 101% |
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.
H Portfolio turnover rate excludes securities received or delivered in-kind.
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, 2016 | Past 1 year | Past 5 years | Past 10 years |
| Industrials Portfolio | (8.29)% | 8.28% | 8.12% |
Prior to October 1, 2006, the fund was named Cyclical Industries 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 Industrials Portfolio on February 28, 2006.
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 | ||
| $21,827 | Industrials Portfolio | |
| $18,666 | S&P 500® Index | |
Industrials Portfolio
Management's Discussion of Fund Performance
Market Recap: The S&P 500® index returned -6.19% for the year ending February 29, 2016. Largely range-bound for the first half of the period, U.S. stocks suffered a steep, late-summer decline on concern about an economic slowdown in China. The market recovered in October, lifted by the U.S. Federal Reserve’s decision to delay raising near-term interest rates until mid-December. Investors also drew courage from a rate cut in China and economic stimulus in Europe. But continued oil-price weakness and U.S.-dollar strength, plus fresh worries about China and the Middle East, pushed the S&P 500® to its worst January since 2009, followed by a volatile but ultimately flattish February. Overall, growth-oriented and larger-cap stocks fared better than value and smaller-cap complements. In this environment, the tech-heavy Nasdaq Composite Index® returned -7.07% for the 12 months; the Russell 2000® Index, -14.97%. Few sectors within the broad-market S&P 500® gained ground, with a wide gap separating leaders from laggards. Despite increased competition among wireless carriers, telecommunication services (+8%) led the way, followed by the more defensive utilities sector (+6%). Rising wages and low inflation buoyed consumer staples (+4%), less so consumer discretionary (0%). Meanwhile, energy (-24%) foundered amid commodity weakness that also hurt materials (-17%). The financials sector (-12%) struggled as well.Comments from Portfolio Manager Tobias Welo: For the year, the fund returned -8.29%, modestly lagging the -8.02% return of the MSCI U.S. IMI Industrials 25/50 Index, as well as the S&P 500®. Industrials stocks trailed the broad market, as categories such as railroads, trucking and industrial machinery recorded double-digit declines. Versus the MSCI benchmark, underweighting airlines and overweighting trucking weighed on the fund’s results. A non-index stake in Netherlands-based AerCap Holdings was the fund’s largest relative detractor. Investors were especially hard on the commercial aircraft and engine lessor in January, focusing on its high debt load amid concerns about the aerospace cycle and emerging-markets pain that could affect demand from those countries. I added to the position. Overweighting parcel carrier Fedex – a position I reduced considerably – also worked against us, as did a large overweighting in West, a provider of conference-call technology and other communications services. Conversely, favorable stock selection in trucking modestly outweighed the negative impact of our overweighting there. Positioning in industrial machinery, aerospace & defense and building products also lifted results. The fund’s top relative contributor, BWX Technologies, is a nuclear-submarine service contractor. This stock outperformed due to the company’s book of business having been revalued after its July spinoff from Babcock & Wilcox Enterprises. After the spinoff, I sold out of the parent company and added to BWX Technologies. The shares rewarded us with a gain of 61% this period. Within the building products group, Lennox International, a provider of residential and commercial heating and cooling systems, did well and rewarded our overweighting there. A.O. Smith, a manufacturer of residential and commercial water heaters and boilers, also was a notable 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.
Industrials Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 29, 2016
| % of fund's net assets | % of fund's net assets 6 months ago | |
| General Electric Co. | 14.0 | 12.2 |
| Danaher Corp. | 6.9 | 7.4 |
| Southwest Airlines Co. | 5.2 | 0.0 |
| Honeywell International, Inc. | 5.0 | 4.1 |
| United Technologies Corp. | 4.7 | 5.6 |
| J.B. Hunt Transport Services, Inc. | 4.7 | 5.2 |
| General Dynamics Corp. | 4.3 | 2.8 |
| AECOM | 3.8 | 3.0 |
| Raytheon Co. | 3.6 | 2.9 |
| Northrop Grumman Corp. | 2.8 | 0.0 |
| 55.0 |
Top Industries (% of fund's net assets)
| As of February 29, 2016 | ||
| Aerospace & Defense | 28.8% | |
| Industrial Conglomerates | 20.9% | |
| Machinery | 7.2% | |
| Road & Rail | 6.0% | |
| Trading Companies & Distributors | 5.3% | |
| All Others* | 31.8% | |
| As of August 31, 2015 | ||
| Aerospace & Defense | 26.7% | |
| Industrial Conglomerates | 20.6% | |
| Road & Rail | 10.1% | |
| Electrical Equipment | 6.7% | |
| Machinery | 6.3% | |
| All Others* | 29.6% | |
* Includes short-term investments and net other assets (liabilities). Percentages shown as 0.0% may reflect amounts less than 0.05%.
Industrials Portfolio
Investments February 29, 2016
Showing Percentage of Net Assets
| Common Stocks - 98.7% | |||
| Shares | Value | ||
| Aerospace & Defense - 28.8% | |||
| Aerospace & Defense - 28.8% | |||
| BWX Technologies, Inc. | 428,056 | $13,654,986 | |
| General Dynamics Corp. | 308,697 | 42,066,140 | |
| Honeywell International, Inc. | 480,359 | 48,684,385 | |
| Northrop Grumman Corp. | 142,400 | 27,372,128 | |
| Orbital ATK, Inc. | 213,161 | 17,854,365 | |
| Raytheon Co. | 285,300 | 35,334,405 | |
| Rockwell Collins, Inc. | 195,700 | 17,137,449 | |
| Teledyne Technologies, Inc. (a) | 257,421 | 21,927,121 | |
| Textron, Inc. | 348,119 | 11,888,264 | |
| United Technologies Corp. | 476,571 | 46,046,290 | |
| 281,965,533 | |||
| Air Freight & Logistics - 3.3% | |||
| Air Freight & Logistics - 3.3% | |||
| C.H. Robinson Worldwide, Inc. | 196,400 | 13,714,612 | |
| FedEx Corp. | 133,717 | 18,303,183 | |
| 32,017,795 | |||
| Airlines - 5.2% | |||
| Airlines - 5.2% | |||
| Southwest Airlines Co. | 1,206,600 | 50,616,870 | |
| Building Products - 4.8% | |||
| Building Products - 4.8% | |||
| A.O. Smith Corp. | 330,139 | 23,235,183 | |
| Fortune Brands Home & Security, Inc. | 180,200 | 9,049,644 | |
| Lennox International, Inc. | 116,172 | 15,010,584 | |
| 47,295,411 | |||
| Commercial Services & Supplies - 4.2% | |||
| Commercial Printing - 0.7% | |||
| Deluxe Corp. | 119,900 | 6,883,459 | |
| Environmental & Facility Services - 0.9% | |||
| Stericycle, Inc. (a) | 81,800 | 9,319,474 | |
| Office Services & Supplies - 2.6% | |||
| Regus PLC | 1,740,300 | 7,012,375 | |
| West Corp. | 809,205 | 18,029,087 | |
| 25,041,462 | |||
| TOTAL COMMERCIAL SERVICES & SUPPLIES | 41,244,395 | ||
| Construction & Engineering - 3.8% | |||
| Construction & Engineering - 3.8% | |||
| AECOM (a) | 1,343,300 | 36,887,018 | |
| Construction Materials - 0.5% | |||
| Construction Materials - 0.5% | |||
| Eagle Materials, Inc. | 73,300 | 4,428,786 | |
| Diversified Consumer Services - 1.4% | |||
| Specialized Consumer Services - 1.4% | |||
| ServiceMaster Global Holdings, Inc. (a) | 366,200 | 13,889,966 | |
| Electrical Equipment - 4.7% | |||
| Electrical Components & Equipment - 4.7% | |||
| AMETEK, Inc. | 416,100 | 19,311,201 | |
| Eaton Corp. PLC | 478,500 | 27,135,735 | |
| 46,446,936 | |||
| Energy Equipment & Services - 0.1% | |||
| Oil & Gas Equipment & Services - 0.1% | |||
| Aspen Aerogels, Inc. (a) | 225,598 | 823,433 | |
| Industrial Conglomerates - 20.9% | |||
| Industrial Conglomerates - 20.9% | |||
| Danaher Corp. | 759,921 | 67,838,148 | |
| General Electric Co. | 4,707,584 | 137,178,997 | |
| 205,017,145 | |||
| Machinery - 7.2% | |||
| Construction Machinery & Heavy Trucks - 1.8% | |||
| Wabtec Corp. | 248,200 | 17,522,920 | |
| Industrial Machinery - 5.4% | |||
| IDEX Corp. | 292,998 | 22,021,730 | |
| Ingersoll-Rand PLC | 345,600 | 19,201,536 | |
| Pentair PLC | 236,000 | 11,259,560 | |
| 52,482,826 | |||
| TOTAL MACHINERY | 70,005,746 | ||
| Professional Services - 2.5% | |||
| Research & Consulting Services - 2.5% | |||
| CEB, Inc. | 177,900 | 9,654,633 | |
| Verisk Analytics, Inc. (a) | 204,150 | 14,870,286 | |
| 24,524,919 | |||
| Road & Rail - 6.0% | |||
| Trucking - 6.0% | |||
| J.B. Hunt Transport Services, Inc. | 601,820 | 45,912,848 | |
| Old Dominion Freight Lines, Inc. (a) | 201,100 | 12,983,016 | |
| 58,895,864 | |||
| Trading Companies & Distributors - 5.3% | |||
| Trading Companies & Distributors - 5.3% | |||
| AerCap Holdings NV (a) | 503,200 | 17,979,336 | |
| HD Supply Holdings, Inc. (a) | 876,248 | 24,350,932 | |
| Wolseley PLC | 186,859 | 9,582,565 | |
| 51,912,833 | |||
| TOTAL COMMON STOCKS | |||
| (Cost $872,997,298) | 965,972,650 | ||
| Money Market Funds - 1.5% | |||
| Fidelity Cash Central Fund, 0.40% (b) | |||
| (Cost $14,967,781) | 14,967,781 | 14,967,781 | |
| TOTAL INVESTMENT PORTFOLIO - 100.2% | |||
| (Cost $887,965,079) | 980,940,431 | ||
| NET OTHER ASSETS (LIABILITIES) - (0.2)% | (2,390,499) | ||
| NET ASSETS - 100% | $978,549,932 |
Legend
(a) Non-income producing
(b) 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 | $24,039 |
| Fidelity Securities Lending Cash Central Fund | 26,915 |
| Total | $50,954 |
Investment Valuation
The following is a summary of the inputs used, as of February 29, 2016, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used 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 | $965,972,650 | $956,390,085 | $9,582,565 | $-- |
| Money Market Funds | 14,967,781 | 14,967,781 | -- | -- |
| Total Investments in Securities: | $980,940,431 | $971,357,866 | $9,582,565 | $-- |
See accompanying notes which are an integral part of the financial statements.
Industrials Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2016 | ||
| Assets | ||
| Investment in securities, at value — See accompanying schedule: Unaffiliated issuers (cost $872,997,298) | $965,972,650 | |
| Fidelity Central Funds (cost $14,967,781) | 14,967,781 | |
| Total Investments (cost $887,965,079) | $980,940,431 | |
| Receivable for fund shares sold | 3,300,883 | |
| Dividends receivable | 2,094,083 | |
| Distributions receivable from Fidelity Central Funds | 1,888 | |
| Prepaid expenses | 4,019 | |
| Other receivables | 30,747 | |
| Total assets | 986,372,051 | |
| Liabilities | ||
| Payable for investments purchased | $6,605,902 | |
| Payable for fund shares redeemed | 549,418 | |
| Accrued management fee | 430,740 | |
| Other affiliated payables | 166,897 | |
| Other payables and accrued expenses | 69,162 | |
| Total liabilities | 7,822,119 | |
| Net Assets | $978,549,932 | |
| Net Assets consist of: | ||
| Paid in capital | $889,291,333 | |
| Distributions in excess of net investment income | (27,494) | |
| Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (3,689,259) | |
| Net unrealized appreciation (depreciation) on investments | 92,975,352 | |
| Net Assets, for 34,828,011 shares outstanding | $978,549,932 | |
| Net Asset Value, offering price and redemption price per share ($978,549,932 ÷ 34,828,011 shares) | $28.10 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 29, 2016 | ||
| Investment Income | ||
| Dividends | $17,213,982 | |
| Income from Fidelity Central Funds | 50,954 | |
| Total income | 17,264,936 | |
| Expenses | ||
| Management fee | $6,109,327 | |
| Transfer agent fees | 1,915,487 | |
| Accounting and security lending fees | 364,953 | |
| Custodian fees and expenses | 19,717 | |
| Independent trustees' compensation | 20,669 | |
| Registration fees | 43,229 | |
| Audit | 46,270 | |
| Legal | 12,700 | |
| Interest | 1,484 | |
| Miscellaneous | 14,103 | |
| Total expenses before reductions | 8,547,939 | |
| Expense reductions | (77,778) | 8,470,161 |
| Net investment income (loss) | 8,794,775 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 55,148,819 | |
| Foreign currency transactions | 1,352 | |
| Total net realized gain (loss) | 55,150,171 | |
| Change in net unrealized appreciation (depreciation) on investment securities | (166,730,410) | |
| Net gain (loss) | (111,580,239) | |
| Net increase (decrease) in net assets resulting from operations | $(102,785,464) |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 29, 2016 | Year ended February 28, 2015 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $8,794,775 | $8,167,148 |
| Net realized gain (loss) | 55,150,171 | 133,982,514 |
| Change in net unrealized appreciation (depreciation) | (166,730,410) | (43,473,148) |
| Net increase (decrease) in net assets resulting from operations | (102,785,464) | 98,676,514 |
| Distributions to shareholders from net investment income | (7,361,744) | (7,771,302) |
| Distributions to shareholders from net realized gain | (62,174,193) | (120,155,720) |
| Total distributions | (69,535,937) | (127,927,022) |
| Share transactions | ||
| Proceeds from sales of shares | 273,540,425 | 664,803,726 |
| Reinvestment of distributions | 67,847,745 | 124,783,311 |
| Cost of shares redeemed | (333,211,627) | (834,778,865) |
| Net increase (decrease) in net assets resulting from share transactions | 8,176,543 | (45,191,828) |
| Redemption fees | 5,989 | 13,871 |
| Total increase (decrease) in net assets | (164,138,869) | (74,428,465) |
| Net Assets | ||
| Beginning of period | 1,142,688,801 | 1,217,117,266 |
| End of period (including distributions in excess of net investment income of $27,494 and undistributed net investment income of $803,228, respectively) | $978,549,932 | $1,142,688,801 |
| Other Information | ||
| Shares | ||
| Sold | 8,694,986 | 20,937,925 |
| Issued in reinvestment of distributions | 2,328,702 | 4,000,298 |
| Redeemed | (11,147,316) | (26,111,243) |
| Net increase (decrease) | (123,628) | (1,173,020) |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Industrials Portfolio
| Years ended February 28, | 2016 A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $32.69 | $33.69 | $28.04 | $24.69 | $25.24 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .24 | .22 | .23 | .28 | .19 |
| Net realized and unrealized gain (loss) | (2.90) | 2.44 | 7.36 | 3.54 | .01 |
| Total from investment operations | (2.66) | 2.66 | 7.59 | 3.82 | .20 |
| Distributions from net investment income | (.20) | (.23) | (.20) | (.26) | (.13) |
| Distributions from net realized gain | (1.73) | (3.43) | (1.74) | (.21) | (.62) |
| Total distributions | (1.93) | (3.66) | (1.94) | (.47) | (.75) |
| Redemption fees added to paid in capitalB,C | – | – | – | – | – |
| Net asset value, end of period | $28.10 | $32.69 | $33.69 | $28.04 | $24.69 |
| Total ReturnD | (8.29)% | 8.74% | 27.80% | 15.71% | .94% |
| Ratios to Average Net AssetsE,F | |||||
| Expenses before reductions | .77% | .78% | .81% | .85% | .87% |
| Expenses net of fee waivers, if any | .76% | .78% | .81% | .85% | .87% |
| Expenses net of all reductions | .76% | .78% | .81% | .84% | .86% |
| Net investment income (loss) | .79% | .68% | .74% | 1.13% | .83% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $978,550 | $1,142,689 | $1,217,117 | $873,266 | $551,144 |
| Portfolio turnover rateG | 75%H | 72%H | 58% | 75% | 102% |
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.
H Portfolio turnover rate excludes securities received or delivered in-kind.
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, 2016 | Past 1 year | Past 5 years | Past 10 years |
| Transportation Portfolio | (16.28)% | 11.02% | 8.21% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Transportation Portfolio on February 28, 2006.
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 | ||
| $22,017 | Transportation Portfolio | |
| $18,666 | S&P 500® Index | |
Transportation Portfolio
Management's Discussion of Fund Performance
Market Recap: The S&P 500® index returned -6.19% for the year ending February 29, 2016. Largely range-bound for the first half of the period, U.S. stocks suffered a steep, late-summer decline on concern about an economic slowdown in China. The market recovered in October, lifted by the U.S. Federal Reserve’s decision to delay raising near-term interest rates until mid-December. Investors also drew courage from a rate cut in China and economic stimulus in Europe. But continued oil-price weakness and U.S.-dollar strength, plus fresh worries about China and the Middle East, pushed the S&P 500® to its worst January since 2009, followed by a volatile but ultimately flattish February. Overall, growth-oriented and larger-cap stocks fared better than value and smaller-cap complements. In this environment, the tech-heavy Nasdaq Composite Index® returned -7.07% for the 12 months; the Russell 2000® Index, -14.97%. Few sectors within the broad-market S&P 500® gained ground, with a wide gap separating leaders from laggards. Despite increased competition among wireless carriers, telecommunication services (+8%) led the way, followed by the more defensive utilities sector (+6%). Rising wages and low inflation buoyed consumer staples (+4%), less so consumer discretionary (0%). Meanwhile, energy (-24%) foundered amid commodity weakness that also hurt materials (-17%). The financials sector (-12%) struggled as well.Comments from Portfolio Manager Matthew Moulis: For the year, the fund returned -16.28%, outpacing the -18.12% return of the MSCI U.S. IMI Transportation 25/50 Index. Transportation stocks lagged the broad-market S&P 500® index amid weak showings in railroads and trucking, among other subindustries. Versus the MSCI benchmark, underweighting railroads boosted fund results, as did stock selection in air freight & logistics and non-benchmark exposure to industrial machinery. The boost in the latter segment was due to our top relative contributor, Global Brass & Copper Holdings, a producer of specialized metal components. This stock strongly outperformed as management resolved some operational issues. An underweighting in index giant Union Pacific, part of the weak railroads segment, was the fund’s second-largest relative contributor. Other contributors included an out-of-benchmark position in Scorpio Tankers, a provider of shipping for refined petroleum products such as heating oil and unleaded gasoline. I sold Scorpio during the period. I’ll also mention an overweighting in Southwest Airlines, a low-cost carrier with primarily domestic exposure, a solid balance sheet and a reasonable valuation, in my opinion. Conversely, stock picking and an overweighting in trucking was the primary negative influence, with our above-index stake in Swift Transportation particularly weighing on performance. Two airlines also hampered results: not owning strong-performing index name JetBlue earlier in the period worked against us, while overweighting Spirit Airlines proved untimely, given the stock’s roughly -39% return.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, 2016
| % of fund's net assets | % of fund's net assets 6 months ago | |
| United Parcel Service, Inc. Class B | 13.2 | 15.0 |
| Union Pacific Corp. | 11.4 | 14.3 |
| Delta Air Lines, Inc. | 6.6 | 5.6 |
| United Continental Holdings, Inc. | 6.5 | 3.7 |
| Southwest Airlines Co. | 6.4 | 6.4 |
| American Airlines Group, Inc. | 5.6 | 6.2 |
| FedEx Corp. | 4.9 | 5.0 |
| CSX Corp. | 4.7 | 3.2 |
| C.H. Robinson Worldwide, Inc. | 4.2 | 2.1 |
| JetBlue Airways Corp. | 4.1 | 0.0 |
| 67.6 |
Top Industries (% of fund's net assets)
| As of February 29, 2016 | ||
| Airlines | 36.1% | |
| Road & Rail | 29.6% | |
| Air Freight & Logistics | 24.2% | |
| Machinery | 2.7% | |
| Marine | 2.0% | |
| All Others* | 5.4% | |
| As of August 31, 2015 | ||
| Road & Rail | 33.6% | |
| Airlines | 31.1% | |
| Air Freight & Logistics | 23.6% | |
| Machinery | 4.4% | |
| Oil, Gas & Consumable Fuels | 3.0% | |
| All Others* | 4.3% | |
* Includes short-term investments and net other assets (liabilities). Percentages shown as 0.0% may reflect amounts less than 0.05%.
Transportation Portfolio
Investments February 29, 2016
Showing Percentage of Net Assets
| Common Stocks - 96.8% | |||
| Shares | Value | ||
| Air Freight & Logistics - 24.2% | |||
| Air Freight & Logistics - 24.2% | |||
| Atlas Air Worldwide Holdings, Inc. (a) | 101,300 | $3,668,073 | |
| C.H. Robinson Worldwide, Inc. | 246,496 | 17,212,816 | |
| FedEx Corp. | 146,900 | 20,107,672 | |
| Park-Ohio Holdings Corp. | 132,331 | 3,890,531 | |
| United Parcel Service, Inc. Class B | 559,500 | 54,019,726 | |
| 98,898,818 | |||
| Airlines - 36.1% | |||
| Airlines - 36.1% | |||
| Alaska Air Group, Inc. | 29,800 | 2,202,220 | |
| Allegiant Travel Co. | 32,100 | 5,260,548 | |
| American Airlines Group, Inc. | 557,800 | 22,869,800 | |
| Delta Air Lines, Inc. | 555,502 | 26,797,416 | |
| Hawaiian Holdings, Inc. (a) | 99,000 | 4,258,980 | |
| JetBlue Airways Corp. (a) | 758,000 | 16,676,000 | |
| SkyWest, Inc. | 155,804 | 2,812,262 | |
| Southwest Airlines Co. | 623,800 | 26,168,410 | |
| Spirit Airlines, Inc. (a) | 290,459 | 13,869,417 | |
| United Continental Holdings, Inc. (a) | 460,036 | 26,341,661 | |
| 147,256,714 | |||
| Electrical Equipment - 0.8% | |||
| Electrical Components & Equipment - 0.8% | |||
| EnerSys | 65,200 | 3,348,672 | |
| Machinery - 2.7% | |||
| Construction Machinery & Heavy Trucks - 1.7% | |||
| Supreme Industries, Inc. Class A | 886,992 | 7,175,765 | |
| Industrial Machinery - 1.0% | |||
| Global Brass & Copper Holdings, Inc. | 178,500 | 3,934,140 | |
| TOTAL MACHINERY | 11,109,905 | ||
| Marine - 2.0% | |||
| Marine - 2.0% | |||
| Kirby Corp. (a) | 7,700 | 435,897 | |
| Matson, Inc. | 191,500 | 7,677,235 | |
| 8,113,132 | |||
| Road & Rail - 29.6% | |||
| Railroads - 20.7% | |||
| CSX Corp. | 786,219 | 18,979,327 | |
| Genesee & Wyoming, Inc. Class A (a) | 111,400 | 6,318,608 | |
| Norfolk Southern Corp. | 171,800 | 12,570,606 | |
| Union Pacific Corp. | 588,695 | 46,424,488 | |
| 84,293,029 | |||
| Trucking - 8.9% | |||
| Avis Budget Group, Inc. (a) | 209,400 | 5,369,016 | |
| Celadon Group, Inc. | 159,000 | 1,426,230 | |
| Hertz Global Holdings, Inc. (a) | 66,600 | 566,100 | |
| J.B. Hunt Transport Services, Inc. | 43,800 | 3,341,502 | |
| Landstar System, Inc. | 103,900 | 6,150,880 | |
| Old Dominion Freight Lines, Inc. (a) | 7,700 | 497,112 | |
| Roadrunner Transportation Systems, Inc. (a) | 168,400 | 1,963,544 | |
| Ryder System, Inc. | 95,400 | 5,411,088 | |
| Saia, Inc. (a) | 134,288 | 3,525,060 | |
| Swift Transporation Co. (a)(b) | 349,800 | 5,960,592 | |
| Universal Truckload Services, Inc. | 134,490 | 2,106,113 | |
| 36,317,237 | |||
| TOTAL ROAD & RAIL | 120,610,266 | ||
| Transportation Infrastructure - 1.4% | |||
| Airport Services - 1.4% | |||
| Macquarie Infrastructure Co. LLC | 30,000 | 1,831,500 | |
| Wesco Aircraft Holdings, Inc. (a) | 305,500 | 3,907,345 | |
| 5,738,845 | |||
| TOTAL COMMON STOCKS | |||
| (Cost $311,619,376) | 395,076,352 | ||
| Money Market Funds - 4.7% | |||
| Fidelity Cash Central Fund, 0.40% (c) | 12,848,246 | 12,848,246 | |
| Fidelity Securities Lending Cash Central Fund, 0.44% (c)(d) | 6,458,350 | 6,458,350 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $19,306,596) | 19,306,596 | ||
| TOTAL INVESTMENT PORTFOLIO - 101.5% | |||
| (Cost $330,925,972) | 414,382,948 | ||
| NET OTHER ASSETS (LIABILITIES) - (1.5)% | (6,212,210) | ||
| NET ASSETS - 100% | $408,170,738 |
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 | $16,749 |
| Fidelity Securities Lending Cash Central Fund | 21,388 |
| Total | $38,137 |
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.
Transportation Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2016 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $5,948,664) — See accompanying schedule: Unaffiliated issuers (cost $311,619,376) | $395,076,352 | |
| Fidelity Central Funds (cost $19,306,596) | 19,306,596 | |
| Total Investments (cost $330,925,972) | $414,382,948 | |
| Cash | 197,572 | |
| Receivable for investments sold | 685,275 | |
| Receivable for fund shares sold | 1,425,083 | |
| Dividends receivable | 1,218,950 | |
| Distributions receivable from Fidelity Central Funds | 6,418 | |
| Prepaid expenses | 1,993 | |
| Other receivables | 4,699 | |
| Total assets | 417,922,938 | |
| Liabilities | ||
| Payable for investments purchased | $2,664,599 | |
| Payable for fund shares redeemed | 327,991 | |
| Accrued management fee | 179,056 | |
| Other affiliated payables | 87,845 | |
| Other payables and accrued expenses | 34,359 | |
| Collateral on securities loaned, at value | 6,458,350 | |
| Total liabilities | 9,752,200 | |
| Net Assets | $408,170,738 | |
| Net Assets consist of: | ||
| Paid in capital | $338,980,443 | |
| Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (14,266,681) | |
| Net unrealized appreciation (depreciation) on investments | 83,456,976 | |
| Net Assets, for 5,572,506 shares outstanding | $408,170,738 | |
| Net Asset Value, offering price and redemption price per share ($408,170,738 ÷ 5,572,506 shares) | $73.25 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 29, 2016 | ||
| Investment Income | ||
| Dividends | $8,502,364 | |
| Interest | 8 | |
| Income from Fidelity Central Funds | 38,137 | |
| Total income | 8,540,509 | |
| Expenses | ||
| Management fee | $3,344,821 | |
| Transfer agent fees | 1,243,563 | |
| Accounting and security lending fees | 223,347 | |
| Custodian fees and expenses | 17,597 | |
| Independent trustees' compensation | 12,345 | |
| Registration fees | 64,360 | |
| Audit | 49,848 | |
| Legal | 9,864 | |
| Interest | 1,699 | |
| Miscellaneous | 7,448 | |
| Total expenses before reductions | 4,974,892 | |
| Expense reductions | (90,315) | 4,884,577 |
| Net investment income (loss) | 3,655,932 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 18,954,977 | |
| Foreign currency transactions | (475) | |
| Total net realized gain (loss) | 18,954,502 | |
| Change in net unrealized appreciation (depreciation) on: Investment securities | (151,446,160) | |
| Assets and liabilities in foreign currencies | (221) | |
| Total change in net unrealized appreciation (depreciation) | (151,446,381) | |
| Net gain (loss) | (132,491,879) | |
| Net increase (decrease) in net assets resulting from operations | $(128,835,947) |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 29, 2016 | Year ended February 28, 2015 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $3,655,932 | $4,091,540 |
| Net realized gain (loss) | 18,954,502 | 52,700,425 |
| Change in net unrealized appreciation (depreciation) | (151,446,381) | 100,902,601 |
| Net increase (decrease) in net assets resulting from operations | (128,835,947) | 157,694,566 |
| Distributions to shareholders from net investment income | (3,339,075) | (3,343,267) |
| Distributions to shareholders from net realized gain | (30,400,241) | (18,761,701) |
| Total distributions | (33,739,316) | (22,104,968) |
| Share transactions | ||
| Proceeds from sales of shares | 110,642,037 | 1,069,242,761 |
| Reinvestment of distributions | 32,315,777 | 21,308,776 |
| Cost of shares redeemed | (718,863,775) | (529,854,123) |
| Net increase (decrease) in net assets resulting from share transactions | (575,905,961) | 560,697,414 |
| Redemption fees | 18,511 | 109,874 |
| Total increase (decrease) in net assets | (738,462,713) | 696,396,886 |
| Net Assets | ||
| Beginning of period | 1,146,633,451 | 450,236,565 |
| End of period (including undistributed net investment income of $0 and $891,261, respectively) | $408,170,738 | $1,146,633,451 |
| Other Information | ||
| Shares | ||
| Sold | 1,313,508 | 12,116,354 |
| Issued in reinvestment of distributions | 432,669 | 244,789 |
| Redeemed | (8,366,334) | (6,070,754) |
| Net increase (decrease) | (6,620,157) | 6,290,389 |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Transportation Portfolio
| Years ended February 28, | 2016 A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $94.04 | $76.28 | $57.75 | $53.02 | $56.26 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .50 | .46 | .45 | .51 | .26 |
| Net realized and unrealized gain (loss) | (15.81) | 19.67 | 20.44 | 7.59 | (.34) |
| Total from investment operations | (15.31) | 20.13 | 20.89 | 8.10 | (.08) |
| Distributions from net investment income | (.52) | (.34) | (.27) | (.41) | (.17) |
| Distributions from net realized gain | (4.95) | (2.04) | (2.09) | (2.96) | (2.99) |
| Total distributions | (5.48)C | (2.38) | (2.36) | (3.37) | (3.16) |
| Redemption fees added to paid in capitalB | –D | .01 | –D | –D | –D |
| Net asset value, end of period | $73.25 | $94.04 | $76.28 | $57.75 | $53.02 |
| Total ReturnE | (16.28)% | 26.80% | 36.60% | 16.10% | .16% |
| Ratios to Average Net AssetsF,G | |||||
| Expenses before reductions | .81% | .81% | .85% | .89% | .88% |
| Expenses net of fee waivers, if any | .81% | .81% | .85% | .89% | .88% |
| Expenses net of all reductions | .80% | .81% | .84% | .86% | .87% |
| Net investment income (loss) | .60% | .53% | .68% | .98% | .49% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $408,171 | $1,146,633 | $450,237 | $212,956 | $212,647 |
| Portfolio turnover rateH | 80% | 72%I | 78% | 47% | 82% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C 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.
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, 2016
1. Organization.
Air Transportation Portfolio, Defense and Aerospace Portfolio, Environment and Alternative Energy Portfolio, Industrial Equipment 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.
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 Fidelity Investments Money Management, Inc. (FIMM), an affiliate of the investment adviser. Annualized expenses of the Money Market Central Funds as of their most recent shareholder report date are less than .005%.
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.
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 Fidelity SelectCo, LLC (SelectCo) Fair Value Committee (the Committee). 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. Utilizing these techniques may result in transfers between Level 1 and Level 2. 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, 2016, including information on transfers between Levels 1 and 2 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 may 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. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. Subsequent to ex-dividend date the Funds determine the components of these distributions, based upon receipt of tax filings or other correspondence relating to the underlying investment. 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 Defense and Aerospace Portfolio and Industrials Portfolio, independent Trustees may elect 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 are included in the accompanying Statement of Assets and Liabilities.
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, 2016, 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, redemptions in kind, deferred trustees compensation, capital loss carryforwards, losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows for each Fund:
| Tax cost | Gross unrealized appreciation | Gross unrealized depreciation | Net unrealized appreciation (depreciation) on securities | |
| Air Transportation Portfolio | $289,572,789 | $57,370,485 | $(18,225,851) | $39,144,634 |
| Defense and Aerospace Portfolio | 700,554,487 | 209,053,157 | (24,870,783) | 184,182,374 |
| Environment and Alternative Energy Portfolio | 77,098,611 | 3,837,036 | (7,375,558) | (3,538,522) |
| Industrial Equipment Portfolio | 149,577,459 | 16,084,134 | (6,591,383) | 9,492,751 |
| Industrials Portfolio | 891,160,115 | 134,757,045 | (44,976,729) | 89,780,316 |
| Transportation Portfolio | 336,437,336 | 96,789,346 | (18,843,734) | 77,945,612 |
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 | |
| Air Transportation Portfolio | $– | $– | $– | $39,144,660 |
| Defense and Aerospace Portfolio | 2,033,973 | 4,505,512 | – | 184,181,285 |
| Environment and Alternative Energy Portfolio | 155,557 | – | (617,229) | (3,540,062) |
| Industrial Equipment Portfolio | – | – | – | 9,489,733 |
| Industrials Portfolio | – | – | – | 89,780,316 |
| Transportation Portfolio | – | – | – | 77,945,612 |
Capital loss carryforwards are only available to offset future capital gains of the Funds to the extent provided by regulations and may be limited. Under the Regulated Investment Company Modernization Act of 2010 (the Act), the Funds are permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period and such capital losses are required to be used prior to any losses that expire. 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 | Total capital loss carryfoward | |
| Environment and Alternative Energy Portfolio | (617,229) | (617,229) |
Certain of the Funds intend to elect to defer to the next fiscal year capital losses recognized during the period November 1, 2015 to February 29, 2016. Loss deferrals were as follows:
| Capital losses | |
| Air Transportation Portfolio | $(7,750,932) |
| Industrial Equipment Portfolio | (823,033) |
| Industrials Portfolio | (494,223) |
| Transportation Portfolio | (8,755,317) |
The tax character of distributions paid was as follows:
| February 29, 2016 | |||
| Ordinary Income | Long-term Capital Gains | Total | |
| Air Transportation Portfolio | $4,357,629 | $28,815,510 | $33,173,139 |
| Defense and Aerospace Portfolio | 7,997,911 | 49,261,334 | 57,259,245 |
| Environment and Alternative Energy Portfolio | 533,726 | 1,831,107 | 2,364,833 |
| Industrial Equipment Portfolio | 940,848 | 10,329,487 | 11,270,335 |
| Industrials Portfolio | 7,361,744 | 62,174,193 | 69,535,937 |
| Transportation Portfolio | 3,339,075 | 30,400,241 | 33,739,316 |
| February 28, 2015 | |||
| Ordinary Income | Long-term Capital Gains | Total | |
| Air Transportation Portfolio | $2,942,928 | $6,447,088 | $9,390,016 |
| Defense and Aerospace Portfolio | 6,773,084 | 49,828,078 | 56,601,162 |
| Environment and Alternative Energy Portfolio | 677,983 | 10,557,304 | 11,235,287 |
| Industrial Equipment Portfolio | 11,351,784 | 48,868,809 | 60,220,593 |
| Industrials Portfolio | 14,000,612 | 113,926,410 | 127,927,022 |
| Transportation Portfolio | 9,020,631 | 13,084,337 | 22,104,968 |
Trading (Redemption) Fees. Shares held by investors in the Funds less than 30 days may be subject to a redemption fee equal to .75% of the NAV of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Funds and accounted for as an addition to paid in capital.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities and in-kind transactions, are noted in the table below.
| Purchases ($) | Sales ($) | |
| Air Transportation Portfolio | 415,236,532 | 742,057,114 |
| Defense and Aerospace Portfolio | 570,233,357 | 467,330,611 |
| Environment and Alternative Energy Portfolio | 15,186,772 | 19,386,485 |
| Industrial Equipment Portfolio | 150,329,482 | 118,796,970 |
| Industrials Portfolio | 820,574,870 | 973,074,580 |
| Transportation Portfolio | 487,412,096 | 1,091,308,042 |
Redemptions In-Kind. During the period, 2,554,993 shares of the Industrial Equipment Portfolio held by an unaffiliated entity were redeemed for cash and investments with a value of $96,042,190. The net realized gain of $25,749,250 on investments delivered through in-kind redemptions is included in the accompanying Statement of Operations. The amount of in-kind redemptions is included in share transactions in the accompanying Statement of Changes in Net Assets. The Industrial Equipment Portfolio recognized no gain or loss for federal income tax purposes.
Exchanges In-Kind. Cash and investments received in-kind through subscriptions totaled $96,022,017 in exchange for 2,963,642 shares of the Industrials Portfolio. The amount of in-kind exchanges is included in share transactions in the accompanying Statement of Changes in Net Assets. The Industrials Portfolio recognized no gain or loss for federal income tax purposes.
5. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity SelectCo, 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 average net assets of all the mutual funds advised by Fidelity Management & Research Company (FMR) and the investment adviser. 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% | .25% | .55% |
| Defense and Aerospace Portfolio | .30% | .25% | .55% |
| Environment and Alternative Energy Portfolio | .30% | .25% | .55% |
| Industrial Equipment Portfolio | .30% | .25% | .55% |
| Industrials Portfolio | .30% | .25% | .55% |
| Transportation Portfolio | .30% | .25% | .55% |
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (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 | .20% |
| Environment and Alternative Energy Portfolio | .27% |
| Industrial Equipment Portfolio | .19% |
| Industrials Portfolio | .17% |
| Transportation 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. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. Certain Funds placed a portion of their portfolio transactions 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 | $15,328 |
| Defense and Aerospace Portfolio | 6,845 |
| Environment and Alternative Energy Portfolio | 258 |
| Industrial Equipment Portfolio | 3,874 |
| Industrials Portfolio | 13,807 |
| Transportation Portfolio | 26,984 |
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Funds, along with other registered investment companies having management contracts with FMR or other affiliated entities of FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. Each applicable fund's 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 | |
| Air Transportation Portfolio | Borrower | $6,446,000 | .36% | $191 |
| Defense and Aerospace Portfolio | Borrower | 9,791,000 | .35% | 1,346 |
| Industrials Portfolio | Borrower | 3,753,950 | .57% | 1,184 |
| Transportation Portfolio | Borrower | 9,664,944 | .35% | 1,699 |
Interfund Trades. The 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 Air Transportation Portfolio for certain losses in the amount of $7,369.
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:
| Air Transportation Portfolio | $733 |
| Defense and Aerospace Portfolio | 1,279 |
| Environment and Alternative Energy Portfolio | 119 |
| Industrial Equipment Portfolio | 250 |
| Industrials Portfolio | 1,636 |
| Transportation Portfolio | 1,120 |
During the period, the Funds did not borrow on this line of credit.
7. Security Lending.
Certain Funds lend portfolio securities through a lending agent from time to time in order to earn additional income. 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. Security lending activity was as follows:
| Total Security Lending Income | |
| Air Transportation Portfolio | $16,086 |
| Defense and Aerospace Portfolio | 18,583 |
| Environment and Alternative Energy Portfolio | 18,273 |
| Industrial Equipment Portfolio | 18,826 |
| Industrials Portfolio | 26,915 |
| Transportation Portfolio | 21,388 |
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. At period end, there were no bank borrowings outstanding. Each applicable Fund's activity in this program during the period for which loans were outstanding was as follows:
| Average Loan Balance | Weighted Average Interest Rate | Interest Expense | |
| Industrials Portfolio | $3,098,750 | .87% | $300 |
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, 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 reduction | Custody expense reduction | |
| Air Transportation Portfolio | $25,111 | $17 |
| Defense and Aerospace Portfolio | 23,271 | – |
| Environment and Alternative Energy Portfolio | 594 | 2 |
| Industrial Equipment Portfolio | 6,098 | – |
| Industrials Portfolio | 43,057 | – |
| Transportation Portfolio | 72,032 | 93 |
In addition, during the period the investment adviser reimbursed and/or waived a portion of operating expenses as follows:
| Amount | |
| Air Transportation Portfolio | $11,602 |
| Defense and Aerospace Portfolio | 26,642 |
| Environment and Alternative Energy Portfolio | 2,370 |
| Industrial Equipment Portfolio | 9,130 |
| Industrials Portfolio | 34,721 |
| Transportation Portfolio | 18,190 |
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.
At the end of the period, the following mutual funds managed by the investment adviser or its affiliates were the owners of record of 10% or more of the total outstanding shares of the following funds:
| VIP FundsManager 50% Portfolio | VIP FundsManager 60% Portfolio | Strategic Advisers Core Fund | |
| Industrial Equipment Portfolio | 22% | 29% | – |
| Industrials Portfolio | – | 14% | 24% |
Mutual funds managed by the investment adviser or its affiliates, in aggregate, were the owners of record of more than 20% of the total outstanding shares of the following funds:
| % of shares held | |
| Industrial Equipment Portfolio | 59% |
| Industrials Portfolio | 51% |
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Select Portfolios and the Shareholders of Air Transportation Portfolio, Defense and Aerospace Portfolio, Environment and Alternative Energy Portfolio, Industrial Equipment Portfolio, Industrials Portfolio and Transportation Portfolio:
In our opinion, the accompanying statements of assets and liabilities, including the schedules of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Air Transportation Portfolio, Defense and Aerospace Portfolio, Environment and Alternative Energy Portfolio, Industrial Equipment Portfolio, Industrials Portfolio and Transportation Portfolio (each a fund of Fidelity Select Portfolios) (the "Funds") at February 29, 2016, 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 then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Funds' management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at February 29, 2016 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 19, 2016
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. Each of the Trustees oversees 75 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. Brian B. Hogan 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. Michael E. Wiley 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 sector portfolios. Other Boards oversee Fidelity's equity and high income funds, and Fidelity's investment grade bond, money market, and asset allocation funds. 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 SelectCo 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 SelectCo, 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 and Audit Committees. Appropriate personnel, including but not limited to the funds' Chief Compliance Officer (CCO), SelectCo's internal auditor, the independent accountants, the funds' Treasurer and portfolio management personnel, make periodic reports to the Board's committees, as appropriate. 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+
Brian B. Hogan (1964)
Year of Election or Appointment: 2014
Trustee
Chairman of the Board of Trustees
Mr. Hogan also serves as Trustee or Vice President of other funds. Mr. Hogan serves as a Director of FMR Investment Management (U.K.) Limited (investment adviser firm, 2015-present) and Fidelity SelectCo, LLC (investment adviser firm, 2014-present) and President of the Equity Division of FMR (investment adviser firm, 2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager.
* 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 SelectCo.
+ 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+
David A. Rosow (1942)
Year of Election or Appointment: 2013
Trustee
Mr. Rosow also serves as Trustee of other Fidelity® funds. Prior to his retirement in 2006, Mr. Rosow was the Chief Executive Officer, owner and operator of a number of private companies, which encompassed oil refining, drilling and marketing of petroleum products (including specialty petroleum products), the recreation industry, and real estate development. Mr. Rosow currently serves as a Director of Oxbow Carbon LLC (upgraders, marketers, and distributors of petroleum byproducts of the oil refining process, 2015-present) and Oxbridge Academy of the Palm Beaches (2015-present). Previously, Mr. Rosow served on the Fairfield Country Day School Board for 27 years, including as its President for 3 years, stepping down in 2006, as Lead Director and Chairman of the Audit Committee of Hudson United Bancorp (1996-2006), Chairman of the Board of Westport Bank and Trust (1992-1996), and as a Director of TD Banknorth (2006-2007). In addition, Mr. Rosow served as a member (2008-2014) and President (2009-2014) of the Town Council of Palm Beach, Florida. Mr. Rosow also served as a Member of the Advisory Board of other Fidelity® funds (2012-2013).
Garnett A. Smith (1947)
Year of Election or Appointment: 2013
Trustee
Mr. Smith also serves as Trustee of other Fidelity® funds. Prior to Mr. Smith's retirement, he served as Chairman and Chief Executive Officer of Inbrand Corp. (manufacturer of personal absorbent products, 1990-1997). He also served as President (1986-1990) of Inbrand Corp. Prior to his employment with Inbrand Corp., he was employed by a retail fabric chain and North Carolina National Bank. In addition, Mr. Smith served as a Member of the Advisory Board of other Fidelity® funds (2012-2013) and as a board member of the Jackson Hole Land Trust (2009-2012).
Michael E. Wiley (1950)
Year of Election or Appointment: 2008
Trustee
Chairman of the Independent Trustees
Mr. Wiley also serves as Trustee of other Fidelity® funds. Mr. Wiley serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), a Director of Tesoro Logistics LP (natural resources logistics, 2015-present), and a Director of Bill Barrett Corporation (exploration and production, 2005-present). In addition, Mr. Wiley also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a Trustee of other Fidelity® funds (2008-2013), as a Director of Asia Pacific Exploration Consolidated (international oil and gas exploration and production, 2008-2013), as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-2010), as a Senior Energy Advisor of Katzenbach Partners, LLC (consulting, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production, 2001-2005).
+ 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:
Except for Anthony R. Rochte, correspondence intended for an officer may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210. Correspondence intended for Mr. Rochte may be sent to SelectCo, 1225 17th Street, Denver, Colorado 80202-5541. Officers appear below in alphabetical order.
Name, Year of Birth; Principal Occupation
Donald F. Donahue (1950)
Year of Election or Appointment: 2015
Member of the Advisory Board
Mr. Donahue also serves as a Member of the Advisory Board of other Fidelity® funds. Mr. Donahue is President and Chief Executive Officer of Miranda Partners, LLC (risk consulting for the financial services industry, 2012-present) and a consultant for the Institute for Defense Analyses (national security, 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 serves as a Member and Treasurer of the Board of Directors of United Way of New York (2012-present), Member of the Board of Directors of NYC Leadership Academy (2012-present) and Physicians for Human Rights (2013-present), and Member of the Board of Advisors of Ripple Labs, Inc. (financial services, 2015-present). He also served as Chairman (2010-2012) and Member of the Board of Directors (2012-2013) of Omgeo, LLC (financial services) and Member of the Board of Directors of XBRL US (financial services non-profit, 2009-2012) and the International Securities Services Association (2009-2012).
Christopher S. Bartel (1971)
Year of Election or Appointment: 2009
Vice President
Mr. Bartel also serves as Vice President of other funds. Mr. Bartel serves as a Director of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2016-present) and Fidelity Management & Research (Hong Kong) (investment adviser firm, 2012-present) and Head of Global Equity Research (2010-present). Previously, Mr. Bartel served as a Director, President, and Chief Executive Officer of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2012-2016), Senior Vice President of Equity Research (2009-2010), Managing Director of Research (2006-2009), and an analyst and portfolio manager (2000-2006).
Marc R. Bryant (1966)
Year of Election or Appointment: 2013
Secretary and Chief Legal Officer (CLO)
Mr. Bryant also serves as Secretary and CLO of other funds. Mr. Bryant serves as CLO, Secretary, and Senior Vice President of Fidelity Management & Research Company (investment adviser firm, 2015-present) and FMR Co., Inc. (investment adviser firm, 2015-present); Secretary of Fidelity SelectCo, LLC (investment adviser firm, 2015-present) and Fidelity Investments Money Management, Inc. (investment adviser firm, 2015-present); and CLO of Fidelity Management & Research (Hong Kong) Limited and FMR Investment Management (U.K.) Limited (investment adviser firms, 2015-present) and Fidelity Management & Research (Japan) Limited (investment adviser firm, 2016-present). He is Senior Vice President and Deputy General Counsel of FMR LLC (diversified financial services company). Previously, Mr. Bryant served as Secretary and CLO of Fidelity Rutland Square Trust II (2010-2014) and Assistant Secretary of Fidelity's Fixed Income and Asset Allocation Funds (2013-2015). Prior to joining Fidelity Investments, Mr. Bryant served as a Senior Vice President and the Head of Global Retail Legal for AllianceBernstein L.P. (2006-2010), and as the General Counsel for ProFund Advisors LLC (2001-2006).
William C. Coffey (1969)
Year of Election or Appointment: 2009
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 Vice President and Associate General Counsel of FMR LLC (2005-2009).
Jonathan Davis (1968)
Year of Election or Appointment: 2010
Assistant Treasurer
Mr. Davis also serves as Assistant Treasurer of other funds, 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).
Adrien E. Deberghes (1967)
Year of Election or Appointment: 2013
President and Treasurer
Mr. Deberghes also serves as an officer of other funds. He is an employee of Fidelity Investments (2008-present). Prior to joining Fidelity Investments, Mr. Deberghes was Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005). Previously, Mr. Deberghes served in other fund officer roles.
Joseph DeSantis (1959)
Year of Election or Appointment: 2015
Vice President
Mr. DeSantis also serves as Vice President of other funds. Mr. DeSantis serves as Group Chief Investment Officer, Equities (2010-present) and is an employee of Fidelity Investments.
Stephanie J. Dorsey (1969)
Year of Election or Appointment: 2010
Assistant Treasurer
Ms. Dorsey also serves as an officer of other funds. She is an employee of Fidelity Investments (2008-present) and has served in other fund officer roles. Prior to joining Fidelity Investments, Ms. Dorsey served as Treasurer (2004-2008) of the JPMorgan Mutual Funds and Vice President (2004-2008) of JPMorgan Chase Bank.
Howard J. Galligan III (1966)
Year of Election or Appointment: 2014
Chief Financial Officer
Mr. Galligan also serves as Chief Financial Officer of other funds. Mr. Galligan serves as President of Fidelity Pricing and Cash Management Services (FPCMS) (2014-present) and as a Director of Strategic Advisers, Inc. (investment adviser firm, 2008-present). Previously, Mr. Galligan served as Chief Administrative Officer of Asset Management (2011-2014) and Chief Operating Officer and Senior Vice President of Investment Support for Strategic Advisers, Inc. (2003-2011).
Scott C. Goebel (1968)
Year of Election or Appointment: 2015
Vice President
Mr. Goebel serves as Vice President of other funds and is an employee of Fidelity Investments (2001-present). Previously, Mr. Goebel served as Secretary of Fidelity SelectCo, LLC (investment adviser firm, 2013-2015), Fidelity Investments Money Management, Inc. (FIMM) (investment adviser firm, 2010-2015), and Fidelity Research and Analysis Company (FRAC) (investment adviser firm, 2010-2015); General Counsel, Secretary, and Senior Vice President of Fidelity Management & Research Company (investment adviser firm, 2008-2015) and FMR Co., Inc. (investment adviser firm, 2008-2015); Assistant Secretary of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2008-2015) and Fidelity Management & Research (U.K.) Inc. (investment adviser firm, 2008-2015); Chief Legal Officer (CLO) of Fidelity Management & Research (Hong Kong) Limited (investment adviser firm, 2008-2015); Secretary and CLO of certain Fidelity® funds (2008-2015); Assistant Secretary of FIMM (2008-2010), FRAC (2008-2010), and certain funds (2007-2008); and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007).
James D. Gryglewicz (1972)
Year of Election or Appointment: 2014
Chief Compliance Officer
Mr. Gryglewicz also serves as Chief Compliance Officer of other funds. Mr. Gryglewicz serves as Compliance Officer of Strategic Advisers, Inc. (investment adviser firm, 2015-present) and Fidelity SelectCo, LLC (investment adviser firm, 2014-present), Senior Vice President of Asset Management Compliance (2009-present), and is an employee of Fidelity Investments (2004-present).
Brian B. Hogan (1964)
Year of Election or Appointment: 2009
Vice President
Mr. Hogan also serves as Trustee or Vice President of other funds. Mr. Hogan serves as a Director of FMR Investment Management (U.K.) Limited (investment adviser firm, 2015-present) and Fidelity SelectCo, LLC (investment adviser firm, 2014-present) and President of the Equity Division of FMR (investment adviser firm, 2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager.
Chris Maher (1972)
Year of Election or Appointment: 2013
Assistant Treasurer
Mr. Maher serves as Assistant Treasurer of other funds. Mr. Maher is Vice President of Valuation Oversight and is an employee of Fidelity Investments. Previously, Mr. Maher served as 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).
John F. Papandrea (1972)
Year of Election or Appointment: 2016
Anti-Money Laundering (AML) Officer
Mr. Papandrea also serves as AML Officer of other funds. Mr. Papandrea is Vice President of FMR LLC (diversified financial services company, 2008-present) and is an employee of Fidelity Investments (2005-present).
Kenneth B. Robins (1969)
Year of Election or Appointment: 2013
Deputy Treasurer
Mr. Robins also serves as an officer of other funds. Mr. Robins serves as Executive Vice President of Fidelity Investments Money Management, Inc. (FIMM) (investment adviser firm, 2013-present) and is an employee of Fidelity Investments (2004-present). Previously, Mr. Robins served in other fund officer roles.
Anthony R. Rochte (1968)
Year of Election or Appointment: 2013
Vice President
Mr. Rochte also serves as Vice President of other funds. Mr. Rochte serves as President of Fidelity SelectCo, LLC (investment adviser firm, 2012-present) and is an employee of Fidelity Investments (2012-present). Prior to joining Fidelity Investments, Mr. Rochte served as Senior Managing Director and head of State Street Global Advisors' North American Intermediary Business Group (2006-2012).
Stacie M. Smith (1974)
Year of Election or Appointment: 2013
Assistant Treasurer
Ms. Smith also serves as an officer of other funds. She 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 (1996-2009). Previously, Ms. Smith served as Deputy Treasurer of certain Fidelity funds (2013-2016).
Renee Stagnone (1975)
Year of Election or Appointment: 2013
Deputy Treasurer
Ms. Stagnone also serves as an officer of other funds. Ms. Stagnone is an employee of Fidelity Investments (1997-present). Previously, Ms. Stagnone served as Deputy Treasurer of certain Fidelity funds (2013-2016).
Joseph F. Zambello (1957)
Year of Election or Appointment: 2011
Deputy Treasurer
Mr. Zambello also serves as Deputy Treasurer of other funds. Mr. Zambello is an employee of Fidelity Investments (1991-present). Previously, Mr. Zambello served as Deputy Treasurer of certain Fidelity funds (2011-2016), Vice President of the Program Management Group of FMR (investment adviser firm, 2009-2011), and Vice President of the Transfer Agent Oversight Group (2005-2009).
Shareholder Expense Example
As a shareholder of a Fund, you incur two types of costs: (1) transaction costs, including redemption fees 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, 2015 to February 29, 2016).
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. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. 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. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. 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, 2015 | Ending Account Value February 29, 2016 | Expenses Paid During Period-B September 1, 2015 to February 29, 2016 | |
| Air Transportation Portfolio | .84% | |||
| Actual | $1,000.00 | $992.30 | $4.16 | |
| Hypothetical-C | $1,000.00 | $1,020.69 | $4.22 | |
| Defense and Aerospace Portfolio | .79% | |||
| Actual | $1,000.00 | $999.30 | $3.93 | |
| Hypothetical-C | $1,000.00 | $1,020.93 | $3.97 | |
| Environment and Alternative Energy Portfolio | .94% | |||
| Actual | $1,000.00 | $981.30 | $4.63 | |
| Hypothetical-C | $1,000.00 | $1,020.19 | $4.72 | |
| Industrial Equipment Portfolio | .84% | |||
| Actual | $1,000.00 | $1,045.80 | $4.27 | |
| Hypothetical-C | $1,000.00 | $1,020.69 | $4.22 | |
| Industrials Portfolio | .76% | |||
| Actual | $1,000.00 | $1,016.00 | $3.81 | |
| Hypothetical-C | $1,000.00 | $1,021.08 | $3.82 | |
| Transportation Portfolio | .82% | |||
| Actual | $1,000.00 | $970.00 | $4.02 | |
| Hypothetical-C | $1,000.00 | $1,020.79 | $4.12 |
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 | 04/18/16 | 04/15/16 | $0.000 | $0.000 |
| Defense and Aerospace Portfolio | 04/18/16 | 04/15/16 | $0.250 | $0.555 |
| Environment and Alternative Energy Portfolio | 04/18/16 | 04/15/16 | $0.039 | $0.000 |
| Industrial Equipment Portfolio | 04/18/16 | 04/15/16 | $0.000 | $0.000 |
| Industrials Portfolio | 04/18/16 | 04/15/16 | $0.000 | $0.000 |
| Transportation Portfolio | 04/18/16 | 04/15/16 | $0.000 | $0.000 |
The funds hereby designate as capital gain dividend the amounts noted below for the taxable year ended February 29, 2016, or, if subsequently determined to be different, the net capital gain of such year.
| Air Transportation Portfolio | $28,924,910 |
| Defense and Aerospace Portfolio | $23,383,294 |
| Industrial Equipment Portfolio | $2,659,077 |
| Industrials Portfolio | $56,594,582 |
| Transportation Portfolio | $28,614,228 |
A percentage of the dividends distributed during the fiscal year for the following funds qualify for the dividends–received deduction for corporate shareholders:
| April 2015 | December 2015 | |
| Air Transportation Portfolio | 57% | 100% |
| Defense and Aerospace Portfolio | 100% | 100% |
| Environment and Alternative Energy Portfolio | 100% | 100% |
| Industrial Equipment Portfolio | 100% | 100% |
| Industrials Portfolio | 100% | 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 2015 | December 2015 | |
| Air Transportation Portfolio | 70% | 100% |
| Defense and Aerospace Portfolio | 100% | 100% |
| Environment and Alternative Energy Portfolio | 100% | 100% |
| Industrial Equipment Portfolio | 100% | 100% |
| Industrials Portfolio | 100% | 100% |
| Transportation Portfolio | 100% | 100% |
The funds will notify shareholders in January 2017 of amounts for use in preparing 2016 income tax returns.
Board Approval of Investment Advisory Contracts and Management Fees
Air Transportation Portfolio
Defense and Aerospace Portfolio
Environment and Alternative Energy Portfolio
Industrial Equipment Portfolio
Industrials Portfolio
Transportation Portfolio
Each year, the Board of Trustees, including the Independent Trustees (together, the Board), votes on the renewal of the management contract with Fidelity SelectCo, LLC (SelectCo), an affiliate of Fidelity Management & Research Company (FMR), and the sub-advisory agreements with affiliates of FMR (together, the Advisory Contracts) for each fund. 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.
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 each fund's Advisory Contracts, including the services and support provided to each fund and its shareholders. The Board has established four standing committees (Committees) — Operations, Audit, Fair Valuation, and Governance and Nominating — 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 Operations Committee, of which all of the Independent Trustees are members, meets regularly throughout the year and considers, among other matters, information specifically related to the annual consideration of the renewal of each fund's Advisory Contracts. The Board, acting directly and through its Committees, requests and receives information concerning the annual consideration of the renewal of each fund's Advisory Contracts. The Board also meets as needed to consider 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 ad hoc joint committees to discuss certain matters relevant to all of the Fidelity funds.
At its January 2016 meeting, the Board unanimously determined to renew each 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 to be provided to each fund and its shareholders (including the investment performance of each fund); (ii) the competitiveness of each fund's management fee and total expense ratio relative to peer funds; (iii) the total costs of the services to be provided by and the profits to be realized by Fidelity from its relationships with each fund; and (iv) the extent to which, if any, economies of scale exist and would be realized as each fund grows, and whether any economies of scale are appropriately shared with fund shareholders.
In considering whether to renew the Advisory Contracts for each 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 each 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 each fund have a broad range of investment choices available to them, including a wide choice among funds offered by Fidelity's competitors, and that each 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 that fund, which is part of the Fidelity family of funds.
Nature, Extent, and Quality of Services Provided. The Board considered the staffing of SelectCo and the sub-advisers (together with SelectCo, the Investment Advisers) as it relates to the funds, including the backgrounds of investment personnel of SelectCo, and also considered the funds' investment objectives, strategies, and related investment philosophies. 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 each 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 reviewed the general qualifications and capabilities of the investment staff of the Investment Advisers, including their 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 each 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, each 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 or convenience of the Fidelity funds as investment vehicles. These services include 24-hour access to account information and market information through telephone representatives and over the Internet, investor education materials and asset allocation tools, and the expanded availability of Fidelity Investor Centers.The Board noted that in 2014 the ad hoc Committee on Transfer Agency Fees was formed by it and the boards of certain other Fidelity funds to review the variety of transfer agency services and fee structures throughout the mutual fund industry compared to Fidelity's.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 investment research 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 making other enhancements to meet client needs; (iv) reducing management fees and total expenses for certain index funds; (v) continuing to launch dedicated lower cost underlying funds to meet portfolio construction needs related to expanding underlying fund options for Fidelity funds of funds, specifically for the Freedom Fund product lines; (vi) rationalizing product lines and gaining increased efficiencies through fund mergers; (vii) continuing to develop, acquire and implement systems and technology to improve services to the funds and shareholders, strengthen information security, and increase efficiency; (viii) implementing investment enhancements to further strengthen Fidelity's target date product line to increase investors' probability of success in achieving their goals; (ix) modifying the eligibility criteria for certain share classes to accommodate roll-over assets from employer-sponsored retirement plans; (x) launching a new Class W of the Freedom Index Funds to attract and retain Fidelity record-kept retirement plan assets; and (xi) implementing changes to Fidelity's money market fund product line in response to recent regulatory reforms.Investment Performance. The Board considered whether each 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 with representatives of the Investment Advisers about fund investment performance that occur at Board meetings throughout the year. 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 each fund, for different time periods, measured against a securities market index ("benchmark index"). In its evaluation of fund investment performance at meetings throughout the year, the Board gave particular attention to information indicating underperformance of certain Fidelity funds for specific time periods and discussed with the Investment Advisers the reasons for such underperformance. Each of Defense and Aerospace Portfolio, Environment and Alternative Energy Portfolio, Industrials Portfolio, Industrial Equipment Portfolio, and Transportation Portfolio underperformed its benchmark for the one-, three-, and five-year periods ended June 30, 2015, and as a result, the Board will continue to discuss with SelectCo the steps it has taken and is taking to address each such fund's performance.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. Depending on the circumstances, the Independent Trustees may be satisfied with a fund's performance notwithstanding that it lags its benchmark index for certain periods.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 each fund and an appropriate benchmark index for the most recent one-, three-, and five-year periods ended June 30, 2015.Based on its review, the Board concluded that the nature, extent, and quality of services provided to each fund under the Advisory Contracts should benefit the shareholders of each fund.Competitiveness of Management Fee and Total Expense Ratio. The Board considered each fund's management fee and total expense ratio compared to "mapped groups" of competitive funds and classes created for the purpose of facilitating the Trustees' analysis of the competitiveness of management fees and total expenses. Fidelity creates "mapped groups" by combining similar Lipper investment objective categories that have comparable investment mandates. For this purpose, all sector focused equity funds are grouped in the same mapped group. Combining Lipper investment objective categories aids the Board's management fee and total expense ratio comparisons by broadening the competitive group used for comparison.Management Fee. The Board considered two proprietary management fee comparisons for the 12-month periods ended June 30 shown in basis points (BP) in the charts below. The group of Lipper funds used by the Board for management fee comparisons is referred to below as the "Total Mapped Group." The Total Mapped Group comparison focuses on a fund's standing in terms of gross management fees before expense reimbursements or caps relative to the total universe of funds with comparable investment mandates (i.e., sector equities), regardless of whether their management fee structures also are comparable. Funds with comparable management fee structures have similar management fee contractual arrangements (e.g., flat rate charged for advisory services, all-inclusive fee rate, etc.). "TMG %" represents the percentage of funds in the Total Mapped Group that had management fees that were lower than a fund's. For example, a hypothetical TMG % of 20% would mean that 80% of the funds in the Total Mapped Group had higher, and 20% had lower, management fees than a fund. The funds' actual TMG %s and the number of funds in the Total Mapped Group are in the charts below. The "Asset-Size Peer Group" (ASPG) comparison focuses on a fund's standing relative to a subset of non-Fidelity funds within the Total Mapped Group that are similar in size and management fee structure. For example, if a fund is in the first quartile of the ASPG, the fund's management fee ranks in the least expensive or lowest 25% of funds in the ASPG. The ASPG represents at least 15% of the funds in the Total Mapped Group with comparable asset size and management fee structures, subject to a minimum of 50 funds (or all funds in the Total Mapped Group if fewer than 50). Additional information, such as the ASPG quartile in which a fund's management fee rate ranked, is also included in the charts and considered by the Board.Air Transportation Portfolio
Defense and Aerospace Portfolio
Environment and Alternative Energy Portfolio
Industrial Equipment Portfolio
Industrials Portfolio
Transportation Portfolio
SELCI-ANN-0416
1.813657.111
Fidelity Advisor Focus Funds® Fidelity Advisor® Consumer Staples Fund Fidelity Advisor® Gold Fund Fidelity Advisor® Materials Fund Fidelity Advisor® Telecommunications Fund Annual Report February 29, 2016 Each Advisor fund listed above is a class of the Fidelity® Select Portfolios® |
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Contents
Fidelity Advisor® Consumer Staples Fund | |
Fidelity Advisor® Gold Fund | |
Fidelity Advisor® Materials Fund | |
Fidelity Advisor® Telecommunications Fund | |
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 1-877-208-0098 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. © 2016 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-Q. Forms N-Q are available on the SEC’s web site at http://www.sec.gov. A fund's Forms N-Q 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.advisor.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.
Fidelity Advisor® Consumer Staples Fund
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, 2016 | Past 1 year | Past 5 years | Past 10 years |
| Class I | (3.26)% | 12.23% | 10.52% |
The initial offering of Class I shares took place on December 12, 2006. Returns prior to December 12, 2006 are those of Consumer Staples Portfolio, the original class of the fund.
Prior to October 1, 2006, the fund was named Food and Agriculture 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 Fidelity Advisor® Consumer Staples Fund - Class I on February 28, 2006.
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.
See above for additional information regarding the performance of Class I.
| Period Ending Values | ||
| $27,190 | Fidelity Advisor® Consumer Staples Fund - Class I | |
| $18,666 | S&P 500® Index | |
Fidelity Advisor® Consumer Staples Fund
Management's Discussion of Fund Performance
Market Recap: The S&P 500® index returned -6.19% for the year ending February 29, 2016. Largely range-bound for the first half of the period, U.S. stocks suffered a steep, late-summer decline on concern about an economic slowdown in China. The market recovered in October, lifted by the U.S. Federal Reserve's decision to delay raising near-term interest rates until mid-December. Investors also drew courage from a rate cut in China and economic stimulus in Europe. But continued oil-price weakness and U.S.-dollar strength, plus fresh worries about China and the Middle East, pushed the S&P 500® to its worst January since 2009, followed by a volatile but ultimately flattish February. Overall, growth-oriented and larger-cap stocks fared better than value and smaller-cap complements. In this environment, the tech-heavy Nasdaq Composite Index® returned -7.07% for the 12 months; the Russell 2000® Index, -14.97%. Few sectors within the broad-market S&P 500® gained ground, with a wide gap separating leaders from laggards. Despite increased competition among wireless carriers, telecommunication services (+8%) led the way, followed by the more defensive utilities sector (+6%). Rising wages and low inflation buoyed consumer staples (+4%), less so consumer discretionary (0%). Meanwhile, energy (-24%) foundered amid commodity weakness that also hurt materials (-17%). The financials sector (-12%) struggled as well.Comments from Portfolio Manager Robert Lee: For the year, the fund’s share classes (excluding sales charges, if applicable) posted in the range of -3.25% to -4.25%, underperforming the 3.43% gain of the MSCI U.S. IMI Consumer Staples 25/50 Index but outpacing the broader market, as investors were attracted to the relative earnings stability of companies in the sector. The fund's underperformance versus the sector benchmark largely was driven by unsuccessful stock selection within the packaged foods & meats, as well as the tobacco industries. Here, our large, overweighted position in Mead Johnson Nutrition was the biggest individual detractor. Avoiding Kraft Foods also hurt, especially after the company announced in March it would merge with competitor H.J. Heinz. Picks among tobacco stocks were another sore spot. This included a non-index stake in U.K.-based British American Tobacco, one of the fund's biggest positions, which was adversely affected by currency fluctuations. Conversely, stock choices among food retail names contributed to the fund's relative results. We liquidated the fund's position in organic-groceries chain Whole Foods early in the period, which proved favorable when the stock subsequently declined on concern that growing competition in the natural/organic food retailing space would siphon away the chain's customers.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 Staples Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 29, 2016
| % of fund's net assets | % of fund's net assets 6 months ago | |
| Procter & Gamble Co. | 13.5 | 9.7 |
| British American Tobacco PLC sponsored ADR | 10.8 | 11.1 |
| CVS Health Corp. | 9.3 | 10.5 |
| Kroger Co. | 6.1 | 5.9 |
| Reynolds American, Inc. | 5.1 | 2.1 |
| Walgreens Boots Alliance, Inc. | 5.1 | 0.0 |
| PepsiCo, Inc. | 4.5 | 9.6 |
| Altria Group, Inc. | 4.1 | 4.4 |
| The Coca-Cola Co. | 3.9 | 3.3 |
| Mead Johnson Nutrition Co. Class A | 3.8 | 4.7 |
| 66.2 |
Top Industries (% of fund's net assets)
| As of February 29, 2016 | ||
| Food & Staples Retailing | 25.2% | |
| Tobacco | 23.3% | |
| Household Products | 16.7% | |
| Beverages | 15.7% | |
| Food Products | 11.2% | |
| All Others* | 7.9% | |
| As of August 31, 2015 | ||
| Food & Staples Retailing | 23.6% | |
| Beverages | 23.5% | |
| Tobacco | 20.0% | |
| Household Products | 13.7% | |
| Food Products | 13.3% | |
| All Others* | 5.9% | |
* Includes short-term investments and net other assets (liabilities).
Percentages shown as 0.0% may reflect amounts less than 0.05%.
Consumer Staples Portfolio
Investments February 29, 2016
Showing Percentage of Net Assets
| Common Stocks - 96.2% | |||
| Shares | Value | ||
| Beverages - 15.6% | |||
| Brewers - 1.0% | |||
| Anheuser-Busch InBev SA NV | 274,890 | $30,753,781 | |
| Distillers & Vintners - 1.3% | |||
| Kweichow Moutai Co. Ltd. | 215,185 | 7,056,059 | |
| Pernod Ricard SA | 107,500 | 11,473,364 | |
| Remy Cointreau SA (a) | 291,476 | 20,198,134 | |
| 38,727,557 | |||
| Soft Drinks - 13.3% | |||
| Coca-Cola Bottling Co. Consolidated | 146,959 | 25,676,676 | |
| Coca-Cola Central Japan Co. Ltd. | 360,900 | 6,237,019 | |
| Coca-Cola FEMSA S.A.B. de CV sponsored ADR (a) | 58,029 | 4,262,230 | |
| Coca-Cola Icecek Sanayi A/S | 990,162 | 11,039,831 | |
| Embotelladora Andina SA ADR | 461,227 | 7,056,773 | |
| Fomento Economico Mexicano S.A.B. de CV sponsored ADR | 69,487 | 6,503,288 | |
| Monster Beverage Corp. | 724,200 | 90,887,100 | |
| PepsiCo, Inc. | 1,400,018 | 136,949,761 | |
| The Coca-Cola Co. | 2,784,918 | 120,113,513 | |
| 408,726,191 | |||
| TOTAL BEVERAGES | 478,207,529 | ||
| Chemicals - 0.0% | |||
| Specialty Chemicals - 0.0% | |||
| Senomyx, Inc. (a)(b) | 24,378 | 80,935 | |
| Food & Staples Retailing - 25.2% | |||
| Drug Retail - 14.6% | |||
| CVS Health Corp. | 2,934,403 | 285,135,940 | |
| Drogasil SA | 439,700 | 5,038,064 | |
| Walgreens Boots Alliance, Inc. | 1,976,324 | 156,011,017 | |
| 446,185,021 | |||
| Food Distributors - 0.8% | |||
| Chefs' Warehouse Holdings (b) | 556,306 | 10,497,494 | |
| United Natural Foods, Inc. (b) | 422,881 | 13,050,108 | |
| 23,547,602 | |||
| Food Retail - 7.4% | |||
| China Resources Beer Holdings Co. Ltd. | 3,126,000 | 5,063,943 | |
| Kroger Co. | 4,664,142 | 186,145,907 | |
| Sprouts Farmers Market LLC (a)(b) | 1,238,229 | 35,264,762 | |
| 226,474,612 | |||
| Hypermarkets & Super Centers - 2.4% | |||
| Wal-Mart Stores, Inc. | 1,131,756 | 75,080,693 | |
| TOTAL FOOD & STAPLES RETAILING | 771,287,928 | ||
| Food Products - 11.2% | |||
| Agricultural Products - 2.1% | |||
| Archer Daniels Midland Co. | 433,500 | 15,155,160 | |
| Bunge Ltd. | 851,888 | 42,355,871 | |
| SLC Agricola SA | 1,290,200 | 5,911,937 | |
| 63,422,968 | |||
| Packaged Foods & Meats - 9.1% | |||
| Amplify Snack Brands, Inc. (a) | 768,695 | 7,909,872 | |
| Blue Buffalo Pet Products, Inc. (a)(b) | 835,176 | 15,283,721 | |
| Dean Foods Co. (a) | 103,700 | 2,000,373 | |
| Mead Johnson Nutrition Co. Class A | 1,597,216 | 117,810,652 | |
| Mondelez International, Inc. | 1,087,700 | 44,084,481 | |
| Nestle SA | 316,427 | 22,128,053 | |
| The Hain Celestial Group, Inc. (b) | 811,146 | 29,988,068 | |
| TreeHouse Foods, Inc. (b) | 392,300 | 33,117,966 | |
| Ulker Biskuvi Sanayi A/S | 1,010,525 | 6,148,043 | |
| 278,471,229 | |||
| TOTAL FOOD PRODUCTS | 341,894,197 | ||
| Health Care Providers & Services - 0.2% | |||
| Health Care Services - 0.2% | |||
| Diplomat Pharmacy, Inc. (a)(b) | 187,148 | 6,666,212 | |
| Hotels, Restaurants & Leisure - 1.4% | |||
| Restaurants - 1.4% | |||
| ARAMARK Holdings Corp. | 1,386,728 | 43,570,994 | |
| Household Durables - 0.1% | |||
| Household Appliances - 0.1% | |||
| SodaStream International Ltd. (a)(b) | 199,014 | 2,971,279 | |
| Household Products - 16.7% | |||
| Household Products - 16.7% | |||
| Colgate-Palmolive Co. | 1,331,288 | 87,385,744 | |
| Procter & Gamble Co. | 5,136,165 | 412,382,687 | |
| Spectrum Brands Holdings, Inc. | 115,182 | 11,030,980 | |
| 510,799,411 | |||
| Personal Products - 2.0% | |||
| Personal Products - 2.0% | |||
| Avon Products, Inc. | 4,764,857 | 18,154,105 | |
| Coty, Inc. Class A (a) | 468,600 | 13,345,728 | |
| Herbalife Ltd. (b) | 416,610 | 22,809,398 | |
| Nu Skin Enterprises, Inc. Class A (a) | 164,617 | 5,019,172 | |
| 59,328,403 | |||
| Pharmaceuticals - 0.5% | |||
| Pharmaceuticals - 0.5% | |||
| Perrigo Co. PLC | 120,400 | 15,200,500 | |
| Tobacco - 23.3% | |||
| Tobacco - 23.3% | |||
| Altria Group, Inc. | 2,016,445 | 124,152,519 | |
| British American Tobacco PLC sponsored ADR | 3,056,665 | 332,076,086 | |
| ITC Ltd. | 1,820,070 | 7,889,505 | |
| Philip Morris International, Inc. | 1,023,368 | 93,157,189 | |
| Reynolds American, Inc. | 3,097,923 | 156,228,257 | |
| 713,503,556 | |||
| TOTAL COMMON STOCKS | |||
| (Cost $2,340,678,069) | 2,943,510,944 | ||
| Nonconvertible Preferred Stocks - 0.1% | |||
| Beverages - 0.1% | |||
| Brewers - 0.1% | |||
| Ambev SA sponsored ADR | |||
| (Cost $2,103,197) | 673,710 | 2,923,901 | |
| Money Market Funds - 6.3% | |||
| Fidelity Cash Central Fund, 0.40% (c) | 119,575,339 | 119,575,339 | |
| Fidelity Securities Lending Cash Central Fund, 0.44% (c)(d) | 73,454,129 | 73,454,129 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $193,029,468) | 193,029,468 | ||
| TOTAL INVESTMENT PORTFOLIO - 102.6% | |||
| (Cost $2,535,810,734) | 3,139,464,313 | ||
| NET OTHER ASSETS (LIABILITIES) - (2.6)% | (78,388,262) | ||
| NET ASSETS - 100% | $3,061,076,051 |
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 | $137,366 |
| Fidelity Securities Lending Cash Central Fund | 418,728 |
| Total | $556,094 |
Investment Valuation
The following is a summary of the inputs used, as of February 29, 2016, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used 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 | $2,943,510,944 | $2,884,392,091 | $59,118,853 | $-- |
| Nonconvertible Preferred Stocks | 2,923,901 | 2,923,901 | -- | -- |
| Money Market Funds | 193,029,468 | 193,029,468 | -- | -- |
| Total Investments in Securities: | $3,139,464,313 | $3,080,345,460 | $59,118,853 | $-- |
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 | 81.1% |
| United Kingdom | 10.8% |
| Bermuda | 1.4% |
| France | 1.1% |
| Belgium | 1.0% |
| Others (Individually Less Than 1%) | 4.6% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Consumer Staples Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2016 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $71,635,431) — See accompanying schedule: Unaffiliated issuers (cost $2,342,781,266) | $2,946,434,845 | |
| Fidelity Central Funds (cost $193,029,468) | 193,029,468 | |
| Total Investments (cost $2,535,810,734) | $3,139,464,313 | |
| Foreign currency held at value (cost $1,525,904) | 1,525,904 | |
| Receivable for investments sold | 13,029,113 | |
| Receivable for fund shares sold | 7,827,178 | |
| Dividends receivable | 2,535,125 | |
| Distributions receivable from Fidelity Central Funds | 152,307 | |
| Prepaid expenses | 9,801 | |
| Other receivables | 72,038 | |
| Total assets | 3,164,615,779 | |
| Liabilities | ||
| Payable to custodian bank | $91,399 | |
| Payable for investments purchased | 23,993,842 | |
| Payable for fund shares redeemed | 3,653,512 | |
| Accrued management fee | 1,365,702 | |
| Distribution and service plan fees payable | 335,864 | |
| Other affiliated payables | 503,947 | |
| Other payables and accrued expenses | 141,333 | |
| Collateral on securities loaned, at value | 73,454,129 | |
| Total liabilities | 103,539,728 | |
| Net Assets | $3,061,076,051 | |
| Net Assets consist of: | ||
| Paid in capital | $2,445,977,747 | |
| Undistributed net investment income | 4,626,720 | |
| Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 6,866,226 | |
| Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 603,605,358 | |
| Net Assets | $3,061,076,051 | |
| Calculation of Maximum Offering Price | ||
| Class A: | ||
| Net Asset Value and redemption price per share ($470,248,537 ÷ 5,237,976 shares) | $89.78 | |
| Maximum offering price per share (100/94.25 of $89.78) | $95.26 | |
| Class T: | ||
| Net Asset Value and redemption price per share ($76,586,170 ÷ 859,512 shares) | $89.10 | |
| Maximum offering price per share (100/96.50 of $89.10) | $92.33 | |
| Class B: | ||
| Net Asset Value and offering price per share ($6,845,981 ÷ 76,905 shares)(a) | $89.02 | |
| Class C: | ||
| Net Asset Value and offering price per share ($250,575,964 ÷ 2,855,078 shares)(a) | $87.77 | |
| Consumer Staples: | ||
| Net Asset Value, offering price and redemption price per share ($2,039,983,007 ÷ 22,545,184 shares) | $90.48 | |
| Class I: | ||
| Net Asset Value, offering price and redemption price per share ($216,836,392 ÷ 2,400,129 shares) | $90.34 |
(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 financial statements.
Statement of Operations
| Year ended February 29, 2016 | ||
| Investment Income | ||
| Dividends | $70,666,443 | |
| Interest | 10 | |
| Income from Fidelity Central Funds | 556,094 | |
| Total income | 71,222,547 | |
| Expenses | ||
| Management fee | $15,733,851 | |
| Transfer agent fees | 5,181,819 | |
| Distribution and service plan fees | 3,849,484 | |
| Accounting and security lending fees | 855,113 | |
| Custodian fees and expenses | 85,731 | |
| Independent trustees' compensation | 52,708 | |
| Registration fees | 237,118 | |
| Audit | 62,434 | |
| Legal | 31,224 | |
| Miscellaneous | 30,356 | |
| Total expenses before reductions | 26,119,838 | |
| Expense reductions | (195,238) | 25,924,600 |
| Net investment income (loss) | 45,297,947 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 141,076,507 | |
| Foreign currency transactions | 134,972 | |
| Total net realized gain (loss) | 141,211,479 | |
| Change in net unrealized appreciation (depreciation) on: Investment securities (net of decrease in deferred foreign taxes of $18,850) | (292,105,987) | |
| Assets and liabilities in foreign currencies | (22,552) | |
| Total change in net unrealized appreciation (depreciation) | (292,128,539) | |
| Net gain (loss) | (150,917,060) | |
| Net increase (decrease) in net assets resulting from operations | $(105,619,113) |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 29, 2016 | Year ended February 28, 2015 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $45,297,947 | $40,432,818 |
| Net realized gain (loss) | 141,211,479 | 155,658,969 |
| Change in net unrealized appreciation (depreciation) | (292,128,539) | 315,382,310 |
| Net increase (decrease) in net assets resulting from operations | (105,619,113) | 511,474,097 |
| Distributions to shareholders from net investment income | (42,428,021) | (39,618,532) |
| Distributions to shareholders from net realized gain | (202,474,580) | (102,399,285) |
| Total distributions | (244,902,601) | (142,017,817) |
| Share transactions - net increase (decrease) | 299,448,347 | 686,786,861 |
| Redemption fees | 52,041 | 51,833 |
| Total increase (decrease) in net assets | (51,021,326) | 1,056,294,974 |
| Net Assets | ||
| Beginning of period | 3,112,097,377 | 2,055,802,403 |
| End of period (including undistributed net investment income of $4,626,720 and undistributed net investment income of $5,947,947, respectively) | $3,061,076,051 | $3,112,097,377 |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Consumer Staples Portfolio Class A
| Years ended February 28, | 2016A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $101.33 | $87.93 | $85.67 | $74.90 | $67.65 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | 1.34 | 1.37 | 1.43 | 1.26 | 1.22 |
| Net realized and unrealized gain (loss) | (4.86) | 17.28 | 7.51 | 11.73 | 8.73 |
| Total from investment operations | (3.52) | 18.65 | 8.94 | 12.99 | 9.95 |
| Distributions from net investment income | (1.31) | (1.28) | (1.44) | (1.08) | (1.06) |
| Distributions from net realized gain | (6.72) | (3.98) | (5.24) | (1.14) | (1.64) |
| Total distributions | (8.03) | (5.25)C | (6.68) | (2.22) | (2.70) |
| Redemption fees added to paid in capitalB,D | – | – | – | – | – |
| Net asset value, end of period | $89.78 | $101.33 | $87.93 | $85.67 | $74.90 |
| Total ReturnE,F | (3.51)% | 21.95% | 10.53% | 17.60% | 15.00% |
| Ratios to Average Net AssetsG,H | |||||
| Expenses before reductions | 1.04% | 1.05% | 1.06% | 1.08% | 1.10% |
| Expenses net of fee waivers, if any | 1.04% | 1.05% | 1.06% | 1.08% | 1.10% |
| Expenses net of all reductions | 1.04% | 1.05% | 1.06% | 1.08% | 1.09% |
| Net investment income (loss) | 1.45% | 1.45% | 1.61% | 1.58% | 1.74% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $470,249 | $414,151 | $329,459 | $277,329 | $205,851 |
| Portfolio turnover rateI | 63% | 42%J | 31% | 28% | 35% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Total distributions of $5.25 per share is comprised of distributions from net investment income of $1.275 and distributions from net realized gain of $3.976 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.
Financial Highlights — Consumer Staples Portfolio Class T
| Years ended February 28, | 2016A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $100.61 | $87.37 | $85.18 | $74.49 | $67.30 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | 1.08 | 1.10 | 1.18 | 1.03 | 1.01 |
| Net realized and unrealized gain (loss) | (4.83) | 17.15 | 7.46 | 11.68 | 8.68 |
| Total from investment operations | (3.75) | 18.25 | 8.64 | 12.71 | 9.69 |
| Distributions from net investment income | (1.04) | (1.04) | (1.21) | (.88) | (.86) |
| Distributions from net realized gain | (6.72) | (3.98) | (5.24) | (1.14) | (1.64) |
| Total distributions | (7.76) | (5.01)C | (6.45) | (2.02) | (2.50) |
| Redemption fees added to paid in capitalB,D | – | – | – | – | – |
| Net asset value, end of period | $89.10 | $100.61 | $87.37 | $85.18 | $74.49 |
| Total ReturnE,F | (3.78)% | 21.60% | 10.23% | 17.29% | 14.67% |
| Ratios to Average Net AssetsG,H | |||||
| Expenses before reductions | 1.32% | 1.32% | 1.33% | 1.36% | 1.38% |
| Expenses net of fee waivers, if any | 1.32% | 1.32% | 1.33% | 1.36% | 1.38% |
| Expenses net of all reductions | 1.31% | 1.32% | 1.33% | 1.35% | 1.38% |
| Net investment income (loss) | 1.17% | 1.18% | 1.34% | 1.30% | 1.45% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $76,586 | $81,489 | $61,421 | $52,024 | $39,047 |
| Portfolio turnover rateI | 63% | 42%J | 31% | 28% | 35% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Total distributions of $5.01 per share is comprised of distributions from net investment income of $1.036 and distributions from net realized gain of $3.976 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.
Financial Highlights — Consumer Staples Portfolio Class B
| Years ended February 28, | 2016 A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $100.13 | $86.90 | $84.72 | $74.01 | $66.83 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .63 | .63 | .71 | .61 | .64 |
| Net realized and unrealized gain (loss) | (4.81) | 17.06 | 7.40 | 11.61 | 8.61 |
| Total from investment operations | (4.18) | 17.69 | 8.11 | 12.22 | 9.25 |
| Distributions from net investment income | (.21) | (.48) | (.69) | (.37) | (.43) |
| Distributions from net realized gain | (6.72) | (3.98) | (5.24) | (1.14) | (1.64) |
| Total distributions | (6.93) | (4.46) | (5.93) | (1.51) | (2.07) |
| Redemption fees added to paid in capitalB,C | – | – | – | – | – |
| Net asset value, end of period | $89.02 | $100.13 | $86.90 | $84.72 | $74.01 |
| Total ReturnD,E | (4.25)% | 21.01% | 9.63% | 16.68% | 14.06% |
| Ratios to Average Net AssetsF,G | |||||
| Expenses before reductions | 1.81% | 1.82% | 1.86% | 1.89% | 1.91% |
| Expenses net of fee waivers, if any | 1.80% | 1.82% | 1.86% | 1.89% | 1.91% |
| Expenses net of all reductions | 1.80% | 1.82% | 1.86% | 1.88% | 1.90% |
| Net investment income (loss) | .68% | .68% | .81% | .78% | .93% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $6,846 | $15,799 | $17,388 | $18,548 | $19,330 |
| Portfolio turnover rateH | 63% | 42%I | 31% | 28% | 35% |
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 Total returns do not include the effect of the contingent deferred sales charge.
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.
Financial Highlights — Consumer Staples Portfolio Class C
| Years ended February 28, | 2016A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $99.27 | $86.32 | $84.28 | $73.75 | $66.71 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .63 | .65 | .75 | .65 | .68 |
| Net realized and unrealized gain (loss) | (4.75) | 16.93 | 7.36 | 11.55 | 8.59 |
| Total from investment operations | (4.12) | 17.58 | 8.11 | 12.20 | 9.27 |
| Distributions from net investment income | (.65) | (.65) | (.84) | (.53) | (.59) |
| Distributions from net realized gain | (6.72) | (3.98) | (5.24) | (1.14) | (1.64) |
| Total distributions | (7.38)C | (4.63) | (6.07)D | (1.67) | (2.23) |
| Redemption fees added to paid in capitalB,E | – | – | – | – | – |
| Net asset value, end of period | $87.77 | $99.27 | $86.32 | $84.28 | $73.75 |
| Total ReturnF,G | (4.23)% | 21.03% | 9.70% | 16.73% | 14.14% |
| Ratios to Average Net AssetsH,I | |||||
| Expenses before reductions | 1.80% | 1.80% | 1.82% | 1.83% | 1.85% |
| Expenses net of fee waivers, if any | 1.80% | 1.80% | 1.82% | 1.83% | 1.85% |
| Expenses net of all reductions | 1.79% | 1.80% | 1.81% | 1.82% | 1.84% |
| Net investment income (loss) | .69% | .70% | .85% | .83% | .99% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $250,576 | $228,151 | $164,669 | $134,966 | $102,321 |
| Portfolio turnover rateJ | 63% | 42%K | 31% | 28% | 35% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C 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.
D Total distributions of $6.07 per share is comprised of distributions from net investment income of $.837 and distributions from net realized gain of $5.237 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 contingent deferred sales charge.
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.
Financial Highlights — Consumer Staples Portfolio
| Years ended February 28, | 2016 A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $102.03 | $88.51 | $86.17 | $75.29 | $67.98 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | 1.61 | 1.64 | 1.69 | 1.48 | 1.42 |
| Net realized and unrealized gain (loss) | (4.89) | 17.40 | 7.55 | 11.82 | 8.76 |
| Total from investment operations | (3.28) | 19.04 | 9.24 | 13.30 | 10.18 |
| Distributions from net investment income | (1.55) | (1.54) | (1.66) | (1.28) | (1.24) |
| Distributions from net realized gain | (6.72) | (3.98) | (5.24) | (1.14) | (1.64) |
| Total distributions | (8.27) | (5.52) | (6.90) | (2.42) | (2.87)C |
| Redemption fees added to paid in capitalB,D | – | – | – | – | – |
| Net asset value, end of period | $90.48 | $102.03 | $88.51 | $86.17 | $75.29 |
| Total ReturnE | (3.25)% | 22.27% | 10.82% | 17.94% | 15.30% |
| Ratios to Average Net AssetsF,G | |||||
| Expenses before reductions | .77% | .77% | .79% | .81% | .83% |
| Expenses net of fee waivers, if any | .77% | .77% | .79% | .81% | .83% |
| Expenses net of all reductions | .76% | .77% | .79% | .80% | .82% |
| Net investment income (loss) | 1.72% | 1.73% | 1.88% | 1.85% | 2.01% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $2,039,983 | $2,173,970 | $1,328,594 | $1,425,055 | $1,202,440 |
| Portfolio turnover rateH | 63% | 42%I | 31% | 28% | 35% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Total distributions of $2.87 per share is comprised of distributions from net investment income of $1.236 and distributions from net realized gain of $1.637 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.
Financial Highlights — Consumer Staples Portfolio Class I
| Years ended February 28, | 2016A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $101.91 | $88.33 | $85.92 | $75.14 | $67.84 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | 1.60 | 1.59 | 1.66 | 1.45 | 1.39 |
| Net realized and unrealized gain (loss) | (4.89) | 17.40 | 7.53 | 11.79 | 8.73 |
| Total from investment operations | (3.29) | 18.99 | 9.19 | 13.24 | 10.12 |
| Distributions from net investment income | (1.55) | (1.44) | (1.54) | (1.32) | (1.19) |
| Distributions from net realized gain | (6.72) | (3.98) | (5.24) | (1.14) | (1.64) |
| Total distributions | (8.28)C | (5.41)D | (6.78) | (2.46) | (2.82)E |
| Redemption fees added to paid in capitalB,F | – | – | – | – | – |
| Net asset value, end of period | $90.34 | $101.91 | $88.33 | $85.92 | $75.14 |
| Total ReturnG | (3.26)% | 22.26% | 10.80% | 17.90% | 15.24% |
| Ratios to Average Net AssetsH,I | |||||
| Expenses before reductions | .78% | .80% | .82% | .85% | .87% |
| Expenses net of fee waivers, if any | .77% | .80% | .82% | .85% | .87% |
| Expenses net of all reductions | .77% | .80% | .82% | .84% | .87% |
| Net investment income (loss) | 1.71% | 1.70% | 1.85% | 1.81% | 1.96% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $216,836 | $198,538 | $154,271 | $378,731 | $163,544 |
| Portfolio turnover rateJ | 63% | 42%K | 31% | 28% | 35% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C 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.
D Total distributions of $5.41 per share is comprised of distributions from net investment income of $1.436 and distributions from net realized gain of $3.976 per share.
E Total distributions of $2.82 per share is comprised of distributions from net investment income of $1.186 and distributions from net realized gain of $1.637 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.
Notes to Financial Statements
For the period ended February 29, 2016
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 T, Class C, Consumer Staples and Class I (formerly Institutional Class) shares, each of which, along with Class B shares, has equal rights as to assets and voting privileges. Class B shares are closed to new accounts and additional purchases, except for exchanges and reinvestments. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a maximum holding period of seven years from the initial date of purchase.
During the period, the Board of Trustees approved the conversion of all existing Class B shares into Class A shares, effective on or about July 1, 2016, regardless of the length of times shares have been held.
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 Fidelity Investments Money Management, Inc. (FIMM), an affiliate of the investment adviser. Annualized expenses of the Money Market Central Funds as of their most recent shareholder report date are less than .005%.
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 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 Fidelity SelectCo, LLC (SelectCo) Fair Value Committee (the Committee). 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. Utilizing these techniques may result in transfers between Level 1 and Level 2. 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, 2016 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 may 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. 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), independent Trustees may elect 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 are included in the accompanying Statement of Assets and Liabilities.
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, 2016, 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 dividends 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.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
| Gross unrealized appreciation | $692,134,097 |
| Gross unrealized depreciation | (101,955,004) |
| Net unrealized appreciation (depreciation) on securities | $590,179,093 |
| Tax Cost | $2,549,285,220 |
The tax-based components of distributable earnings as of period end were as follows:
| Undistributed ordinary income | $4,689,383 |
| Undistributed long-term capital gain | $20,340,712 |
| Net unrealized appreciation (depreciation) on securities and other investments | $590,130,872 |
The tax character of distributions paid was as follows:
| February 29, 2016 | February 28, 2015 | |
| Ordinary Income | $74,502,566 | $ 43,895,099 |
| Long-term Capital Gains | 170,400,035 | 98,122,718 |
| Total | $244,902,601 | $ 142,017,817 |
Trading (Redemption) Fees. Shares held by investors in the Fund less than 30 days may be subject to a redemption fee equal to .75% of the NAV of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Fund and accounted for as an addition to paid in capital.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $1,808,424,320 and $1,779,392,270, respectively.
5. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity SelectCo, 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 .25% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by Fidelity Management & Research Company (FMR) and the investment adviser. 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 .55% 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 Corporation (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% | $1,045,882 | $– |
| Class T | .25% | .25% | 375,890 | – |
| Class B | .75% | .25% | 112,537 | 84,403 |
| Class C | .75% | .25% | 2,315,175 | 557,247 |
| $3,849,484 | $641,650 |
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 T 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 T, Class B, and Class C redemptions. The deferred sales charges range from 5.00% to 1.00% for Class B shares, 1.00% for Class C shares, 1.00% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained by FDC | |
| Class A | $336,934 |
| Class T | 43,845 |
| Class B(a) | 2,345 |
| Class C(a) | 32,125 |
| $415,249 |
(a) When Class B and 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, Inc., (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. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements.
For the period, transfer agent fees for each class were as follows:
| Amount | % of Class-Level Average Net Assets | |
| Class A | $829,869 | .20 |
| Class T | 169,721 | .23 |
| Class B | 24,522 | .22 |
| Class C | 467,790 | .20 |
| Consumer Staples | 3,352,990 | .17 |
| Class I | 336,927 | .18 |
| $ 5,181,819 |
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. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions 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 $15,509 for the period.
Interfund Trades. The Fund 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.
The Fund participates 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 Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $4,139 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, the Fund did not borrow on this line of credit.
7. Security Lending.
The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. 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. 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. Total security lending income during the period amounted to $418,728.
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 $115,438 for the period.
In addition, through arrangements with the Fund's custodian, credits realized as a result of certain uninvested cash balances were used to reduce the Fund's expense. During the period, these credits reduced the Fund's custody expense by $120.
In addition, during the period the investment adviser reimbursed and/or waived a portion of fund-level operating expenses in the amount of $21,509 and a portion of class-level operating expenses as follows:
| Amount | |
| Class A | $7,870 |
| Class T | 1,516 |
| Class B | 395 |
| Class C | 4,058 |
| Consumer Staples | 37,669 |
| Class I | 6,663 |
| $58,171 |
9. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
| Years ended February 29, | 2016 | 2015 |
| From net investment income | ||
| Class A | $5,892,374 | $4,812,004 |
| Class T | 832,225 | 776,331 |
| Class B | 21,356 | 83,556 |
| Class C | 1,681,417 | 1,335,126 |
| Consumer Staples | 30,907,531 | 29,856,743 |
| Class I | 3,093,118 | 2,754,772 |
| Total | $42,428,021 | $39,618,532 |
| From net realized gain | ||
| Class A | $29,492,766 | $14,768,867 |
| Class T | 5,430,950 | 2,841,831 |
| Class B | 809,700 | 743,976 |
| Class C | 16,753,262 | 7,778,566 |
| Consumer Staples | 136,504,977 | 65,408,817 |
| Class I | 13,482,925 | 10,857,228 |
| Total | $202,474,580 | $102,399,285 |
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, 2016 | Year ended February 28, 2015 | Year ended February 29, 2016 | Year ended February 28, 2015 | |
| Class A | ||||
| Shares sold | 1,973,363 | 1,066,097 | $181,606,150 | $101,322,941 |
| Reinvestment of distributions | 372,764 | 205,710 | 34,290,264 | 18,829,531 |
| Shares redeemed | (1,195,463) | (931,333) | (110,798,612) | (86,559,239) |
| Net increase (decrease) | 1,150,664 | 340,474 | $105,097,802 | $33,593,233 |
| Class T | ||||
| Shares sold | 197,944 | 215,514 | $18,205,532 | $20,203,421 |
| Reinvestment of distributions | 66,110 | 38,102 | 6,055,600 | 3,463,287 |
| Shares redeemed | (214,470) | (146,712) | (19,884,944) | (13,666,581) |
| Net increase (decrease) | 49,584 | 106,904 | $4,376,188 | $10,000,127 |
| Class B | ||||
| Shares sold | 4,002 | 7,270 | $364,996 | $675,777 |
| Reinvestment of distributions | 8,400 | 8,161 | 777,774 | 730,673 |
| Shares redeemed | (93,279) | (57,733) | (8,496,255) | (5,359,510) |
| Net increase (decrease) | (80,877) | (42,302) | $(7,353,485) | $(3,953,060) |
| Class C | ||||
| Shares sold | 926,964 | 636,469 | $84,032,895 | $59,593,472 |
| Reinvestment of distributions | 181,545 | 86,847 | 16,369,686 | 7,772,854 |
| Shares redeemed | (551,638) | (332,705) | (49,873,026) | (30,479,924) |
| Net increase (decrease) | 556,871 | 390,611 | $50,529,555 | $36,886,402 |
| Consumer Staples | ||||
| Shares sold | 5,277,258 | 8,889,529 | $487,809,315 | $838,041,591 |
| Reinvestment of distributions | 1,736,133 | 985,926 | 161,200,153 | 91,713,079 |
| Shares redeemed | (5,774,399) | (3,580,043) | (543,103,364) | (340,719,360) |
| Net increase (decrease) | 1,238,992 | 6,295,412 | $105,906,104 | $589,035,310 |
| Class I | ||||
| Shares sold | 1,318,941 | 3,870,748(a) | $121,982,188 | $354,438,000(a) |
| Reinvestment of distributions | 148,325 | 135,150 | 13,734,363 | 12,187,732 |
| Shares redeemed | (1,015,396) | (3,804,175)(b) | (94,824,368) | (345,400,883)(b) |
| Net increase (decrease) | 451,870 | 201,723 | $40,892,183 | $21,224,849 |
(a) Amount includes in-kind exchanges.
(b) Amount includes in-kind redemptions.
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.
Mutual funds managed by the investment adviser or its affiliates were the owners of record, in the aggregate, of approximately 26% of the total outstanding shares of the Fund.
Fidelity Advisor® Gold Fund
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, 2016 | Past 1 year | Past 5 years | Past 10 years |
| Class I | (2.00)% | (17.95)% | (2.51)% |
The initial offering of Class I shares took place on December 12, 2006. Returns prior to December 12, 2006 are those of Gold Portfolio, the original class of the fund.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Fidelity Advisor® Gold Fund - Class I on February 28, 2006.
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.
See above for additional information regarding the performance of Class I.
| Period Ending Values | ||
| $7,752 | Fidelity Advisor® Gold Fund - Class I | |
| $18,666 | S&P 500® Index | |
Fidelity Advisor® Gold Fund
Management's Discussion of Fund Performance
Market Recap: The S&P 500® index returned -6.19% for the year ending February 29, 2016. Largely range-bound for the first half of the period, U.S. stocks suffered a steep, late-summer decline on concern about an economic slowdown in China. The market recovered in October, lifted by the U.S. Federal Reserve's decision to delay raising near-term interest rates until mid-December. Investors also drew courage from a rate cut in China and economic stimulus in Europe. But continued oil-price weakness and U.S.-dollar strength, plus fresh worries about China and the Middle East, pushed the S&P 500® to its worst January since 2009, followed by a volatile but ultimately flattish February. Overall, growth-oriented and larger-cap stocks fared better than value and smaller-cap complements. In this environment, the tech-heavy Nasdaq Composite Index® returned -7.07% for the 12 months; the Russell 2000® Index, -14.97%. Few sectors within the broad-market S&P 500® gained ground, with a wide gap separating leaders from laggards. Despite increased competition among wireless carriers, telecommunication services (+8%) led the way, followed by the more defensive utilities sector (+6%). Rising wages and low inflation buoyed consumer staples (+4%), less so consumer discretionary (0%). Meanwhile, energy (-24%) foundered amid commodity weakness that also hurt materials (-17%). The financials sector (-12%) struggled as well.Comments from Portfolio Manager S. Joseph Wickwire II, CFA: For the year, the fund's share classes (excluding sales charges, if applicable) posted a modestly negative return that straddled the -2.37% result of the S&P® Global BMI Gold Capped Index and solidly outperformed the broadly based S&P 500® index. The fund outdistanced the -11.96% return of the global MSCI ACWI (All Country World Index) Index, an additional comparison used given the fund's global mandate. For most of the period, gold stocks were overcome by market concerns about the supposedly imminent interest rate hikes that investors believed the U.S. Federal Reserve was on a pathway to deliver. The gold price rebounded from its December lows after the Fed increased the fed funds rate by a quarter percentage point. Versus the industry benchmark, performance was helped by overweighting outperforming stocks such as Detour Gold, Randgold Resources, Torex Gold Resources, Premier Gold Mines, OceanaGold and Guyana Goldfields. Underweighting underperforming names such as Goldcorp and Compania de Minas Buenaventura also boosted results. A roughly 11% exposure, on average, to gold and silver bullion buoyed performance as well, especially in the period's extreme downturns. Lastly, the fund's foreign holdings helped, despite headwinds from a rising U.S. dollar. Conversely, we were hurt by underweightings in stocks that outperformed. Relative detractors included Sibanye Gold, Centamin, Harmony Gold Mining, Polyus Gold International and Zijin Mining Group. I sold Centamin and Polyus from the fund by period end. To a lesser extent, we also were hurt by overweightings in companies that underperformed, including B2Gold, Eldorado Gold and Argonaut Gold.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.
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, 2016
| % of fund's net assets | % of fund's net assets 6 months ago | |
| Gold Bullion | 11.0 | 5.2 |
| Randgold Resources Ltd. sponsored ADR | 7.9 | 7.8 |
| Newcrest Mining Ltd. | 5.8 | 5.6 |
| Newmont Mining Corp. | 5.8 | 4.5 |
| Goldcorp, Inc. | 5.7 | 8.0 |
| Franco-Nevada Corp. | 5.6 | 6.3 |
| Agnico Eagle Mines Ltd. (Canada) | 4.9 | 5.6 |
| Barrick Gold Corp. | 4.1 | 3.2 |
| Silver Bullion | 3.8 | 5.3 |
| AngloGold Ashanti Ltd. sponsored ADR | 3.2 | 3.0 |
| 57.8 |
Top Industries (% of fund's net assets)
| As of February 29, 2016 | ||
| Gold | 81.2% | |
| Commodities & Related Investments* | 14.8% | |
| Precious Metals & Minerals | 1.0% | |
| Silver | 0.7% | |
| Construction Materials | 0.2% | |
| Diversified Metals & Mining | 0.1% | |
| All Others* | 2.0% | |
* Includes gold bullion and/or silver bullion.
| As of August 31, 2015 | ||
| Gold | 87.1% | |
| Commodities & Related Investments * | 10.5% | |
| Precious Metals & Minerals | 1.1% | |
| Silver | 0.7% | |
| Diversified Metals & Mining | 0.2% | |
| 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, 2016 | ||
| Canada | 49.6% | |
| United States of America* | 25.3% | |
| Australia | 7.9% | |
| Bailiwick of Jersey | 7.9% | |
| South Africa | 6.7% | |
| China | 0.8% | |
| United Kingdom | 0.7% | |
| Cayman Islands | 0.6% | |
| Peru | 0.5% | |
Percentages are based on country or territory of incorporation and are adjusted for the effect of futures contracts, if applicable.
| As of August 31, 2015 | ||
| Canada | 57.9% | |
| United States of America* | 18.7% | |
| Bailiwick of Jersey | 8.4% | |
| Australia | 7.4% | |
| South Africa | 5.6% | |
| United Kingdom | 0.7% | |
| Peru | 0.7% | |
| Cayman Islands | 0.4% | |
| China | 0.2% | |
Percentages are based on country or territory of incorporation and are adjusted for the effect of futures contracts, if applicable.
Gold Portfolio
Consolidated Investments February 29, 2016
Showing Percentage of Net Assets
| Common Stocks - 83.2% | |||
| Shares | Value | ||
| Australia - 7.9% | |||
| Metals & Mining - 7.9% | |||
| Gold - 7.9% | |||
| Evolution Mining Ltd. | 352,543 | $440,348 | |
| Medusa Mining Ltd. (a)(b) | 1,228,595 | 539,299 | |
| Newcrest Mining Ltd. (b) | 5,814,753 | 72,999,912 | |
| Northern Star Resources Ltd. | 4,351,118 | 12,111,881 | |
| Perseus Mining Ltd.: | |||
| (Australia) (b) | 1,717,134 | 453,474 | |
| (Canada) (b) | 1,300,000 | 350,702 | |
| Regis Resources Ltd. | 2,107,191 | 3,880,340 | |
| Resolute Mng Ltd. (b) | 2,390,161 | 955,347 | |
| Saracen Mineral Holdings Ltd. (b) | 8,462,787 | 5,889,306 | |
| Silver Lake Resources Ltd. (a)(b) | 4,145,985 | 961,739 | |
| St Barbara Ltd. (b) | 650,000 | 869,883 | |
| 99,452,231 | |||
| Bailiwick of Jersey - 7.9% | |||
| Metals & Mining - 7.9% | |||
| Gold - 7.9% | |||
| Randgold Resources Ltd. sponsored ADR (a) | 1,088,395 | 99,316,044 | |
| Bermuda - 0.0% | |||
| Metals & Mining - 0.0% | |||
| Steel - 0.0% | |||
| African Minerals Ltd. (a)(b) | 1,718,700 | 24 | |
| Canada - 49.6% | |||
| Metals & Mining - 49.6% | |||
| Diversified Metals & Mining - 0.1% | |||
| Ivanhoe Mines Ltd. (b) | 3,101,200 | 1,558,622 | |
| True Gold Mining, Inc. (b) | 171,000 | 48,027 | |
| 1,606,649 | |||
| Gold - 47.8% | |||
| Agnico Eagle Mines Ltd. (Canada) | 1,741,501 | 61,280,756 | |
| Alacer Gold Corp. (b) | 1,656,963 | 3,318,825 | |
| Alamos Gold, Inc. | 2,232,987 | 10,232,461 | |
| Argonaut Gold, Inc. (b) | 5,673,162 | 6,876,560 | |
| B2Gold Corp. (b) | 28,725,793 | 32,059,089 | |
| Barrick Gold Corp. | 3,737,469 | 51,932,311 | |
| Centerra Gold, Inc. | 483,300 | 2,657,614 | |
| Continental Gold, Inc. (b)(c) | 7,063,900 | 7,779,166 | |
| Detour Gold Corp. (b) | 1,623,100 | 25,564,125 | |
| Detour Gold Corp. (b)(d) | 785,900 | 12,378,070 | |
| Eldorado Gold Corp. | 8,859,235 | 26,518,774 | |
| Franco-Nevada Corp. | 1,169,000 | 69,768,477 | |
| Goldcorp, Inc. (a) | 4,963,800 | 71,320,231 | |
| Guyana Goldfields, Inc. (b) | 4,281,800 | 13,766,319 | |
| Guyana Goldfields, Inc. (b)(d) | 155,000 | 498,337 | |
| IAMGOLD Corp. (a)(b) | 837,100 | 2,029,333 | |
| Integra Gold Corp. (b) | 35,000 | 10,218 | |
| Kinross Gold Corp. (b) | 1,998,891 | 5,850,413 | |
| Kirkland Lake Gold, Inc. (b) | 1,512,400 | 9,132,526 | |
| Klondex Mines Ltd. (b) | 96,000 | 256,142 | |
| Lake Shore Gold Corp. (b) | 2,661,600 | 3,580,275 | |
| New Gold, Inc. (b) | 8,862,675 | 30,000,777 | |
| Novagold Resources, Inc. (a)(b) | 1,559,100 | 7,720,599 | |
| OceanaGold Corp. | 9,214,832 | 25,471,893 | |
| Osisko Gold Royalties Ltd. | 473,793 | 4,892,009 | |
| Pilot Gold, Inc. (b) | 1,418,150 | 461,187 | |
| Premier Gold Mines Ltd. (b)(c) | 10,803,622 | 25,711,502 | |
| Pretium Resources, Inc. (a)(b) | 1,077,052 | 5,031,019 | |
| Pretium Resources, Inc. (b)(d) | 225,000 | 1,050,998 | |
| Primero Mining Corp. (a)(b) | 2,287,100 | 3,752,670 | |
| Richmont Mines, Inc. (b) | 92,800 | 433,478 | |
| Sandstorm Gold Ltd. (b) | 578,875 | 1,724,217 | |
| Seabridge Gold, Inc. (a)(b) | 853,207 | 7,858,036 | |
| SEMAFO, Inc. (b) | 4,307,900 | 15,283,016 | |
| Teranga Gold Corp. (a)(b) | 85,000 | 35,809 | |
| Teranga Gold Corp. CDI unit (b) | 3,338,072 | 1,358,053 | |
| Torex Gold Resources, Inc. (b) | 24,995,500 | 33,253,437 | |
| Yamana Gold, Inc. | 6,445,920 | 18,246,765 | |
| 599,095,487 | |||
| Precious Metals & Minerals - 1.0% | |||
| Gold Standard Ventures Corp. (b) | 2,175,400 | 2,009,793 | |
| Tahoe Resources, Inc. | 1,138,582 | 10,527,466 | |
| 12,537,259 | |||
| Silver - 0.7% | |||
| MAG Silver Corp. (b) | 414,200 | 2,948,075 | |
| Silver Wheaton Corp. | 395,200 | 6,233,236 | |
| 9,181,311 | |||
| TOTAL METALS & MINING | 622,420,706 | ||
| Cayman Islands - 0.6% | |||
| Metals & Mining - 0.6% | |||
| Gold - 0.6% | |||
| Endeavour Mining Corp. (b) | 828,840 | 7,436,894 | |
| China - 0.8% | |||
| Metals & Mining - 0.8% | |||
| Gold - 0.8% | |||
| Zijin Mining Group Co. Ltd. (H Shares) | 32,876,000 | 9,848,366 | |
| Peru - 0.5% | |||
| Metals & Mining - 0.5% | |||
| Gold - 0.5% | |||
| Compania de Minas Buenaventura SA sponsored ADR (b) | 1,072,228 | 5,597,030 | |
| South Africa - 6.7% | |||
| Metals & Mining - 6.7% | |||
| Gold - 6.7% | |||
| AngloGold Ashanti Ltd. sponsored ADR (b) | 3,119,908 | 40,621,202 | |
| Gold Fields Ltd. sponsored ADR | 4,726,126 | 20,180,558 | |
| Harmony Gold Mining Co. Ltd. (b) | 1,484,000 | 4,807,735 | |
| Harmony Gold Mining Co. Ltd. sponsored ADR (a)(b) | 1,812,900 | 5,910,054 | |
| Sibanye Gold Ltd. ADR | 865,006 | 12,430,136 | |
| 83,949,685 | |||
| United Kingdom - 0.7% | |||
| Metals & Mining - 0.7% | |||
| Gold - 0.7% | |||
| Acacia Mining PLC | 2,657,994 | 9,182,231 | |
| United States of America - 8.5% | |||
| Construction Materials - 0.2% | |||
| Construction Materials - 0.2% | |||
| Eagle Materials, Inc. | 50,500 | 3,051,212 | |
| Metals & Mining - 8.3% | |||
| Gold - 8.3% | |||
| McEwen Mining, Inc. (a) | 579,110 | 1,059,771 | |
| Newmont Mining Corp. | 2,795,900 | 72,218,097 | |
| Royal Gold, Inc. | 656,513 | 30,442,508 | |
| 103,720,376 | |||
| TOTAL UNITED STATES OF AMERICA | 106,771,588 | ||
| TOTAL COMMON STOCKS | |||
| (Cost $1,235,860,010) | 1,043,974,799 | ||
| Troy Ounces | |||
| Commodities - 14.8% | |||
| Gold Bullion (b) | 111,510 | 138,222,221 | |
| Silver Bullion (b) | 3,162,000 | 47,146,052 | |
| TOTAL COMMODITIES | |||
| (Cost $196,019,406) | 185,368,273 | ||
| Shares | |||
| Money Market Funds - 4.5% | |||
| Fidelity Cash Central Fund, 0.40% (e) | 35,782,221 | 35,782,221 | |
| Fidelity Securities Lending Cash Central Fund, 0.44% (e)(f) | 19,998,096 | 19,998,096 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $55,780,317) | 55,780,317 | ||
| TOTAL INVESTMENT PORTFOLIO - 102.5% | |||
| (Cost $1,487,659,733) | 1,285,123,389 | ||
| NET OTHER ASSETS (LIABILITIES) - (2.5)% | (30,961,190) | ||
| NET ASSETS - 100% | $1,254,162,199 |
Legend
(a) Security or a portion of the security is on loan at period end.
(b) Non-income producing
(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 $13,927,405 or 1.1% 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 | $24,524 |
| Fidelity Securities Lending Cash Central Fund | 260,688 |
| Total | $285,212 |
Consolidated Subsidiary
| Value, beginning of period | Purchases | Sales Proceeds | Dividend Income | Value, end of period | |
| Fidelity Select Gold Cayman Ltd. | $116,684,748 | $115,940,297 | $42,608,630 | $-- | $185,320,085 |
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 | Value, end of period |
| Continental Gold, Inc. (formerly Continental Gold Ltd.) | $7,850,572 | $2,894,378 | $-- | $-- | $7,779,166 |
| Endeavour Mining Corp. | 3,968,035 | 11,431 | -- | -- | -- |
| Premier Gold Mines Ltd. | 20,747,454 | 1,036,932 | 421,766 | -- | 25,711,502 |
| Total | $32,566,061 | $3,942,741 | $421,766 | $-- | $33,490,668 |
Investment Valuation
The following is a summary of the inputs used, as of February 29, 2016, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used 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 | $1,043,974,799 | $966,167,128 | $77,807,647 | $24 |
| Commodities | 185,368,273 | 185,368,273 | -- | -- |
| Money Market Funds | 55,780,317 | 55,780,317 | -- | -- |
| Total Investments in Securities: | $1,285,123,389 | $1,207,315,718 | $77,807,647 | $24 |
The following is a summary of transfers between Level 1 and Level 2 for the period ended February 29, 2016. Transfers are assumed to have occurred at the beginning of the period, and are primarily attributable to the valuation techniques used for foreign equity securities, as discussed in the accompanying Notes to Consolidated Financial Statements:
| Transfers | Total |
| Level 1 to Level 2 | $69,980,874 |
| Level 2 to Level 1 | $0 |
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, 2016 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $19,733,536) — See accompanying schedule: Unaffiliated issuers (cost $1,178,084,778) | $1,010,484,131 | |
| Fidelity Central Funds (cost $55,780,317) | 55,780,317 | |
| Commodities (cost $196,019,406) | 185,368,273 | |
| Other affiliated issuers (cost $57,775,232) | 33,490,668 | |
| Total Investments (cost $1,487,659,733) | $1,285,123,389 | |
| Receivable for investments sold | 6,797,261 | |
| Receivable for fund shares sold | 5,565,691 | |
| Dividends receivable | 509,903 | |
| Distributions receivable from Fidelity Central Funds | 34,747 | |
| Prepaid expenses | 2,927 | |
| Other receivables | 62,068 | |
| Total assets | 1,298,095,986 | |
| Liabilities | ||
| Payable for investments purchased | $18,108,935 | |
| Payable for fund shares redeemed | 4,873,656 | |
| Accrued management fee | 506,531 | |
| Distribution and service plan fees payable | 54,799 | |
| Other affiliated payables | 249,139 | |
| Other payables and accrued expenses | 142,631 | |
| Collateral on securities loaned, at value | 19,998,096 | |
| Total liabilities | 43,933,787 | |
| Net Assets | $1,254,162,199 | |
| Net Assets consist of: | ||
| Paid in capital | $2,708,861,690 | |
| Accumulated net investment loss | (13,704) | |
| Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (1,252,131,751) | |
| Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (202,554,036) | |
| Net Assets | $1,254,162,199 | |
| Calculation of Maximum Offering Price | ||
| Class A: | ||
| Net Asset Value and redemption price per share ($53,509,144 ÷ 3,023,298 shares) | $17.70 | |
| Maximum offering price per share (100/94.25 of $17.70) | $18.78 | |
| Class T: | ||
| Net Asset Value and redemption price per share ($17,719,589 ÷ 1,019,901 shares) | $17.37 | |
| Maximum offering price per share (100/96.50 of $17.37) | $18.00 | |
| Class B: | ||
| Net Asset Value and offering price per share ($1,387,809 ÷ 82,864 shares)(a) | $16.75 | |
| Class C: | ||
| Net Asset Value and offering price per share ($52,732,246 ÷ 3,160,888 shares)(a) | $16.68 | |
| Gold: | ||
| Net Asset Value, offering price and redemption price per share ($1,076,206,149 ÷ 59,384,404 shares) | $18.12 | |
| Class I: | ||
| Net Asset Value, offering price and redemption price per share ($52,607,262 ÷ 2,901,278 shares) | $18.13 |
(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, 2016 | ||
| Investment Income | ||
| Dividends | $7,600,661 | |
| Income from Fidelity Central Funds | 285,212 | |
| Income before foreign taxes withheld | 7,885,873 | |
| Less foreign taxes withheld | (825,677) | |
| Total income | 7,060,196 | |
| Expenses | ||
| Management fee | $5,414,585 | |
| Transfer agent fees | 2,620,065 | |
| Distribution and service plan fees | 541,896 | |
| Accounting and security lending fees | 443,034 | |
| Custodian fees and expenses | 282,703 | |
| Independent trustees' compensation | 16,899 | |
| Registration fees | 124,224 | |
| Audit | 68,140 | |
| Legal | 10,887 | |
| Miscellaneous | 13,130 | |
| Total expenses before reductions | 9,535,563 | |
| Expense reductions | (362,326) | 9,173,237 |
| Net investment income (loss) | (2,113,041) | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investments: | ||
| Unaffiliated issuers | (155,210,150) | |
| Other affiliated issuers | (648,863) | |
| Commodities | (7,003,431) | |
| Foreign currency transactions | 1,660,481 | |
| Total net realized gain (loss) | (161,201,963) | |
| Change in net unrealized appreciation (depreciation) on: Investments | 155,642,129 | |
| Assets and liabilities in foreign currencies | (18,709) | |
| Commodities | 2,764,458 | |
| Total change in net unrealized appreciation (depreciation) | 158,387,878 | |
| Net gain (loss) | (2,814,085) | |
| Net increase (decrease) in net assets resulting from operations | $(4,927,126) |
See accompanying notes which are an integral part of the consolidated financial statements.
Consolidated Statement of Changes in Net Assets
| Year ended February 29, 2016 | Year ended February 28, 2015 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $(2,113,041) | $(3,405,899) |
| Net realized gain (loss) | (161,201,963) | (231,533,739) |
| Change in net unrealized appreciation (depreciation) | 158,387,878 | (19,537,556) |
| Net increase (decrease) in net assets resulting from operations | (4,927,126) | (254,477,194) |
| Share transactions - net increase (decrease) | 137,310,705 | (124,744,949) |
| Redemption fees | 180,108 | 222,335 |
| Total increase (decrease) in net assets | 132,563,687 | (378,999,808) |
| Net Assets | ||
| Beginning of period | 1,121,598,512 | 1,500,598,320 |
| End of period (including accumulated net investment loss of $13,704 and accumulated net investment loss of $19,281, respectively) | $1,254,162,199 | $1,121,598,512 |
See accompanying notes which are an integral part of the consolidated financial statements.
Consolidated Financial Highlights — Gold Portfolio Class A
| Years ended February 28, | 2016 A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $18.11 | $22.01 | $30.25 | $45.37 | $50.92 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | (.06) | (.10) | –C | .07 | (.13) |
| Net realized and unrealized gain (loss) | (.35) | (3.80) | (8.25) | (15.19) | (2.83) |
| Total from investment operations | (.41) | (3.90) | (8.25) | (15.12) | (2.96) |
| Distributions from net realized gain | – | – | – | – | (2.59) |
| Total distributions | – | – | – | – | (2.59) |
| Redemption fees added to paid in capitalB | –C | –C | .01 | –C | –C |
| Net asset value, end of period | $17.70 | $18.11 | $22.01 | $30.25 | $45.37 |
| Total ReturnD,E | (2.26)% | (17.72)% | (27.24)% | (33.33)% | (6.24)% |
| Ratios to Average Net AssetsF,G | |||||
| Expenses before reductions | 1.23% | 1.23% | 1.21% | 1.18% | 1.14% |
| Expenses net of fee waivers, if any | 1.20% | 1.19% | 1.19% | 1.17% | 1.14% |
| Expenses net of all reductions | 1.20% | 1.19% | 1.18% | 1.17% | 1.14% |
| Net investment income (loss) | (.44)% | (.51)% | - %H | .18% | (.28)% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $53,509 | $46,898 | $60,270 | $101,202 | $152,969 |
| Portfolio turnover rateI | 20% | 20% | 56% | 18% | 22% |
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 Total returns do not include the effect of the sales charges.
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 represents less than .005%.
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.
Consolidated Financial Highlights — Gold Portfolio Class T
| Years ended February 28, | 2016 A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $17.83 | $21.73 | $29.95 | $45.04 | $50.68 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | (.11) | (.15) | (.06) | (.03) | (.27) |
| Net realized and unrealized gain (loss) | (.35) | (3.75) | (8.17) | (15.06) | (2.80) |
| Total from investment operations | (.46) | (3.90) | (8.23) | (15.09) | (3.07) |
| Distributions from net realized gain | – | – | – | – | (2.57) |
| Total distributions | – | – | – | – | (2.57) |
| Redemption fees added to paid in capitalB | –C | –C | .01 | –C | –C |
| Net asset value, end of period | $17.37 | $17.83 | $21.73 | $29.95 | $45.04 |
| Total ReturnD,E | (2.58)% | (17.95)% | (27.45)% | (33.50)% | (6.49)% |
| Ratios to Average Net AssetsF,G | |||||
| Expenses before reductions | 1.52% | 1.50% | 1.49% | 1.45% | 1.43% |
| Expenses net of fee waivers, if any | 1.48% | 1.46% | 1.47% | 1.44% | 1.42% |
| Expenses net of all reductions | 1.48% | 1.46% | 1.46% | 1.44% | 1.42% |
| Net investment income (loss) | (.72)% | (.79)% | (.28)% | (.09)% | (.57)% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $17,720 | $16,200 | $18,402 | $24,913 | $40,664 |
| Portfolio turnover rateH | 20% | 20% | 56% | 18% | 22% |
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 Total returns do not include the effect of the sales charges.
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.
Consolidated Financial Highlights — Gold Portfolio Class B
| Years ended February 28, | 2016 A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $17.27 | $21.14 | $29.27 | $44.24 | $50.02 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | (.17) | (.24) | (.16) | (.21) | (.49) |
| Net realized and unrealized gain (loss) | (.35) | (3.63) | (7.98) | (14.76) | (2.76) |
| Total from investment operations | (.52) | (3.87) | (8.14) | (14.97) | (3.25) |
| Distributions from net realized gain | – | – | – | – | (2.53) |
| Total distributions | – | – | – | – | (2.53) |
| Redemption fees added to paid in capitalB | –C | –C | .01 | –C | –C |
| Net asset value, end of period | $16.75 | $17.27 | $21.14 | $29.27 | $44.24 |
| Total ReturnD,E | (3.01)% | (18.31)% | (27.78)% | (33.84)% | (6.95)% |
| Ratios to Average Net AssetsF,G | |||||
| Expenses before reductions | 1.98% | 1.97% | 1.95% | 1.93% | 1.90% |
| Expenses net of fee waivers, if any | 1.94% | 1.93% | 1.93% | 1.92% | 1.90% |
| Expenses net of all reductions | 1.94% | 1.93% | 1.93% | 1.91% | 1.90% |
| Net investment income (loss) | (1.18)% | (1.26)% | (.75)% | (.57)% | (1.04)% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $1,388 | $2,461 | $4,373 | $9,423 | $20,894 |
| Portfolio turnover rateH | 20% | 20% | 56% | 18% | 22% |
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 Total returns do not include the effect of the contingent deferred sales charge.
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.
Consolidated Financial Highlights — Gold Portfolio Class C
| Years ended February 28, | 2016 A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $17.20 | $21.06 | $29.15 | $44.05 | $49.81 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | (.16) | (.23) | (.16) | (.20) | (.47) |
| Net realized and unrealized gain (loss) | (.36) | (3.63) | (7.94) | (14.70) | (2.76) |
| Total from investment operations | (.52) | (3.86) | (8.10) | (14.90) | (3.23) |
| Distributions from net realized gain | – | – | – | – | (2.53) |
| Total distributions | – | – | – | – | (2.53) |
| Redemption fees added to paid in capitalB | –C | –C | .01 | –C | –C |
| Net asset value, end of period | $16.68 | $17.20 | $21.06 | $29.15 | $44.05 |
| Total ReturnD,E | (3.02)% | (18.33)% | (27.75)% | (33.83)% | (6.93)% |
| Ratios to Average Net AssetsF,G | |||||
| Expenses before reductions | 1.97% | 1.96% | 1.96% | 1.93% | 1.87% |
| Expenses net of fee waivers, if any | 1.93% | 1.92% | 1.94% | 1.92% | 1.87% |
| Expenses net of all reductions | 1.93% | 1.92% | 1.93% | 1.91% | 1.87% |
| Net investment income (loss) | (1.17)% | (1.25)% | (.76)% | (.57)% | (1.01)% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $52,732 | $39,429 | $33,811 | $37,787 | $67,996 |
| Portfolio turnover rateH | 20% | 20% | 56% | 18% | 22% |
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 Total returns do not include the effect of the contingent deferred sales charge.
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.
Consolidated Financial Highlights — Gold Portfolio
| Years ended February 28, | 2016 A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $18.50 | $22.41 | $30.72 | $45.96 | $51.44 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | (.03) | (.04) | .06 | .16 | (.02) |
| Net realized and unrealized gain (loss) | (.35) | (3.87) | (8.38) | (15.40) | (2.85) |
| Total from investment operations | (.38) | (3.91) | (8.32) | (15.24) | (2.87) |
| Distributions from net realized gain | – | – | – | – | (2.61) |
| Total distributions | – | – | – | – | (2.61) |
| Redemption fees added to paid in capitalB | –C | –C | .01 | –C | –C |
| Net asset value, end of period | $18.12 | $18.50 | $22.41 | $30.72 | $45.96 |
| Total ReturnD | (2.05)% | (17.45)% | (27.05)% | (33.16)% | (6.00)% |
| Ratios to Average Net AssetsE,F | |||||
| Expenses before reductions | .97% | .94% | .94% | .93% | .89% |
| Expenses net of fee waivers, if any | .93% | .90% | .92% | .92% | .89% |
| Expenses net of all reductions | .93% | .90% | .91% | .92% | .89% |
| Net investment income (loss) | (.17)% | (.22)% | .27% | .43% | (.03)% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $1,076,206 | $992,944 | $1,275,913 | $2,301,019 | $3,924,440 |
| Portfolio turnover rateG | 20% | 20% | 56% | 18% | 22% |
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 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.
G 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.
Consolidated Financial Highlights — Gold Portfolio Class I
| Years ended February 28, | 2016 A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $18.50 | $22.41 | $30.69 | $45.87 | $51.32 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | (.02) | (.04) | .07 | .20 | .02 |
| Net realized and unrealized gain (loss) | (.35) | (3.87) | (8.36) | (15.38) | (2.85) |
| Total from investment operations | (.37) | (3.91) | (8.29) | (15.18) | (2.83) |
| Distributions from net realized gain | – | – | – | – | (2.62) |
| Total distributions | – | – | – | – | (2.62) |
| Redemption fees added to paid in capitalB | –C | –C | .01 | –C | –C |
| Net asset value, end of period | $18.13 | $18.50 | $22.41 | $30.69 | $45.87 |
| Total ReturnD | (2.00)% | (17.45)% | (26.98)% | (33.09)% | (5.94)% |
| Ratios to Average Net AssetsE,F | |||||
| Expenses before reductions | .92% | .90% | .87% | .84% | .82% |
| Expenses net of fee waivers, if any | .88% | .86% | .85% | .83% | .81% |
| Expenses net of all reductions | .88% | .86% | .84% | .82% | .81% |
| Net investment income (loss) | (.12)% | (.18)% | .34% | .52% | .04% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $52,607 | $23,667 | $107,830 | $128,262 | $168,548 |
| Portfolio turnover rateG | 20% | 20% | 56% | 18% | 22% |
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 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.
G 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, 2016
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 T, Class C, Gold and Class I (formerly Institutional Class) shares, each of which, along with Class B shares, has equal rights as to assets and voting privileges. Class B shares are closed to new accounts and additional purchases, except for exchanges and reinvestments. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a maximum holding period of seven years from the initial date of purchase. The Fund's investments in emerging markets can be subject to social, economic, regulatory, and political uncertainties and can be extremely volatile.
During the period, the Board of Trustees approved the conversion of all existing Class B shares into Class A shares, effective on or about July 1, 2016, regardless of the length of times shares have been held.
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 $185,320,085 in the Subsidiary, representing 14.8% 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 Fidelity Investments Money Management, Inc. (FIMM), an affiliate of the investment adviser. Annualized expenses of the Money Market Central Funds as of their most recent shareholder report date are less than .005%.
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 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 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 Fidelity SelectCo, LLC (SelectCo) Fair Value Committee (the Committee). 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. Utilizing these techniques may result in transfers between Level 1 and Level 2. 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, 2016, including information on transfers between Levels 1 and 2, 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 may 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. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. Subsequent to ex-dividend date the Fund determines the components of these distributions, based upon receipt of tax filings or other correspondence relating to the underlying investment. 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), independent Trustees may elect 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 are included in the accompanying Statement of Assets and Liabilities.
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, 2016, 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 dividends 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 corporation, deferred trustees compensation, capital loss carryforwards and losses deferred due to wash sales.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end on an unconsolidated basis were as follows:
| Gross unrealized appreciation | $175,385,332 |
| Gross unrealized depreciation | (530,042,755) |
| Net unrealized appreciation (depreciation) on securities | $(354,657,423) |
| Tax Cost | $1,639,732,624 |
The tax-based components of distributable earnings as of period end were as follows:
| Undistributed ordinary income | $16,636,474 |
| Capital loss carryforward | $(1,152,602,929) |
| Net unrealized appreciation (depreciation) on securities and other investments | $(354,660,525) |
Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. Under the Regulated Investment Company Modernization Act of 2010 (the Act), the Fund is permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period and such capital losses are required to be used prior to any losses that expire. 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 | $(137,035,055) |
| Long-term | (1,015,567,874) |
| Total capital loss carryforward | $(1,152,602,929) |
Trading (Redemption) Fees. Shares held by investors in the Fund less than 30 days may be subject to a redemption fee equal to .75% of the NAV of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Fund and accounted for as an addition to paid in capital.
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, aggregated $308,152,319 and $183,244,812, respectively.
6. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity SelectCo, 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 .25% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by Fidelity Management & Research Company (FMR) and the investment adviser. The group fee rate decreases as assets under management increase and increases as assets under management decrease.
FMR, either through itself or through an affiliate provides investment management related services to the Subsidiary for which the Subsidiary pays a monthly management fee at the annual rate of .30% of its net assets. Under the management contract with the subsidiary, FMR pays all other expenses of the Subsidiary, except custodian fees.
For the reporting period, the total consolidated annual management fee rate which includes the management fee of the Fund and the Subsidiary was .58% of the Fund's average net assets.
During the period, the investment adviser waived a portion of the Fund's management fee representing the amount of the management fee paid by the Subsidiary to FMR as described in the Expense Reductions note.
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 Corporation (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% | $97,126 | $– |
| Class T | .25% | .25% | 67,784 | – |
| Class B | .75% | .25% | 15,769 | 11,827 |
| Class C | .75% | .25% | 361,217 | 94,153 |
| $541,896 | $105,980 |
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 T 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 T, Class B, and Class C redemptions. The deferred sales charges range from 5.00% to 1.00% for Class B shares, 1.00% for Class C shares, 1.00% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained by FDC | |
| Class A | $30,057 |
| Class T | 7,972 |
| Class B(a) | 1,554 |
| Class C(a) | 9,782 |
| $49,365 |
(a) When Class B and 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, Inc., (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. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements.
For the period, transfer agent fees for each class were as follows:
| Amount | % of Class-Level Average Net Assets | |
| Class A | $115,271 | .30 |
| Class T | 45,054 | .33 |
| Class B | 4,675 | .30 |
| Class C | 101,686 | .28 |
| Gold | 2,293,659 | .28 |
| Class I | 59,720 | .24 |
| $ 2,620,065 |
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. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions 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 $6,119 for the period.
Interfund Trades. The Fund 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.
The Fund participates 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 Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $1,237 and is reflected in Miscellaneous expenses on the Consolidated Statement of Operations. During the period, the Fund did not borrow on this line of credit.
8. Security Lending.
The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. 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. Total security lending income during the period amounted to $260,688.
9. Expense Reductions.
The investment adviser has contractually agreed to waive the Fund's management fee in an amount equal to the management fee paid by the Subsidiary to FMR. During the period, this waiver reduced the Fund's management fee by $318,965.
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 $11,135 for the period.
In addition, during the period the investment adviser reimbursed and/or waived a portion of fund-level operating expenses in the amount of $6,985 and a portion of class-level operating expenses as follows:
| Amount | |
| Class A | $99 |
| Class T | 28 |
| Class B | 4 |
| Class C | 395 |
| Gold | 23,242 |
| Class I | 1,473 |
| $ 25,241 |
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, 2016 | Year ended February 28, 2015 | Year ended February 29, 2016 | Year ended February 28, 2015 | |
| Class A | ||||
| Shares sold | 1,535,243 | 1,014,651 | $23,173,408 | $20,366,842 |
| Shares redeemed | (1,100,912) | (1,163,476) | (16,009,093) | (22,763,258) |
| Net increase (decrease) | 434,331 | (148,825) | $7,164,315 | $(2,396,416) |
| Class T | ||||
| Shares sold | 373,972 | 317,888 | $5,610,984 | $6,202,712 |
| Shares redeemed | (262,516) | (256,267) | (3,867,307) | (4,926,125) |
| Net increase (decrease) | 111,456 | 61,621 | $1,743,677 | $1,276,587 |
| Class B | ||||
| Shares sold | 6,237 | 6,743 | $87,905 | $129,320 |
| Shares redeemed | (65,868) | (71,044) | (948,946) | (1,326,720) |
| Net increase (decrease) | (59,631) | (64,301) | $(861,041) | $(1,197,400) |
| Class C | ||||
| Shares sold | 1,382,064 | 1,131,151 | $19,834,455 | $21,162,781 |
| Shares redeemed | (513,567) | (444,470) | (7,072,215) | (8,210,673) |
| Net increase (decrease) | 868,497 | 686,681 | $12,762,240 | $12,952,108 |
| Gold | ||||
| Shares sold | 25,445,576 | 22,066,731 | $393,817,498 | $446,680,830 |
| Shares redeemed | (19,739,546) | (25,311,740) | (303,052,757) | (508,417,315) |
| Net increase (decrease) | 5,706,030 | (3,245,009) | $90,764,741 | $(61,736,485) |
| Class I | ||||
| Shares sold | 2,727,491 | 1,547,691 | $42,106,104 | $33,198,070 |
| Shares redeemed | (1,105,474) | (5,080,368) | (16,369,331) | (106,841,413) |
| Net increase (decrease) | 1,622,017 | (3,532,677) | $25,736,773 | $(73,643,343) |
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.
Fidelity Advisor® Materials Fund
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, 2016 | Past 1 year | Past 5 years | Past 10 years |
| Class I | (19.79)% | 1.83% | 7.14% |
The initial offering of Class I shares took place on December 12, 2006. Returns prior to December 12, 2006 are those of Materials Portfolio, the original class of the fund.
Prior to October 1, 2006, the fund was named Industrial Materials 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 Fidelity Advisor® Materials Fund - Class I on February 28, 2006.
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.
See above for additional information regarding the performance of Class I.
| Period Ending Values | ||
| $19,935 | Fidelity Advisor® Materials Fund - Class I | |
| $18,666 | S&P 500® Index | |
Fidelity Advisor® Materials Fund
Management's Discussion of Fund Performance
Market Recap: The S&P 500® index returned -6.19% for the year ending February 29, 2016. Largely range-bound for the first half of the period, U.S. stocks suffered a steep, late-summer decline on concern about an economic slowdown in China. The market recovered in October, lifted by the U.S. Federal Reserve’s decision to delay raising near-term interest rates until mid-December. Investors also drew courage from a rate cut in China and economic stimulus in Europe. But continued oil-price weakness and U.S.-dollar strength, plus fresh worries about China and the Middle East, pushed the S&P 500® to its worst January since 2009, followed by a volatile but ultimately flattish February. Overall, growth-oriented and larger-cap stocks fared better than value and smaller-cap complements. In this environment, the tech-heavy Nasdaq Composite Index® returned -7.07% for the 12 months; the Russell 2000® Index, -14.97%. Few sectors within the broad-market S&P 500® gained ground, with a wide gap separating leaders from laggards. Despite increased competition among wireless carriers, telecommunication services (+8%) led the way, followed by the more defensive utilities sector (+6%). Rising wages and low inflation buoyed consumer staples (+4%), less so consumer discretionary (0%). Meanwhile, energy (-24%) foundered amid commodity weakness that also hurt materials (-17%). The financials sector (-12%) struggled as well.Comments from Portfolio Manager Tobias Welo: For the year, the fund’s share classes (excluding sales charges, if applicable) trailed the -17.90% return of the MSCI U.S. IMI Materials 25/50 Index. Materials stocks also lagged the S&P 500® index, weighed down by weak-performing categories such as diversified metals & mining and fertilizers & agricultural chemicals. Versus the MSCI index, stock selection and a sizable overweighting in paper-packaging stocks detracted from the fund’s results, as did our picks in construction materials and diversified chemicals, and an underweighting in industrial gases. Paper-packaging stock WestRock was by far our biggest detractor, as well as the fund’s third-largest holding at period end and a sizable overweighting. Fundamentals for the firm’s chemicals segment weakened as a result of lower oil prices, which hampered the stock. Another detractor versus the index was a large underweighting in index heavyweight Dow Chemical, which managed a modest gain this period. Not owning index component Airgas in November, when the company received a buyout bid from France-based industrial gases provider Air Liquide, also worked against us. Conversely, underweighting diversified metals & mining, the weakest group in the MSCI index, and avoiding aluminum shares bolstered relative results. The fund’s top relative contributor was Freeport-McMoRan, an index name that returned -64%. I sold our token stake in this natural resources provider in February 2015, just before the period began. Our overweighted stake in specialty chemicals contributor Cytec Industries also contributed. The company makes composites and other materials for aerospace and industrial customers. I established this position in March, and the stock had a nice move in July, after the company announced it had entered into a merger agreement with Brussels-based Solvay, a global chemical company. I liquidated our stake in Cytec soon after to pursue opportunities I thought had more upside.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.
Materials Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 29, 2016
| % of fund's net assets | % of fund's net assets 6 months ago | |
| E.I. du Pont de Nemours & Co. | 14.6 | 9.4 |
| Eastman Chemical Co. | 8.9 | 8.0 |
| WestRock Co. | 8.5 | 9.2 |
| Monsanto Co. | 7.3 | 9.6 |
| LyondellBasell Industries NV Class A | 6.2 | 7.2 |
| Graphic Packaging Holding Co. | 5.3 | 3.8 |
| Ecolab, Inc. | 5.2 | 6.4 |
| The Dow Chemical Co. | 4.9 | 0.0 |
| PPG Industries, Inc. | 4.9 | 4.9 |
| Eagle Materials, Inc. | 4.8 | 4.6 |
| 70.6 |
Top Industries (% of fund's net assets)
| As of February 29, 2016 | ||
| Chemicals | 71.1% | |
| Containers & Packaging | 19.4% | |
| Construction Materials | 4.8% | |
| Metals & Mining | 1.8% | |
| Building Products | 1.1% | |
| All Others* | 1.8% | |
| As of August 31, 2015 | ||
| Chemicals | 63.5% | |
| Containers & Packaging | 21.6% | |
| Metals & Mining | 5.2% | |
| Construction Materials | 4.6% | |
| Paper & Forest Products | 1.5% | |
| All Others* | 3.6% | |
* Includes short-term investments and net other assets (liabilities).
Percentages shown as 0.0% may reflect amounts less than 0.05%.
Materials Portfolio
Investments February 29, 2016
Showing Percentage of Net Assets
| Common Stocks - 98.3% | |||
| Shares | Value | ||
| Building Products - 1.1% | |||
| Building Products - 1.1% | |||
| GCP Applied Technologies, Inc. (a) | 797,440 | $14,138,611 | |
| Chemicals - 71.1% | |||
| Commodity Chemicals - 7.3% | |||
| LyondellBasell Industries NV Class A | 1,016,696 | 81,549,186 | |
| Orion Engineered Carbons SA | 1,134,534 | 14,578,762 | |
| 96,127,948 | |||
| Diversified Chemicals - 28.6% | |||
| E.I. du Pont de Nemours & Co. | 3,171,200 | 193,030,945 | |
| Eastman Chemical Co. | 1,824,548 | 117,044,754 | |
| Olin Corp. | 140,600 | 2,131,496 | |
| The Dow Chemical Co. | 1,343,300 | 65,297,813 | |
| 377,505,008 | |||
| Fertilizers & Agricultural Chemicals - 11.8% | |||
| Agrium, Inc. | 146,500 | 12,615,458 | |
| CF Industries Holdings, Inc. | 903,610 | 32,945,621 | |
| Monsanto Co. | 1,071,630 | 96,435,984 | |
| Potash Corp. of Saskatchewan, Inc. | 833,300 | 14,122,372 | |
| 156,119,435 | |||
| Specialty Chemicals - 23.4% | |||
| Ashland, Inc. | 476,300 | 45,386,627 | |
| Ecolab, Inc. | 664,424 | 68,136,681 | |
| Frutarom Industries Ltd. | 270,296 | 13,977,842 | |
| NewMarket Corp. | 58,129 | 21,225,223 | |
| PPG Industries, Inc. | 669,400 | 64,617,182 | |
| Valspar Corp. | 621,100 | 48,594,864 | |
| W.R. Grace & Co. (a) | 699,640 | 48,093,254 | |
| 310,031,673 | |||
| TOTAL CHEMICALS | 939,784,064 | ||
| Construction Materials - 4.8% | |||
| Construction Materials - 4.8% | |||
| Eagle Materials, Inc. | 1,052,715 | 63,605,040 | |
| Containers & Packaging - 19.4% | |||
| Metal & Glass Containers - 4.3% | |||
| Ball Corp. | 855,170 | 56,637,909 | |
| Paper Packaging - 15.1% | |||
| Graphic Packaging Holding Co. | 5,639,795 | 69,538,672 | |
| Sealed Air Corp. | 380,400 | 17,395,692 | |
| WestRock Co. | 3,342,919 | 112,890,375 | |
| 199,824,739 | |||
| TOTAL CONTAINERS & PACKAGING | 256,462,648 | ||
| Energy Equipment & Services - 0.1% | |||
| Oil & Gas Equipment & Services - 0.1% | |||
| Aspen Aerogels, Inc. (a) | 340,453 | 1,242,653 | |
| Metals & Mining - 1.8% | |||
| Diversified Metals & Mining - 1.8% | |||
| Compass Minerals International, Inc. | 340,800 | 23,119,872 | |
| TOTAL COMMON STOCKS | |||
| (Cost $1,255,329,095) | 1,298,352,888 | ||
| Money Market Funds - 1.5% | |||
| Fidelity Cash Central Fund, 0.40% (b) | |||
| (Cost $19,504,253) | 19,504,253 | 19,504,253 | |
| TOTAL INVESTMENT PORTFOLIO - 99.8% | |||
| (Cost $1,274,833,348) | 1,317,857,141 | ||
| NET OTHER ASSETS (LIABILITIES) - 0.2% | 3,053,922 | ||
| NET ASSETS - 100% | $1,320,911,063 |
Legend
(a) Non-income producing
(b) 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 | $38,726 |
| Fidelity Securities Lending Cash Central Fund | 89,068 |
| Total | $127,794 |
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 | Value, end of period |
| Aspen Aerogels, Inc. | $10,127,522 | $-- | $7,035,841 | $-- | $-- |
| Total | $10,127,522 | $-- | $7,035,841 | $-- | $-- |
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 | 89.7% |
| Netherlands | 6.2% |
| Canada | 2.0% |
| Luxembourg | 1.1% |
| Israel | 1.0% |
| 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, 2016 | ||
| Assets | ||
| Investment in securities, at value — See accompanying schedule: Unaffiliated issuers (cost $1,255,329,095) | $1,298,352,888 | |
| Fidelity Central Funds (cost $19,504,253) | 19,504,253 | |
| Total Investments (cost $1,274,833,348) | $1,317,857,141 | |
| Receivable for investments sold | 26,728,214 | |
| Receivable for fund shares sold | 2,004,012 | |
| Dividends receivable | 2,889,783 | |
| Distributions receivable from Fidelity Central Funds | 1,712 | |
| Prepaid expenses | 6,204 | |
| Other receivables | 54,626 | |
| Total assets | 1,349,541,692 | |
| Liabilities | ||
| Payable for investments purchased | $24,989,520 | |
| Payable for fund shares redeemed | 2,558,256 | |
| Accrued management fee | 592,501 | |
| Distribution and service plan fees payable | 110,741 | |
| Other affiliated payables | 287,993 | |
| Other payables and accrued expenses | 91,618 | |
| Total liabilities | 28,630,629 | |
| Net Assets | $1,320,911,063 | |
| Net Assets consist of: | ||
| Paid in capital | $1,314,144,629 | |
| Distributions in excess of net investment income | (45,053) | |
| Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (36,212,306) | |
| Net unrealized appreciation (depreciation) on investments | 43,023,793 | |
| Net Assets | $1,320,911,063 | |
| Calculation of Maximum Offering Price | ||
| Class A: | ||
| Net Asset Value and redemption price per share ($202,746,868 ÷ 3,221,442 shares) | $62.94 | |
| Maximum offering price per share (100/94.25 of $62.94) | $66.78 | |
| Class T: | ||
| Net Asset Value and redemption price per share ($30,117,887 ÷ 481,737 shares) | $62.52 | |
| Maximum offering price per share (100/96.50 of $62.52) | $64.79 | |
| Class B: | ||
| Net Asset Value and offering price per share ($3,021,034 ÷ 49,306 shares)(a) | $61.27 | |
| Class C: | ||
| Net Asset Value and offering price per share ($66,895,988 ÷ 1,095,101 shares)(a) | $61.09 | |
| Materials: | ||
| Net Asset Value, offering price and redemption price per share ($711,984,554 ÷ 11,265,515 shares) | $63.20 | |
| Class I: | ||
| Net Asset Value, offering price and redemption price per share ($306,144,732 ÷ 4,853,795 shares) | $63.07 |
(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, 2016 | ||
| Investment Income | ||
| Dividends | $36,704,710 | |
| Interest | 36 | |
| Income from Fidelity Central Funds | 127,794 | |
| Total income | 36,832,540 | |
| Expenses | ||
| Management fee | $9,399,943 | |
| Transfer agent fees | 3,633,828 | |
| Distribution and service plan fees | 1,795,819 | |
| Accounting and security lending fees | 530,288 | |
| Custodian fees and expenses | 34,030 | |
| Independent trustees' compensation | 32,246 | |
| Registration fees | 133,878 | |
| Audit | 55,040 | |
| Legal | 20,722 | |
| Miscellaneous | 23,598 | |
| Total expenses before reductions | 15,659,392 | |
| Expense reductions | (116,230) | 15,543,162 |
| Net investment income (loss) | 21,289,378 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | (352,968) | |
| Other affiliated issuers | 596,307 | |
| Foreign currency transactions | (63,699) | |
| Total net realized gain (loss) | 179,640 | |
| Change in net unrealized appreciation (depreciation) on investment securities | (394,277,283) | |
| Net gain (loss) | (394,097,643) | |
| Net increase (decrease) in net assets resulting from operations | $(372,808,265) |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 29, 2016 | Year ended February 28, 2015 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $21,289,378 | $16,415,183 |
| Net realized gain (loss) | 179,640 | 140,995,843 |
| Change in net unrealized appreciation (depreciation) | (394,277,283) | (115,351,730) |
| Net increase (decrease) in net assets resulting from operations | (372,808,265) | 42,059,296 |
| Distributions to shareholders from net investment income | (15,036,509) | (14,132,791) |
| Distributions to shareholders from net realized gain | (20,008,646) | (176,045,519) |
| Total distributions | (35,045,155) | (190,178,310) |
| Share transactions - net increase (decrease) | (326,507,843) | 139,840,860 |
| Redemption fees | 36,485 | 59,111 |
| Total increase (decrease) in net assets | (734,324,778) | (8,219,043) |
| Net Assets | ||
| Beginning of period | 2,055,235,841 | 2,063,454,884 |
| End of period (including distributions in excess of net investment income of $45,053 and distributions in excess of net investment income of $33,066, respectively) | $1,320,911,063 | $2,055,235,841 |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Materials Portfolio Class A
| Years ended February 28, | 2016 A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $80.43 | $86.46 | $73.44 | $69.23 | $69.96 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .79 | .51 | .36 | .70 | .40 |
| Net realized and unrealized gain (loss) | (16.80) | 1.05 | 14.56 | 5.69 | (.35) |
| Total from investment operations | (16.01) | 1.56 | 14.92 | 6.39 | .05 |
| Distributions from net investment income | (.58) | (.43) | (.30) | (.63) | (.40) |
| Distributions from net realized gain | (.91) | (7.17) | (1.60) | (1.55) | (.38) |
| Total distributions | (1.48)C | (7.59)D | (1.90) | (2.18) | (.78) |
| Redemption fees added to paid in capitalB,E | – | – | – | – | – |
| Net asset value, end of period | $62.94 | $80.43 | $86.46 | $73.44 | $69.23 |
| Total ReturnF,G | (20.01)% | 2.20% | 20.46% | 9.40% | .21% |
| Ratios to Average Net AssetsH,I | |||||
| Expenses before reductions | 1.06% | 1.06% | 1.10% | 1.13% | 1.13% |
| Expenses net of fee waivers, if any | 1.06% | 1.06% | 1.10% | 1.13% | 1.13% |
| Expenses net of all reductions | 1.06% | 1.06% | 1.09% | 1.12% | 1.13% |
| Net investment income (loss) | 1.09% | .61% | .45% | 1.02% | .61% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $202,747 | $319,740 | $336,777 | $219,627 | $157,781 |
| Portfolio turnover rateJ | 64% | 76%K | 53% | 61% | 94% |
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 Total distributions of $7.59 per share is comprised of distributions from net investment income of $.425 and distributions from net realized gain of $7.167 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.
Financial Highlights — Materials Portfolio Class T
| Years ended February 28, | 2016 A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $79.95 | $85.99 | $73.05 | $68.91 | $69.68 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .56 | .25 | .12 | .50 | .21 |
| Net realized and unrealized gain (loss) | (16.69) | 1.06 | 14.48 | 5.66 | (.35) |
| Total from investment operations | (16.13) | 1.31 | 14.60 | 6.16 | (.14) |
| Distributions from net investment income | (.40) | (.18) | (.06) | (.46) | (.25) |
| Distributions from net realized gain | (.91) | (7.17) | (1.60) | (1.55) | (.38) |
| Total distributions | (1.30)C | (7.35) | (1.66) | (2.02)D | (.63) |
| Redemption fees added to paid in capitalB,E | – | – | – | – | – |
| Net asset value, end of period | $62.52 | $79.95 | $85.99 | $73.05 | $68.91 |
| Total ReturnF,G | (20.27)% | 1.90% | 20.10% | 9.10% | (.09)% |
| Ratios to Average Net AssetsH,I | |||||
| Expenses before reductions | 1.38% | 1.37% | 1.40% | 1.42% | 1.42% |
| Expenses net of fee waivers, if any | 1.37% | 1.37% | 1.40% | 1.42% | 1.42% |
| Expenses net of all reductions | 1.37% | 1.37% | 1.39% | 1.41% | 1.41% |
| Net investment income (loss) | .77% | .31% | .15% | .73% | .33% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $30,118 | $45,252 | $45,223 | $37,860 | $28,290 |
| Portfolio turnover rateJ | 64% | 76%K | 53% | 61% | 94% |
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 Total distributions of $2.02 per share is comprised of distributions from net investment income of $.463 and distributions from net realized gain of $1.552 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.
Financial Highlights — Materials Portfolio Class B
| Years ended February 28, | 2016 A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $78.31 | $84.63 | $72.21 | $68.13 | $68.95 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .19 | (.18) | (.28) | .16 | (.11) |
| Net realized and unrealized gain (loss) | (16.32) | 1.03 | 14.28 | 5.57 | (.33) |
| Total from investment operations | (16.13) | .85 | 14.00 | 5.73 | (.44) |
| Distributions from net investment income | – | – | – | (.10) | – |
| Distributions from net realized gain | (.91) | (7.17) | (1.58) | (1.55) | (.38) |
| Total distributions | (.91) | (7.17) | (1.58) | (1.65) | (.38) |
| Redemption fees added to paid in capitalB,C | – | – | – | – | – |
| Net asset value, end of period | $61.27 | $78.31 | $84.63 | $72.21 | $68.13 |
| Total ReturnD,E | (20.67)% | 1.35% | 19.50% | 8.55% | (.57)% |
| Ratios to Average Net AssetsF,G | |||||
| Expenses before reductions | 1.88% | 1.89% | 1.90% | 1.92% | 1.91% |
| Expenses net of fee waivers, if any | 1.88% | 1.89% | 1.90% | 1.92% | 1.91% |
| Expenses net of all reductions | 1.87% | 1.89% | 1.90% | 1.91% | 1.91% |
| Net investment income (loss) | .27% | (.22)% | (.36)% | .24% | (.17)% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $3,021 | $6,487 | $8,671 | $10,218 | $11,040 |
| Portfolio turnover rateH | 64% | 76%I | 53% | 61% | 94% |
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 Total returns do not include the effect of the contingent deferred sales charge.
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.
Financial Highlights — Materials Portfolio Class C
| Years ended February 28, | 2016 A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $78.12 | $84.38 | $71.96 | $67.98 | $68.78 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .24 | (.12) | (.23) | .18 | (.10) |
| Net realized and unrealized gain (loss) | (16.28) | 1.03 | 14.23 | 5.55 | (.32) |
| Total from investment operations | (16.04) | .91 | 14.00 | 5.73 | (.42) |
| Distributions from net investment income | (.08) | – | – | (.20) | – |
| Distributions from net realized gain | (.91) | (7.17) | (1.58) | (1.55) | (.38) |
| Total distributions | (.99) | (7.17) | (1.58) | (1.75) | (.38) |
| Redemption fees added to paid in capitalB,C | – | – | – | – | – |
| Net asset value, end of period | $61.09 | $78.12 | $84.38 | $71.96 | $67.98 |
| Total ReturnD,E | (20.61)% | 1.43% | 19.56% | 8.58% | (.55)% |
| Ratios to Average Net AssetsF,G | |||||
| Expenses before reductions | 1.81% | 1.82% | 1.85% | 1.89% | 1.89% |
| Expenses net of fee waivers, if any | 1.81% | 1.82% | 1.85% | 1.89% | 1.89% |
| Expenses net of all reductions | 1.81% | 1.82% | 1.84% | 1.88% | 1.89% |
| Net investment income (loss) | .34% | (.14)% | (.30)% | .26% | (.15)% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $66,896 | $107,697 | $106,879 | $75,007 | $58,296 |
| Portfolio turnover rateH | 64% | 76%I | 53% | 61% | 94% |
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 Total returns do not include the effect of the contingent deferred sales charge.
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.
Financial Highlights — Materials Portfolio
| Years ended February 28, | 2016 A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $80.77 | $86.81 | $73.68 | $69.41 | $70.11 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .98 | .73 | .58 | .90 | .60 |
| Net realized and unrealized gain (loss) | (16.89) | 1.05 | 14.63 | 5.71 | (.37) |
| Total from investment operations | (15.91) | 1.78 | 15.21 | 6.61 | .23 |
| Distributions from net investment income | (.76) | (.65) | (.48) | (.79) | (.55) |
| Distributions from net realized gain | (.91) | (7.17) | (1.60) | (1.55) | (.38) |
| Total distributions | (1.66)C | (7.82) | (2.08) | (2.34) | (.93) |
| Redemption fees added to paid in capitalB,D | – | – | – | – | – |
| Net asset value, end of period | $63.20 | $80.77 | $86.81 | $73.68 | $69.41 |
| Total ReturnE | (19.81)% | 2.46% | 20.80% | 9.71% | .49% |
| Ratios to Average Net AssetsF,G | |||||
| Expenses before reductions | .81% | .80% | .82% | .85% | .85% |
| Expenses net of fee waivers, if any | .81% | .80% | .82% | .85% | .85% |
| Expenses net of all reductions | .80% | .80% | .82% | .84% | .84% |
| Net investment income (loss) | 1.34% | .87% | .73% | 1.30% | .90% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $711,985 | $1,107,689 | $1,231,942 | $1,146,782 | $1,089,619 |
| Portfolio turnover rateH | 64% | 76%I | 53% | 61% | 94% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C 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.
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.
Financial Highlights — Materials Portfolio Class I
| Years ended February 28, | 2016 A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $80.60 | $86.66 | $73.57 | $69.35 | $70.05 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | 1.00 | .74 | .59 | .90 | .60 |
| Net realized and unrealized gain (loss) | (16.86) | 1.05 | 14.60 | 5.70 | (.36) |
| Total from investment operations | (15.86) | 1.79 | 15.19 | 6.60 | .24 |
| Distributions from net investment income | (.77) | (.68) | (.50) | (.83) | (.56) |
| Distributions from net realized gain | (.91) | (7.17) | (1.60) | (1.55) | (.38) |
| Total distributions | (1.67)C | (7.85) | (2.10) | (2.38) | (.94) |
| Redemption fees added to paid in capitalB,D | – | – | – | – | – |
| Net asset value, end of period | $63.07 | $80.60 | $86.66 | $73.57 | $69.35 |
| Total ReturnE | (19.79)% | 2.49% | 20.81% | 9.71% | .50% |
| Ratios to Average Net AssetsF,G | |||||
| Expenses before reductions | .78% | .78% | .81% | .85% | .84% |
| Expenses net of fee waivers, if any | .78% | .78% | .81% | .85% | .84% |
| Expenses net of all reductions | .78% | .78% | .81% | .84% | .83% |
| Net investment income (loss) | 1.37% | .89% | .74% | 1.30% | .91% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $306,145 | $468,371 | $333,963 | $246,696 | $89,299 |
| Portfolio turnover rateH | 64% | 76%I | 53% | 61% | 94% |
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.
Notes to Financial Statements
For the period ended February 29, 2016
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 T, Class C, Materials and Class I (formerly Institutional Class) shares, each of which, along with Class B shares, has equal rights as to assets and voting privileges. Class B shares are closed to new accounts and additional purchases, except for exchanges and reinvestments. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a maximum holding period of seven years from the initial date of purchase.
During the period, the Board of Trustees approved the conversion of all existing Class B shares into Class A shares, effective on or about July 1, 2016, regardless of the length of times shares have been held.
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 Fidelity Investments Money Management, Inc. (FIMM), an affiliate of the investment adviser. Annualized expenses of the Money Market Central Funds as of their most recent shareholder report date are less than .005%.
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 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 Fidelity SelectCo, LLC (SelectCo) Fair Value Committee (the Committee). 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. Utilizing these techniques may result in transfers between Level 1 and Level 2. 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 may 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. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. Subsequent to ex-dividend date the Fund determines the components of these distributions, based upon receipt of tax filings or other correspondence relating to the underlying investment. 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), independent Trustees may elect 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 are included in the accompanying Statement of Assets and Liabilities.
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, 2016, 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 dividends 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, passive foreign investment companies (PFIC), original issue discount, deferred trustees compensation, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
| Gross unrealized appreciation | $171,131,096 |
| Gross unrealized depreciation | (136,462,813) |
| Net unrealized appreciation (depreciation) on securities | $34,668,283 |
| Tax Cost | $1,283,188,858 |
The tax-based components of distributable earnings as of period end were as follows:
| Net unrealized appreciation (depreciation) on securities and other investments | $34,668,283 |
The Fund intends to elect to defer to its next fiscal year $26,553,392 of capital losses recognized during the period November 1, 2015 to February 29, 2016.
Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. Under the Regulated Investment Company Modernization Act of 2010 (the Act), the Fund is permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period and such capital losses are required to be used prior to any losses that expire. The capital loss carryforward information presented below, including any applicable limitation, is estimated as of fiscal period end and is subject to adjustment.
| Fiscal year of expiration | |
| 2017 | $(199,630) |
| 2018 | (1,022,988) |
| 2019 | (80,787) |
| Total with expiration | $(1,303,405) |
The Fund acquired $1,303,405 of capital loss carryforwards as part of a merger in a prior period. The losses acquired that will be available to offset future capital gains of the Fund will be limited to approximately $611,309 per year.
The tax character of distributions paid was as follows:
| February 29, 2016 | February 28, 2015 | |
| Ordinary Income | $15,036,509 | $ 14,132,791 |
| Long-term Capital Gains | 20,008,646 | 176,045,519 |
| Total | $35,045,155 | $ 190,178,310 |
Trading (Redemption) Fees. Shares held by investors in the Fund less than 30 days may be subject to a redemption fee equal to .75% of the NAV of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Fund and accounted for as an addition to paid in capital.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $1,081,563,958 and $1,425,677,892, respectively.
5. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity SelectCo, 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 .25% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by Fidelity Management & Research Company (FMR) and the investment adviser. 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 .55% 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 Corporation (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% | $669,561 | $– |
| Class T | .25% | .25% | 187,278 | – |
| Class B | .75% | .25% | 45,667 | 34,250 |
| Class C | .75% | .25% | 893,313 | 121,122 |
| $1,795,819 | $155,372 |
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 T 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 T, Class B, and Class C redemptions. The deferred sales charges range from 5.00% to 1.00% for Class B shares, 1.00% for Class C shares, 1.00% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained by FDC | |
| Class A | $63,199 |
| Class T | 4,994 |
| Class B(a) | 3,199 |
| Class C(a) | 13,325 |
| $84,717 |
(a) When Class B and 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, Inc., (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. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements.
For the period, transfer agent fees for each class were as follows:
| Amount | % of Class-Level Average Net Assets | |
| Class A | $584,630 | .22 |
| Class T | 105,698 | .28 |
| Class B | 13,231 | .29 |
| Class C | 198,202 | .22 |
| Materials | 1,969,720 | .22 |
| Class I | 762,347 | .19 |
| $ 3,633,828 |
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. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions 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 $18,365 for the period.
Interfund Trades. The Fund 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.
The Fund participates 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 Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $2,641 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, the Fund did not borrow on this line of credit.
7. Security Lending.
The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. 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. At period end, there were no security loans outstanding. 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. Total security lending income during the period amounted to $89,068.
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 $57,488 for the period.
In addition, during the period the investment adviser reimbursed and/or waived a portion of fund-level operating expenses in the amount of $13,331 and a portion of class-level operating expenses as follows:
| Amount | |
| Class A | $6,876 |
| Class T | 846 |
| Class B | 22 |
| Class C | 2,309 |
| Materials | 27,233 |
| Class I | 8,125 |
| $45,411 |
9. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
| Year ended February 29, 2016 | Year ended February 28, 2015 | |
| From net investment income | ||
| Class A | $1,939,569 | $1,638,100 |
| Class T | 197,484 | 99,020 |
| Class C | 96,966 | – |
| Materials | 8,906,972 | 8,803,568 |
| Class I | 3,895,518 | 3,592,103 |
| Total | $15,036,509 | $14,132,791 |
| From net realized gain | ||
| Class A | $3,076,815 | $27,780,861 |
| Class T | 454,774 | 3,863,168 |
| Class B | 50,258 | 628,830 |
| Class C | 1,065,857 | 9,676,799 |
| Materials | 10,731,466 | 98,020,822 |
| Class I | 4,629,476 | 36,075,039 |
| Total | $20,008,646 | $176,045,519 |
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, 2016 | Year ended February 28, 2015 | Year ended February 29, 2016 | Year ended February 28, 2015 | |
| Class A | ||||
| Shares sold | 820,014 | 1,287,549 | $59,881,537 | $107,992,682 |
| Reinvestment of distributions | 70,909 | 350,058 | 4,729,990 | 27,494,344 |
| Shares redeemed | (1,644,717) | (1,557,532) | (118,125,615) | (130,043,911) |
| Net increase (decrease) | (753,794) | 80,075 | $(53,514,088) | $5,443,115 |
| Class T | ||||
| Shares sold | 84,811 | 122,029 | $5,963,121 | $10,167,521 |
| Reinvestment of distributions | 9,611 | 48,608 | 637,500 | 3,794,851 |
| Shares redeemed | (178,706) | (130,511) | (12,734,979) | (10,688,592) |
| Net increase (decrease) | (84,284) | 40,126 | $(6,134,358) | $3,273,780 |
| Class B | ||||
| Shares sold | 1,827 | 2,935 | $136,913 | $242,184 |
| Reinvestment of distributions | 717 | 7,683 | 46,833 | 590,123 |
| Shares redeemed | (36,076) | (30,247) | (2,579,948) | (2,465,575) |
| Net increase (decrease) | (33,532) | (19,629) | $(2,396,202) | $(1,633,268) |
| Class C | ||||
| Shares sold | 141,291 | 367,698 | $10,125,628 | $30,096,831 |
| Reinvestment of distributions | 16,060 | 110,883 | 1,043,658 | 8,472,087 |
| Shares redeemed | (440,847) | (366,676) | (30,549,327) | (29,116,038) |
| Net increase (decrease) | (283,496) | 111,905 | $(19,380,041) | $9,452,880 |
| Materials | ||||
| Shares sold | 1,388,149 | 2,411,814 | $101,563,248 | $202,615,605 |
| Reinvestment of distributions | 273,187 | 1,274,428 | 18,281,510 | 100,536,677 |
| Shares redeemed | (4,109,408) | (4,164,314) | (297,748,381) | (345,204,286) |
| Net increase (decrease) | (2,448,072) | (478,072) | $(177,903,623) | $(42,052,004) |
| Class I | ||||
| Shares sold | 1,480,820 | 4,739,071(a) | $107,996,943 | $400,864,210(a) |
| Reinvestment of distributions | 118,643 | 464,747 | 7,923,047 | 36,366,289 |
| Shares redeemed | (2,556,391) | (3,246,644)(b) | (183,099,521) | (271,874,142)(b) |
| Net increase (decrease) | (956,928) | 1,957,174 | $(67,179,531) | $165,356,357 |
(a) Amount includes in-kind exchanges.
(b) Amount includes in-kind redemptions.
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.
Fidelity Advisor® Telecommunications Fund
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, 2016 | Past 1 year | Past 5 years | Past 10 years |
| Class I | 0.51% | 8.32% | 6.06% |
The initial offering of Class I shares took place on December 12, 2006. Returns prior to December 12, 2006 are those of Telecommunications Portfolio, the original class of the fund.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Fidelity Advisor® Telecommunications Fund - Class I on February 28, 2006.
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.
See above for additional information regarding the performance of Class I.
| Period Ending Values | ||
| $18,014 | Fidelity Advisor® Telecommunications Fund - Class I | |
| $18,666 | S&P 500® Index | |
Fidelity Advisor® Telecommunications Fund
Management's Discussion of Fund Performance
Market Recap: The S&P 500® index returned -6.19% for the year ending February 29, 2016. Largely range-bound for the first half of the period, U.S. stocks suffered a steep, late-summer decline on concern about an economic slowdown in China. The market recovered in October, lifted by the U.S. Federal Reserve’s decision to delay raising near-term interest rates until mid-December. Investors also drew courage from a rate cut in China and economic stimulus in Europe. But continued oil-price weakness and U.S.-dollar strength, plus fresh worries about China and the Middle East, pushed the S&P 500® to its worst January since 2009, followed by a volatile but ultimately flattish February. Overall, growth-oriented and larger-cap stocks fared better than value and smaller-cap complements. In this environment, the tech-heavy Nasdaq Composite Index® returned -7.07% for the 12 months; the Russell 2000® Index, -14.97%. Few sectors within the broad-market S&P 500® gained ground, with a wide gap separating leaders from laggards. Despite increased competition among wireless carriers, telecommunication services (+8%) led the way, followed by the more defensive utilities sector (+6%). Rising wages and low inflation buoyed consumer staples (+4%), less so consumer discretionary (0%). Meanwhile, energy (-24%) foundered amid commodity weakness that also hurt materials (-17%). The financials sector (-12%) struggled as well.Comments from Portfolio Manager Matthew Drukker: For the year, the fund’s share classes (excluding sales charges, if applicable) posted mixed results, lagging the 3.42% gain of the sector benchmark, the MSCI U.S. IMI Telecommunications Services 25/50 Index, by about 3 to 4 percentage points, but significantly outpacing the return of the broad-based S&P 500®. Underweighting strong-performing small-cap stocks, several of which benefited from acquisitions, hurt relative performance. In addition, stock picking in most industry groups detracted – especially alternative carriers, Internet software & services and wireless telecommunication services. The most significant individual detractor was Shenandoah Telecom, a wireless affiliate of Sprint, which we significantly underweighted. It hurt the fund when Shenandoah announced an accretive acquisition of Shentel, a neighboring regional service provider, in August. Conversely, stock selection in the cable & satellite group aided results versus the benchmark, as did lighter-than index stakes in wireline-only companies. An out-of-index stake in broadcast-satellite service provider DIRECTV was the fund’s top contributor. The stock proved to be a solid relative performer in the run-up to the company’s acquisition by AT&T in July.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, 2016
| % of fund's net assets | % of fund's net assets 6 months ago | |
| AT&T, Inc. | 22.2 | 24.0 |
| Verizon Communications, Inc. | 12.5 | 16.6 |
| American Tower Corp. | 6.2 | 4.2 |
| T-Mobile U.S., Inc. | 4.7 | 4.5 |
| Cogent Communications Group, Inc. | 4.6 | 3.9 |
| CenturyLink, Inc. | 4.4 | 3.2 |
| Level 3 Communications, Inc. | 4.3 | 4.5 |
| SBA Communications Corp. Class A | 3.9 | 4.2 |
| Telephone & Data Systems, Inc. | 2.8 | 3.0 |
| Frontier Communications Corp. | 2.4 | 2.8 |
| 68.0 |
Top Industries (% of fund's net assets)
| As of February 29, 2016 | ||
| Diversified Telecommunication Services | 69.1% | |
| Wireless Telecommunication Services | 12.4% | |
| Media | 7.8% | |
| Real Estate Investment Trusts | 7.2% | |
| Communications Equipment | 1.4% | |
| All Others* | 2.1% | |
| As of August 31, 2015 | ||
| Diversified Telecommunication Services | 70.2% | |
| Wireless Telecommunication Services | 19.1% | |
| Real Estate Investment Trusts | 5.2% | |
| Media | 2.1% | |
| Internet Software & Services | 1.0% | |
| All Others* | 2.4% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
Telecommunications Portfolio
Investments February 29, 2016
Showing Percentage of Net Assets
| Common Stocks - 98.7% | |||
| Shares | Value | ||
| Communications Equipment - 1.4% | |||
| Communications Equipment - 1.4% | |||
| NetScout Systems, Inc. (a) | 78,100 | $1,614,327 | |
| Qualcomm, Inc. | 52,600 | 2,671,554 | |
| Ruckus Wireless, Inc. (a) | 639,300 | 6,188,424 | |
| 10,474,305 | |||
| Diversified Telecommunication Services - 69.1% | |||
| Alternative Carriers - 18.1% | |||
| 8x8, Inc. (a) | 1,107,486 | 12,880,062 | |
| Cogent Communications Group, Inc. | 902,968 | 33,138,926 | |
| Globalstar, Inc. (a)(b) | 4,734,500 | 7,385,820 | |
| Iliad SA | 13,933 | 3,427,759 | |
| inContact, Inc. (a) | 984,723 | 9,128,382 | |
| Iridium Communications, Inc. (a)(b) | 756,676 | 5,243,765 | |
| Level 3 Communications, Inc. (a) | 638,467 | 30,997,573 | |
| Lumos Networks Corp. (a) | 922,878 | 11,351,399 | |
| Vonage Holdings Corp. (a) | 1,243,171 | 6,675,828 | |
| Zayo Group Holdings, Inc. (a) | 449,000 | 10,632,320 | |
| 130,861,834 | |||
| Integrated Telecommunication Services - 51.0% | |||
| AT&T, Inc. | 4,359,320 | 161,076,874 | |
| Atlantic Tele-Network, Inc. | 175,300 | 12,611,082 | |
| Bezeq The Israel Telecommunication Corp. Ltd. | 1,252,300 | 2,811,201 | |
| CenturyLink, Inc. | 1,039,578 | 31,800,691 | |
| Cincinnati Bell, Inc. (a) | 1,425,238 | 4,931,323 | |
| Consolidated Communications Holdings, Inc. | 336,498 | 7,870,688 | |
| FairPoint Communications, Inc. (a) | 253,100 | 3,804,093 | |
| Frontier Communications Corp. (b) | 3,158,783 | 17,089,016 | |
| General Communications, Inc. Class A (a) | 280,894 | 5,362,266 | |
| IDT Corp. Class B | 246,381 | 3,210,344 | |
| SBA Communications Corp. Class A (a) | 301,156 | 28,576,693 | |
| Verizon Communications, Inc. | 1,788,197 | 90,715,234 | |
| Windstream Holdings, Inc. (b) | 3,480 | 26,170 | |
| 369,885,675 | |||
| TOTAL DIVERSIFIED TELECOMMUNICATION SERVICES | 500,747,509 | ||
| Internet Software & Services - 0.8% | |||
| Internet Software & Services - 0.8% | |||
| Akamai Technologies, Inc. (a) | 400 | 21,588 | |
| Gogo, Inc. (a)(b) | 445,000 | 4,841,600 | |
| Rackspace Hosting, Inc. (a) | 44,500 | 958,085 | |
| 5,821,273 | |||
| Media - 7.8% | |||
| Cable & Satellite - 6.9% | |||
| Altice NV Class A (a) | 439,232 | 6,331,096 | |
| Cablevision Systems Corp. - NY Group Class A | 117,800 | 3,832,034 | |
| Charter Communications, Inc. Class A (a)(b) | 37,700 | 6,769,412 | |
| Comcast Corp. Class A | 185,300 | 10,697,369 | |
| Liberty Global PLC Class C (a) | 87,636 | 3,151,391 | |
| Megacable Holdings S.A.B. de CV unit | 595,800 | 2,299,729 | |
| Time Warner Cable, Inc. | 87,800 | 16,757,508 | |
| 49,838,539 | |||
| Movies & Entertainment - 0.9% | |||
| Twenty-First Century Fox, Inc. Class A | 244,400 | 6,603,688 | |
| TOTAL MEDIA | 56,442,227 | ||
| Real Estate Investment Trusts - 7.2% | |||
| Specialized REITs - 7.2% | |||
| American Tower Corp. | 490,290 | 45,204,738 | |
| Communications Sales & Leasing, Inc. | 213,400 | 4,022,590 | |
| Crown Castle International Corp. | 19,200 | 1,660,800 | |
| CyrusOne, Inc. | 32,100 | 1,272,444 | |
| 52,160,572 | |||
| Wireless Telecommunication Services - 12.4% | |||
| Wireless Telecommunication Services - 12.4% | |||
| Bharti Infratel Ltd. | 709,844 | 3,712,878 | |
| KDDI Corp. | 198,400 | 5,068,723 | |
| Leap Wireless International, Inc. rights (a) | 400 | 1,032 | |
| Millicom International Cellular SA (a) | 38,000 | 1,828,560 | |
| Shenandoah Telecommunications Co. | 270,352 | 6,531,704 | |
| Sprint Corp. (a)(b) | 3,260,785 | 11,217,100 | |
| T-Mobile U.S., Inc. (a) | 924,497 | 34,298,839 | |
| Telephone & Data Systems, Inc. | 747,564 | 19,974,910 | |
| U.S. Cellular Corp. (a) | 169,000 | 6,996,600 | |
| 89,630,346 | |||
| TOTAL COMMON STOCKS | |||
| (Cost $641,573,230) | 715,276,232 | ||
| Nonconvertible Preferred Stocks - 0.0% | |||
| Diversified Telecommunication Services - 0.0% | |||
| Integrated Telecommunication Services - 0.0% | |||
| Telefonica Brasil SA sponsored ADR | |||
| (Cost $5,221) | 500 | 4,790 | |
| Money Market Funds - 8.2% | |||
| Fidelity Cash Central Fund, 0.40% (c) | 14,840,160 | 14,840,160 | |
| Fidelity Securities Lending Cash Central Fund, 0.44% (c)(d) | 44,767,150 | 44,767,150 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $59,607,310) | 59,607,310 | ||
| TOTAL INVESTMENT PORTFOLIO - 106.9% | |||
| (Cost $701,185,761) | 774,888,332 | ||
| NET OTHER ASSETS (LIABILITIES) - (6.9)% | (49,779,351) | ||
| NET ASSETS - 100% | $725,108,981 |
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 | $17,909 |
| Fidelity Securities Lending Cash Central Fund | 418,984 |
| Total | $436,893 |
Investment Valuation
The following is a summary of the inputs used, as of February 29, 2016, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used 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 | $715,276,232 | $710,206,477 | $5,068,723 | $1,032 |
| Nonconvertible Preferred Stocks | 4,790 | 4,790 | -- | -- |
| Money Market Funds | 59,607,310 | 59,607,310 | -- | -- |
| Total Investments in Securities: | $774,888,332 | $769,818,577 | $5,068,723 | $1,032 |
See accompanying notes which are an integral part of the financial statements.
Telecommunications Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2016 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $43,307,801) — See accompanying schedule: Unaffiliated issuers (cost $641,578,451) | $715,281,022 | |
| Fidelity Central Funds (cost $59,607,310) | 59,607,310 | |
| Total Investments (cost $701,185,761) | $774,888,332 | |
| Receivable for investments sold | 188,405 | |
| Receivable for fund shares sold | 5,959,697 | |
| Dividends receivable | 80,741 | |
| Distributions receivable from Fidelity Central Funds | 46,183 | |
| Prepaid expenses | 1,516 | |
| Other receivables | 8,250 | |
| Total assets | 781,173,124 | |
| Liabilities | ||
| Payable to custodian bank | $188,406 | |
| Payable for investments purchased | 10,114,861 | |
| Payable for fund shares redeemed | 526,677 | |
| Accrued management fee | 302,918 | |
| Distribution and service plan fees payable | 11,978 | |
| Other affiliated payables | 111,583 | |
| Other payables and accrued expenses | 40,570 | |
| Collateral on securities loaned, at value | 44,767,150 | |
| Total liabilities | 56,064,143 | |
| Net Assets | $725,108,981 | |
| Net Assets consist of: | ||
| Paid in capital | $660,326,554 | |
| Undistributed net investment income | 1,545,938 | |
| Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (10,462,529) | |
| Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 73,699,018 | |
| Net Assets | $725,108,981 | |
| Calculation of Maximum Offering Price | ||
| Class A: | ||
| Net Asset Value and redemption price per share ($13,031,522 ÷ 209,111.8 shares) | $62.32 | |
| Maximum offering price per share (100/94.25 of $62.32) | $66.12 | |
| Class T: | ||
| Net Asset Value and redemption price per share ($8,279,755 ÷ 133,642.9 shares) | $61.95 | |
| Maximum offering price per share (100/96.50 of $61.95) | $64.20 | |
| Class B: | ||
| Net Asset Value and offering price per share ($265,271 ÷ 4,241.4 shares)(a) | $62.54 | |
| Class C: | ||
| Net Asset Value and offering price per share ($7,735,013 ÷ 124,557.3 shares)(a) | $62.10 | |
| Telecommunications: | ||
| Net Asset Value, offering price and redemption price per share ($689,600,429 ÷ 11,019,025.0 shares) | $62.58 | |
| Class I: | ||
| Net Asset Value, offering price and redemption price per share ($6,196,991 ÷ 99,222.3 shares) | $62.46 |
(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, 2016 | ||
| Investment Income | ||
| Dividends | $11,648,548 | |
| Interest | 26 | |
| Income from Fidelity Central Funds | 436,893 | |
| Total income | 12,085,467 | |
| Expenses | ||
| Management fee | $2,684,686 | |
| Transfer agent fees | 937,198 | |
| Distribution and service plan fees | 138,393 | |
| Accounting and security lending fees | 194,114 | |
| Custodian fees and expenses | 21,329 | |
| Independent trustees' compensation | 8,658 | |
| Registration fees | 93,120 | |
| Audit | 54,687 | |
| Legal | 5,468 | |
| Interest | 121 | |
| Miscellaneous | 4,950 | |
| Total expenses before reductions | 4,142,724 | |
| Expense reductions | (44,040) | 4,098,684 |
| Net investment income (loss) | 7,986,783 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | (82,853) | |
| Foreign currency transactions | (5,146) | |
| Total net realized gain (loss) | (87,999) | |
| Change in net unrealized appreciation (depreciation) on: Investment securities | 9,808,309 | |
| Assets and liabilities in foreign currencies | (749) | |
| Total change in net unrealized appreciation (depreciation) | 9,807,560 | |
| Net gain (loss) | 9,719,561 | |
| Net increase (decrease) in net assets resulting from operations | $17,706,344 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 29, 2016 | Year ended February 28, 2015 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $7,986,783 | $6,193,869 |
| Net realized gain (loss) | (87,999) | 7,829,307 |
| Change in net unrealized appreciation (depreciation) | 9,807,560 | 28,387,304 |
| Net increase (decrease) in net assets resulting from operations | 17,706,344 | 42,410,480 |
| Distributions to shareholders from net investment income | (6,674,056) | (13,679,321) |
| Distributions to shareholders from net realized gain | (4,168,398) | – |
| Total distributions | (10,842,454) | (13,679,321) |
| Share transactions - net increase (decrease) | 345,924,755 | (19,703,086) |
| Redemption fees | 10,972 | 3,706 |
| Total increase (decrease) in net assets | 352,799,617 | 9,031,779 |
| Net Assets | ||
| Beginning of period | 372,309,364 | 363,277,585 |
| End of period (including undistributed net investment income of $1,545,938 and undistributed net investment income of $262,486, respectively) | $725,108,981 | $372,309,364 |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Telecommunications Portfolio Class A
| Years ended February 28, | 2016 A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $63.26 | $58.71 | $51.58 | $46.12 | $46.93 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .81 | .76 | 1.76C | .99 | .56 |
| Net realized and unrealized gain (loss) | (.76)D | 5.83 | 6.48 | 5.43 | (.86) |
| Total from investment operations | .05 | 6.59 | 8.24 | 6.42 | (.30) |
| Distributions from net investment income | (.54) | (2.04) | (1.11) | (.96) | (.51) |
| Distributions from net realized gain | (.45) | – | (.01) | – | – |
| Total distributions | (.99) | (2.04) | (1.11)E | (.96) | (.51) |
| Redemption fees added to paid in capitalB,F | – | – | – | – | – |
| Net asset value, end of period | $62.32 | $63.26 | $58.71 | $51.58 | $46.12 |
| Total ReturnG,H | .16% | 11.54% | 16.00% | 13.97% | (.54)% |
| Ratios to Average Net AssetsI,J | |||||
| Expenses before reductions | 1.15% | 1.15% | 1.18% | 1.18% | 1.20% |
| Expenses net of fee waivers, if any | 1.15% | 1.15% | 1.18% | 1.18% | 1.20% |
| Expenses net of all reductions | 1.15% | 1.15% | 1.15% | 1.17% | 1.18% |
| Net investment income (loss) | 1.33% | 1.26% | 3.08%C | 2.01% | 1.21% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $13,032 | $11,052 | $7,712 | $6,449 | $4,677 |
| Portfolio turnover rateK | 51% | 94%L | 111% | 76% | 72% |
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 $.95 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been 1.43%.
D 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.
E Total distributions of $1.11 per share is comprised of distributions from net investment income of $1.106 and distributions from net realized gain of $.005 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.
Financial Highlights — Telecommunications Portfolio Class T
| Years ended February 28, | 2016 A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $63.04 | $58.50 | $51.41 | $46.01 | $46.81 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .61 | .57 | 1.59C | .85 | .42 |
| Net realized and unrealized gain (loss) | (.76)D | 5.81 | 6.44 | 5.39 | (.84) |
| Total from investment operations | (.15) | 6.38 | 8.03 | 6.24 | (.42) |
| Distributions from net investment income | (.49) | (1.84) | (.94) | (.84) | (.38) |
| Distributions from net realized gain | (.45) | – | (.01) | – | – |
| Total distributions | (.94) | (1.84) | (.94)E | (.84) | (.38) |
| Redemption fees added to paid in capitalB,F | – | – | – | – | – |
| Net asset value, end of period | $61.95 | $63.04 | $58.50 | $51.41 | $46.01 |
| Total ReturnG,H | (.16)% | 11.19% | 15.64% | 13.61% | (.82)% |
| Ratios to Average Net AssetsI,J | |||||
| Expenses before reductions | 1.47% | 1.47% | 1.48% | 1.48% | 1.49% |
| Expenses net of fee waivers, if any | 1.47% | 1.47% | 1.48% | 1.48% | 1.49% |
| Expenses net of all reductions | 1.46% | 1.46% | 1.45% | 1.46% | 1.47% |
| Net investment income (loss) | 1.01% | .94% | 2.78%C | 1.72% | .92% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $8,280 | $5,095 | $4,344 | $4,237 | $2,702 |
| Portfolio turnover rateK | 51% | 94%L | 111% | 76% | 72% |
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 $.94 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been 1.13%.
D 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.
E Total distributions of $.94 per share is comprised of distributions from net investment income of $.939 and distributions from net realized gain of $.005 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.
Financial Highlights — Telecommunications Portfolio Class B
| Years ended February 28, | 2016 A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $63.45 | $58.77 | $51.63 | $46.14 | $46.93 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .34 | .29 | 1.33C | .62 | .21 |
| Net realized and unrealized gain (loss) | (.76)D | 5.84 | 6.48 | 5.42 | (.83) |
| Total from investment operations | (.42) | 6.13 | 7.81 | 6.04 | (.62) |
| Distributions from net investment income | (.04) | (1.45) | (.66) | (.55) | (.17) |
| Distributions from net realized gain | (.45) | – | (.01) | – | – |
| Total distributions | (.49) | (1.45) | (.67) | (.55) | (.17) |
| Redemption fees added to paid in capitalB,E | – | – | – | – | – |
| Net asset value, end of period | $62.54 | $63.45 | $58.77 | $51.63 | $46.14 |
| Total ReturnF,G | (.63)% | 10.67% | 15.13% | 13.11% | (1.29)% |
| Ratios to Average Net AssetsH,I | |||||
| Expenses before reductions | 1.93% | 1.93% | 1.93% | 1.93% | 1.95% |
| Expenses net of fee waivers, if any | 1.93% | 1.93% | 1.93% | 1.93% | 1.95% |
| Expenses net of all reductions | 1.92% | 1.92% | 1.91% | 1.92% | 1.93% |
| Net investment income (loss) | .56% | .49% | 2.32%C | 1.26% | .47% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $265 | $409 | $546 | $576 | $596 |
| Portfolio turnover rateJ | 51% | 94%K | 111% | 76% | 72% |
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 $.95 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .67%.
D 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.
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 contingent deferred sales charge.
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.
Financial Highlights — Telecommunications Portfolio Class C
| Years ended February 28, | 2016 A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $63.04 | $58.54 | $51.47 | $46.02 | $46.89 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .36 | .34 | 1.36C | .63 | .22 |
| Net realized and unrealized gain (loss) | (.75)D | 5.80 | 6.46 | 5.41 | (.84) |
| Total from investment operations | (.39) | 6.14 | 7.82 | 6.04 | (.62) |
| Distributions from net investment income | (.10) | (1.64) | (.74) | (.59) | (.25) |
| Distributions from net realized gain | (.45) | – | (.01) | – | – |
| Total distributions | (.55) | (1.64) | (.75) | (.59) | (.25) |
| Redemption fees added to paid in capitalB,E | – | – | – | – | – |
| Net asset value, end of period | $62.10 | $63.04 | $58.54 | $51.47 | $46.02 |
| Total ReturnF,G | (.57)% | 10.75% | 15.20% | 13.14% | (1.27)% |
| Ratios to Average Net AssetsH,I | |||||
| Expenses before reductions | 1.89% | 1.85% | 1.88% | 1.90% | 1.93% |
| Expenses net of fee waivers, if any | 1.89% | 1.85% | 1.88% | 1.90% | 1.93% |
| Expenses net of all reductions | 1.88% | 1.85% | 1.85% | 1.89% | 1.91% |
| Net investment income (loss) | .60% | .56% | 2.38%C | 1.29% | .48% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $7,735 | $7,074 | $5,523 | $4,353 | $3,514 |
| Portfolio turnover rateJ | 51% | 94%K | 111% | 76% | 72% |
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 $.94 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .73%.
D 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.
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 contingent deferred sales charge.
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.
Financial Highlights — Telecommunications Portfolio
| Years ended February 28, | 2016 A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $63.54 | $58.94 | $51.75 | $46.26 | $47.07 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | 1.02 | .96 | 1.96C | 1.15 | .70 |
| Net realized and unrealized gain (loss) | (.77)D | 5.85 | 6.51 | 5.43 | (.86) |
| Total from investment operations | .25 | 6.81 | 8.47 | 6.58 | (.16) |
| Distributions from net investment income | (.76) | (2.21) | (1.28) | (1.09) | (.65) |
| Distributions from net realized gain | (.45) | – | (.01) | – | – |
| Total distributions | (1.21) | (2.21) | (1.28)E | (1.09) | (.65) |
| Redemption fees added to paid in capitalB,F | – | – | – | – | – |
| Net asset value, end of period | $62.58 | $63.54 | $58.94 | $51.75 | $46.26 |
| Total ReturnG | .49% | 11.90% | 16.40% | 14.30% | (.23)% |
| Ratios to Average Net AssetsH,I | |||||
| Expenses before reductions | .82% | .83% | .85% | .87% | .90% |
| Expenses net of fee waivers, if any | .81% | .83% | .85% | .87% | .90% |
| Expenses net of all reductions | .81% | .82% | .82% | .85% | .88% |
| Net investment income (loss) | 1.67% | 1.58% | 3.41%C | 2.33% | 1.52% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $689,600 | $346,174 | $343,548 | $377,841 | $342,262 |
| Portfolio turnover rateJ | 51% | 94%K | 111% | 76% | 72% |
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 $.95 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been 1.76%.
D 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.
E Total distributions of $1.28 per share is comprised of distributions from net investment income of $1.275 and distributions from net realized gain of $.005 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.
Financial Highlights — Telecommunications Portfolio Class I
| Years ended February 28, | 2016 A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $63.38 | $58.80 | $51.65 | $46.20 | $47.02 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | 1.02 | .94 | 1.93C | 1.17 | .70 |
| Net realized and unrealized gain (loss) | (.76)D | 5.83 | 6.48 | 5.42 | (.88) |
| Total from investment operations | .26 | 6.77 | 8.41 | 6.59 | (.18) |
| Distributions from net investment income | (.73) | (2.19) | (1.25) | (1.14) | (.64) |
| Distributions from net realized gain | (.45) | – | (.01) | – | – |
| Total distributions | (1.18) | (2.19) | (1.26) | (1.14) | (.64) |
| Redemption fees added to paid in capitalB,E | – | – | – | – | – |
| Net asset value, end of period | $62.46 | $63.38 | $58.80 | $51.65 | $46.20 |
| Total ReturnF | .51% | 11.85% | 16.30% | 14.33% | (.26)% |
| Ratios to Average Net AssetsG,H | |||||
| Expenses before reductions | .82% | .86% | .91% | .85% | .89% |
| Expenses net of fee waivers, if any | .82% | .86% | .91% | .85% | .89% |
| Expenses net of all reductions | .81% | .85% | .88% | .83% | .87% |
| Net investment income (loss) | 1.67% | 1.55% | 3.35%C | 2.35% | 1.52% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $6,197 | $2,505 | $1,604 | $2,641 | $1,022 |
| Portfolio turnover rateI | 51% | 94%J | 111% | 76% | 72% |
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 $.95 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been 1.70%.
D 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.
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.
Notes to Financial Statements
For the period ended February 29, 2016
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 T, Class C, Telecommunications and Class I(formerly Institutional Class) shares, each of which, along with Class B shares, has equal rights as to assets and voting privileges. Class B shares are closed to new accounts and additional purchases, except for exchanges and reinvestments. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after maximum a holding period of seven years from the initial date of purchase.
During the period, the Board of Trustees approved the conversion of all existing Class B shares into Class A shares, effective on or about July 1, 2016, regardless of the length of times shares have been held.
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 Fidelity Investments Money Management, Inc. (FIMM), an affiliate of the investment adviser. Annualized expenses of the Money Market Central Funds as of their most recent shareholder report date are less than .005%.
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 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 Fidelity SelectCo, LLC (SelectCo) Fair Value Committee (the Committee). 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. Utilizing these techniques may result in transfers between Level 1 and Level 2. 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, 2016, 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 may 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. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. Subsequent to ex-dividend date the Fund determines the components of these distributions, based upon receipt of tax filings or other correspondence relating to the underlying investment. 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.
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, 2016, 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 dividends 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 transaction, deferred trustees compensation, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
| Gross unrealized appreciation | $87,574,989 |
| Gross unrealized depreciation | (19,550,843) |
| Net unrealized appreciation (depreciation) on securities | $68,024,146 |
| Tax Cost | $706,864,186 |
The tax-based components of distributable earnings as of period end were as follows:
| Undistributed ordinary income | $1,546,307 |
| Net unrealized appreciation (depreciation) on securities and other investments | $68,020,593 |
The Fund elected to defer to its next fiscal year approximately $4,784,105 of capital losses recognized during the period November 1, 2015 to February 29, 2016.
The tax character of distributions paid was as follows:
| February 29, 2016 | February 28, 2015 | |
| Ordinary Income | $7,554,050 | $ 13,679,321 |
| Long-term Capital Gains | 3,288,404 | – |
| Total | $10,842,454 | $ 13,679,321 |
Trading (Redemption) Fees. Shares held by investors in the Fund less than 30 days may be subject to a redemption fee equal to .75% of the NAV of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Fund and accounted for as an addition to paid in capital.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $593,783,140 and $248,822,719, respectively.
5. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity SelectCo, 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 .25% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by Fidelity Management & Research Company (FMR) and the investment adviser. 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 .55% 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 Corporation (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% | $28,965 | $521 |
| Class T | .25% | .25% | 30,284 | – |
| Class B | .75% | .25% | 3,185 | 2,389 |
| Class C | .75% | .25% | 75,959 | 16,767 |
| $138,393 | $19,677 |
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 T 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 T, Class B, and Class C redemptions. The deferred sales charges range from 5.00% to 1.00% for Class B shares, 1.00% for Class C shares, 1.00% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained by FDC | |
| Class A | $12,523 |
| Class T | 2,208 |
| Class B(a) | 54 |
| Class C(a) | 607 |
| $15,392 |
(a) When Class B and 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, Inc., (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. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements.
For the period, transfer agent fees for each class were as follows:
| Amount | % of Class-Level Average Net Assets | |
| Class A | $31,945 | .28 |
| Class T | 20,483 | .34 |
| Class B | 963 | .30 |
| Class C | 19,956 | .26 |
| Telecommunications | 857,974 | .19 |
| Class I | 5,877 | .19 |
| $937,198 |
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. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions 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 $19,509 for the period.
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other registered investment companies having management contracts with FMR or other affiliated entities of FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. The Fund's 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 |
| Borrower | $5,833,500 | .37% | $121 |
Interfund Trades. The Fund 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.
The Fund participates 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 Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $636 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, the Fund did not borrow on this line of credit.
7. Security Lending.
The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. 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. 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. Total security lending income during the period amounted to $418,984.
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 $30,812 for the period.
In addition, during the period the investment adviser reimbursed and/or waived a portion of fund-level operating expenses in the amount of $3,782 and a portion of class-level operating expenses as follows:
| Amount | |
| Class A | $152 |
| Class T | 11 |
| Class B | 1 |
| Class C | 135 |
| Telecommunications | 9,106 |
| Class I | 41 |
| $9,446 |
9. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
| Year ended February 29, 2016 | Year ended February 28, 2015 | |
| From net investment income | ||
| Class A | $101,836 | $309,863 |
| Class T | 64,003 | 143,116 |
| Class B | 172 | 12,248 |
| Class C | 12,147 | 161,299 |
| Telecommunications | 6,462,442 | 12,985,170 |
| Class I | 33,456 | 67,625 |
| Total | $6,674,056 | $13,679,321 |
| From net realized gain | ||
| Class A | $85,263 | $– |
| Class T | 59,140 | – |
| Class B | 2,151 | – |
| Class C | 53,589 | – |
| Telecommunications | 3,948,074 | – |
| Class I | 20,181 | – |
| Total | $4,168,398 | $– |
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, 2016 | Year ended February 28, 2015 | Year ended February 29, 2016 | Year ended February 28, 2015 | |
| Class A | ||||
| Shares sold | 91,221 | 79,279 | $5,573,645 | $4,786,534 |
| Reinvestment of distributions | 3,029 | 5,091 | 178,902 | 297,550 |
| Shares redeemed | (59,841) | (41,031) | (3,630,540) | (2,466,354) |
| Net increase (decrease) | 34,409 | 43,339 | $2,122,007 | $2,617,730 |
| Class T | ||||
| Shares sold | 70,704 | 20,637 | $4,245,232 | $1,237,395 |
| Reinvestment of distributions | 2,087 | 2,409 | 122,479 | 139,987 |
| Shares redeemed | (19,976) | (16,465) | (1,205,139) | (994,017) |
| Net increase (decrease) | 52,815 | 6,581 | $3,162,572 | $383,365 |
| Class B | ||||
| Shares sold | 129 | 45 | $7,453 | $2,624 |
| Reinvestment of distributions | 39 | 197 | 2,323 | 11,445 |
| Shares redeemed | (2,377) | (3,091) | (146,261) | (186,477) |
| Net increase (decrease) | (2,209) | (2,849) | $(136,485) | $(172,408) |
| Class C | ||||
| Shares sold | 48,243 | 28,734 | $2,966,823 | $1,731,696 |
| Reinvestment of distributions | 861 | 2,043 | 50,662 | 118,683 |
| Shares redeemed | (36,747) | (12,919) | (2,199,789) | (773,747) |
| Net increase (decrease) | 12,357 | 17,858 | $817,696 | $1,076,632 |
| Telecommunications | ||||
| Shares sold | 6,996,236 | 3,400,370 | $423,896,658 | $205,982,254 |
| Reinvestment of distributions | 169,238 | 212,695 | 10,035,177 | 12,494,070 |
| Shares redeemed | (1,594,679) | (3,993,893)(a) | (97,516,561) | (242,841,980)(a) |
| Net increase (decrease) | 5,570,795 | (380,828) | $336,415,274 | $(24,365,656) |
| Class I | ||||
| Shares sold | 91,633 | 29,046 | $5,507,038 | $1,764,278 |
| Reinvestment of distributions | 779 | 956 | 46,233 | 56,138 |
| Shares redeemed | (32,720) | (17,754) | (2,009,580) | (1,063,165) |
| Net increase (decrease) | 59,692 | 12,248 | $3,543,691 | $757,251 |
(a) Amount includes in-kind redemptions.
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.
At the end of the period, Fidelity VIP FundsManager 50% Portfolio and Fidelity VIP FundsManager 60% Portfolio were the owners of record of approximately 13% and 17%, respectively of the total outstanding shares of the Fund. Mutual funds managed by the investment adviser or its affiliates were the owners of record, in the aggregate, of approximately 43% of the total outstanding shares of the Fund.
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Select Portfolios and the Shareholders of Consumer Staples Portfolio, Gold Portfolio, Materials Portfolio and Telecommunications Portfolio:
In our opinion, the accompanying statements of assets and liabilities (consolidated statement of assets and liabilities for Gold Portfolio), including the schedules of investments (consolidated schedule of investments for Gold Portfolio), and the related statements of operations (consolidated statement of operations for Gold Portfolio) and of changes in net assets (consolidated changes in net assets for Gold Portfolio) and the financial highlights (consolidated financial highlights for Gold Portfolio) present fairly, in all material respects, the financial positions of Consumer Staples Portfolio, Gold Portfolio, Materials Portfolio and Telecommunications Portfolio (funds of Fidelity Select Portfolios) (the "Funds") at February 29, 2016, 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 then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Funds' management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at February 29, 2016 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 19, 2016
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. Each of the Trustees oversees 75 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 1-877-208-0098.
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. Brian B. Hogan 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. Michael E. Wiley 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 sector portfolios. Other Boards oversee Fidelity's equity and high income funds, and Fidelity's investment grade bond, money market, and asset allocation funds. 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 SelectCo 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 SelectCo, 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 and Audit Committees. Appropriate personnel, including but not limited to the funds' Chief Compliance Officer (CCO), SelectCo's internal auditor, the independent accountants, the funds' Treasurer and portfolio management personnel, make periodic reports to the Board's committees, as appropriate. 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+
Brian B. Hogan (1964)
Year of Election or Appointment: 2014
Trustee
Chairman of the Board of Trustees
Mr. Hogan also serves as Trustee or Vice President of other funds. Mr. Hogan serves as a Director of FMR Investment Management (U.K.) Limited (investment adviser firm, 2015-present) and Fidelity SelectCo, LLC (investment adviser firm, 2014-present) and President of the Equity Division of FMR (investment adviser firm, 2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager.
* 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 SelectCo.
+ 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+
David A. Rosow (1942)
Year of Election or Appointment: 2013
Trustee
Mr. Rosow also serves as Trustee of other Fidelity® funds. Prior to his retirement in 2006, Mr. Rosow was the Chief Executive Officer, owner and operator of a number of private companies, which encompassed oil refining, drilling and marketing of petroleum products (including specialty petroleum products), the recreation industry, and real estate development. Mr. Rosow currently serves as a Director of Oxbow Carbon LLC (upgraders, marketers, and distributors of petroleum byproducts of the oil refining process, 2015-present) and Oxbridge Academy of the Palm Beaches (2015-present). Previously, Mr. Rosow served on the Fairfield Country Day School Board for 27 years, including as its President for 3 years, stepping down in 2006, as Lead Director and Chairman of the Audit Committee of Hudson United Bancorp (1996-2006), Chairman of the Board of Westport Bank and Trust (1992-1996), and as a Director of TD Banknorth (2006-2007). In addition, Mr. Rosow served as a member (2008-2014) and President (2009-2014) of the Town Council of Palm Beach, Florida. Mr. Rosow also served as a Member of the Advisory Board of other Fidelity® funds (2012-2013).
Garnett A. Smith (1947)
Year of Election or Appointment: 2013
Trustee
Mr. Smith also serves as Trustee of other Fidelity® funds. Prior to Mr. Smith's retirement, he served as Chairman and Chief Executive Officer of Inbrand Corp. (manufacturer of personal absorbent products, 1990-1997). He also served as President (1986-1990) of Inbrand Corp. Prior to his employment with Inbrand Corp., he was employed by a retail fabric chain and North Carolina National Bank. In addition, Mr. Smith served as a Member of the Advisory Board of other Fidelity® funds (2012-2013) and as a board member of the Jackson Hole Land Trust (2009-2012).
Michael E. Wiley (1950)
Year of Election or Appointment: 2008
Trustee
Chairman of the Independent Trustees
Mr. Wiley also serves as Trustee of other Fidelity® funds. Mr. Wiley serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), a Director of Tesoro Logistics LP (natural resources logistics, 2015-present), and a Director of Bill Barrett Corporation (exploration and production, 2005-present). In addition, Mr. Wiley also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a Trustee of other Fidelity® funds (2008-2013), as a Director of Asia Pacific Exploration Consolidated (international oil and gas exploration and production, 2008-2013), as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-2010), as a Senior Energy Advisor of Katzenbach Partners, LLC (consulting, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production, 2001-2005).
+ 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:
Except for Anthony R. Rochte, correspondence intended for an officer may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210. Correspondence intended for Mr. Rochte may be sent to SelectCo, 1225 17th Street, Denver, Colorado 80202-5541. Officers appear below in alphabetical order.
Name, Year of Birth; Principal Occupation
Donald F. Donahue (1950)
Year of Election or Appointment: 2015
Member of the Advisory Board
Mr. Donahue also serves as a Member of the Advisory Board of other Fidelity® funds. Mr. Donahue is President and Chief Executive Officer of Miranda Partners, LLC (risk consulting for the financial services industry, 2012-present) and a consultant for the Institute for Defense Analyses (national security, 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 serves as a Member and Treasurer of the Board of Directors of United Way of New York (2012-present), Member of the Board of Directors of NYC Leadership Academy (2012-present) and Physicians for Human Rights (2013-present), and Member of the Board of Advisors of Ripple Labs, Inc. (financial services, 2015-present). He also served as Chairman (2010-2012) and Member of the Board of Directors (2012-2013) of Omgeo, LLC (financial services) and Member of the Board of Directors of XBRL US (financial services non-profit, 2009-2012) and the International Securities Services Association (2009-2012).
Christopher S. Bartel (1971)
Year of Election or Appointment: 2009
Vice President
Mr. Bartel also serves as Vice President of other funds. Mr. Bartel serves as a Director of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2016-present) and Fidelity Management & Research (Hong Kong) (investment adviser firm, 2012-present) and Head of Global Equity Research (2010-present). Previously, Mr. Bartel served as a Director, President, and Chief Executive Officer of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2012-2016), Senior Vice President of Equity Research (2009-2010), Managing Director of Research (2006-2009), and an analyst and portfolio manager (2000-2006).
Marc R. Bryant (1966)
Year of Election or Appointment: 2013
Secretary and Chief Legal Officer (CLO)
Mr. Bryant also serves as Secretary and CLO of other funds. Mr. Bryant serves as CLO, Secretary, and Senior Vice President of Fidelity Management & Research Company (investment adviser firm, 2015-present) and FMR Co., Inc. (investment adviser firm, 2015-present); Secretary of Fidelity SelectCo, LLC (investment adviser firm, 2015-present) and Fidelity Investments Money Management, Inc. (investment adviser firm, 2015-present); and CLO of Fidelity Management & Research (Hong Kong) Limited and FMR Investment Management (U.K.) Limited (investment adviser firms, 2015-present) and Fidelity Management & Research (Japan) Limited (investment adviser firm, 2016-present). He is Senior Vice President and Deputy General Counsel of FMR LLC (diversified financial services company). Previously, Mr. Bryant served as Secretary and CLO of Fidelity Rutland Square Trust II (2010-2014) and Assistant Secretary of Fidelity's Fixed Income and Asset Allocation Funds (2013-2015). Prior to joining Fidelity Investments, Mr. Bryant served as a Senior Vice President and the Head of Global Retail Legal for AllianceBernstein L.P. (2006-2010), and as the General Counsel for ProFund Advisors LLC (2001-2006).
William C. Coffey (1969)
Year of Election or Appointment: 2009
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 Vice President and Associate General Counsel of FMR LLC (2005-2009).
Jonathan Davis (1968)
Year of Election or Appointment: 2010
Assistant Treasurer
Mr. Davis also serves as Assistant Treasurer of other funds, 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).
Adrien E. Deberghes (1967)
Year of Election or Appointment: 2013
President and Treasurer
Mr. Deberghes also serves as an officer of other funds. He is an employee of Fidelity Investments (2008-present). Prior to joining Fidelity Investments, Mr. Deberghes was Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005). Previously, Mr. Deberghes served in other fund officer roles.
Joseph DeSantis (1959)
Year of Election or Appointment: 2015
Vice President
Mr. DeSantis also serves as Vice President of other funds. Mr. DeSantis serves as Group Chief Investment Officer, Equities (2010-present) and is an employee of Fidelity Investments.
Stephanie J. Dorsey (1969)
Year of Election or Appointment: 2010
Assistant Treasurer
Ms. Dorsey also serves as an officer of other funds. She is an employee of Fidelity Investments (2008-present) and has served in other fund officer roles. Prior to joining Fidelity Investments, Ms. Dorsey served as Treasurer (2004-2008) of the JPMorgan Mutual Funds and Vice President (2004-2008) of JPMorgan Chase Bank.
Howard J. Galligan III (1966)
Year of Election or Appointment: 2014
Chief Financial Officer
Mr. Galligan also serves as Chief Financial Officer of other funds. Mr. Galligan serves as President of Fidelity Pricing and Cash Management Services (FPCMS) (2014-present) and as a Director of Strategic Advisers, Inc. (investment adviser firm, 2008-present). Previously, Mr. Galligan served as Chief Administrative Officer of Asset Management (2011-2014) and Chief Operating Officer and Senior Vice President of Investment Support for Strategic Advisers, Inc. (2003-2011).
Scott C. Goebel (1968)
Year of Election or Appointment: 2015
Vice President
Mr. Goebel serves as Vice President of other funds and is an employee of Fidelity Investments (2001-present). Previously, Mr. Goebel served as Secretary of Fidelity SelectCo, LLC (investment adviser firm, 2013-2015), Fidelity Investments Money Management, Inc. (FIMM) (investment adviser firm, 2010-2015), and Fidelity Research and Analysis Company (FRAC) (investment adviser firm, 2010-2015); General Counsel, Secretary, and Senior Vice President of Fidelity Management & Research Company (investment adviser firm, 2008-2015) and FMR Co., Inc. (investment adviser firm, 2008-2015); Assistant Secretary of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2008-2015) and Fidelity Management & Research (U.K.) Inc. (investment adviser firm, 2008-2015); Chief Legal Officer (CLO) of Fidelity Management & Research (Hong Kong) Limited (investment adviser firm, 2008-2015); Secretary and CLO of certain Fidelity® funds (2008-2015); Assistant Secretary of FIMM (2008-2010), FRAC (2008-2010), and certain funds (2007-2008); and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007).
James D. Gryglewicz (1972)
Year of Election or Appointment: 2014
Chief Compliance Officer
Mr. Gryglewicz also serves as Chief Compliance Officer of other funds. Mr. Gryglewicz serves as Compliance Officer of Strategic Advisers, Inc. (investment adviser firm, 2015-present) and Fidelity SelectCo, LLC (investment adviser firm, 2014-present), Senior Vice President of Asset Management Compliance (2009-present), and is an employee of Fidelity Investments (2004-present).
Brian B. Hogan (1964)
Year of Election or Appointment: 2009
Vice President
Mr. Hogan also serves as Trustee or Vice President of other funds. Mr. Hogan serves as a Director of FMR Investment Management (U.K.) Limited (investment adviser firm, 2015-present) and Fidelity SelectCo, LLC (investment adviser firm, 2014-present) and President of the Equity Division of FMR (investment adviser firm, 2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager.
Chris Maher (1972)
Year of Election or Appointment: 2013
Assistant Treasurer
Mr. Maher serves as Assistant Treasurer of other funds. Mr. Maher is Vice President of Valuation Oversight and is an employee of Fidelity Investments. Previously, Mr. Maher served as 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).
John F. Papandrea (1972)
Year of Election or Appointment: 2016
Anti-Money Laundering (AML) Officer
Mr. Papandrea also serves as AML Officer of other funds. Mr. Papandrea is Vice President of FMR LLC (diversified financial services company, 2008-present) and is an employee of Fidelity Investments (2005-present).
Kenneth B. Robins (1969)
Year of Election or Appointment: 2013
Deputy Treasurer
Mr. Robins also serves as an officer of other funds. Mr. Robins serves as Executive Vice President of Fidelity Investments Money Management, Inc. (FIMM) (investment adviser firm, 2013-present) and is an employee of Fidelity Investments (2004-present). Previously, Mr. Robins served in other fund officer roles.
Anthony R. Rochte (1968)
Year of Election or Appointment: 2013
Vice President
Mr. Rochte also serves as Vice President of other funds. Mr. Rochte serves as President of Fidelity SelectCo, LLC (investment adviser firm, 2012-present) and is an employee of Fidelity Investments (2012-present). Prior to joining Fidelity Investments, Mr. Rochte served as Senior Managing Director and head of State Street Global Advisors' North American Intermediary Business Group (2006-2012).
Stacie M. Smith (1974)
Year of Election or Appointment: 2013
Assistant Treasurer
Ms. Smith also serves as an officer of other funds. She 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 (1996-2009). Previously, Ms. Smith served as Deputy Treasurer of certain Fidelity funds (2013-2016).
Renee Stagnone (1975)
Year of Election or Appointment: 2013
Deputy Treasurer
Ms. Stagnone also serves as an officer of other funds. Ms. Stagnone is an employee of Fidelity Investments (1997-present). Previously, Ms. Stagnone served as Deputy Treasurer of certain Fidelity funds (2013-2016).
Joseph F. Zambello (1957)
Year of Election or Appointment: 2011
Deputy Treasurer
Mr. Zambello also serves as Deputy Treasurer of other funds. Mr. Zambello is an employee of Fidelity Investments (1991-present). Previously, Mr. Zambello served as Deputy Treasurer of certain Fidelity funds (2011-2016), Vice President of the Program Management Group of FMR (investment adviser firm, 2009-2011), and Vice President of the Transfer Agent Oversight Group (2005-2009).
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, redemption fees 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, 2015 to February 29, 2016).
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. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. 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. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. 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, 2015 | Ending Account Value February 29, 2016 | Expenses Paid During Period-B September 1, 2015 to February 29, 2016 | |
| Consumer Staples Portfolio | ||||
| Class A | 1.04% | |||
| Actual | $1,000.00 | $1,070.60 | $5.35 | |
| Hypothetical-C | $1,000.00 | $1,019.69 | $5.22 | |
| Class T | 1.32% | |||
| Actual | $1,000.00 | $1,068.90 | $6.79 | |
| Hypothetical-C | $1,000.00 | $1,018.30 | $6.62 | |
| Class B | 1.81% | |||
| Actual | $1,000.00 | $1,066.40 | $9.30 | |
| Hypothetical-C | $1,000.00 | $1,015.86 | $9.07 | |
| Class C | 1.79% | |||
| Actual | $1,000.00 | $1,066.50 | $9.20 | |
| Hypothetical-C | $1,000.00 | $1,015.96 | $8.97 | |
| Consumer Staples | .76% | |||
| Actual | $1,000.00 | $1,071.90 | $3.92 | |
| Hypothetical-C | $1,000.00 | $1,021.08 | $3.82 | |
| Class I | .78% | |||
| Actual | $1,000.00 | $1,072.00 | $4.02 | |
| Hypothetical-C | $1,000.00 | $1,020.98 | $3.92 | |
| Gold Portfolio | ||||
| Class A | 1.18% | |||
| Actual | $1,000.00 | $1,306.30 | $6.77 | |
| Hypothetical-C | $1,000.00 | $1,019.00 | $5.92 | |
| Class T | 1.48% | |||
| Actual | $1,000.00 | $1,304.10 | $8.48 | |
| Hypothetical-C | $1,000.00 | $1,017.50 | $7.42 | |
| Class B | 1.93% | |||
| Actual | $1,000.00 | $1,301.50 | $11.04 | |
| Hypothetical-C | $1,000.00 | $1,015.27 | $9.67 | |
| Class C | 1.92% | |||
| Actual | $1,000.00 | $1,302.10 | $10.99 | |
| Hypothetical-C | $1,000.00 | $1,015.32 | $9.62 | |
| Gold | .93% | |||
| Actual | $1,000.00 | $1,308.30 | $5.34 | |
| Hypothetical-C | $1,000.00 | $1,020.24 | $4.67 | |
| Class I | .87% | |||
| Actual | $1,000.00 | $1,308.10 | $4.99 | |
| Hypothetical-C | $1,000.00 | $1,020.54 | $4.37 | |
| Materials Portfolio | ||||
| Class A | 1.06% | |||
| Actual | $1,000.00 | $900.90 | $5.01 | |
| Hypothetical-C | $1,000.00 | $1,019.59 | $5.32 | |
| Class T | 1.38% | |||
| Actual | $1,000.00 | $899.60 | $6.52 | |
| Hypothetical-C | $1,000.00 | $1,018.00 | $6.92 | |
| Class B | 1.89% | |||
| Actual | $1,000.00 | $897.30 | $8.92 | |
| Hypothetical-C | $1,000.00 | $1,015.47 | $9.47 | |
| Class C | 1.82% | |||
| Actual | $1,000.00 | $897.70 | $8.59 | |
| Hypothetical-C | $1,000.00 | $1,015.81 | $9.12 | |
| Materials | .82% | |||
| Actual | $1,000.00 | $902.10 | $3.88 | |
| Hypothetical-C | $1,000.00 | $1,020.79 | $4.12 | |
| Class I | .78% | |||
| Actual | $1,000.00 | $902.20 | $3.69 | |
| Hypothetical-C | $1,000.00 | $1,020.98 | $3.92 | |
| Telecommunications Portfolio | ||||
| Class A | 1.14% | |||
| Actual | $1,000.00 | $1,067.60 | $5.86 | |
| Hypothetical-C | $1,000.00 | $1,019.19 | $5.72 | |
| Class T | 1.45% | |||
| Actual | $1,000.00 | $1,066.00 | $7.45 | |
| Hypothetical-C | $1,000.00 | $1,017.65 | $7.27 | |
| Class B | 1.91% | |||
| Actual | $1,000.00 | $1,063.30 | $9.80 | |
| Hypothetical-C | $1,000.00 | $1,015.37 | $9.57 | |
| Class C | 1.86% | |||
| Actual | $1,000.00 | $1,063.70 | $9.54 | |
| Hypothetical-C | $1,000.00 | $1,015.61 | $9.32 | |
| Telecommunications | .80% | |||
| Actual | $1,000.00 | $1,069.20 | $4.12 | |
| Hypothetical-C | $1,000.00 | $1,020.89 | $4.02 | |
| Class I | .78% | |||
| Actual | $1,000.00 | $1,069.50 | $4.01 | |
| 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 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:
| Consumer Staples Portfolio | Pay Date | Record Date | Dividends | Capital Gains |
| Class I | 04/18/16 | 04/15/16 | $0.160 | $0.592 |
| Gold Portfolio | Pay Date | Record Date | Dividends | Capital Gains |
| Class I | 04/18/16 | 04/15/16 | $0.000 | $0.251 |
| Materials Portfolio | Pay Date | Record Date | Dividends | Capital Gains |
| Class I | 04/18/16 | 04/15/16 | $0.000 | $0.000 |
| Telecommunications Portfolio | Pay Date | Record Date | Dividends | Capital Gains |
| Class I | 04/18/16 | 04/15/16 | $0.126 | $0.000 |
The funds hereby designate as capital gain dividend the amounts noted below for the taxable year ended February 29, 2016, or, if subsequently determined to be different, the net capital gain of such year.
| Fund | |
| Consumer Staples Portfolio | $109,949,003 |
| Materials Portfolio | $19,113,522 |
| Telecommunications Portfolio | $3,283,851 |
A percentage of the dividends distributed during the fiscal year for the following funds qualifies for the dividends–received deduction for corporate shareholders:
| Fund | April 2015 | December 2015 |
| Consumer Staples Portfolio | ||
| Class I | 35% | 70% |
| Gold Portfolio | ||
| Class I | 0% | 0% |
| Materials Portfolio | ||
| Class I | 0% | 100% |
| Telecommunications Portfolio | ||
| Class I | 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.
| Fund | April 2015 | December 2015 |
| Consumers Staples Portfolio | ||
| Class I | 100% | 100% |
| Gold Portfolio | ||
| Class I | 0% | 0% |
| Materials Portfolio | ||
| Class I | 0% | 100% |
| Telecommunications Portfolio | ||
| Class I | 100% | 100% |
The fund will notify shareholders in January 2017 of amounts for use in preparing 2016 income tax returns.
Board Approval of Investment Advisory Contracts and Management Fees
Consumer Staples Portfolio
Gold Portfolio
Materials Portfolio
Telecommunications Portfolio
Each year, the Board of Trustees, including the Independent Trustees (together, the Board), votes on the renewal of the management contract with Fidelity SelectCo, LLC (SelectCo), an affiliate of Fidelity Management & Research Company (FMR), and the sub-advisory agreements with affiliates of FMR (together, the Advisory Contracts) for each fund. 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.
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 each fund's Advisory Contracts, including the services and support provided to each fund and its shareholders. The Board has established four standing committees (Committees) — Operations, Audit, Fair Valuation, and Governance and Nominating — 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 Operations Committee, of which all of the Independent Trustees are members, meets regularly throughout the year and considers, among other matters, information specifically related to the annual consideration of the renewal of each fund's Advisory Contracts. The Board, acting directly and through its Committees, requests and receives information concerning the annual consideration of the renewal of each fund's Advisory Contracts. The Board also meets as needed to consider 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 ad hoc joint committees to discuss certain matters relevant to all of the Fidelity funds.
At its January 2016 meeting, the Board unanimously determined to renew each 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 to be provided to each fund and its shareholders (including the investment performance of each fund); (ii) the competitiveness of each fund's management fee and total expense ratio relative to peer funds; (iii) the total costs of the services to be provided by and the profits to be realized by Fidelity from its relationships with each fund; and (iv) the extent to which, if any, economies of scale exist and would be realized as each fund grows, and whether any economies of scale are appropriately shared with fund shareholders.
In considering whether to renew the Advisory Contracts for each 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 each 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 each fund have a broad range of investment choices available to them, including a wide choice among funds offered by Fidelity's competitors, and that each 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 that fund, which is part of the Fidelity family of funds.
Nature, Extent, and Quality of Services Provided. The Board considered the staffing of SelectCo and the sub-advisers (together with SelectCo, the Investment Advisers) as it relates to the funds, including the backgrounds of investment personnel of SelectCo, and also considered the funds' investment objectives, strategies, and related investment philosophies. 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 each 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 reviewed the general qualifications and capabilities of the investment staff of the Investment Advisers, including their 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 each 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, each 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 or convenience of the Fidelity funds as investment vehicles. These services include 24-hour access to account information and market information through telephone representatives and over the Internet, investor education materials and asset allocation tools, and the expanded availability of Fidelity Investor Centers.The Board noted that in 2014 the ad hoc Committee on Transfer Agency Fees was formed by it and the boards of certain other Fidelity funds to review the variety of transfer agency services and fee structures throughout the mutual fund industry compared to Fidelity's.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 investment research 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 making other enhancements to meet client needs; (iv) reducing management fees and total expenses for certain index funds; (v) continuing to launch dedicated lower cost underlying funds to meet portfolio construction needs related to expanding underlying fund options for Fidelity funds of funds, specifically for the Freedom Fund product lines; (vi) rationalizing product lines and gaining increased efficiencies through fund mergers; (vii) continuing to develop, acquire and implement systems and technology to improve services to the funds and shareholders, strengthen information security, and increase efficiency; (viii) implementing investment enhancements to further strengthen Fidelity's target date product line to increase investors' probability of success in achieving their goals; (ix) modifying the eligibility criteria for certain share classes to accommodate roll-over assets from employer-sponsored retirement plans; (x) launching a new Class W of the Freedom Index Funds to attract and retain Fidelity record-kept retirement plan assets; and (xi) implementing changes to Fidelity's money market fund product line in response to recent regulatory reforms.Investment Performance. The Board considered whether each 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 with representatives of the Investment Advisers about fund investment performance that occur at Board meetings throughout the year. 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 each fund, for different time periods, measured against a securities market index ("benchmark index"). In its evaluation of fund investment performance at meetings throughout the year, the Board gave particular attention to information indicating underperformance of certain Fidelity funds for specific time periods and discussed with the Investment Advisers the reasons for such underperformance. Each of Consumer Staples Portfolio and Materials Portfolio underperformed its benchmark for the one-, three-, and five-year periods ended June 30, 2015, and as a result, the Board will continue to discuss with SelectCo the steps it is taking to address each such fund's performance.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. Depending on the circumstances, the Independent Trustees may be satisfied with a fund's performance notwithstanding that it lags its benchmark index for certain periods.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 each fund and an appropriate benchmark index for the most recent one-, three-, and five-year periods ended June 30, 2015.Based on its review, the Board concluded that the nature, extent, and quality of services provided to each fund under the Advisory Contracts should benefit the shareholders of each fund.Competitiveness of Management Fee and Total Expense Ratio. The Board considered each fund's management fee and total expense ratio compared to "mapped groups" of competitive funds and classes created for the purpose of facilitating the Trustees' analysis of the competitiveness of management fees and total expenses. Fidelity creates "mapped groups" by combining similar Lipper investment objective categories that have comparable investment mandates. For this purpose, all sector focused equity funds are grouped in the same mapped group. Combining Lipper investment objective categories aids the Board's management fee and total expense ratio comparisons by broadening the competitive group used for comparison.Management Fee. The Board considered two proprietary management fee comparisons for the 12-month periods ended June 30 shown in basis points (BP) in the charts below. The group of Lipper funds used by the Board for management fee comparisons is referred to below as the "Total Mapped Group." The Total Mapped Group comparison focuses on a fund's standing in terms of gross management fees before expense reimbursements or caps relative to the total universe of funds with comparable investment mandates (i.e., sector equities), regardless of whether their management fee structures also are comparable. Funds with comparable management fee structures have similar management fee contractual arrangements (e.g., flat rate charged for advisory services, all-inclusive fee rate, etc.). "TMG %" represents the percentage of funds in the Total Mapped Group that had management fees that were lower than a fund's. For example, a hypothetical TMG % of 20% would mean that 80% of the funds in the Total Mapped Group had higher, and 20% had lower, management fees than a fund. The funds' actual TMG %s and the number of funds in the Total Mapped Group are in the charts below. The "Asset-Size Peer Group" (ASPG) comparison focuses on a fund's standing relative to a subset of non-Fidelity funds within the Total Mapped Group that are similar in size and management fee structure. For example, if a fund is in the first quartile of the ASPG, the fund's management fee ranks in the least expensive or lowest 25% of funds in the ASPG. The ASPG represents at least 15% of the funds in the Total Mapped Group with comparable asset size and management fee structures, subject to a minimum of 50 funds (or all funds in the Total Mapped Group if fewer than 50). Additional information, such as the ASPG quartile in which a fund's management fee rate ranked, is also included in the charts and considered by the Board.Consumer Staples Portfolio
Gold Portfolio
Materials Portfolio
Telecommunications Portfolio
ASGMTI-ANN-0416
1.845769.109
Fidelity® Select Portfolios® Biotechnology Portfolio Health Care Portfolio Health Care Services Portfolio (formerly Medical Delivery Portfolio) Medical Equipment and Systems Portfolio Pharmaceuticals Portfolio Annual Report February 29, 2016 |
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Contents
Biotechnology Portfolio | |
Health Care Portfolio | |
Health Care Services Portfolio | |
Medical Equipment and Systems 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. © 2016 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.
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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, 2016 | Past 1 year | Past 5 years | Past 10 years |
| Biotechnology Portfolio | (30.35)% | 22.68% | 11.70% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Biotechnology Portfolio on February 28, 2006.
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 | ||
| $30,224 | Biotechnology Portfolio | |
| $18,666 | S&P 500® Index | |
Biotechnology Portfolio
Management's Discussion of Fund Performance
Market Recap: The S&P 500® index returned -6.19% for the year ending February 29, 2016. Largely range-bound for the first half of the period, U.S. stocks suffered a steep, late-summer decline on concern about an economic slowdown in China. The market recovered in October, lifted by the U.S. Federal Reserve’s decision to delay raising near-term interest rates until mid-December. Investors also drew courage from a rate cut in China and economic stimulus in Europe. But continued oil-price weakness and U.S.-dollar strength, plus fresh worries about China and the Middle East, pushed the S&P 500® to its worst January since 2009, followed by a volatile but ultimately flattish February. Overall, growth-oriented and larger-cap stocks fared better than value and smaller-cap complements. In this environment, the tech-heavy Nasdaq Composite Index® returned -7.07% for the 12 months; the Russell 2000® Index, -14.97%. Few sectors within the broad-market S&P 500® gained ground, with a wide gap separating leaders from laggards. Despite increased competition among wireless carriers, telecommunication services (+8%) led the way, followed by the more defensive utilities sector (+6%). Rising wages and low inflation buoyed consumer staples (+4%), less so consumer discretionary (0%). Meanwhile, energy (-24%) foundered amid commodity weakness that also hurt materials (-17%). The financials sector (-12%) struggled as well.Comments from Portfolio Manager Rajiv Kaul: For the year, the fund returned -30.35%, well behind the -21.97% return of the MSCI U.S. IMI Biotechnology 25/50 Index. Biotechnology stocks fell far short of the broad-market S&P 500® index amid calls for tighter regulation of drug pricing, coupled with some negative clinical outcomes and a generally more defensive investor mindset. Versus the MSCI index, the fund’s underperformance was largely traceable to lighter-than-benchmark weightings in the strong-performing shares of the largest, most financially stable biotech companies, and overweightings in smaller firms that investors shunned amid greater market volatility and growing recession fears. Accordingly, the two largest relative detractors were outperforming large-cap index names Amgen, in which the fund had only a token position, and AbbVie, which we didn’t own. Negligible exposure to hemophilia specialist and index stock Baxalta also worked against us. In August, after the company received a buyout offer from Ireland-based Shire, Baxalta’s share price spiked higher, and I sold our small stake, missing the ensuing rally. Underweightings in large-caps Gilead Sciences and Celgene further weighed on our relative result. I reduced both positions to free up capital to increase our holdings in smaller companies I thought had better growth potential. Conversely, the fund’s top relative contributor by a wide margin was a non-benchmark stake in Denmark-based Genmab. Its share price rose in November after the company received early U.S. approval for Darzalex®, a new drug treating bone marrow cancer. Receptos shares delivered a strong double-digit return, rewarding our overweighting here. The company was acquired by Celgene in August. Also adding value by virtue of industry consolidation was Dyax, which in November received a buyout offer from Shire, with the deal closing in January. I sold both Dyax and Receptos to nail down profits.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, 2016
| % of fund's net assets | % of fund's net assets 6 months ago | |
| Alexion Pharmaceuticals, Inc. | 5.6 | 4.6 |
| Regeneron Pharmaceuticals, Inc. | 5.0 | 4.9 |
| Vertex Pharmaceuticals, Inc. | 4.2 | 4.1 |
| BioMarin Pharmaceutical, Inc. | 3.9 | 4.2 |
| Celgene Corp. | 3.7 | 4.6 |
| Biogen, Inc. | 3.5 | 6.3 |
| Incyte Corp. | 3.0 | 2.6 |
| Genmab A/S | 2.7 | 1.3 |
| Medivation, Inc. | 2.6 | 1.7 |
| Gilead Sciences, Inc. | 2.2 | 6.8 |
| 36.4 |
Top Industries (% of fund's net assets)
| As of February 29, 2016 | ||
| Biotechnology | 85.9% | |
| Pharmaceuticals | 12.2% | |
| Health Care Equipment & Supplies | 0.3% | |
| Health Care Providers & Services | 0.1% | |
| Life Sciences Tools & Services | 0.1% | |
| All Others* | 1.4% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
| As of August 31, 2015 | ||
| Biotechnology | 89.8% | |
| Pharmaceuticals | 9.7% | |
| Health Care Equipment & Supplies | 0.2% | |
| Life Sciences Tools & Services | 0.1% | |
| All Others* | 0.2% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
Biotechnology Portfolio
Investments February 29, 2016
Showing Percentage of Net Assets
| Common Stocks - 96.7% | |||
| Shares | Value | ||
| Biotechnology - 84.5% | |||
| Biotechnology - 84.5% | |||
| ACADIA Pharmaceuticals, Inc. (a)(b) | 4,780,980 | $82,519,715 | |
| Acceleron Pharma, Inc. (a)(c) | 3,430,732 | 86,934,749 | |
| Achillion Pharmaceuticals, Inc. (a)(b)(c) | 7,229,800 | 53,428,222 | |
| Acorda Therapeutics, Inc. (a)(c) | 3,750,211 | 122,669,402 | |
| Actelion Ltd. | 549,423 | 76,704,623 | |
| Adamas Pharmaceuticals, Inc. (a)(c) | 1,978,833 | 25,329,062 | |
| Adaptimmune Therapeutics PLC sponsored ADR (b) | 3,497,755 | 25,148,858 | |
| ADMA Biologics, Inc. (a) | 372,800 | 1,770,800 | |
| Aduro Biotech, Inc. | 1,113,037 | 16,205,819 | |
| Aduro Biotech, Inc. (d) | 1,711,378 | 24,917,664 | |
| Aegerion Pharmaceuticals, Inc. (a)(b)(c) | 2,843,518 | 16,037,442 | |
| Agenus, Inc. (a)(b) | 2,301,918 | 6,376,313 | |
| Agenus, Inc. warrants 1/9/18 (a) | 1,548,000 | 1,176 | |
| Agios Pharmaceuticals, Inc. (a) | 287,590 | 11,029,077 | |
| Aimmune Therapeutics, Inc. (c)(d) | 2,173,892 | 34,782,272 | |
| Aimmune Therapeutics, Inc. (a)(b)(c) | 1,887,151 | 30,194,416 | |
| Akebia Therapeutics, Inc. (a)(b)(c) | 2,072,111 | 15,126,410 | |
| Alder Biopharmaceuticals, Inc. (a)(b)(c) | 3,213,343 | 61,021,384 | |
| Aldeyra Therapeutics, Inc. (a)(c) | 958,916 | 4,698,688 | |
| Alexion Pharmaceuticals, Inc. (a) | 3,865,503 | 544,262,812 | |
| Alkermes PLC (a) | 2,521,111 | 81,356,252 | |
| Alnylam Pharmaceuticals, Inc. (a) | 1,811,378 | 106,092,409 | |
| AMAG Pharmaceuticals, Inc. (a) | 1,697,477 | 44,609,696 | |
| Amarin Corp. PLC ADR (a)(b) | 4,615,566 | 6,738,726 | |
| Amgen, Inc. | 34,486 | 4,906,668 | |
| Amicus Therapeutics, Inc. (a)(b) | 4,332,862 | 26,690,430 | |
| Anacor Pharmaceuticals, Inc. (a)(c) | 2,603,522 | 166,052,633 | |
| Applied Genetic Technologies Corp. (a)(c) | 1,438,294 | 19,086,161 | |
| Ardelyx, Inc. (a)(b)(c) | 3,314,248 | 32,015,636 | |
| ARIAD Pharmaceuticals, Inc. (a)(b) | 3,393,551 | 18,528,788 | |
| Array BioPharma, Inc. (a) | 2,704,296 | 6,787,783 | |
| Ascendis Pharma A/S sponsored ADR (a) | 156,332 | 2,712,360 | |
| Asterias Biotherapeutics, Inc. (a)(b) | 653,913 | 2,805,287 | |
| Atara Biotherapeutics, Inc. (a)(b)(c) | 2,068,920 | 34,013,045 | |
| aTyr Pharma, Inc. (a)(b) | 201,820 | 902,135 | |
| aTyr Pharma, Inc. (d) | 675,659 | 3,020,196 | |
| Avalanche Biotechnologies, Inc. (a)(b) | 720,957 | 3,691,300 | |
| Axovant Sciences Ltd. (a) | 1,192,909 | 15,042,582 | |
| BioCryst Pharmaceuticals, Inc. (a) | 501,360 | 997,706 | |
| Biogen, Inc. (a) | 1,306,357 | 338,895,133 | |
| BioMarin Pharmaceutical, Inc. (a) | 4,620,690 | 378,295,890 | |
| BioTime, Inc. warrants 10/1/18 (a) | 30,113 | 16,562 | |
| bluebird bio, Inc. (a) | 251,619 | 11,629,830 | |
| Blueprint Medicines Corp. (b) | 1,265,944 | 21,938,810 | |
| Calithera Biosciences, Inc. (a)(b)(c) | 1,794,600 | 10,659,924 | |
| Cara Therapeutics, Inc. (a) | 1,127,189 | 5,545,770 | |
| Catabasis Pharmaceuticals, Inc. (b) | 605,098 | 2,541,412 | |
| Catalyst Pharmaceutical Partners, Inc.: | |||
| warrants 5/2/17 (a) | 141,443 | 20,772 | |
| warrants 5/30/17 (a) | 282,100 | 67,425 | |
| Celgene Corp. (a) | 3,539,400 | 356,877,702 | |
| Cell Therapeutics, Inc. warrants 7/6/16 (a) | 835,596 | 8 | |
| Celldex Therapeutics, Inc. (a)(b) | 4,745,256 | 32,267,741 | |
| Cepheid, Inc. (a) | 589,900 | 17,508,232 | |
| Cerulean Pharma, Inc. (a)(b)(c) | 2,620,301 | 5,109,587 | |
| Chiasma, Inc. (c)(d) | 1,530,734 | 15,108,345 | |
| Chiasma, Inc. (a)(c) | 127,365 | 1,257,093 | |
| Chiasma, Inc. warrants (a)(c) | 382,683 | 2,225,547 | |
| Chimerix, Inc. (a) | 1,485,567 | 6,848,464 | |
| Cidara Therapeutics, Inc. (b)(c) | 86,800 | 869,736 | |
| Cidara Therapeutics, Inc. (c)(d) | 1,066,786 | 10,689,196 | |
| Clovis Oncology, Inc. (a)(b) | 649,924 | 12,101,585 | |
| Concert Pharmaceuticals, Inc. (a) | 132,750 | 1,707,165 | |
| CTI BioPharma Corp. (a)(b)(c) | 21,073,098 | 11,419,512 | |
| Cytokinetics, Inc. (a) | 1,553,278 | 9,785,651 | |
| Cytokinetics, Inc. warrants 6/25/17 (a) | 3,828,480 | 1,216,385 | |
| CytomX Therapeutics, Inc. | 287,485 | 3,523,129 | |
| DBV Technologies SA sponsored ADR (a) | 1,147,600 | 28,862,140 | |
| Dicerna Pharmaceuticals, Inc. (a) | 659,421 | 3,270,728 | |
| Dynavax Technologies Corp. (a)(b)(c) | 1,992,386 | 32,117,262 | |
| Edge Therapeutics, Inc. (a) | 876,488 | 6,275,654 | |
| Editas Medicine, Inc. | 226,465 | 5,900,546 | |
| Editas Medicine, Inc. | 681,263 | 19,722,564 | |
| Emergent BioSolutions, Inc. (a) | 336,186 | 11,373,172 | |
| Enanta Pharmaceuticals, Inc. (a)(b) | 520,428 | 14,774,951 | |
| Epirus Biopharmaceuticals, Inc. (a)(c) | 1,220,700 | 3,259,269 | |
| Epizyme, Inc. (a)(b)(c) | 5,506,360 | 48,400,904 | |
| Esperion Therapeutics, Inc. (a)(b)(c) | 1,335,559 | 19,886,474 | |
| Exact Sciences Corp. (a)(b) | 2,258,602 | 11,360,768 | |
| Exelixis, Inc. (a)(b) | 5,125,140 | 18,655,510 | |
| Fate Therapeutics, Inc. (a)(c) | 1,760,366 | 3,098,244 | |
| Fibrocell Science, Inc. (a)(c) | 2,432,240 | 5,496,862 | |
| Fibrocell Science, Inc. (a)(b)(c) | 894,400 | 2,021,344 | |
| FibroGen, Inc. (a) | 363,239 | 6,294,932 | |
| Forward Pharma A/S sponsored ADR (a)(b) | 117,900 | 1,504,404 | |
| Foundation Medicine, Inc. (a)(b) | 861,721 | 12,779,322 | |
| Galapagos Genomics NV sponsored ADR (b) | 1,138,988 | 46,732,678 | |
| Genmab A/S (a) | 2,132,348 | 262,312,219 | |
| Genocea Biosciences, Inc. (a) | 898,978 | 3,523,994 | |
| Genomic Health, Inc. (a) | 516,228 | 13,127,678 | |
| Geron Corp. (a)(b)(c) | 15,808,751 | 38,099,090 | |
| Gilead Sciences, Inc. | 2,409,190 | 210,201,828 | |
| Global Blood Therapeutics, Inc. (a)(c) | 2,861,396 | 42,720,642 | |
| Halozyme Therapeutics, Inc. (a)(b) | 5,381,542 | 43,751,936 | |
| Heron Therapeutics, Inc. (a) | 757,495 | 12,029,021 | |
| Histogenics Corp. (a)(c) | 1,240,986 | 3,226,564 | |
| Ignyta, Inc. (a) | 1,393,909 | 8,907,079 | |
| Immune Design Corp. (a)(b)(c) | 1,311,741 | 13,130,527 | |
| ImmunoGen, Inc. (a)(b)(c) | 4,827,278 | 35,142,584 | |
| Immunomedics, Inc. (a)(b)(c) | 9,463,964 | 21,388,559 | |
| Incyte Corp. (a) | 3,990,557 | 293,305,940 | |
| Infinity Pharmaceuticals, Inc. (a) | 1,808,933 | 10,455,633 | |
| Insys Therapeutics, Inc. (a)(b) | 1,283,790 | 22,440,649 | |
| Intercept Pharmaceuticals, Inc. (a)(b) | 1,193,868 | 132,973,018 | |
| Intrexon Corp. (a)(b) | 1,082,653 | 33,508,110 | |
| Ionis Pharmaceuticals, Inc. (a) | 2,519,207 | 87,063,794 | |
| Ironwood Pharmaceuticals, Inc. Class A (a) | 4,692,810 | 45,285,617 | |
| Juno Therapeutics, Inc. (a)(b) | 341,603 | 12,014,178 | |
| Juno Therapeutics, Inc. (d) | 1,158,952 | 40,760,342 | |
| Karyopharm Therapeutics, Inc. (a)(b)(c) | 3,571,115 | 21,069,579 | |
| Keryx Biopharmaceuticals, Inc. (a)(b) | 2,881,369 | 11,583,103 | |
| Kite Pharma, Inc. (a)(b) | 2,293,908 | 102,583,566 | |
| Kura Oncology, Inc. (b)(c) | 2,075,817 | 8,510,850 | |
| La Jolla Pharmaceutical Co. (a)(b)(c) | 1,517,804 | 23,359,004 | |
| Lexicon Pharmaceuticals, Inc. (a)(b) | 5,001,703 | 46,715,906 | |
| Ligand Pharmaceuticals, Inc. Class B (a)(b) | 921,401 | 85,026,884 | |
| Lion Biotechnologies, Inc. (a)(b) | 1,954,882 | 10,908,242 | |
| Loxo Oncology, Inc. (a)(c) | 1,611,362 | 30,277,492 | |
| Macrogenics, Inc. (a)(c) | 3,011,153 | 48,118,225 | |
| MannKind Corp. (a)(b) | 4,967,414 | 5,116,436 | |
| MediciNova, Inc. (a)(b)(c) | 2,489,320 | 14,935,920 | |
| Medivation, Inc. (a) | 7,076,505 | 253,126,584 | |
| Merrimack Pharmaceuticals, Inc. (a) | 1,020,904 | 5,911,034 | |
| Mesoblast Ltd. sponsored ADR (a)(b) | 1,006,300 | 6,581,202 | |
| MiMedx Group, Inc. (a)(b) | 1,006,364 | 8,282,376 | |
| Minerva Neurosciences, Inc. (a)(c) | 1,843,948 | 8,980,027 | |
| Mirati Therapeutics, Inc. (a) | 126,345 | 2,664,616 | |
| Mirna Therapeutics, Inc. (a)(b)(c) | 1,146,800 | 4,977,112 | |
| Momenta Pharmaceuticals, Inc. (a) | 1,062,677 | 8,931,800 | |
| Myriad Genetics, Inc. (a)(b) | 1,033,343 | 36,167,005 | |
| NantKwest, Inc. (a)(b) | 1,465,343 | 10,081,560 | |
| Neurocrine Biosciences, Inc. (a) | 3,582,851 | 131,777,260 | |
| NewLink Genetics Corp. (a)(b) | 1,164,818 | 24,507,771 | |
| Nivalis Therapeutics, Inc. (b) | 81,400 | 368,742 | |
| Novavax, Inc. (a)(b)(c) | 16,470,821 | 71,812,780 | |
| Novelos Therapeutics, Inc. warrants 12/6/16 (a) | 2,362,400 | 24 | |
| OncoMed Pharmaceuticals, Inc. (a)(b) | 952,133 | 9,073,827 | |
| Ophthotech Corp. (a)(c) | 3,355,798 | 151,145,142 | |
| Opko Health, Inc. (a)(b) | 2,041,581 | 18,986,703 | |
| Oragenics, Inc. (a)(b)(c) | 987,200 | 1,046,432 | |
| Oragenics, Inc. (a)(c) | 1,558,058 | 1,651,541 | |
| Orexigen Therapeutics, Inc. (a)(b)(c) | 9,571,208 | 6,796,515 | |
| Organovo Holdings, Inc. (a)(b) | 1,111,017 | 2,499,788 | |
| Osiris Therapeutics, Inc. (b)(c) | 1,866,995 | 13,330,344 | |
| OvaScience, Inc. (a) | 1,061,925 | 5,893,684 | |
| PolyMedix, Inc. warrants 4/10/16 (a) | 2,961,167 | 30 | |
| Portola Pharmaceuticals, Inc. (a)(c) | 2,940,691 | 82,839,265 | |
| Progenics Pharmaceuticals, Inc. (a)(b)(c) | 4,222,136 | 18,619,620 | |
| ProNai Therapeutics, Inc. (a)(b)(c) | 1,620,396 | 9,544,132 | |
| ProQR Therapeutics BV (a)(c) | 1,510,385 | 6,555,071 | |
| Proteon Therapeutics, Inc. (a)(b) | 605,931 | 3,259,909 | |
| Prothena Corp. PLC (a) | 726,935 | 23,145,610 | |
| PTC Therapeutics, Inc. (a)(b) | 1,058,633 | 8,447,891 | |
| Puma Biotechnology, Inc. (a)(b) | 1,330,825 | 59,594,344 | |
| Radius Health, Inc. (a)(b)(c) | 4,136,959 | 121,212,899 | |
| Raptor Pharmaceutical Corp. (a) | 3,563,879 | 12,331,021 | |
| Regeneron Pharmaceuticals, Inc. (a) | 1,267,412 | 486,711,556 | |
| REGENXBIO, Inc. (a)(b)(c) | 1,738,319 | 21,085,809 | |
| Regulus Therapeutics, Inc. (a)(b) | 1,944,641 | 12,776,291 | |
| Repligen Corp. (a)(c) | 1,781,715 | 45,843,527 | |
| Retrophin, Inc. (a) | 1,088,973 | 15,496,086 | |
| Sage Therapeutics, Inc. (a) | 1,442,993 | 42,423,994 | |
| Sangamo Biosciences, Inc. (a) | 3,485,031 | 18,261,562 | |
| Sarepta Therapeutics, Inc. (a)(b) | 1,938,600 | 26,578,206 | |
| Seattle Genetics, Inc. (a)(b) | 5,249,305 | 158,476,518 | |
| Seres Therapeutics, Inc. | 1,292,035 | 29,858,929 | |
| Seres Therapeutics, Inc. (b) | 1,028,440 | 23,767,248 | |
| Sophiris Bio, Inc. (a)(c) | 1,273,715 | 2,292,687 | |
| Spark Therapeutics, Inc. (b)(c) | 1,446,320 | 46,079,755 | |
| Spectrum Pharmaceuticals, Inc. (a)(c) | 3,903,900 | 17,645,628 | |
| Stemline Therapeutics, Inc. (a)(c) | 1,513,299 | 7,278,968 | |
| Sunesis Pharmaceuticals, Inc. (a)(b)(c) | 4,253,094 | 3,189,821 | |
| TESARO, Inc. (a)(b)(c) | 2,149,849 | 86,982,891 | |
| TG Therapeutics, Inc. (a)(b)(c) | 5,034,231 | 41,935,144 | |
| Threshold Pharmaceuticals, Inc. (a)(b) | 366,950 | 82,747 | |
| Threshold Pharmaceuticals, Inc. warrants 3/16/16 (a) | 631,520 | 6 | |
| Tobira Therapeutics, Inc. (a)(b)(c) | 1,240,797 | 8,784,843 | |
| Tokai Pharmaceuticals, Inc. (a)(b) | 484,000 | 3,083,080 | |
| Trevena, Inc. (a) | 1,172,960 | 9,817,675 | |
| Ultragenyx Pharmaceutical, Inc. (a)(c) | 1,976,978 | 120,575,888 | |
| uniQure B.V. (a)(b) | 870,789 | 12,217,170 | |
| United Therapeutics Corp. (a) | 1,018,209 | 124,160,405 | |
| Verastem, Inc. (a)(b) | 697,814 | 781,552 | |
| Versartis, Inc. (a)(c) | 2,163,970 | 14,217,283 | |
| Vertex Pharmaceuticals, Inc. (a) | 4,833,334 | 413,201,724 | |
| Vical, Inc. (a)(c) | 5,921,845 | 2,152,591 | |
| Vitae Pharmaceuticals, Inc. (a)(b)(c) | 2,182,971 | 19,712,228 | |
| Vital Therapies, Inc. (a)(b)(c) | 2,698,149 | 22,394,637 | |
| Voyager Therapeutics, Inc. (a)(b)(c) | 1,317,197 | 12,605,575 | |
| Voyager Therapeutics, Inc. (c) | 1,286,274 | 11,694,160 | |
| Xencor, Inc. (a)(c) | 2,293,425 | 25,227,675 | |
| Xenon Pharmaceuticals, Inc. (a)(c) | 808,705 | 5,871,198 | |
| XOMA Corp. (a)(b)(c) | 7,564,102 | 5,748,718 | |
| Zafgen, Inc. (a)(c) | 2,712,346 | 16,979,286 | |
| 8,214,833,962 | |||
| Capital Markets - 0.1% | |||
| Asset Management & Custody Banks - 0.1% | |||
| RPI International Holdings LP (e) | 54,958 | 7,540,238 | |
| Health Care Equipment & Supplies - 0.3% | |||
| Health Care Equipment - 0.3% | |||
| Bellerophon Therapeutics, Inc. (b)(c) | 1,074,370 | 2,363,614 | |
| Novocure Ltd. | 701,713 | 7,792,874 | |
| Novocure Ltd. (a)(b) | 728,672 | 8,518,176 | |
| Vermillion, Inc. (a)(b)(c) | 4,344,964 | 7,038,842 | |
| Zosano Pharma Corp. (a)(c) | 1,196,540 | 2,871,696 | |
| 28,585,202 | |||
| Life Sciences Tools & Services - 0.1% | |||
| Life Sciences Tools & Services - 0.1% | |||
| JHL Biotech, Inc. | 2,204,254 | 7,824,071 | |
| Transgenomic, Inc. (a) | 236,500 | 132,440 | |
| Transgenomic, Inc. warrants 2/3/17 (a) | 1,419,000 | 14 | |
| 7,956,525 | |||
| Personal Products - 0.0% | |||
| Personal Products - 0.0% | |||
| MYOS Corp. (a) | 33,334 | 51,668 | |
| Pharmaceuticals - 11.7% | |||
| Pharmaceuticals - 11.7% | |||
| Achaogen, Inc. (a) | 901,382 | 3,154,837 | |
| Adimab LLC unit (a)(e)(f) | 1,954,526 | 37,429,173 | |
| Aradigm Corp. (a) | 148,009 | 457,348 | |
| Aradigm Corp. (a) | 11,945 | 36,910 | |
| Aralez Pharmaceuticals, Inc. (a) | 556,535 | 3,155,553 | |
| Auris Medical Holding AG (a) | 1,405,000 | 6,673,750 | |
| Avexis, Inc. | 143,800 | 2,791,158 | |
| Axsome Therapeutics, Inc. (a)(c) | 1,913,710 | 14,869,527 | |
| Biodel, Inc. (a)(b)(c) | 3,258,878 | 1,108,019 | |
| Biodelivery Sciences International, Inc. (a)(b) | 2,464,002 | 9,560,328 | |
| Carbylan Therapeutics, Inc. (c) | 2,619,196 | 1,623,902 | |
| Cempra, Inc. (a)(b)(c) | 4,396,674 | 73,996,023 | |
| Dermira, Inc. (a)(c) | 1,960,686 | 45,213,419 | |
| Dermira, Inc. (c)(d) | 875,705 | 20,193,757 | |
| Egalet Corp. (a)(b)(c) | 2,505,947 | 16,940,202 | |
| Eisai Co. Ltd. | 1,004,900 | 61,939,233 | |
| Endo Health Solutions, Inc. (a) | 649 | 27,135 | |
| Flex Pharma, Inc. | 107,200 | 796,496 | |
| GW Pharmaceuticals PLC ADR (a)(b) | 1,217,289 | 50,030,578 | |
| Horizon Pharma PLC (a)(c) | 9,421,902 | 161,679,838 | |
| Intra-Cellular Therapies, Inc. (a) | 1,753,982 | 49,321,974 | |
| Jazz Pharmaceuticals PLC (a) | 1,424,013 | 173,131,501 | |
| MyoKardia, Inc. (c) | 2,241,490 | 15,118,850 | |
| MyoKardia, Inc. (a)(c) | 379,000 | 2,690,900 | |
| Nektar Therapeutics (a) | 1,432,471 | 16,000,701 | |
| NeurogesX, Inc. (a)(c) | 2,550,000 | 22,950 | |
| Ocular Therapeutix, Inc. (a)(b)(c) | 1,677,928 | 13,205,293 | |
| Pacira Pharmaceuticals, Inc. (a)(b) | 1,737,935 | 90,389,999 | |
| Paratek Pharmaceuticals, Inc. (a)(c) | 1,760,132 | 26,894,817 | |
| Parnell Pharmaceuticals Holdings Ltd. (a)(c) | 692,482 | 2,042,822 | |
| Repros Therapeutics, Inc. (a)(b)(c) | 1,672,182 | 1,438,077 | |
| Revance Therapeutics, Inc. (a)(b) | 404,100 | 7,146,509 | |
| SCYNEXIS, Inc. (a) | 509,200 | 2,495,080 | |
| Sun Pharmaceutical Industries Ltd. | 2,246,469 | 28,124,916 | |
| Tetraphase Pharmaceuticals, Inc. (a)(b) | 1,742,703 | 7,040,520 | |
| The Medicines Company (a)(b) | 2,317,208 | 74,521,409 | |
| TherapeuticsMD, Inc. (a) | 7,282,942 | 44,498,776 | |
| Theravance Biopharma, Inc. (a)(b) | 1,652,300 | 25,974,156 | |
| WAVE Life Sciences (c) | 982,333 | 14,044,906 | |
| WAVE Life Sciences (a)(b)(c) | 689,728 | 10,380,406 | |
| Zogenix, Inc. (a)(b)(c) | 2,397,186 | 25,410,172 | |
| Zogenix, Inc. warrants 7/27/17 (a)(c) | 498,465 | 17,676 | |
| 1,141,589,596 | |||
| TOTAL COMMON STOCKS | |||
| (Cost $9,652,973,387) | 9,400,557,191 | ||
| Preferred Stocks - 2.1% | |||
| Convertible Preferred Stocks - 2.1% | |||
| Biotechnology - 1.4% | |||
| Biotechnology - 1.4% | |||
| 23andMe, Inc. Series E (e) | 1,505,457 | 13,308,240 | |
| AC Immune SA Series E (e) | 409,750 | 2,931,352 | |
| Gensight Biologics Series B (e) | 333,187 | 1,665,856 | |
| Immunocore Ltd. Series A (e) | 73,318 | 10,019,141 | |
| Intellia Therapeutics, Inc. Series B (e) | 508,813 | 2,671,268 | |
| Jounce Therapeutics, Inc. Series B (e) | 7,257,779 | 9,972,188 | |
| Moderna LLC: | |||
| Series D, 8.00% (a)(e) | 207,494 | 9,598,257 | |
| Series E (a)(e) | 269,897 | 12,484,895 | |
| Ovid Therapeutics, Inc. Series B (e) | 1,039,201 | 3,867,906 | |
| Pronutria Biosciences, Inc. Series C (e) | 1,642,272 | 23,287,417 | |
| RaNA Therapeutics LLC Series B (e) | 5,634,091 | 3,200,164 | |
| Scholar Rock LLC Series B (e) | 4,276,340 | 9,100,052 | |
| Syndax Pharmaceuticals, Inc. Series C1 (e) | 1,153,417 | 12,456,904 | |
| Twist Bioscience Corp.: | |||
| Series C (e) | 8,133,875 | 17,452,856 | |
| Series D (e) | 1,976,343 | 4,240,639 | |
| 136,257,135 | |||
| Health Care Providers & Services - 0.1% | |||
| Health Care Services - 0.1% | |||
| Allena Pharmaceuticals, Inc. Series C (e) | 6,041,631 | 10,760,145 | |
| Health Care Technology - 0.1% | |||
| Health Care Technology - 0.1% | |||
| Codiak Biosciences, Inc.: | |||
| Series A (e) | 856,366 | 1,862,596 | |
| Series B (e) | 2,783,187 | 6,053,432 | |
| 7,916,028 | |||
| Pharmaceuticals - 0.5% | |||
| Pharmaceuticals - 0.5% | |||
| Afferent Pharmaceuticals, Inc. Series C (e) | 8,274,568 | 11,634,043 | |
| Corvus Pharmaceuticals, Inc. Series B (e) | 747,748 | 10,094,598 | |
| Kolltan Pharmaceuticals, Inc. Series D (a)(e) | 10,639,609 | 8,405,291 | |
| Stemcentrx, Inc. Series G (e) | 876,163 | 12,565,930 | |
| Syros Pharmaceuticals, Inc. Series B, 6.00% (a)(e) | 1,138,582 | 2,869,227 | |
| 45,569,089 | |||
| TOTAL CONVERTIBLE PREFERRED STOCKS | 200,502,397 | ||
| Nonconvertible Preferred Stocks - 0.0% | |||
| Biotechnology - 0.0% | |||
| Biotechnology - 0.0% | |||
| Yumanity Holdings LLC Class A 0.00% (e) | 588,700 | 3,738,245 | |
| TOTAL PREFERRED STOCKS | |||
| (Cost $245,657,178) | 204,240,642 | ||
| Money Market Funds - 11.2% | |||
| Fidelity Cash Central Fund, 0.40% (g) | 101,094,469 | 101,094,469 | |
| Fidelity Securities Lending Cash Central Fund, 0.44% (g)(h) | 993,228,575 | 993,228,575 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $1,094,323,044) | 1,094,323,044 | ||
| TOTAL INVESTMENT PORTFOLIO - 110.0% | |||
| (Cost $10,992,953,609) | 10,699,120,877 | ||
| NET OTHER ASSETS (LIABILITIES) - (10.0)% | (975,522,299) | ||
| NET ASSETS - 100% | $9,723,598,578 |
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 $149,471,772 or 1.5% of net assets.
(e) Restricted securities - 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 $249,210,051 or 2.6% 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) 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 |
| AC Immune SA Series E | 10/19/15 | $3,948,449 |
| Adimab LLC unit | 9/17/14 - 6/5/15 | $31,094,459 |
| Afferent Pharmaceuticals, Inc. Series C | 7/1/15 | $20,299,998 |
| Allena Pharmaceuticals, Inc. Series C | 11/25/15 | $16,010,322 |
| Codiak Biosciences, Inc. Series A | 11/12/15 | $856,366 |
| Codiak Biosciences, Inc. Series B | 11/12/15 | $8,349,561 |
| Corvus Pharmaceuticals, Inc. Series B | 9/16/15 | $10,475,949 |
| Gensight Biologics Series B | 7/2/15 | $2,567,478 |
| Immunocore Ltd. Series A | 7/27/15 | $13,796,921 |
| Intellia Therapeutics, Inc. Series B | 8/20/15 | $2,671,268 |
| Jounce Therapeutics, Inc. Series B | 4/17/15 | $16,402,581 |
| Kolltan Pharmaceuticals, Inc. Series D | 3/13/14 | $10,639,609 |
| Moderna LLC Series D, 8.00% | 11/6/13 | $4,425,847 |
| Moderna LLC Series E | 12/18/14 | $16,644,548 |
| Ovid Therapeutics, Inc. Series B | 8/10/15 | $6,474,222 |
| Pronutria Biosciences, Inc. Series C | 1/30/15 | $16,554,102 |
| RaNA Therapeutics LLC Series B | 7/17/15 | $6,084,818 |
| RPI International Holdings LP | 5/21/15 | $6,479,548 |
| Scholar Rock LLC Series B | 12/17/15 | $12,829,020 |
| Stemcentrx, Inc. Series G | 8/14/15 | $20,186,796 |
| Syndax Pharmaceuticals, Inc. Series C1 | 8/21/15 | $16,137,754 |
| Syros Pharmaceuticals, Inc. Series B, 6.00% | 10/9/14 - 1/12/16 | $3,582,093 |
| Twist Bioscience Corp. Series C | 5/29/15 | $12,199,999 |
| Twist Bioscience Corp. Series D | 1/8/16 | $4,240,639 |
| Yumanity Holdings LLC Class A 0.00% | 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 | $87,535 |
| Fidelity Securities Lending Cash Central Fund | 33,076,564 |
| Total | $33,164,099 |
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 | Value, end of period |
| Acceleron Pharma, Inc. | $124,672,058 | $13,157,083 | $-- | $-- | $86,934,749 |
| Achillion Pharmaceuticals, Inc. | 87,769,772 | -- | -- | -- | 53,428,222 |
| Acorda Therapeutics, Inc. | 126,918,714 | -- | 10,602 | -- | 122,669,402 |
| Adamas Pharmaceuticals, Inc. | 29,593,192 | 8,993,693 | 1,674,276 | -- | 25,329,062 |
| Aegerion Pharmaceuticals, Inc. | 77,343,690 | -- | -- | -- | 16,037,442 |
| Aimmune Therapeutics, Inc. | -- | -- | -- | -- | 34,782,272 |
| Aimmune Therapeutics, Inc. | -- | 41,733,831 | 644,790 | -- | 30,194,416 |
| Akebia Therapeutics, Inc. | 5,790,491 | 12,389,295 | 107,582 | -- | 15,126,410 |
| Alder Biopharmaceuticals, Inc. | 8,264,767 | 100,997,609 | -- | -- | 61,021,384 |
| Aldeyra Therapeutics, Inc. | 5,676,463 | 3,018,000 | -- | -- | 4,698,688 |
| Anacor Pharmaceuticals, Inc. | 49,918,773 | 114,792,668 | -- | -- | 166,052,633 |
| Applied Genetic Technologies Corp. | 22,821,543 | 5,588,424 | 374,765 | -- | 19,086,161 |
| Ardelyx, Inc. | 29,190,159 | 20,163,043 | -- | -- | 32,015,636 |
| Atara Biotherapeutics, Inc. | 26,396,865 | 70,695,569 | 39,207,684 | -- | 34,013,045 |
| Axsome Therapeutics, Inc. | -- | 17,223,390 | -- | -- | 14,869,527 |
| Bellerophon Therapeutics, Inc. | 12,802,584 | 74,368 | -- | -- | 2,363,614 |
| Biodel, Inc. | -- | 3,018,704 | 7,528 | -- | 1,108,019 |
| Calithera Biosciences, Inc. | 20,983,814 | 7,846,286 | -- | -- | 10,659,924 |
| Cara Therapeutics, Inc. | 6,937,743 | 16,710,484 | 1,958,853 | -- | -- |
| Carbylan Therapeutics, Inc. | -- | 13,246,490 | 304 | -- | 1,623,902 |
| Cempra, Inc. | 165,600 | 115,839,119 | 15,344,062 | -- | 73,996,023 |
| Cerulean Pharma, Inc. | 15,645,230 | 4,642,206 | 490,800 | -- | 5,109,587 |
| Chiasma, Inc. | -- | -- | -- | -- | 15,108,345 |
| Chiasma, Inc. | -- | 2,519,156 | -- | -- | 1,257,093 |
| Chiasma, Inc. warrants | -- | -- | -- | -- | 2,225,547 |
| Cidara Therapeutics, Inc. | -- | 1,408,485 | -- | -- | 869,736 |
| Cidara Therapeutics, Inc. | -- | -- | -- | -- | 10,689,196 |
| CTI BioPharma Corp. | 7,367,453 | 29,389,701 | 500,907 | -- | 11,419,512 |
| Dermira, Inc. | 13,185,490 | -- | -- | -- | -- |
| Dermira, Inc. | 19,704,594 | 15,935,461 | 1,851,757 | -- | 45,213,419 |
| Dermira, Inc. | -- | -- | -- | -- | 20,193,757 |
| Dyax Corp. | 107,545,440 | 78,052,438 | 360,637,088 | -- | -- |
| Dynavax Technologies Corp. | -- | 56,765,560 | 3,896,389 | -- | 32,117,262 |
| Egalet Corp. | 17,461,523 | 16,877,458 | -- | -- | 16,940,202 |
| Epirus Biopharmaceuticals, Inc. | 12,853,971 | -- | -- | -- | 3,259,269 |
| Epizyme, Inc. | 80,350,788 | 26,694,932 | -- | -- | 48,400,904 |
| Esperion Therapeutics, Inc. | 67,939,105 | 76,533,849 | 18,482,080 | -- | 19,886,474 |
| Fate Therapeutics, Inc. | 6,878,794 | 2,305,959 | -- | -- | 3,098,244 |
| Fibrocell Science, Inc. | 11,845,009 | -- | -- | -- | 5,496,862 |
| Fibrocell Science, Inc. | 4,355,728 | -- | -- | -- | 2,021,344 |
| Geron Corp. | 47,395,355 | 483,317 | -- | -- | 38,099,090 |
| Global Blood Therapeutics, Inc. | -- | 11,858,044 | -- | -- | 42,720,642 |
| Histogenics Corp. | 13,241,321 | -- | -- | -- | 3,226,564 |
| Horizon Pharma PLC | 125,280,137 | 83,720,757 | -- | -- | 161,679,838 |
| Hyperion Therapeutics, Inc. | 59,072,193 | -- | 92,062,169 | -- | -- |
| Ignyta, Inc. | 10,178,903 | 2,873,809 | -- | -- | -- |
| Immune Design Corp. | 15,113,732 | 16,536,993 | -- | -- | 13,130,527 |
| ImmunoGen, Inc. | 12,057,073 | 50,260,264 | -- | -- | 35,142,584 |
| Immunomedics, Inc. | 17,865,023 | 14,741,776 | -- | -- | 21,388,559 |
| Intercept Pharmaceuticals, Inc. | 259,372,145 | 6,185,618 | -- | -- | -- |
| Karyopharm Therapeutics, Inc. | 81,985,213 | 14,544,658 | -- | -- | 21,069,579 |
| Kura Oncology, Inc. | -- | 14,051,950 | -- | -- | 8,510,850 |
| KYTHERA Biopharmaceuticals, Inc. | 54,184,482 | 14,060,114 | 118,536,146 | -- | -- |
| La Jolla Pharmaceutical Co. | 19,477,400 | 16,212,370 | -- | -- | 23,359,004 |
| Ligand Pharmaceuticals, Inc. Class B | 47,010,120 | 10,862,077 | 5,763,547 | -- | -- |
| Loxo Oncology, Inc. | -- | 44,051,931 | -- | -- | 30,277,492 |
| Macrogenics, Inc. | 87,247,247 | 15,221,414 | -- | -- | 48,118,225 |
| MediciNova, Inc. | -- | 8,713,150 | -- | -- | 14,935,920 |
| Minerva Neurosciences, Inc. | 6,560,424 | 3,323,584 | -- | -- | 8,980,027 |
| Mirna Therapeutics, Inc. | -- | 8,027,600 | -- | -- | 4,977,112 |
| MyoKardia, Inc. | -- | 22,200,001 | -- | -- | 15,118,850 |
| MyoKardia, Inc. | -- | 3,790,000 | -- | -- | 2,690,900 |
| NeurogesX, Inc. | 15,300 | -- | -- | -- | 22,950 |
| NewLink Genetics Corp. | 71,346,813 | -- | 13,754,518 | -- | -- |
| Novavax, Inc. | 131,868,162 | 15,480,637 | -- | -- | 71,812,780 |
| Ocular Therapeutix, Inc. | 16,331,509 | 26,982,208 | -- | -- | 13,205,293 |
| Ophthotech Corp. | 158,638,348 | 20,532,605 | 808,149 | -- | 151,145,142 |
| Oragenics, Inc. | 1,115,536 | -- | -- | -- | 1,046,432 |
| Oragenics, Inc. | 1,760,606 | -- | -- | -- | 1,651,541 |
| Orexigen Therapeutics, Inc. | 51,734,406 | 4,989,839 | 290,351 | -- | 6,796,515 |
| Osiris Therapeutics, Inc. | 32,243,004 | -- | -- | 373,399 | 13,330,344 |
| Paratek Pharmaceuticals, Inc. | 40,049,455 | 9,947,527 | -- | -- | 26,894,817 |
| Parnell Pharmaceuticals Holdings Ltd. | 2,936,124 | -- | -- | -- | 2,042,822 |
| Portola Pharmaceuticals, Inc. | 93,948,729 | 20,512,315 | -- | -- | 82,839,265 |
| Progenics Pharmaceuticals, Inc. | 28,961,271 | -- | 1,030,645 | -- | 18,619,620 |
| ProNai Therapeutics, Inc. | -- | 44,941,941 | -- | -- | 9,544,132 |
| ProQR Therapeutics BV | 24,561,033 | -- | -- | -- | -- |
| ProQR Therapeutics BV | 1,150,513 | -- | -- | -- | 6,555,071 |
| PTC Therapeutics, Inc. | 146,997,577 | 15,056,959 | 51,154,685 | -- | -- |
| Radius Health, Inc. | 124,452,401 | 70,100,328 | -- | -- | 121,212,899 |
| Receptos, Inc. | 290,260,273 | -- | 496,505,196 | -- | -- |
| REGENXBIO, Inc. | -- | 48,058,303 | -- | -- | 21,085,809 |
| Repligen Corp. | 47,854,409 | -- | 2,068,454 | -- | 45,843,527 |
| Repros Therapeutics, Inc. | 21,372,818 | 990,532 | 737,014 | -- | 1,438,077 |
| Sage Therapeutics, Inc. | 54,038,026 | 1,506,946 | -- | -- | -- |
| Sage Therapeutics, Inc. | 7,478,180 | -- | -- | -- | -- |
| Sangamo Biosciences, Inc. | 57,896,240 | 1,820,594 | 379,875 | -- | -- |
| Seres Therapeutics, Inc. | -- | 37,782,820 | -- | -- | -- |
| Sophiris Bio, Inc. | 1,024,808 | -- | 7,175 | -- | 2,292,687 |
| Spark Therapeutics, Inc. | 55,513,996 | 31,248,604 | -- | -- | 46,079,755 |
| Spectrum Pharmaceuticals, Inc. | 24,321,297 | -- | -- | -- | 17,645,628 |
| Stemline Therapeutics, Inc. | 22,987,012 | -- | -- | -- | 7,278,968 |
| Sunesis Pharmaceuticals, Inc. | 9,442,979 | -- | 373 | -- | 3,189,821 |
| TESARO, Inc. | 57,175,893 | 63,549,603 | -- | -- | 86,982,891 |
| TG Therapeutics, Inc. | 20,075,398 | 59,498,370 | -- | -- | 41,935,144 |
| Tobira Therapeutics, Inc. | -- | 15,648,474 | -- | -- | 8,784,843 |
| Ultragenyx Pharmaceutical, Inc. | 103,155,222 | 9,286,667 | -- | -- | 120,575,888 |
| Verastem, Inc. | 14,619,846 | 243,970 | 1,597,907 | -- | -- |
| Vermillion, Inc. | -- | 9,818,816 | 846,831 | -- | 7,038,842 |
| Versartis, Inc. | 40,767,554 | 2,002,500 | -- | -- | 14,217,283 |
| Vical, Inc. | 6,040,282 | -- | -- | -- | 2,152,591 |
| Vitae Pharmaceuticals, Inc. | 24,883,893 | 608,147 | -- | -- | 19,712,228 |
| Vital Therapies, Inc. | 32,994,640 | 8,002,500 | 5,717,458 | -- | 22,394,637 |
| Voyager Therapeutics, Inc. | -- | 18,504,820 | -- | -- | 12,605,575 |
| Voyager Therapeutics, Inc. | -- | 16,400,001 | -- | -- | 11,694,160 |
| WAVE Life Sciences | -- | 12,152,800 | -- | -- | 14,044,906 |
| WAVE Life Sciences | -- | 11,075,812 | -- | -- | 10,380,406 |
| Xencor, Inc. | 19,542,838 | 29,825,095 | 4,283,469 | -- | 25,227,675 |
| Xenon Pharmaceuticals, Inc. | 4,992,163 | -- | -- | -- | -- |
| Xenon Pharmaceuticals, Inc. | 10,142,029 | -- | -- | -- | 5,871,198 |
| XOMA Corp. | 17,853,076 | 16,184,481 | 876,294 | -- | 5,748,718 |
| Zafgen, Inc. | 101,011,814 | 4,434,103 | -- | -- | 16,979,286 |
| Zogenix, Inc. | 16,471,906 | -- | -- | -- | -- |
| Zogenix, Inc. | -- | 19,602,545 | -- | -- | 25,410,172 |
| Zogenix, Inc. warrants 7/27/17 | 69,302 | -- | -- | -- | 17,676 |
| Zosano Pharma Corp. | 8,593,602 | 1,116,423 | -- | -- | 2,871,696 |
| ZS Pharma, Inc. | 59,491,385 | 9,923,742 | 126,018,879 | -- | -- |
| Total | $3,914,601,789 | $1,896,163,715 | $1,367,628,602 | $373,399 | $2,668,962,757 |
Investment Valuation
The following is a summary of the inputs used, as of February 29, 2016, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used 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 | $9,400,557,191 | $9,224,200,948 | $131,386,802 | $44,969,441 |
| Preferred Stocks | 204,240,642 | -- | 22,551,502 | 181,689,140 |
| Money Market Funds | 1,094,323,044 | 1,094,323,044 | -- | -- |
| Total Investments in Securities: | $10,699,120,877 | $10,318,523,992 | $153,938,304 | $226,658,581 |
The following is a reconciliation of Investments in Securities and Derivative Instruments for which Level 3 inputs were used in determining value:
| Investments in Securities: | |
| Preferred Stocks | |
| Beginning Balance | $137,108,643 |
| Total Realized Gain (Loss) | -- |
| Total Unrealized Gain (Loss) | (45,724,617) |
| Cost of Purchases | 168,072,332 |
| Proceeds of Sales | (77,767,218) |
| Amortization/Accretion | -- |
| Transfers in to Level 3 | -- |
| Transfers out of Level 3 | -- |
| Ending Balance | $181,689,140 |
| The change in unrealized gain (loss) for the period attributable to Level 3 securities held at February 29, 2016 | $(45,724,644) |
| Other Investments in Securities | |
| Beginning Balance | $30,873,907 |
| Total Realized Gain (Loss) | (1,638,822) |
| Total Unrealized Gain (Loss) | 8,782,539 |
| Cost of Purchases | 20,930,457 |
| Proceeds of Sales | (13,978,670) |
| Amortization/Accretion | -- |
| Transfers in to Level 3 | 30 |
| Transfers out of Level 3 | -- |
| Ending Balance | $44,969,441 |
| The change in unrealized gain (loss) for the period attributable to Level 3 securities held at February 29, 2016 | $7,143,720 |
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 | 87.9% |
| Ireland | 4.5% |
| Denmark | 2.7% |
| United Kingdom | 1.0% |
| Others (Individually Less Than 1%) | 3.9% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Biotechnology Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2016 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $927,113,852) — See accompanying schedule: Unaffiliated issuers (cost $6,241,539,575) | $6,935,835,076 | |
| Fidelity Central Funds (cost $1,094,323,044) | 1,094,323,044 | |
| Other affiliated issuers (cost $3,657,090,990) | 2,668,962,757 | |
| Total Investments (cost $10,992,953,609) | $10,699,120,877 | |
| Restricted cash | 42,870 | |
| Receivable for investments sold | 62,623,520 | |
| Receivable for fund shares sold | 10,767,286 | |
| Dividends receivable | 104,551 | |
| Distributions receivable from Fidelity Central Funds | 2,276,940 | |
| Prepaid expenses | 58,255 | |
| Other receivables | 303,555 | |
| Total assets | 10,775,297,854 | |
| Liabilities | ||
| Payable to custodian bank | $2,303,856 | |
| Payable for investments purchased | 32,760,724 | |
| Payable for fund shares redeemed | 16,422,042 | |
| Accrued management fee | 4,530,133 | |
| Other affiliated payables | 1,841,279 | |
| Other payables and accrued expenses | 612,667 | |
| Collateral on securities loaned, at value | 993,228,575 | |
| Total liabilities | 1,051,699,276 | |
| Net Assets | $9,723,598,578 | |
| Net Assets consist of: | ||
| Paid in capital | $9,714,610,843 | |
| Accumulated net investment loss | (263,824) | |
| Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 303,132,228 | |
| Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (293,880,669) | |
| Net Assets, for 60,018,851 shares outstanding | $9,723,598,578 | |
| Net Asset Value, offering price and redemption price per share ($9,723,598,578 ÷ 60,018,851 shares) | $162.01 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 29, 2016 | ||
| Investment Income | ||
| Dividends (including $373,399 earned from other affiliated issuers) | $15,510,791 | |
| Income from Fidelity Central Funds (including $33,076,564 from security lending) | 33,164,099 | |
| Total income | 48,674,890 | |
| Expenses | ||
| Management fee | $79,677,798 | |
| Transfer agent fees | 23,126,847 | |
| Accounting and security lending fees | 1,794,460 | |
| Custodian fees and expenses | 368,180 | |
| Independent trustees' compensation | 266,186 | |
| Registration fees | 749,731 | |
| Audit | 87,615 | |
| Legal | 151,876 | |
| Interest | 34,677 | |
| Miscellaneous | 146,450 | |
| Total expenses before reductions | 106,403,820 | |
| Expense reductions | (509,173) | 105,894,647 |
| Net investment income (loss) | (57,219,757) | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 401,952,848 | |
| Other affiliated issuers | 711,654,741 | |
| Foreign currency transactions | (329,852) | |
| Total net realized gain (loss) | 1,113,277,737 | |
| Change in net unrealized appreciation (depreciation) on: Investment securities (net of increase in deferred foreign taxes of $53,009) | (5,765,265,560) | |
| Assets and liabilities in foreign currencies | 5,072 | |
| Total change in net unrealized appreciation (depreciation) | (5,765,260,488) | |
| Net gain (loss) | (4,651,982,751) | |
| Net increase (decrease) in net assets resulting from operations | $(4,709,202,508) |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 29, 2016 | Year ended February 28, 2015 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $(57,219,757) | $(39,801,989) |
| Net realized gain (loss) | 1,113,277,737 | 1,567,318,834 |
| Change in net unrealized appreciation (depreciation) | (5,765,260,488) | 591,127,348 |
| Net increase (decrease) in net assets resulting from operations | (4,709,202,508) | 2,118,644,193 |
| Distributions to shareholders from net realized gain | (935,222,849) | (1,044,601,828) |
| Share transactions | ||
| Proceeds from sales of shares | 6,221,332,903 | 4,289,879,665 |
| Reinvestment of distributions | 894,323,787 | 999,582,805 |
| Cost of shares redeemed | (5,026,035,970) | (4,120,805,109) |
| Net increase (decrease) in net assets resulting from share transactions | 2,089,620,720 | 1,168,657,361 |
| Redemption fees | 1,350,923 | 1,039,850 |
| Total increase (decrease) in net assets | (3,553,453,714) | 2,243,739,576 |
| Net Assets | ||
| Beginning of period | 13,277,052,292 | 11,033,312,716 |
| End of period (including accumulated net investment loss of $263,824 and accumulated net investment loss of $144,426, respectively) | $9,723,598,578 | $13,277,052,292 |
| Other Information | ||
| Shares | ||
| Sold | 24,881,387 | 19,696,850 |
| Issued in reinvestment of distributions | 3,692,321 | 4,576,425 |
| Redeemed | (22,091,457) | (20,560,338) |
| Net increase (decrease) | 6,482,251 | 3,712,937 |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Biotechnology Portfolio
| Years ended February 28, | 2016 A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $248.00 | $221.45 | $120.51 | $97.78 | $74.01 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | (.95) | (.87) | (.54) | (.16) | (.23) |
| Net realized and unrealized gain (loss) | (69.22) | 51.24 | 101.91 | 29.36 | 24.11 |
| Total from investment operations | (70.17) | 50.37 | 101.37 | 29.20 | 23.88 |
| Distributions from net realized gain | (15.84) | (23.84) | (.46) | (6.48) | (.12) |
| Total distributions | (15.84) | (23.84) | (.46) | (6.48) | (.12) |
| Redemption fees added to paid in capitalB | .02 | .02 | .03 | .01 | .01 |
| Net asset value, end of period | $162.01 | $248.00 | $221.45 | $120.51 | $97.78 |
| Total ReturnC | (30.35)% | 24.21% | 84.25% | 31.78% | 32.31% |
| Ratios to Average Net AssetsD,E | |||||
| Expenses before reductions | .73% | .74% | .76% | .81% | .83% |
| Expenses net of fee waivers, if any | .73% | .74% | .76% | .80% | .83% |
| Expenses net of all reductions | .73% | .74% | .75% | .79% | .83% |
| Net investment income (loss) | (.39)% | (.41)% | (.32)% | (.15)% | (.27)% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $9,723,599 | $13,277,052 | $11,033,313 | $3,450,725 | $1,741,830 |
| Portfolio turnover rateF | 35% | 61% | 35% | 42% | 106% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
D 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.
E 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.
F 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, 2016 | Past 1 year | Past 5 years | Past 10 years |
| Health Care Portfolio | (14.90)% | 18.50% | 11.72% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Health Care Portfolio on February 28, 2006.
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 | ||
| $30,290 | Health Care Portfolio | |
| $18,666 | S&P 500® Index | |
Health Care Portfolio
Management's Discussion of Fund Performance
Market Recap: The S&P 500® index returned -6.19% for the year ending February 29, 2016. Largely range-bound for the first half of the period, U.S. stocks suffered a steep, late-summer decline on concern about an economic slowdown in China. The market recovered in October, lifted by the U.S. Federal Reserve’s decision to delay raising near-term interest rates until mid-December. Investors also drew courage from a rate cut in China and economic stimulus in Europe. But continued oil-price weakness and U.S.-dollar strength, plus fresh worries about China and the Middle East, pushed the S&P 500® to its worst January since 2009, followed by a volatile but ultimately flattish February. Overall, growth-oriented and larger-cap stocks fared better than value and smaller-cap complements. In this environment, the tech-heavy Nasdaq Composite Index® returned -7.07% for the 12 months; the Russell 2000® Index, -14.97%. Few sectors within the broad-market S&P 500® gained ground, with a wide gap separating leaders from laggards. Despite increased competition among wireless carriers, telecommunication services (+8%) led the way, followed by the more defensive utilities sector (+6%). Rising wages and low inflation buoyed consumer staples (+4%), less so consumer discretionary (0%). Meanwhile, energy (-24%) foundered amid commodity weakness that also hurt materials (-17%). The financials sector (-12%) struggled as well.Comments from Portfolio Manager Eddie Yoon: For the year, the fund returned -14.90%, substantially lagging the -9.12% return of the MSCI U.S. IMI Health Care 25/50 Index sector benchmark. Health care stocks trailed the broad market by a wide margin due to a sharp pullback after multiyear gains for the group, along with increasing concerns surrounding drug pricing and global macroeconomic instability. Versus the sector benchmark, security selection in the biotechnology and pharmaceuticals industries dragged on results most the past year. Among individual stocks, an overweighting in Puma Biotechnology was the fund's largest detractor. Shares of the development-stage firm plummeted because the firm continued to report disappointing trial data for neratinib, its drug to treat breast cancer. It also hurt to avoid large-cap index giant Johnson & Johnson (J&J). J&J outperformed mainly due to the firm announcing better-than-expected quarterly earnings in October and January. Also in January, the firm reported an increase in its adjusted earnings guidance for fiscal 2016. Conversely, the fund’s sizable position in medical device maker Medtronic rated the top spot. The fund’s biggest holding, the stock rebounded in late September when the firm announced it had acquired Lazarus Effect, which develops vascular devices that capture and remove stroke-causing blood clots. In December, the stock also benefited from a better-than-anticipated quarterly earnings report and revenue growth in line with expectations. A position in another device maker, Boston Scientific, also aided 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.
Health Care Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 29, 2016
| % of fund's net assets | % of fund's net assets 6 months ago | |
| Medtronic PLC | 10.1 | 8.2 |
| Allergan PLC | 6.5 | 6.2 |
| Teva Pharmaceutical Industries Ltd. sponsored ADR | 5.7 | 5.2 |
| Amgen, Inc. | 5.4 | 2.6 |
| Boston Scientific Corp. | 5.0 | 4.7 |
| Bristol-Myers Squibb Co. | 3.9 | 2.6 |
| McKesson Corp. | 2.7 | 3.3 |
| UnitedHealth Group, Inc. | 2.6 | 2.3 |
| Vertex Pharmaceuticals, Inc. | 2.3 | 3.0 |
| Cigna Corp. | 2.1 | 2.5 |
| 46.3 |
Top Industries (% of fund's net assets)
| As of February 29, 2016 | ||
| Biotechnology | 27.1% | |
| Pharmaceuticals | 26.5% | |
| Health Care Equipment & Supplies | 25.2% | |
| Health Care Providers & Services | 13.4% | |
| Health Care Technology | 3.2% | |
| All Others* | 4.6% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
| As of August 31, 2015 | ||
| Pharmaceuticals | 35.7% | |
| Health Care Equipment & Supplies | 21.0% | |
| Biotechnology | 19.5% | |
| Health Care Providers & Services | 14.5% | |
| Health Care Technology | 3.5% | |
| All Others* | 5.8% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
Health Care Portfolio
Investments February 29, 2016
Showing Percentage of Net Assets
| Common Stocks - 98.8% | |||
| Shares | Value | ||
| Biotechnology - 27.0% | |||
| Biotechnology - 27.0% | |||
| AbbVie, Inc. | 2,200,000 | $120,142,000 | |
| Ablynx NV (a) | 2,000,000 | 25,542,718 | |
| Acceleron Pharma, Inc. (a) | 600,000 | 15,204,000 | |
| Acorda Therapeutics, Inc. (a) | 902,112 | 29,508,084 | |
| Actelion Ltd. | 300,000 | 41,882,824 | |
| Advaxis, Inc. (a)(b) | 1,676,051 | 9,151,238 | |
| Alexion Pharmaceuticals, Inc. (a) | 840,000 | 118,272,000 | |
| Alnylam Pharmaceuticals, Inc. (a) | 529,877 | 31,034,896 | |
| AMAG Pharmaceuticals, Inc. (a)(b) | 1,300,000 | 34,164,000 | |
| Amgen, Inc. | 2,800,000 | 398,384,000 | |
| Amicus Therapeutics, Inc. (a) | 2,400,000 | 14,784,000 | |
| Anacor Pharmaceuticals, Inc. (a) | 927,138 | 59,132,862 | |
| Arena Pharmaceuticals, Inc. (a)(b) | 9,000,000 | 13,410,000 | |
| Array BioPharma, Inc. (a)(b) | 4,000,000 | 10,040,000 | |
| BeiGene Ltd. ADR | 112,826 | 3,302,417 | |
| Biogen, Inc. (a) | 600,000 | 155,652,000 | |
| BioMarin Pharmaceutical, Inc. (a) | 840,000 | 68,770,800 | |
| bluebird bio, Inc. (a) | 134,900 | 6,235,078 | |
| Blueprint Medicines Corp. | 700,000 | 12,131,000 | |
| Cara Therapeutics, Inc. (a) | 680,415 | 3,347,642 | |
| Celgene Corp. (a) | 600,000 | 60,498,000 | |
| Cellectis SA sponsored ADR (b) | 840,000 | 20,000,400 | |
| Curis, Inc. (a)(c) | 7,829,565 | 10,726,504 | |
| CytomX Therapeutics, Inc. (a) | 438,377 | 5,655,063 | |
| Edge Therapeutics, Inc. (a) | 375,559 | 2,689,002 | |
| Galapagos Genomics NV sponsored ADR | 429,787 | 17,634,161 | |
| Gilead Sciences, Inc. | 680,000 | 59,330,000 | |
| Heron Therapeutics, Inc. (a)(b) | 568,130 | 9,021,904 | |
| Incyte Corp. (a) | 290,000 | 21,315,000 | |
| Insmed, Inc. (a) | 2,870,370 | 35,104,625 | |
| Intercept Pharmaceuticals, Inc. (a) | 257,900 | 28,724,902 | |
| Mirati Therapeutics, Inc. (a) | 900,000 | 18,981,000 | |
| Neurocrine Biosciences, Inc. (a) | 840,000 | 30,895,200 | |
| ProNai Therapeutics, Inc. (a) | 329,600 | 1,941,344 | |
| ProQR Therapeutics BV (a) | 428,102 | 1,857,963 | |
| Prothena Corp. PLC (a) | 382,517 | 12,179,341 | |
| Puma Biotechnology, Inc. (a)(b) | 1,170,000 | 52,392,600 | |
| Regeneron Pharmaceuticals, Inc. (a) | 373,000 | 143,239,460 | |
| Spark Therapeutics, Inc. | 474,283 | 15,110,656 | |
| TESARO, Inc. (a) | 940,000 | 38,032,400 | |
| Ultragenyx Pharmaceutical, Inc. (a) | 632,000 | 38,545,680 | |
| United Therapeutics Corp. (a) | 260,000 | 31,704,400 | |
| Vertex Pharmaceuticals, Inc. (a) | 1,970,000 | 168,415,300 | |
| Xencor, Inc. (a) | 1,000,000 | 11,000,000 | |
| 2,005,086,464 | |||
| Capital Markets - 0.1% | |||
| Asset Management & Custody Banks - 0.1% | |||
| RPI International Holdings LP (d) | 38,202 | 5,241,314 | |
| Diversified Consumer Services - 0.2% | |||
| Specialized Consumer Services - 0.2% | |||
| Carriage Services, Inc. (c) | 850,000 | 17,518,500 | |
| Health Care Equipment & Supplies - 25.2% | |||
| Health Care Equipment - 23.0% | |||
| Boston Scientific Corp. (a) | 21,900,000 | 371,862,000 | |
| CONMED Corp. | 600,000 | 23,844,000 | |
| Edwards Lifesciences Corp. (a) | 1,320,000 | 114,840,000 | |
| Genmark Diagnostics, Inc. (a)(c) | 2,305,720 | 11,413,314 | |
| HeartWare International, Inc. (a) | 600,000 | 19,176,000 | |
| Integra LifeSciences Holdings Corp. (a) | 780,000 | 47,860,800 | |
| Intuitive Surgical, Inc. (a) | 181,000 | 101,913,860 | |
| LivaNova PLC (a) | 553,702 | 31,250,941 | |
| Medtronic PLC | 9,700,000 | 750,683,000 | |
| Neovasc, Inc. (a)(c) | 4,200,000 | 16,758,000 | |
| Nevro Corp. (a) | 922,400 | 53,130,240 | |
| Novocure Ltd. (a)(b) | 570,000 | 6,663,300 | |
| ResMed, Inc. | 800,000 | 45,528,000 | |
| Wright Medical Group NV (a) | 3,762,206 | 64,296,101 | |
| Zeltiq Aesthetics, Inc. (a)(b) | 1,000,000 | 23,030,000 | |
| Zimmer Biomet Holdings, Inc. | 280,000 | 27,106,800 | |
| 1,709,356,356 | |||
| Health Care Supplies - 2.2% | |||
| Penumbra, Inc. | 1,250,000 | 55,361,250 | |
| The Cooper Companies, Inc. | 560,000 | 80,057,600 | |
| The Spectranetics Corp. (a) | 2,000,000 | 28,360,000 | |
| 163,778,850 | |||
| TOTAL HEALTH CARE EQUIPMENT & SUPPLIES | 1,873,135,206 | ||
| Health Care Providers & Services - 13.2% | |||
| Health Care Distributors & Services - 3.5% | |||
| Amplifon SpA | 3,000,000 | 24,150,270 | |
| EBOS Group Ltd. | 3,280,000 | 33,757,819 | |
| McKesson Corp. | 1,300,000 | 202,306,000 | |
| 260,214,089 | |||
| Health Care Facilities - 3.2% | |||
| Brookdale Senior Living, Inc. (a) | 1,600,000 | 22,992,000 | |
| HCA Holdings, Inc. (a) | 1,200,000 | 83,052,000 | |
| Surgical Care Affiliates, Inc. (a) | 1,280,000 | 51,878,400 | |
| Universal Health Services, Inc. Class B | 723,675 | 79,872,010 | |
| 237,794,410 | |||
| Health Care Services - 1.1% | |||
| Adeptus Health, Inc. Class A (a)(b) | 400,000 | 22,768,000 | |
| Envision Healthcare Holdings, Inc. (a) | 1,711,900 | 37,644,681 | |
| United Drug PLC (United Kingdom) | 2,800,000 | 21,824,208 | |
| 82,236,889 | |||
| Managed Health Care - 5.4% | |||
| Aetna, Inc. | 280,000 | 30,416,400 | |
| Cigna Corp. | 1,120,000 | 156,363,200 | |
| Humana, Inc. | 140,000 | 24,775,800 | |
| UnitedHealth Group, Inc. | 1,600,000 | 190,560,000 | |
| 402,115,400 | |||
| TOTAL HEALTH CARE PROVIDERS & SERVICES | 982,360,788 | ||
| Health Care Technology - 3.2% | |||
| Health Care Technology - 3.2% | |||
| athenahealth, Inc. (a)(b) | 900,000 | 116,163,000 | |
| Castlight Health, Inc. (a) | 1,875,650 | 6,227,158 | |
| Castlight Health, Inc. Class B (a) | 300,688 | 998,284 | |
| Connecture, Inc. (a)(b)(c) | 2,000,000 | 5,980,000 | |
| Evolent Health, Inc. (b) | 822,388 | 8,264,999 | |
| HealthStream, Inc. (a)(c) | 2,000,000 | 41,340,000 | |
| Medidata Solutions, Inc. (a) | 1,700,000 | 58,650,000 | |
| 237,623,441 | |||
| Life Sciences Tools & Services - 2.6% | |||
| Life Sciences Tools & Services - 2.6% | |||
| Agilent Technologies, Inc. | 3,700,000 | 138,195,000 | |
| Bruker Corp. | 1,500,000 | 38,970,000 | |
| PRA Health Sciences, Inc. (a)(b) | 400,000 | 17,268,000 | |
| 194,433,000 | |||
| Pharmaceuticals - 26.5% | |||
| Pharmaceuticals - 26.5% | |||
| Allergan PLC (a) | 1,680,000 | 487,384,800 | |
| Astellas Pharma, Inc. | 3,000,000 | 43,163,626 | |
| Bristol-Myers Squibb Co. | 4,640,000 | 287,355,200 | |
| Catalent, Inc. (a) | 1,900,034 | 46,113,825 | |
| Dechra Pharmaceuticals PLC | 2,000,000 | 31,845,528 | |
| Eisai Co. Ltd. | 740,000 | 45,611,536 | |
| Endo Health Solutions, Inc. (a) | 2,200,000 | 91,982,000 | |
| Horizon Pharma PLC (a) | 2,380,000 | 40,840,800 | |
| Jazz Pharmaceuticals PLC (a) | 480,000 | 58,358,400 | |
| Jiangsu Hengrui Medicine Co. Ltd. | 5,200,000 | 35,679,585 | |
| Mylan N.V. | 1,800,000 | 81,126,000 | |
| Pfizer, Inc. | 4,280,000 | 126,987,600 | |
| Prestige Brands Holdings, Inc. (a) | 714,600 | 34,943,940 | |
| Sun Pharmaceutical Industries Ltd. | 3,000,000 | 37,558,830 | |
| Teva Pharmaceutical Industries Ltd. sponsored ADR | 7,600,000 | 422,560,000 | |
| The Medicines Company (a) | 890,700 | 28,644,912 | |
| TherapeuticsMD, Inc. (a)(b) | 6,100,000 | 37,271,000 | |
| Valeant Pharmaceuticals International, Inc. (Canada) (a) | 550,000 | 36,190,000 | |
| 1,973,617,582 | |||
| Professional Services - 0.8% | |||
| Human Resource & Employment Services - 0.8% | |||
| WageWorks, Inc. (a) | 1,200,000 | 57,804,000 | |
| TOTAL COMMON STOCKS | |||
| (Cost $6,974,721,079) | 7,346,820,295 | ||
| Convertible Preferred Stocks - 0.5% | |||
| Biotechnology - 0.1% | |||
| Biotechnology - 0.1% | |||
| 10X Genomics, Inc. Series C 0.00% (d) | 2,233,040 | 10,000,000 | |
| Health Care Providers & Services - 0.2% | |||
| Health Care Services - 0.2% | |||
| 1Life Healthcare, Inc. Series G (a)(d) | 1,639,892 | 14,316,257 | |
| Software - 0.2% | |||
| Application Software - 0.2% | |||
| Outset Medical, Inc. Series B (d) | 8,159,125 | 11,830,731 | |
| TOTAL CONVERTIBLE PREFERRED STOCKS | |||
| (Cost $39,300,001) | 36,146,988 | ||
| Money Market Funds - 2.6% | |||
| Fidelity Cash Central Fund, 0.40% (e) | 18,884,368 | 18,884,368 | |
| Fidelity Securities Lending Cash Central Fund, 0.44% (e)(f) | 176,194,815 | 176,194,815 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $195,079,183) | 195,079,183 | ||
| TOTAL INVESTMENT PORTFOLIO - 101.9% | |||
| (Cost $7,209,100,263) | 7,578,046,466 | ||
| NET OTHER ASSETS (LIABILITIES) - (1.9)% | (138,961,362) | ||
| NET ASSETS - 100% | $7,439,085,104 |
Legend
(a) Non-income producing
(b) Security or a portion of the security is on loan at period end.
(c) Affiliated company
(d) Restricted securities - 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 $41,388,302 or 0.6% 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.
Additional information on each restricted holding is as follows:
| Security | Acquisition Date | Acquisition Cost |
| 10X Genomics, Inc. Series C 0.00% | 2/23/16 | $10,000,000 |
| 1Life Healthcare, Inc. Series G | 4/10/14 | $10,800,001 |
| Outset Medical, Inc. Series B | 5/5/15 | $18,500,000 |
| RPI International Holdings LP | 5/21/15 | $4,504,016 |
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 | $238,297 |
| Fidelity Securities Lending Cash Central Fund | 1,486,002 |
| Total | $1,724,299 |
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 | Value, end of period |
| Carriage Services, Inc. | $19,541,500 | $-- | $-- | $85,000 | $17,518,500 |
| Connecture, Inc. | 17,280,000 | -- | -- | -- | 5,980,000 |
| Curis, Inc. | 21,019,931 | 3,301,784 | 203,178 | -- | 10,726,504 |
| Discovery Laboratories, Inc. | 8,855,000 | 637,500 | 1,419,890 | -- | -- |
| Genmark Diagnostics, Inc. | 27,500,449 | 1,032,001 | -- | -- | 11,413,314 |
| HealthStream, Inc. | 38,820,000 | 12,855,642 | -- | -- | 41,340,000 |
| Mirati Therapeutics, Inc. | 16,639,000 | 5,420,919 | -- | -- | -- |
| Neovasc, Inc. | 39,600,000 | 1,795,800 | -- | -- | 16,758,000 |
| Surgical Care Affiliates, Inc. | 38,976,000 | 27,175,068 | 26,675,372 | -- | -- |
| TriVascular Technologies, Inc. | 13,381,307 | 4,700,086 | 20,392,623 | -- | -- |
| Vanda Pharmaceuticals, Inc. | 23,672,000 | -- | 22,115,861 | -- | -- |
| Wright Medical Group NV (formerly Tornier NV) | 52,020,955 | 38,482,210 | -- | -- | -- |
| Total | $317,306,142 | $95,401,010 | $70,806,924 | $85,000 | $103,736,318 |
Investment Valuation
The following is a summary of the inputs used, as of February 29, 2016, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used 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 | $7,346,820,295 | $7,197,442,569 | $144,136,412 | $5,241,314 |
| Convertible Preferred Stocks | 36,146,988 | -- | -- | 36,146,988 |
| Money Market Funds | 195,079,183 | 195,079,183 | -- | -- |
| Total Investments in Securities: | $7,578,046,466 | $7,392,521,752 | $144,136,412 | $41,388,302 |
The following is a summary of transfers between Level 1 and Level 2 for the period ended February 29, 2016. Transfers are assumed to have occurred at the beginning of the period, and are primarily attributable to the valuation techniques used for foreign equity securities, as discussed in the accompanying Notes to Financial Statements:
| Transfers | Total |
| Level 1 to Level 2 | $52,179,728 |
| Level 2 to Level 1 | $146,178,750 |
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 | 66.7% |
| Ireland | 19.6% |
| Israel | 5.7% |
| Netherlands | 2.0% |
| Japan | 1.2% |
| Others (Individually Less Than 1%) | 4.8% |
| 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, 2016 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $170,275,581) — See accompanying schedule: Unaffiliated issuers (cost $6,869,737,524) | $7,279,230,965 | |
| Fidelity Central Funds (cost $195,079,183) | 195,079,183 | |
| Other affiliated issuers (cost $144,283,556) | 103,736,318 | |
| Total Investments (cost $7,209,100,263) | $7,578,046,466 | |
| Receivable for investments sold | 97,489,375 | |
| Receivable for fund shares sold | 5,609,677 | |
| Dividends receivable | 7,415,247 | |
| Distributions receivable from Fidelity Central Funds | 164,800 | |
| Prepaid expenses | 36,716 | |
| Other receivables | 279,216 | |
| Total assets | 7,689,041,497 | |
| Liabilities | ||
| Payable for investments purchased | $55,964,106 | |
| Payable for fund shares redeemed | 12,808,793 | |
| Accrued management fee | 3,438,458 | |
| Other affiliated payables | 1,203,050 | |
| Other payables and accrued expenses | 347,171 | |
| Collateral on securities loaned, at value | 176,194,815 | |
| Total liabilities | 249,956,393 | |
| Net Assets | $7,439,085,104 | |
| Net Assets consist of: | ||
| Paid in capital | $7,088,090,796 | |
| Accumulated net investment loss | (209,016) | |
| Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (17,715,210) | |
| Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 368,918,534 | |
| Net Assets, for 41,207,316 shares outstanding | $7,439,085,104 | |
| Net Asset Value, offering price and redemption price per share ($7,439,085,104 ÷ 41,207,316 shares) | $180.53 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 29, 2016 | ||
| Investment Income | ||
| Dividends (including $85,000 earned from other affiliated issuers) | $64,449,316 | |
| Interest | 144 | |
| Income from Fidelity Central Funds (including $1,486,002 from security lending) | 1,724,299 | |
| Total income | 66,173,759 | |
| Expenses | ||
| Management fee | $52,717,787 | |
| Transfer agent fees | 14,980,707 | |
| Accounting and security lending fees | 1,320,605 | |
| Custodian fees and expenses | 168,492 | |
| Independent trustees' compensation | 177,182 | |
| Depreciation in deferred trustee compensation account | (251) | |
| Registration fees | 450,702 | |
| Audit | 58,936 | |
| Legal | 106,899 | |
| Interest | 7,856 | |
| Miscellaneous | 98,729 | |
| Total expenses before reductions | 70,087,644 | |
| Expense reductions | (689,883) | 69,397,761 |
| Net investment income (loss) | (3,224,002) | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 740,264,813 | |
| Other affiliated issuers | (8,476,092) | |
| Foreign currency transactions | 95,025 | |
| Total net realized gain (loss) | 731,883,746 | |
| Change in net unrealized appreciation (depreciation) on: Investment securities | (2,182,030,930) | |
| Assets and liabilities in foreign currencies | (27,661) | |
| Total change in net unrealized appreciation (depreciation) | (2,182,058,591) | |
| Net gain (loss) | (1,450,174,845) | |
| Net increase (decrease) in net assets resulting from operations | $(1,453,398,847) |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 29, 2016 | Year ended February 28, 2015 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $(3,224,002) | $(12,736,218) |
| Net realized gain (loss) | 731,883,746 | 1,233,760,978 |
| Change in net unrealized appreciation (depreciation) | (2,182,058,591) | 588,737,627 |
| Net increase (decrease) in net assets resulting from operations | (1,453,398,847) | 1,809,762,387 |
| Distributions to shareholders from net realized gain | (1,001,012,967) | (1,009,840,103) |
| Share transactions | ||
| Proceeds from sales of shares | 2,350,566,255 | 4,120,654,780 |
| Reinvestment of distributions | 951,495,392 | 964,770,473 |
| Cost of shares redeemed | (3,240,646,680) | (2,234,166,562) |
| Net increase (decrease) in net assets resulting from share transactions | 61,414,967 | 2,851,258,691 |
| Redemption fees | 273,990 | 346,983 |
| Total increase (decrease) in net assets | (2,392,722,857) | 3,651,527,958 |
| Net Assets | ||
| Beginning of period | 9,831,807,961 | 6,180,280,003 |
| End of period (including accumulated net investment loss of $209,016 and accumulated net investment loss of $217,204, respectively) | $7,439,085,104 | $9,831,807,961 |
| Other Information | ||
| Shares | ||
| Sold | 10,253,270 | 19,148,481 |
| Issued in reinvestment of distributions | 4,381,950 | 4,618,668 |
| Redeemed | (15,011,754) | (10,679,375) |
| Net increase (decrease) | (376,534) | 13,087,774 |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Health Care Portfolio
| Years ended February 28, | 2016 A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $236.43 | $216.88 | $144.20 | $133.07 | $133.93 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | (.07) | (.38) | (.20) | .50 | –C |
| Net realized and unrealized gain (loss) | (31.64) | 50.00 | 92.44 | 24.74 | 10.86 |
| Total from investment operations | (31.71) | 49.62 | 92.24 | 25.24 | 10.86 |
| Distributions from net investment income | – | – | (.03) | (.44) | – |
| Distributions from net realized gain | (24.20) | (30.08) | (19.53) | (13.67) | (11.72) |
| Total distributions | (24.20) | (30.08) | (19.57)D | (14.11) | (11.72) |
| Redemption fees added to paid in capitalB | .01 | .01 | .01 | –C | –C |
| Net asset value, end of period | $180.53 | $236.43 | $216.88 | $144.20 | $133.07 |
| Total ReturnE | (14.90)% | 25.44% | 67.13% | 20.07% | 9.10% |
| Ratios to Average Net AssetsF,G | |||||
| Expenses before reductions | .73% | .74% | .77% | .79% | .80% |
| Expenses net of fee waivers, if any | .73% | .74% | .77% | .79% | .80% |
| Expenses net of all reductions | .72% | .74% | .76% | .78% | .80% |
| Net investment income (loss) | (.03)% | (.18)% | (.11)% | .36% | - %H |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $7,439,085 | $9,831,808 | $6,180,280 | $2,724,341 | $2,176,224 |
| Portfolio turnover rateI | 76% | 98%J | 99% | 95% | 130% |
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 distributions of $19.57 per share is comprised of distributions from net investment income of $.034 and distributions from net realized gain of $19.532 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 represents less than .005%.
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.
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, 2016 | Past 1 year | Past 5 years | Past 10 years |
| Health Care Services Portfolio | (6.30)% | 12.76% | 8.24% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Health Care Services Portfolio on February 28, 2006.
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 | ||
| $22,077 | Health Care Services Portfolio | |
| $18,666 | S&P 500® Index | |
Health Care Services Portfolio
Management's Discussion of Fund Performance
Market Recap: The S&P 500® index returned -6.19% for the year ending February 29, 2016. Largely range-bound for the first half of the period, U.S. stocks suffered a steep, late-summer decline on concern about an economic slowdown in China. The market recovered in October, lifted by the U.S. Federal Reserve’s decision to delay raising near-term interest rates until mid-December. Investors also drew courage from a rate cut in China and economic stimulus in Europe. But continued oil-price weakness and U.S.-dollar strength, plus fresh worries about China and the Middle East, pushed the S&P 500® to its worst January since 2009, followed by a volatile but ultimately flattish February. Overall, growth-oriented and larger-cap stocks fared better than value and smaller-cap complements. In this environment, the tech-heavy Nasdaq Composite Index® returned -7.07% for the 12 months; the Russell 2000® Index, -14.97%. Few sectors within the broad-market S&P 500® gained ground, with a wide gap separating leaders from laggards. Despite increased competition among wireless carriers, telecommunication services (+8%) led the way, followed by the more defensive utilities sector (+6%). Rising wages and low inflation buoyed consumer staples (+4%), less so consumer discretionary (0%). Meanwhile, energy (-24%) foundered amid commodity weakness that also hurt materials (-17%). The financials sector(-12%) struggled as well.Comments from Co-Portfolio Managers Eddie Yoon and Justin Segalini: For the year, the fund returned -6.30%, topping the -6.86% return of the MSCI U.S. IMI Health Care Providers & Services 25/50 Index, and lagging the broad-based S&P 500®. Health care services stocks trailed the broad market amid global macroeconomic instability and a sharp pullback after multiyear gains. Versus the MSCI industry index, security selection in health care facilities contributed. Largely avoiding health care facilities firm and benchmark component Brookdale Senior Living was the biggest relative contributor. Brookdale's stock suffered because its post-merger integration with Emeritus Senior Living encountered more problems than expected. We added a position in Brookdale in January because we believed earnings have likely stabilized. Conversely, positioning in managed health care and picks among health care distributors hurt our relative result. From the former category, untimely ownership of Humana was the biggest relative detractor. Humana’s stock gained sharply in late May in anticipation of a merger with competitor Aetna, but the fund missed out because Humana was not held at that time.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, 2016, the fund was renamed Fidelity® Select Health Care Services Portfolio. At the same time, Eddie Yoon and Justin Segalini were named Co-Managers of the fund, replacing Steven Bullock.Health Care Services Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 29, 2016
| % of fund's net assets | % of fund's net assets 6 months ago | |
| UnitedHealth Group, Inc. | 21.3 | 18.0 |
| McKesson Corp. | 7.4 | 7.9 |
| Cigna Corp. | 6.3 | 6.2 |
| Express Scripts Holding Co. | 6.0 | 10.8 |
| Humana, Inc. | 5.3 | 2.5 |
| Aetna, Inc. | 5.0 | 4.3 |
| Anthem, Inc. | 4.9 | 4.8 |
| HCA Holdings, Inc. | 4.9 | 4.9 |
| Cardinal Health, Inc. | 4.3 | 6.1 |
| Laboratory Corp. of America Holdings | 3.7 | 1.4 |
| 69.1 |
Top Industries (% of fund's net assets)
| As of February 29, 2016 | ||
| Health Care Providers & Services | 97.5% | |
| Food & Staples Retailing | 0.9% | |
| Pharmaceuticals | 0.6% | |
| Professional Services | 0.5% | |
| All Others* | 0.5% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
| As of August 31, 2015 | ||
| Health Care Providers & Services | 97.6% | |
| Professional Services | 0.4% | |
| IT Services | 0.3% | |
| Diversified Consumer Services | 0.1% | |
| Industrial Conglomerates | 0.1% | |
| All Others* | 1.5% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
Health Care Services Portfolio
Investments February 29, 2016
Showing Percentage of Net Assets
| Common Stocks - 99.5% | |||
| Shares | Value | ||
| Food & Staples Retailing - 0.9% | |||
| Drug Retail - 0.9% | |||
| CVS Health Corp. | 77,000 | $7,482,090 | |
| Health Care Providers & Services - 97.5% | |||
| Health Care Distributors & Services - 15.6% | |||
| AmerisourceBergen Corp. | 270,000 | 23,387,400 | |
| Cardinal Health, Inc. | 440,000 | 35,948,000 | |
| Henry Schein, Inc. (a) | 55,000 | 9,099,750 | |
| McKesson Corp. | 400,000 | 62,248,000 | |
| 130,683,150 | |||
| Health Care Facilities - 15.5% | |||
| Acadia Healthcare Co., Inc. (a) | 18,000 | 997,380 | |
| AmSurg Corp. (a) | 280,000 | 19,054,000 | |
| Brookdale Senior Living, Inc. (a) | 180,000 | 2,586,600 | |
| Community Health Systems, Inc. (a) | 230,000 | 3,477,600 | |
| HCA Holdings, Inc. (a) | 590,000 | 40,833,900 | |
| HealthSouth Corp. | 228,000 | 8,032,440 | |
| LifePoint Hospitals, Inc. (a) | 110,000 | 6,859,600 | |
| Surgical Care Affiliates, Inc. (a) | 161,467 | 6,544,258 | |
| Tenet Healthcare Corp. (a) | 140,000 | 3,474,800 | |
| U.S. Physical Therapy, Inc. | 110,000 | 5,575,900 | |
| Universal Health Services, Inc. Class B | 250,000 | 27,592,500 | |
| VCA, Inc. (a) | 85,000 | 4,337,550 | |
| 129,366,528 | |||
| Health Care Services - 20.3% | |||
| Adeptus Health, Inc. Class A (a)(b) | 80,000 | 4,553,600 | |
| Chemed Corp. | 20,000 | 2,570,000 | |
| DaVita HealthCare Partners, Inc. (a) | 400,000 | 26,388,000 | |
| Envision Healthcare Holdings, Inc. (a) | 210,000 | 4,617,900 | |
| Express Scripts Holding Co. (a)(b) | 710,000 | 49,969,800 | |
| Fresenius SE & Co. KGaA | 64,800 | 4,291,594 | |
| Laboratory Corp. of America Holdings (a) | 280,000 | 30,755,200 | |
| MEDNAX, Inc. (a) | 280,000 | 18,771,200 | |
| Providence Service Corp. (a) | 130,000 | 6,176,300 | |
| Quest Diagnostics, Inc. | 300,000 | 19,959,000 | |
| Team Health Holdings, Inc. (a) | 50,000 | 2,228,500 | |
| 170,281,094 | |||
| Managed Health Care - 46.1% | |||
| Aetna, Inc. | 382,000 | 41,496,660 | |
| Anthem, Inc. | 316,000 | 41,298,040 | |
| Centene Corp. (a) | 270,000 | 15,379,200 | |
| Cigna Corp. | 380,000 | 53,051,800 | |
| Health Net, Inc. (a) | 90,000 | 5,599,800 | |
| Humana, Inc. | 251,000 | 44,419,470 | |
| Molina Healthcare, Inc. (a) | 60,000 | 3,722,400 | |
| UnitedHealth Group, Inc. | 1,500,000 | 178,649,999 | |
| Wellcare Health Plans, Inc. (a) | 28,000 | 2,516,360 | |
| 386,133,729 | |||
| TOTAL HEALTH CARE PROVIDERS & SERVICES | 816,464,501 | ||
| Pharmaceuticals - 0.6% | |||
| Pharmaceuticals - 0.6% | |||
| Catalent, Inc. (a) | 202,503 | 4,914,748 | |
| Professional Services - 0.5% | |||
| Human Resource & Employment Services - 0.5% | |||
| WageWorks, Inc. (a) | 86,756 | 4,179,037 | |
| TOTAL COMMON STOCKS | |||
| (Cost $568,543,335) | 833,040,376 | ||
| Money Market Funds - 1.4% | |||
| Fidelity Cash Central Fund, 0.40% (c) | 4,519,605 | 4,519,605 | |
| Fidelity Securities Lending Cash Central Fund, 0.44% (c)(d) | 7,410,850 | 7,410,850 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $11,930,455) | 11,930,455 | ||
| TOTAL INVESTMENT PORTFOLIO - 100.9% | |||
| (Cost $580,473,790) | 844,970,831 | ||
| NET OTHER ASSETS (LIABILITIES) - (0.9)% | (7,452,406) | ||
| NET ASSETS - 100% | $837,518,425 |
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 | $23,075 |
| Fidelity Securities Lending Cash Central Fund | 38,651 |
| Total | $61,726 |
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.
Health Care Services Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2016 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $7,073,454) — See accompanying schedule: Unaffiliated issuers (cost $568,543,335) | $833,040,376 | |
| Fidelity Central Funds (cost $11,930,455) | 11,930,455 | |
| Total Investments (cost $580,473,790) | $844,970,831 | |
| Receivable for investments sold | 878,720 | |
| Receivable for fund shares sold | 537,142 | |
| Dividends receivable | 233,601 | |
| Distributions receivable from Fidelity Central Funds | 9,095 | |
| Prepaid expenses | 3,579 | |
| Other receivables | 22,811 | |
| Total assets | 846,655,779 | |
| Liabilities | ||
| Payable for investments purchased | $9,550 | |
| Payable for fund shares redeemed | 1,128,087 | |
| Accrued management fee | 376,402 | |
| Other affiliated payables | 156,054 | |
| Other payables and accrued expenses | 56,411 | |
| Collateral on securities loaned, at value | 7,410,850 | |
| Total liabilities | 9,137,354 | |
| Net Assets | $837,518,425 | |
| Net Assets consist of: | ||
| Paid in capital | $568,491,114 | |
| Accumulated net investment loss | (538,491) | |
| Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 5,070,186 | |
| Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 264,495,616 | |
| Net Assets, for 10,657,293 shares outstanding | $837,518,425 | |
| Net Asset Value, offering price and redemption price per share ($837,518,425 ÷ 10,657,293 shares) | $78.59 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 29, 2016 | ||
| Investment Income | ||
| Dividends | $7,056,385 | |
| Interest | 19 | |
| Income from Fidelity Central Funds (including $38,651 from security lending) | 61,726 | |
| Total income | 7,118,130 | |
| Expenses | ||
| Management fee | $5,281,300 | |
| Transfer agent fees | 1,707,547 | |
| Accounting and security lending fees | 323,370 | |
| Custodian fees and expenses | 14,352 | |
| Independent trustees' compensation | 17,629 | |
| Registration fees | 63,741 | |
| Audit | 41,215 | |
| Legal | 11,094 | |
| Interest | 217 | |
| Miscellaneous | 10,144 | |
| Total expenses before reductions | 7,470,609 | |
| Expense reductions | (26,963) | 7,443,646 |
| Net investment income (loss) | (325,516) | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 32,982,698 | |
| Foreign currency transactions | (10,502) | |
| Total net realized gain (loss) | 32,972,196 | |
| Change in net unrealized appreciation (depreciation) on: Investment securities | (99,108,446) | |
| Assets and liabilities in foreign currencies | (1,550) | |
| Total change in net unrealized appreciation (depreciation) | (99,109,996) | |
| Net gain (loss) | (66,137,800) | |
| Net increase (decrease) in net assets resulting from operations | $(66,463,316) |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 29, 2016 | Year ended February 28, 2015 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $(325,516) | $(856,688) |
| Net realized gain (loss) | 32,972,196 | 67,152,548 |
| Change in net unrealized appreciation (depreciation) | (99,109,996) | 113,459,236 |
| Net increase (decrease) in net assets resulting from operations | (66,463,316) | 179,755,096 |
| Distributions to shareholders from net investment income | (196,725) | – |
| Distributions to shareholders from net realized gain | (36,264,193) | (68,132,265) |
| Total distributions | (36,460,918) | (68,132,265) |
| Share transactions | ||
| Proceeds from sales of shares | 418,304,133 | 205,039,822 |
| Reinvestment of distributions | 35,019,570 | 65,616,728 |
| Cost of shares redeemed | (391,343,866) | (196,364,541) |
| Net increase (decrease) in net assets resulting from share transactions | 61,979,837 | 74,292,009 |
| Redemption fees | 46,721 | 15,203 |
| Total increase (decrease) in net assets | (40,897,676) | 185,930,043 |
| Net Assets | ||
| Beginning of period | 878,416,101 | 692,486,058 |
| End of period (including accumulated net investment loss of $538,491 and accumulated net investment loss of $5,747, respectively) | $837,518,425 | $878,416,101 |
| Other Information | ||
| Shares | ||
| Sold | 4,736,725 | 2,561,684 |
| Issued in reinvestment of distributions | 408,409 | 847,811 |
| Redeemed | (4,554,229) | (2,508,957) |
| Net increase (decrease) | 590,905 | 900,538 |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Health Care Services Portfolio
| Years ended February 28, | 2016 A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $87.26 | $75.55 | $59.90 | $61.26 | $55.32 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | (.03) | (.09) | (.07) | .06 | (.03) |
| Net realized and unrealized gain (loss) | (5.21) | 19.25 | 20.08 | 1.77 | 5.96 |
| Total from investment operations | (5.24) | 19.16 | 20.01 | 1.83 | 5.93 |
| Distributions from net investment income | (.02) | – | – | (.03) | – |
| Distributions from net realized gain | (3.41) | (7.45) | (4.36) | (3.16) | – |
| Total distributions | (3.43) | (7.45) | (4.36) | (3.19) | – |
| Redemption fees added to paid in capitalB | –C | –C | –C | –C | .01 |
| Net asset value, end of period | $78.59 | $87.26 | $75.55 | $59.90 | $61.26 |
| Total ReturnC,D | (6.30)% | 26.88% | 34.22% | 3.17% | 10.74% |
| Ratios to Average Net AssetsE,F | |||||
| Expenses before reductions | .77% | .79% | .82% | .84% | .86% |
| Expenses net of fee waivers, if any | .77% | .79% | .82% | .84% | .86% |
| Expenses net of all reductions | .77% | .79% | .82% | .83% | .84% |
| Net investment income (loss) | (.03)% | (.12)% | (.10)% | .10% | (.05)% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $837,518 | $878,416 | $692,486 | $562,949 | $870,358 |
| Portfolio turnover rateG | 39% | 44% | 65% | 96% | 86% |
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 Equipment and Systems 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, 2016 | Past 1 year | Past 5 years | Past 10 years |
| Medical Equipment and Systems Portfolio | (6.63)% | 13.46% | 10.83% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Medical Equipment and Systems Portfolio on February 28, 2006.
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 | ||
| $27,962 | Medical Equipment and Systems Portfolio | |
| $18,666 | S&P 500® Index | |
Medical Equipment and Systems Portfolio
Management's Discussion of Fund Performance
Market Recap: The S&P 500® index returned -6.19% for the year ending February 29, 2016. Largely range-bound for the first half of the period, U.S. stocks suffered a steep, late-summer decline on concern about an economic slowdown in China. The market recovered in October, lifted by the U.S. Federal Reserve’s decision to delay raising near-term interest rates until mid-December. Investors also drew courage from a rate cut in China and economic stimulus in Europe. But continued oil-price weakness and U.S.-dollar strength, plus fresh worries about China and the Middle East, pushed the S&P 500® to its worst January since 2009, followed by a volatile but ultimately flattish February. Overall, growth-oriented and larger-cap stocks fared better than value and smaller-cap complements. In this environment, the tech-heavy Nasdaq Composite Index® returned -7.07% for the 12 months; the Russell 2000® Index, -14.97%. Few sectors within the broad-market S&P 500® gained ground, with a wide gap separating leaders from laggards. Despite increased competition among wireless carriers, telecommunication services (+8%) led the way, followed by the more defensive utilities sector (+6%). Rising wages and low inflation buoyed consumer staples (+4%), less so consumer discretionary (0%). Meanwhile, energy (-24%) foundered amid commodity weakness that also hurt materials (-17%). The financials sector (-12%) struggled as well.Comments from Portfolio Manager Eddie Yoon: For the year, the fund returned -6.63%, underperforming the -2.09% return of the MSCI U.S. IMI Health Care Equipment & Supplies 25/50 Index. Medical equipment stocks modestly trailed the -6.19% result of the broad-based S&P 500® index market, hampered by a sharp pullback after multiyear gains and increasing concerns surrounding drug pricing and global economic instability. Versus the MSCI sector benchmark, fund performance was hurt by picks in the health care equipment and non-benchmark exposure to weak-performing biotechnology firm Puma Biotechnology. Puma was our largest individual relative detractor, as shares of the development-stage firm plummeted because the firm continued to report disappointing trial data for neratinib, its drug to treat breast cancer. Security selection in the health care equipment industry – the fund’s core area of investment, representing 85% of assets this period – also dragged on relative performance the past year. Here, a non-index position in Neovasc disappointed. On the positive side an underweighting in Abbott Laboratories – a producer of generic pharmaceuticals, medical devices and nutrition products – was the largest individual relative contributor the past year. The stock was weighed down by market concerns over the firm’s emerging-markets exposure and its high price-to-earnings multiple. An out-of-index investment in Sartorius, a leader in the emerging area of disposable biotechnology manufacturing, also aided 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.
Medical Equipment and Systems Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 29, 2016
| % of fund's net assets | % of fund's net assets 6 months ago | |
| Medtronic PLC | 24.8 | 23.5 |
| Boston Scientific Corp. | 11.0 | 11.3 |
| Intuitive Surgical, Inc. | 6.4 | 1.1 |
| Edwards Lifesciences Corp. | 5.6 | 2.3 |
| Abbott Laboratories | 4.5 | 7.6 |
| Zimmer Biomet Holdings, Inc. | 4.4 | 4.8 |
| Stryker Corp. | 3.3 | 4.7 |
| The Cooper Companies, Inc. | 3.3 | 3.1 |
| ResMed, Inc. | 2.8 | 2.0 |
| Integra LifeSciences Holdings Corp. | 2.6 | 2.2 |
| 68.7 |
Top Industries (% of fund's net assets)
| As of February 29, 2016 | ||
| Health Care Equipment & Supplies | 92.6% | |
| Life Sciences Tools & Services | 2.1% | |
| Pharmaceuticals | 1.7% | |
| Health Care Providers & Services | 0.9% | |
| Health Care Technology | 0.9% | |
| All Others* | 1.8% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
| As of August 31, 2015 | ||
| Health Care Equipment & Supplies | 92.3% | |
| Pharmaceuticals | 2.0% | |
| Life Sciences Tools & Services | 1.9% | |
| Health Care Providers & Services | 1.1% | |
| Industrial Conglomerates | 1.0% | |
| All Others* | 1.7% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
Medical Equipment and Systems Portfolio
Investments February 29, 2016
Showing Percentage of Net Assets
| Common Stocks - 97.5% | |||
| Shares | Value | ||
| Biotechnology - 0.4% | |||
| Biotechnology - 0.4% | |||
| Puma Biotechnology, Inc. (a) | 160,161 | $7,172,010 | |
| Health Care Equipment & Supplies - 91.7% | |||
| Health Care Equipment - 84.0% | |||
| Abbott Laboratories | 2,200,000 | 85,228,000 | |
| Atricure, Inc. (a) | 1,150,000 | 19,055,500 | |
| Boston Scientific Corp. (a) | 12,400,000 | 210,552,000 | |
| Cardiovascular Systems, Inc. (a) | 500,000 | 4,180,000 | |
| CONMED Corp. | 300,000 | 11,922,000 | |
| DexCom, Inc. (a) | 160,000 | 10,409,600 | |
| Edwards Lifesciences Corp. (a) | 1,240,000 | 107,880,000 | |
| Fukuda Denshi Co. Ltd. | 260,000 | 14,272,946 | |
| Genmark Diagnostics, Inc. (a) | 1,280,000 | 6,336,000 | |
| HeartWare International, Inc. (a) | 210,000 | 6,711,600 | |
| Inogen, Inc. (a) | 392,104 | 13,402,115 | |
| Integra LifeSciences Holdings Corp. (a) | 800,000 | 49,088,000 | |
| Intuitive Surgical, Inc. (a) | 216,200 | 121,733,572 | |
| Invuity, Inc. (b) | 520,000 | 3,811,600 | |
| K2M Group Holdings, Inc. (a) | 1,280,000 | 15,155,200 | |
| LivaNova PLC (a) | 530,763 | 29,956,264 | |
| Masimo Corp. (a) | 330,000 | 12,487,200 | |
| Medtronic PLC | 6,140,000 | 475,174,598 | |
| Natus Medical, Inc. (a) | 440,000 | 15,980,800 | |
| Neovasc, Inc. (a) | 2,421,948 | 9,663,573 | |
| Nevro Corp. (a)(b) | 380,504 | 21,917,030 | |
| ResMed, Inc. | 940,000 | 53,495,400 | |
| St. Jude Medical, Inc. | 860,000 | 46,173,400 | |
| Steris PLC | 428,000 | 27,528,960 | |
| Stryker Corp. | 640,000 | 63,923,200 | |
| Teleflex, Inc. | 280,000 | 39,989,600 | |
| Wright Medical Group NV (a) | 2,314,874 | 39,561,197 | |
| Zeltiq Aesthetics, Inc. (a)(b) | 400,000 | 9,212,000 | |
| Zimmer Biomet Holdings, Inc. | 880,000 | 85,192,800 | |
| 1,609,994,155 | |||
| Health Care Supplies - 7.7% | |||
| ASAHI INTECC Co. Ltd. | 228,000 | 10,612,668 | |
| Endologix, Inc. (a)(b) | 1,279,999 | 11,033,591 | |
| ICU Medical, Inc. (a) | 160,000 | 14,704,000 | |
| Penumbra, Inc. | 265,152 | 11,743,317 | |
| The Cooper Companies, Inc. | 440,000 | 62,902,400 | |
| The Spectranetics Corp. (a)(b) | 1,900,000 | 26,942,000 | |
| Vascular Solutions, Inc. (a) | 280,000 | 8,416,800 | |
| 146,354,776 | |||
| TOTAL HEALTH CARE EQUIPMENT & SUPPLIES | 1,756,348,931 | ||
| Health Care Providers & Services - 0.7% | |||
| Health Care Distributors & Services - 0.1% | |||
| Amplifon SpA | 303,694 | 2,444,764 | |
| Health Care Services - 0.6% | |||
| Miraca Holdings, Inc. | 260,000 | 11,202,083 | |
| TOTAL HEALTH CARE PROVIDERS & SERVICES | 13,646,847 | ||
| Health Care Technology - 0.9% | |||
| Health Care Technology - 0.9% | |||
| Castlight Health, Inc. (a) | 999,300 | 3,317,676 | |
| Castlight Health, Inc. Class B (a) | 76,183 | 252,928 | |
| HTG Molecular Diagnostics (c) | 673,461 | 1,939,568 | |
| Medidata Solutions, Inc. (a) | 330,000 | 11,385,000 | |
| 16,895,172 | |||
| Life Sciences Tools & Services - 2.1% | |||
| Life Sciences Tools & Services - 2.1% | |||
| Agilent Technologies, Inc. | 800,000 | 29,880,000 | |
| Bruker Corp. | 400,000 | 10,392,000 | |
| 40,272,000 | |||
| Pharmaceuticals - 1.7% | |||
| Pharmaceuticals - 1.7% | |||
| Allergan PLC (a) | 40,000 | 11,604,400 | |
| Teva Pharmaceutical Industries Ltd. sponsored ADR | 400,000 | 22,240,000 | |
| 33,844,400 | |||
| TOTAL COMMON STOCKS | |||
| (Cost $1,572,308,720) | 1,868,179,360 | ||
| Preferred Stocks - 1.4% | |||
| Convertible Preferred Stocks - 0.5% | |||
| Health Care Providers & Services - 0.2% | |||
| Health Care Services - 0.2% | |||
| 1Life Healthcare, Inc. Series G (a)(d) | 455,526 | 3,976,742 | |
| Software - 0.3% | |||
| Application Software - 0.3% | |||
| Outset Medical, Inc. Series B (d) | 3,307,754 | 4,796,243 | |
| TOTAL CONVERTIBLE PREFERRED STOCKS | 8,772,985 | ||
| Nonconvertible Preferred Stocks - 0.9% | |||
| Health Care Equipment & Supplies - 0.9% | |||
| Health Care Equipment - 0.9% | |||
| Sartorius AG (non-vtg.) | 69,000 | 17,812,130 | |
| TOTAL PREFERRED STOCKS | |||
| (Cost $16,432,148) | 26,585,115 | ||
| Money Market Funds - 3.1% | |||
| Fidelity Cash Central Fund, 0.40% (e) | 21,656,031 | 21,656,031 | |
| Fidelity Securities Lending Cash Central Fund, 0.44% (e)(f) | 36,909,333 | 36,909,333 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $58,565,364) | 58,565,364 | ||
| TOTAL INVESTMENT PORTFOLIO - 102.0% | |||
| (Cost $1,647,306,232) | 1,953,329,839 | ||
| NET OTHER ASSETS (LIABILITIES) - (2.0)% | (37,558,334) | ||
| NET ASSETS - 100% | $1,915,771,505 |
Legend
(a) Non-income producing
(b) Security or a portion of the security is on loan at period end.
(c) Affiliated company
(d) Restricted securities - 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 $8,772,985 or 0.5% 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.
Additional information on each restricted holding is as follows:
| Security | Acquisition Date | Acquisition Cost |
| 1Life Healthcare, Inc. Series G | 4/10/14 | $3,000,003 |
| Outset Medical, Inc. Series B | 5/5/15 - 6/5/15 | $7,500,001 |
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 | $22,830 |
| Fidelity Securities Lending Cash Central Fund | 213,435 |
| Total | $236,265 |
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 | Value, end of period |
| HTG Molecular Diagnostics | $-- | $9,428,454 | $-- | $-- | $1,939,568 |
| Total | $-- | $9,428,454 | $-- | $-- | $1,939,568 |
Investment Valuation
The following is a summary of the inputs used, as of February 29, 2016, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used 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 | $1,868,179,360 | $1,820,348,346 | $47,831,014 | $-- |
| Preferred Stocks | 26,585,115 | 17,812,130 | -- | 8,772,985 |
| Money Market Funds | 58,565,364 | 58,565,364 | -- | -- |
| Total Investments in Securities: | $1,953,329,839 | $1,896,725,840 | $47,831,014 | $8,772,985 |
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 | 65.0% |
| Ireland | 25.4% |
| United Kingdom | 3.0% |
| Netherlands | 2.1% |
| Japan | 1.9% |
| Israel | 1.1% |
| Others (Individually Less Than 1%) | 1.5% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Medical Equipment and Systems Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2016 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $35,503,378) — See accompanying schedule: Unaffiliated issuers (cost $1,579,312,414) | $1,892,824,907 | |
| Fidelity Central Funds (cost $58,565,364) | 58,565,364 | |
| Other affiliated issuers (cost $9,428,454) | 1,939,568 | |
| Total Investments (cost $1,647,306,232) | $1,953,329,839 | |
| Cash | 24,773 | |
| Receivable for investments sold | 11,350,305 | |
| Receivable for fund shares sold | 2,612,436 | |
| Dividends receivable | 532,721 | |
| Distributions receivable from Fidelity Central Funds | 21,342 | |
| Prepaid expenses | 7,328 | |
| Other receivables | 59,969 | |
| Total assets | 1,967,938,713 | |
| Liabilities | ||
| Payable for investments purchased | $10,131,632 | |
| Payable for fund shares redeemed | 3,846,017 | |
| Accrued management fee | 859,243 | |
| Other affiliated payables | 322,591 | |
| Other payables and accrued expenses | 98,392 | |
| Collateral on securities loaned, at value | 36,909,333 | |
| Total liabilities | 52,167,208 | |
| Net Assets | $1,915,771,505 | |
| Net Assets consist of: | ||
| Paid in capital | $1,604,659,212 | |
| Distributions in excess of net investment income | (2,859,853) | |
| Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 7,949,341 | |
| Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 306,022,805 | |
| Net Assets, for 56,769,546 shares outstanding | $1,915,771,505 | |
| Net Asset Value, offering price and redemption price per share ($1,915,771,505 ÷ 56,769,546 shares) | $33.75 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 29, 2016 | ||
| Investment Income | ||
| Dividends | $13,389,944 | |
| Interest | 18 | |
| Income from Fidelity Central Funds (including $213,435 from security lending) | 236,265 | |
| Total income | 13,626,227 | |
| Expenses | ||
| Management fee | $11,263,895 | |
| Transfer agent fees | 3,455,124 | |
| Accounting and security lending fees | 640,249 | |
| Custodian fees and expenses | 34,085 | |
| Independent trustees' compensation | 37,720 | |
| Registration fees | 82,233 | |
| Audit | 45,221 | |
| Legal | 22,275 | |
| Interest | 913 | |
| Miscellaneous | 22,088 | |
| Total expenses before reductions | 15,603,803 | |
| Expense reductions | (163,114) | 15,440,689 |
| Net investment income (loss) | (1,814,462) | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 107,421,489 | |
| Foreign currency transactions | (44,316) | |
| Total net realized gain (loss) | 107,377,173 | |
| Change in net unrealized appreciation (depreciation) on: Investment securities | (244,048,131) | |
| Assets and liabilities in foreign currencies | 2,720 | |
| Total change in net unrealized appreciation (depreciation) | (244,045,411) | |
| Net gain (loss) | (136,668,238) | |
| Net increase (decrease) in net assets resulting from operations | $(138,482,700) |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 29, 2016 | Year ended February 28, 2015 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $(1,814,462) | $1,850,801 |
| Net realized gain (loss) | 107,377,173 | 414,857,444 |
| Change in net unrealized appreciation (depreciation) | (244,045,411) | 36,857,734 |
| Net increase (decrease) in net assets resulting from operations | (138,482,700) | 453,565,979 |
| Distributions to shareholders from net investment income | (323,937) | (2,127,455) |
| Distributions to shareholders from net realized gain | (304,740,732) | (266,626,490) |
| Total distributions | (305,064,669) | (268,753,945) |
| Share transactions | ||
| Proceeds from sales of shares | 386,283,948 | 311,116,720 |
| Reinvestment of distributions | 288,871,521 | 255,506,585 |
| Cost of shares redeemed | (423,373,975) | (364,261,170) |
| Net increase (decrease) in net assets resulting from share transactions | 251,781,494 | 202,362,135 |
| Redemption fees | 22,443 | 24,200 |
| Total increase (decrease) in net assets | (191,743,432) | 387,198,369 |
| Net Assets | ||
| Beginning of period | 2,107,514,937 | 1,720,316,568 |
| End of period (including distributions in excess of net investment income of $2,859,853 and distributions in excess of net investment income of $730,211, respectively) | $1,915,771,505 | $2,107,514,937 |
| Other Information | ||
| Shares | ||
| Sold | 10,257,167 | 7,939,627 |
| Issued in reinvestment of distributions | 7,601,549 | 6,807,619 |
| Redeemed | (11,391,991) | (9,675,095) |
| Net increase (decrease) | 6,466,725 | 5,072,151 |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Medical Equipment and Systems Portfolio
| Years ended February 28, | 2016 A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $41.90 | $38.03 | $30.60 | $28.02 | $29.55 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | (.03) | .04 | .01 | .04 | .01 |
| Net realized and unrealized gain (loss) | (2.25) | 9.86 | 10.94 | 3.77 | (.10) |
| Total from investment operations | (2.28) | 9.90 | 10.95 | 3.81 | (.09) |
| Distributions from net investment income | (.01) | (.05) | – | (.05) | (.02) |
| Distributions from net realized gain | (5.86) | (5.98) | (3.52) | (1.18) | (1.43) |
| Total distributions | (5.87) | (6.03) | (3.52) | (1.23) | (1.44)C |
| Redemption fees added to paid in capitalB,D | – | – | – | – | – |
| Net asset value, end of period | $33.75 | $41.90 | $38.03 | $30.60 | $28.02 |
| Total ReturnE | (6.63)% | 28.52% | 37.03% | 14.09% | .23% |
| Ratios to Average Net AssetsF,G | |||||
| Expenses before reductions | .76% | .77% | .80% | .83% | .84% |
| Expenses net of fee waivers, if any | .76% | .77% | .80% | .83% | .84% |
| Expenses net of all reductions | .75% | .77% | .79% | .82% | .84% |
| Net investment income (loss) | (.09)% | .11% | .04% | .13% | .02% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $1,915,772 | $2,107,515 | $1,720,317 | $1,404,437 | $1,361,012 |
| Portfolio turnover rateH | 46% | 106% | 75% | 69% | 120% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Total distributions of $1.44 per share is comprised of distributions from net investment income of $.015 and distributions from net realized gain of $1.426 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.
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, 2016 | Past 1 year | Past 5 years | Past 10 years |
| Pharmaceuticals Portfolio | (11.33)% | 16.07% | 11.55% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Pharmaceuticals Portfolio on February 28, 2006.
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 | ||
| $29,833 | Pharmaceuticals Portfolio | |
| $18,666 | S&P 500® Index | |
Pharmaceuticals Portfolio
Management's Discussion of Fund Performance
Market Recap: The S&P 500® index returned -6.19% for the year ending February 29, 2016. Largely range-bound for the first half of the period, U.S. stocks suffered a steep, late-summer decline on concern about an economic slowdown in China. The market recovered in October, lifted by the U.S. Federal Reserve’s decision to delay raising near-term interest rates until mid-December. Investors also drew courage from a rate cut in China and economic stimulus in Europe. But continued oil-price weakness and U.S.-dollar strength, plus fresh worries about China and the Middle East, pushed the S&P 500® to its worst January since 2009, followed by a volatile but ultimately flattish February. Overall, growth-orientedand larger-cap stocks fared better than value and smaller-cap complements. In this environment, the tech-heavy Nasdaq Composite Index® returned -7.07% for the 12 months; the Russell 2000® Index, -14.97%. Few sectors within the broad-market S&P 500® gained ground, with a wide gap separating leaders from laggards. Despite increased competition among wireless carriers, telecommunication services (+8%) led the way, followed by the more defensive utilities sector (+6%). Rising wages and low inflation buoyed consumer staples (+4%), less so consumer discretionary (0%). Meanwhile, energy (-24%) foundered amid commodity weakness that also hurt materials (-17%). The financials sector(-12%) struggled as well.Comments from Portfolio Manager Asher Anolic: For the year, the fund returned -11.33%, outpacing the -15.55% result of the S&P® Custom Pharmaceuticals Index, but underperforming the broad market S&P 500®. Pharmaceuticals stocks underperformed the broad market by a wide margin the past year against growing concerns about drug pricing and profit taking after a strong multiyear run for the industry. Versus the S&P® industry index, security selection within the fund’s primary area of investment, pharmaceuticals, was the biggest contributor, followed by an overweighting in biotechnology. Johnson & Johnson was our largest holding and biggest individual contributor this period. The stock outperformed because the firm announced better-than-expected earnings guidance for 2016. A sizable out-of-index stake in Teva Pharmaceuticals Industries – a longtime fund holding – was another plus. Shares popped in July, when the firm announced it would buy Allergan’s generics division. By contrast, an overweighting in Endo International was the fund’s biggest individual detractor. The firm produces generic and branded pharmaceuticals. Unfortunately for the fund, the stock was hurt the past year by investors’ antipathy toward specialty-pharma merger-and-acquisition stories, as well as business execution mishaps on newly acquired assets.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, 2016
| % of fund's net assets | % of fund's net assets 6 months ago | |
| Johnson & Johnson | 13.4 | 11.3 |
| Allergan PLC | 8.4 | 8.1 |
| Sanofi SA sponsored ADR | 7.0 | 7.0 |
| GlaxoSmithKline PLC sponsored ADR | 6.3 | 1.2 |
| Eli Lilly & Co. | 5.2 | 5.0 |
| Novo Nordisk A/S Series B sponsored ADR | 5.2 | 3.3 |
| Pfizer, Inc. | 5.2 | 4.6 |
| Bristol-Myers Squibb Co. | 5.0 | 5.2 |
| AbbVie, Inc. | 4.6 | 6.6 |
| Teva Pharmaceutical Industries Ltd. sponsored ADR | 4.4 | 4.6 |
| 64.7 |
Top Industries (% of fund's net assets)
| As of February 29, 2016 | ||
| Pharmaceuticals | 85.0% | |
| Biotechnology | 10.6% | |
| Health Care Equipment & Supplies | 1.3% | |
| Household Products | 0.8% | |
| Life Sciences Tools & Services | 0.8% | |
| All Others* | 1.5% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
| As of August 31, 2015 | ||
| Pharmaceuticals | 85.4% | |
| Biotechnology | 6.8% | |
| Health Care Providers & Services | 3.0% | |
| Health Care Equipment & Supplies | 1.0% | |
| Household Products | 1.0% | |
| All Others* | 2.8% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
Pharmaceuticals Portfolio
Investments February 29, 2016
Showing Percentage of Net Assets
| Common Stocks - 99.3% | |||
| Shares | Value | ||
| Biotechnology - 10.6% | |||
| Biotechnology - 10.6% | |||
| AbbVie, Inc. | 1,438,190 | $78,539,556 | |
| Ablynx NV (a)(b) | 655,300 | 8,369,072 | |
| Affimed NV (a) | 690,600 | 2,203,014 | |
| Alexion Pharmaceuticals, Inc. (a) | 100,786 | 14,190,669 | |
| Alnylam Pharmaceuticals, Inc. (a) | 38,500 | 2,254,945 | |
| AMAG Pharmaceuticals, Inc. (a) | 158,700 | 4,170,636 | |
| Amgen, Inc. | 179,400 | 25,525,032 | |
| Anacor Pharmaceuticals, Inc. (a) | 55,500 | 3,539,790 | |
| BeiGene Ltd. ADR | 26,820 | 785,021 | |
| Biogen, Inc. (a) | 31,600 | 8,197,672 | |
| BioMarin Pharmaceutical, Inc. (a) | 58,700 | 4,805,769 | |
| Cara Therapeutics, Inc. (a) | 310,700 | 1,528,644 | |
| Cytokinetics, Inc. (a)(b) | 363,700 | 2,291,310 | |
| Dynavax Technologies Corp. (a) | 145,102 | 2,339,044 | |
| Eagle Pharmaceuticals, Inc. (a)(b) | 69,500 | 4,405,605 | |
| FibroGen, Inc. (a) | 126,200 | 2,187,046 | |
| Genmab A/S (a) | 22,300 | 2,743,249 | |
| Ligand Pharmaceuticals, Inc. Class B (a) | 28,900 | 2,666,892 | |
| Loxo Oncology, Inc. (a) | 166,286 | 3,124,514 | |
| Regeneron Pharmaceuticals, Inc. (a) | 6,500 | 2,496,130 | |
| Xencor, Inc. (a) | 230,200 | 2,532,200 | |
| 178,895,810 | |||
| Chemicals - 0.3% | |||
| Specialty Chemicals - 0.3% | |||
| Codexis, Inc. (a) | 1,278,700 | 5,191,522 | |
| Food & Staples Retailing - 0.5% | |||
| Drug Retail - 0.5% | |||
| Tsuruha Holdings, Inc. | 103,100 | 8,719,215 | |
| Health Care Equipment & Supplies - 1.3% | |||
| Health Care Equipment - 1.3% | |||
| LivaNova PLC (a) | 172,601 | 9,741,600 | |
| Novocure Ltd. (a)(b) | 239,000 | 2,793,910 | |
| Teleflex, Inc. | 61,800 | 8,826,276 | |
| 21,361,786 | |||
| Household Products - 0.8% | |||
| Household Products - 0.8% | |||
| Reckitt Benckiser Group PLC | 154,863 | 14,106,436 | |
| Life Sciences Tools & Services - 0.8% | |||
| Life Sciences Tools & Services - 0.8% | |||
| Agilent Technologies, Inc. | 371,800 | 13,886,730 | |
| Personal Products - 0.0% | |||
| Personal Products - 0.0% | |||
| MYOS Corp. (a) | 40,000 | 62,000 | |
| Pharmaceuticals - 85.0% | |||
| Pharmaceuticals - 85.0% | |||
| Akorn, Inc. (a)(b) | 215,500 | 5,730,145 | |
| Allergan PLC (a) | 492,638 | 142,919,210 | |
| Amphastar Pharmaceuticals, Inc. (a) | 396,600 | 4,176,198 | |
| Astellas Pharma, Inc. | 1,110,600 | 15,979,174 | |
| AstraZeneca PLC sponsored ADR | 269,600 | 7,729,432 | |
| Bristol-Myers Squibb Co. | 1,378,010 | 85,340,159 | |
| Cempra, Inc. (a) | 103,600 | 1,743,588 | |
| DepoMed, Inc. (a) | 194,400 | 2,970,432 | |
| Eisai Co. Ltd. | 154,200 | 9,504,458 | |
| Eli Lilly & Co. | 1,227,100 | 88,351,200 | |
| Endo Health Solutions, Inc. (a) | 826,900 | 34,572,689 | |
| GlaxoSmithKline PLC sponsored ADR (b) | 2,752,900 | 106,454,643 | |
| Horizon Pharma PLC (a) | 924,900 | 15,871,284 | |
| Impax Laboratories, Inc. (a) | 256,700 | 8,391,523 | |
| Intra-Cellular Therapies, Inc. (a) | 3,800 | 106,856 | |
| Jazz Pharmaceuticals PLC (a) | 274,500 | 33,373,710 | |
| Jiangsu Hengrui Medicine Co. Ltd. | 954,750 | 6,550,978 | |
| Johnson & Johnson | 2,157,800 | 227,022,139 | |
| Mallinckrodt PLC (a) | 181,300 | 11,789,939 | |
| Merck & Co., Inc. | 260,836 | 13,096,576 | |
| Mylan N.V. | 1,097,800 | 49,477,846 | |
| Novartis AG sponsored ADR | 416,398 | 29,610,062 | |
| Novo Nordisk A/S Series B sponsored ADR (b) | 1,713,900 | 88,094,460 | |
| Pacira Pharmaceuticals, Inc. (a) | 105,500 | 5,487,055 | |
| Perrigo Co. PLC | 104,052 | 13,136,565 | |
| Pfizer, Inc. | 2,966,188 | 88,006,798 | |
| Prestige Brands Holdings, Inc. (a) | 464,300 | 22,704,270 | |
| Recordati SpA | 516,500 | 12,479,233 | |
| Sanofi SA sponsored ADR | 2,995,122 | 118,457,075 | |
| Shire PLC sponsored ADR (b) | 202,100 | 31,549,831 | |
| Sosei Group Corp. (b) | 40,300 | 5,617,446 | |
| Supernus Pharmaceuticals, Inc. (a) | 718,000 | 9,003,720 | |
| Teligent, Inc. (a)(b) | 235,000 | 1,374,750 | |
| Teva Pharmaceutical Industries Ltd. sponsored ADR | 1,349,089 | 75,009,348 | |
| The Medicines Company (a) | 154,016 | 4,953,155 | |
| TherapeuticsMD, Inc. (a)(b) | 1,970,300 | 12,038,533 | |
| Valeant Pharmaceuticals International, Inc. (Canada) (a) | 640,227 | 42,126,937 | |
| Zoetis, Inc. Class A | 215,300 | 8,840,218 | |
| 1,439,641,635 | |||
| TOTAL COMMON STOCKS | |||
| (Cost $1,567,422,988) | 1,681,865,134 | ||
| Convertible Preferred Stocks - 0.0% | |||
| Life Sciences Tools & Services - 0.0% | |||
| Life Sciences Tools & Services - 0.0% | |||
| Living Proof, Inc. 8.00% (a)(c) | |||
| (Cost $200,000) | 112,714 | 284,039 | |
| Money Market Funds - 5.9% | |||
| Fidelity Cash Central Fund, 0.40% (d) | 4,214,271 | 4,214,271 | |
| Fidelity Securities Lending Cash Central Fund, 0.44% (d)(e) | 95,475,244 | 95,475,244 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $99,689,515) | 99,689,515 | ||
| TOTAL INVESTMENT PORTFOLIO - 105.2% | |||
| (Cost $1,667,312,503) | 1,781,838,688 | ||
| NET OTHER ASSETS (LIABILITIES) - (5.2)% | (88,428,652) | ||
| NET ASSETS - 100% | $1,693,410,036 |
Legend
(a) Non-income producing
(b) Security or a portion of the security is on loan at period end.
(c) Restricted securities - 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 $284,039 or 0.0% 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.
Additional information on each restricted holding is as follows:
| Security | Acquisition Date | Acquisition Cost |
| Living Proof, Inc. 8.00% | 2/13/13 | $200,000 |
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 | $32,280 |
| Fidelity Securities Lending Cash Central Fund | 312,139 |
| Total | $344,419 |
Investment Valuation
The following is a summary of the inputs used, as of February 29, 2016, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used 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 | $1,681,865,134 | $1,627,938,405 | $53,926,729 | $-- |
| Convertible Preferred Stocks | 284,039 | -- | -- | 284,039 |
| Money Market Funds | 99,689,515 | 99,689,515 | -- | -- |
| Total Investments in Securities: | $1,781,838,688 | $1,727,627,920 | $53,926,729 | $284,039 |
The following is a summary of transfers between Level 1 and Level 2 for the period ended February 29, 2016. Transfers are assumed to have occurred at the beginning of the period, and are primarily attributable to the valuation techniques used for foreign equity securities, as discussed in the accompanying Notes to Financial Statements:
| Transfers | Total |
| Level 1 to Level 2 | $9,618,324 |
| Level 2 to Level 1 | $50,096,318 |
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 | 46.8% |
| Ireland | 14.8% |
| United Kingdom | 8.2% |
| France | 7.0% |
| Denmark | 5.4% |
| Israel | 4.4% |
| Netherlands | 3.0% |
| Canada | 2.5% |
| Japan | 2.4% |
| Bailiwick of Jersey | 2.1% |
| Switzerland | 1.8% |
| Others (Individually Less Than 1%) | 1.6% |
| 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, 2016 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $91,465,195) — See accompanying schedule: Unaffiliated issuers (cost $1,567,622,988) | $1,682,149,173 | |
| Fidelity Central Funds (cost $99,689,515) | 99,689,515 | |
| Total Investments (cost $1,667,312,503) | $1,781,838,688 | |
| Receivable for investments sold | 7,492,659 | |
| Receivable for fund shares sold | 1,383,732 | |
| Dividends receivable | 9,390,819 | |
| Distributions receivable from Fidelity Central Funds | 80,032 | |
| Prepaid expenses | 8,006 | |
| Other receivables | 45,600 | |
| Total assets | 1,800,239,536 | |
| Liabilities | ||
| Payable to custodian bank | $73 | |
| Payable for investments purchased | 6,348,820 | |
| Payable for fund shares redeemed | 3,760,591 | |
| Accrued management fee | 797,061 | |
| Other affiliated payables | 342,658 | |
| Other payables and accrued expenses | 105,053 | |
| Collateral on securities loaned, at value | 95,475,244 | |
| Total liabilities | 106,829,500 | |
| Net Assets | $1,693,410,036 | |
| Net Assets consist of: | ||
| Paid in capital | $1,614,158,482 | |
| Distributions in excess of net investment income | (39,142) | |
| Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (35,206,000) | |
| Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 114,496,696 | |
| Net Assets, for 93,067,831 shares outstanding | $1,693,410,036 | |
| Net Asset Value, offering price and redemption price per share ($1,693,410,036 ÷ 93,067,831 shares) | $18.20 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 29, 2016 | ||
| Investment Income | ||
| Dividends | $40,735,845 | |
| Interest | 26 | |
| Income from Fidelity Central Funds (including $312,139 from security lending) | 344,419 | |
| Income before foreign taxes withheld | 41,080,290 | |
| Less foreign taxes withheld | (2,061,817) | |
| Total income | 39,018,473 | |
| Expenses | ||
| Management fee | $11,472,834 | |
| Transfer agent fees | 3,839,571 | |
| Accounting and security lending fees | 639,029 | |
| Custodian fees and expenses | 55,743 | |
| Independent trustees' compensation | 38,088 | |
| Registration fees | 150,659 | |
| Audit | 45,873 | |
| Legal | 22,778 | |
| Interest | 1,696 | |
| Miscellaneous | 22,439 | |
| Total expenses before reductions | 16,288,710 | |
| Expense reductions | (109,581) | 16,179,129 |
| Net investment income (loss) | 22,839,344 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 114,436,813 | |
| Foreign currency transactions | (77,709) | |
| Total net realized gain (loss) | 114,359,104 | |
| Change in net unrealized appreciation (depreciation) on: Investment securities | (394,780,089) | |
| Assets and liabilities in foreign currencies | (2,592) | |
| Total change in net unrealized appreciation (depreciation) | (394,782,681) | |
| Net gain (loss) | (280,423,577) | |
| Net increase (decrease) in net assets resulting from operations | $(257,584,233) |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 29, 2016 | Year ended February 28, 2015 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $22,839,344 | $10,819,387 |
| Net realized gain (loss) | 114,359,104 | 248,040,186 |
| Change in net unrealized appreciation (depreciation) | (394,782,681) | 46,742,902 |
| Net increase (decrease) in net assets resulting from operations | (257,584,233) | 305,602,475 |
| Distributions to shareholders from net investment income | (15,478,004) | (13,480,605) |
| Distributions to shareholders from net realized gain | (216,777,060) | (156,387,668) |
| Total distributions | (232,255,064) | (169,868,273) |
| Share transactions | ||
| Proceeds from sales of shares | 846,431,853 | 891,442,186 |
| Reinvestment of distributions | 222,801,615 | 163,418,607 |
| Cost of shares redeemed | (778,963,083) | (932,575,497) |
| Net increase (decrease) in net assets resulting from share transactions | 290,270,385 | 122,285,296 |
| Redemption fees | 114,340 | 101,684 |
| Total increase (decrease) in net assets | (199,454,572) | 258,121,182 |
| Net Assets | ||
| Beginning of period | 1,892,864,608 | 1,634,743,426 |
| End of period (including distributions in excess of net investment income of $39,142 and undistributed net investment income of $3,033,161, respectively) | $1,693,410,036 | $1,892,864,608 |
| Other Information | ||
| Shares | ||
| Sold | 36,402,595 | 42,226,714 |
| Issued in reinvestment of distributions | 10,422,776 | 8,114,920 |
| Redeemed | (35,766,896) | (44,744,142) |
| Net increase (decrease) | 11,058,475 | 5,597,492 |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Pharmaceuticals Portfolio
| Years ended February 28, | 2016 A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $23.08 | $21.39 | $16.13 | $14.11 | $12.74 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .24 | .14 | .26 | .23 | .15 |
| Net realized and unrealized gain (loss) | (2.52) | 3.76 | 6.96 | 2.26 | 1.64 |
| Total from investment operations | (2.28) | 3.90 | 7.22 | 2.49 | 1.79 |
| Distributions from net investment income | (.17) | (.18) | (.18) | (.20) | (.11) |
| Distributions from net realized gain | (2.43) | (2.03) | (1.77) | (.27) | (.31) |
| Total distributions | (2.60) | (2.21) | (1.96)C | (.47) | (.42) |
| Redemption fees added to paid in capitalB,D | – | – | – | – | – |
| Net asset value, end of period | $18.20 | $23.08 | $21.39 | $16.13 | $14.11 |
| Total ReturnE | (11.33)% | 20.04% | 46.77% | 17.93% | 14.34% |
| Ratios to Average Net AssetsF,G | |||||
| Expenses before reductions | .78% | .79% | .82% | .85% | .89% |
| Expenses net of fee waivers, if any | .78% | .79% | .81% | .85% | .89% |
| Expenses net of all reductions | .77% | .79% | .81% | .84% | .88% |
| Net investment income (loss) | 1.09% | .66% | 1.39% | 1.54% | 1.12% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $1,693,410 | $1,892,865 | $1,634,743 | $911,064 | $715,882 |
| Portfolio turnover rateH | 77% | 72%I | 95% | 54% | 73% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Total distributions of $1.96 per share is comprised of distributions from net investment income of $.182 and distributions from net realized gain of $1.773 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, 2016
1. Organization.
Biotechnology Portfolio, Health Care Portfolio, Health Care Services Portfolio (formerly Medical Delivery Portfolio), Medical Equipment and Systems 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. Share transactions on the Statement of Changes in Net Assets may contain exchanges between affiliated funds.
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 Fidelity Investments Money Management, Inc. (FIMM), an affiliate of the investment adviser. Annualized expenses of the Money Market Central Funds as of their most recent shareholder report date are less than .005%.
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.
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 Fidelity SelectCo, LLC (SelectCo) Fair Value Committee (the Committee). 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. Utilizing these techniques may result in transfers between Level 1 and Level 2. 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. Equity securities, including restricted securities, for which observable inputs are not available are valued using alternate valuation approaches, including the market approach and the income approach and are categorized as Level 3 in the hierarchy. The market approach generally consists of using comparable market transactions while the income approach generally consists of using the net present value of estimated future cash flows, adjusted as appropriate for liquidity, credit, market and/or other risk factors.
Investments in open-end mutual funds, including 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 Biotechnology Portfolio that were valued at period end based on unobservable inputs. These amounts exclude valuations provided by a broker.
| Asset Type | Fair Value at 02/29/16 | Valuation Technique (s) | Unobservable Input | Amount or Range / Weighted Average | Impact to Valuation from an Increase in Input(a) |
| Equities | $226,658,581 | Discounted cash flow | Discount rate | 3.5% - 15.0% / 9.2% | Decrease |
| Entity valuation | Projected royalty | $3.00 | Decrease | ||
| Entity valuation | $140.20 | Increase | |||
| Expected distribution | Recovery rate | 0.0% | Increase | ||
| Last transaction price | Discount rate | 6.0% | Decrease | ||
| Transaction price | $1.00 - $140.00 / $21.80 | Increase | |||
| Adjusted transaction price | $6.76 | Increase | |||
| Market comparable | Discount rate | 21.0% | Decrease | ||
| EV/Sales multiple | 2.0 | Increase | |||
| Proxy adjustment | Proxy movement | 19.9% - 47.4% / 31.3% | Increase | ||
| Transaction price | Transaction price | $8.00 | Increase | ||
| Discount for lack of marketability | 10.0% | Decrease |
(a) Represents the expected directional change in the fair value of the Level 3 investments that would result from an increase in the corresponding input. A decrease to the unobservable input would have the opposite effect. Significant changes in these inputs could result in significantly higher or lower fair value measurements.
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, 2016 , including information on transfers between Levels 1 and 2, 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 may 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. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. Subsequent to ex-dividend date the Funds determine the components of these distributions, based upon receipt of tax filings or other correspondence relating to the underlying investment. 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 the Funds, independent Trustees may elect 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 are included in the accompanying Statement of Assets and Liabilities.
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, 2016, 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, passive foreign investment companies (PFIC), partnerships, deferred trustees compensation, net operating losses and losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows for each Fund:
| Tax cost | Gross unrealized appreciation | Gross unrealized depreciation | Net unrealized appreciation (depreciation) on securities | |
| Biotechnology Portfolio | $11,040,974,764 | $2,413,800,128 | $(2,755,654,015) | $(341,853,887) |
| Health Care Portfolio | 7,263,099,281 | 1,250,296,366 | (935,349,181) | 314,947,185 |
| Health Care Services Portfolio | 583,891,147 | 294,417,127 | (33,337,443) | 261,079,684 |
| Medical Equipment and Systems Portfolio | 1,650,730,887 | 415,389,640 | (112,790,688) | 302,598,952 |
| Pharmaceuticals Portfolio | 1,688,404,199 | 260,679,228 | (167,244,739) | 93,434,489 |
The tax-based components of distributable earnings as of period end were as follows for each Fund:
| Undistributed long-term capital gain | Net unrealized appreciation (depreciation) on securities and other investments | |
| Biotechnology Portfolio | $351,153,382 | $(341,848,815) |
| Health Care Portfolio | 36,283,808 | 314,919,516 |
| Health Care Services Portfolio | 8,487,542 | 261,078,259 |
| Medical Equipment and Systems Portfolio | 16,602,838 | 302,598,150 |
| Pharmaceuticals Portfolio | – | 93,405,594 |
The Health Care Services Portfolio intends to elect to defer to its next fiscal year $518,382 of ordinary losses recognized during the period January 1, 2016 to February 29, 2016.
The Medical Equipment and Systems Portfolio intends to elect to defer to its next fiscal year $5,228,842 of capital losses recognized during the period November 1, 2015 to February 29, 2016. The Medical Equipment and Systems Portfolio intends to elect to defer to its next fiscal year $2,817,466 of ordinary losses recognized during the period January 1, 2016 to February 29, 2016.
The Pharmaceuticals Portfolio intends to elect to defer to its next fiscal year $14,114,304 of capital losses recognized during the period November 1, 2015 to February 29, 2016.
The tax character of distributions paid was as follows:
| February 29, 2016 | |||
| Ordinary Income | Long-term Capital Gains | Total | |
| Biotechnology Portfolio | $– | $935,222,849 | $935,222,849 |
| Health Care Portfolio | 320,022,051 | 680,990,916 | 1,001,012,967 |
| Health Care Services Portfolio | 5,714,562 | 30,746,356 | 36,460,918 |
| Medical Equipment and Systems Portfolio | 70,275,728 | 234,788,941 | 305,064,669 |
| Pharmaceuticals Portfolio | 53,177,399 | 179,077,665 | 232,255,064 |
| February 28, 2015 | |||
| Ordinary Income | Long-term Capital Gains | Total | |
| Biotechnology Portfolio | $– | $1,044,601,828 | $1,044,601,828 |
| Health Care Portfolio | 220,468,699 | 789,371,404 | 1,009,840,103 |
| Health Care Services Portfolio | 6,970,783 | 61,161,482 | 68,132,265 |
| Medical Equipment and Systems Portfolio | 73,059,262 | 195,694,683 | 268,753,945 |
| Pharmaceuticals Portfolio | 52,685,263 | 117,183,010 | 169,868,273 |
Trading (Redemption) Fees. Shares held by investors in the Funds less than 30 days may be subject to a redemption fee equal to .75% of the NAV of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Funds and accounted for as an addition to paid in capital.
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.
Consolidated Subsidiary. The Biotechnology Portfolio invests in certain investments through a wholly-owned subsidiary ("Subsidiary"), which may be subject to federal and state taxes upon disposition.
At period end, investments held through this Subsidiary were $37,472,043 representing .40% of the Fund's net assets. The financial statements have been consolidated and include accounts of the Fund and each Subsidiary. Accordingly, all inter-company transactions and balances have been eliminated.
Any cash held by the Subsidiary is restricted as to its use and is presented as Restricted cash in the Statement of Assets and Liabilities.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, are noted in the table below.
| Purchases ($) | Sales ($) | |
| Biotechnology Portfolio | 6,007,699,446 | 4,988,552,378 |
| Health Care Portfolio | 7,111,109,325 | 7,971,769,824 |
| Health Care Services Portfolio | 422,061,174 | 364,776,838 |
| Medical Equipment and Systems Portfolio | 927,988,104 | 985,828,603 |
| Pharmaceuticals Portfolio | 1,660,481,884 | 1,572,075,306 |
5. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity SelectCo, 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 average net assets of all the mutual funds advised by Fidelity Management & Research Company (FMR) and the investment adviser. 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% | .25% | .55% |
| Health Care Portfolio | .30% | .25% | .55% |
| Health Care Services Portfolio | .30% | .25% | .55% |
| Medical Equipment and Systems Portfolio | .30% | .25% | .55% |
| Pharmaceuticals Portfolio | .30% | .25% | .55% |
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (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 | .16% |
| Health Care Services Portfolio | .18% |
| Medical Equipment and Systems Portfolio | .17% |
| Pharmaceuticals Portfolio | .18% |
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. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. Certain Funds placed a portion of their portfolio transactions 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 | $286,108 |
| Health Care Portfolio | 140,126 |
| Health Care Services Portfolio | 7,760 |
| Medical Equipment and Systems Portfolio | 22,276 |
| Pharmaceuticals Portfolio | 34,168 |
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Funds, along with other registered investment companies having management contracts with Fidelity Management & Research Company (FMR) or other affiliated entities of FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. Each applicable fund's 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 | |
| Biotechnology Portfolio | Borrower | $35,594,197 | .45% | $26,893 |
| Health Care Portfolio | Borrower | $32,675,550 | .43% | $7,856 |
| Health Care Services Portfolio | Borrower | $5,290,500 | .37% | $217 |
| Medical Equipment and Systems Portfolio | Borrower | $7,001,091 | .43% | $913 |
| Pharmaceuticals Portfolio | Borrower | $7,337,000 | .42% | $1,696 |
Interfund Trades. The 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:
| Biotechnology Portfolio | $20,507 |
| Health Care Portfolio | 13,902 |
| Health Care Services Portfolio | 1,361 |
| Medical Equipment and Systems Portfolio | 2,948 |
| Pharmaceuticals Portfolio | 2,951 |
During the period, the Funds did not borrow on this line of credit.
7. Security Lending.
Certain Funds lend portfolio securities through a lending agent from time to time in order to earn additional income. 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.
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. At period end, there were no bank borrowings outstanding. Each applicable Fund's activity in this program during the period for which loans were outstanding was as follows:
| Average Loan Balance | Weighted Average Interest Rate | Interest Expense | |
| Biotechnology Portfolio | $37,560,778 | .83% | $7,784 |
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, 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 reduction | Custody expense reduction | |
| Biotechnology Portfolio | $190,570 | $587 |
| Health Care Portfolio | 475,900 | 253 |
| Health Care Services Portfolio | 2,894 | – |
| Medical Equipment and Systems Portfolio | 108,355 | 30 |
| Pharmaceuticals Portfolio | 58,816 | 168 |
In addition, during the period the investment adviser reimbursed and/or waived a portion of operating expenses as follows:
| Amount | |
| Biotechnology Portfolio | $318,016 |
| Health Care Portfolio | 213,730 |
| Health Care Services Portfolio | 24,069 |
| Medical Equipment and Systems Portfolio | 54,729 |
| Pharmaceuticals Portfolio | 50,597 |
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.
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Select Portfolios and the Shareholders of Biotechnology Portfolio, Health Care Portfolio, Health Care Services Portfolio (formerly Medical Delivery Portfolio), Medical Equipment and Systems Portfolio and Pharmaceuticals Portfolio:
In our opinion, the accompanying statements of assets and liabilities, including the schedules of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Biotechnology Portfolio, Health Care Portfolio, Health Care Services Portfolio, Medical Equipment and Systems Portfolio and Pharmaceuticals Portfolio (each a fund of Fidelity Select Portfolios) (the "Funds") at February 29, 2016, 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 then ended and the financial highlights for each of the five years in the period then ended in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Funds' management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at February 29, 2016 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 15, 2016
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. Each of the Trustees oversees 75 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. Brian B. Hogan 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. Michael E. Wiley 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 sector portfolios. Other Boards oversee Fidelity's equity and high income funds, and Fidelity's investment grade bond, money market, and asset allocation funds. 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 SelectCo 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 SelectCo, 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 and Audit Committees. Appropriate personnel, including but not limited to the funds' Chief Compliance Officer (CCO), SelectCo's internal auditor, the independent accountants, the funds' Treasurer and portfolio management personnel, make periodic reports to the Board's committees, as appropriate. 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+
Brian B. Hogan (1964)
Year of Election or Appointment: 2014
Trustee
Chairman of the Board of Trustees
Mr. Hogan also serves as Trustee or Vice President of other funds. Mr. Hogan serves as a Director of FMR Investment Management (U.K.) Limited (investment adviser firm, 2015-present) and Fidelity SelectCo, LLC (investment adviser firm, 2014-present) and President of the Equity Division of FMR (investment adviser firm, 2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager.
* 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 SelectCo.
+ 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+
David A. Rosow (1942)
Year of Election or Appointment: 2013
Trustee
Mr. Rosow also serves as Trustee of other Fidelity® funds. Prior to his retirement in 2006, Mr. Rosow was the Chief Executive Officer, owner and operator of a number of private companies, which encompassed oil refining, drilling and marketing of petroleum products (including specialty petroleum products), the recreation industry, and real estate development. Mr. Rosow currently serves as a Director of Oxbow Carbon LLC (upgraders, marketers, and distributors of petroleum byproducts of the oil refining process, 2015-present) and Oxbridge Academy of the Palm Beaches (2015-present). Previously, Mr. Rosow served on the Fairfield Country Day School Board for 27 years, including as its President for 3 years, stepping down in 2006, as Lead Director and Chairman of the Audit Committee of Hudson United Bancorp (1996-2006), Chairman of the Board of Westport Bank and Trust (1992-1996), and as a Director of TD Banknorth (2006-2007). In addition, Mr. Rosow served as a member (2008-2014) and President (2009-2014) of the Town Council of Palm Beach, Florida. Mr. Rosow also served as a Member of the Advisory Board of other Fidelity® funds (2012-2013).
Garnett A. Smith (1947)
Year of Election or Appointment: 2013
Trustee
Mr. Smith also serves as Trustee of other Fidelity® funds. Prior to Mr. Smith's retirement, he served as Chairman and Chief Executive Officer of Inbrand Corp. (manufacturer of personal absorbent products, 1990-1997). He also served as President (1986-1990) of Inbrand Corp. Prior to his employment with Inbrand Corp., he was employed by a retail fabric chain and North Carolina National Bank. In addition, Mr. Smith served as a Member of the Advisory Board of other Fidelity® funds (2012-2013) and as a board member of the Jackson Hole Land Trust (2009-2012).
Michael E. Wiley (1950)
Year of Election or Appointment: 2008
Trustee
Chairman of the Independent Trustees
Mr. Wiley also serves as Trustee of other Fidelity® funds. Mr. Wiley serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), a Director of Tesoro Logistics LP (natural resources logistics, 2015-present), and a Director of Bill Barrett Corporation (exploration and production, 2005-present). In addition, Mr. Wiley also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a Trustee of other Fidelity® funds (2008-2013), as a Director of Asia Pacific Exploration Consolidated (international oil and gas exploration and production, 2008-2013), as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-2010), as a Senior Energy Advisor of Katzenbach Partners, LLC (consulting, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production, 2001-2005).
+ 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:
Except for Anthony R. Rochte, correspondence intended for an officer may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210. Correspondence intended for Mr. Rochte may be sent to SelectCo, 1225 17th Street, Denver, Colorado 80202-5541. Officers appear below in alphabetical order.
Name, Year of Birth; Principal Occupation
Donald F. Donahue (1950)
Year of Election or Appointment: 2015
Member of the Advisory Board
Mr. Donahue also serves as a Member of the Advisory Board of other Fidelity® funds. Mr. Donahue is President and Chief Executive Officer of Miranda Partners, LLC (risk consulting for the financial services industry, 2012-present) and a consultant for the Institute for Defense Analyses (national security, 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 serves as a Member and Treasurer of the Board of Directors of United Way of New York (2012-present), Member of the Board of Directors of NYC Leadership Academy (2012-present) and Physicians for Human Rights (2013-present), and Member of the Board of Advisors of Ripple Labs, Inc. (financial services, 2015-present). He also served as Chairman (2010-2012) and Member of the Board of Directors (2012-2013) of Omgeo, LLC (financial services) and Member of the Board of Directors of XBRL US (financial services non-profit, 2009-2012) and the International Securities Services Association (2009-2012).
Christopher S. Bartel (1971)
Year of Election or Appointment: 2009
Vice President
Mr. Bartel also serves as Vice President of other funds. Mr. Bartel serves as a Director of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2016-present) and Fidelity Management & Research (Hong Kong) (investment adviser firm, 2012-present) and Head of Global Equity Research (2010-present). Previously, Mr. Bartel served as a Director, President, and Chief Executive Officer of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2012-2016), Senior Vice President of Equity Research (2009-2010), Managing Director of Research (2006-2009), and an analyst and portfolio manager (2000-2006).
Marc R. Bryant (1966)
Year of Election or Appointment: 2013
Secretary and Chief Legal Officer (CLO)
Mr. Bryant also serves as Secretary and CLO of other funds. Mr. Bryant serves as CLO, Secretary, and Senior Vice President of Fidelity Management & Research Company (investment adviser firm, 2015-present) and FMR Co., Inc. (investment adviser firm, 2015-present); Secretary of Fidelity SelectCo, LLC (investment adviser firm, 2015-present) and Fidelity Investments Money Management, Inc. (investment adviser firm, 2015-present); and CLO of Fidelity Management & Research (Hong Kong) Limited and FMR Investment Management (U.K.) Limited (investment adviser firms, 2015-present) and Fidelity Management & Research (Japan) Limited (investment adviser firm, 2016-present). He is Senior Vice President and Deputy General Counsel of FMR LLC (diversified financial services company). Previously, Mr. Bryant served as Secretary and CLO of Fidelity Rutland Square Trust II (2010-2014) and Assistant Secretary of Fidelity's Fixed Income and Asset Allocation Funds (2013-2015). Prior to joining Fidelity Investments, Mr. Bryant served as a Senior Vice President and the Head of Global Retail Legal for AllianceBernstein L.P. (2006-2010), and as the General Counsel for ProFund Advisors LLC (2001-2006).
William C. Coffey (1969)
Year of Election or Appointment: 2009
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 Vice President and Associate General Counsel of FMR LLC (2005-2009).
Jonathan Davis (1968)
Year of Election or Appointment: 2010
Assistant Treasurer
Mr. Davis also serves as Assistant Treasurer of other funds, 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).
Adrien E. Deberghes (1967)
Year of Election or Appointment: 2013
President and Treasurer
Mr. Deberghes also serves as an officer of other funds. He is an employee of Fidelity Investments (2008-present). Prior to joining Fidelity Investments, Mr. Deberghes was Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005). Previously, Mr. Deberghes served in other fund officer roles.
Joseph DeSantis (1959)
Year of Election or Appointment: 2015
Vice President
Mr. DeSantis also serves as Vice President of other funds. Mr. DeSantis serves as Group Chief Investment Officer, Equities (2010-present) and is an employee of Fidelity Investments.
Stephanie J. Dorsey (1969)
Year of Election or Appointment: 2010
Assistant Treasurer
Ms. Dorsey also serves as an officer of other funds. She is an employee of Fidelity Investments (2008-present) and has served in other fund officer roles. Prior to joining Fidelity Investments, Ms. Dorsey served as Treasurer (2004-2008) of the JPMorgan Mutual Funds and Vice President (2004-2008) of JPMorgan Chase Bank.
Howard J. Galligan III (1966)
Year of Election or Appointment: 2014
Chief Financial Officer
Mr. Galligan also serves as Chief Financial Officer of other funds. Mr. Galligan serves as President of Fidelity Pricing and Cash Management Services (FPCMS) (2014-present) and as a Director of Strategic Advisers, Inc. (investment adviser firm, 2008-present). Previously, Mr. Galligan served as Chief Administrative Officer of Asset Management (2011-2014) and Chief Operating Officer and Senior Vice President of Investment Support for Strategic Advisers, Inc. (2003-2011).
Scott C. Goebel (1968)
Year of Election or Appointment: 2015
Vice President
Mr. Goebel serves as Vice President of other funds and is an employee of Fidelity Investments (2001-present). Previously, Mr. Goebel served as Secretary of Fidelity SelectCo, LLC (investment adviser firm, 2013-2015), Fidelity Investments Money Management, Inc. (FIMM) (investment adviser firm, 2010-2015), and Fidelity Research and Analysis Company (FRAC) (investment adviser firm, 2010-2015); General Counsel, Secretary, and Senior Vice President of Fidelity Management & Research Company (investment adviser firm, 2008-2015) and FMR Co., Inc. (investment adviser firm, 2008-2015); Assistant Secretary of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2008-2015) and Fidelity Management & Research (U.K.) Inc. (investment adviser firm, 2008-2015); Chief Legal Officer (CLO) of Fidelity Management & Research (Hong Kong) Limited (investment adviser firm, 2008-2015); Secretary and CLO of certain Fidelity® funds (2008-2015); Assistant Secretary of FIMM (2008-2010), FRAC (2008-2010), and certain funds (2007-2008); and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007).
James D. Gryglewicz (1972)
Year of Election or Appointment: 2014
Chief Compliance Officer
Mr. Gryglewicz also serves as Chief Compliance Officer of other funds. Mr. Gryglewicz serves as Compliance Officer of Strategic Advisers, Inc. (investment adviser firm, 2015-present) and Fidelity SelectCo, LLC (investment adviser firm, 2014-present), Senior Vice President of Asset Management Compliance (2009-present), and is an employee of Fidelity Investments (2004-present).
Brian B. Hogan (1964)
Year of Election or Appointment: 2009
Vice President
Mr. Hogan also serves as Trustee or Vice President of other funds. Mr. Hogan serves as a Director of FMR Investment Management (U.K.) Limited (investment adviser firm, 2015-present) and Fidelity SelectCo, LLC (investment adviser firm, 2014-present) and President of the Equity Division of FMR (investment adviser firm, 2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager.
Chris Maher (1972)
Year of Election or Appointment: 2013
Assistant Treasurer
Mr. Maher serves as Assistant Treasurer of other funds. Mr. Maher is Vice President of Valuation Oversight and is an employee of Fidelity Investments. Previously, Mr. Maher served as 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).
John F. Papandrea (1972)
Year of Election or Appointment: 2016
Anti-Money Laundering (AML) Officer
Mr. Papandrea also serves as AML Officer of other funds. Mr. Papandrea is Vice President of FMR LLC (diversified financial services company, 2008-present) and is an employee of Fidelity Investments (2005-present).
Kenneth B. Robins (1969)
Year of Election or Appointment: 2013
Deputy Treasurer
Mr. Robins also serves as an officer of other funds. Mr. Robins serves as Executive Vice President of Fidelity Investments Money Management, Inc. (FIMM) (investment adviser firm, 2013-present) and is an employee of Fidelity Investments (2004-present). Previously, Mr. Robins served in other fund officer roles.
Anthony R. Rochte (1968)
Year of Election or Appointment: 2013
Vice President
Mr. Rochte also serves as Vice President of other funds. Mr. Rochte serves as President of Fidelity SelectCo, LLC (investment adviser firm, 2012-present) and is an employee of Fidelity Investments (2012-present). Prior to joining Fidelity Investments, Mr. Rochte served as Senior Managing Director and head of State Street Global Advisors' North American Intermediary Business Group (2006-2012).
Stacie M. Smith (1974)
Year of Election or Appointment: 2013
Assistant Treasurer
Ms. Smith also serves as an officer of other funds. She 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 (1996-2009). Previously, Ms. Smith served as Deputy Treasurer of certain Fidelity funds (2013-2016).
Renee Stagnone (1975)
Year of Election or Appointment: 2013
Deputy Treasurer
Ms. Stagnone also serves as an officer of other funds. Ms. Stagnone is an employee of Fidelity Investments (1997-present). Previously, Ms. Stagnone served as Deputy Treasurer of certain Fidelity funds (2013-2016).
Joseph F. Zambello (1957)
Year of Election or Appointment: 2011
Deputy Treasurer
Mr. Zambello also serves as Deputy Treasurer of other funds. Mr. Zambello is an employee of Fidelity Investments (1991-present). Previously, Mr. Zambello served as Deputy Treasurer of certain Fidelity funds (2011-2016), Vice President of the Program Management Group of FMR (investment adviser firm, 2009-2011), and Vice President of the Transfer Agent Oversight Group (2005-2009).
Shareholder Expense Example
As a shareholder of a Fund, you incur two types of costs: (1) transaction costs, including redemption fees 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, 2015 to February 29, 2016).
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. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. 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. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. 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, 2015 | Ending Account Value February 29, 2016 | Expenses Paid During Period-B September 1, 2015 to February 29, 2016 | |
| Biotechnology Portfolio | .74% | |||
| Actual | $1,000.00 | $679.10 | $3.09 | |
| Hypothetical-C | $1,000.00 | $1,021.18 | $3.72 | |
| Health Care Portfolio | .73% | |||
| Actual | $1,000.00 | $859.20 | $3.37 | |
| Hypothetical-C | $1,000.00 | $1,021.23 | $3.67 | |
| Health Care Services Portfolio | .78% | |||
| Actual | $1,000.00 | $915.00 | $3.71 | |
| Hypothetical-C | $1,000.00 | $1,020.98 | $3.92 | |
| Medical Equipment and Systems Portfolio | .76% | |||
| Actual | $1,000.00 | $959.60 | $3.70 | |
| Hypothetical-C | $1,000.00 | $1,021.08 | $3.82 | |
| Pharmaceuticals Portfolio | .78% | |||
| Actual | $1,000.00 | $861.60 | $3.61 | |
| 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:
| Pay Date | Record Date | Capital Gains | |
| Health Care Portfolio | 04/11/16 | 04/08/16 | $0.904 |
| Biotechnology Portfolio | 04/11/16 | 04/08/16 | $5.961 |
| Pharmaceuticals Portfolio | 04/11/16 | 04/08/16 | $0.000 |
| Medical Equipment and Systems Portfolio | 04/11/16 | 04/08/16 | $0.295 |
| Health Care Services Portfolio | 04/11/16 | 04/08/16 | $0.811 |
The funds hereby designate as capital gain dividend the amounts noted below for the taxable year ended February 29, 2016, or, if subsequently determined to be different, the net capital gain of such year.
| Health Care Portfolio | $716,864,067 |
| Biotechnology Portfolio | $1,131,873,889 |
| Pharmaceuticals Portfolio | $101,194,603 |
| Medical Equipment and Systems Portfolio | $95,358,669 |
| Health Care Services Portfolio | $32,593,598 |
A percentage of the dividends distributed during the fiscal year for the following funds qualify for the dividends–received deduction for corporate shareholders:
| April 2015 | December 2015 | |
| Health Care Portfolio | 1% | 70% |
| Biotechnology Portfolio | 0% | 0% |
| Pharmaceuticals Portfolio | 7% | 49% |
| Medical Equipment and Systems Portfolio | 0% | 36% |
| Health Care Services Portfolio | 89% | 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 2015 | December 2015 | |
| Health Care Portfolio | 2% | 76% |
| Biotechnology Portfolio | 0% | 0% |
| Pharmaceuticals Portfolio | 18% | 72% |
| Medical Equipment and Systems Portfolio | 2% | 57% |
| Health Care Services Portfolio | 91% | 100% |
The funds will notify shareholders in January 2017 of amounts for use in preparing 2016 income tax returns.
Board Approval of Investment Advisory Contracts and Management Fees
Biotechnology Portfolio
Health Care Portfolio
Health Care Services Portfolio (f/k/a Medical Delivery Portfolio)
Medical Equipment and Systems Portfolio
Pharmaceuticals Portfolio
Each year, the Board of Trustees, including the Independent Trustees (together, the Board), votes on the renewal of the management contract with Fidelity SelectCo, LLC (SelectCo), an affiliate of Fidelity Management & Research Company (FMR), and the sub-advisory agreements with affiliates of FMR (together, the Advisory Contracts) for each fund. 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.
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 each fund's Advisory Contracts, including the services and support provided to each fund and its shareholders. The Board has established four standing committees (Committees) — Operations, Audit, Fair Valuation, and Governance and Nominating — 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 Operations Committee, of which all of the Independent Trustees are members, meets regularly throughout the year and considers, among other matters, information specifically related to the annual consideration of the renewal of each fund's Advisory Contracts. The Board, acting directly and through its Committees, requests and receives information concerning the annual consideration of the renewal of each fund's Advisory Contracts. The Board also meets as needed to consider 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 ad hoc joint committees to discuss certain matters relevant to all of the Fidelity funds.
At its January 2016 meeting, the Board unanimously determined to renew each 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 to be provided to each fund and its shareholders (including the investment performance of each fund); (ii) the competitiveness of each fund's management fee and total expense ratio relative to peer funds; (iii) the total costs of the services to be provided by and the profits to be realized by Fidelity from its relationships with each fund; and (iv) the extent to which, if any, economies of scale exist and would be realized as each fund grows, and whether any economies of scale are appropriately shared with fund shareholders.
In considering whether to renew the Advisory Contracts for each 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 each 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 each fund have a broad range of investment choices available to them, including a wide choice among funds offered by Fidelity's competitors, and that each 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 that fund, which is part of the Fidelity family of funds.
Nature, Extent, and Quality of Services Provided. The Board considered the staffing of SelectCo and the sub-advisers (together with SelectCo, the Investment Advisers) as it relates to the funds, including the backgrounds of investment personnel of SelectCo, and also considered the funds' investment objectives, strategies, and related investment philosophies. 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 each 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 reviewed the general qualifications and capabilities of the investment staff of the Investment Advisers, including their 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 each 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, each 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 or convenience of the Fidelity funds as investment vehicles. These services include 24-hour access to account information and market information through telephone representatives and over the Internet, investor education materials and asset allocation tools, and the expanded availability of Fidelity Investor Centers.The Board noted that in 2014 the ad hoc Committee on Transfer Agency Fees was formed by it and the boards of certain other Fidelity funds to review the variety of transfer agency services and fee structures throughout the mutual fund industry compared to Fidelity's.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 investment research 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 making other enhancements to meet client needs; (iv) reducing management fees and total expenses for certain index funds; (v) continuing to launch dedicated lower cost underlying funds to meet portfolio construction needs related to expanding underlying fund options for Fidelity funds of funds, specifically for the Freedom Fund product lines; (vi) rationalizing product lines and gaining increased efficiencies through fund mergers; (vii) continuing to develop, acquire and implement systems and technology to improve services to the funds and shareholders, strengthen information security, and increase efficiency; (viii) implementing investment enhancements to further strengthen Fidelity's target date product line to increase investors' probability of success in achieving their goals; (ix) modifying the eligibility criteria for certain share classes to accommodate roll-over assets from employer-sponsored retirement plans; (x) launching a new Class W of the Freedom Index Funds to attract and retain Fidelity record-kept retirement plan assets; and (xi) implementing changes to Fidelity's money market fund product line in response to recent regulatory reforms.Investment Performance. The Board considered whether each 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 with representatives of the Investment Advisers about fund investment performance that occur at Board meetings throughout the year. 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 each fund, for different time periods, measured against a securities market index ("benchmark index"). In its evaluation of fund investment performance at meetings throughout the year, the Board gave particular attention to information indicating underperformance of certain Fidelity funds for specific time periods and discussed with the Investment Advisers the reasons for such underperformance. Medical Delivery Portfolio underperformed its benchmark for the one-, three-, and five-year periods ended June 30, 2015, and as a result, the Board will continue to discuss with SelectCo the steps it has taken and is taking to address the fund's performance.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. Depending on the circumstances, the Independent Trustees may be satisfied with a fund's performance notwithstanding that it lags its benchmark index for certain periods.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 each fund and an appropriate benchmark index for the most recent one-, three-, and five-year periods ended June 30, 2015.Based on its review, the Board concluded that the nature, extent, and quality of services provided to each fund under the Advisory Contracts should benefit the shareholders of each fund.Competitiveness of Management Fee and Total Expense Ratio. The Board considered each fund's management fee and total expense ratio compared to "mapped groups" of competitive funds and classes created for the purpose of facilitating the Trustees' analysis of the competitiveness of management fees and total expenses. Fidelity creates "mapped groups" by combining similar Lipper investment objective categories that have comparable investment mandates. For this purpose, all sector focused equity funds are grouped in the same mapped group. Combining Lipper investment objective categories aids the Board's management fee and total expense ratio comparisons by broadening the competitive group used for comparison.Management Fee. The Board considered two proprietary management fee comparisons for the 12-month periods ended June 30 shown in basis points (BP) in the charts below. The group of Lipper funds used by the Board for management fee comparisons is referred to below as the "Total Mapped Group." The Total Mapped Group comparison focuses on a fund's standing in terms of gross management fees before expense reimbursements or caps relative to the total universe of funds with comparable investment mandates (i.e., sector equities), regardless of whether their management fee structures also are comparable. Funds with comparable management fee structures have similar management fee contractual arrangements (e.g., flat rate charged for advisory services, all-inclusive fee rate, etc.). "TMG %" represents the percentage of funds in the Total Mapped Group that had management fees that were lower than a fund's. For example, a hypothetical TMG % of 20% would mean that 80% of the funds in the Total Mapped Group had higher, and 20% had lower, management fees than a fund. The funds' actual TMG %s and the number of funds in the Total Mapped Group are in the charts below. The "Asset-Size Peer Group" (ASPG) comparison focuses on a fund's standing relative to a subset of non-Fidelity funds within the Total Mapped Group that are similar in size and management fee structure. For example, if a fund is in the first quartile of the ASPG, the fund's management fee ranks in the least expensive or lowest 25% of funds in the ASPG. The ASPG represents at least 15% of the funds in the Total Mapped Group with comparable asset size and management fee structures, subject to a minimum of 50 funds (or all funds in the Total Mapped Group if fewer than 50). Additional information, such as the ASPG quartile in which a fund's management fee rate ranked, is also included in the charts and considered by the Board.Biotechnology Portfolio
Health Care Portfolio
Medical Delivery Portfolio
Medical Equipment and Systems Portfolio
Pharmaceuticals Portfolio
SELHC-ANN-0416
1.813640.111
Fidelity® Select Portfolios® Consumer Staples Portfolio Annual Report February 29, 2016 |
|
Contents
Board Approval of Investment Advisory Contracts and Management Fees |
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You may also call 1-800-544-8544 to request a free copy of the proxy voting guidelines.
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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. © 2016 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-Q. Forms N-Q are available on the SEC’s web site at http://www.sec.gov. A fund's Forms N-Q 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.advisor.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.
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, 2016 | Past 1 year | Past 5 years | Past 10 years |
| Consumer Staples Portfolio | (3.25)% | 12.26% | 10.52% |
Prior to October 1, 2006, the fund was named Food and Agriculture 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 Staples Portfolio, a class of the fund, on February 28, 2006.
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 | ||
| $27,200 | Consumer Staples Portfolio | |
| $18,666 | S&P 500® Index | |
Management's Discussion of Fund Performance
Market Recap: The S&P 500® index returned -6.19% for the year ending February 29, 2016. Largely range-bound for the first half of the period, U.S. stocks suffered a steep, late-summer decline on concern about an economic slowdown in China. The market recovered in October, lifted by the U.S. Federal Reserve's decision to delay raising near-term interest rates until mid-December. Investors also drew courage from a rate cut in China and economic stimulus in Europe. But continued oil-price weakness and U.S.-dollar strength, plus fresh worries about China and the Middle East, pushed the S&P 500® to its worst January since 2009, followed by a volatile but ultimately flattish February. Overall, growth-oriented and larger-cap stocks fared better than value and smaller-cap complements. In this environment, the tech-heavy Nasdaq Composite Index® returned -7.07% for the 12 months; the Russell 2000® Index, -14.97%. Few sectors within the broad-market S&P 500® gained ground, with a wide gap separating leaders from laggards. Despite increased competition among wireless carriers, telecommunication services (+8%) led the way, followed by the more defensive utilities sector (+6%). Rising wages and low inflation buoyed consumer staples (+4%), less so consumer discretionary (0%). Meanwhile, energy (-24%) foundered amid commodity weakness that also hurt materials (-17%). The financials sector (-12%) struggled as well.Comments from Portfolio Manager Robert Lee: For the year, the fund’s share classes (excluding sales charges, if applicable) posted in the range of -3.25% to -4.25%, underperforming the 3.43% gain of the MSCI U.S. IMI Consumer Staples 25/50 Index but outpacing the broader market, as investors were attracted to the relative earnings stability of companies in the sector. The fund's underperformance versus the sector benchmark largely was driven by unsuccessful stock selection within the packaged foods & meats, as well as the tobacco industries. Here, our large, overweighted position in Mead Johnson Nutrition was the biggest individual detractor. Avoiding Kraft Foods also hurt, especially after the company announced in March it would merge with competitor H.J. Heinz. Picks among tobacco stocks were another sore spot. This included a non-index stake in U.K.-based British American Tobacco, one of the fund's biggest positions, which was adversely affected by currency fluctuations. Conversely, stock choices among food retail names contributed to the fund's relative results. We liquidated the fund's position in organic-groceries chain Whole Foods early in the period, which proved favorable when the stock subsequently declined on concern that growing competition in the natural/organic food retailing space would siphon away the chain's customers.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, 2016
| % of fund's net assets | % of fund's net assets 6 months ago | |
| Procter & Gamble Co. | 13.5 | 9.7 |
| British American Tobacco PLC sponsored ADR | 10.8 | 11.1 |
| CVS Health Corp. | 9.3 | 10.5 |
| Kroger Co. | 6.1 | 5.9 |
| Reynolds American, Inc. | 5.1 | 2.1 |
| Walgreens Boots Alliance, Inc. | 5.1 | 0.0 |
| PepsiCo, Inc. | 4.5 | 9.6 |
| Altria Group, Inc. | 4.1 | 4.4 |
| The Coca-Cola Co. | 3.9 | 3.3 |
| Mead Johnson Nutrition Co. Class A | 3.8 | 4.7 |
| 66.2 |
Top Industries (% of fund's net assets)
| As of February 29, 2016 | ||
| Food & Staples Retailing | 25.2% | |
| Tobacco | 23.3% | |
| Household Products | 16.7% | |
| Beverages | 15.7% | |
| Food Products | 11.2% | |
| All Others* | 7.9% | |
| As of August 31, 2015 | ||
| Food & Staples Retailing | 23.6% | |
| Beverages | 23.5% | |
| Tobacco | 20.0% | |
| Household Products | 13.7% | |
| Food Products | 13.3% | |
| All Others* | 5.9% | |
* Includes short-term investments and net other assets (liabilities).
Percentages shown as 0.0% may reflect amounts less than 0.05%.
Investments February 29, 2016
Showing Percentage of Net Assets
| Common Stocks - 96.2% | |||
| Shares | Value | ||
| Beverages - 15.6% | |||
| Brewers - 1.0% | |||
| Anheuser-Busch InBev SA NV | 274,890 | $30,753,781 | |
| Distillers & Vintners - 1.3% | |||
| Kweichow Moutai Co. Ltd. | 215,185 | 7,056,059 | |
| Pernod Ricard SA | 107,500 | 11,473,364 | |
| Remy Cointreau SA (a) | 291,476 | 20,198,134 | |
| 38,727,557 | |||
| Soft Drinks - 13.3% | |||
| Coca-Cola Bottling Co. Consolidated | 146,959 | 25,676,676 | |
| Coca-Cola Central Japan Co. Ltd. | 360,900 | 6,237,019 | |
| Coca-Cola FEMSA S.A.B. de CV sponsored ADR (a) | 58,029 | 4,262,230 | |
| Coca-Cola Icecek Sanayi A/S | 990,162 | 11,039,831 | |
| Embotelladora Andina SA ADR | 461,227 | 7,056,773 | |
| Fomento Economico Mexicano S.A.B. de CV sponsored ADR | 69,487 | 6,503,288 | |
| Monster Beverage Corp. | 724,200 | 90,887,100 | |
| PepsiCo, Inc. | 1,400,018 | 136,949,761 | |
| The Coca-Cola Co. | 2,784,918 | 120,113,513 | |
| 408,726,191 | |||
| TOTAL BEVERAGES | 478,207,529 | ||
| Chemicals - 0.0% | |||
| Specialty Chemicals - 0.0% | |||
| Senomyx, Inc. (a)(b) | 24,378 | 80,935 | |
| Food & Staples Retailing - 25.2% | |||
| Drug Retail - 14.6% | |||
| CVS Health Corp. | 2,934,403 | 285,135,940 | |
| Drogasil SA | 439,700 | 5,038,064 | |
| Walgreens Boots Alliance, Inc. | 1,976,324 | 156,011,017 | |
| 446,185,021 | |||
| Food Distributors - 0.8% | |||
| Chefs' Warehouse Holdings (b) | 556,306 | 10,497,494 | |
| United Natural Foods, Inc. (b) | 422,881 | 13,050,108 | |
| 23,547,602 | |||
| Food Retail - 7.4% | |||
| China Resources Beer Holdings Co. Ltd. | 3,126,000 | 5,063,943 | |
| Kroger Co. | 4,664,142 | 186,145,907 | |
| Sprouts Farmers Market LLC (a)(b) | 1,238,229 | 35,264,762 | |
| 226,474,612 | |||
| Hypermarkets & Super Centers - 2.4% | |||
| Wal-Mart Stores, Inc. | 1,131,756 | 75,080,693 | |
| TOTAL FOOD & STAPLES RETAILING | 771,287,928 | ||
| Food Products - 11.2% | |||
| Agricultural Products - 2.1% | |||
| Archer Daniels Midland Co. | 433,500 | 15,155,160 | |
| Bunge Ltd. | 851,888 | 42,355,871 | |
| SLC Agricola SA | 1,290,200 | 5,911,937 | |
| 63,422,968 | |||
| Packaged Foods & Meats - 9.1% | |||
| Amplify Snack Brands, Inc. (a) | 768,695 | 7,909,872 | |
| Blue Buffalo Pet Products, Inc. (a)(b) | 835,176 | 15,283,721 | |
| Dean Foods Co. (a) | 103,700 | 2,000,373 | |
| Mead Johnson Nutrition Co. Class A | 1,597,216 | 117,810,652 | |
| Mondelez International, Inc. | 1,087,700 | 44,084,481 | |
| Nestle SA | 316,427 | 22,128,053 | |
| The Hain Celestial Group, Inc. (b) | 811,146 | 29,988,068 | |
| TreeHouse Foods, Inc. (b) | 392,300 | 33,117,966 | |
| Ulker Biskuvi Sanayi A/S | 1,010,525 | 6,148,043 | |
| 278,471,229 | |||
| TOTAL FOOD PRODUCTS | 341,894,197 | ||
| Health Care Providers & Services - 0.2% | |||
| Health Care Services - 0.2% | |||
| Diplomat Pharmacy, Inc. (a)(b) | 187,148 | 6,666,212 | |
| Hotels, Restaurants & Leisure - 1.4% | |||
| Restaurants - 1.4% | |||
| ARAMARK Holdings Corp. | 1,386,728 | 43,570,994 | |
| Household Durables - 0.1% | |||
| Household Appliances - 0.1% | |||
| SodaStream International Ltd. (a)(b) | 199,014 | 2,971,279 | |
| Household Products - 16.7% | |||
| Household Products - 16.7% | |||
| Colgate-Palmolive Co. | 1,331,288 | 87,385,744 | |
| Procter & Gamble Co. | 5,136,165 | 412,382,687 | |
| Spectrum Brands Holdings, Inc. | 115,182 | 11,030,980 | |
| 510,799,411 | |||
| Personal Products - 2.0% | |||
| Personal Products - 2.0% | |||
| Avon Products, Inc. | 4,764,857 | 18,154,105 | |
| Coty, Inc. Class A (a) | 468,600 | 13,345,728 | |
| Herbalife Ltd. (b) | 416,610 | 22,809,398 | |
| Nu Skin Enterprises, Inc. Class A (a) | 164,617 | 5,019,172 | |
| 59,328,403 | |||
| Pharmaceuticals - 0.5% | |||
| Pharmaceuticals - 0.5% | |||
| Perrigo Co. PLC | 120,400 | 15,200,500 | |
| Tobacco - 23.3% | |||
| Tobacco - 23.3% | |||
| Altria Group, Inc. | 2,016,445 | 124,152,519 | |
| British American Tobacco PLC sponsored ADR | 3,056,665 | 332,076,086 | |
| ITC Ltd. | 1,820,070 | 7,889,505 | |
| Philip Morris International, Inc. | 1,023,368 | 93,157,189 | |
| Reynolds American, Inc. | 3,097,923 | 156,228,257 | |
| 713,503,556 | |||
| TOTAL COMMON STOCKS | |||
| (Cost $2,340,678,069) | 2,943,510,944 | ||
| Nonconvertible Preferred Stocks - 0.1% | |||
| Beverages - 0.1% | |||
| Brewers - 0.1% | |||
| Ambev SA sponsored ADR | |||
| (Cost $2,103,197) | 673,710 | 2,923,901 | |
| Money Market Funds - 6.3% | |||
| Fidelity Cash Central Fund, 0.40% (c) | 119,575,339 | 119,575,339 | |
| Fidelity Securities Lending Cash Central Fund, 0.44% (c)(d) | 73,454,129 | 73,454,129 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $193,029,468) | 193,029,468 | ||
| TOTAL INVESTMENT PORTFOLIO - 102.6% | |||
| (Cost $2,535,810,734) | 3,139,464,313 | ||
| NET OTHER ASSETS (LIABILITIES) - (2.6)% | (78,388,262) | ||
| NET ASSETS - 100% | $3,061,076,051 |
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 | $137,366 |
| Fidelity Securities Lending Cash Central Fund | 418,728 |
| Total | $556,094 |
Investment Valuation
The following is a summary of the inputs used, as of February 29, 2016, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used 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 | $2,943,510,944 | $2,884,392,091 | $59,118,853 | $-- |
| Nonconvertible Preferred Stocks | 2,923,901 | 2,923,901 | -- | -- |
| Money Market Funds | 193,029,468 | 193,029,468 | -- | -- |
| Total Investments in Securities: | $3,139,464,313 | $3,080,345,460 | $59,118,853 | $-- |
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 | 81.1% |
| United Kingdom | 10.8% |
| Bermuda | 1.4% |
| France | 1.1% |
| Belgium | 1.0% |
| Others (Individually Less Than 1%) | 4.6% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Financial Statements
Statement of Assets and Liabilities
| February 29, 2016 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $71,635,431) — See accompanying schedule: Unaffiliated issuers (cost $2,342,781,266) | $2,946,434,845 | |
| Fidelity Central Funds (cost $193,029,468) | 193,029,468 | |
| Total Investments (cost $2,535,810,734) | $3,139,464,313 | |
| Foreign currency held at value (cost $1,525,904) | 1,525,904 | |
| Receivable for investments sold | 13,029,113 | |
| Receivable for fund shares sold | 7,827,178 | |
| Dividends receivable | 2,535,125 | |
| Distributions receivable from Fidelity Central Funds | 152,307 | |
| Prepaid expenses | 9,801 | |
| Other receivables | 72,038 | |
| Total assets | 3,164,615,779 | |
| Liabilities | ||
| Payable to custodian bank | $91,399 | |
| Payable for investments purchased | 23,993,842 | |
| Payable for fund shares redeemed | 3,653,512 | |
| Accrued management fee | 1,365,702 | |
| Distribution and service plan fees payable | 335,864 | |
| Other affiliated payables | 503,947 | |
| Other payables and accrued expenses | 141,333 | |
| Collateral on securities loaned, at value | 73,454,129 | |
| Total liabilities | 103,539,728 | |
| Net Assets | $3,061,076,051 | |
| Net Assets consist of: | ||
| Paid in capital | $2,445,977,747 | |
| Undistributed net investment income | 4,626,720 | |
| Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 6,866,226 | |
| Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 603,605,358 | |
| Net Assets | $3,061,076,051 | |
| Calculation of Maximum Offering Price | ||
| Class A: | ||
| Net Asset Value and redemption price per share ($470,248,537 ÷ 5,237,976 shares) | $89.78 | |
| Maximum offering price per share (100/94.25 of $89.78) | $95.26 | |
| Class T: | ||
| Net Asset Value and redemption price per share ($76,586,170 ÷ 859,512 shares) | $89.10 | |
| Maximum offering price per share (100/96.50 of $89.10) | $92.33 | |
| Class B: | ||
| Net Asset Value and offering price per share ($6,845,981 ÷ 76,905 shares)(a) | $89.02 | |
| Class C: | ||
| Net Asset Value and offering price per share ($250,575,964 ÷ 2,855,078 shares)(a) | $87.77 | |
| Consumer Staples: | ||
| Net Asset Value, offering price and redemption price per share ($2,039,983,007 ÷ 22,545,184 shares) | $90.48 | |
| Class I: | ||
| Net Asset Value, offering price and redemption price per share ($216,836,392 ÷ 2,400,129 shares) | $90.34 |
(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 financial statements.
Statement of Operations
| Year ended February 29, 2016 | ||
| Investment Income | ||
| Dividends | $70,666,443 | |
| Interest | 10 | |
| Income from Fidelity Central Funds | 556,094 | |
| Total income | 71,222,547 | |
| Expenses | ||
| Management fee | $15,733,851 | |
| Transfer agent fees | 5,181,819 | |
| Distribution and service plan fees | 3,849,484 | |
| Accounting and security lending fees | 855,113 | |
| Custodian fees and expenses | 85,731 | |
| Independent trustees' compensation | 52,708 | |
| Registration fees | 237,118 | |
| Audit | 62,434 | |
| Legal | 31,224 | |
| Miscellaneous | 30,356 | |
| Total expenses before reductions | 26,119,838 | |
| Expense reductions | (195,238) | 25,924,600 |
| Net investment income (loss) | 45,297,947 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 141,076,507 | |
| Foreign currency transactions | 134,972 | |
| Total net realized gain (loss) | 141,211,479 | |
| Change in net unrealized appreciation (depreciation) on: Investment securities (net of decrease in deferred foreign taxes of $18,850) | (292,105,987) | |
| Assets and liabilities in foreign currencies | (22,552) | |
| Total change in net unrealized appreciation (depreciation) | (292,128,539) | |
| Net gain (loss) | (150,917,060) | |
| Net increase (decrease) in net assets resulting from operations | $(105,619,113) |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 29, 2016 | Year ended February 28, 2015 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $45,297,947 | $40,432,818 |
| Net realized gain (loss) | 141,211,479 | 155,658,969 |
| Change in net unrealized appreciation (depreciation) | (292,128,539) | 315,382,310 |
| Net increase (decrease) in net assets resulting from operations | (105,619,113) | 511,474,097 |
| Distributions to shareholders from net investment income | (42,428,021) | (39,618,532) |
| Distributions to shareholders from net realized gain | (202,474,580) | (102,399,285) |
| Total distributions | (244,902,601) | (142,017,817) |
| Share transactions - net increase (decrease) | 299,448,347 | 686,786,861 |
| Redemption fees | 52,041 | 51,833 |
| Total increase (decrease) in net assets | (51,021,326) | 1,056,294,974 |
| Net Assets | ||
| Beginning of period | 3,112,097,377 | 2,055,802,403 |
| End of period (including undistributed net investment income of $4,626,720 and undistributed net investment income of $5,947,947, respectively) | $3,061,076,051 | $3,112,097,377 |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Consumer Staples Portfolio Class A
| Years ended February 28, | 2016A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $101.33 | $87.93 | $85.67 | $74.90 | $67.65 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | 1.34 | 1.37 | 1.43 | 1.26 | 1.22 |
| Net realized and unrealized gain (loss) | (4.86) | 17.28 | 7.51 | 11.73 | 8.73 |
| Total from investment operations | (3.52) | 18.65 | 8.94 | 12.99 | 9.95 |
| Distributions from net investment income | (1.31) | (1.28) | (1.44) | (1.08) | (1.06) |
| Distributions from net realized gain | (6.72) | (3.98) | (5.24) | (1.14) | (1.64) |
| Total distributions | (8.03) | (5.25)C | (6.68) | (2.22) | (2.70) |
| Redemption fees added to paid in capitalB,D | – | – | – | – | – |
| Net asset value, end of period | $89.78 | $101.33 | $87.93 | $85.67 | $74.90 |
| Total ReturnE,F | (3.51)% | 21.95% | 10.53% | 17.60% | 15.00% |
| Ratios to Average Net AssetsG,H | |||||
| Expenses before reductions | 1.04% | 1.05% | 1.06% | 1.08% | 1.10% |
| Expenses net of fee waivers, if any | 1.04% | 1.05% | 1.06% | 1.08% | 1.10% |
| Expenses net of all reductions | 1.04% | 1.05% | 1.06% | 1.08% | 1.09% |
| Net investment income (loss) | 1.45% | 1.45% | 1.61% | 1.58% | 1.74% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $470,249 | $414,151 | $329,459 | $277,329 | $205,851 |
| Portfolio turnover rateI | 63% | 42%J | 31% | 28% | 35% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Total distributions of $5.25 per share is comprised of distributions from net investment income of $1.275 and distributions from net realized gain of $3.976 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.
Financial Highlights — Consumer Staples Portfolio Class T
| Years ended February 28, | 2016A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $100.61 | $87.37 | $85.18 | $74.49 | $67.30 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | 1.08 | 1.10 | 1.18 | 1.03 | 1.01 |
| Net realized and unrealized gain (loss) | (4.83) | 17.15 | 7.46 | 11.68 | 8.68 |
| Total from investment operations | (3.75) | 18.25 | 8.64 | 12.71 | 9.69 |
| Distributions from net investment income | (1.04) | (1.04) | (1.21) | (.88) | (.86) |
| Distributions from net realized gain | (6.72) | (3.98) | (5.24) | (1.14) | (1.64) |
| Total distributions | (7.76) | (5.01)C | (6.45) | (2.02) | (2.50) |
| Redemption fees added to paid in capitalB,D | – | – | – | – | – |
| Net asset value, end of period | $89.10 | $100.61 | $87.37 | $85.18 | $74.49 |
| Total ReturnE,F | (3.78)% | 21.60% | 10.23% | 17.29% | 14.67% |
| Ratios to Average Net AssetsG,H | |||||
| Expenses before reductions | 1.32% | 1.32% | 1.33% | 1.36% | 1.38% |
| Expenses net of fee waivers, if any | 1.32% | 1.32% | 1.33% | 1.36% | 1.38% |
| Expenses net of all reductions | 1.31% | 1.32% | 1.33% | 1.35% | 1.38% |
| Net investment income (loss) | 1.17% | 1.18% | 1.34% | 1.30% | 1.45% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $76,586 | $81,489 | $61,421 | $52,024 | $39,047 |
| Portfolio turnover rateI | 63% | 42%J | 31% | 28% | 35% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Total distributions of $5.01 per share is comprised of distributions from net investment income of $1.036 and distributions from net realized gain of $3.976 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.
Financial Highlights — Consumer Staples Portfolio Class B
| Years ended February 28, | 2016 A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $100.13 | $86.90 | $84.72 | $74.01 | $66.83 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .63 | .63 | .71 | .61 | .64 |
| Net realized and unrealized gain (loss) | (4.81) | 17.06 | 7.40 | 11.61 | 8.61 |
| Total from investment operations | (4.18) | 17.69 | 8.11 | 12.22 | 9.25 |
| Distributions from net investment income | (.21) | (.48) | (.69) | (.37) | (.43) |
| Distributions from net realized gain | (6.72) | (3.98) | (5.24) | (1.14) | (1.64) |
| Total distributions | (6.93) | (4.46) | (5.93) | (1.51) | (2.07) |
| Redemption fees added to paid in capitalB,C | – | – | – | – | – |
| Net asset value, end of period | $89.02 | $100.13 | $86.90 | $84.72 | $74.01 |
| Total ReturnD,E | (4.25)% | 21.01% | 9.63% | 16.68% | 14.06% |
| Ratios to Average Net AssetsF,G | |||||
| Expenses before reductions | 1.81% | 1.82% | 1.86% | 1.89% | 1.91% |
| Expenses net of fee waivers, if any | 1.80% | 1.82% | 1.86% | 1.89% | 1.91% |
| Expenses net of all reductions | 1.80% | 1.82% | 1.86% | 1.88% | 1.90% |
| Net investment income (loss) | .68% | .68% | .81% | .78% | .93% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $6,846 | $15,799 | $17,388 | $18,548 | $19,330 |
| Portfolio turnover rateH | 63% | 42%I | 31% | 28% | 35% |
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 Total returns do not include the effect of the contingent deferred sales charge.
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.
Financial Highlights — Consumer Staples Portfolio Class C
| Years ended February 28, | 2016A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $99.27 | $86.32 | $84.28 | $73.75 | $66.71 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .63 | .65 | .75 | .65 | .68 |
| Net realized and unrealized gain (loss) | (4.75) | 16.93 | 7.36 | 11.55 | 8.59 |
| Total from investment operations | (4.12) | 17.58 | 8.11 | 12.20 | 9.27 |
| Distributions from net investment income | (.65) | (.65) | (.84) | (.53) | (.59) |
| Distributions from net realized gain | (6.72) | (3.98) | (5.24) | (1.14) | (1.64) |
| Total distributions | (7.38)C | (4.63) | (6.07)D | (1.67) | (2.23) |
| Redemption fees added to paid in capitalB,E | – | – | – | – | – |
| Net asset value, end of period | $87.77 | $99.27 | $86.32 | $84.28 | $73.75 |
| Total ReturnF,G | (4.23)% | 21.03% | 9.70% | 16.73% | 14.14% |
| Ratios to Average Net AssetsH,I | |||||
| Expenses before reductions | 1.80% | 1.80% | 1.82% | 1.83% | 1.85% |
| Expenses net of fee waivers, if any | 1.80% | 1.80% | 1.82% | 1.83% | 1.85% |
| Expenses net of all reductions | 1.79% | 1.80% | 1.81% | 1.82% | 1.84% |
| Net investment income (loss) | .69% | .70% | .85% | .83% | .99% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $250,576 | $228,151 | $164,669 | $134,966 | $102,321 |
| Portfolio turnover rateJ | 63% | 42%K | 31% | 28% | 35% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C 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.
D Total distributions of $6.07 per share is comprised of distributions from net investment income of $.837 and distributions from net realized gain of $5.237 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 contingent deferred sales charge.
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.
Financial Highlights — Consumer Staples Portfolio
| Years ended February 28, | 2016 A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $102.03 | $88.51 | $86.17 | $75.29 | $67.98 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | 1.61 | 1.64 | 1.69 | 1.48 | 1.42 |
| Net realized and unrealized gain (loss) | (4.89) | 17.40 | 7.55 | 11.82 | 8.76 |
| Total from investment operations | (3.28) | 19.04 | 9.24 | 13.30 | 10.18 |
| Distributions from net investment income | (1.55) | (1.54) | (1.66) | (1.28) | (1.24) |
| Distributions from net realized gain | (6.72) | (3.98) | (5.24) | (1.14) | (1.64) |
| Total distributions | (8.27) | (5.52) | (6.90) | (2.42) | (2.87)C |
| Redemption fees added to paid in capitalB,D | – | – | – | – | – |
| Net asset value, end of period | $90.48 | $102.03 | $88.51 | $86.17 | $75.29 |
| Total ReturnE | (3.25)% | 22.27% | 10.82% | 17.94% | 15.30% |
| Ratios to Average Net AssetsF,G | |||||
| Expenses before reductions | .77% | .77% | .79% | .81% | .83% |
| Expenses net of fee waivers, if any | .77% | .77% | .79% | .81% | .83% |
| Expenses net of all reductions | .76% | .77% | .79% | .80% | .82% |
| Net investment income (loss) | 1.72% | 1.73% | 1.88% | 1.85% | 2.01% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $2,039,983 | $2,173,970 | $1,328,594 | $1,425,055 | $1,202,440 |
| Portfolio turnover rateH | 63% | 42%I | 31% | 28% | 35% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Total distributions of $2.87 per share is comprised of distributions from net investment income of $1.236 and distributions from net realized gain of $1.637 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.
Financial Highlights — Consumer Staples Portfolio Class I
| Years ended February 28, | 2016A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $101.91 | $88.33 | $85.92 | $75.14 | $67.84 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | 1.60 | 1.59 | 1.66 | 1.45 | 1.39 |
| Net realized and unrealized gain (loss) | (4.89) | 17.40 | 7.53 | 11.79 | 8.73 |
| Total from investment operations | (3.29) | 18.99 | 9.19 | 13.24 | 10.12 |
| Distributions from net investment income | (1.55) | (1.44) | (1.54) | (1.32) | (1.19) |
| Distributions from net realized gain | (6.72) | (3.98) | (5.24) | (1.14) | (1.64) |
| Total distributions | (8.28)C | (5.41)D | (6.78) | (2.46) | (2.82)E |
| Redemption fees added to paid in capitalB,F | – | – | – | – | – |
| Net asset value, end of period | $90.34 | $101.91 | $88.33 | $85.92 | $75.14 |
| Total ReturnG | (3.26)% | 22.26% | 10.80% | 17.90% | 15.24% |
| Ratios to Average Net AssetsH,I | |||||
| Expenses before reductions | .78% | .80% | .82% | .85% | .87% |
| Expenses net of fee waivers, if any | .77% | .80% | .82% | .85% | .87% |
| Expenses net of all reductions | .77% | .80% | .82% | .84% | .87% |
| Net investment income (loss) | 1.71% | 1.70% | 1.85% | 1.81% | 1.96% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $216,836 | $198,538 | $154,271 | $378,731 | $163,544 |
| Portfolio turnover rateJ | 63% | 42%K | 31% | 28% | 35% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C 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.
D Total distributions of $5.41 per share is comprised of distributions from net investment income of $1.436 and distributions from net realized gain of $3.976 per share.
E Total distributions of $2.82 per share is comprised of distributions from net investment income of $1.186 and distributions from net realized gain of $1.637 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.
Notes to Financial Statements
For the period ended February 29, 2016
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 T, Class C, Consumer Staples and Class I (formerly Institutional Class) shares, each of which, along with Class B shares, has equal rights as to assets and voting privileges. Class B shares are closed to new accounts and additional purchases, except for exchanges and reinvestments. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a maximum holding period of seven years from the initial date of purchase.
During the period, the Board of Trustees approved the conversion of all existing Class B shares into Class A shares, effective on or about July 1, 2016, regardless of the length of times shares have been held.
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 Fidelity Investments Money Management, Inc. (FIMM), an affiliate of the investment adviser. Annualized expenses of the Money Market Central Funds as of their most recent shareholder report date are less than .005%.
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 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 Fidelity SelectCo, LLC (SelectCo) Fair Value Committee (the Committee). 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. Utilizing these techniques may result in transfers between Level 1 and Level 2. 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, 2016 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 may 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. 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), independent Trustees may elect 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 are included in the accompanying Statement of Assets and Liabilities.
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, 2016, 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 dividends 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.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
| Gross unrealized appreciation | $692,134,097 |
| Gross unrealized depreciation | (101,955,004) |
| Net unrealized appreciation (depreciation) on securities | $590,179,093 |
| Tax Cost | $2,549,285,220 |
The tax-based components of distributable earnings as of period end were as follows:
| Undistributed ordinary income | $4,689,383 |
| Undistributed long-term capital gain | $20,340,712 |
| Net unrealized appreciation (depreciation) on securities and other investments | $590,130,872 |
The tax character of distributions paid was as follows:
| February 29, 2016 | February 28, 2015 | |
| Ordinary Income | $74,502,566 | $ 43,895,099 |
| Long-term Capital Gains | 170,400,035 | 98,122,718 |
| Total | $244,902,601 | $ 142,017,817 |
Trading (Redemption) Fees. Shares held by investors in the Fund less than 30 days may be subject to a redemption fee equal to .75% of the NAV of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Fund and accounted for as an addition to paid in capital.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $1,808,424,320 and $1,779,392,270, respectively.
5. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity SelectCo, 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 .25% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by Fidelity Management & Research Company (FMR) and the investment adviser. 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 .55% 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 Corporation (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% | $1,045,882 | $– |
| Class T | .25% | .25% | 375,890 | – |
| Class B | .75% | .25% | 112,537 | 84,403 |
| Class C | .75% | .25% | 2,315,175 | 557,247 |
| $3,849,484 | $641,650 |
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 T 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 T, Class B, and Class C redemptions. The deferred sales charges range from 5.00% to 1.00% for Class B shares, 1.00% for Class C shares, 1.00% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained by FDC | |
| Class A | $336,934 |
| Class T | 43,845 |
| Class B(a) | 2,345 |
| Class C(a) | 32,125 |
| $415,249 |
(a) When Class B and 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, Inc., (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. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements.
For the period, transfer agent fees for each class were as follows:
| Amount | % of Class-Level Average Net Assets | |
| Class A | $829,869 | .20 |
| Class T | 169,721 | .23 |
| Class B | 24,522 | .22 |
| Class C | 467,790 | .20 |
| Consumer Staples | 3,352,990 | .17 |
| Class I | 336,927 | .18 |
| $ 5,181,819 |
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. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions 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 $15,509 for the period.
Interfund Trades. The Fund 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.
The Fund participates 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 Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $4,139 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, the Fund did not borrow on this line of credit.
7. Security Lending.
The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. 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. 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. Total security lending income during the period amounted to $418,728.
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 $115,438 for the period.
In addition, through arrangements with the Fund's custodian, credits realized as a result of certain uninvested cash balances were used to reduce the Fund's expense. During the period, these credits reduced the Fund's custody expense by $120.
In addition, during the period the investment adviser reimbursed and/or waived a portion of fund-level operating expenses in the amount of $21,509 and a portion of class-level operating expenses as follows:
| Amount | |
| Class A | $7,870 |
| Class T | 1,516 |
| Class B | 395 |
| Class C | 4,058 |
| Consumer Staples | 37,669 |
| Class I | 6,663 |
| $58,171 |
9. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
| Years ended February 29, | 2016 | 2015 |
| From net investment income | ||
| Class A | $5,892,374 | $4,812,004 |
| Class T | 832,225 | 776,331 |
| Class B | 21,356 | 83,556 |
| Class C | 1,681,417 | 1,335,126 |
| Consumer Staples | 30,907,531 | 29,856,743 |
| Class I | 3,093,118 | 2,754,772 |
| Total | $42,428,021 | $39,618,532 |
| From net realized gain | ||
| Class A | $29,492,766 | $14,768,867 |
| Class T | 5,430,950 | 2,841,831 |
| Class B | 809,700 | 743,976 |
| Class C | 16,753,262 | 7,778,566 |
| Consumer Staples | 136,504,977 | 65,408,817 |
| Class I | 13,482,925 | 10,857,228 |
| Total | $202,474,580 | $102,399,285 |
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, 2016 | Year ended February 28, 2015 | Year ended February 29, 2016 | Year ended February 28, 2015 | |
| Class A | ||||
| Shares sold | 1,973,363 | 1,066,097 | $181,606,150 | $101,322,941 |
| Reinvestment of distributions | 372,764 | 205,710 | 34,290,264 | 18,829,531 |
| Shares redeemed | (1,195,463) | (931,333) | (110,798,612) | (86,559,239) |
| Net increase (decrease) | 1,150,664 | 340,474 | $105,097,802 | $33,593,233 |
| Class T | ||||
| Shares sold | 197,944 | 215,514 | $18,205,532 | $20,203,421 |
| Reinvestment of distributions | 66,110 | 38,102 | 6,055,600 | 3,463,287 |
| Shares redeemed | (214,470) | (146,712) | (19,884,944) | (13,666,581) |
| Net increase (decrease) | 49,584 | 106,904 | $4,376,188 | $10,000,127 |
| Class B | ||||
| Shares sold | 4,002 | 7,270 | $364,996 | $675,777 |
| Reinvestment of distributions | 8,400 | 8,161 | 777,774 | 730,673 |
| Shares redeemed | (93,279) | (57,733) | (8,496,255) | (5,359,510) |
| Net increase (decrease) | (80,877) | (42,302) | $(7,353,485) | $(3,953,060) |
| Class C | ||||
| Shares sold | 926,964 | 636,469 | $84,032,895 | $59,593,472 |
| Reinvestment of distributions | 181,545 | 86,847 | 16,369,686 | 7,772,854 |
| Shares redeemed | (551,638) | (332,705) | (49,873,026) | (30,479,924) |
| Net increase (decrease) | 556,871 | 390,611 | $50,529,555 | $36,886,402 |
| Consumer Staples | ||||
| Shares sold | 5,277,258 | 8,889,529 | $487,809,315 | $838,041,591 |
| Reinvestment of distributions | 1,736,133 | 985,926 | 161,200,153 | 91,713,079 |
| Shares redeemed | (5,774,399) | (3,580,043) | (543,103,364) | (340,719,360) |
| Net increase (decrease) | 1,238,992 | 6,295,412 | $105,906,104 | $589,035,310 |
| Class I | ||||
| Shares sold | 1,318,941 | 3,870,748(a) | $121,982,188 | $354,438,000(a) |
| Reinvestment of distributions | 148,325 | 135,150 | 13,734,363 | 12,187,732 |
| Shares redeemed | (1,015,396) | (3,804,175)(b) | (94,824,368) | (345,400,883)(b) |
| Net increase (decrease) | 451,870 | 201,723 | $40,892,183 | $21,224,849 |
(a) Amount includes in-kind exchanges.
(b) Amount includes in-kind redemptions.
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.
Mutual funds managed by the investment adviser or its affiliates were the owners of record, in the aggregate, of approximately 26% of the total outstanding shares of the Fund.
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Select Portfolios and Shareholders of Consumer Staples Portfolio:
In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Consumer Staples Portfolio (a fund of Fidelity Select Portfolios) at February 29, 2016, 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 then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Consumer Staples Portfolio’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at February 29, 2016 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 19, 2016
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. Each of the Trustees oversees 75 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. Brian B. Hogan 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. Michael E. Wiley 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 sector portfolios. Other Boards oversee Fidelity's equity and high income funds, and Fidelity's investment grade bond, money market, and asset allocation funds. 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 SelectCo 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 SelectCo, 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 and Audit Committees. Appropriate personnel, including but not limited to the fund's Chief Compliance Officer (CCO), SelectCo's internal auditor, the independent accountants, the fund's Treasurer and portfolio management personnel, make periodic reports to the Board's committees, as appropriate. 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+
Brian B. Hogan (1964)
Year of Election or Appointment: 2014
Trustee
Chairman of the Board of Trustees
Mr. Hogan also serves as Trustee or Vice President of other funds. Mr. Hogan serves as a Director of FMR Investment Management (U.K.) Limited (investment adviser firm, 2015-present) and Fidelity SelectCo, LLC (investment adviser firm, 2014-present) and President of the Equity Division of FMR (investment adviser firm, 2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager.
* 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 SelectCo.
+ 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+
David A. Rosow (1942)
Year of Election or Appointment: 2013
Trustee
Mr. Rosow also serves as Trustee of other Fidelity® funds. Prior to his retirement in 2006, Mr. Rosow was the Chief Executive Officer, owner and operator of a number of private companies, which encompassed oil refining, drilling and marketing of petroleum products (including specialty petroleum products), the recreation industry, and real estate development. Mr. Rosow currently serves as a Director of Oxbow Carbon LLC (upgraders, marketers, and distributors of petroleum byproducts of the oil refining process, 2015-present) and Oxbridge Academy of the Palm Beaches (2015-present). Previously, Mr. Rosow served on the Fairfield Country Day School Board for 27 years, including as its President for 3 years, stepping down in 2006, as Lead Director and Chairman of the Audit Committee of Hudson United Bancorp (1996-2006), Chairman of the Board of Westport Bank and Trust (1992-1996), and as a Director of TD Banknorth (2006-2007). In addition, Mr. Rosow served as a member (2008-2014) and President (2009-2014) of the Town Council of Palm Beach, Florida. Mr. Rosow also served as a Member of the Advisory Board of other Fidelity® funds (2012-2013).
Garnett A. Smith (1947)
Year of Election or Appointment: 2013
Trustee
Mr. Smith also serves as Trustee of other Fidelity® funds. Prior to Mr. Smith's retirement, he served as Chairman and Chief Executive Officer of Inbrand Corp. (manufacturer of personal absorbent products, 1990-1997). He also served as President (1986-1990) of Inbrand Corp. Prior to his employment with Inbrand Corp., he was employed by a retail fabric chain and North Carolina National Bank. In addition, Mr. Smith served as a Member of the Advisory Board of other Fidelity® funds (2012-2013) and as a board member of the Jackson Hole Land Trust (2009-2012).
Michael E. Wiley (1950)
Year of Election or Appointment: 2008
Trustee
Chairman of the Independent Trustees
Mr. Wiley also serves as Trustee of other Fidelity® funds. Mr. Wiley serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), a Director of Tesoro Logistics LP (natural resources logistics, 2015-present), and a Director of Bill Barrett Corporation (exploration and production, 2005-present). In addition, Mr. Wiley also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a Trustee of other Fidelity® funds (2008-2013), as a Director of Asia Pacific Exploration Consolidated (international oil and gas exploration and production, 2008-2013), as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-2010), as a Senior Energy Advisor of Katzenbach Partners, LLC (consulting, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production, 2001-2005).
+ 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:
Except for Anthony R. Rochte, correspondence intended for an officer may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210. Correspondence intended for Mr. Rochte may be sent to SelectCo, 1225 17th Street, Denver, Colorado 80202-5541. Officers appear below in alphabetical order.
Name, Year of Birth; Principal Occupation
Donald F. Donahue (1950)
Year of Election or Appointment: 2015
Member of the Advisory Board
Mr. Donahue also serves as a Member of the Advisory Board of other Fidelity® funds. Mr. Donahue is President and Chief Executive Officer of Miranda Partners, LLC (risk consulting for the financial services industry, 2012-present) and a consultant for the Institute for Defense Analyses (national security, 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 serves as a Member and Treasurer of the Board of Directors of United Way of New York (2012-present), Member of the Board of Directors of NYC Leadership Academy (2012-present) and Physicians for Human Rights (2013-present), and Member of the Board of Advisors of Ripple Labs, Inc. (financial services, 2015-present). He also served as Chairman (2010-2012) and Member of the Board of Directors (2012-2013) of Omgeo, LLC (financial services) and Member of the Board of Directors of XBRL US (financial services non-profit, 2009-2012) and the International Securities Services Association (2009-2012).
Christopher S. Bartel (1971)
Year of Election or Appointment: 2009
Vice President
Mr. Bartel also serves as Vice President of other funds. Mr. Bartel serves as a Director of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2016-present) and Fidelity Management & Research (Hong Kong) (investment adviser firm, 2012-present) and Head of Global Equity Research (2010-present). Previously, Mr. Bartel served as a Director, President, and Chief Executive Officer of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2012-2016), Senior Vice President of Equity Research (2009-2010), Managing Director of Research (2006-2009), and an analyst and portfolio manager (2000-2006).
Marc R. Bryant (1966)
Year of Election or Appointment: 2013
Secretary and Chief Legal Officer (CLO)
Mr. Bryant also serves as Secretary and CLO of other funds. Mr. Bryant serves as CLO, Secretary, and Senior Vice President of Fidelity Management & Research Company (investment adviser firm, 2015-present) and FMR Co., Inc. (investment adviser firm, 2015-present); Secretary of Fidelity SelectCo, LLC (investment adviser firm, 2015-present) and Fidelity Investments Money Management, Inc. (investment adviser firm, 2015-present); and CLO of Fidelity Management & Research (Hong Kong) Limited and FMR Investment Management (U.K.) Limited (investment adviser firms, 2015-present) and Fidelity Management & Research (Japan) Limited (investment adviser firm, 2016-present). He is Senior Vice President and Deputy General Counsel of FMR LLC (diversified financial services company). Previously, Mr. Bryant served as Secretary and CLO of Fidelity Rutland Square Trust II (2010-2014) and Assistant Secretary of Fidelity's Fixed Income and Asset Allocation Funds (2013-2015). Prior to joining Fidelity Investments, Mr. Bryant served as a Senior Vice President and the Head of Global Retail Legal for AllianceBernstein L.P. (2006-2010), and as the General Counsel for ProFund Advisors LLC (2001-2006).
William C. Coffey (1969)
Year of Election or Appointment: 2009
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 Vice President and Associate General Counsel of FMR LLC (2005-2009).
Jonathan Davis (1968)
Year of Election or Appointment: 2010
Assistant Treasurer
Mr. Davis also serves as Assistant Treasurer of other funds, 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).
Adrien E. Deberghes (1967)
Year of Election or Appointment: 2013
President and Treasurer
Mr. Deberghes also serves as an officer of other funds. He is an employee of Fidelity Investments (2008-present). Prior to joining Fidelity Investments, Mr. Deberghes was Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005). Previously, Mr. Deberghes served in other fund officer roles.
Joseph DeSantis (1959)
Year of Election or Appointment: 2015
Vice President
Mr. DeSantis also serves as Vice President of other funds. Mr. DeSantis serves as Group Chief Investment Officer, Equities (2010-present) and is an employee of Fidelity Investments.
Stephanie J. Dorsey (1969)
Year of Election or Appointment: 2010
Assistant Treasurer
Ms. Dorsey also serves as an officer of other funds. She is an employee of Fidelity Investments (2008-present) and has served in other fund officer roles. Prior to joining Fidelity Investments, Ms. Dorsey served as Treasurer (2004-2008) of the JPMorgan Mutual Funds and Vice President (2004-2008) of JPMorgan Chase Bank.
Howard J. Galligan III (1966)
Year of Election or Appointment: 2014
Chief Financial Officer
Mr. Galligan also serves as Chief Financial Officer of other funds. Mr. Galligan serves as President of Fidelity Pricing and Cash Management Services (FPCMS) (2014-present) and as a Director of Strategic Advisers, Inc. (investment adviser firm, 2008-present). Previously, Mr. Galligan served as Chief Administrative Officer of Asset Management (2011-2014) and Chief Operating Officer and Senior Vice President of Investment Support for Strategic Advisers, Inc. (2003-2011).
Scott C. Goebel (1968)
Year of Election or Appointment: 2015
Vice President
Mr. Goebel serves as Vice President of other funds and is an employee of Fidelity Investments (2001-present). Previously, Mr. Goebel served as Secretary of Fidelity SelectCo, LLC (investment adviser firm, 2013-2015), Fidelity Investments Money Management, Inc. (FIMM) (investment adviser firm, 2010-2015), and Fidelity Research and Analysis Company (FRAC) (investment adviser firm, 2010-2015); General Counsel, Secretary, and Senior Vice President of Fidelity Management & Research Company (investment adviser firm, 2008-2015) and FMR Co., Inc. (investment adviser firm, 2008-2015); Assistant Secretary of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2008-2015) and Fidelity Management & Research (U.K.) Inc. (investment adviser firm, 2008-2015); Chief Legal Officer (CLO) of Fidelity Management & Research (Hong Kong) Limited (investment adviser firm, 2008-2015); Secretary and CLO of certain Fidelity® funds (2008-2015); Assistant Secretary of FIMM (2008-2010), FRAC (2008-2010), and certain funds (2007-2008); and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007).
James D. Gryglewicz (1972)
Year of Election or Appointment: 2014
Chief Compliance Officer
Mr. Gryglewicz also serves as Chief Compliance Officer of other funds. Mr. Gryglewicz serves as Compliance Officer of Strategic Advisers, Inc. (investment adviser firm, 2015-present) and Fidelity SelectCo, LLC (investment adviser firm, 2014-present), Senior Vice President of Asset Management Compliance (2009-present), and is an employee of Fidelity Investments (2004-present).
Brian B. Hogan (1964)
Year of Election or Appointment: 2009
Vice President
Mr. Hogan also serves as Trustee or Vice President of other funds. Mr. Hogan serves as a Director of FMR Investment Management (U.K.) Limited (investment adviser firm, 2015-present) and Fidelity SelectCo, LLC (investment adviser firm, 2014-present) and President of the Equity Division of FMR (investment adviser firm, 2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager.
Chris Maher (1972)
Year of Election or Appointment: 2013
Assistant Treasurer
Mr. Maher serves as Assistant Treasurer of other funds. Mr. Maher is Vice President of Valuation Oversight and is an employee of Fidelity Investments. Previously, Mr. Maher served as 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).
John F. Papandrea (1972)
Year of Election or Appointment: 2016
Anti-Money Laundering (AML) Officer
Mr. Papandrea also serves as AML Officer of other funds. Mr. Papandrea is Vice President of FMR LLC (diversified financial services company, 2008-present) and is an employee of Fidelity Investments (2005-present).
Kenneth B. Robins (1969)
Year of Election or Appointment: 2013
Deputy Treasurer
Mr. Robins also serves as an officer of other funds. Mr. Robins serves as Executive Vice President of Fidelity Investments Money Management, Inc. (FIMM) (investment adviser firm, 2013-present) and is an employee of Fidelity Investments (2004-present). Previously, Mr. Robins served in other fund officer roles.
Anthony R. Rochte (1968)
Year of Election or Appointment: 2013
Vice President
Mr. Rochte also serves as Vice President of other funds. Mr. Rochte serves as President of Fidelity SelectCo, LLC (investment adviser firm, 2012-present) and is an employee of Fidelity Investments (2012-present). Prior to joining Fidelity Investments, Mr. Rochte served as Senior Managing Director and head of State Street Global Advisors' North American Intermediary Business Group (2006-2012).
Stacie M. Smith (1974)
Year of Election or Appointment: 2013
Assistant Treasurer
Ms. Smith also serves as an officer of other funds. She 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 (1996-2009). Previously, Ms. Smith served as Deputy Treasurer of certain Fidelity funds (2013-2016).
Renee Stagnone (1975)
Year of Election or Appointment: 2013
Deputy Treasurer
Ms. Stagnone also serves as an officer of other funds. Ms. Stagnone is an employee of Fidelity Investments (1997-present). Previously, Ms. Stagnone served as Deputy Treasurer of certain Fidelity funds (2013-2016).
Joseph F. Zambello (1957)
Year of Election or Appointment: 2011
Deputy Treasurer
Mr. Zambello also serves as Deputy Treasurer of other funds. Mr. Zambello is an employee of Fidelity Investments (1991-present). Previously, Mr. Zambello served as Deputy Treasurer of certain Fidelity funds (2011-2016), Vice President of the Program Management Group of FMR (investment adviser firm, 2009-2011), and Vice President of the Transfer Agent Oversight Group (2005-2009).
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, redemption fees 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, 2015 to February 29, 2016).
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. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount.
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. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount.
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, 2015 | Ending Account Value February 29, 2016 | Expenses Paid During Period-B September 1, 2015 to February 29, 2016 | |
| Class A | 1.04% | |||
| Actual | $1,000.00 | $1,070.60 | $5.35 | |
| Hypothetical-C | $1,000.00 | $1,019.69 | $5.22 | |
| Class T | 1.32% | |||
| Actual | $1,000.00 | $1,068.90 | $6.79 | |
| Hypothetical-C | $1,000.00 | $1,018.30 | $6.62 | |
| Class B | 1.81% | |||
| Actual | $1,000.00 | $1,066.40 | $9.30 | |
| Hypothetical-C | $1,000.00 | $1,015.86 | $9.07 | |
| Class C | 1.79% | |||
| Actual | $1,000.00 | $1,066.50 | $9.20 | |
| Hypothetical-C | $1,000.00 | $1,015.96 | $8.97 | |
| Consumer Staples | .76% | |||
| Actual | $1,000.00 | $1,071.90 | $3.92 | |
| Hypothetical-C | $1,000.00 | $1,021.08 | $3.82 | |
| Class I | .78% | |||
| Actual | $1,000.00 | $1,072.00 | $4.02 | |
| 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 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 on April 18, 2016 to shareholders of record at the opening of business on April 15, 2016, a distribution of $0.592 per share derived from capital gains realized from sales of portfolio securities and a dividend of $0.159 per share from net investment income.
Consumer Staples hereby designates as a capital gain dividend with respect to the taxable year ended February 29, 2016, $109,949,003 or, if subsequently determined to be different, the net capital gain of such year.
Consumer Staples designates 35% and 70% of the dividends distributed in April and December, respectively during the fiscal year as qualifying for the dividends–received deduction for corporate shareholders.
Consumer Staples designates 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 2017 of amounts for use in preparing 2016 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 SelectCo, LLC (SelectCo), an affiliate of Fidelity Management & Research Company (FMR), and the sub-advisory agreements with affiliates of FMR (together, the Advisory Contracts) for the fund. 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.
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 four standing committees (Committees) — Operations, Audit, Fair Valuation, and Governance and Nominating — 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 Operations Committee, of which all of the Independent Trustees are members, meets regularly throughout the year and considers, among other matters, information specifically related to the annual consideration of the renewal of the fund's Advisory Contracts. 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 consider 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 ad hoc joint committees to discuss certain matters relevant to all of the Fidelity funds.
At its January 2016 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 to be 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 to be provided by and the profits to be realized by Fidelity from its relationships with the fund; and (iv) the extent to which, if any, economies of scale exist and would be 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 the staffing of SelectCo and the sub-advisers (together with SelectCo, the Investment Advisers) as it relates to the fund, including the backgrounds of investment personnel of SelectCo, 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 reviewed the general qualifications and capabilities of the investment staff of the Investment Advisers, including their 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 or convenience of the Fidelity funds as investment vehicles. These services include 24-hour access to account information and market information through telephone representatives and over the Internet, investor education materials and asset allocation tools, and the expanded availability of Fidelity Investor Centers.The Board noted that in 2014 the ad hoc Committee on Transfer Agency Fees was formed by it and the boards of certain other Fidelity funds to review the variety of transfer agency services and fee structures throughout the mutual fund industry compared to Fidelity's.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 investment research 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 making other enhancements to meet client needs; (iv) reducing management fees and total expenses for certain index funds; (v) continuing to launch dedicated lower cost underlying funds to meet portfolio construction needs related to expanding underlying fund options for Fidelity funds of funds, specifically for the Freedom Fund product lines; (vi) rationalizing product lines and gaining increased efficiencies through fund mergers; (vii) continuing to develop, acquire and implement systems and technology to improve services to the funds and shareholders, strengthen information security, and increase efficiency; (viii) implementing investment enhancements to further strengthen Fidelity's target date product line to increase investors' probability of success in achieving their goals; (ix) modifying the eligibility criteria for certain share classes to accommodate roll-over assets from employer-sponsored retirement plans; (x) launching a new Class W of the Freedom Index Funds to attract and retain Fidelity record-kept retirement plan assets; and (xi) implementing changes to Fidelity's money market fund product line in response to recent regulatory reforms.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 with representatives of the Investment Advisers about fund investment performance that occur at Board meetings throughout the year. 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 a securities market index ("benchmark index"). In its evaluation of fund investment performance at meetings throughout the year, the Board gave particular attention to information indicating underperformance of certain Fidelity funds for specific time periods and discussed with the Investment Advisers the reasons for such underperformance. The fund underperformed its benchmark for the one-, three-, and five-year periods ended June 30, 2015, and as a result, the Board will continue to discuss with SelectCo the steps it has taken and is taking to address the fund's performance.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. Depending on the circumstances, the Independent Trustees may be satisfied with a fund's performance notwithstanding that it lags its benchmark index for certain periods.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, 2015.Based on its review, the Board concluded that the nature, extent, and quality of services provided to the fund under the Advisory Contracts should benefit the shareholders of the fund.Competitiveness of Management Fee and Total Expense Ratio. The Board considered the fund's management fee and total expense ratio compared to "mapped groups" of competitive funds and classes created for the purpose of facilitating the Trustees' analysis of the competitiveness of management fees and total expenses. Fidelity creates "mapped groups" by combining similar Lipper investment objective categories that have comparable investment mandates. For this purpose, all sector focused equity funds are grouped in the same mapped group. Combining Lipper investment objective categories aids the Board's management fee and total expense ratio comparisons by broadening the competitive group used for comparison.Management Fee. The Board considered two proprietary management fee comparisons for the 12-month periods ended June 30 shown in basis points (BP) in the chart below. The group of Lipper funds used by the Board for management fee comparisons is referred to below as the "Total Mapped Group." The Total Mapped Group comparison focuses on a fund's standing in terms of gross management fees before expense reimbursements or caps relative to the total universe of funds with comparable investment mandates (i.e., sector equities), regardless of whether their management fee structures also are comparable. Funds with comparable management fee structures have similar management fee contractual arrangements (e.g., flat rate charged for advisory services, all-inclusive fee rate, etc.). "TMG %" represents the percentage of funds in the Total Mapped Group that had management fees that were lower than the fund's. For example, a hypothetical TMG % of 20% would mean that 80% of the funds in the Total Mapped Group had higher, and 20% had lower, management fees than the fund. The fund's actual TMG %s and the number of funds in the Total Mapped Group are in the chart below. The "Asset-Size Peer Group" (ASPG) comparison focuses on a fund's standing relative to a subset of non-Fidelity funds within the Total Mapped Group that are similar in size and management fee structure. For example, if a fund is in the first quartile of the ASPG, the fund's management fee ranks in the least expensive or lowest 25% of funds in the ASPG. The ASPG represents at least 15% of the funds in the Total Mapped Group with comparable asset size and management fee structures, subject to a minimum of 50 funds (or all funds in the Total Mapped Group if fewer than 50). Additional information, such as the ASPG quartile in which the fund's management fee rate ranked, is also included in the chart and considered by the Board.Consumer Staples Portfolio
SELCS-ANN-0416
1.846042.109
Fidelity® Select Portfolios® Automotive Portfolio Construction and Housing Portfolio Consumer Discretionary Portfolio Leisure Portfolio Multimedia Portfolio Retailing Portfolio Annual Report February 29, 2016 |
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Contents
Automotive Portfolio | |
Construction and Housing Portfolio | |
Consumer Discretionary Portfolio | |
Leisure Portfolio | |
Multimedia 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 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. © 2016 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-Q. Forms N-Q are available on the SEC’s web site at http://www.sec.gov. A fund's Forms N-Q 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.advisor.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.
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, 2016 | Past 1 year | Past 5 years | Past 10 years |
| Automotive Portfolio | (20.00)% | 2.86% | 5.42% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Automotive Portfolio on February 28, 2006.
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 | ||
| $16,958 | Automotive Portfolio | |
| $18,666 | S&P 500® Index | |
Automotive Portfolio
Management's Discussion of Fund Performance
Market Recap: The S&P 500® index returned -6.19% for the year ending February 29, 2016. Largely range-bound for the first half of the period, U.S. stocks suffered a steep, late-summer decline on concern about an economic slowdown in China. The market recovered in October, lifted by the U.S. Federal Reserve’s decision to delay raising near-term interest rates until mid-December. Investors also drew courage from a rate cut in China and economic stimulus in Europe. But continued oil-price weakness and U.S.-dollar strength, plus fresh worries about China and the Middle East, pushed the S&P 500® to its worst January since 2009, followed by a volatile but ultimately flattish February. Overall, growth-oriented and larger-cap stocks fared better than value and smaller-cap complements. In this environment, the tech-heavy Nasdaq Composite Index® returned -7.07% for the 12 months; the Russell 2000® Index, -14.97%. Few sectors within the broad-market S&P 500 gained ground, with a wide gap separating leaders from laggards. Despite increased competition among wireless carriers, telecommunication services (+8%) led the way, followed by the more defensive utilities sector (+6%). Rising wages and low inflation buoyed consumer staples (+4%), less so consumer discretionary (0%). Meanwhile, energy (-24%) foundered amid commodity weakness that also hurt materials (-17%). The financials sector (-12%) struggled as well.Comments from Portfolio Manager Annie Rosen: For the year, the fund returned -20.00%, underperforming the -18.22% result of its industry benchmark, the S&P® Custom Automobiles & Components Index. Automotive stocks trailed the S&P 500® by a wide margin for the 12 months, mainly due to investors’ concerns about a slowdown in auto demand in China and the recent Volkswagen diesel-emissions scandal. Versus the industry benchmark, unfavorable picks among automobile manufacturers weighed most on results. Out-of-benchmark stakes in India-based Tata Motors and Germany's Volkswagen were the fund's biggest relative detractors. Tata Motors, owner of British luxury brand Jaguar Land Rover, had the most negative effect as share prices declined for the period amid China's scrutiny of foreign automakers and general concern about China’s automobile market. Last September, allegations that Volkswagen had deployed software to cheat on governmental emissions tests wreaked havoc on the stock. I exited the position shortly after this news broke in an attempt to curb losses. An underweighting in the tires & rubber segment and an out-of-benchmark allocation to consumer electronics also detracted. Conversely, picks in the auto parts & equipment group aided results. A timely stake in Remy International, a producer of vehicle starters, alternators and hybrid motors, was the largest relative individual contributor. The stock surged in July on an acquisition bid from BorgWarner, and I sold it from the fund shortly after. Investments in automotive electronics supplier Visteon and out-of-index, France-based automaker Renault also helped 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.
Automotive Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 29, 2016
| % of fund's net assets | % of fund's net assets 6 months ago | |
| General Motors Co. | 15.5 | 11.4 |
| Toyota Motor Corp. sponsored ADR | 9.5 | 11.9 |
| Ford Motor Co. | 8.2 | 12.3 |
| Tesla Motors, Inc. | 8.0 | 7.8 |
| Delphi Automotive PLC | 7.2 | 6.7 |
| BorgWarner, Inc. | 4.8 | 4.3 |
| Tenneco, Inc. | 4.8 | 4.8 |
| Harman International Industries, Inc. | 4.5 | 2.8 |
| NGK Spark Plug Co. Ltd. | 4.5 | 4.6 |
| Mobileye NV | 4.0 | 1.0 |
| 71.0 |
Top Industries (% of fund's net assets)
| As of February 29, 2016 | ||
| Automobiles | 50.6% | |
| Auto Components | 34.2% | |
| Household Durables | 4.5% | |
| Software | 4.0% | |
| Commercial Services & Supplies | 2.0% | |
| All Others* | 4.7% | |
| As of August 31, 2015 | ||
| Automobiles | 56.0% | |
| Auto Components | 34.4% | |
| Household Durables | 2.8% | |
| Commercial Services & Supplies | 2.0% | |
| Electronic Equipment & Components | 1.7% | |
| All Others* | 3.1% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
Automotive Portfolio
Investments February 29, 2016
Showing Percentage of Net Assets
| Common Stocks - 96.8% | |||
| Shares | Value | ||
| Auto Components - 34.2% | |||
| Auto Parts & Equipment - 34.2% | |||
| BorgWarner, Inc. | 97,010 | $3,170,287 | |
| Continental AG | 7,600 | 1,526,210 | |
| Delphi Automotive PLC | 70,758 | 4,718,143 | |
| Magna International, Inc. Class A (sub. vtg.) | 50,968 | 1,977,694 | |
| NGK Spark Plug Co. Ltd. | 158,300 | 2,954,688 | |
| Schaeffler AG (a) | 88,300 | 1,384,184 | |
| Stoneridge, Inc. (a) | 84,240 | 1,014,250 | |
| Tenneco, Inc. (a) | 68,506 | 3,118,393 | |
| Visteon Corp. | 37,040 | 2,589,837 | |
| 22,453,686 | |||
| Automobiles - 50.6% | |||
| Automobile Manufacturers - 49.4% | |||
| Ford Motor Co. | 432,931 | 5,415,967 | |
| General Motors Co. | 346,414 | 10,198,427 | |
| Honda Motor Co. Ltd. sponsored ADR | 46,895 | 1,205,670 | |
| Renault SA | 24,000 | 2,196,761 | |
| Tata Motors Ltd. sponsored ADR (a)(b) | 88,440 | 1,966,021 | |
| Tesla Motors, Inc. (a)(b) | 27,400 | 5,258,882 | |
| Toyota Motor Corp. sponsored ADR (b) | 59,817 | 6,226,950 | |
| 32,468,678 | |||
| Motorcycle Manufacturers - 1.2% | |||
| Harley-Davidson, Inc. | 18,120 | 782,240 | |
| TOTAL AUTOMOBILES | 33,250,918 | ||
| Commercial Services & Supplies - 2.0% | |||
| Diversified Support Services - 2.0% | |||
| KAR Auction Services, Inc. | 37,180 | 1,316,544 | |
| Electronic Equipment & Components - 1.5% | |||
| Electronic Equipment & Instruments - 1.5% | |||
| Research Frontiers, Inc. (a)(b) | 218,344 | 1,010,933 | |
| Household Durables - 4.5% | |||
| Consumer Electronics - 4.5% | |||
| Harman International Industries, Inc. | 38,640 | 2,962,915 | |
| Software - 4.0% | |||
| Application Software - 4.0% | |||
| Mobileye NV (a)(b) | 81,800 | 2,655,228 | |
| TOTAL COMMON STOCKS | |||
| (Cost $50,367,766) | 63,650,224 | ||
| Money Market Funds - 23.1% | |||
| Fidelity Cash Central Fund, 0.40% (c) | 22,011 | 22,011 | |
| Fidelity Securities Lending Cash Central Fund, 0.44% (c)(d) | 15,167,425 | 15,167,425 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $15,189,436) | 15,189,436 | ||
| TOTAL INVESTMENT PORTFOLIO - 119.9% | |||
| (Cost $65,557,202) | 78,839,660 | ||
| NET OTHER ASSETS (LIABILITIES) - (19.9)% | (13,094,874) | ||
| NET ASSETS - 100% | $65,744,786 |
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 | $2,760 |
| Fidelity Securities Lending Cash Central Fund | 126,714 |
| Total | $129,474 |
Investment Valuation
The following is a summary of the inputs used, as of February 29, 2016, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used 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 | $63,650,224 | $60,695,536 | $2,954,688 | $-- |
| Money Market Funds | 15,189,436 | 15,189,436 | -- | -- |
| Total Investments in Securities: | $78,839,660 | $75,884,972 | $2,954,688 | $-- |
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 | 59.2% |
| Japan | 15.8% |
| Bailiwick of Jersey | 7.2% |
| Germany | 4.4% |
| Netherlands | 4.0% |
| France | 3.4% |
| Canada | 3.0% |
| India | 3.0% |
| 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, 2016 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $14,906,661) — See accompanying schedule: Unaffiliated issuers (cost $50,367,766) | $63,650,224 | |
| Fidelity Central Funds (cost $15,189,436) | 15,189,436 | |
| Total Investments (cost $65,557,202) | $78,839,660 | |
| Receivable for investments sold | 2,048,609 | |
| Receivable for fund shares sold | 267,141 | |
| Dividends receivable | 238,294 | |
| Distributions receivable from Fidelity Central Funds | 17,922 | |
| Prepaid expenses | 391 | |
| Other receivables | 2,698 | |
| Total assets | 81,414,715 | |
| Liabilities | ||
| Payable for investments purchased | $283,127 | |
| Payable for fund shares redeemed | 137,136 | |
| Accrued management fee | 31,390 | |
| Other affiliated payables | 17,772 | |
| Other payables and accrued expenses | 33,079 | |
| Collateral on securities loaned, at value | 15,167,425 | |
| Total liabilities | 15,669,929 | |
| Net Assets | $65,744,786 | |
| Net Assets consist of: | ||
| Paid in capital | $52,276,562 | |
| Undistributed net investment income | 170,482 | |
| Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 16,713 | |
| Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 13,281,029 | |
| Net Assets, for 1,949,472 shares outstanding | $65,744,786 | |
| Net Asset Value, offering price and redemption price per share ($65,744,786 ÷ 1,949,472 shares) | $33.72 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 29, 2016 | ||
| Investment Income | ||
| Dividends | $2,418,597 | |
| Income from Fidelity Central Funds (including $126,714 from security lending) | 129,474 | |
| Total income | 2,548,071 | |
| Expenses | ||
| Management fee | $592,064 | |
| Transfer agent fees | 232,525 | |
| Accounting and security lending fees | 44,823 | |
| Custodian fees and expenses | 10,290 | |
| Independent trustees' compensation | 2,041 | |
| Registration fees | 21,059 | |
| Audit | 40,937 | |
| Legal | 1,379 | |
| Interest | 315 | |
| Miscellaneous | 1,824 | |
| Total expenses before reductions | 947,257 | |
| Expense reductions | (12,783) | 934,474 |
| Net investment income (loss) | 1,613,597 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 11,349,424 | |
| Foreign currency transactions | 9,379 | |
| Total net realized gain (loss) | 11,358,803 | |
| Change in net unrealized appreciation (depreciation) on: Investment securities | (35,351,092) | |
| Assets and liabilities in foreign currencies | 2,020 | |
| Total change in net unrealized appreciation (depreciation) | (35,349,072) | |
| Net gain (loss) | (23,990,269) | |
| Net increase (decrease) in net assets resulting from operations | $(22,376,672) |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 29, 2016 | Year ended February 28, 2015 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $1,613,597 | $1,294,323 |
| Net realized gain (loss) | 11,358,803 | 31,540,853 |
| Change in net unrealized appreciation (depreciation) | (35,349,072) | (24,167,890) |
| Net increase (decrease) in net assets resulting from operations | (22,376,672) | 8,667,286 |
| Distributions to shareholders from net investment income | (1,044,092) | (1,014,489) |
| Distributions to shareholders from net realized gain | (14,444,816) | (32,500,600) |
| Total distributions | (15,488,908) | (33,515,089) |
| Share transactions | ||
| Proceeds from sales of shares | 26,726,919 | 54,086,634 |
| Reinvestment of distributions | 14,872,884 | 32,352,775 |
| Cost of shares redeemed | (75,869,391) | (137,945,557) |
| Net increase (decrease) in net assets resulting from share transactions | (34,269,588) | (51,506,148) |
| Redemption fees | 2,686 | 3,842 |
| Total increase (decrease) in net assets | (72,132,482) | (76,350,109) |
| Net Assets | ||
| Beginning of period | 137,877,268 | 214,227,377 |
| End of period (including undistributed net investment income of $170,482 and undistributed net investment income of $176,383, respectively) | $65,744,786 | $137,877,268 |
| Other Information | ||
| Shares | ||
| Sold | 610,209 | 1,045,483 |
| Issued in reinvestment of distributions | 353,475 | 682,332 |
| Redeemed | (1,838,445) | (2,665,298) |
| Net increase (decrease) | (874,761) | (937,483) |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Automotive Portfolio
| Years ended February 28, | 2016 A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $48.82 | $56.95 | $40.65 | $38.05 | $46.87 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .65 | .42 | .22 | .24 | .03 |
| Net realized and unrealized gain (loss) | (9.37) | 3.05 | 16.96 | 2.65 | (6.45) |
| Total from investment operations | (8.72) | 3.47 | 17.18 | 2.89 | (6.42) |
| Distributions from net investment income | (.45) | (.38) | (.15) | (.26) | (.02) |
| Distributions from net realized gain | (5.93) | (11.22) | (.73) | (.02) | (2.41) |
| Total distributions | (6.38) | (11.60) | (.88) | (.29)C | (2.42)D |
| Redemption fees added to paid in capitalB | –E | –E | –E | –E | .02 |
| Net asset value, end of period | $33.72 | $48.82 | $56.95 | $40.65 | $38.05 |
| Total ReturnF | (20.00)% | 8.04% | 42.33% | 7.64% | (13.06)% |
| Ratios to Average Net AssetsG,H | |||||
| Expenses before reductions | .87% | .85% | .84% | .91% | .90% |
| Expenses net of fee waivers, if any | .87% | .85% | .84% | .91% | .90% |
| Expenses net of all reductions | .86% | .85% | .83% | .89% | .90% |
| Net investment income (loss) | 1.49% | .82% | .43% | .66% | .08% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $65,745 | $137,877 | $214,227 | $142,959 | $170,016 |
| Portfolio turnover rateI | 80% | 71% | 148% | 72% | 49% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Total distributions of $.29 per share is comprised of distributions from net investment income of $.261 and distributions from net realized gain of $.024 per share.
D Total distributions of $2.42 per share is comprised of distributions from net investment income of $.015 and distributions from net realized gain of $2.408 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.
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, 2016 | Past 1 year | Past 5 years | Past 10 years |
| Construction and Housing Portfolio | (8.11)% | 12.82% | 6.51% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Construction and Housing Portfolio on February 28, 2006.
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 | ||
| $18,785 | Construction and Housing Portfolio | |
| $18,666 | S&P 500® Index | |
Construction and Housing Portfolio
Management's Discussion of Fund Performance
Market Recap: The S&P 500® index returned -6.19% for the year ending February 29, 2016. Largely range-bound for the first half of the period, U.S. stocks suffered a steep, late-summer decline on concern about an economic slowdown in China. The market recovered in October, lifted by the U.S. Federal Reserve's decision to delay raising near-term interest rates until mid-December. Investors also drew courage from a rate cut in China and economic stimulus in Europe. But continued oil-price weakness and U.S.-dollar strength, plus fresh worries about China and the Middle East, pushed the S&P 500® to its worst January since 2009, followed by a volatile but ultimately flattish February. Overall, growth-oriented and larger-cap stocks fared better than value and smaller-cap complements. In this environment, the tech-heavy Nasdaq Composite Index® returned -7.07% for the 12 months; the Russell 2000® Index, -14.97%. Few sectors within the broad-market S&P 500® gained ground, with a wide gap separating leaders from laggards. Despite increased competition among wireless carriers, telecommunication services (+8%) led the way, followed by the more defensive utilities sector (+6%). Rising wages and low inflation buoyed consumer staples (+4%), less so consumer discretionary (0%). Meanwhile, energy (-24%) foundered amid commodity weakness that also hurt materials (-17%). The financials sector (-12%) struggled as well.Comments from Portfolio Manager Holger Boerner: For the year, the fund returned -8.11%, significantly behind the -0.49% return of the MSCI U.S. IMI Construction & Housing 25/50 Index and also lagging the S&P 500®. Security selection accounted for most of the underperformance versus the industry benchmark, with especially disappointing picks in homebuilding, real estate services, construction materials, and construction & engineering. Individual detractors included William Lyon Homes, a homebuilder on the West Coast. Overly aggressive earnings expectations and above-average debt led to its roughly -48% return this past year. An out-of-index stake in Blu Homes, a privately held builder of prefabricated modular homes, also hurt. Elsewhere, an out-of-index stake in Sprouts Farmers market, a natural foods retail grocer with expansion plans, fell as price cuts by a competitor and produce inflation pressured the company's profit margin. All three were small-cap stocks. By contrast, having no exposure to the weak-performing real estate development group helped relative performance. Individual contributors included LGI Homes, a Texas-based homebuilder targeting first-time buyers. Sprouts and LGI were not held 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, 2016
| % of fund's net assets | % of fund's net assets 6 months ago | |
| Home Depot, Inc. | 24.1 | 24.7 |
| Lowe's Companies, Inc. | 10.5 | 11.8 |
| AvalonBay Communities, Inc. | 7.2 | 6.1 |
| UDR, Inc. | 5.0 | 4.7 |
| Mid-America Apartment Communities, Inc. | 4.1 | 2.3 |
| Fortune Brands Home & Security, Inc. | 3.5 | 2.3 |
| Martin Marietta Materials, Inc. | 3.3 | 0.0 |
| D.R. Horton, Inc. | 3.0 | 2.0 |
| A.O. Smith Corp. | 2.8 | 2.8 |
| Toll Brothers, Inc. | 2.7 | 2.3 |
| 66.2 |
Top Industries (% of fund's net assets)
| As of February 29, 2016 | ||
| Specialty Retail | 34.6% | |
| Real Estate Investment Trusts | 23.0% | |
| Household Durables | 18.8% | |
| Building Products | 12.4% | |
| Construction Materials | 4.2% | |
| All Others* | 7.0% | |
| As of August 31, 2015 | ||
| Specialty Retail | 36.5% | |
| Real Estate Investment Trusts | 20.6% | |
| Household Durables | 16.1% | |
| Construction & Engineering | 6.0% | |
| Building Products | 5.8% | |
| All Others* | 15.0% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
Percentages shown as 0.0% may reflect amounts less than 0.05%.
Construction and Housing Portfolio
Investments February 29, 2016
Showing Percentage of Net Assets
| Common Stocks - 98.1% | |||
| Shares | Value | ||
| Building Products - 12.4% | |||
| Building Products - 12.4% | |||
| A.O. Smith Corp. | 176,526 | $12,423,900 | |
| Apogee Enterprises, Inc. | 160,248 | 6,398,703 | |
| Builders FirstSource, Inc. (a) | 269,300 | 2,135,549 | |
| Continental Building Products, Inc. (a) | 381,551 | 6,440,581 | |
| Fortune Brands Home & Security, Inc. | 313,900 | 15,764,058 | |
| Gibraltar Industries, Inc. (a) | 214,250 | 5,295,189 | |
| Lennox International, Inc. | 56,300 | 7,274,523 | |
| 55,732,503 | |||
| Construction & Engineering - 2.7% | |||
| Construction & Engineering - 2.7% | |||
| Dycom Industries, Inc. (a) | 99,394 | 5,662,476 | |
| Quanta Services, Inc. (a) | 303,550 | 6,159,030 | |
| 11,821,506 | |||
| Construction Materials - 4.2% | |||
| Construction Materials - 4.2% | |||
| Eagle Materials, Inc. | 68,318 | 4,127,774 | |
| Martin Marietta Materials, Inc. | 103,360 | 14,741,203 | |
| 18,868,977 | |||
| Household Durables - 18.1% | |||
| Home Furnishings - 2.1% | |||
| Mohawk Industries, Inc. (a) | 54,300 | 9,759,339 | |
| Homebuilding - 14.8% | |||
| Cairn Homes PLC (a) | 3,002,829 | 3,797,455 | |
| D.R. Horton, Inc. | 501,800 | 13,408,096 | |
| KB Home (b) | 579,800 | 7,073,560 | |
| New Home Co. LLC (a)(b) | 554,285 | 5,570,564 | |
| PulteGroup, Inc. | 602,857 | 10,363,112 | |
| Taylor Morrison Home Corp. (a) | 424,665 | 5,907,090 | |
| Toll Brothers, Inc. (a) | 447,650 | 12,287,993 | |
| William Lyon Homes, Inc. (a)(b) | 672,211 | 7,972,422 | |
| 66,380,292 | |||
| Household Appliances - 1.2% | |||
| Whirlpool Corp. (b) | 34,200 | 5,311,944 | |
| TOTAL HOUSEHOLD DURABLES | 81,451,575 | ||
| Real Estate Investment Trusts - 23.0% | |||
| Diversified REITs - 1.8% | |||
| Forest City Realty Trust, Inc. | 423,800 | 7,903,870 | |
| Residential REITs - 21.2% | |||
| AvalonBay Communities, Inc. | 188,778 | 32,401,856 | |
| Essex Property Trust, Inc. | 46,636 | 9,759,982 | |
| Mid-America Apartment Communities, Inc. | 206,676 | 18,588,439 | |
| Sun Communities, Inc. | 181,791 | 12,276,346 | |
| UDR, Inc. | 649,200 | 22,287,036 | |
| 95,313,659 | |||
| TOTAL REAL ESTATE INVESTMENT TRUSTS | 103,217,529 | ||
| Real Estate Management & Development - 3.1% | |||
| Real Estate Services - 3.1% | |||
| Countrywide PLC | 250,819 | 1,242,805 | |
| Foxtons Group PLC | 1,406,149 | 3,087,402 | |
| RE/MAX Holdings, Inc. | 108,699 | 3,484,890 | |
| Realogy Holdings Corp. (a) | 194,000 | 6,202,180 | |
| 14,017,277 | |||
| Specialty Retail - 34.6% | |||
| Home Improvement Retail - 34.6% | |||
| Home Depot, Inc. | 871,260 | 108,140,789 | |
| Lowe's Companies, Inc. | 701,134 | 47,347,579 | |
| 155,488,368 | |||
| TOTAL COMMON STOCKS | |||
| (Cost $354,184,201) | 440,597,735 | ||
| Convertible Preferred Stocks - 0.7% | |||
| Household Durables - 0.7% | |||
| Homebuilding - 0.7% | |||
| Blu Homes, Inc. Series A, 5.00% (a)(c) | |||
| (Cost $4,000,001) | 865,801 | 3,229,438 | |
| Money Market Funds - 4.9% | |||
| Fidelity Cash Central Fund, 0.40% (d) | 7,594,789 | 7,594,789 | |
| Fidelity Securities Lending Cash Central Fund, 0.44% (d)(e) | 14,285,375 | 14,285,375 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $21,880,164) | 21,880,164 | ||
| TOTAL INVESTMENT PORTFOLIO - 103.7% | |||
| (Cost $380,064,366) | 465,707,337 | ||
| NET OTHER ASSETS (LIABILITIES) - (3.7)% | (16,404,141) | ||
| NET ASSETS - 100% | $449,303,196 |
Legend
(a) Non-income producing
(b) Security or a portion of the security is on loan at period end.
(c) Restricted securities - 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 $3,229,438 or 0.7% 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.
Additional information on each restricted holding is as follows:
| Security | Acquisition Date | Acquisition Cost |
| Blu Homes, Inc. Series A, 5.00% | 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 | $14,248 |
| Fidelity Securities Lending Cash Central Fund | 56,203 |
| Total | $70,451 |
Investment Valuation
The following is a summary of the inputs used, as of February 29, 2016, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used 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 | $440,597,735 | $440,597,735 | $-- | $-- |
| Convertible Preferred Stocks | 3,229,438 | -- | -- | 3,229,438 |
| Money Market Funds | 21,880,164 | 21,880,164 | -- | -- |
| Total Investments in Securities: | $465,707,337 | $462,477,899 | $-- | $3,229,438 |
The following is a reconciliation of Investments in Securities and Derivative Instruments for which Level 3 inputs were used in determining value:
| Investments in Securities: | |
| Beginning Balance | $6,961,040 |
| Total Realized Gain (Loss) | -- |
| Total Unrealized Gain (Loss) | (3,731,602) |
| Cost of Purchases | -- |
| Proceeds of Sales | -- |
| Amortization/Accretion | -- |
| Transfers in to Level 3 | -- |
| Transfers out of Level 3 | -- |
| Ending Balance | $3,229,438 |
| The change in unrealized gain (loss) for the period attributable to Level 3 securities held at February 29, 2016 | $(3,731,602) |
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. 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.
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, 2016 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $13,888,259) — See accompanying schedule: Unaffiliated issuers (cost $358,184,202) | $443,827,173 | |
| Fidelity Central Funds (cost $21,880,164) | 21,880,164 | |
| Total Investments (cost $380,064,366) | $465,707,337 | |
| Receivable for investments sold | 141,417 | |
| Receivable for fund shares sold | 539,268 | |
| Dividends receivable | 122,780 | |
| Distributions receivable from Fidelity Central Funds | 9,620 | |
| Prepaid expenses | 1,599 | |
| Other receivables | 4,873 | |
| Total assets | 466,526,894 | |
| Liabilities | ||
| Payable for investments purchased | $272,628 | |
| Payable for fund shares redeemed | 2,332,238 | |
| Accrued management fee | 203,115 | |
| Other affiliated payables | 92,007 | |
| Other payables and accrued expenses | 38,335 | |
| Collateral on securities loaned, at value | 14,285,375 | |
| Total liabilities | 17,223,698 | |
| Net Assets | $449,303,196 | |
| Net Assets consist of: | ||
| Paid in capital | $381,749,827 | |
| Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (18,089,594) | |
| Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 85,642,963 | |
| Net Assets, for 8,451,147 shares outstanding | $449,303,196 | |
| Net Asset Value, offering price and redemption price per share ($449,303,196 ÷ 8,451,147 shares) | $53.16 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 29, 2016 | ||
| Investment Income | ||
| Dividends | $6,529,334 | |
| Income from Fidelity Central Funds (including $56,203 from security lending) | 70,451 | |
| Total income | 6,599,785 | |
| Expenses | ||
| Management fee | $2,650,218 | |
| Transfer agent fees | 926,027 | |
| Accounting and security lending fees | 189,097 | |
| Custodian fees and expenses | 17,447 | |
| Independent trustees' compensation | 8,820 | |
| Registration fees | 54,799 | |
| Audit | 40,105 | |
| Legal | 4,774 | |
| Miscellaneous | 4,570 | |
| Total expenses before reductions | 3,895,857 | |
| Expense reductions | (44,190) | 3,851,667 |
| Net investment income (loss) | 2,748,118 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | (8,757,269) | |
| Foreign currency transactions | 6,644 | |
| Total net realized gain (loss) | (8,750,625) | |
| Change in net unrealized appreciation (depreciation) on: Investment securities | (43,593,248) | |
| Assets and liabilities in foreign currencies | (8) | |
| Total change in net unrealized appreciation (depreciation) | (43,593,256) | |
| Net gain (loss) | (52,343,881) | |
| Net increase (decrease) in net assets resulting from operations | $(49,595,763) |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 29, 2016 | Year ended February 28, 2015 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $2,748,118 | $1,779,852 |
| Net realized gain (loss) | (8,750,625) | 36,555,977 |
| Change in net unrealized appreciation (depreciation) | (43,593,256) | 14,605,675 |
| Net increase (decrease) in net assets resulting from operations | (49,595,763) | 52,941,504 |
| Distributions to shareholders from net investment income | (2,235,224) | (1,765,360) |
| Distributions to shareholders from net realized gain | (14,717,246) | (39,110,787) |
| Total distributions | (16,952,470) | (40,876,147) |
| Share transactions | ||
| Proceeds from sales of shares | 351,705,660 | 126,467,385 |
| Reinvestment of distributions | 16,385,270 | 39,619,226 |
| Cost of shares redeemed | (271,749,922) | (135,431,284) |
| Net increase (decrease) in net assets resulting from share transactions | 96,341,008 | 30,655,327 |
| Redemption fees | 31,411 | 8,087 |
| Total increase (decrease) in net assets | 29,824,186 | 42,728,771 |
| Net Assets | ||
| Beginning of period | 419,479,010 | 376,750,239 |
| End of period (including undistributed net investment income of $0 and $187,823, respectively) | $449,303,196 | $419,479,010 |
| Other Information | ||
| Shares | ||
| Sold | 5,957,476 | 2,209,593 |
| Issued in reinvestment of distributions | 281,591 | 737,432 |
| Redeemed | (4,809,523) | (2,480,004) |
| Net increase (decrease) | 1,429,544 | 467,021 |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Construction and Housing Portfolio
| Years ended February 28, | 2016 A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $59.74 | $57.48 | $52.01 | $40.01 | $37.43 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .33 | .29 | .26 | .19 | .21 |
| Net realized and unrealized gain (loss) | (5.02) | 8.53 | 9.65 | 12.47 | 2.62 |
| Total from investment operations | (4.69) | 8.82 | 9.91 | 12.66 | 2.83 |
| Distributions from net investment income | (.23) | (.29) | (.30) | (.14) | (.25) |
| Distributions from net realized gain | (1.66) | (6.28) | (4.14) | (.53) | – |
| Total distributions | (1.89) | (6.56)C | (4.44) | (.67) | (.25) |
| Redemption fees added to paid in capitalB | –D | –D | –D | .01 | –D |
| Net asset value, end of period | $53.16 | $59.74 | $57.48 | $52.01 | $40.01 |
| Total ReturnE | (8.11)% | 16.99% | 19.84% | 31.79% | 7.65% |
| Ratios to Average Net AssetsF,G | |||||
| Expenses before reductions | .81% | .82% | .81% | .86% | .96% |
| Expenses net of fee waivers, if any | .80% | .82% | .81% | .86% | .96% |
| Expenses net of all reductions | .80% | .82% | .81% | .86% | .96% |
| Net investment income (loss) | .57% | .52% | .47% | .42% | .59% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $449,303 | $419,479 | $376,750 | $781,007 | $171,514 |
| Portfolio turnover rateH | 80% | 71% | 53% | 47% | 81% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Total distributions of $6.56 per share is comprised of distributions from net investment income of $.287 and distributions from net realized gain of $6.276 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.
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, 2016 | Past 1 year | Past 5 years | Past 10 years |
| Consumer Discretionary Portfolio | (4.60)% | 12.66% | 8.28% |
Prior to October 1, 2006, the fund was named Consumer Industries 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 Discretionary Portfolio on February 28, 2006.
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 | ||
| $22,153 | Consumer Discretionary Portfolio | |
| $18,666 | S&P 500® Index | |
Consumer Discretionary Portfolio
Management's Discussion of Fund Performance
Market Recap: The S&P 500® index returned -6.19% for the year ending February 29, 2016. Largely range-bound for the first half of the period, U.S. stocks suffered a steep, late-summer decline on concern about an economic slowdown in China. The market recovered in October, lifted by the U.S. Federal Reserve's decision to delay raising near-term interest rates until mid-December. Investors also drew courage from a rate cut in China and economic stimulus in Europe. But continued oil-price weakness and U.S.-dollar strength, plus fresh worries about China and the Middle East, pushed the S&P 500® to its worst January since 2009, followed by a volatile but ultimately flattish February. Overall, growth-oriented and larger-cap stocks fared better than value and smaller-cap complements. In this environment, the tech-heavy Nasdaq Composite Index® returned -7.07% for the 12 months; the Russell 2000® Index, -14.97%. Few sectors within the broad-market S&P 500® gained ground, with a wide gap separating leaders from laggards. Despite increased competition among wireless carriers, telecommunication services (+8%) led the way, followed by the more defensive utilities sector (+6%). Rising wages and low inflation buoyed consumer staples (+4%), less so consumer discretionary (0%). Meanwhile, energy (-24%) foundered amid commodity weakness that also hurt materials (-17%). The financials sector (-12%) struggled as well.Comments from Portfolio Manager Peter Dixon: For the year, the fund returned -4.60, lagging the -3.47% return of the benchmark MSCI U.S. IMI Consumer Discretionary 25/50 Index. The sector declined largely because seasonal sales were hurt later in the period by a relatively mild winter. However, consumer discretionary stocks beat the broad S&P 500® index, as U.S. consumers benefited from a number of factors, including low gasoline prices and persistently low, albeit rising, interest rates. Versus the sector benchmark, picks in the hotels, resorts & cruise lines segment and positioning in Internet retail dragged on results. Global hotel and resort giant Hilton Worldwide Holdings was one of the fund's largest holdings and also its biggest individual detractor. Despite the firm's strong if slightly weakening fundamentals, shares of Hilton returned -26% as investors became wary the hotel industry was entering late-cycle expansion - the last stop before a slowdown - and that revenue per available room was decelerating. Investors' increasing concern surrounding a more global economic slowdown also weighed on the stock. The fund’s foreign holdings also hurt performance against a stronger U.S. dollar. Conversely, picks within movies & entertainment proved a plus. Athletic apparel and footwear maker Nike was the fund's biggest individual contributor 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.
Consumer Discretionary Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 29, 2016
| % of fund's net assets | % of fund's net assets 6 months ago | |
| Amazon.com, Inc. | 11.0 | 7.9 |
| Home Depot, Inc. | 9.1 | 5.1 |
| The Walt Disney Co. | 7.6 | 7.4 |
| NIKE, Inc. Class B | 5.7 | 5.0 |
| Charter Communications, Inc. Class A | 5.5 | 1.8 |
| L Brands, Inc. | 4.9 | 4.7 |
| Starbucks Corp. | 4.7 | 4.7 |
| Hilton Worldwide Holdings, Inc. | 4.1 | 4.5 |
| Ross Stores, Inc. | 4.1 | 2.6 |
| Las Vegas Sands Corp. | 3.1 | 2.8 |
| 59.8 |
Top Industries (% of fund's net assets)
| As of February 29, 2016 | ||
| Specialty Retail | 23.8% | |
| Media | 22.1% | |
| Hotels, Restaurants & Leisure | 17.4% | |
| Internet & Catalog Retail | 13.3% | |
| Textiles, Apparel & Luxury Goods | 9.2% | |
| All Others* | 14.2% | |
| As of August 31, 2015 | ||
| Hotels, Restaurants & Leisure | 21.8% | |
| Media | 21.2% | |
| Specialty Retail | 19.6% | |
| Internet & Catalog Retail | 9.1% | |
| Textiles, Apparel & Luxury Goods | 6.4% | |
| All Others* | 21.9% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
Consumer Discretionary Portfolio
Investments February 29, 2016
Showing Percentage of Net Assets
| Common Stocks - 96.2% | |||
| Shares | Value | ||
| Auto Components - 4.5% | |||
| Auto Parts & Equipment - 4.5% | |||
| Delphi Automotive PLC | 334,706 | $22,318,196 | |
| Tenneco, Inc. (a) | 371,314 | 16,902,213 | |
| Visteon Corp. | 151,900 | 10,620,848 | |
| 49,841,257 | |||
| Beverages - 1.9% | |||
| Distillers & Vintners - 1.0% | |||
| Constellation Brands, Inc. Class A (sub. vtg.) | 77,200 | 10,918,396 | |
| Soft Drinks - 0.9% | |||
| Monster Beverage Corp. | 85,600 | 10,742,800 | |
| TOTAL BEVERAGES | 21,661,196 | ||
| Hotels, Restaurants & Leisure - 17.4% | |||
| Casinos & Gaming - 3.1% | |||
| Las Vegas Sands Corp. | 726,270 | 35,064,316 | |
| Hotels, Resorts & Cruise Lines - 5.3% | |||
| Accor SA | 317,530 | 13,523,389 | |
| Hilton Worldwide Holdings, Inc. | 2,218,078 | 46,091,661 | |
| 59,615,050 | |||
| Leisure Facilities - 1.8% | |||
| Vail Resorts, Inc. | 152,789 | 19,466,846 | |
| Restaurants - 7.2% | |||
| McDonald's Corp. | 149,300 | 17,496,467 | |
| Ruth's Hospitality Group, Inc. | 588,236 | 10,335,307 | |
| Starbucks Corp. | 906,700 | 52,779,007 | |
| 80,610,781 | |||
| TOTAL HOTELS, RESTAURANTS & LEISURE | 194,756,993 | ||
| Household Durables - 1.1% | |||
| Home Furnishings - 0.5% | |||
| Tempur Sealy International, Inc. (a) | 86,600 | 4,994,222 | |
| Household Appliances - 0.6% | |||
| Techtronic Industries Co. Ltd. | 1,875,500 | 7,161,480 | |
| TOTAL HOUSEHOLD DURABLES | 12,155,702 | ||
| Household Products - 1.2% | |||
| Household Products - 1.2% | |||
| Spectrum Brands Holdings, Inc. | 135,100 | 12,938,527 | |
| Internet & Catalog Retail - 13.3% | |||
| Internet Retail - 13.3% | |||
| Amazon.com, Inc. (a) | 222,180 | 122,758,891 | |
| Netflix, Inc. (a) | 98,400 | 9,191,544 | |
| Ocado Group PLC (a)(b) | 4,715,761 | 17,065,443 | |
| 149,015,878 | |||
| Internet Software & Services - 0.5% | |||
| Internet Software & Services - 0.5% | |||
| Alibaba Group Holding Ltd. sponsored ADR (a) | 82,800 | 5,697,468 | |
| Media - 22.1% | |||
| Advertising - 1.7% | |||
| Interpublic Group of Companies, Inc. | 880,700 | 18,838,173 | |
| Broadcasting - 2.2% | |||
| ITV PLC | 7,204,400 | 24,928,226 | |
| Cable & Satellite - 9.1% | |||
| Charter Communications, Inc. Class A (a)(b) | 344,700 | 61,894,332 | |
| Comcast Corp. Class A | 488,600 | 28,206,878 | |
| Naspers Ltd. Class N | 98,300 | 11,676,068 | |
| 101,777,278 | |||
| Movies & Entertainment - 9.1% | |||
| The Walt Disney Co. | 889,047 | 84,921,769 | |
| Time Warner, Inc. | 249,200 | 16,497,040 | |
| 101,418,809 | |||
| TOTAL MEDIA | 246,962,486 | ||
| Multiline Retail - 0.8% | |||
| General Merchandise Stores - 0.8% | |||
| B&M European Value Retail S.A. | 2,313,745 | 9,174,880 | |
| Software - 0.4% | |||
| Application Software - 0.4% | |||
| Mobileye NV (a)(b) | 149,600 | 4,856,016 | |
| Specialty Retail - 23.8% | |||
| Apparel Retail - 10.9% | |||
| Inditex SA | 204,620 | 6,313,538 | |
| L Brands, Inc. | 649,125 | 55,039,309 | |
| Ross Stores, Inc. | 829,559 | 45,609,154 | |
| TJX Companies, Inc. | 199,795 | 14,804,810 | |
| 121,766,811 | |||
| Automotive Retail - 3.8% | |||
| AutoZone, Inc. (a) | 28,420 | 22,013,279 | |
| O'Reilly Automotive, Inc. (a) | 80,286 | 20,900,052 | |
| 42,913,331 | |||
| Home Improvement Retail - 9.1% | |||
| Home Depot, Inc. | 814,600 | 101,108,152 | |
| TOTAL SPECIALTY RETAIL | 265,788,294 | ||
| Textiles, Apparel & Luxury Goods - 9.2% | |||
| Apparel, Accessories & Luxury Goods - 3.5% | |||
| G-III Apparel Group Ltd. (a) | 383,226 | 20,215,172 | |
| Regina Miracle International Holdings Ltd. (a) | 608,606 | 881,057 | |
| VF Corp. | 275,900 | 17,963,849 | |
| 39,060,078 | |||
| Footwear - 5.7% | |||
| NIKE, Inc. Class B | 1,038,750 | 63,976,613 | |
| TOTAL TEXTILES, APPAREL & LUXURY GOODS | 103,036,691 | ||
| TOTAL COMMON STOCKS | |||
| (Cost $956,523,125) | 1,075,885,388 | ||
| Money Market Funds - 11.5% | |||
| Fidelity Cash Central Fund, 0.40% (c) | 45,990,870 | 45,990,870 | |
| Fidelity Securities Lending Cash Central Fund, 0.44% (c)(d) | 82,757,647 | 82,757,647 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $128,748,517) | 128,748,517 | ||
| TOTAL INVESTMENT PORTFOLIO - 107.7% | |||
| (Cost $1,085,271,642) | 1,204,633,905 | ||
| NET OTHER ASSETS (LIABILITIES) - (7.7)% | (85,612,724) | ||
| NET ASSETS - 100% | $1,119,021,181 |
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 | $42,771 |
| Fidelity Securities Lending Cash Central Fund | 508,865 |
| Total | $551,636 |
Investment Valuation
The following is a summary of the inputs used, as of February 29, 2016, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used 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 | $1,075,885,388 | $1,069,571,850 | $6,313,538 | $-- |
| Money Market Funds | 128,748,517 | 128,748,517 | -- | -- |
| Total Investments in Securities: | $1,204,633,905 | $1,198,320,367 | $6,313,538 | $-- |
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 | 89.0% |
| United Kingdom | 4.5% |
| Bailiwick of Jersey | 2.0% |
| France | 1.2% |
| South Africa | 1.1% |
| Others (Individually Less Than 1%) | 2.2% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Consumer Discretionary Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2016 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $78,987,048) — See accompanying schedule: Unaffiliated issuers (cost $956,523,125) | $1,075,885,388 | |
| Fidelity Central Funds (cost $128,748,517) | 128,748,517 | |
| Total Investments (cost $1,085,271,642) | $1,204,633,905 | |
| Receivable for investments sold | 4,606,126 | |
| Receivable for fund shares sold | 1,395,713 | |
| Dividends receivable | 2,272,235 | |
| Distributions receivable from Fidelity Central Funds | 102,885 | |
| Prepaid expenses | 4,166 | |
| Other receivables | 4,058 | |
| Total assets | 1,213,019,088 | |
| Liabilities | ||
| Payable for investments purchased | $9,237,301 | |
| Payable for fund shares redeemed | 1,257,675 | |
| Accrued management fee | 499,862 | |
| Other affiliated payables | 191,174 | |
| Other payables and accrued expenses | 54,248 | |
| Collateral on securities loaned, at value | 82,757,647 | |
| Total liabilities | 93,997,907 | |
| Net Assets | $1,119,021,181 | |
| Net Assets consist of: | ||
| Paid in capital | $1,044,580,364 | |
| Undistributed net investment income | 1,145,499 | |
| Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (46,061,004) | |
| Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 119,356,322 | |
| Net Assets, for 34,563,682 shares outstanding | $1,119,021,181 | |
| Net Asset Value, offering price and redemption price per share ($1,119,021,181 ÷ 34,563,682 shares) | $32.38 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 29, 2016 | ||
| Investment Income | ||
| Dividends | $16,917,713 | |
| Income from Fidelity Central Funds (including $508,865 from security lending) | 551,636 | |
| Total income | 17,469,349 | |
| Expenses | ||
| Management fee | $6,519,961 | |
| Transfer agent fees | 1,977,429 | |
| Accounting and security lending fees | 394,218 | |
| Custodian fees and expenses | 40,686 | |
| Independent trustees' compensation | 21,671 | |
| Registration fees | 98,796 | |
| Audit | 47,893 | |
| Legal | 11,968 | |
| Miscellaneous | 11,941 | |
| Total expenses before reductions | 9,124,563 | |
| Expense reductions | (86,248) | 9,038,315 |
| Net investment income (loss)�� | 8,431,034 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers (net of foreign taxes of $74,206) | (30,191,052) | |
| Foreign currency transactions | (65,709) | |
| Total net realized gain (loss) | (30,256,761) | |
| Change in net unrealized appreciation (depreciation) on: Investment securities (net of decrease in deferred foreign taxes of $355,571) | (42,276,076) | |
| Assets and liabilities in foreign currencies | (2,878) | |
| Total change in net unrealized appreciation (depreciation) | (42,278,954) | |
| Net gain (loss) | (72,535,715) | |
| Net increase (decrease) in net assets resulting from operations | $(64,104,681) |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 29, 2016 | Year ended February 28, 2015 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $8,431,034 | $3,926,598 |
| Net realized gain (loss) | (30,256,761) | 77,731,562 |
| Change in net unrealized appreciation (depreciation) | (42,278,954) | 50,665,375 |
| Net increase (decrease) in net assets resulting from operations | (64,104,681) | 132,323,535 |
| Distributions to shareholders from net investment income | (6,151,529) | (2,942,822) |
| Distributions to shareholders from net realized gain | (36,964,370) | (64,572,472) |
| Total distributions | (43,115,899) | (67,515,294) |
| Share transactions | ||
| Proceeds from sales of shares | 430,866,530 | 953,129,672 |
| Reinvestment of distributions | 42,462,193 | 66,769,010 |
| Cost of shares redeemed | (326,103,388) | (563,595,486) |
| Net increase (decrease) in net assets resulting from share transactions | 147,225,335 | 456,303,196 |
| Redemption fees | 28,212 | 8,470 |
| Total increase (decrease) in net assets | 40,032,967 | 521,119,907 |
| Net Assets | ||
| Beginning of period | 1,078,988,214 | 557,868,307 |
| End of period (including undistributed net investment income of $1,145,499 and undistributed net investment income of $893,669, respectively) | $1,119,021,181 | $1,078,988,214 |
| Other Information | ||
| Shares | ||
| Sold | 12,418,787 | 29,777,744 |
| Issued in reinvestment of distributions | 1,227,860 | 2,124,019 |
| Redeemed | (9,712,724) | (18,022,350) |
| Net increase (decrease) | 3,933,923 | 13,879,413 |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Consumer Discretionary Portfolio
| Years ended February 28, | 2016 A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $35.23 | $33.30 | $27.40 | $25.97 | $24.98 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .24 | .15 | .04 | .11 | .17 |
| Net realized and unrealized gain (loss) | (1.79) | 4.39 | 8.67 | 3.70 | 1.91 |
| Total from investment operations | (1.55) | 4.54 | 8.71 | 3.81 | 2.08 |
| Distributions from net investment income | (.18) | (.11) | (.03) | (.11) | (.12) |
| Distributions from net realized gain | (1.13) | (2.51) | (2.77) | (2.27) | (.97) |
| Total distributions | (1.30)C | (2.61)D | (2.81)E | (2.38) | (1.09) |
| Redemption fees added to paid in capitalB,F | – | – | – | – | – |
| Net asset value, end of period | $32.38 | $35.23 | $33.30 | $27.40 | $25.97 |
| Total ReturnG | (4.60)% | 14.79% | 32.17% | 15.38% | 8.67% |
| Ratios to Average Net AssetsH,I | |||||
| Expenses before reductions | .77% | .79% | .82% | .86% | .89% |
| Expenses net of fee waivers, if any | .77% | .79% | .82% | .86% | .89% |
| Expenses net of all reductions | .76% | .79% | .81% | .84% | .88% |
| Net investment income (loss) | .71% | .46% | .14% | .43% | .72% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $1,119,021 | $1,078,988 | $557,868 | $397,925 | $278,524 |
| Portfolio turnover rateJ | 69% | 109%K | 138% | 170% | 174% |
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 Total distributions of $2.61 per share is comprised of distributions from net investment income of $.105 and distributions from net realized gain of $2.508 per share.
E Total distributions of $2.81 per share is comprised of distributions from net investment income of $.034 and distributions from net realized gain of $2.772 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.
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, 2016 | Past 1 year | Past 5 years | Past 10 years |
| Leisure Portfolio | (3.48)% | 13.03% | 10.21% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Leisure Portfolio on February 28, 2006.
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 | ||
| $26,429 | Leisure Portfolio | |
| $18,666 | S&P 500® Index | |
Leisure Portfolio
Management's Discussion of Fund Performance
Market Recap: The S&P 500® index returned -6.19% for the year ending February 29, 2016. Largely range-bound for the first half of the period, U.S. stocks suffered a steep, late-summer decline on concern about an economic slowdown in China. The market recovered in October, lifted by the U.S. Federal Reserve’s decision to delay raising near-term interest rates until mid-December. Investors also drew courage from a rate cut in China and economic stimulus in Europe. But continued oil-price weakness and U.S.-dollar strength, plus fresh worries about China and the Middle East, pushed the S&P 500® to its worst January since 2009, followed by a volatile but ultimately flattish February. Overall, growth-oriented and larger-cap stocks fared better than value and smaller-cap complements. In this environment, the tech-heavy Nasdaq Composite Index® returned -7.07% for the 12 months; the Russell 2000® Index, -14.97%. Few sectors within the broad-market S&P 500® gained ground, with a wide gap separating leaders from laggards. Despite increased competition among wireless carriers, telecommunication services (+8%) led the way, followed by the more defensive utilities sector (+6%). Rising wages and low inflation buoyed consumer staples (+4%), less so consumer discretionary (0%). Meanwhile, energy (-24%) foundered amid commodity weakness that also hurt materials (-17%). The financials sector (-12%) struggled as well.Comments from Portfolio Manager Katherine Shaw: For the year, the fund returned -3.48%, lagging the 0.80% gain of the MSCI U.S. IMI Consumer Services 25/50 Index, but outpacing the broad-based S&P 500® Index. After a strong advance from March through July, leisure stocks sharply reversed course in August, as the market environment became more challenging and investors began to fear the possibility of a U.S. recession. Versus the industry index, stock selection among restaurants hurt most. Specifically, a sizable underweighting in fast-food chain McDonald’s, an index heavyweight and outperformer this period, was the fund’s largest individual detractor by far. I had been skeptical about the company’s turnaround and high valuation. However, as I became more confident in the speed of recovery for McDonald’s, I used market pullbacks – like the one in late August – to buy the stock at prices I viewed as favorable, nearly doubling the fund’s stake but remaining considerably underweighted. Also detracting were poor-performing positions in fast-casual restaurant provider Fiesta Restaurant Group and fast-food chain Jack-in-the Box, both of which I still held at period end. Conversely, stock selection in the specialized consumer services group provided the biggest boost versus the MSCI index, especially Steiner Leisure. The stock surged after the company agreed to be acquired by a private equity firm in mid-August. The deal was completed in December.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, 2016
| % of fund's net assets | % of fund's net assets 6 months ago | |
| Starbucks Corp. | 20.6 | 18.4 |
| McDonald's Corp. | 9.3 | 6.8 |
| Yum! Brands, Inc. | 6.9 | 9.5 |
| Las Vegas Sands Corp. | 6.1 | 5.7 |
| Marriott International, Inc. Class A | 4.9 | 4.0 |
| Wyndham Worldwide Corp. | 4.8 | 5.0 |
| Chipotle Mexican Grill, Inc. | 4.5 | 5.9 |
| Hilton Worldwide Holdings, Inc. | 4.0 | 3.8 |
| Jack in the Box, Inc. | 2.8 | 2.8 |
| Vail Resorts, Inc. | 2.7 | 1.7 |
| 66.6 |
Top Industries (% of fund's net assets)
| As of February 29, 2016 | ||
| Hotels, Restaurants & Leisure | 88.1% | |
| Diversified Consumer Services | 5.8% | |
| Commercial Services & Supplies | 0.8% | |
| Internet Software & Services | 0.7% | |
| Food Products | 0.6% | |
| All Others* | 4.0% | |
| As of August 31, 2015 | ||
| Hotels, Restaurants & Leisure | 89.1% | |
| Diversified Consumer Services | 3.4% | |
| Internet Software & Services | 1.4% | |
| Commercial Services & Supplies | 0.8% | |
| Media | 0.7% | |
| All Others* | 4.6% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
Leisure Portfolio
Investments February 29, 2016
Showing Percentage of Net Assets
| Common Stocks - 97.3% | |||
| Shares | Value | ||
| Automobiles - 0.3% | |||
| Automobile Manufacturers - 0.3% | |||
| General Motors Co. | 34,000 | $1,000,960 | |
| Commercial Services & Supplies - 0.8% | |||
| Diversified Support Services - 0.8% | |||
| KAR Auction Services, Inc. | 92,800 | 3,286,048 | |
| Diversified Consumer Services - 5.8% | |||
| Education Services - 2.2% | |||
| 2U, Inc. (a) | 93,075 | 2,080,226 | |
| Houghton Mifflin Harcourt Co. (a) | 367,932 | 6,920,801 | |
| 9,001,027 | |||
| Specialized Consumer Services - 3.6% | |||
| H&R Block, Inc. | 233,800 | 7,687,344 | |
| ServiceMaster Global Holdings, Inc. (a) | 194,934 | 7,393,847 | |
| 15,081,191 | |||
| TOTAL DIVERSIFIED CONSUMER SERVICES | 24,082,218 | ||
| Food Products - 0.6% | |||
| Packaged Foods & Meats - 0.6% | |||
| Amplify Snack Brands, Inc. | 59,700 | 614,313 | |
| Greencore Group PLC | 372,300 | 1,971,179 | |
| 2,585,492 | |||
| Hotels, Restaurants & Leisure - 88.1% | |||
| Casinos & Gaming - 8.3% | |||
| Las Vegas Sands Corp. | 528,876 | 25,534,133 | |
| MGM China Holdings Ltd. | 548,800 | 627,962 | |
| MGM Mirage, Inc. (a) | 450,800 | 8,533,644 | |
| 34,695,739 | |||
| Hotels, Resorts & Cruise Lines - 16.0% | |||
| Accor SA | 12,800 | 545,143 | |
| Extended Stay America, Inc. unit | 342,751 | 5,065,860 | |
| Hilton Worldwide Holdings, Inc. | 808,400 | 16,798,552 | |
| Marriott International, Inc. Class A (b) | 297,396 | 20,267,537 | |
| Royal Caribbean Cruises Ltd. | 56,900 | 4,231,653 | |
| Wyndham Worldwide Corp. | 270,802 | 19,725,218 | |
| 66,633,963 | |||
| Leisure Facilities - 3.5% | |||
| Cedar Fair LP (depositary unit) | 55,543 | 3,273,704 | |
| Vail Resorts, Inc. | 87,892 | 11,198,320 | |
| 14,472,024 | |||
| Restaurants - 60.3% | |||
| Buffalo Wild Wings, Inc. (a) | 40,500 | 6,425,325 | |
| Chipotle Mexican Grill, Inc. (a) | 37,110 | 18,894,928 | |
| Dave & Buster's Entertainment, Inc. (a) | 73,914 | 2,728,166 | |
| Del Frisco's Restaurant Group, Inc. (a) | 113,500 | 1,752,440 | |
| DineEquity, Inc. | 35,949 | 3,288,255 | |
| Domino's Pizza, Inc. | 70,800 | 9,419,232 | |
| Dunkin' Brands Group, Inc. (b) | 124,400 | 5,794,552 | |
| El Pollo Loco Holdings, Inc. (a)(b) | 85,526 | 1,104,141 | |
| Fiesta Restaurant Group, Inc. (a)(b) | 197,908 | 6,554,713 | |
| Jack in the Box, Inc. | 166,587 | 11,452,856 | |
| McDonald's Corp. | 329,210 | 38,580,120 | |
| Panera Bread Co. Class A (a) | 35,086 | 7,269,819 | |
| Papa John's International, Inc. (b) | 88,943 | 5,172,035 | |
| Restaurant Brands International, Inc. | 14,300 | 501,821 | |
| Ruth's Hospitality Group, Inc. | 356,274 | 6,259,734 | |
| Sonic Corp. (b) | 317,960 | 9,338,485 | |
| Starbucks Corp. | 1,475,600 | 85,894,677 | |
| Whitbread PLC | 22,726 | 1,240,259 | |
| Wingstop, Inc. (b) | 33,050 | 787,251 | |
| Yum! Brands, Inc. | 399,136 | 28,925,386 | |
| 251,384,195 | |||
| TOTAL HOTELS, RESTAURANTS & LEISURE | 367,185,921 | ||
| Household Durables - 0.1% | |||
| Household Appliances - 0.1% | |||
| Helen of Troy Ltd. (a) | 4,700 | 448,192 | |
| Internet Software & Services - 0.7% | |||
| Internet Software & Services - 0.7% | |||
| Facebook, Inc. Class A (a) | 19,700 | 2,106,324 | |
| JUST EAT Ltd. (a) | 181,400 | 973,821 | |
| 3,080,145 | |||
| IT Services - 0.2% | |||
| Data Processing & Outsourced Services - 0.2% | |||
| Visa, Inc. Class A | 13,200 | 955,548 | |
| Media - 0.3% | |||
| Movies & Entertainment - 0.3% | |||
| The Walt Disney Co. | 12,200 | 1,165,344 | |
| Personal Products - 0.2% | |||
| Personal Products - 0.2% | |||
| Nu Skin Enterprises, Inc. Class A (b) | 26,396 | 804,814 | |
| Specialty Retail - 0.2% | |||
| Specialty Stores - 0.2% | |||
| Sally Beauty Holdings, Inc. (a) | 25,600 | 808,448 | |
| TOTAL COMMON STOCKS | |||
| (Cost $267,237,660) | 405,403,130 | ||
| Money Market Funds - 8.9% | |||
| Fidelity Cash Central Fund, 0.40% (c) | 8,080,091 | 8,080,091 | |
| Fidelity Securities Lending Cash Central Fund, 0.44% (c)(d) | 29,049,861 | 29,049,861 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $37,129,952) | 37,129,952 | ||
| TOTAL INVESTMENT PORTFOLIO - 106.2% | |||
| (Cost $304,367,612) | 442,533,082 | ||
| NET OTHER ASSETS (LIABILITIES) - (6.2)% | (25,761,826) | ||
| NET ASSETS - 100% | $416,771,256 |
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 | $5,172 |
| Fidelity Securities Lending Cash Central Fund | 132,509 |
| Total | $137,681 |
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.
Leisure Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2016 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $28,838,934) — See accompanying schedule: Unaffiliated issuers (cost $267,237,660) | $405,403,130 | |
| Fidelity Central Funds (cost $37,129,952) | 37,129,952 | |
| Total Investments (cost $304,367,612) | $442,533,082 | |
| Receivable for investments sold | 2,595,498 | |
| Receivable for fund shares sold | 1,157,798 | |
| Dividends receivable | 497,799 | |
| Distributions receivable from Fidelity Central Funds | 11,371 | |
| Prepaid expenses | 1,687 | |
| Other receivables | 1,763 | |
| Total assets | 446,798,998 | |
| Liabilities | ||
| Payable for investments purchased | $344,706 | |
| Payable for fund shares redeemed | 340,675 | |
| Accrued management fee | 183,096 | |
| Other affiliated payables | 75,265 | |
| Other payables and accrued expenses | 34,139 | |
| Collateral on securities loaned, at value | 29,049,861 | |
| Total liabilities | 30,027,742 | |
| Net Assets | $416,771,256 | |
| Net Assets consist of: | ||
| Paid in capital | $288,742,129 | |
| Distributions in excess of net investment income | (253,677) | |
| Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (9,881,140) | |
| Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 138,163,944 | |
| Net Assets, for 3,248,133 shares outstanding | $416,771,256 | |
| Net Asset Value, offering price and redemption price per share ($416,771,256 ÷ 3,248,133 shares) | $128.31 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 29, 2016 | ||
| Investment Income | ||
| Dividends | $8,445,409 | |
| Income from Fidelity Central Funds (including $132,509 from security lending) | 137,681 | |
| Total income | 8,583,090 | |
| Expenses | ||
| Management fee | $2,531,803 | |
| Transfer agent fees | 820,391 | |
| Accounting and security lending fees | 183,839 | |
| Custodian fees and expenses | 9,324 | |
| Independent trustees' compensation | 8,493 | |
| Registration fees | 37,550 | |
| Audit | 44,330 | |
| Legal | 4,929 | |
| Interest | 785 | |
| Miscellaneous | 5,295 | |
| Total expenses before reductions | 3,646,739 | |
| Expense reductions | (33,040) | 3,613,699 |
| Net investment income (loss) | 4,969,391 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 6,756,822 | |
| Foreign currency transactions | (574) | |
| Total net realized gain (loss) | 6,756,248 | |
| Change in net unrealized appreciation (depreciation) on: Investment securities | (31,611,448) | |
| Assets and liabilities in foreign currencies | (1,272) | |
| Total change in net unrealized appreciation (depreciation) | (31,612,720) | |
| Net gain (loss) | (24,856,472) | |
| Net increase (decrease) in net assets resulting from operations | $(19,887,081) |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 29, 2016 | Year ended February 28, 2015 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $4,969,391 | $4,640,549 |
| Net realized gain (loss) | 6,756,248 | 90,218,609 |
| Change in net unrealized appreciation (depreciation) | (31,612,720) | (44,238,899) |
| Net increase (decrease) in net assets resulting from operations | (19,887,081) | 50,620,259 |
| Distributions to shareholders from net investment income | (4,443,299) | (4,879,767) |
| Distributions to shareholders from net realized gain | (19,302,225) | (33,240,879) |
| Total distributions | (23,745,524) | (38,120,646) |
| Share transactions | ||
| Proceeds from sales of shares | 153,197,305 | 67,372,454 |
| Reinvestment of distributions | 22,420,095 | 36,550,960 |
| Cost of shares redeemed | (160,521,528) | (239,280,764) |
| Net increase (decrease) in net assets resulting from share transactions | 15,095,872 | (135,357,350) |
| Redemption fees | 12,188 | 4,103 |
| Total increase (decrease) in net assets | (28,524,545) | (122,853,634) |
| Net Assets | ||
| Beginning of period | 445,295,801 | 568,149,435 |
| End of period (including distributions in excess of net investment income of $253,677 and undistributed net investment income of $305,530, respectively) | $416,771,256 | $445,295,801 |
| Other Information | ||
| Shares | ||
| Sold | 1,101,279 | 512,008 |
| Issued in reinvestment of distributions | 170,326 | 287,167 |
| Redeemed | (1,201,292) | (1,828,098) |
| Net increase (decrease) | 70,313 | (1,028,923) |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Leisure Portfolio
| Years ended February 28, | 2016 A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $140.13 | $135.06 | $108.30 | $106.53 | $91.26 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | 1.47 | 1.31 | 1.40C | 1.40D | .64 |
| Net realized and unrealized gain (loss) | (6.24) | 14.80 | 35.09 | 6.22 | 14.73 |
| Total from investment operations | (4.77) | 16.11 | 36.49 | 7.62 | 15.37 |
| Distributions from net investment income | (1.30) | (1.47) | (1.01) | (1.36) | (.09) |
| Distributions from net realized gain | (5.75) | (9.57) | (8.72) | (4.50) | (.01) |
| Total distributions | (7.05) | (11.04) | (9.73) | (5.86) | (.10) |
| Redemption fees added to paid in capitalB | –E | –E | –E | .01 | –E |
| Net asset value, end of period | $128.31 | $140.13 | $135.06 | $108.30 | $106.53 |
| Total ReturnF | (3.48)% | 12.91% | 34.71% | 7.52% | 16.85% |
| Ratios to Average Net AssetsG,H | |||||
| Expenses before reductions | .79% | .80% | .82% | .85% | .86% |
| Expenses net of fee waivers, if any | .79% | .80% | .82% | .85% | .86% |
| Expenses net of all reductions | .78% | .80% | .81% | .83% | .86% |
| Net investment income (loss) | 1.08% | 1.00% | 1.13%C | 1.33%D | .68% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $416,771 | $445,296 | $568,149 | $347,701 | $440,507 |
| Portfolio turnover rateI | 48% | 32%J | 65% | 90% | 77% |
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 $.43 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .79%.
D Net Investment income per share reflects a large, non-recurring dividend which amounted to $.53 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .82%.
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.
Multimedia 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, 2016 | Past 1 year | Past 5 years | Past 10 years |
| Multimedia Portfolio | (10.88)% | 12.06% | 9.27% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Multimedia Portfolio on February 28, 2006.
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 | ||
| $24,278 | Multimedia Portfolio | |
| $18,666 | S&P 500® Index | |
Multimedia Portfolio
Management's Discussion of Fund Performance
Market Recap: The S&P 500® index returned -6.19% for the year ending February 29, 2016. Largely range-bound for the first half of the period, U.S. stocks suffered a steep, late-summer decline on concern about an economic slowdown in China. The market recovered in October, lifted by the U.S. Federal Reserve’s decision to delay raising near-term interest rates until mid-December. Investors also drew courage from a rate cut in China and economic stimulus in Europe. But continued oil-price weakness and U.S.-dollar strength, plus fresh worries about China and the Middle East, pushed the S&P 500® to its worst January since 2009, followed by a volatile but ultimately flattish February. Overall, growth-oriented and larger-cap stocks fared better than value and smaller-cap complements. In this environment, the tech-heavy Nasdaq Composite Index® returned -7.07% for the 12 months; the Russell 2000® Index, -14.97%. Few sectors within the broad-market S&P 500® gained ground, with a wide gap separating leaders from laggards. Despite increased competition among wireless carriers, telecommunication services (+8%) led the way, followed by the more defensive utilities sector (+6%). Rising wages and low inflation buoyed consumer staples (+4%), less so consumer discretionary (0%). Meanwhile, energy (-24%) foundered amid commodity weakness that also hurt materials (-17%). The financials sector(-12%) struggled as well.Comments from Portfolio Manager Nidhi Gupta: For the year, the fund returned -10.88%, outpacing the –11.18% gain of the MSCI U.S. IMI Media 25/50 Index, but lagging the result of the broad-based S&P 500® Index. The multimedia industry contracted significantly in August, due to increasing concerns about a China-led global growth slowdown, coupled with ongoing disruption from digital’s impact on traditional media. Most media stocks did not recover by period end. Versus the MSCI sector index, the fund benefited from stock selection in the out-of-index Internet software & services group, buoyed by our position in social network Facebook. Even though the stock experienced a sharp decline in late August, I liked the company because it has been a direct recipient of consumers' shift away from TV. During the period, Facebook reported record earnings and revenues, and the stock rose. Elsewhere, avoiding three poor-performing index components – live-events promoter SFX Entertainment, mass media company News Corp. and radio-station owner Cumulus Media – lifted the fund’s relative result. Each of these companies is tied to traditional media and fell outside my investment parameters. On the downside, stock picking in the cable & satellite group was most detrimental. Here, unfavorable timing in cable network Starz made for the largest relative detractor.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.
Multimedia Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 29, 2016
| % of fund's net assets | % of fund's net assets 6 months ago | |
| The Walt Disney Co. | 23.2 | 24.8 |
| Comcast Corp. Class A | 19.1 | 18.1 |
| Charter Communications, Inc. Class A | 5.1 | 5.0 |
| Time Warner Cable, Inc. | 4.9 | 5.0 |
| Liberty Global PLC Class C | 4.8 | 4.6 |
| Time Warner, Inc. | 4.7 | 4.9 |
| Facebook, Inc. Class A | 3.6 | 2.8 |
| AMC Networks, Inc. Class A | 2.8 | 2.8 |
| Netflix, Inc. | 2.8 | 2.0 |
| Twenty-First Century Fox, Inc. Class A | 2.6 | 2.2 |
| 73.6 |
Top Industries (% of fund's net assets)
| As of February 29, 2016 | ||
| Media | 85.8% | |
| Internet Software & Services | 6.3% | |
| Internet & Catalog Retail | 6.0% | |
| IT Services | 1.6% | |
| All Others* | 0.3% | |
| As of August 31, 2015 | ||
| Media | 88.2% | |
| Internet & Catalog Retail | 5.2% | |
| Internet Software & Services | 3.9% | |
| IT Services | 1.5% | |
| All Others* | 1.2% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
Multimedia Portfolio
Investments February 29, 2016
Showing Percentage of Net Assets
| Common Stocks - 99.7% | |||
| Shares | Value | ||
| Internet & Catalog Retail - 6.0% | |||
| Internet Retail - 6.0% | |||
| Expedia, Inc. | 58,500 | $6,090,435 | |
| Netflix, Inc. (a) | 173,600 | 16,215,976 | |
| Wayfair LLC Class A (a)(b) | 316,100 | 12,318,417 | |
| 34,624,828 | |||
| Internet Software & Services - 6.3% | |||
| Internet Software & Services - 6.3% | |||
| Alphabet, Inc.: | |||
| Class A | 10,900 | 7,817,698 | |
| Class C | 11,214 | 7,824,793 | |
| Facebook, Inc. Class A (a) | 193,100 | 20,646,252 | |
| 36,288,743 | |||
| IT Services - 1.6% | |||
| Data Processing & Outsourced Services - 1.6% | |||
| PayPal Holdings, Inc. (a) | 238,900 | 9,111,646 | |
| Media - 85.8% | |||
| Advertising - 2.1% | |||
| Interpublic Group of Companies, Inc. | 284,700 | 6,089,733 | |
| Omnicom Group, Inc. | 78,200 | 6,084,742 | |
| 12,174,475 | |||
| Broadcasting - 3.8% | |||
| CBS Corp. Class B | 244,800 | 11,843,424 | |
| Cumulus Media, Inc. Class A (a) | 210 | 53 | |
| Discovery Communications, Inc.: | |||
| Class A (a) | 450 | 11,250 | |
| Class C (non-vtg.) (a) | 92,300 | 2,275,195 | |
| Entercom Communications Corp. Class A (a) | 3,053 | 34,896 | |
| Liberty Media Corp. Class C (a) | 210,786 | 7,356,431 | |
| 21,521,249 | |||
| Cable & Satellite - 42.0% | |||
| AMC Networks, Inc. Class A (a) | 248,500 | 16,286,690 | |
| Charter Communications, Inc. Class A (a)(b) | 164,900 | 29,609,444 | |
| Comcast Corp. Class A | 1,903,750 | 109,903,488 | |
| DISH Network Corp. Class A (a) | 159,300 | 7,507,809 | |
| Liberty Broadband Corp.: | |||
| Class A (a) | 35,623 | 1,791,481 | |
| Class C (a) | 91,640 | 4,615,907 | |
| Liberty Global PLC: | |||
| Class A (a) | 26,938 | 992,396 | |
| Class C (a) | 764,047 | 27,475,130 | |
| Sirius XM Holdings, Inc. (a)(b) | 889,300 | 3,308,196 | |
| Starz Series A (a) | 480,600 | 12,106,314 | |
| Time Warner Cable, Inc. | 148,669 | 28,374,965 | |
| 241,971,820 | |||
| Movies & Entertainment - 37.9% | |||
| AMC Entertainment Holdings, Inc. Class A | 12,185 | 292,806 | |
| Lions Gate Entertainment Corp. (b) | 631,877 | 13,332,605 | |
| Live Nation Entertainment, Inc. (a) | 621,400 | 13,664,586 | |
| The Madison Square Garden Co. (a) | 67,599 | 10,477,845 | |
| The Walt Disney Co. | 1,397,204 | 133,460,924 | |
| Time Warner, Inc. | 404,982 | 26,809,808 | |
| Twenty-First Century Fox, Inc. Class A | 564,707 | 15,258,383 | |
| Viacom, Inc. Class B (non-vtg.) | 136,300 | 5,022,655 | |
| 218,319,612 | |||
| Publishing - 0.0% | |||
| Gannett Co., Inc. | 6,937 | 105,859 | |
| TOTAL MEDIA | 494,093,015 | ||
| TOTAL COMMON STOCKS | |||
| (Cost $381,117,387) | 574,118,232 | ||
| Money Market Funds - 9.3% | |||
| Fidelity Cash Central Fund, 0.40% (c) | 1,166,851 | 1,166,851 | |
| Fidelity Securities Lending Cash Central Fund, 0.44% (c)(d) | 52,653,925 | 52,653,925 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $53,820,776) | 53,820,776 | ||
| TOTAL INVESTMENT PORTFOLIO - 109.0% | |||
| (Cost $434,938,163) | 627,939,008 | ||
| NET OTHER ASSETS (LIABILITIES) - (9.0)% | (51,820,573) | ||
| NET ASSETS - 100% | $576,118,435 |
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 | $3,543 |
| Fidelity Securities Lending Cash Central Fund | 995,295 |
| Total | $998,838 |
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.
Multimedia Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2016 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $50,460,723) — See accompanying schedule: Unaffiliated issuers (cost $381,117,387) | $574,118,232 | |
| Fidelity Central Funds (cost $53,820,776) | 53,820,776 | |
| Total Investments (cost $434,938,163) | $627,939,008 | |
| Receivable for investments sold | 5,265,858 | |
| Receivable for fund shares sold | 144,932 | |
| Dividends receivable | 204,263 | |
| Distributions receivable from Fidelity Central Funds | 178,845 | |
| Prepaid expenses | 2,885 | |
| Other receivables | 219 | |
| Total assets | 633,736,010 | |
| Liabilities | ||
| Payable for investments purchased | $3,909,084 | |
| Payable for fund shares redeemed | 630,162 | |
| Accrued management fee | 261,054 | |
| Other affiliated payables | 129,777 | |
| Other payables and accrued expenses | 33,573 | |
| Collateral on securities loaned, at value | 52,653,925 | |
| Total liabilities | 57,617,575 | |
| Net Assets | $576,118,435 | |
| Net Assets consist of: | ||
| Paid in capital | $367,747,704 | |
| Undistributed net investment income | 520,969 | |
| Accumulated undistributed net realized gain (loss) on investments | 14,848,917 | |
| Net unrealized appreciation (depreciation) on investments | 193,000,845 | |
| Net Assets, for 8,399,566 shares outstanding | $576,118,435 | |
| Net Asset Value, offering price and redemption price per share ($576,118,435 ÷ 8,399,566 shares) | $68.59 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 29, 2016 | ||
| Investment Income | ||
| Dividends | $7,474,899 | |
| Income from Fidelity Central Funds (including $995,295 from security lending) | 998,838 | |
| Total income | 8,473,737 | |
| Expenses | ||
| Management fee | $4,049,972 | |
| Transfer agent fees | 1,550,854 | |
| Accounting and security lending fees | 271,173 | |
| Custodian fees and expenses | 9,207 | |
| Independent trustees' compensation | 13,790 | |
| Registration fees | 38,507 | |
| Audit | 42,403 | |
| Legal | 8,882 | |
| Interest | 3,227 | |
| Miscellaneous | 9,898 | |
| Total expenses before reductions | 5,997,913 | |
| Expense reductions | (74,030) | 5,923,883 |
| Net investment income (loss) | 2,549,854 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 54,342,127 | |
| Total net realized gain (loss) | 54,342,127 | |
| Change in net unrealized appreciation (depreciation) on investment securities | (136,778,350) | |
| Net gain (loss) | (82,436,223) | |
| Net increase (decrease) in net assets resulting from operations | $(79,886,369) |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 29, 2016 | Year ended February 28, 2015 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $2,549,854 | $2,307,365 |
| Net realized gain (loss) | 54,342,127 | 84,462,999 |
| Change in net unrealized appreciation (depreciation) | (136,778,350) | (14,371,615) |
| Net increase (decrease) in net assets resulting from operations | (79,886,369) | 72,398,749 |
| Distributions to shareholders from net investment income | (1,958,887) | (2,039,294) |
| Distributions to shareholders from net realized gain | (45,417,906) | (70,422,213) |
| Total distributions | (47,376,793) | (72,461,507) |
| Share transactions | ||
| Proceeds from sales of shares | 135,578,462 | 212,392,932 |
| Reinvestment of distributions | 45,576,045 | 69,926,090 |
| Cost of shares redeemed | (280,779,334) | (488,279,180) |
| Net increase (decrease) in net assets resulting from share transactions | (99,624,827) | (205,960,158) |
| Redemption fees | 18,383 | 23,333 |
| Total increase (decrease) in net assets | (226,869,606) | (205,999,583) |
| Net Assets | ||
| Beginning of period | 802,988,041 | 1,008,987,624 |
| End of period (including undistributed net investment income of $520,969 and undistributed net investment income of $171,842, respectively) | $576,118,435 | $802,988,041 |
| Other Information | ||
| Shares | ||
| Sold | 1,657,134 | 2,629,387 |
| Issued in reinvestment of distributions | 601,289 | 892,056 |
| Redeemed | (3,594,976) | (6,128,688) |
| Net increase (decrease) | (1,336,553) | (2,607,245) |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Multimedia Portfolio
| Years ended February 28, | 2016 A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $82.48 | $81.74 | $61.55 | $48.48 | $47.80 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .27 | .22 | .20 | .53C | .29 |
| Net realized and unrealized gain (loss) | (8.82) | 7.62 | 22.46 | 12.96 | .96 |
| Total from investment operations | (8.55) | 7.84 | 22.66 | 13.49 | 1.25 |
| Distributions from net investment income | (.23) | (.20) | (.19) | (.43) | (.32) |
| Distributions from net realized gain | (5.12) | (6.89) | (2.30) | – | (.25) |
| Total distributions | (5.34)D | (7.10)E | (2.48)F | (.43) | (.57) |
| Redemption fees added to paid in capitalB | –G | –G | .01 | .01 | –G |
| Net asset value, end of period | $68.59 | $82.48 | $81.74 | $61.55 | $48.48 |
| Total ReturnH | (10.88)% | 10.16% | 37.01% | 27.91% | 2.73% |
| Ratios to Average Net AssetsI,J | |||||
| Expenses before reductions | .81% | .81% | .81% | .88% | .90% |
| Expenses net of fee waivers, if any | .81% | .81% | .81% | .88% | .90% |
| Expenses net of all reductions | .80% | .81% | .80% | .88% | .90% |
| Net investment income (loss) | .34% | .27% | .27% | .97%C | .64% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $576,118 | $802,988 | $1,008,988 | $657,366 | $183,157 |
| Portfolio turnover rateK | 42% | 55% | 111% | 30% | 85% |
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 $.12 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .76%.
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 Total distributions of $7.10 per share is comprised of distributions from net investment income of $.204 and distributions from net realized gain of $6.892 per share.
F Total distributions of $2.48 per share is comprised of distributions from net investment income of $.187 and distributions from net realized gain of $2.295 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.
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, 2016 | Past 1 year | Past 5 years | Past 10 years |
| Retailing Portfolio | 5.11% | 18.18% | 12.85% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Retailing Portfolio on February 28, 2006.
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 | ||
| $33,506 | Retailing Portfolio | |
| $18,666 | S&P 500® Index | |
Retailing Portfolio
Management's Discussion of Fund Performance
Market Recap: The S&P 500® index returned -6.19% for the year ending February 29, 2016. Largely range-bound for the first half of the period, U.S. stocks suffered a steep, late-summer decline on concern about an economic slowdown in China. The market recovered in October, lifted by the U.S. Federal Reserve’s decision to delay raising near-term interest rates until mid-December. Investors also drew courage from a rate cut in China and economic stimulus in Europe. But continued oil-price weakness and U.S.-dollar strength, plus fresh worries about China and the Middle East, pushed the S&P 500® to its worst January since 2009, followed by a volatile but ultimately flattish February. Overall, growth-oriented and larger-cap stocks fared better than value and smaller-cap complements. In this environment, the tech-heavy Nasdaq Composite Index® returned -7.07% for the 12 months; the Russell 2000® Index, -14.97%. Few sectors within the broad-market S&P 500® gained ground, with a wide gap separating leaders from laggards. Despite increased competition among wireless carriers, telecommunication services (+8%) led the way, followed by the more defensive utilities sector (+6%). Rising wages and low inflation buoyed consumer staples (+4%), less so consumer discretionary (0%). Meanwhile, energy (-24%) foundered amid commodity weakness that also hurt materials (-17%). The financials sector(-12%) struggled as well.Comments from Portfolio Manager Deena Friedman: For the year, the fund returned 5.11%, outperforming both the 3.47% result of the MSCI U.S. IMI Retailing 25/50 Index and the broad-based S&P 500® Index. The fund’s return was aided by strong stock picks in automotive retail. Here, holding aftermarket auto-parts retailer O’Reilly Automotive aided the fund’s relative result. Helped along by solid same-store-sales growth, the company reported better-than-anticipated quarterly results, lifting the stock price. Elsewhere, an underweighting in department stores proved additive, especially avoiding Kohl’s. In my view, Kohl’s had few key brands and high exposure to the lower-end consumer, who is more sensitive to costs. The company reported numerous disappointing quarterly results, and the stock fell significantly. In the home furnishing retail group, avoiding Bed Bath & Beyond also helped. On the downside, relative performance was hurt by an underweighting in the strong-performing Internet retail category. Not owning enough shares of Internet-based entertainment network Netflix early in the period was particularly detrimental. I added to my stake in it by period end. An underweighting in e-commerce giant Amazon.com 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.
Retailing Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 29, 2016
| % of fund's net assets | % of fund's net assets 6 months ago | |
| Home Depot, Inc. | 19.3 | 16.3 |
| Amazon.com, Inc. | 19.2 | 14.6 |
| TJX Companies, Inc. | 5.5 | 5.1 |
| Priceline Group, Inc. | 5.1 | 7.1 |
| Netflix, Inc. | 4.9 | 3.7 |
| AutoZone, Inc. | 4.8 | 4.6 |
| O'Reilly Automotive, Inc. | 4.7 | 4.6 |
| L Brands, Inc. | 3.7 | 4.6 |
| Ross Stores, Inc. | 3.4 | 2.5 |
| G-III Apparel Group Ltd. | 2.8 | 3.7 |
| 73.4 |
Top Industries (% of fund's net assets)
| As of February 29, 2016 | ||
| Specialty Retail | 49.1% | |
| Internet & Catalog Retail | 29.2% | |
| Textiles, Apparel & Luxury Goods | 8.7% | |
| Hotels, Restaurants & Leisure | 2.4% | |
| Food & Staples Retailing | 1.7% | |
| All Others* | 8.9% | |
| As of August 31, 2015 | ||
| Specialty Retail | 48.8% | |
| Internet & Catalog Retail | 25.9% | |
| Textiles, Apparel & Luxury Goods | 12.0% | |
| Multiline Retail | 2.6% | |
| Food & Staples Retailing | 2.1% | |
| All Others* | 8.6% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
Retailing Portfolio
Investments February 29, 2016
Showing Percentage of Net Assets
| Common Stocks - 97.2% | |||
| Shares | Value | ||
| Food & Staples Retailing - 1.7% | |||
| Drug Retail - 0.8% | |||
| CVS Health Corp. | 146,700 | $14,254,839 | |
| Hypermarkets & Super Centers - 0.9% | |||
| Costco Wholesale Corp. | 113,543 | 17,034,856 | |
| TOTAL FOOD & STAPLES RETAILING | 31,289,695 | ||
| Food Products - 1.1% | |||
| Packaged Foods & Meats - 1.1% | |||
| Associated British Foods PLC | 432,300 | 20,493,791 | |
| Hotels, Restaurants & Leisure - 2.4% | |||
| Restaurants - 2.4% | |||
| Chipotle Mexican Grill, Inc. (a) | 16,900 | 8,604,804 | |
| Dave & Buster's Entertainment, Inc. (a) | 310,500 | 11,460,555 | |
| Starbucks Corp. | 413,100 | 24,046,551 | |
| 44,111,910 | |||
| Household Durables - 1.6% | |||
| Home Furnishings - 0.4% | |||
| Tempur Sealy International, Inc. (a) | 130,700 | 7,537,469 | |
| Household Appliances - 1.2% | |||
| Techtronic Industries Co. Ltd. | 5,777,500 | 22,061,024 | |
| TOTAL HOUSEHOLD DURABLES | 29,598,493 | ||
| Internet & Catalog Retail - 29.2% | |||
| Internet Retail - 29.2% | |||
| Amazon.com, Inc. (a) | 643,080 | 355,314,562 | |
| Netflix, Inc. (a) | 975,100 | 91,084,091 | |
| Priceline Group, Inc. (a) | 75,020 | 94,916,054 | |
| 541,314,707 | |||
| Internet Software & Services - 1.7% | |||
| Internet Software & Services - 1.7% | |||
| Alibaba Group Holding Ltd. sponsored ADR (a) | 198,200 | 13,638,142 | |
| Facebook, Inc. Class A (a) | 160,400 | 17,149,968 | |
| 30,788,110 | |||
| Multiline Retail - 1.2% | |||
| Department Stores - 0.8% | |||
| Macy's, Inc. | 353,800 | 15,287,698 | |
| General Merchandise Stores - 0.4% | |||
| B&M European Value Retail S.A. | 1,745,251 | 6,920,585 | |
| TOTAL MULTILINE RETAIL | 22,208,283 | ||
| Specialty Retail - 49.1% | |||
| Apparel Retail - 13.6% | |||
| Inditex SA | 608,457 | 18,773,904 | |
| L Brands, Inc. | 797,683 | 67,635,542 | |
| Ross Stores, Inc. | 1,159,800 | 63,765,804 | |
| TJX Companies, Inc. | 1,373,700 | 101,791,170 | |
| 251,966,420 | |||
| Automotive Retail - 9.5% | |||
| AutoZone, Inc. (a) | 113,563 | 87,962,493 | |
| O'Reilly Automotive, Inc. (a) | 334,386 | 87,047,364 | |
| 175,009,857 | |||
| Home Improvement Retail - 20.8% | |||
| Home Depot, Inc. | 2,876,300 | 357,006,354 | |
| Lowe's Companies, Inc. | 406,400 | 27,444,192 | |
| 384,450,546 | |||
| Homefurnishing Retail - 0.2% | |||
| Restoration Hardware Holdings, Inc. (a) | 96,800 | 3,677,432 | |
| Specialty Stores - 5.0% | |||
| Signet Jewelers Ltd. | 253,500 | 27,479,400 | |
| Staples, Inc. | 353,200 | 3,337,740 | |
| Tiffany & Co., Inc. | 78,500 | 5,100,930 | |
| Tractor Supply Co. | 233,100 | 19,713,267 | |
| Ulta Salon, Cosmetics & Fragrance, Inc. (a) | 225,100 | 37,184,269 | |
| 92,815,606 | |||
| TOTAL SPECIALTY RETAIL | 907,919,861 | ||
| Technology Hardware, Storage & Peripherals - 0.5% | |||
| Technology Hardware, Storage & Peripherals - 0.5% | |||
| Apple, Inc. | 89,500 | 8,653,755 | |
| Textiles, Apparel & Luxury Goods - 8.7% | |||
| Apparel, Accessories & Luxury Goods - 7.1% | |||
| Coach, Inc. | 52,600 | 2,048,244 | |
| G-III Apparel Group Ltd. (a) | 982,226 | 51,812,422 | |
| Kate Spade & Co. (a) | 596,400 | 11,820,648 | |
| lululemon athletica, Inc. (a)(b) | 279,957 | 17,561,703 | |
| Michael Kors Holdings Ltd. (a) | 79,200 | 4,486,680 | |
| PVH Corp. | 113,900 | 9,015,185 | |
| Under Armour, Inc. Class A (sub. vtg.) (a)(b) | 259,200 | 21,692,448 | |
| VF Corp. | 215,800 | 14,050,738 | |
| 132,488,068 | |||
| Footwear - 1.6% | |||
| NIKE, Inc. Class B | 480,140 | 29,571,823 | |
| TOTAL TEXTILES, APPAREL & LUXURY GOODS | 162,059,891 | ||
| TOTAL COMMON STOCKS | |||
| (Cost $1,402,265,869) | 1,798,438,496 | ||
| Principal Amount | Value | ||
| Convertible Bonds - 0.1% | |||
| Software - 0.1% | |||
| Home Entertainment Software - 0.1% | |||
| Take-Two Interactive Software, Inc. 1.75% 12/1/16 (Cost $1,000,000) | 1,000,000 | 1,885,000 | |
| Shares | Value | ||
| Money Market Funds - 3.8% | |||
| Fidelity Cash Central Fund, 0.40% (c) | 40,034,128 | 40,034,128 | |
| Fidelity Securities Lending Cash Central Fund, 0.44% (c)(d) | 29,298,600 | 29,298,600 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $69,332,728) | 69,332,728 | ||
| TOTAL INVESTMENT PORTFOLIO - 101.1% | |||
| (Cost $1,472,598,597) | 1,869,656,224 | ||
| NET OTHER ASSETS (LIABILITIES) - (1.1)% | (19,660,693) | ||
| NET ASSETS - 100% | $1,849,995,531 |
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 | $86,807 |
| Fidelity Securities Lending Cash Central Fund | 92,109 |
| Total | $178,916 |
Investment Valuation
The following is a summary of the inputs used, as of February 29, 2016, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used 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 | $1,798,438,496 | $1,779,664,592 | $18,773,904 | $-- |
| Convertible Bonds | 1,885,000 | -- | 1,885,000 | -- |
| Money Market Funds | 69,332,728 | 69,332,728 | -- | -- |
| Total Investments in Securities: | $1,869,656,224 | $1,848,997,320 | $20,658,904 | $-- |
See accompanying notes which are an integral part of the financial statements.
Retailing Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2016 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $28,828,021) — See accompanying schedule: Unaffiliated issuers (cost $1,403,265,869) | $1,800,323,496 | |
| Fidelity Central Funds (cost $69,332,728) | 69,332,728 | |
| Total Investments (cost $1,472,598,597) | $1,869,656,224 | |
| Receivable for investments sold | 943,275 | |
| Receivable for fund shares sold | 10,806,521 | |
| Dividends receivable | 2,569,883 | |
| Interest receivable | 4,375 | |
| Distributions receivable from Fidelity Central Funds | 19,406 | |
| Prepaid expenses | 3,391 | |
| Other receivables | 1,069 | |
| Total assets | 1,884,004,144 | |
| Liabilities | ||
| Payable for fund shares redeemed | $3,473,785 | |
| Accrued management fee | 822,131 | |
| Other affiliated payables | 342,008 | |
| Other payables and accrued expenses | 72,089 | |
| Collateral on securities loaned, at value | 29,298,600 | |
| Total liabilities | 34,008,613 | |
| Net Assets | $1,849,995,531 | |
| Net Assets consist of: | ||
| Paid in capital | $1,491,030,767 | |
| Undistributed net investment income | 120,718 | |
| Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (38,204,171) | |
| Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 397,048,217 | |
| Net Assets, for 18,725,464 shares outstanding | $1,849,995,531 | |
| Net Asset Value, offering price and redemption price per share ($1,849,995,531 ÷ 18,725,464 shares) | $98.80 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 29, 2016 | ||
| Investment Income | ||
| Dividends | $10,650,275 | |
| Special dividends | 1,595,366 | |
| Interest | 17,500 | |
| Income from Fidelity Central Funds (including $92,109 from security lending) | 178,916 | |
| Total income | 12,442,057 | |
| Expenses | ||
| Management fee | $7,329,714 | |
| Transfer agent fees | 2,545,202 | |
| Accounting and security lending fees | 429,433 | |
| Custodian fees and expenses | 28,888 | |
| Independent trustees' compensation | 23,738 | |
| Registration fees | 260,294 | |
| Audit | 41,820 | |
| Legal | 10,694 | |
| Interest | 1,987 | |
| Miscellaneous | 10,805 | |
| Total expenses before reductions | 10,682,575 | |
| Expense reductions | (40,005) | 10,642,570 |
| Net investment income (loss) | 1,799,487 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | (37,099,536) | |
| Foreign currency transactions | (6,362) | |
| Total net realized gain (loss) | (37,105,898) | |
| Change in net unrealized appreciation (depreciation) on: Investment securities | 29,389,132 | |
| Assets and liabilities in foreign currencies | (5,659) | |
| Total change in net unrealized appreciation (depreciation) | 29,383,473 | |
| Net gain (loss) | (7,722,425) | |
| Net increase (decrease) in net assets resulting from operations | $(5,922,938) |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 29, 2016 | Year ended February 28, 2015 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $1,799,487 | $3,039,275 |
| Net realized gain (loss) | (37,105,898) | 51,285,454 |
| Change in net unrealized appreciation (depreciation) | 29,383,473 | 61,709,364 |
| Net increase (decrease) in net assets resulting from operations | (5,922,938) | 116,034,093 |
| Distributions to shareholders from net investment income | (2,519,114) | (1,546,416) |
| Distributions to shareholders from net realized gain | (11,161,013) | (70,497,905) |
| Total distributions | (13,680,127) | (72,044,321) |
| Share transactions | ||
| Proceeds from sales of shares | 1,567,283,062 | 203,801,729 |
| Reinvestment of distributions | 13,184,083 | 69,797,839 |
| Cost of shares redeemed | (626,245,827) | (466,362,827) |
| Net increase (decrease) in net assets resulting from share transactions | 954,221,318 | (192,763,259) |
| Redemption fees | 200,057 | 30,612 |
| Total increase (decrease) in net assets | 934,818,310 | (148,742,875) |
| Net Assets | ||
| Beginning of period | 915,177,221 | 1,063,920,096 |
| End of period (including undistributed net investment income of $120,718 and undistributed net investment income of $1,012,540, respectively) | $1,849,995,531 | $915,177,221 |
| Other Information | ||
| Shares | ||
| Sold | 15,421,390 | 2,328,758 |
| Issued in reinvestment of distributions | 136,859 | 847,929 |
| Redeemed | (6,439,576) | (5,604,901) |
| Net increase (decrease) | 9,118,673 | (2,428,214) |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Retailing Portfolio
| Years ended February 28, | 2016 A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $95.26 | $88.40 | $66.59 | $57.54 | $53.68 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .13C | .31D | .15E | .52F | .49G |
| Net realized and unrealized gain (loss) | 4.69H | 13.72 | 23.64 | 10.27 | 7.46 |
| Total from investment operations | 4.82 | 14.03 | 23.79 | 10.79 | 7.95 |
| Distributions from net investment income | (.18) | (.17) | (.12) | (.38) | (.34) |
| Distributions from net realized gain | (1.10) | (7.01) | (1.86) | (1.36) | (3.76) |
| Total distributions | (1.29)I | (7.17)J | (1.99)K | (1.75)L | (4.10) |
| Redemption fees added to paid in capitalB | .01 | –M | .01 | .01 | .01 |
| Net asset value, end of period | $98.80 | $95.26 | $88.40 | $66.59 | $57.54 |
| Total ReturnN | 5.11% | 17.29% | 35.82% | 18.98% | 15.70% |
| Ratios to Average Net AssetsO,P | |||||
| Expenses before reductions | .81% | .81% | .83% | .86% | .90% |
| Expenses net of fee waivers, if any | .80% | .81% | .83% | .86% | .90% |
| Expenses net of all reductions | .80% | .81% | .82% | .84% | .88% |
| Net investment income (loss) | .14%C | .36%D | .18%E | .83%F | .93%G |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $1,849,996 | $915,177 | $1,063,920 | $643,082 | $344,743 |
| Portfolio turnover rateQ | 11% | 31% | 72% | 119% | 217% |
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 $.12 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .02%.
D Net Investment income per share reflects a large, non-recurring dividend which amounted to $.13 per share. Excluding non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .22%.
E Net Investment income per share reflects a large, non-recurring dividend which amounted to $.08 per share. Excluding non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been.08%.
F Net Investment income per share reflects a large, non-recurring dividend which amounted to $.19 per share. Excluding non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .53%.
G Net Investment income per share reflects a large, non-recurring dividend which amounted to $.28 per share. Excluding non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .40%.
H 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.
I Total distributions of $1.29 per share is comprised of distributions from net investment income of $.182 and distributions from net realized gain of $1.103 per share.
J Total distributions of $7.17 per share is comprised of distributions from net investment income of $.166 and distributions from net realized gain of $7.006 per share.
K Total distributions of $1.99 per share is comprised of distributions from net investment income of $.124 and distributions from net realized gain of $1.861 per share.
L Total distributions of $1.75 per share is comprised of distributions from net investment income of $.383 and distributions from net realized gain of $1.364 per share.
M Amount represents less than $.005 per share.
N Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
O 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.
P 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.
Q 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, 2016
1. Organization.
Automotive Portfolio, Construction and Housing Portfolio, Consumer Discretionary Portfolio, Leisure Portfolio, Multimedia 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. 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.
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 Fidelity Investments Money Management, Inc. (FIMM), an affiliate of the investment adviser. Annualized expenses of the Money Market Central Funds as of their most recent shareholder report date are less than .005%.
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.
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 Fidelity SelectCo, LLC (SelectCo) Fair Value Committee (the Committee). 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. Utilizing these techniques may result in transfers between Level 1 and Level 2. 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. Equity securities, including restricted securities, for which observable inputs are not available are valued using alternate valuation approaches, including the market approach and the income approach and are categorized as Level 3 in the hierarchy. The market approach generally consists of using comparable market transactions while the income approach generally consists of using the net present value of estimated future cash flows, adjusted as appropriate for liquidity, credit, market and/or other risk factors.
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, 2016, 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 may 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. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. Subsequent to ex-dividend date the Funds determine the components of these distributions, based upon receipt of tax filings or other correspondence relating to the underlying investment. 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.
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, 2016, 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, certain foreign taxes, passive foreign investment companies (PFIC), partnerships, deferred trustees compensation, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows for each Fund:
| Tax cost | Gross unrealized appreciation | Gross unrealized depreciation | Net unrealized appreciation (depreciation) on securities | |
| Automotive Portfolio | $66,374,554 | $18,013,399 | $(5,548,293) | $12,465,106 |
| Construction and Housing Portfolio | 383,348,223 | 111,784,717 | (29,425,603) | 82,359,114 |
| Consumer Discretionary Portfolio | 1,088,169,602 | 172,800,154 | (56,335,851) | 116,464,303 |
| Leisure Portfolio | 309,610,230 | 151,345,642 | (18,422,790) | 132,922,852 |
| Multimedia Portfolio | 436,177,236 | 218,533,481 | (26,771,709) | 191,761,772 |
| Retailing Portfolio | 1,474,734,594 | 473,915,609 | (78,993,979) | 394,921,630 |
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 | $170,691 | $834,067 | $– | $12,463,576 |
| Construction and Housing Portfolio | – | – | – | 82,359,106 |
| Consumer Discretionary Portfolio | 1,145,502 | – | – | 116,458,362 |
| Leisure Portfolio | – | – | – | 132,921,326 |
| Multimedia Portfolio | 520,973 | 16,087,990 | – | 191,761,772 |
| Retailing Portfolio | 121,015 | – | (36,068,175) | 394,912,220 |
Capital loss carryforwards are only available to offset future capital gains of the Funds to the extent provided by regulations and may be limited. Under the Regulated Investment Company Modernization Act of 2010 (the Act), the Funds are permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period and such capital losses are required to be used prior to any losses that expire. 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 no expiration | Total capital loss carryfoward | |
| Retailing Portfolio | $(31,764,292) | $(4,303,883) | $(36,068,175) | $(36,068,175) |
Certain of the Funds intend to elect to defer to the next fiscal year capital losses recognized during the period November 1, 2015 to February 29, 2016. Loss deferrals were as follows:
| Capital losses | |
| Construction and Housing Portfolio | $(14,805,738) |
| Consumer Discretionary Portfolio | (43,516,439) |
| Leisure Portfolio | (4,638,522) |
The tax character of distributions paid was as follows:
| February 29, 2016 | |||
| Ordinary Income | Long-term Capital Gains | Total | |
| Automotive Portfolio | $1,044,092 | $14,444,816 | $15,488,908 |
| Construction and Housing Portfolio | 2,235,224 | 14,717,246 | 16,952,470 |
| Consumer Discretionary Portfolio | 6,151,529 | 36,964,370 | 43,115,899 |
| Leisure Portfolio | 4,952,234 | 18,793,290 | 23,745,524 |
| Multimedia Portfolio | 1,958,887 | 45,417,906 | 47,376,793 |
| Retailing Portfolio | 2,519,114 | 11,161,013 | 13,680,127 |
| February 28, 2015 | |||
| Ordinary Income | Long-term Capital Gains | Total | |
| Automotive Portfolio | $4,645,027 | $28,870,062 | $33,515,089 |
| Construction and Housing Portfolio | 1,765,360 | 39,110,787 | 40,876,147 |
| Consumer Discretionary Portfolio | 13,853,843 | 53,661,451 | 67,515,294 |
| Leisure Portfolio | 10,541,206 | 27,579,440 | 38,120,646 |
| Multimedia Portfolio | 5,165,039 | 67,296,468 | 72,461,507 |
| Retailing Portfolio | 23,417,783 | 48,626,538 | 72,044,321 |
Trading (Redemption) Fees. Shares held by investors in the Funds less than 30 days may be subject to a redemption fee equal to .75% of the NAV of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Funds and accounted for as an addition to paid in capital.
Restricted Securities. The Funds may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities is included at the end of each applicable Fund's Schedule of Investments.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, are noted in the table below.
| Purchases ($) | Sales ($) | |
| Automotive Portfolio | 85,131,553 | 132,987,108 |
| Construction and Housing Portfolio | 465,975,749 | 377,580,775 |
| Consumer Discretionary Portfolio | 887,299,749 | 802,921,113 |
| Leisure Portfolio | 220,344,295 | 228,938,068 |
| Multimedia Portfolio | 304,838,895 | 450,109,667 |
| Retailing Portfolio | 1,061,476,278 | 141,492,574 |
5. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity SelectCo, 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 average net assets of all the mutual funds advised by Fidelity Management & Research Company (FMR) and the investment adviser. 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% | .25% | .55% |
| Construction and Housing Portfolio | .30% | .25% | .55% |
| Consumer Discretionary Portfolio | .30% | .25% | .55% |
| Leisure Portfolio | .30% | .25% | .55% |
| Multimedia Portfolio | .30% | .25% | .55% |
| Retailing Portfolio | .30% | .25% | .55% |
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (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:
| Automotive Portfolio | .21% |
| Construction and Housing Portfolio | .19% |
| Consumer Discretionary Portfolio | .17% |
| Leisure Portfolio | .18% |
| Multimedia Portfolio | .21% |
| Retailing 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. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. Certain Funds placed a portion of their portfolio transactions 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 | $2,937 |
| Construction and Housing Portfolio | 19,186 |
| Consumer Discretionary Portfolio | 9,976 |
| Leisure Portfolio | 4,984 |
| Multimedia Portfolio | 12,982 |
| Retailing Portfolio | 4,808 |
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Funds, along with other registered investment companies having management contracts with FMR or other affiliated entities of FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. Each applicable fund's 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 | |
| Leisure Portfolio | Borrower | $3,612,938 | .49% | $785 |
| Multimedia Portfolio | Borrower | 4,262,400 | .36% | 1,717 |
| Retailing Portfolio | Borrower | 17,991,333 | .66% | 1,987 |
Interfund Trades. The 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:
| Automotive Portfolio | $169 |
| Construction and Housing Portfolio | 659 |
| Consumer Discretionary Portfolio | 1,652 |
| Leisure Portfolio | 661 |
| Multimedia Portfolio | 1,113 |
| Retailing Portfolio | 1,631 |
During the period, the Funds did not borrow on this line of credit.
7. Security Lending.
Certain Funds lend portfolio securities through a lending agent from time to time in order to earn additional income. 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.
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. At period end, there were no bank borrowings outstanding. Each applicable Fund's activity in this program during the period for which loans were outstanding was as follows:
| Average Loan Balance | Weighted Average Interest Rate | Interest Expense | |
| Automotive Portfolio | $6,434,000 | .88% | $315 |
| Multimedia Portfolio | 5,721,667 | .63% | 1,510 |
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. All of the applicable expense reductions are noted in the table below.
| Brokerage Service reduction | Custody expense reduction | |
| Automotive Portfolio | $7,396 | $– |
| Construction and Housing Portfolio | 29,231 | – |
| Consumer Discretionary Portfolio | 60,296 | 38 |
| Leisure Portfolio | 19,087 | – |
| Multimedia Portfolio | 48,025 | – |
| Retailing Portfolio | 8,998 | 33 |
In addition, during the period the investment adviser reimbursed and/or waived a portion of operating expenses as follows:
| Amount | |
| Automotive Portfolio | $5,387 |
| Construction and Housing Portfolio | 14,959 |
| Consumer Discretionary Portfolio | 25,914 |
| Leisure Portfolio | 13,953 |
| Multimedia Portfolio | 26,005 |
| Retailing Portfolio | 30,974 |
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.
At the end of the period, the following mutual funds managed by the investment adviser or its affiliates were the owners of record of 10% or more of the total outstanding shares of the following Funds.
| VIP FundsManager 50% Portfolio | VIP FundsManager 60% Portfolio | Strategic Advisers Core Fund | |
| Construction and Housing Portfolio | – | 12% | – |
| Consumer Discretionary Portfolio | 14% | 20% | 27% |
Mutual funds managed by the investment adviser or its affiliates, in aggregate, were the owners of record of more than 20% of the total outstanding shares of the following Funds.
| % of shares held | |
| Construction and Housing Portfolio | 24% |
| Consumer Discretionary Portfolio | 67% |
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Select Portfolios and the Shareholders of Automotive Portfolio, Construction and Housing Portfolio, Consumer Discretionary Portfolio, Leisure Portfolio, Multimedia Portfolio and Retailing Portfolio:
In our opinion, the accompanying statements of assets and liabilities, including the schedules of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Automotive Portfolio, Construction and Housing Portfolio, Consumer Discretionary Portfolio, Leisure Portfolio, Multimedia Portfolio and Retailing Portfolio (each a fund of Fidelity Select Portfolios) (the "Funds") at February 29, 2016, 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 then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Funds' management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at February 29, 2016 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 15, 2016
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. Each of the Trustees oversees 75 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. Brian B. Hogan 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. Michael E. Wiley 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 sector portfolios. Other Boards oversee Fidelity's equity and high income funds, and Fidelity's investment grade bond, money market, and asset allocation funds. 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 SelectCo 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 SelectCo, 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 and Audit Committees. Appropriate personnel, including but not limited to the funds' Chief Compliance Officer (CCO), SelectCo's internal auditor, the independent accountants, the funds' Treasurer and portfolio management personnel, make periodic reports to the Board's committees, as appropriate. 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+
Brian B. Hogan (1964)
Year of Election or Appointment: 2014
Trustee
Chairman of the Board of Trustees
Mr. Hogan also serves as Trustee or Vice President of other funds. Mr. Hogan serves as a Director of FMR Investment Management (U.K.) Limited (investment adviser firm, 2015-present) and Fidelity SelectCo, LLC (investment adviser firm, 2014-present) and President of the Equity Division of FMR (investment adviser firm, 2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager.
* 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 SelectCo.
+ 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+
David A. Rosow (1942)
Year of Election or Appointment: 2013
Trustee
Mr. Rosow also serves as Trustee of other Fidelity® funds. Prior to his retirement in 2006, Mr. Rosow was the Chief Executive Officer, owner and operator of a number of private companies, which encompassed oil refining, drilling and marketing of petroleum products (including specialty petroleum products), the recreation industry, and real estate development. Mr. Rosow currently serves as a Director of Oxbow Carbon LLC (upgraders, marketers, and distributors of petroleum byproducts of the oil refining process, 2015-present) and Oxbridge Academy of the Palm Beaches (2015-present). Previously, Mr. Rosow served on the Fairfield Country Day School Board for 27 years, including as its President for 3 years, stepping down in 2006, as Lead Director and Chairman of the Audit Committee of Hudson United Bancorp (1996-2006), Chairman of the Board of Westport Bank and Trust (1992-1996), and as a Director of TD Banknorth (2006-2007). In addition, Mr. Rosow served as a member (2008-2014) and President (2009-2014) of the Town Council of Palm Beach, Florida. Mr. Rosow also served as a Member of the Advisory Board of other Fidelity® funds (2012-2013).
Garnett A. Smith (1947)
Year of Election or Appointment: 2013
Trustee
Mr. Smith also serves as Trustee of other Fidelity® funds. Prior to Mr. Smith's retirement, he served as Chairman and Chief Executive Officer of Inbrand Corp. (manufacturer of personal absorbent products, 1990-1997). He also served as President (1986-1990) of Inbrand Corp. Prior to his employment with Inbrand Corp., he was employed by a retail fabric chain and North Carolina National Bank. In addition, Mr. Smith served as a Member of the Advisory Board of other Fidelity® funds (2012-2013) and as a board member of the Jackson Hole Land Trust (2009-2012).
Michael E. Wiley (1950)
Year of Election or Appointment: 2008
Trustee
Chairman of the Independent Trustees
Mr. Wiley also serves as Trustee of other Fidelity® funds. Mr. Wiley serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), a Director of Tesoro Logistics LP (natural resources logistics, 2015-present), and a Director of Bill Barrett Corporation (exploration and production, 2005-present). In addition, Mr. Wiley also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a Trustee of other Fidelity® funds (2008-2013), as a Director of Asia Pacific Exploration Consolidated (international oil and gas exploration and production, 2008-2013), as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-2010), as a Senior Energy Advisor of Katzenbach Partners, LLC (consulting, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production, 2001-2005).
+ 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:
Except for Anthony R. Rochte, correspondence intended for an officer may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210. Correspondence intended for Mr. Rochte may be sent to SelectCo, 1225 17th Street, Denver, Colorado 80202-5541. Officers appear below in alphabetical order.
Name, Year of Birth; Principal Occupation
Donald F. Donahue (1950)
Year of Election or Appointment: 2015
Member of the Advisory Board
Mr. Donahue also serves as a Member of the Advisory Board of other Fidelity® funds. Mr. Donahue is President and Chief Executive Officer of Miranda Partners, LLC (risk consulting for the financial services industry, 2012-present) and a consultant for the Institute for Defense Analyses (national security, 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 serves as a Member and Treasurer of the Board of Directors of United Way of New York (2012-present), Member of the Board of Directors of NYC Leadership Academy (2012-present) and Physicians for Human Rights (2013-present), and Member of the Board of Advisors of Ripple Labs, Inc. (financial services, 2015-present). He also served as Chairman (2010-2012) and Member of the Board of Directors (2012-2013) of Omgeo, LLC (financial services) and Member of the Board of Directors of XBRL US (financial services non-profit, 2009-2012) and the International Securities Services Association (2009-2012).
Christopher S. Bartel (1971)
Year of Election or Appointment: 2009
Vice President
Mr. Bartel also serves as Vice President of other funds. Mr. Bartel serves as a Director of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2016-present) and Fidelity Management & Research (Hong Kong) (investment adviser firm, 2012-present) and Head of Global Equity Research (2010-present). Previously, Mr. Bartel served as a Director, President, and Chief Executive Officer of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2012-2016), Senior Vice President of Equity Research (2009-2010), Managing Director of Research (2006-2009), and an analyst and portfolio manager (2000-2006).
Marc R. Bryant (1966)
Year of Election or Appointment: 2013
Secretary and Chief Legal Officer (CLO)
Mr. Bryant also serves as Secretary and CLO of other funds. Mr. Bryant serves as CLO, Secretary, and Senior Vice President of Fidelity Management & Research Company (investment adviser firm, 2015-present) and FMR Co., Inc. (investment adviser firm, 2015-present); Secretary of Fidelity SelectCo, LLC (investment adviser firm, 2015-present) and Fidelity Investments Money Management, Inc. (investment adviser firm, 2015-present); and CLO of Fidelity Management & Research (Hong Kong) Limited and FMR Investment Management (U.K.) Limited (investment adviser firms, 2015-present) and Fidelity Management & Research (Japan) Limited (investment adviser firm, 2016-present). He is Senior Vice President and Deputy General Counsel of FMR LLC (diversified financial services company). Previously, Mr. Bryant served as Secretary and CLO of Fidelity Rutland Square Trust II (2010-2014) and Assistant Secretary of Fidelity's Fixed Income and Asset Allocation Funds (2013-2015). Prior to joining Fidelity Investments, Mr. Bryant served as a Senior Vice President and the Head of Global Retail Legal for AllianceBernstein L.P. (2006-2010), and as the General Counsel for ProFund Advisors LLC (2001-2006).
William C. Coffey (1969)
Year of Election or Appointment: 2009
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 Vice President and Associate General Counsel of FMR LLC (2005-2009).
Jonathan Davis (1968)
Year of Election or Appointment: 2010
Assistant Treasurer
Mr. Davis also serves as Assistant Treasurer of other funds, 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).
Adrien E. Deberghes (1967)
Year of Election or Appointment: 2013
President and Treasurer
Mr. Deberghes also serves as an officer of other funds. He is an employee of Fidelity Investments (2008-present). Prior to joining Fidelity Investments, Mr. Deberghes was Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005). Previously, Mr. Deberghes served in other fund officer roles.
Joseph DeSantis (1959)
Year of Election or Appointment: 2015
Vice President
Mr. DeSantis also serves as Vice President of other funds. Mr. DeSantis serves as Group Chief Investment Officer, Equities (2010-present) and is an employee of Fidelity Investments.
Stephanie J. Dorsey (1969)
Year of Election or Appointment: 2010
Assistant Treasurer
Ms. Dorsey also serves as an officer of other funds. She is an employee of Fidelity Investments (2008-present) and has served in other fund officer roles. Prior to joining Fidelity Investments, Ms. Dorsey served as Treasurer (2004-2008) of the JPMorgan Mutual Funds and Vice President (2004-2008) of JPMorgan Chase Bank.
Howard J. Galligan III (1966)
Year of Election or Appointment: 2014
Chief Financial Officer
Mr. Galligan also serves as Chief Financial Officer of other funds. Mr. Galligan serves as President of Fidelity Pricing and Cash Management Services (FPCMS) (2014-present) and as a Director of Strategic Advisers, Inc. (investment adviser firm, 2008-present). Previously, Mr. Galligan served as Chief Administrative Officer of Asset Management (2011-2014) and Chief Operating Officer and Senior Vice President of Investment Support for Strategic Advisers, Inc. (2003-2011).
Scott C. Goebel (1968)
Year of Election or Appointment: 2015
Vice President
Mr. Goebel serves as Vice President of other funds and is an employee of Fidelity Investments (2001-present). Previously, Mr. Goebel served as Secretary of Fidelity SelectCo, LLC (investment adviser firm, 2013-2015), Fidelity Investments Money Management, Inc. (FIMM) (investment adviser firm, 2010-2015), and Fidelity Research and Analysis Company (FRAC) (investment adviser firm, 2010-2015); General Counsel, Secretary, and Senior Vice President of Fidelity Management & Research Company (investment adviser firm, 2008-2015) and FMR Co., Inc. (investment adviser firm, 2008-2015); Assistant Secretary of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2008-2015) and Fidelity Management & Research (U.K.) Inc. (investment adviser firm, 2008-2015); Chief Legal Officer (CLO) of Fidelity Management & Research (Hong Kong) Limited (investment adviser firm, 2008-2015); Secretary and CLO of certain Fidelity® funds (2008-2015); Assistant Secretary of FIMM (2008-2010), FRAC (2008-2010), and certain funds (2007-2008); and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007).
James D. Gryglewicz (1972)
Year of Election or Appointment: 2014
Chief Compliance Officer
Mr. Gryglewicz also serves as Chief Compliance Officer of other funds. Mr. Gryglewicz serves as Compliance Officer of Strategic Advisers, Inc. (investment adviser firm, 2015-present) and Fidelity SelectCo, LLC (investment adviser firm, 2014-present), Senior Vice President of Asset Management Compliance (2009-present), and is an employee of Fidelity Investments (2004-present).
Brian B. Hogan (1964)
Year of Election or Appointment: 2009
Vice President
Mr. Hogan also serves as Trustee or Vice President of other funds. Mr. Hogan serves as a Director of FMR Investment Management (U.K.) Limited (investment adviser firm, 2015-present) and Fidelity SelectCo, LLC (investment adviser firm, 2014-present) and President of the Equity Division of FMR (investment adviser firm, 2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager.
Chris Maher (1972)
Year of Election or Appointment: 2013
Assistant Treasurer
Mr. Maher serves as Assistant Treasurer of other funds. Mr. Maher is Vice President of Valuation Oversight and is an employee of Fidelity Investments. Previously, Mr. Maher served as 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).
John F. Papandrea (1972)
Year of Election or Appointment: 2016
Anti-Money Laundering (AML) Officer
Mr. Papandrea also serves as AML Officer of other funds. Mr. Papandrea is Vice President of FMR LLC (diversified financial services company, 2008-present) and is an employee of Fidelity Investments (2005-present).
Kenneth B. Robins (1969)
Year of Election or Appointment: 2013
Deputy Treasurer
Mr. Robins also serves as an officer of other funds. Mr. Robins serves as Executive Vice President of Fidelity Investments Money Management, Inc. (FIMM) (investment adviser firm, 2013-present) and is an employee of Fidelity Investments (2004-present). Previously, Mr. Robins served in other fund officer roles.
Anthony R. Rochte (1968)
Year of Election or Appointment: 2013
Vice President
Mr. Rochte also serves as Vice President of other funds. Mr. Rochte serves as President of Fidelity SelectCo, LLC (investment adviser firm, 2012-present) and is an employee of Fidelity Investments (2012-present). Prior to joining Fidelity Investments, Mr. Rochte served as Senior Managing Director and head of State Street Global Advisors' North American Intermediary Business Group (2006-2012).
Stacie M. Smith (1974)
Year of Election or Appointment: 2013
Assistant Treasurer
Ms. Smith also serves as an officer of other funds. She 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 (1996-2009). Previously, Ms. Smith served as Deputy Treasurer of certain Fidelity funds (2013-2016).
Renee Stagnone (1975)
Year of Election or Appointment: 2013
Deputy Treasurer
Ms. Stagnone also serves as an officer of other funds. Ms. Stagnone is an employee of Fidelity Investments (1997-present). Previously, Ms. Stagnone served as Deputy Treasurer of certain Fidelity funds (2013-2016).
Joseph F. Zambello (1957)
Year of Election or Appointment: 2011
Deputy Treasurer
Mr. Zambello also serves as Deputy Treasurer of other funds. Mr. Zambello is an employee of Fidelity Investments (1991-present). Previously, Mr. Zambello served as Deputy Treasurer of certain Fidelity funds (2011-2016), Vice President of the Program Management Group of FMR (investment adviser firm, 2009-2011), and Vice President of the Transfer Agent Oversight Group (2005-2009).
Shareholder Expense Example
As a shareholder of a Fund, you incur two types of costs: (1) transaction costs, including redemption fees 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, 2015 to February 29, 2016).
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. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. 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. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. 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, 2015 | Ending Account Value February 29, 2016 | Expenses Paid During Period-B September 1, 2015 to February 29, 2016 | |
| Automotive Portfolio | .88% | |||
| Actual | $1,000.00 | $885.20 | $4.12 | |
| Hypothetical-C | $1,000.00 | $1,020.49 | $4.42 | |
| Construction and Housing Portfolio | .80% | |||
| Actual | $1,000.00 | $940.70 | $3.86 | |
| Hypothetical-C | $1,000.00 | $1,020.89 | $4.02 | |
| Consumer Discretionary Portfolio | .76% | |||
| Actual | $1,000.00 | $978.60 | $3.74 | |
| Hypothetical-C | $1,000.00 | $1,021.08 | $3.82 | |
| Leisure Portfolio | .79% | |||
| Actual | $1,000.00 | $976.40 | $3.88 | |
| Hypothetical-C | $1,000.00 | $1,020.93 | $3.97 | |
| Multimedia Portfolio | .81% | |||
| Actual | $1,000.00 | $948.10 | $3.92 | |
| Hypothetical-C | $1,000.00 | $1,020.84 | $4.07 | |
| Retailing Portfolio | .80% | |||
| Actual | $1,000.00 | $1,000.60 | $3.98 | |
| 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:
| Fund | Pay Date | Record Date | Dividends | Capital Gains |
| Automotive Portfolio | 04/18/2016 | 04/15/2016 | $0.087 | $0.423 |
| Construction and Housing Portfolio | 04/18/2016 | 04/15/2016 | $0.000 | $0.000 |
| Consumer Discretionary Portfolio | 04/18/2016 | 04/15/2016 | $0.035 | $0.000 |
| Leisure Portfolio | 04/18/2016 | 04/15/2016 | $0.000 | $0.000 |
| Multimedia Portfolio | 04/18/2016 | 04/15/2016 | $0.065 | $1.984 |
| Retailing Portfolio | 04/18/2016 | 04/15/2016 | $0.008 | $0.000 |
The funds hereby designate as capital gain dividend the amounts noted below for the taxable year ended February 29, 2016, or, if subsequently determined to be different, the net capital gain of such year.
| Fund | |
| Automotive Portfolio | $11,769,714 |
| Construction and Housing Portfolio | $8,427,577 |
| Consumer Discretionary Portfolio | $14,757,339 |
| Leisure Portfolio | $13,468,394 |
| Multimedia Portfolio | $53,938,588 |
A percentage of the dividends distributed during the fiscal year for the following funds qualifies for the dividends–received deduction for corporate shareholders:
| Fund | April 2015 | December 2015 |
| Automotive Portfolio | 100% | 100% |
| Construction and Housing Portfolio | 100% | 100% |
| Consumer Discretionary Portfolio | 100% | 100% |
| Leisure Portfolio | 100% | 100% |
| Multimedia Portfolio | 100% | 100% |
| Retailing 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.
| Fund | April 2015 | December 2015 |
| Automotive Portfolio | 100% | 100% |
| Construction and Housing Portfolio | 100% | 100% |
| Consumer Discretionary Portfolio | 100% | 100% |
| Leisure Portfolio | 100% | 100% |
| Multimedia Portfolio | 100% | 100% |
| Retailing Portfolio | 100% | 100% |
The fund will notify shareholders in January 2017 of amounts for use in preparing 2016 income tax returns.
Board Approval of Investment Advisory Contracts and Management Fees
Automotive Portfolio
Construction and Housing Portfolio
Consumer Discretionary Portfolio
Leisure Portfolio
Multimedia Portfolio
Retailing Portfolio
Each year, the Board of Trustees, including the Independent Trustees (together, the Board), votes on the renewal of the management contract with Fidelity SelectCo, LLC (SelectCo), an affiliate of Fidelity Management & Research Company (FMR), and the sub-advisory agreements with affiliates of FMR (together, the Advisory Contracts) for each fund. 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.
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 each fund's Advisory Contracts, including the services and support provided to each fund and its shareholders. The Board has established four standing committees (Committees) — Operations, Audit, Fair Valuation, and Governance and Nominating — 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 Operations Committee, of which all of the Independent Trustees are members, meets regularly throughout the year and considers, among other matters, information specifically related to the annual consideration of the renewal of each fund's Advisory Contracts. The Board, acting directly and through its Committees, requests and receives information concerning the annual consideration of the renewal of each fund's Advisory Contracts. The Board also meets as needed to consider 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 ad hoc joint committees to discuss certain matters relevant to all of the Fidelity funds.
At its January 2016 meeting, the Board unanimously determined to renew each 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 to be provided to each fund and its shareholders (including the investment performance of each fund); (ii) the competitiveness of each fund's management fee and total expense ratio relative to peer funds; (iii) the total costs of the services to be provided by and the profits to be realized by Fidelity from its relationships with each fund; and (iv) the extent to which, if any, economies of scale exist and would be realized as each fund grows, and whether any economies of scale are appropriately shared with fund shareholders.
In considering whether to renew the Advisory Contracts for each 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 each 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 each fund have a broad range of investment choices available to them, including a wide choice among funds offered by Fidelity's competitors, and that each 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 that fund, which is part of the Fidelity family of funds.
Nature, Extent, and Quality of Services Provided. The Board considered the staffing of SelectCo and the sub-advisers (together with SelectCo, the Investment Advisers) as it relates to the funds, including the backgrounds of investment personnel of SelectCo, and also considered the funds' investment objectives, strategies, and related investment philosophies. 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 each 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 reviewed the general qualifications and capabilities of the investment staff of the Investment Advisers, including their 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 each 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, each 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 or convenience of the Fidelity funds as investment vehicles. These services include 24-hour access to account information and market information through telephone representatives and over the Internet, investor education materials and asset allocation tools, and the expanded availability of Fidelity Investor Centers.The Board noted that in 2014 the ad hoc Committee on Transfer Agency Fees was formed by it and the boards of certain other Fidelity funds to review the variety of transfer agency services and fee structures throughout the mutual fund industry compared to Fidelity's.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 investment research 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 making other enhancements to meet client needs; (iv) reducing management fees and total expenses for certain index funds; (v) continuing to launch dedicated lower cost underlying funds to meet portfolio construction needs related to expanding underlying fund options for Fidelity funds of funds, specifically for the Freedom Fund product lines; (vi) rationalizing product lines and gaining increased efficiencies through fund mergers; (vii) continuing to develop, acquire and implement systems and technology to improve services to the funds and shareholders, strengthen information security, and increase efficiency; (viii) implementing investment enhancements to further strengthen Fidelity's target date product line to increase investors' probability of success in achieving their goals; (ix) modifying the eligibility criteria for certain share classes to accommodate roll-over assets from employer-sponsored retirement plans; (x) launching a new Class W of the Freedom Index Funds to attract and retain Fidelity record-kept retirement plan assets; and (xi) implementing changes to Fidelity's money market fund product line in response to recent regulatory reforms.Investment Performance. The Board considered whether each 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 with representatives of the Investment Advisers about fund investment performance that occur at Board meetings throughout the year. 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 each fund, for different time periods, measured against a securities market index ("benchmark index"). In its evaluation of fund investment performance at meetings throughout the year, the Board gave particular attention to information indicating underperformance of certain Fidelity funds for specific time periods and discussed with the Investment Advisers the reasons for such underperformance. Each of the Automotive, Consumer Discretionary, and Retailing Portfolios underperformed its benchmark for the one-, three-, and five-year periods ended June 30, 2015, and as a result, the Board will continue to discuss with SelectCo the steps it has taken and is taking to address each such fund's performance.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. Depending on the circumstances, the Independent Trustees may be satisfied with a fund's performance notwithstanding that it lags its benchmark index for certain periods.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 each fund and an appropriate benchmark index for the most recent one-, three-, and five-year periods ended June 30, 2015.Based on its review, the Board concluded that the nature, extent, and quality of services provided to each fund under the Advisory Contracts should benefit the shareholders of each fund.Competitiveness of Management Fee and Total Expense Ratio. The Board considered each fund's management fee and total expense ratio compared to "mapped groups" of competitive funds and classes created for the purpose of facilitating the Trustees' analysis of the competitiveness of management fees and total expenses. Fidelity creates "mapped groups" by combining similar Lipper investment objective categories that have comparable investment mandates. For this purpose, all sector focused equity funds are grouped in the same mapped group. Combining Lipper investment objective categories aids the Board's management fee and total expense ratio comparisons by broadening the competitive group used for comparison.Management Fee. The Board considered two proprietary management fee comparisons for the 12-month periods ended June 30 shown in basis points (BP) in the charts below. The group of Lipper funds used by the Board for management fee comparisons is referred to below as the "Total Mapped Group." The Total Mapped Group comparison focuses on a fund's standing in terms of gross management fees before expense reimbursements or caps relative to the total universe of funds with comparable investment mandates (i.e., sector equities), regardless of whether their management fee structures also are comparable. Funds with comparable management fee structures have similar management fee contractual arrangements (e.g., flat rate charged for advisory services, all-inclusive fee rate, etc.). "TMG %" represents the percentage of funds in the Total Mapped Group that had management fees that were lower than a fund's. For example, a hypothetical TMG % of 20% would mean that 80% of the funds in the Total Mapped Group had higher, and 20% had lower, management fees than a fund. The funds' actual TMG %s and the number of funds in the Total Mapped Group are in the charts below. The "Asset-Size Peer Group" (ASPG) comparison focuses on a fund's standing relative to a subset of non-Fidelity funds within the Total Mapped Group that are similar in size and management fee structure. For example, if a fund is in the first quartile of the ASPG, the fund's management fee ranks in the least expensive or lowest 25% of funds in the ASPG. The ASPG represents at least 15% of the funds in the Total Mapped Group with comparable asset size and management fee structures, subject to a minimum of 50 funds (or all funds in the Total Mapped Group if fewer than 50). Additional information, such as the ASPG quartile in which a fund's management fee rate ranked, is also included in the charts and considered by the Board.Automotive Portfolio
Construction and Housing Portfolio
Consumer Discretionary Portfolio
Leisure Portfolio
Multimedia Portfolio
Retailing Portfolio
SELCON-ANN-0416
1.813633.111
Fidelity® Select Portfolios® Communications Equipment Portfolio Computers Portfolio Electronics Portfolio IT Services Portfolio Software and IT Services Portfolio (formerly Software and Computer Services Portfolio) Technology Portfolio Annual Report February 29, 2016 |
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Contents
Communications Equipment Portfolio | |
Computers Portfolio | |
Electronics Portfolio | |
IT Services 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. © 2016 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-Q. Forms N-Q are available on the SEC’s web site at http://www.sec.gov. A fund's Forms N-Q 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.advisor.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.
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, 2016 | Past 1 year | Past 5 years | Past 10 years |
| Communications Equipment Portfolio | (16.38)% | 0.19% | 3.34% |
Prior to October 1, 2006, the fund was named Developing Communications 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 Communications Equipment Portfolio on February 28, 2006.
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 | ||
| $13,885 | Communications Equipment Portfolio | |
| $18,666 | S&P 500® Index | |
Communications Equipment Portfolio
Management's Discussion of Fund Performance
Market Recap: The S&P 500® index returned -6.19% for the year ending February 29, 2016. Largely range-bound for the first half of the period, U.S. stocks suffered a steep, late-summer decline on concern about an economic slowdown in China. The market recovered in October, lifted by the U.S. Federal Reserve’s decision to delay raising near-term interest rates until mid-December. Investors also drew courage from a rate cut in China and economic stimulus in Europe. But continued oil-price weakness and U.S.-dollar strength, plus fresh worries about China and the Middle East, pushed the S&P 500® to its worst January since 2009, followed by a volatile but ultimately flattish February. Overall, growth-oriented and larger-cap stocks fared better than value and smaller-cap complements. In this environment, the tech-heavy Nasdaq Composite Index® returned -7.07% for the 12 months; the Russell 2000® Index, -14.97%. Few sectors within the broad-market S&P 500® gained ground, with a wide gap separating leaders from laggards. Despite increased competition among wireless carriers, telecommunication services (+8%) led the way, followed by the more defensive utilities sector (+6%). Rising wages and low inflation buoyed consumer staples (+4%), less so consumer discretionary (0%). Meanwhile, energy (-24%) foundered amid commodity weakness that also hurt materials (-17%). The financials sector (-12%) struggled as well.Comments from Portfolio Manager Colin Anderson: For the year, the fund returned -16.38%, trailing the -15.24% return of the S&P® Custom Communications Equipment Index, while finishing well behind the -6.19% result of the broad-market S&P 500® index. Stocks in our universe were weaker than the broader market amid considerable market volatility, slowing economic growth and lackluster fundamentals for communications equipment firms. Versus the S&P® industry index, stock picking and an underweighting in the fund’s primary category of communications equipment hampered its performance, along with an overweighting in semiconductors. An out-of-index stake in Radware, an Israel-based manufacturer of application delivery controllers, was the fund’s largest relative detractor. The recovery in revenue growth we anticipated here proved quite short-lived, leading to poor earnings reports in some recent quarters. The stock’s decline left it among the cheapest names in the broader networking universe, so I added to the position, making it among the fund’s larger holdings at period end. Other detractors included Palo Alto Networks, a provider of enterprise security platforms. My concerns about valuation kept us out of this stock until the final month of the period, when I built an underweighted position. Although the stock appreciated nicely between then and period end, not carrying a market exposure the remainder of the period hurt, as Palo Alto shares managed a small gain, versus our benchmark’s double-digit decline. Conversely, non-index exposure to several related industries, including Internet software & services, modestly added value. An overweighted stake in Juniper Networks was our largest relative contributor. Juniper was one of the few network equipment makers to benefit from a rebound in sales to large telecom customers. Overweighting military radiomaker Harris also contributed, as did a non-benchmark position in Internet-search provider Alphabet, the parent company of Google.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, 2016
| % of fund's net assets | % of fund's net assets 6 months ago | |
| Cisco Systems, Inc. | 18.9 | 18.3 |
| Qualcomm, Inc. | 17.0 | 18.1 |
| F5 Networks, Inc. | 6.0 | 6.7 |
| Nokia Corp. sponsored ADR | 5.4 | 3.7 |
| CommScope Holding Co., Inc. | 4.9 | 5.4 |
| Juniper Networks, Inc. | 4.7 | 4.6 |
| Harris Corp. | 4.7 | 4.7 |
| Telefonaktiebolaget LM Ericsson (B Shares) sponsored ADR | 4.6 | 4.1 |
| Brocade Communications Systems, Inc. | 4.5 | 4.0 |
| Ruckus Wireless, Inc. | 2.3 | 2.4 |
| 73.0 |
Top Industries (% of fund's net assets)
| As of February 29, 2016 | ||
| Communications Equipment | 89.3% | |
| Technology Hardware, Storage & Peripherals | 3.2% | |
| Semiconductors & Semiconductor Equipment | 1.7% | |
| Electronic Equipment & Components | 1.6% | |
| Internet Software & Services | 1.4% | |
| All Others* | 2.8% | |
| As of August 31, 2015 | ||
| Communications Equipment | 91.6% | |
| Technology Hardware, Storage & Peripherals | 3.0% | |
| Semiconductors & Semiconductor Equipment | 1.8% | |
| Internet Software & Services | 1.3% | |
| Electronic Equipment & Components | 1.1% | |
| All Others* | 1.2% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
Communications Equipment Portfolio
Investments February 29, 2016
Showing Percentage of Net Assets
| Common Stocks - 98.0% | |||
| Shares | Value | ||
| Communications Equipment - 89.3% | |||
| Communications Equipment - 89.3% | |||
| ADTRAN, Inc. | 76,800 | $1,436,928 | |
| Arris International PLC (a) | 117,586 | 2,809,130 | |
| AudioCodes Ltd. (a) | 40,500 | 174,555 | |
| Black Box Corp. | 21,800 | 288,850 | |
| Brocade Communications Systems, Inc. | 770,500 | 7,651,065 | |
| Calix Networks, Inc. (a) | 27,500 | 191,125 | |
| Ciena Corp. (a) | 7,700 | 157,850 | |
| Cisco Systems, Inc. | 1,225,876 | 32,093,433 | |
| CommScope Holding Co., Inc. (a) | 328,600 | 8,277,434 | |
| EchoStar Holding Corp. Class A (a) | 9,300 | 415,710 | |
| F5 Networks, Inc. (a) | 106,535 | 10,245,471 | |
| Finisar Corp. (a) | 167,000 | 2,434,860 | |
| Harris Corp. | 101,300 | 7,903,426 | |
| Infinera Corp. (a) | 58,914 | 924,361 | |
| InterDigital, Inc. | 42,600 | 2,118,498 | |
| Ixia (a) | 99,600 | 1,136,436 | |
| Juniper Networks, Inc. | 324,012 | 8,003,096 | |
| Lumentum Holdings, Inc. (a) | 36,320 | 872,770 | |
| Mitel Networks Corp. (a) | 60,900 | 440,307 | |
| Motorola Solutions, Inc. | 32,959 | 2,422,157 | |
| NETGEAR, Inc. (a) | 13,650 | 539,312 | |
| NetScout Systems, Inc. (a) | 100,000 | 2,067,000 | |
| Nokia Corp. sponsored ADR (b) | 1,528,903 | 9,219,285 | |
| Palo Alto Networks, Inc. (a) | 6,200 | 897,698 | |
| Plantronics, Inc. | 38,400 | 1,440,000 | |
| Polycom, Inc. (a) | 75,963 | 790,775 | |
| Qualcomm, Inc. | 565,919 | 28,743,026 | |
| Radware Ltd. (a) | 253,000 | 2,912,030 | |
| Ruckus Wireless, Inc. (a) | 394,800 | 3,821,664 | |
| Sandvine Corp. (U.K.) | 86,300 | 189,439 | |
| Sierra Wireless, Inc. (a) | 11,900 | 157,318 | |
| Sonus Networks, Inc. (a) | 102,860 | 801,279 | |
| Telefonaktiebolaget LM Ericsson (B Shares) sponsored ADR | 857,680 | 7,869,214 | |
| Viavi Solutions, Inc. (a) | 204,100 | 1,332,773 | |
| Wi-Lan, Inc. (b) | 325,700 | 592,182 | |
| 151,370,457 | |||
| Diversified Financial Services - 0.2% | |||
| Other Diversified Financial Services - 0.2% | |||
| Broadcom Ltd. | 2,473 | 331,308 | |
| Diversified Telecommunication Services - 0.2% | |||
| Alternative Carriers - 0.2% | |||
| Vonage Holdings Corp. (a) | 78,000 | 418,860 | |
| Electronic Equipment & Components - 1.6% | |||
| Electronic Components - 0.3% | |||
| II-VI, Inc. (a) | 21,400 | 469,730 | |
| Electronic Equipment & Instruments - 0.7% | |||
| Keysight Technologies, Inc. (a) | 46,300 | 1,207,967 | |
| Electronic Manufacturing Services - 0.6% | |||
| QLogic Corp. (a) | 8,300 | 106,987 | |
| TE Connectivity Ltd. | 15,400 | 876,568 | |
| 983,555 | |||
| TOTAL ELECTRONIC EQUIPMENT & COMPONENTS | 2,661,252 | ||
| Internet Software & Services - 1.4% | |||
| Internet Software & Services - 1.4% | |||
| Alphabet, Inc.: | |||
| Class A | 900 | 645,498 | |
| Class C | 1,005 | 701,259 | |
| Rackspace Hosting, Inc. (a) | 12,100 | 260,513 | |
| Web.com Group, Inc. (a) | 42,000 | 762,300 | |
| 2,369,570 | |||
| Semiconductors & Semiconductor Equipment - 1.7% | |||
| Semiconductors - 1.7% | |||
| GSI Technology, Inc. (a) | 56,485 | 220,856 | |
| Marvell Technology Group Ltd. | 90,000 | 859,500 | |
| Maxim Integrated Products, Inc. | 16,100 | 545,146 | |
| Qorvo, Inc. (a) | 21,200 | 955,696 | |
| Semtech Corp. (a) | 18,800 | 360,208 | |
| 2,941,406 | |||
| Software - 0.4% | |||
| Application Software - 0.0% | |||
| Xura, Inc. (a) | 400 | 7,852 | |
| Systems Software - 0.4% | |||
| Oracle Corp. | 18,800 | 691,464 | |
| TOTAL SOFTWARE | 699,316 | ||
| Technology Hardware, Storage & Peripherals - 3.2% | |||
| Technology Hardware, Storage & Peripherals - 3.2% | |||
| BlackBerry Ltd. (a) | 337,700 | 2,635,707 | |
| EMC Corp. | 40,200 | 1,050,426 | |
| Hewlett Packard Enterprise Co. | 12,600 | 167,202 | |
| HP, Inc. | 74,200 | 793,198 | |
| Samsung Electronics Co. Ltd. | 752 | 714,749 | |
| 5,361,282 | |||
| TOTAL COMMON STOCKS | |||
| (Cost $175,547,672) | 166,153,451 | ||
| Money Market Funds - 2.7% | |||
| Fidelity Cash Central Fund, 0.40% (c) | 2,316,058 | 2,316,058 | |
| Fidelity Securities Lending Cash Central Fund, 0.44% (c)(d) | 2,181,545 | 2,181,545 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $4,497,603) | 4,497,603 | ||
| TOTAL INVESTMENT PORTFOLIO - 100.7% | |||
| (Cost $180,045,275) | 170,651,054 | ||
| NET OTHER ASSETS (LIABILITIES) - (0.7)% | (1,196,528) | ||
| NET ASSETS - 100% | $169,454,526 |
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 | $1,623 |
| Fidelity Securities Lending Cash Central Fund | 50,662 |
| Total | $52,285 |
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 | 82.4% |
| Finland | 5.4% |
| Sweden | 4.6% |
| Canada | 2.5% |
| Israel | 1.8% |
| United Kingdom | 1.7% |
| Others (Individually Less Than 1%) | 1.6% |
| 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, 2016 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $2,104,724) — See accompanying schedule: Unaffiliated issuers (cost $175,547,672) | $166,153,451 | |
| Fidelity Central Funds (cost $4,497,603) | 4,497,603 | |
| Total Investments (cost $180,045,275) | $170,651,054 | |
| Cash | 33,720 | |
| Receivable for investments sold | 4,168,207 | |
| Receivable for fund shares sold | 575,765 | |
| Dividends receivable | 332,387 | |
| Distributions receivable from Fidelity Central Funds | 2,332 | |
| Prepaid expenses | 765 | |
| Other receivables | 122 | |
| Total assets | 175,764,352 | |
| Liabilities | ||
| Payable for investments purchased | $3,609,143 | |
| Payable for fund shares redeemed | 370,233 | |
| Accrued management fee | 72,494 | |
| Other affiliated payables | 42,763 | |
| Other payables and accrued expenses | 33,648 | |
| Collateral on securities loaned, at value | 2,181,545 | |
| Total liabilities | 6,309,826 | |
| Net Assets | $169,454,526 | |
| Net Assets consist of: | ||
| Paid in capital | $181,871,355 | |
| Undistributed net investment income | 366,182 | |
| Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (3,388,137) | |
| Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (9,394,874) | |
| Net Assets, for 6,344,707 shares outstanding | $169,454,526 | |
| Net Asset Value, offering price and redemption price per share ($169,454,526 ÷ 6,344,707 shares) | $26.71 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 29, 2016 | ||
| Investment Income | ||
| Dividends | $4,076,393 | |
| Income from Fidelity Central Funds(including $50,662 from security lending) | 52,285 | |
| Total income | 4,128,678 | |
| Expenses | ||
| Management fee | $1,167,720 | |
| Transfer agent fees | 525,450 | |
| Accounting and security lending fees | 84,554 | |
| Custodian fees and expenses | 65,476 | |
| Independent trustees' compensation | 4,040 | |
| Registration fees | 18,645 | |
| Audit | 44,729 | |
| Legal | 5,734 | |
| Interest | 722 | |
| Miscellaneous | 2,820 | |
| Total expenses before reductions | 1,919,890 | |
| Expense reductions | (12,600) | 1,907,290 |
| Net investment income (loss) | 2,221,388 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 3,583,148 | |
| Foreign currency transactions | 4,808 | |
| Total net realized gain (loss) | 3,587,956 | |
| Change in net unrealized appreciation (depreciation) on: Investment securities | (44,367,458) | |
| Assets and liabilities in foreign currencies | (469) | |
| Total change in net unrealized appreciation (depreciation) | (44,367,927) | |
| Net gain (loss) | (40,779,971) | |
| Net increase (decrease) in net assets resulting from operations | $(38,558,583) |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 29, 2016 | Year ended February 28, 2015 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $2,221,388 | $2,392,115 |
| Net realized gain (loss) | 3,587,956 | 21,974,008 |
| Change in net unrealized appreciation (depreciation) | (44,367,927) | 5,918,097 |
| Net increase (decrease) in net assets resulting from operations | (38,558,583) | 30,284,220 |
| Distributions to shareholders from net investment income | (1,909,084) | (2,341,970) |
| Distributions to shareholders from net realized gain | (4,239,791) | (13,481,847) |
| Total distributions | (6,148,875) | (15,823,817) |
| Share transactions | ||
| Proceeds from sales of shares | 11,320,528 | 29,367,762 |
| Reinvestment of distributions | 5,866,394 | 15,205,659 |
| Cost of shares redeemed | (66,657,375) | (142,751,589) |
| Net increase (decrease) in net assets resulting from share transactions | (49,470,453) | (98,178,168) |
| Redemption fees | 1,390 | 3,746 |
| Total increase (decrease) in net assets | (94,176,521) | (83,714,019) |
| Net Assets | ||
| Beginning of period | 263,631,047 | 347,345,066 |
| End of period (including undistributed net investment income of $366,182 and undistributed net investment income of $75,709, respectively) | $169,454,526 | $263,631,047 |
| Other Information | ||
| Shares | ||
| Sold | 380,053 | 924,755 |
| Issued in reinvestment of distributions | 202,174 | 482,625 |
| Redeemed | (2,229,389) | (4,535,265) |
| Net increase (decrease) | (1,647,162) | (3,127,885) |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Communications Equipment Portfolio
| Years ended February 28, | 2016A | 2015 | 2014 | 2013 | 2012A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $32.99 | $31.24 | $24.31 | $24.50 | $29.60 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .31 | .28 | .18 | .14C | .03 |
| Net realized and unrealized gain (loss) | (5.64) | 3.52 | 6.95 | (.14)D | (5.10) |
| Total from investment operations | (5.33) | 3.80 | 7.13 | – | (5.07) |
| Distributions from net investment income | (.30) | (.30) | (.20) | (.17) | (.03) |
| Distributions from net realized gain | (.65) | (1.75) | – | – | – |
| Tax return of capital | – | – | – | (.02) | – |
| Total distributions | (.95) | (2.05) | (.20) | (.19) | (.03) |
| Redemption fees added to paid in capitalB,E | – | – | – | – | – |
| Net asset value, end of period | $26.71 | $32.99 | $31.24 | $24.31 | $24.50 |
| Total ReturnF | (16.38)% | 12.49% | 29.41% | .07%D | (17.13)% |
| Ratios to Average Net AssetsG,H | |||||
| Expenses before reductions | .90% | .89% | .92% | .93% | .90% |
| Expenses net of fee waivers, if any | .89% | .89% | .92% | .93% | .90% |
| Expenses net of all reductions | .89% | .89% | .90% | .89% | .89% |
| Net investment income (loss) | 1.04% | .89% | .69% | .61%C | .12% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $169,455 | $263,631 | $347,345 | $316,012 | $332,598 |
| Portfolio turnover rateI | 30% | 42%J | 65% | 54% | 91% |
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 $.10 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .18%.
D Net realized and unrealized gain (loss) per share reflects proceeds from litigation which amounted to $.06 per share. Excluding these litigation proceeds, the total return would have been (.19) %.
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.
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, 2016 | Past 1 year | Past 5 years | Past 10 years |
| Computers Portfolio | (21.56)% | 4.09% | 6.88% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Computers Portfolio on February 28, 2006.
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 | ||
| $19,461 | Computers Portfolio | |
| $18,666 | S&P 500® Index | |
Computers Portfolio
Management's Discussion of Fund Performance
Market Recap: The S&P 500® index returned -6.19% for the year ending February 29, 2016. Largely range-bound for the first half of the period, U.S. stocks suffered a steep, late-summer decline on concern about an economic slowdown in China. The market recovered in October, lifted by the U.S. Federal Reserve’s decision to delay raising near-term interest rates until mid-December. Investors also drew courage from a rate cut in China and economic stimulus in Europe. But continued oil-price weakness and U.S.-dollar strength, plus fresh worries about China and the Middle East, pushed the S&P 500® to its worst January since 2009, followed by a volatile but ultimately flattish February. Overall, growth-oriented and larger-cap stocks fared better than value and smaller-cap complements. In this environment, the tech-heavy Nasdaq Composite Index® returned -7.07% for the 12 months; the Russell 2000® Index, -14.97%. Few sectors within the broad-market S&P 500® gained ground, with a wide gap separating leaders from laggards. Despite increased competition among wireless carriers, telecommunication services (+8%) led the way, followed by the more defensive utilities sector (+6%). Rising wages and low inflation buoyed consumer staples (+4%), less so consumer discretionary (0%). Meanwhile, energy (-24%) foundered amid commodity weakness that also hurt materials (-17%). The financials sector (-12%) struggled as well.Comments from Portfolio Manager Christopher Lin: For the year, the fund returned -21.56%, outpacing the -24.91% return of its benchmark, the S&P® Custom Computers & Peripherals Index. However, the fund lagged the broad-market S&P 500® index. Computer stocks suffered from considerable market volatility, a slowing U.S. economy and lackluster spending on personal computers. Versus the S&P® Custom index, the fund was helped most by out-of-benchmark exposure to a few names from the Internet software & services group. These included the fund’s largest relative contributor and Internet-search giant Alphabet, which began trading in October as the new parent company of Google and the firm’s other business lines. Another standout was social-networking firm Facebook. Further boosting relative performance were negligible exposure to 3D Systems, a provider of technology for three-dimensional printing, and not owning Violin Memory, a manufacturer of enterprise storage equipment. Both of these index names fared exceedingly poorly. Conversely, a large underweighting in supercomputer maker Cray – the fund’s largest relative detractor – worked against us. Although I reduced the fund’s exposure here in view of the company’s generally erratic financial results and the questionable future I saw for manufacturers of branded supercomputers, this index name returned 42% for the period. We also were hurt by underweighting Super Micro Computer, which outperformed the benchmark. Not owning index component Immersion – which controls certain patents in haptic, or touch-based, technologies – for much of the period further hampered relative performance. The stock had a nice advance in the first half of the period, which I missed, and toward period end I thought it had declined sufficiently to warrant a modest position. Unfortunately, it continued to decline after I bought 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.
Computers Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 29, 2016
| % of fund's net assets | % of fund's net assets 6 months ago | |
| Apple, Inc. | 22.9 | 19.7 |
| EMC Corp. | 11.2 | 8.3 |
| SanDisk Corp. | 8.1 | 5.1 |
| HP, Inc. | 5.0 | 4.1 |
| Seagate Technology LLC | 5.0 | 5.0 |
| IBM Corp. | 4.9 | 6.7 |
| Hewlett Packard Enterprise Co. | 4.8 | 4.0 |
| Alphabet, Inc. Class A | 4.4 | 4.7 |
| Facebook, Inc. Class A | 4.2 | 2.4 |
| Western Digital Corp. | 4.1 | 5.0 |
| 74.6 |
Top Industries (% of fund's net assets)
| As of February 29, 2016 | ||
| Technology Hardware, Storage & Peripherals | 75.2% | |
| Internet Software & Services | 11.6% | |
| IT Services | 7.8% | |
| Electronic Equipment & Components | 2.6% | |
| Communications Equipment | 1.0% | |
| All Others* | 1.8% | |
| As of August 31, 2015 | ||
| Technology Hardware, Storage & Peripherals | 71.7% | |
| Internet Software & Services | 11.8% | |
| IT Services | 9.4% | |
| Communications Equipment | 2.8% | |
| Semiconductors & Semiconductor Equipment | 1.6% | |
| All Others* | 2.7% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
Computers Portfolio
Investments February 29, 2016
Showing Percentage of Net Assets
| Common Stocks - 99.4% | |||
| Shares | Value | ||
| Communications Equipment - 1.0% | |||
| Communications Equipment - 1.0% | |||
| Qualcomm, Inc. | 79,271 | $4,026,174 | |
| Electronic Equipment & Components - 2.6% | |||
| Electronic Manufacturing Services - 2.6% | |||
| QLogic Corp. (a) | 786,246 | 10,134,711 | |
| Internet & Catalog Retail - 0.3% | |||
| Internet Retail - 0.3% | |||
| Amazon.com, Inc. (a) | 2,000 | 1,105,040 | |
| Internet Software & Services - 11.6% | |||
| Internet Software & Services - 11.6% | |||
| Alibaba Group Holding Ltd. sponsored ADR (a)(b) | 81,600 | 5,614,896 | |
| Alphabet, Inc.: | |||
| Class A | 23,900 | 17,141,558 | |
| Class C | 8,557 | 5,970,818 | |
| Facebook, Inc. Class A (a) | 152,684 | 16,324,973 | |
| 45,052,245 | |||
| IT Services - 7.8% | |||
| Data Processing & Outsourced Services - 2.2% | |||
| MasterCard, Inc. Class A | 39,200 | 3,407,264 | |
| Visa, Inc. Class A | 73,700 | 5,335,143 | |
| 8,742,407 | |||
| IT Consulting & Other Services - 5.6% | |||
| IBM Corp. | 145,448 | 19,058,051 | |
| Teradata Corp. (a) | 100,857 | 2,516,382 | |
| 21,574,433 | |||
| TOTAL IT SERVICES | 30,316,840 | ||
| Semiconductors & Semiconductor Equipment - 0.9% | |||
| Semiconductors - 0.9% | |||
| Micron Technology, Inc. (a) | 344,400 | 3,660,972 | |
| Technology Hardware, Storage & Peripherals - 75.2% | |||
| Technology Hardware, Storage & Peripherals - 75.2% | |||
| 3D Systems Corp. (a)(b) | 77,600 | 827,992 | |
| Apple, Inc. | 922,005 | 89,148,665 | |
| Canon, Inc. sponsored ADR (b) | 246,100 | 6,940,020 | |
| Cray, Inc. (a) | 13,800 | 585,258 | |
| Diebold, Inc. (b) | 231,300 | 5,740,866 | |
| Electronics for Imaging, Inc. (a) | 211,800 | 8,389,398 | |
| EMC Corp. | 1,664,578 | 43,495,423 | |
| Hewlett Packard Enterprise Co. | 1,421,156 | 18,858,740 | |
| HP, Inc. | 1,813,905 | 19,390,644 | |
| Immersion Corp. (a) | 81,300 | 732,513 | |
| Lexmark International, Inc. Class A | 421,800 | 13,084,236 | |
| NCR Corp. (a) | 162,300 | 3,791,328 | |
| NetApp, Inc. | 182,660 | 4,537,274 | |
| Nimble Storage, Inc. (a)(b) | 878,823 | 6,362,679 | |
| Quantum Corp. (a)(b) | 4,457,800 | 2,273,478 | |
| SanDisk Corp. | 435,000 | 31,433,100 | |
| Seagate Technology LLC | 615,352 | 19,297,439 | |
| Silicon Graphics International Corp. (a)(b) | 67,100 | 407,297 | |
| Super Micro Computer, Inc. (a) | 28,200 | 915,654 | |
| Western Digital Corp. | 364,434 | 15,863,812 | |
| 292,075,816 | |||
| TOTAL COMMON STOCKS | |||
| (Cost $319,121,819) | 386,371,798 | ||
| Money Market Funds - 4.7% | |||
| Fidelity Securities Lending Cash Central Fund, 0.44% (c)(d) | |||
| (Cost $18,061,575) | 18,061,575 | 18,061,575 | |
| TOTAL INVESTMENT PORTFOLIO - 104.1% | |||
| (Cost $337,183,394) | 404,433,373 | ||
| NET OTHER ASSETS (LIABILITIES) - (4.1)% | (15,879,867) | ||
| NET ASSETS - 100% | $388,553,506 |
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 | $6,422 |
| Fidelity Securities Lending Cash Central Fund | 118,593 |
| Total | $125,015 |
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 | Value, end of period |
| Datalink Corp. | $15,196,124 | $-- | $14,792,124 | $-- | $-- |
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.
Computers Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2016 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $15,708,176) — See accompanying schedule: Unaffiliated issuers (cost $319,121,819) | $386,371,798 | |
| Fidelity Central Funds (cost $18,061,575) | 18,061,575 | |
| Total Investments (cost $337,183,394) | $404,433,373 | |
| Receivable for investments sold | 4,109,299 | |
| Receivable for fund shares sold | 58,379 | |
| Dividends receivable | 644,541 | |
| Distributions receivable from Fidelity Central Funds | 7,758 | |
| Prepaid expenses | 2,117 | |
| Other receivables | 151,218 | |
| Total assets | 409,406,685 | |
| Liabilities | ||
| Payable to custodian bank | $1,867,730 | |
| Payable for investments purchased | 193,050 | |
| Payable for fund shares redeemed | 419,506 | |
| Accrued management fee | 175,782 | |
| Other affiliated payables | 85,817 | |
| Other payables and accrued expenses | 49,719 | |
| Collateral on securities loaned, at value | 18,061,575 | |
| Total liabilities | 20,853,179 | |
| Net Assets | $388,553,506 | |
| Net Assets consist of: | ||
| Paid in capital | $328,990,250 | |
| Undistributed net investment income | 680,917 | |
| Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (8,286,757) | |
| Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 67,169,096 | |
| Net Assets, for 6,220,413 shares outstanding | $388,553,506 | |
| Net Asset Value, offering price and redemption price per share ($388,553,506 ÷ 6,220,413 shares) | $62.46 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 29, 2016 | ||
| Investment Income | ||
| Dividends | $9,908,989 | |
| Income from Fidelity Central Funds(including $118,593 from security lending) | 125,015 | |
| Total income | 10,034,004 | |
| Expenses | ||
| Management fee | $3,217,235 | |
| Transfer agent fees | 1,162,785 | |
| Accounting and security lending fees | 219,903 | |
| Custodian fees and expenses | 13,093 | |
| Independent trustees' compensation | 11,287 | |
| Registration fees | 20,624 | |
| Audit | 42,429 | |
| Legal | 9,990 | |
| Interest | 7,699 | |
| Miscellaneous | 7,695 | |
| Total expenses before reductions | 4,712,740 | |
| Expense reductions | (60,159) | 4,652,581 |
| Net investment income (loss) | 5,381,423 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 9,817,823 | |
| Other affiliated issuers | 126,875 | |
| Foreign currency transactions | 9,653 | |
| Total net realized gain (loss) | 9,954,351 | |
| Change in net unrealized appreciation (depreciation) on: Investment securities | (148,536,404) | |
| Assets and liabilities in foreign currencies | 769 | |
| Total change in net unrealized appreciation (depreciation) | (148,535,635) | |
| Net gain (loss) | (138,581,284) | |
| Net increase (decrease) in net assets resulting from operations | $(133,199,861) |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 29, 2016 | Year ended February 28, 2015 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $5,381,423 | $3,977,548 |
| Net realized gain (loss) | 9,954,351 | 19,825,223 |
| Change in net unrealized appreciation (depreciation) | (148,535,635) | 60,854,430 |
| Net increase (decrease) in net assets resulting from operations | (133,199,861) | 84,657,201 |
| Distributions to shareholders from net investment income | (5,463,090) | (4,364,252) |
| Distributions to shareholders from net realized gain | (14,901,951) | (16,558,901) |
| Total distributions | (20,365,041) | (20,923,153) |
| Share transactions | ||
| Proceeds from sales of shares | 22,498,928 | 195,542,539 |
| Reinvestment of distributions | 19,596,807 | 20,358,707 |
| Cost of shares redeemed | (308,829,724) | (150,113,082) |
| Net increase (decrease) in net assets resulting from share transactions | (266,733,989) | 65,788,164 |
| Redemption fees | 805 | 6,717 |
| Total increase (decrease) in net assets | (420,298,086) | 129,528,929 |
| Net Assets | ||
| Beginning of period | 808,851,592 | 679,322,663 |
| End of period (including undistributed net investment income of $680,917 and undistributed net investment income of $774,709, respectively) | $388,553,506 | $808,851,592 |
| Other Information | ||
| Shares | ||
| Sold | 298,264 | 2,396,480 |
| Issued in reinvestment of distributions | 290,433 | 245,952 |
| Redeemed | (4,081,263) | (1,931,757) |
| Net increase (decrease) | (3,492,566) | 710,675 |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Computers Portfolio
| Years ended February 28, | 2016A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $83.28 | $75.46 | $64.51 | $64.89 | $59.80 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .69 | .45 | .59 | .18 | (.18) |
| Net realized and unrealized gain (loss) | (18.42) | 9.61 | 15.76 | (.43) | 5.27 |
| Total from investment operations | (17.73) | 10.06 | 16.35 | (.25) | 5.09 |
| Distributions from net investment income | (.80) | (.47) | (.53) | (.13) | – |
| Distributions from net realized gain | (2.29) | (1.77) | (4.87) | – | – |
| Total distributions | (3.09) | (2.24) | (5.40) | (.13) | – |
| Redemption fees added to paid in capitalB,C | – | – | – | – | – |
| Net asset value, end of period | $62.46 | $83.28 | $75.46 | $64.51 | $64.89 |
| Total ReturnD | (21.56)% | 13.36% | 27.13% | (.38)% | 8.51% |
| Ratios to Average Net AssetsE,F | |||||
| Expenses before reductions | .80% | .80% | .82% | .85% | .86% |
| Expenses net of fee waivers, if any | .80% | .80% | .82% | .85% | .86% |
| Expenses net of all reductions | .79% | .80% | .82% | .82% | .85% |
| Net investment income (loss) | .91% | .57% | .86% | .29% | (.32)% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $388,554 | $808,852 | $679,323 | $687,105 | $758,713 |
| Portfolio turnover rateG | 31% | 46% | 35% | 184% | 193% |
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.
Electronics 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, 2016 | Past 1 year | Past 5 years | Past 10 years |
| Electronics Portfolio | (10.44)% | 9.36% | 6.30% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Electronics Portfolio on February 28, 2006.
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 | ||
| $18,416 | Electronics Portfolio | |
| $18,666 | S&P 500® Index | |
Electronics Portfolio
Management's Discussion of Fund Performance
Market Recap: The S&P 500® index returned -6.19% for the year ending February 29, 2016. Largely range-bound for the first half of the period, U.S. stocks suffered a steep, late-summer decline on concern about an economic slowdown in China. The market recovered in October, lifted by the U.S. Federal Reserve’s decision to delay raising near-term interest rates until mid-December. Investors also drew courage from a rate cut in China and economic stimulus in Europe. But continued oil-price weakness and U.S.-dollar strength, plus fresh worries about China and the Middle East, pushed the S&P 500® to its worst January since 2009, followed by a volatile but ultimately flattish February. Overall, growth-oriented and larger-cap stocks fared better than value and smaller-cap complements. In this environment, the tech-heavy Nasdaq Composite Index® returned -7.07% for the 12 months; the Russell 2000® Index, -14.97%. Few sectors within the broad-market S&P 500® gained ground, with a wide gap separating leaders from laggards. Despite increased competition among wireless carriers, telecommunication services (+8%) led the way, followed by the more defensive utilities sector (+6%). Rising wages and low inflation buoyed consumer staples (+4%), less so consumer discretionary (0%). Meanwhile, energy (-24%) foundered amid commodity weakness that also hurt materials (-17%). The financials sector (-12%) struggled as well.Comments from Portfolio Manager Stephen Barwikowski: For the year, the fund returned -10.44%, trailing the -9.56% return of the MSCI U.S. IMI Semiconductors & Semiconductor Equipment 25/50 Index. The fund also finished behind the S&P 500® index, as concerns about a slowing U.S. economy and weak semiconductor demand weighed on the chip group. Versus the MSCI index, out-of-benchmark exposure to technology hardware, storage & peripherals hampered performance the most, along with weak stock picking in semiconductors. Chipmakers Micron Technology and Marvell Technology Group were the fund’s two largest relative detractors. They were part of a group of stocks with PC exposure – which also included non-benchmark positions in printer and computer maker HP and hard-disk-drive manufacturers Seagate Technology and Western Digital – that I favored in place of investing more in PC chipmaker Intel. Unfortunately, all of these “Intel substitutes” suffered steep declines this period. A sizable overweighting in Semtech, a maker of analog and mixed-signal semiconductors, also worked against us, as did a large underweighting in Avago Technologies. Although I was initially wary of this stock’s valuation, I grew much more enthusiastic about it after the firm’s May announcement of plans to buy Broadcom in a blockbuster $37 billion deal that closed in February. Although Avago detracted from relative performance, Broadcom was the fund’s largest contributor and largest position at period end. Conversely, good stock picks and a large underweighting in the relatively weak-performing semiconductor equipment segment bolstered fund results. At the stock level, negligible exposure to two poorly performing index stocks in that group – Applied Materials and SunEdison – lifted relative performance. I’ll also mention Altera, whose shares in the fund returned a robust 43% during the period. This company was acquired by Intel in December.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.
Electronics Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 29, 2016
| % of fund's net assets | % of fund's net assets 6 months ago | |
| Broadcom Ltd. | 11.8 | 11.9 |
| Qualcomm, Inc. | 9.9 | 4.2 |
| Intel Corp. | 7.9 | 14.2 |
| NXP Semiconductors NV | 7.4 | 0.6 |
| ON Semiconductor Corp. | 5.2 | 0.0 |
| Maxim Integrated Products, Inc. | 4.9 | 5.3 |
| Micron Technology, Inc. | 4.7 | 5.7 |
| Lam Research Corp. | 4.2 | 2.5 |
| Marvell Technology Group Ltd. | 3.9 | 4.3 |
| Semtech Corp. | 3.6 | 4.8 |
| 63.5 |
Top Industries (% of fund's net assets)
| As of February 29, 2016 | ||
| Semiconductors & Semiconductor Equipment | 63.8% | |
| Diversified Financial Services | 11.8% | |
| Communications Equipment | 9.9% | |
| Technology Hardware, Storage & Peripherals | 7.4% | |
| Electronic Equipment & Components | 4.4% | |
| All Others* | 2.7% | |
| As of August 31, 2015 | ||
| Semiconductors & Semiconductor Equipment | 84.7% | |
| Technology Hardware, Storage & Peripherals | 6.7% | |
| Communications Equipment | 4.2% | |
| Electronic Equipment & Components | 3.3% | |
| Diversified Telecommunication Services | 0.4% | |
| All Others* | 0.7% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
Percentages shown as 0.0% may reflect amounts less than 0.05%.
Electronics Portfolio
Investments February 29, 2016
Showing Percentage of Net Assets
| Common Stocks - 97.9% | |||
| Shares | Value | ||
| Biotechnology - 0.0% | |||
| Biotechnology - 0.0% | |||
| Arrowhead Research Corp. warrants 5/21/17 (a) | 285,468 | $3 | |
| Commercial Services & Supplies - 0.4% | |||
| Office Services & Supplies - 0.4% | |||
| West Corp. | 240,800 | 5,365,024 | |
| Communications Equipment - 9.9% | |||
| Communications Equipment - 9.9% | |||
| Qualcomm, Inc. | 2,596,984 | 131,900,817 | |
| Diversified Financial Services - 11.8% | |||
| Other Diversified Financial Services - 11.8% | |||
| Broadcom Ltd. | 1,175,400 | 157,468,337 | |
| Diversified Telecommunication Services - 0.0% | |||
| Alternative Carriers - 0.0% | |||
| Intelsat SA (a)(b) | 202,142 | 347,684 | |
| Electronic Equipment & Components - 4.4% | |||
| Electronic Equipment & Instruments - 0.4% | |||
| Keysight Technologies, Inc. (a) | 221,300 | 5,773,717 | |
| Electronic Manufacturing Services - 4.0% | |||
| Jabil Circuit, Inc. | 1,252,732 | 26,119,462 | |
| TTM Technologies, Inc. (a) | 4,195,506 | 27,522,519 | |
| 53,641,981 | |||
| TOTAL ELECTRONIC EQUIPMENT & COMPONENTS | 59,415,698 | ||
| Internet Software & Services - 0.4% | |||
| Internet Software & Services - 0.4% | |||
| Rackspace Hosting, Inc. (a) | 246,600 | 5,309,298 | |
| IT Services - 0.1% | |||
| Data Processing & Outsourced Services - 0.1% | |||
| EVERTEC, Inc. | 104,712 | 1,246,073 | |
| Semiconductors & Semiconductor Equipment - 63.5% | |||
| Semiconductor Equipment - 7.4% | |||
| Amkor Technology, Inc. (a) | 512,067 | 2,591,059 | |
| Applied Materials, Inc. | 1,670,600 | 31,524,222 | |
| Lam Research Corp. | 764,473 | 56,035,871 | |
| PDF Solutions, Inc. (a) | 161,300 | 1,832,368 | |
| SunEdison Semiconductor Ltd. (a) | 601,200 | 4,106,196 | |
| SunEdison, Inc. (a)(b) | 460,200 | 911,196 | |
| Xcerra Corp. (a) | 350,900 | 2,003,639 | |
| 99,004,551 | |||
| Semiconductors - 56.1% | |||
| Analog Devices, Inc. | 327,989 | 17,380,137 | |
| Applied Micro Circuits Corp. (a) | 780,938 | 4,513,822 | |
| Cavium, Inc. (a) | 183,500 | 10,916,415 | |
| Cypress Semiconductor Corp. (b) | 3,674,400 | 29,321,712 | |
| Dialog Semiconductor PLC (a) | 4,521 | 149,709 | |
| Diodes, Inc. (a) | 163,900 | 3,137,046 | |
| Exar Corp. (a) | 57,202 | 305,459 | |
| Intel Corp. | 3,580,017 | 105,932,703 | |
| Intersil Corp. Class A | 2,596,098 | 33,152,171 | |
| Marvell Technology Group Ltd. | 5,421,296 | 51,773,377 | |
| Maxim Integrated Products, Inc. | 1,934,225 | 65,492,859 | |
| Microchip Technology, Inc. (b) | 945,000 | 42,043,050 | |
| Micron Technology, Inc. (a) | 5,908,440 | 62,806,717 | |
| NVIDIA Corp. | 559,720 | 17,552,819 | |
| NXP Semiconductors NV (a) | 1,390,404 | 99,052,381 | |
| ON Semiconductor Corp. (a) | 8,290,150 | 69,554,359 | |
| Qorvo, Inc. (a) | 919,500 | 41,451,060 | |
| Semtech Corp. (a) | 2,513,075 | 48,150,517 | |
| Skyworks Solutions, Inc. | 719,800 | 47,830,710 | |
| Texas Instruments, Inc. | 6,250 | 331,375 | |
| 750,848,398 | |||
| TOTAL SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT | 849,852,949 | ||
| Technology Hardware, Storage & Peripherals - 7.4% | |||
| Technology Hardware, Storage & Peripherals - 7.4% | |||
| Hewlett Packard Enterprise Co. | 516,400 | 6,852,628 | |
| HP, Inc. | 3,424,900 | 36,612,181 | |
| Nimble Storage, Inc. (a)(b) | 657,900 | 4,763,196 | |
| Seagate Technology LLC | 776,100 | 24,338,496 | |
| Western Digital Corp. | 597,900 | 26,026,587 | |
| 98,593,088 | |||
| TOTAL COMMON STOCKS | |||
| (Cost $1,406,066,659) | 1,309,498,971 | ||
| Principal Amount | Value | ||
| Nonconvertible Bonds - 0.3% | |||
| Semiconductors & Semiconductor Equipment - 0.3% | |||
| Semiconductors - 0.3% | |||
| Advanced Micro Devices, Inc.: | |||
| 7% 7/1/24 | 4,785,000 | 2,990,625 | |
| 7.75% 8/1/20 | 2,270,000 | 1,549,275 | |
| 4,539,900 | |||
| TOTAL NONCONVERTIBLE BONDS | |||
| (Cost $5,974,221) | 4,539,900 | ||
| Shares | Value | ||
| Money Market Funds - 4.1% | |||
| Fidelity Cash Central Fund, 0.40% (c) | 10,943,307 | 10,943,307 | |
| Fidelity Securities Lending Cash Central Fund, 0.44% (c)(d) | 43,315,775 | 43,315,775 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $54,259,082) | 54,259,082 | ||
| TOTAL INVESTMENT PORTFOLIO - 102.3% | |||
| (Cost $1,466,299,962) | 1,368,297,953 | ||
| NET OTHER ASSETS (LIABILITIES) - (2.3)% | (30,122,977) | ||
| NET ASSETS - 100% | $1,338,174,976 |
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 | $61,564 |
| Fidelity Securities Lending Cash Central Fund | 460,025 |
| Total | $521,589 |
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 | Value, end of period |
| MagnaChip Semiconductor Corp. | $10,903,713 | $2,214,166 | $18,355,704 | $-- | $-- |
| Semtech Corp. | 49,741,634 | 59,700,900 | 35,099,329 | -- | -- |
| TTM Technologies, Inc. | 53,948,528 | 16,701,441 | 40,823,899 | -- | -- |
| Total | $114,593,875 | $78,616,507 | $94,278,932 | $-- | $-- |
Investment Valuation
The following is a summary of the inputs used, as of February 29, 2016, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used 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 | $1,309,498,971 | $1,309,498,968 | $3 | $-- |
| Nonconvertible Bonds | 4,539,900 | -- | 4,539,900 | -- |
| Money Market Funds | 54,259,082 | 54,259,082 | -- | -- |
| Total Investments in Securities: | $1,368,297,953 | $1,363,758,050 | $4,539,903 | $-- |
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% |
| Singapore | 12.1% |
| Netherlands | 7.4% |
| Bermuda | 3.9% |
| Ireland | 1.8% |
| Others (Individually Less Than 1%) | 0.1% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Electronics Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2016 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $41,741,082) — See accompanying schedule: Unaffiliated issuers (cost $1,412,040,880) | $1,314,038,871 | |
| Fidelity Central Funds (cost $54,259,082) | 54,259,082 | |
| Total Investments (cost $1,466,299,962) | $1,368,297,953 | |
| Receivable for investments sold | 14,948,144 | |
| Receivable for fund shares sold | 699,364 | |
| Dividends receivable | 3,950,147 | |
| Interest receivable | 70,485 | |
| Distributions receivable from Fidelity Central Funds | 22,383 | |
| Prepaid expenses | 6,273 | |
| Other receivables | 149,723 | |
| Total assets | 1,388,144,472 | |
| Liabilities | ||
| Payable for investments purchased | $3,920,588 | |
| Payable for fund shares redeemed | 1,783,932 | |
| Accrued management fee | 585,416 | |
| Other affiliated payables | 239,595 | |
| Other payables and accrued expenses | 124,190 | |
| Collateral on securities loaned, at value | 43,315,775 | |
| Total liabilities | 49,969,496 | |
| Net Assets | $1,338,174,976 | |
| Net Assets consist of: | ||
| Paid in capital | $1,457,456,033 | |
| Undistributed net investment income | 902,519 | |
| Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (22,178,328) | |
| Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (98,005,248) | |
| Net Assets, for 19,151,490 shares outstanding | $1,338,174,976 | |
| Net Asset Value, offering price and redemption price per share ($1,338,174,976 ÷ 19,151,490 shares) | $69.87 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 29, 2016 | ||
| Investment Income | ||
| Dividends | $27,335,125 | |
| Interest | 768,505 | |
| Income from Fidelity Central Funds(including $460,025 from security lending) | 521,589 | |
| Total income | 28,625,219 | |
| Expenses | ||
| Management fee | $9,628,489 | |
| Transfer agent fees | 3,043,462 | |
| Accounting and security lending fees | 554,312 | |
| Custodian fees and expenses | 111,589 | |
| Independent trustees' compensation | 33,637 | |
| Depreciation in deferred trustee compensation account | (30) | |
| Registration fees | 67,930 | |
| Audit | 48,152 | |
| Legal | 26,977 | |
| Interest | 5,304 | |
| Miscellaneous | 20,579 | |
| Total expenses before reductions | 13,540,401 | |
| Expense reductions | (466,731) | 13,073,670 |
| Net investment income (loss) | 15,551,549 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 124,812,868 | |
| Other affiliated issuers | (20,916,106) | |
| Foreign currency transactions | (12,114) | |
| Total net realized gain (loss) | 103,884,648 | |
| Change in net unrealized appreciation (depreciation) on: Investment securities | (339,859,956) | |
| Assets and liabilities in foreign currencies | 4,608 | |
| Total change in net unrealized appreciation (depreciation) | (339,855,348) | |
| Net gain (loss) | (235,970,700) | |
| Net increase (decrease) in net assets resulting from operations | $(220,419,151) |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 29, 2016 | Year ended February 28, 2015 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $15,551,549 | $10,916,263 |
| Net realized gain (loss) | 103,884,648 | 300,293,041 |
| Change in net unrealized appreciation (depreciation) | (339,855,348) | 227,965,379 |
| Net increase (decrease) in net assets resulting from operations | (220,419,151) | 539,174,683 |
| Distributions to shareholders from net investment income | (15,827,117) | (10,701,038) |
| Distributions to shareholders from net realized gain | (235,831,061) | (50,011,366) |
| Total distributions | (251,658,178) | (60,712,404) |
| Share transactions | ||
| Proceeds from sales of shares | 258,847,468 | 1,265,212,788 |
| Reinvestment of distributions | 240,283,384 | 57,811,166 |
| Cost of shares redeemed | (1,083,972,350) | (660,454,560) |
| Net increase (decrease) in net assets resulting from share transactions | (584,841,498) | 662,569,394 |
| Redemption fees | 54,935 | 154,050 |
| Total increase (decrease) in net assets | (1,056,863,892) | 1,141,185,723 |
| Net Assets | ||
| Beginning of period | 2,395,038,868 | 1,253,853,145 |
| End of period (including undistributed net investment income of $902,519 and undistributed net investment income of $1,323,381, respectively) | $1,338,174,976 | $2,395,038,868 |
| Other Information | ||
| Shares | ||
| Sold | 3,158,007 | 16,339,638 |
| Issued in reinvestment of distributions | 2,946,726 | 686,150 |
| Redeemed | (13,726,287) | (8,604,455) |
| Net increase (decrease) | (7,621,554) | 8,421,333 |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Electronics Portfolio
| Years ended February 28, | 2016 A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $89.46 | $68.32 | $49.82 | $53.29 | $53.36 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .70 | .47 | .36 | .17 | .01 |
| Net realized and unrealized gain (loss) | (8.79) | 23.21 | 18.53 | (3.49) | (.02) |
| Total from investment operations | (8.09) | 23.68 | 18.89 | (3.32) | (.01) |
| Distributions from net investment income | (.83) | (.45) | (.32) | (.15) | (.06) |
| Distributions from net realized gain | (10.68) | (2.10) | (.06) | – | – |
| Total distributions | (11.50)C | (2.55) | (.39)D | (.15) | (.06) |
| Redemption fees added to paid in capitalB | –E | .01 | –E | –E | –E |
| Net asset value, end of period | $69.87 | $89.46 | $68.32 | $49.82 | $53.29 |
| Total ReturnF | (10.44)% | 34.91% | 38.01% | (6.20)% | (.01)% |
| Ratios to Average Net AssetsG,H | |||||
| Expenses before reductions | .77% | .78% | .82% | .84% | .84% |
| Expenses net of fee waivers, if any | .77% | .78% | .82% | .84% | .84% |
| Expenses net of all reductions | .74% | .77% | .79% | .82% | .83% |
| Net investment income (loss) | .88% | .61% | .63% | .36% | .03% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $1,338,175 | $2,395,039 | $1,253,853 | $953,784 | $1,291,741 |
| Portfolio turnover rateI | 179% | 132%J | 186% | 118% | 137% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Total distributions of $11.50 per share is comprised of distributions from net investment income of $.825 and distributions from net realized gain of $10.678 per share.
D Total distributions of $.39 per share is comprised of distributions from net investment income of $.322 and distributions from net realized gain of $.064 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.
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, 2016 | Past 1 year | Past 5 years | Past 10 years |
| IT Services Portfolio | (0.59)% | 14.70% | 12.35% |
Prior to October 1, 2006, the fund was named Business Service and Outsourcing 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 IT Services Portfolio on February 28, 2006.
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 | ||
| $32,046 | IT Services Portfolio | |
| $18,666 | S&P 500® Index | |
IT Services Portfolio
Management's Discussion of Fund Performance
Market Recap: The S&P 500® index returned -6.19% for the year ending February 29, 2016. Largely range-bound for the first half of the period, U.S. stocks suffered a steep, late-summer decline on concern about an economic slowdown in China. The market recovered in October, lifted by the U.S. Federal Reserve’s decision to delay raising near-term interest rates until mid-December. Investors also drew courage from a rate cut in China and economic stimulus in Europe. But continued oil-price weakness and U.S.-dollar strength, plus fresh worries about China and the Middle East, pushed the S&P 500® to its worst January since 2009, followed by a volatile but ultimately flattish February. Overall, growth-oriented and larger-cap stocks fared better than value and smaller-cap complements. In this environment, the tech-heavy Nasdaq Composite Index® returned -7.07% for the 12 months; the Russell 2000® Index, -14.97%. Few sectors within the broad-market S&P 500® gained ground, with a wide gap separating leaders from laggards. Despite increased competition among wireless carriers, telecommunication services (+8%) led the way, followed by the more defensive utilities sector (+6%). Rising wages and low inflation buoyed consumer staples (+4%), less so consumer discretionary (0%). Meanwhile, energy (-24%) foundered amid commodity weakness that also hurt materials (-17%). The financials sector (-12%) struggled as well.Comments from Lead Portfolio Manager Kyle Weaver: For the year, the fund returned -0.59%, significantly outpacing the -3.02% return of the MSCI U.S. IMI Information Technology Services 25/50 Index, while also topping the more-diversified S&P 500® index. Over the period, technology stocks were helped by compelling business models and resilient cash flow of companies in the group. Versus the MSCI index, the fund benefited from stock selection in IT consulting & other services, out-of-benchmark exposure to application software and a modest cash position. At the stock level, a sizable underweighting in IBM, the largest component of our MSCI benchmark, was by far the fund’s top relative contributor, given that IBM shares returned -16%. Also contributing was a large overweighting in ExlService Holdings, a provider of outsourced business process services focused on the insurance industry, along with an out-of-benchmark stake in Globant, an application software company incorporated in Luxembourg but based in Argentina. Conversely, a non-index position in Endurance International Group Holdings was far and away the biggest detractor this period. Endurance competes in the Web-hosting space. We added significantly to our position as the shares declined. Overweighting Alliance Data Systems also worked against relative results. Shares of this provider of private-label card services for retailers had an especially difficult January. We didn’t share investors’ pessimistic view and nearly tripled the fund’s share count during the 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 September 30, 2015, Daniel Sherwood was named Co-Manager of the fund.IT Services Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 29, 2016
| % of fund's net assets | % of fund's net assets 6 months ago | |
| Visa, Inc. Class A | 17.0 | 15.8 |
| MasterCard, Inc. Class A | 9.8 | 9.6 |
| Cognizant Technology Solutions Corp. Class A | 6.6 | 7.6 |
| Accenture PLC Class A | 6.0 | 4.8 |
| PayPal Holdings, Inc. | 5.2 | 2.7 |
| Alliance Data Systems Corp. | 4.3 | 4.0 |
| IBM Corp. | 3.9 | 7.9 |
| Fiserv, Inc. | 3.4 | 1.6 |
| Fidelity National Information Services, Inc. | 2.9 | 3.5 |
| ExlService Holdings, Inc. | 2.3 | 2.1 |
| 61.4 |
Top Industries (% of fund's net assets)
| As of February 29, 2016 | ||
| IT Services | 88.6% | |
| Internet Software & Services | 5.6% | |
| Electronic Equipment & Components | 1.6% | |
| Professional Services | 1.4% | |
| Diversified Consumer Services | 0.8% | |
| All Others* | 2.0% | |
| As of August 31, 2015 | ||
| IT Services | 86.3% | |
| Internet Software & Services | 6.1% | |
| Technology Hardware, Storage & Peripherals | 2.2% | |
| Professional Services | 1.6% | |
| Diversified Consumer Services | 0.6% | |
| All Others* | 3.2% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
IT Services Portfolio
Investments February 29, 2016
Showing Percentage of Net Assets
| Common Stocks - 98.6% | |||
| Shares | Value | ||
| Diversified Consumer Services - 0.8% | |||
| Specialized Consumer Services - 0.8% | |||
| H&R Block, Inc. | 457,325 | $15,036,846 | |
| Electronic Equipment & Components - 1.6% | |||
| Electronic Equipment & Instruments - 1.6% | |||
| VeriFone Systems, Inc. (a) | 1,255,700 | 29,998,673 | |
| Internet Software & Services - 5.6% | |||
| Internet Software & Services - 5.6% | |||
| Cvent, Inc. (a) | 126,400 | 2,468,592 | |
| Endurance International Group Holdings, Inc. (a)(b) | 3,165,832 | 35,583,952 | |
| GoDaddy, Inc. (a)(b) | 1,165,200 | 36,529,020 | |
| Marketo, Inc. (a) | 210,470 | 3,550,629 | |
| Q2 Holdings, Inc. (a) | 417,620 | 8,465,157 | |
| Rightside Group Ltd. (a) | 9,454 | 80,737 | |
| Shopify, Inc. Class A | 47,500 | 1,063,050 | |
| Web.com Group, Inc. (a) | 793,508 | 14,402,170 | |
| Wix.com Ltd. (a) | 188,817 | 3,630,951 | |
| 105,774,258 | |||
| IT Services - 88.6% | |||
| Data Processing & Outsourced Services - 62.4% | |||
| Alliance Data Systems Corp. (a) | 383,248 | 80,531,902 | |
| Amadeus IT Holding SA Class A | 47,500 | 1,920,422 | |
| Automatic Data Processing, Inc. | 101,500 | 8,596,035 | |
| Black Knight Financial Services, Inc. Class A | 6,100 | 178,791 | |
| Broadridge Financial Solutions, Inc. | 7,800 | 437,814 | |
| Cardtronics, Inc. (a) | 862,200 | 29,073,384 | |
| Cass Information Systems, Inc. | 1,852 | 92,341 | |
| Convergys Corp. | 85,000 | 2,191,300 | |
| CoreLogic, Inc. (a) | 190,100 | 6,575,559 | |
| CSG Systems International, Inc. | 100,070 | 3,798,657 | |
| DST Systems, Inc. | 41,600 | 4,350,528 | |
| Euronet Worldwide, Inc. (a) | 265,700 | 17,413,978 | |
| Everi Holdings, Inc. (a) | 1,204,700 | 3,541,818 | |
| EVERTEC, Inc. | 417,600 | 4,969,440 | |
| ExlService Holdings, Inc. (a) | 925,870 | 43,599,218 | |
| Fidelity National Information Services, Inc. | 930,000 | 54,172,500 | |
| First Data Corp. Class A (a) | 188,700 | 2,358,750 | |
| Fiserv, Inc. (a) | 680,400 | 65,066,652 | |
| FleetCor Technologies, Inc. (a) | 254,500 | 32,497,105 | |
| Global Payments, Inc. | 594,800 | 36,253,060 | |
| Heartland Payment Systems, Inc. | 105,700 | 9,885,064 | |
| Jack Henry & Associates, Inc. | 1,600 | 131,584 | |
| MasterCard, Inc. Class A | 2,128,100 | 184,974,452 | |
| Maximus, Inc. | 443,200 | 21,792,144 | |
| MoneyGram International, Inc. (a) | 1,309,749 | 7,046,450 | |
| Paychex, Inc. | 1,800 | 92,502 | |
| PayPal Holdings, Inc. (a) | 2,586,000 | 98,630,040 | |
| Sabre Corp. | 1,486,300 | 40,353,045 | |
| Sykes Enterprises, Inc. (a) | 37,200 | 1,133,484 | |
| Syntel, Inc. (a) | 82,500 | 3,771,900 | |
| Teletech Holdings, Inc. | 2,000 | 55,400 | |
| The Western Union Co. | 5,100 | 93,126 | |
| Total System Services, Inc. | 179,900 | 7,840,042 | |
| Travelport Worldwide Ltd. | 1,417,324 | 18,396,866 | |
| Vantiv, Inc. (a) | 489,800 | 25,489,192 | |
| Visa, Inc. Class A | 4,450,748 | 322,189,647 | |
| WEX, Inc. (a) | 232,000 | 15,149,600 | |
| WNS Holdings Ltd. sponsored ADR (a) | 732,029 | 20,862,827 | |
| Xerox Corp. | 546,100 | 5,248,021 | |
| 1,180,754,640 | |||
| IT Consulting & Other Services - 26.2% | |||
| Accenture PLC Class A | 1,137,700 | 114,065,802 | |
| Acxiom Corp. (a) | 235,500 | 4,884,270 | |
| Booz Allen Hamilton Holding Corp. Class A | 1,223,400 | 33,765,840 | |
| CACI International, Inc. Class A (a) | 11,800 | 1,140,116 | |
| Capgemini SA | 233,300 | 19,466,108 | |
| Cognizant Technology Solutions Corp. Class A (a) | 2,183,432 | 124,411,955 | |
| Computer Sciences Corp. | 52,900 | 1,524,049 | |
| CSRA, Inc. | 52,900 | 1,372,755 | |
| EPAM Systems, Inc. (a) | 550,653 | 37,653,652 | |
| Forrester Research, Inc. | 130,400 | 4,058,048 | |
| Gartner, Inc. Class A (a) | 424,076 | 34,943,862 | |
| IBM Corp. | 568,050 | 74,431,592 | |
| Leidos Holdings, Inc. | 27,525 | 1,189,631 | |
| Luxoft Holding, Inc. (a) | 330,350 | 16,768,566 | |
| Perficient, Inc. (a) | 28,300 | 510,815 | |
| Science Applications International Corp. | 70,800 | 3,161,220 | |
| Teradata Corp. (a) | 3,500 | 87,325 | |
| Unisys Corp. (a) | 273,390 | 2,944,410 | |
| Virtusa Corp. (a) | 574,998 | 20,354,929 | |
| 496,734,945 | |||
| TOTAL IT SERVICES | 1,677,489,585 | ||
| Professional Services - 1.4% | |||
| Human Resource & Employment Services - 0.5% | |||
| TriNet Group, Inc. (a) | 718,700 | 9,407,783 | |
| Research & Consulting Services - 0.9% | |||
| ICF International, Inc. (a) | 534,311 | 18,049,026 | |
| TOTAL PROFESSIONAL SERVICES | 27,456,809 | ||
| Software - 0.5% | |||
| Application Software - 0.5% | |||
| Globant SA (a) | 338,871 | 10,454,170 | |
| Technology Hardware, Storage & Peripherals - 0.1% | |||
| Technology Hardware, Storage & Peripherals - 0.1% | |||
| Nimble Storage, Inc. (a)(b) | 283,100 | 2,049,644 | |
| TOTAL COMMON STOCKS | |||
| (Cost $1,647,259,638) | 1,868,259,985 | ||
| Money Market Funds - 4.1% | |||
| Fidelity Cash Central Fund, 0.40% (c) | 17,778,392 | 17,778,392 | |
| Fidelity Securities Lending Cash Central Fund, 0.44% (c)(d) | 58,824,189 | 58,824,189 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $76,602,581) | 76,602,581 | ||
| TOTAL INVESTMENT PORTFOLIO - 102.7% | |||
| (Cost $1,723,862,219) | 1,944,862,566 | ||
| NET OTHER ASSETS (LIABILITIES) - (2.7)% | (50,687,494) | ||
| NET ASSETS - 100% | $1,894,175,072 |
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 | $75,035 |
| Fidelity Securities Lending Cash Central Fund | 879,969 |
| Total | $955,004 |
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 | 88.8% |
| Ireland | 6.0% |
| Bailiwick of Jersey | 1.1% |
| France | 1.0% |
| Bermuda | 1.0% |
| Others (Individually Less Than 1%) | 2.1% |
| 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, 2016 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $57,559,028) — See accompanying schedule: Unaffiliated issuers (cost $1,647,259,638) | $1,868,259,985 | |
| Fidelity Central Funds (cost $76,602,581) | 76,602,581 | |
| Total Investments (cost $1,723,862,219) | $1,944,862,566 | |
| Cash | 1,420,201 | |
| Receivable for investments sold | 8,844,081 | |
| Receivable for fund shares sold | 3,651,774 | |
| Dividends receivable | 1,600,777 | |
| Distributions receivable from Fidelity Central Funds | 67,215 | |
| Prepaid expenses | 4,721 | |
| Other receivables | 24,496 | |
| Total assets | 1,960,475,831 | |
| Liabilities | ||
| Payable for investments purchased | $2,982,222 | |
| Payable for fund shares redeemed | 3,197,850 | |
| Accrued management fee | 849,900 | |
| Other affiliated payables | 376,668 | |
| Other payables and accrued expenses | 69,930 | |
| Collateral on securities loaned, at value | 58,824,189 | |
| Total liabilities | 66,300,759 | |
| Net Assets | $1,894,175,072 | |
| Net Assets consist of: | ||
| Paid in capital | $1,706,272,594 | |
| Accumulated net investment loss | (930,621) | |
| Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (32,159,082) | |
| Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 220,992,181 | |
| Net Assets, for 50,971,322 shares outstanding | $1,894,175,072 | |
| Net Asset Value, offering price and redemption price per share ($1,894,175,072 ÷ 50,971,322 shares) | $37.16 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 29, 2016 | ||
| Investment Income | ||
| Dividends | $10,481,660 | |
| Interest | 20 | |
| Income from Fidelity Central Funds (including $879,969 from security lending) | 955,004 | |
| Total income | 11,436,684 | |
| Expenses | ||
| Management fee | $8,462,819 | |
| Transfer agent fees | 3,108,158 | |
| Accounting and security lending fees | 491,500 | |
| Custodian fees and expenses | 18,107 | |
| Independent trustees' compensation | 27,289 | |
| Registration fees | 228,498 | |
| Audit | 49,079 | |
| Legal | 16,791 | |
| Interest | 2,230 | |
| Miscellaneous | 14,498 | |
| Total expenses before reductions | 12,418,969 | |
| Expense reductions | (81,244) | 12,337,725 |
| Net investment income (loss) | (901,041) | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | (71,954) | |
| Foreign currency transactions | 46,606 | |
| Total net realized gain (loss) | (25,348) | |
| Change in net unrealized appreciation (depreciation) on: Investment securities | (87,798,732) | |
| Assets and liabilities in foreign currencies | (1,937) | |
| Total change in net unrealized appreciation (depreciation) | (87,800,669) | |
| Net gain (loss) | (87,826,017) | |
| Net increase (decrease) in net assets resulting from operations | $(88,727,058) |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 29, 2016 | Year ended February 28, 2015 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $(901,041) | $(791,376) |
| Net realized gain (loss) | (25,348) | 112,913,924 |
| Change in net unrealized appreciation (depreciation) | (87,800,669) | (55,301,680) |
| Net increase (decrease) in net assets resulting from operations | (88,727,058) | 56,820,868 |
| Distributions to shareholders from net investment income | – | (115,078) |
| Distributions to shareholders from net realized gain | (49,044,175) | (71,266,576) |
| Total distributions | (49,044,175) | (71,381,654) |
| Share transactions | ||
| Proceeds from sales of shares | 1,630,756,010 | 288,892,698 |
| Reinvestment of distributions | 47,070,205 | 68,706,176 |
| Cost of shares redeemed | (588,015,383) | (1,054,650,724) |
| Net increase (decrease) in net assets resulting from share transactions | 1,089,810,832 | (697,051,850) |
| Redemption fees | 137,784 | 38,282 |
| Total increase (decrease) in net assets | 952,177,383 | (711,574,354) |
| Net Assets | ||
| Beginning of period | 941,997,689 | 1,653,572,043 |
| End of period (including accumulated net investment loss of $930,621 and accumulated net investment loss of $850,482, respectively) | $1,894,175,072 | $941,997,689 |
| Other Information | ||
| Shares | ||
| Sold | 40,832,843 | 7,872,885 |
| Issued in reinvestment of distributions | 1,210,538 | 1,874,758 |
| Redeemed | (15,298,511) | (29,192,121) |
| Net increase (decrease) | 26,744,870 | (19,444,478) |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — IT Services Portfolio
| Years ended February 28, | 2016A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $38.88 | $37.86 | $27.53 | $23.77 | $22.31 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | (.02) | (.03) | (.03) | (.02)C | (.05) |
| Net realized and unrealized gain (loss) | (.15) | 4.06 | 11.42 | 4.08 | 1.86 |
| Total from investment operations | (.17) | 4.03 | 11.39 | 4.06 | 1.81 |
| Distributions from net investment income | – | (.01) | – | – | – |
| Distributions from net realized gain | (1.55) | (3.01) | (1.06) | (.30) | (.35) |
| Total distributions | (1.55) | (3.01)D | (1.06) | (.30) | (.35) |
| Redemption fees added to paid in capitalB,E | – | – | – | – | – |
| Net asset value, end of period | $37.16 | $38.88 | $37.86 | $27.53 | $23.77 |
| Total ReturnF | (.59)% | 11.16% | 41.66% | 17.22% | 8.18% |
| Ratios to Average Net AssetsG,H | |||||
| Expenses before reductions | .81% | .81% | .84% | .86% | .91% |
| Expenses net of fee waivers, if any | .81% | .81% | .84% | .86% | .91% |
| Expenses net of all reductions | .80% | .81% | .83% | .85% | .91% |
| Net investment income (loss) | (.06)% | (.07)% | (.09)% | (.09)%C | (.24)% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $1,894,175 | $941,998 | $1,653,572 | $470,962 | $249,124 |
| Portfolio turnover rateI | 24% | 56% | 74% | 107% | 143% |
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 $.02 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been (.19) %.
D Total distributions of $3.01 per share is comprised of distributions from net investment income of $.005 and distributions from net realized gain of $3.009 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, 2016 | Past 1 year | Past 5 years | Past 10 years |
| Software and IT Services Portfolio | (1.84)% | 13.74% | 12.81% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Software and IT Services Portfolio on February 28, 2006.
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 | ||
| $33,383 | Software and IT Services Portfolio | |
| $18,666 | S&P 500® Index | |
Software and IT Services Portfolio
Management's Discussion of Fund Performance
Market Recap: The S&P 500® index returned -6.19% for the year ending February 29, 2016. Largely range-bound for the first half of the period, U.S. stocks suffered a steep, late-summer decline on concern about an economic slowdown in China. The market recovered in October, lifted by the U.S. Federal Reserve's decision to delay raising near-term interest rates until mid-December. Investors also drew courage from a rate cut in China and economic stimulus in Europe. But continued oil-price weakness and U.S.-dollar strength, plus fresh worries about China and the Middle East, pushed the S&P 500® to its worst January since 2009, followed by a volatile but ultimately flattish February. Overall, growth-oriented and larger-cap stocks fared better than value and smaller-cap complements. In this environment, the tech-heavy Nasdaq Composite Index® returned -7.07% for the 12 months; the Russell 2000® Index, -14.97%. Few sectors within the broad-market S&P 500® gained ground, with a wide gap separating leaders from laggards. Despite increased competition among wireless carriers, telecommunication services (+8%) led the way, followed by the more defensive utilities sector (+6%). Rising wages and low inflation buoyed consumer staples (+4%), less so consumer discretionary (0%). Meanwhile, energy (-24%) foundered amid commodity weakness that also hurt materials (-17%). The financials sector (-12%) struggled as well.Comments from Portfolio Manager Ali Khan: For the year, the fund returned -1.84%, lagging the 2.83% gain of the MSCI U.S. IMI Software & Services 25/50 Index, but handily outpacing the broad-based S&P 500® index. Weak stock selection, especially within the Internet software & services group, was the primary detractor versus the MSCI industry index. The fund's outsized stake in real-time social-media platform Twitter was the biggest relative detractor. Shares were weighed down by management's execution of the business plan, executive turnover and a decline in monthly active users. I still have confidence in the company, increasing our exposure the past year. Elsewhere, consulting services company ICF International, an out-of-index holding, was another miss. Investors seemed to question the sustainability of the company's growth. I decreased the fund's stake, but I wasn't aggressive enough to avoid a loss. A non-index position in Qualcomm also hurt. Investor concerns about the company's short-term growth in China weighed on its stock price. As the valuation fell, I added to the fund's stake on weakness. On the plus side, underweighting IT consulting & other services was beneficial, as was stock picking in data processing & outsourced services. Among individual contributors, the largest boost came from a sizable stake in Alphabet, parent of Internet search provider Google. Combining its Class A and Class C shares made it the fund's largest holding at period end. Underweighting technology and consulting company IBM also added to the fund's relative result. IBM kept pace with the benchmark, but I believed the company faced structural issues, leaving its balance sheet and cost structure less flexible to counter how quickly the industry is changing. I did add more shares as the stock's valuation fell, as part of my effort to manage risk.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: The fund has been renamed Select Software and IT Services Portfolio to better communicate its mandate and reflect current terminology used in the industry. This is a change in name only. The fund's industry benchmark remains the same, as do the fund's investment policies and features.Software and IT Services Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 29, 2016
| % of fund's net assets | % of fund's net assets 6 months ago | |
| Microsoft Corp. | 11.3 | 11.1 |
| Alphabet, Inc. Class C | 10.5 | 10.1 |
| Facebook, Inc. Class A | 9.4 | 4.9 |
| Alphabet, Inc. Class A | 8.8 | 8.2 |
| Visa, Inc. Class A | 6.6 | 6.9 |
| MasterCard, Inc. Class A | 4.0 | 4.5 |
| Oracle Corp. | 3.3 | 5.7 |
| Salesforce.com, Inc. | 2.8 | 3.4 |
| Adobe Systems, Inc. | 2.4 | 2.7 |
| IBM Corp. | 2.3 | 1.9 |
| 61.4 |
Top Industries (% of fund's net assets)
| As of February 29, 2016 | ||
| Internet Software & Services | 39.6% | |
| Software | 31.3% | |
| IT Services | 19.5% | |
| Communications Equipment | 2.0% | |
| Electronic Equipment & Components | 1.4% | |
| All Others* | 6.2% | |
| As of August 31, 2015 | ||
| Internet Software & Services | 33.0% | |
| Software | 30.7% | |
| IT Services | 22.1% | |
| Communications Equipment | 2.4% | |
| Professional Services | 2.2% | |
| All Others* | 9.6% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
Software and IT Services Portfolio
Investments February 29, 2016
Showing Percentage of Net Assets
| Common Stocks - 99.2% | |||
| Shares | Value | ||
| Commercial Services & Supplies - 0.1% | |||
| Security & Alarm Services - 0.1% | |||
| Mix Telematics Ltd. | 24,490,396 | $3,457,177 | |
| Communications Equipment - 2.0% | |||
| Communications Equipment - 2.0% | |||
| Qualcomm, Inc. | 1,170,500 | 59,449,695 | |
| Consumer Finance - 0.7% | |||
| Consumer Finance - 0.7% | |||
| American Express Co. | 380,200 | 21,131,516 | |
| Diversified Consumer Services - 0.1% | |||
| Education Services - 0.1% | |||
| Chegg, Inc. (a)(b) | 936,200 | 4,016,298 | |
| Diversified Telecommunication Services - 0.8% | |||
| Alternative Carriers - 0.8% | |||
| inContact, Inc. (a) | 2,510,656 | 23,273,781 | |
| Electronic Equipment & Components - 1.4% | |||
| Electronic Equipment & Instruments - 0.2% | |||
| Fitbit, Inc. (b) | 499,200 | 6,105,216 | |
| Electronic Manufacturing Services - 1.2% | |||
| Trimble Navigation Ltd. (a) | 1,487,200 | 34,592,272 | |
| TOTAL ELECTRONIC EQUIPMENT & COMPONENTS | 40,697,488 | ||
| Health Care Technology - 0.3% | |||
| Health Care Technology - 0.3% | |||
| Medidata Solutions, Inc. (a) | 277,600 | 9,577,200 | |
| Internet & Catalog Retail - 0.4% | |||
| Internet Retail - 0.4% | |||
| Groupon, Inc. Class A (a)(b) | 2,234,500 | 10,680,910 | |
| Internet Software & Services - 39.6% | |||
| Internet Software & Services - 39.6% | |||
| Actua Corp. (a) | 429,389 | 3,490,933 | |
| Akamai Technologies, Inc. (a) | 483,700 | 26,105,289 | |
| Alibaba Group Holding Ltd. sponsored ADR (a) | 412,900 | 28,411,649 | |
| Alphabet, Inc.: | |||
| Class A | 366,000 | 262,502,520 | |
| Class C | 448,560 | 312,991,711 | |
| Bazaarvoice, Inc. (a) | 1,179,900 | 3,704,886 | |
| Cvent, Inc. (a) | 220,200 | 4,300,506 | |
| Demandware, Inc. (a)(b) | 575,350 | 19,958,892 | |
| Endurance International Group Holdings, Inc. (a) | 1,183,700 | 13,304,788 | |
| Facebook, Inc. Class A (a) | 2,604,300 | 278,451,756 | |
| LinkedIn Corp. Class A (a) | 350,300 | 41,051,657 | |
| Marketo, Inc. (a) | 491,400 | 8,289,918 | |
| New Relic, Inc. (a)(b) | 261,400 | 6,958,468 | |
| NIC, Inc. | 552,300 | 9,714,957 | |
| Opower, Inc. (a)(b) | 503,500 | 4,163,945 | |
| Pandora Media, Inc. (a)(b) | 475,900 | 4,863,698 | |
| Rackspace Hosting, Inc. (a) | 974,900 | 20,989,597 | |
| SciQuest, Inc. (a) | 412,857 | 5,016,213 | |
| Shutterstock, Inc. (a)(b) | 498,900 | 17,411,610 | |
| Twitter, Inc. (a) | 1,718,300 | 31,135,596 | |
| Web.com Group, Inc. (a) | 706,034 | 12,814,517 | |
| Yahoo!, Inc. (a) | 1,932,659 | 61,439,230 | |
| 1,177,072,336 | |||
| IT Services - 19.5% | |||
| Data Processing & Outsourced Services - 16.2% | |||
| Alliance Data Systems Corp. (a) | 83,400 | 17,524,842 | |
| EVERTEC, Inc. | 1,004,400 | 11,952,360 | |
| Fidelity National Information Services, Inc. | 856,100 | 49,867,825 | |
| FleetCor Technologies, Inc. (a) | 55,400 | 7,074,026 | |
| Global Payments, Inc. | 106,600 | 6,497,270 | |
| MasterCard, Inc. Class A | 1,374,300 | 119,454,156 | |
| PayPal Holdings, Inc. (a) | 803,800 | 30,656,932 | |
| The Western Union Co. | 862,100 | 15,741,946 | |
| Visa, Inc. Class A | 2,708,820 | 196,091,480 | |
| WEX, Inc. (a) | 400,300 | 26,139,590 | |
| 481,000,427 | |||
| IT Consulting & Other Services - 3.3% | |||
| Cognizant Technology Solutions Corp. Class A (a) | 105,100 | 5,988,598 | |
| IBM Corp. | 533,800 | 69,943,814 | |
| Lionbridge Technologies, Inc. (a)(c) | 5,098,675 | 22,485,157 | |
| 98,417,569 | |||
| TOTAL IT SERVICES | 579,417,996 | ||
| Media - 0.4% | |||
| Advertising - 0.4% | |||
| Aimia, Inc. (b) | 678,600 | 4,223,069 | |
| MDC Partners, Inc. Class A | 309,381 | 6,596,003 | |
| 10,819,072 | |||
| Professional Services - 1.3% | |||
| Research & Consulting Services - 1.3% | |||
| ICF International, Inc. (a)(c) | 1,151,579 | 38,900,339 | |
| Software - 31.3% | |||
| Application Software - 12.4% | |||
| Adobe Systems, Inc. (a) | 836,200 | 71,202,430 | |
| Autodesk, Inc. (a) | 674,100 | 34,877,934 | |
| Cadence Design Systems, Inc. (a) | 959,700 | 20,681,535 | |
| Citrix Systems, Inc. (a) | 850,200 | 60,066,630 | |
| Parametric Technology Corp. (a) | 842,000 | 26,026,220 | |
| RealPage, Inc. (a) | 192,800 | 3,865,640 | |
| Salesforce.com, Inc. (a) | 1,216,226 | 82,399,312 | |
| Synopsys, Inc. (a) | 111,000 | 4,967,250 | |
| Textura Corp. (a) | 466,200 | 8,041,950 | |
| Workday, Inc. Class A (a) | 746,700 | 45,138,015 | |
| Zendesk, Inc. (a) | 680,200 | 12,447,660 | |
| 369,714,576 | |||
| Home Entertainment Software - 1.3% | |||
| Activision Blizzard, Inc. | 705,700 | 22,349,519 | |
| Electronic Arts, Inc. (a) | 235,100 | 15,102,824 | |
| 37,452,343 | |||
| Systems Software - 17.6% | |||
| Microsoft Corp. | 6,587,400 | 335,166,909 | |
| NetSuite, Inc. (a)(b) | 440,900 | 26,639,178 | |
| Oracle Corp. | 2,702,300 | 99,390,594 | |
| ServiceNow, Inc. (a) | 112,800 | 6,202,872 | |
| Tableau Software, Inc. (a) | 686,500 | 31,338,725 | |
| VMware, Inc. Class A (a)(b) | 500,400 | 25,265,196 | |
| 524,003,474 | |||
| TOTAL SOFTWARE | 931,170,393 | ||
| Technology Hardware, Storage & Peripherals - 1.3% | |||
| Technology Hardware, Storage & Peripherals - 1.3% | |||
| Apple, Inc. | 294,400 | 28,465,536 | |
| Seagate Technology LLC | 271,100 | 8,501,696 | |
| 36,967,232 | |||
| TOTAL COMMON STOCKS | |||
| (Cost $2,226,829,323) | 2,946,631,433 | ||
| Convertible Preferred Stocks - 0.0% | |||
| Software - 0.0% | |||
| Application Software - 0.0% | |||
| Deem, Inc. (a)(d) | |||
| (Cost $8,064,516) | 2,497,881 | 249,788 | |
| Money Market Funds - 3.7% | |||
| Fidelity Cash Central Fund, 0.40% (e) | 21,346,396 | 21,346,396 | |
| Fidelity Securities Lending Cash Central Fund, 0.44% (e)(f) | 87,899,232 | 87,899,232 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $109,245,628) | 109,245,628 | ||
| TOTAL INVESTMENT PORTFOLIO - 102.9% | |||
| (Cost $2,344,139,467) | 3,056,126,849 | ||
| NET OTHER ASSETS (LIABILITIES) - (2.9)% | (84,757,288) | ||
| NET ASSETS - 100% | $2,971,369,561 |
Legend
(a) Non-income producing
(b) Security or a portion of the security is on loan at period end.
(c) Affiliated company
(d) Restricted securities - 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 $249,788 or 0.0% 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.
Additional information on each restricted holding is as follows:
| Security | Acquisition Date | Acquisition Cost |
| Deem, Inc. | 9/19/13 | $8,064,516 |
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 | $125,209 |
| Fidelity Securities Lending Cash Central Fund | 837,741 |
| Total | $962,950 |
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 | Value, end of period |
| E2open, Inc. | $13,347,484 | $-- | $13,394,208 | $-- | $-- |
| ICF International, Inc. | 81,216,278 | -- | 27,432,238 | -- | 38,900,339 |
| Lionbridge Technologies, Inc. | 35,222,828 | -- | 6,685,311 | -- | 22,485,157 |
| MDC Partners, Inc. Class A (sub. vtg.) | 89,859,570 | -- | 58,043,322 | 1,503,885 | -- |
| Web.com Group, Inc. | 51,303,292 | -- | 49,896,254 | -- | -- |
| WNS Holdings Ltd. sponsored ADR | 71,644,587 | -- | 84,308,137 | -- | -- |
| Total | $342,594,039 | $-- | $239,759,470 | $1,503,885 | $61,385,496 |
Investment Valuation
The following is a summary of the inputs used, as of February 29, 2016, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used 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 | $2,946,631,433 | $2,946,631,433 | $-- | $-- |
| Convertible Preferred Stocks | 249,788 | -- | -- | 249,788 |
| Money Market Funds | 109,245,628 | 109,245,628 | -- | -- |
| Total Investments in Securities: | $3,056,126,849 | $3,055,877,061 | $-- | $249,788 |
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, 2016 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $86,094,617) — See accompanying schedule: Unaffiliated issuers (cost $2,186,497,275) | $2,885,495,725 | |
| Fidelity Central Funds (cost $109,245,628) | 109,245,628 | |
| Other affiliated issuers (cost $48,396,564) | 61,385,496 | |
| Total Investments (cost $2,344,139,467) | $3,056,126,849 | |
| Receivable for investments sold | 27,539,662 | |
| Receivable for fund shares sold | 4,134,002 | |
| Dividends receivable | 4,121,218 | |
| Distributions receivable from Fidelity Central Funds | 103,339 | |
| Prepaid expenses | 9,777 | |
| Other receivables | 195,484 | |
| Total assets | 3,092,230,331 | |
| Liabilities | ||
| Payable for investments purchased | $26,138,091 | |
| Payable for fund shares redeemed | 4,841,498 | |
| Accrued management fee | 1,335,864 | |
| Other affiliated payables | 523,070 | |
| Other payables and accrued expenses | 123,015 | |
| Collateral on securities loaned, at value | 87,899,232 | |
| Total liabilities | 120,860,770 | |
| Net Assets | $2,971,369,561 | |
| Net Assets consist of: | ||
| Paid in capital | $2,241,246,921 | |
| Undistributed net investment income | 1,093,261 | |
| Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 17,121,914 | |
| Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 711,907,465 | |
| Net Assets, for 26,743,725 shares outstanding | $2,971,369,561 | |
| Net Asset Value, offering price and redemption price per share ($2,971,369,561 ÷ 26,743,725 shares) | $111.11 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 29, 2016 | ||
| Investment Income | ||
| Dividends (including $1,503,885 earned from other affiliated issuers) | $24,703,165 | |
| Interest | 28 | |
| Income from Fidelity Central Funds(including $837,741 from security lending) | 962,950 | |
| Total income | 25,666,143 | |
| Expenses | ||
| Management fee | $16,328,826 | |
| Transfer agent fees | 5,251,152 | |
| Accounting and security lending fees | 888,974 | |
| Custodian fees and expenses | 46,319 | |
| Independent trustees' compensation | 54,927 | |
| Registration fees | 99,113 | |
| Audit | 51,061 | |
| Legal | 37,120 | |
| Interest | 740 | |
| Miscellaneous | 34,266 | |
| Total expenses before reductions | 22,792,498 | |
| Expense reductions | (139,186) | 22,653,312 |
| Net investment income (loss) | 3,012,831 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 51,259,400 | |
| Other affiliated issuers | 65,787,710 | |
| Foreign currency transactions | (28,815) | |
| Total net realized gain (loss) | 117,018,295 | |
| Change in net unrealized appreciation (depreciation) on: Investment securities | (197,980,388) | |
| Assets and liabilities in foreign currencies | (13,287) | |
| Total change in net unrealized appreciation (depreciation) | (197,993,675) | |
| Net gain (loss) | (80,975,380) | |
| Net increase (decrease) in net assets resulting from operations | $(77,962,549) |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 29, 2016 | Year ended February 28, 2015 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $3,012,831 | $(4,676,943) |
| Net realized gain (loss) | 117,018,295 | 345,090,319 |
| Change in net unrealized appreciation (depreciation) | (197,993,675) | (213,840,902) |
| Net increase (decrease) in net assets resulting from operations | (77,962,549) | 126,572,474 |
| Distributions to shareholders from net investment income | (1,330,049) | – |
| Distributions to shareholders from net realized gain | (160,508,932) | (318,048,641) |
| Total distributions | (161,838,981) | (318,048,641) |
| Share transactions | ||
| Proceeds from sales of shares | 680,171,334 | 613,896,141 |
| Reinvestment of distributions | 155,152,051 | 306,040,231 |
| Cost of shares redeemed | (636,997,573) | (1,560,250,010) |
| Net increase (decrease) in net assets resulting from share transactions | 198,325,812 | (640,313,638) |
| Redemption fees | 53,547 | 76,611 |
| Total increase (decrease) in net assets | (41,422,171) | (831,713,194) |
| Net Assets | ||
| Beginning of period | 3,012,791,732 | 3,844,504,926 |
| End of period (including undistributed net investment income of $1,093,261 and accumulated net investment loss of $55,594, respectively) | $2,971,369,561 | $3,012,791,732 |
| Other Information | ||
| Shares | ||
| Sold | 5,708,334 | 5,243,985 |
| Issued in reinvestment of distributions | 1,319,769 | 2,681,318 |
| Redeemed | (5,522,076) | (13,597,758) |
| Net increase (decrease) | 1,506,027 | (5,672,455) |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Software and IT Services Portfolio
| Years ended February 28, | 2016 A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $119.38 | $124.38 | $87.97 | $89.96 | $91.63 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .12 | (.17) | .06 | .04 | (.06) |
| Net realized and unrealized gain (loss) | (2.05) | 7.26 | 41.95 | 7.25 | 10.39 |
| Total from investment operations | (1.93) | 7.09 | 42.01 | 7.29 | 10.33 |
| Distributions from net investment income | (.05) | – | – | (.78)C | – |
| Distributions from net realized gain | (6.29) | (12.09) | (5.60) | (8.50)C | (12.00) |
| Total distributions | (6.34) | (12.09) | (5.60) | (9.28) | (12.00) |
| Redemption fees added to paid in capitalB,D | – | – | – | – | – |
| Net asset value, end of period | $111.11 | $119.38 | $124.38 | $87.97 | $89.96 |
| Total ReturnE | (1.84)% | 6.33% | 48.18% | 8.85% | 13.08% |
| Ratios to Average Net AssetsF,G | |||||
| Expenses before reductions | .77% | .77% | .79% | .82% | .82% |
| Expenses net of fee waivers, if any | .76% | .77% | .79% | .82% | .82% |
| Expenses net of all reductions | .76% | .77% | .78% | .80% | .81% |
| Net investment income (loss) | .10% | (.15)% | .06% | .04% | (.07)% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $2,971,370 | $3,012,792 | $3,844,505 | $2,027,731 | $1,621,616 |
| Portfolio turnover rateH | 36% | 53% | 87% | 96% | 238% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C The amounts shown reflect certain reclassifications related to book to tax differences that were made in the year shown.
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.
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, 2016 | Past 1 year | Past 5 years | Past 10 years |
| Technology Portfolio | (7.16)% | 7.18% | 8.33% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Technology Portfolio on February 28, 2006.
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 | ||
| $22,254 | Technology Portfolio | |
| $18,666 | S&P 500® Index | |
Technology Portfolio
Management's Discussion of Fund Performance
Market Recap: The S&P 500® index returned -6.19% for the year ending February 29, 2016. Largely range-bound for the first half of the period, U.S. stocks suffered a steep, late-summer decline on concern about an economic slowdown in China. The market recovered in October, lifted by the U.S. Federal Reserve’s decision to delay raising near-term interest rates until mid-December. Investors also drew courage from a rate cut in China and economic stimulus in Europe. But continued oil-price weakness and U.S.-dollar strength, plus fresh worries about China and the Middle East, pushed the S&P 500® to its worst January since 2009, followed by a volatile but ultimately flattish February. Overall, growth-oriented and larger-cap stocks fared better than value and smaller-cap complements. In this environment, the tech-heavy Nasdaq Composite Index® returned -7.07% for the 12 months; the Russell 2000® Index, -14.97%. Few sectors within the broad-market S&P 500® gained ground, with a wide gap separating leaders from laggards. Despite increased competition among wireless carriers, telecommunication services (+8%) led the way, followed by the more defensive utilities sector (+6%). Rising wages and low inflation buoyed consumer staples (+4%), less so consumer discretionary (0%). Meanwhile, energy (-24%) foundered amid commodity weakness that also hurt materials (-17%). The financials sector (-12%) struggled as well.Comments from Portfolio Manager Charlie Chai: For the year, the fund returned -7.16%, trailing the -6.13% return of its industry benchmark, the MSCI U.S. IMI Information Technology 25/50 Index. Technology stocks performed about in line with the broad-market S&P 500® index, as strength in subindustries such as Internet software & services and systems software was countered by weakness in technology hardware, storage & peripherals, and semiconductors. Versus the MSCI index, the fund was hampered most by positioning in systems software and stock selection in semiconductors. At the stock level, a substantial underweighting in Microsoft was easily the fund’s largest relative detractor. This index heavyweight enjoyed strong fourth-quarter performance, bolstered by better-than-expected profit and increasing sales of cloud-computing software, including its Microsoft® Office 365 productivity suite. In the Internet retail group, one holding that significantly curbed relative performance was an out-of-benchmark stake in Jumei International Holding, a China-based online retailer of beauty products. In semiconductors, a large overweighting in Marvell Technology Group also detracted. Conversely, the biggest boost came from an out-of-index position in China-based online travel firm Ctrip.com International. Ctrip shares surged higher in October and November in anticipation of the stock becoming part of the MSCI China Index in December. At that point, I began reducing the position, liquidating it entirely by period end. Online classified-advertising platform 58.com, another out-of-index name based in China, also bolstered relative results, as did a sizable underweighting in index heavyweight Apple. Apple shares suffered amid disappointing sales of its iPhone® 6s and iPhone® 6s Plus smartphones, launched in September. I reduced this position, finding what I believed were better growth prospects elsewhere. With that said, Apple remained by far the fund’s largest position.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, 2016
| % of fund's net assets | % of fund's net assets 6 months ago | |
| Apple, Inc. | 10.1 | 12.4 |
| Alphabet, Inc. Class C | 5.7 | 5.5 |
| Facebook, Inc. Class A | 5.4 | 5.0 |
| Alphabet, Inc. Class A | 5.2 | 5.2 |
| Yahoo!, Inc. | 3.4 | 3.1 |
| Visa, Inc. Class A | 2.6 | 2.0 |
| Marvell Technology Group Ltd. | 2.3 | 2.1 |
| Microsoft Corp. | 2.0 | 2.5 |
| Tesla Motors, Inc. | 1.9 | 1.6 |
| Micron Technology, Inc. | 1.8 | 0.6 |
| 40.4 |
Top Industries (% of fund's net assets)
| As of February 29, 2016 | ||
| Internet Software & Services | 29.6% | |
| Semiconductors & Semiconductor Equipment | 16.6% | |
| Software | 15.8% | |
| Technology Hardware, Storage & Peripherals | 11.8% | |
| IT Services | 7.2% | |
| All Others* | 19.0% | |
| As of August 31, 2015 | ||
| Internet Software & Services | 28.1% | |
| Technology Hardware, Storage & Peripherals | 17.1% | |
| Software | 14.3% | |
| Semiconductors & Semiconductor Equipment | 12.5% | |
| IT Services | 7.0% | |
| All Others* | 21.0% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
Technology Portfolio
Investments February 29, 2016
Showing Percentage of Net Assets
| Common Stocks - 98.0% | |||
| Shares | Value | ||
| Auto Components - 0.0% | |||
| Auto Parts & Equipment - 0.0% | |||
| Weifu High-Technology Co. Ltd. (B Shares) | 98,200 | $179,405 | |
| Automobiles - 1.9% | |||
| Automobile Manufacturers - 1.9% | |||
| Tesla Motors, Inc. (a)(b) | 272,656 | 52,330,866 | |
| Biotechnology - 0.2% | |||
| Biotechnology - 0.2% | |||
| BeiGene Ltd. ADR | 44,519 | 1,303,071 | |
| Genscript Biotech Corp. | 29,430,000 | 5,070,191 | |
| 6,373,262 | |||
| Chemicals - 0.3% | |||
| Specialty Chemicals - 0.3% | |||
| Duk San Neolux Co. Ltd. (a) | 276,198 | 7,476,586 | |
| Communications Equipment - 2.4% | |||
| Communications Equipment - 2.4% | |||
| Ciena Corp. (a) | 152,500 | 3,126,250 | |
| CommScope Holding Co., Inc. (a) | 738,800 | 18,610,372 | |
| F5 Networks, Inc. (a) | 145,800 | 14,021,586 | |
| Ixia (a) | 14,906 | 170,077 | |
| Palo Alto Networks, Inc. (a) | 32,200 | 4,662,238 | |
| Qualcomm, Inc. | 538,100 | 27,330,099 | |
| Radware Ltd. (a) | 1,163 | 13,386 | |
| 67,934,008 | |||
| Consumer Finance - 0.0% | |||
| Consumer Finance - 0.0% | |||
| LendingClub Corp. (a) | 1,100 | 9,603 | |
| Diversified Consumer Services - 0.2% | |||
| Education Services - 0.2% | |||
| New Oriental Education & Technology Group, Inc. sponsored ADR | 59,995 | 1,867,644 | |
| TAL Education Group ADR (a) | 62,800 | 3,249,900 | |
| 5,117,544 | |||
| Specialized Consumer Services - 0.0% | |||
| LifeLock, Inc. (a) | 1,500 | 16,545 | |
| TOTAL DIVERSIFIED CONSUMER SERVICES | 5,134,089 | ||
| Diversified Financial Services - 1.5% | |||
| Other Diversified Financial Services - 1.5% | |||
| Broadcom Ltd. | 313,800 | 42,039,786 | |
| Diversified Telecommunication Services - 0.0% | |||
| Alternative Carriers - 0.0% | |||
| 8x8, Inc. (a) | 123,000 | 1,430,490 | |
| Electrical Equipment - 0.1% | |||
| Electrical Components & Equipment - 0.1% | |||
| Lumenpulse, Inc. (a) | 40,300 | 479,549 | |
| Nidec Corp. | 39,500 | 2,645,734 | |
| 3,125,283 | |||
| Electronic Equipment & Components - 3.5% | |||
| Electronic Components - 1.6% | |||
| Alps Electric Co. Ltd. | 105,600 | 1,732,953 | |
| Japan Aviation Electronics Industry Ltd. | 1,000 | 10,397 | |
| Largan Precision Co. Ltd. | 159,000 | 12,125,538 | |
| Ledlink Optics, Inc. | 1,567,914 | 2,150,864 | |
| Murata Manufacturing Co. Ltd. | 26,500 | 3,179,962 | |
| Samsung SDI Co. Ltd. | 108,228 | 8,723,593 | |
| Sunny Optical Technology Group Co. Ltd. | 1,323,000 | 3,061,693 | |
| Universal Display Corp. (a) | 101,300 | 4,840,114 | |
| Yageo Corp. | 4,613,217 | 7,632,951 | |
| Yaskawa Electric Corp. | 1,900 | 22,787 | |
| 43,480,852 | |||
| Electronic Equipment & Instruments - 0.3% | |||
| Chroma ATE, Inc. | 3,464,644 | 7,348,076 | |
| Cognex Corp. | 62,900 | 2,327,929 | |
| 9,676,005 | |||
| Electronic Manufacturing Services - 1.6% | |||
| Trimble Navigation Ltd. (a) | 1,925,821 | 44,794,596 | |
| Technology Distributors - 0.0% | |||
| Digital China Holdings Ltd. (H Shares) | 42,000 | 48,490 | |
| TOTAL ELECTRONIC EQUIPMENT & COMPONENTS | 97,999,943 | ||
| Health Care Equipment & Supplies - 0.2% | |||
| Health Care Equipment - 0.2% | |||
| Intai Technology Corp. | 987,000 | 3,919,377 | |
| Olympus Corp. | 8,000 | 291,692 | |
| 4,211,069 | |||
| Health Care Providers & Services - 0.0% | |||
| Managed Health Care - 0.0% | |||
| HealthEquity, Inc. (a) | 21,700 | 451,794 | |
| Health Care Technology - 1.7% | |||
| Health Care Technology - 1.7% | |||
| athenahealth, Inc. (a) | 120,926 | 15,607,919 | |
| Inovalon Holdings, Inc. Class A (b) | 396,600 | 6,817,554 | |
| M3, Inc. | 56,600 | 1,347,309 | |
| Medidata Solutions, Inc. (a) | 476,800 | 16,449,600 | |
| Veeva Systems, Inc. Class A (a)(b) | 275,200 | 6,684,608 | |
| 46,906,990 | |||
| Hotels, Restaurants & Leisure - 0.4% | |||
| Casinos & Gaming - 0.3% | |||
| 500.com Ltd. sponsored ADR Class A (a)(b) | 425,329 | 7,940,892 | |
| Hotels, Resorts & Cruise Lines - 0.1% | |||
| Tuniu Corp. Class A sponsored ADR (a) | 411,921 | 4,349,886 | |
| TOTAL HOTELS, RESTAURANTS & LEISURE | 12,290,778 | ||
| Household Durables - 1.0% | |||
| Consumer Electronics - 1.0% | |||
| Sony Corp. | 496,700 | 10,437,908 | |
| Sony Corp. sponsored ADR | 769,900 | 16,260,288 | |
| 26,698,196 | |||
| Internet & Catalog Retail - 2.7% | |||
| Catalog Retail - 0.0% | |||
| Liberty Interactive Corp. QVC Group Series A (a) | 588 | 14,923 | |
| Internet Retail - 2.7% | |||
| Amazon.com, Inc. (a) | 37,500 | 20,719,500 | |
| Groupon, Inc. Class A (a)(b) | 705,300 | 3,371,334 | |
| JD.com, Inc. sponsored ADR (a) | 364,000 | 9,358,440 | |
| Jumei International Holding Ltd. sponsored ADR (a) | 1,519,244 | 9,556,045 | |
| MySale Group PLC (a) | 42,200 | 25,844 | |
| Priceline Group, Inc. (a) | 100 | 126,521 | |
| Qunar Cayman Islands Ltd. sponsored ADR (a)(b) | 574,052 | 21,291,589 | |
| Vipshop Holdings Ltd. ADR (a) | 975,100 | 10,833,361 | |
| 75,282,634 | |||
| TOTAL INTERNET & CATALOG RETAIL | 75,297,557 | ||
| Internet Software & Services - 28.7% | |||
| Internet Software & Services - 28.7% | |||
| 58.com, Inc. ADR (a)(b) | 887,173 | 47,020,169 | |
| Alibaba Group Holding Ltd. sponsored ADR (a)(b) | 707,400 | 48,676,194 | |
| Alphabet, Inc.: | |||
| Class A | 201,503 | 144,521,982 | |
| Class C | 227,468 | 158,720,346 | |
| Baidu.com, Inc. sponsored ADR (a) | 13,500 | 2,341,170 | |
| Benefitfocus, Inc. (a)(b) | 93,600 | 2,938,104 | |
| Box, Inc. Class A (a) | 113,500 | 1,306,385 | |
| ChannelAdvisor Corp. (a) | 227,700 | 2,420,451 | |
| Cornerstone OnDemand, Inc. (a) | 312,086 | 8,988,077 | |
| Cvent, Inc. (a) | 133,064 | 2,598,740 | |
| Demandware, Inc. (a)(b) | 352,479 | 12,227,497 | |
| DeNA Co. Ltd. | 379,400 | 5,537,722 | |
| eBay, Inc. (a) | 52,600 | 1,251,880 | |
| Endurance International Group Holdings, Inc. (a)(b) | 1,193,620 | 13,416,289 | |
| Envestnet, Inc. (a) | 434 | 8,901 | |
| Facebook, Inc. Class A (a) | 1,401,974 | 149,899,060 | |
| Hortonworks, Inc. (a)(b) | 364,130 | 4,205,702 | |
| Instructure, Inc. (a)(b) | 195,116 | 2,790,159 | |
| LinkedIn Corp. Class A (a) | 125,400 | 14,695,626 | |
| Marketo, Inc. (a) | 366,064 | 6,175,500 | |
| NetEase, Inc. sponsored ADR | 10,400 | 1,399,944 | |
| New Relic, Inc. (a) | 233,525 | 6,216,436 | |
| Q2 Holdings, Inc. (a) | 1,400 | 28,378 | |
| Rackspace Hosting, Inc. (a) | 311,091 | 6,697,789 | |
| Renren, Inc. ADR (a) | 532,300 | 1,666,099 | |
| SciQuest, Inc. (a) | 546,742 | 6,642,915 | |
| Shopify, Inc. | 6,256 | 140,009 | |
| Shopify, Inc. Class A | 31,500 | 704,970 | |
| SINA Corp. (a) | 404,900 | 17,297,328 | |
| SouFun Holdings Ltd. ADR (b) | 1,629,500 | 8,685,235 | |
| Twitter, Inc. (a) | 51,000 | 924,120 | |
| Web.com Group, Inc. (a) | 383,898 | 6,967,749 | |
| Weibo Corp. sponsored ADR (a) | 1,600 | 22,976 | |
| Xunlei Ltd. sponsored ADR (a)(b) | 1,182,055 | 6,879,560 | |
| Yahoo!, Inc. (a) | 3,006,500 | 95,576,635 | |
| Yirendai Ltd. sponsored ADR(b) | 124,834 | 742,762 | |
| YY, Inc. ADR (a) | 123,300 | 6,417,765 | |
| Zillow Group, Inc.: | |||
| Class A (a)(b) | 1,298 | 30,049 | |
| Class C (a)(b) | 1,496 | 32,314 | |
| 796,812,987 | |||
| IT Services - 7.2% | |||
| Data Processing & Outsourced Services - 6.5% | |||
| Amadeus IT Holding SA Class A | 345,500 | 13,968,546 | |
| Fidelity National Information Services, Inc. | 70,768 | 4,122,236 | |
| Fiserv, Inc. (a) | 80,200 | 7,669,526 | |
| FleetCor Technologies, Inc. (a) | 108,800 | 13,892,672 | |
| Global Payments, Inc. | 245,500 | 14,963,225 | |
| MasterCard, Inc. Class A | 160,100 | 13,915,892 | |
| Optimal Payments PLC (a) | 2,551,741 | 14,108,893 | |
| PayPal Holdings, Inc. (a) | 152,200 | 5,804,908 | |
| Sabre Corp. | 161,300 | 4,379,295 | |
| Total System Services, Inc. | 61,699 | 2,688,842 | |
| Travelport Worldwide Ltd. | 635,000 | 8,242,300 | |
| Vantiv, Inc. (a) | 53,100 | 2,763,324 | |
| Visa, Inc. Class A | 1,009,900 | 73,106,661 | |
| 179,626,320 | |||
| IT Consulting & Other Services - 0.7% | |||
| Cognizant Technology Solutions Corp. Class A (a) | 312,212 | 17,789,840 | |
| EPAM Systems, Inc. (a) | 40,205 | 2,749,218 | |
| Virtusa Corp. (a) | 600 | 21,240 | |
| 20,560,298 | |||
| TOTAL IT SERVICES | 200,186,618 | ||
| Life Sciences Tools & Services - 0.1% | |||
| Life Sciences Tools & Services - 0.1% | |||
| JHL Biotech, Inc. | 1,015,442 | 3,604,344 | |
| Machinery - 0.2% | |||
| Industrial Machinery - 0.2% | |||
| Harmonic Drive Systems, Inc. (b) | 96,700 | 2,182,280 | |
| King Slide Works Co. Ltd. | 57,000 | 704,762 | |
| Minebea Ltd. | 194,000 | 1,424,420 | |
| 4,311,462 | |||
| Media - 0.7% | |||
| Advertising - 0.1% | |||
| iCar Asia Ltd. (a) | 2,268,088 | 1,473,152 | |
| Cable & Satellite - 0.5% | |||
| Naspers Ltd. Class N | 125,202 | 14,871,485 | |
| Publishing - 0.1% | |||
| NEXT Co. Ltd. | 39,300 | 348,410 | |
| Schibsted ASA: | |||
| (A Shares) | 40,666 | 1,118,695 | |
| (B Shares) (a) | 94,653 | 2,486,375 | |
| 3,953,480 | |||
| TOTAL MEDIA | 20,298,117 | ||
| Professional Services - 0.6% | |||
| Human Resource & Employment Services - 0.5% | |||
| 51job, Inc. sponsored ADR (a) | 800 | 22,240 | |
| WageWorks, Inc. (a) | 284,000 | 13,680,280 | |
| 13,702,520 | |||
| Research & Consulting Services - 0.1% | |||
| ICF International, Inc. (a) | 61,500 | 2,077,470 | |
| Verisk Analytics, Inc. (a) | 400 | 29,136 | |
| 2,106,606 | |||
| TOTAL PROFESSIONAL SERVICES | 15,809,126 | ||
| Semiconductors & Semiconductor Equipment - 16.6% | |||
| Semiconductor Equipment - 1.2% | |||
| Amkor Technology, Inc. (a) | 2,324,020 | 11,759,541 | |
| Applied Materials, Inc. | 1,700 | 32,079 | |
| ASM Pacific Technology Ltd. | 65,200 | 522,653 | |
| EO Technics Co. Ltd. | 135,507 | 13,721,314 | |
| Hermes Microvision, Inc. | 164,000 | 4,075,208 | |
| Nanometrics, Inc. (a) | 21,591 | 299,683 | |
| Rubicon Technology, Inc. (a)(b) | 1,264,318 | 1,211,090 | |
| SolarEdge Technologies, Inc. | 93,800 | 2,295,286 | |
| SunEdison, Inc. (a) | 1,300 | 2,574 | |
| 33,919,428 | |||
| Semiconductors - 15.4% | |||
| Advanced Micro Devices, Inc. (a)(b) | 705,100 | 1,508,914 | |
| Advanced Semiconductor Engineering, Inc. | 16,251,000 | 18,382,743 | |
| Advanced Semiconductor Engineering, Inc. sponsored ADR | 2,357,589 | 13,249,650 | |
| Ambarella, Inc. (a)(b) | 126,300 | 5,860,320 | |
| ams AG | 20,430 | 615,867 | |
| Cavium, Inc. (a) | 130,000 | 7,733,700 | |
| Chipbond Technology Corp. | 4,992,000 | 7,809,151 | |
| ChipMOS TECHNOLOGIES (Bermuda) Ltd. | 461,647 | 7,977,260 | |
| Cirrus Logic, Inc. (a) | 41,000 | 1,444,430 | |
| Cypress Semiconductor Corp. | 330,291 | 2,635,722 | |
| Everlight Electronics Co. Ltd. | 2,761,000 | 4,958,687 | |
| Genesis Photonics, Inc. (a) | 5,306,208 | 1,224,350 | |
| Himax Technologies, Inc. sponsored ADR | 763,191 | 7,547,959 | |
| Hua Hong Semiconductor Ltd. (a) | 5,465,000 | 5,023,721 | |
| Inotera Memories, Inc. (a) | 2,761,000 | 2,367,212 | |
| Inphi Corp. (a) | 21,600 | 546,480 | |
| Integrated Device Technology, Inc. (a) | 166,900 | 3,241,198 | |
| Intersil Corp. Class A | 630,685 | 8,053,847 | |
| Lattice Semiconductor Corp. (a)(b) | 499,700 | 3,163,101 | |
| Lextar Electronics Corp. | 810,000 | 410,592 | |
| MagnaChip Semiconductor Corp. (a)(b) | 295,035 | 1,543,033 | |
| Marvell Technology Group Ltd. | 6,599,728 | 63,027,402 | |
| Maxim Integrated Products, Inc. | 649,200 | 21,981,912 | |
| Melexis NV | 567 | 28,981 | |
| Micron Technology, Inc. (a) | 4,779,100 | 50,801,833 | |
| Microsemi Corp. (a) | 287,300 | 9,949,199 | |
| Monolithic Power Systems, Inc. | 167,995 | 9,921,785 | |
| NXP Semiconductors NV (a) | 363,408 | 25,889,186 | |
| ON Semiconductor Corp. (a) | 741,700 | 6,222,863 | |
| Power Integrations, Inc. | 75,500 | 3,460,165 | |
| Qorvo, Inc. (a) | 580,643 | 26,175,386 | |
| Sanken Electric Co. Ltd. | 704,000 | 1,895,500 | |
| Semiconductor Manufacturing International Corp. (a) | 32,101,000 | 2,653,532 | |
| Semtech Corp. (a) | 559,080 | 10,711,973 | |
| Silicon Laboratories, Inc. (a) | 140,340 | 5,789,025 | |
| Silicon Motion Technology Corp. sponsored ADR | 178,400 | 6,010,296 | |
| Siliconware Precision Industries Co. Ltd. | 17,205,097 | 26,381,182 | |
| Siliconware Precision Industries Co. Ltd. sponsored ADR | 2,633,123 | 19,959,072 | |
| Sitronix Technology Corp. | 596,000 | 1,685,389 | |
| Skyworks Solutions, Inc. | 321,700 | 21,376,965 | |
| STMicroelectronics NV | 2,860 | 16,368 | |
| Vanguard International Semiconductor Corp. | 4,489,000 | 6,900,752 | |
| Xilinx, Inc. | 600 | 28,332 | |
| 426,165,035 | |||
| TOTAL SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT | 460,084,463 | ||
| Software - 15.8% | |||
| Application Software - 7.2% | |||
| Adobe Systems, Inc. (a) | 501,439 | 42,697,531 | |
| ANSYS, Inc. (a) | 314 | 26,068 | |
| Autodesk, Inc. (a) | 366,000 | 18,936,840 | |
| Blackbaud, Inc. | 32,000 | 1,808,960 | |
| Citrix Systems, Inc. (a) | 108,502 | 7,665,666 | |
| Guidewire Software, Inc. (a) | 411 | 20,234 | |
| HubSpot, Inc. (a) | 1,200 | 49,992 | |
| Intuit, Inc. | 138,700 | 13,403,968 | |
| Kingdee International Software Group Co. Ltd. | 707,600 | 233,803 | |
| Linx SA | 1,400 | 16,212 | |
| Mobileye NV (a)(b) | 693,426 | 22,508,608 | |
| Parametric Technology Corp. (a) | 900 | 27,819 | |
| Paylocity Holding Corp. (a)(b) | 315,328 | 9,340,015 | |
| Qlik Technologies, Inc. (a) | 700 | 16,254 | |
| RealPage, Inc. (a) | 16,400 | 328,820 | |
| Salesforce.com, Inc. (a) | 625,292 | 42,363,533 | |
| Splunk, Inc. (a) | 134,200 | 5,851,120 | |
| SS&C Technologies Holdings, Inc. | 94,000 | 5,479,260 | |
| Textura Corp. (a)(b) | 518,581 | 8,945,522 | |
| Ultimate Software Group, Inc. (a) | 117 | 20,096 | |
| Workday, Inc. Class A (a) | 164,700 | 9,956,115 | |
| Workiva, Inc. (a) | 1,900 | 23,712 | |
| Zendesk, Inc. (a) | 548,175 | 10,031,603 | |
| 199,751,751 | |||
| Home Entertainment Software - 2.3% | |||
| Activision Blizzard, Inc. | 527,660 | 16,710,992 | |
| Electronic Arts, Inc. (a) | 167,400 | 10,753,776 | |
| NCSOFT Corp. | 88,379 | 17,113,963 | |
| NHN Entertainment Corp. (a) | 168,228 | 7,397,501 | |
| Nintendo Co. Ltd. | 80,800 | 11,309,905 | |
| 63,286,137 | |||
| Systems Software - 6.3% | |||
| Allot Communications Ltd. (a) | 528,072 | 2,386,885 | |
| CommVault Systems, Inc. (a) | 600 | 22,482 | |
| CyberArk Software Ltd. (a) | 40,700 | 1,525,029 | |
| Fleetmatics Group PLC (a) | 693,287 | 25,034,594 | |
| Fortinet, Inc. (a) | 272,066 | 7,726,674 | |
| Imperva, Inc. (a) | 164,561 | 7,219,291 | |
| Infoblox, Inc. (a) | 1,700 | 26,316 | |
| Microsoft Corp. | 1,070,840 | 54,484,339 | |
| NetSuite, Inc. (a)(b) | 266,584 | 16,107,005 | |
| Oracle Corp. | 744,500 | 27,382,710 | |
| Progress Software Corp. (a) | 95,300 | 2,403,466 | |
| Proofpoint, Inc. (a)(b) | 153,700 | 7,199,308 | |
| Rapid7, Inc. (a)(b) | 4,600 | 61,134 | |
| ServiceNow, Inc. (a) | 99,550 | 5,474,255 | |
| Tableau Software, Inc. (a) | 46,100 | 2,104,465 | |
| VMware, Inc. Class A (a)(b) | 304,300 | 15,364,107 | |
| 174,522,060 | |||
| TOTAL SOFTWARE | 437,559,948 | ||
| Technology Hardware, Storage & Peripherals - 11.8% | |||
| Technology Hardware, Storage & Peripherals - 11.8% | |||
| Apple, Inc. | 2,893,297 | 279,752,888 | |
| BlackBerry Ltd. (a) | 2,700 | 21,073 | |
| Electronics for Imaging, Inc. (a) | 69,949 | 2,770,680 | |
| EMC Corp. | 646,900 | 16,903,497 | |
| HP, Inc. | 643,600 | 6,880,084 | |
| Nimble Storage, Inc. (a) | 3,700 | 26,788 | |
| Quanta Computer, Inc. | 1,866,000 | 3,154,815 | |
| SanDisk Corp. | 229,100 | 16,554,766 | |
| Silicon Graphics International Corp. (a) | 439,166 | 2,665,738 | |
| Stratasys Ltd. (a) | 300 | 5,655 | |
| 328,735,984 | |||
| Wireless Telecommunication Services - 0.2% | |||
| Wireless Telecommunication Services - 0.2% | |||
| Bharti Infratel Ltd. | 987,878 | 5,167,150 | |
| TOTAL COMMON STOCKS | |||
| (Cost $2,495,686,261) | 2,722,459,904 | ||
| Preferred Stocks - 1.9% | |||
| Convertible Preferred Stocks - 1.5% | |||
| Internet & Catalog Retail - 0.6% | |||
| Internet Retail - 0.6% | |||
| China Internet Plus Holdings Ltd. Series B (c) | 3,918,573 | 15,128,435 | |
| Internet Software & Services - 0.9% | |||
| Internet Software & Services - 0.9% | |||
| Uber Technologies, Inc. Series D, 8.00% (a)(c) | 515,696 | 25,151,643 | |
| IT Services - 0.0% | |||
| Data Processing & Outsourced Services - 0.0% | |||
| Nutanix, Inc. Series E (a)(c) | 72,872 | 809,608 | |
| TOTAL CONVERTIBLE PREFERRED STOCKS | 41,089,686 | ||
| Nonconvertible Preferred Stocks - 0.4% | |||
| Internet & Catalog Retail - 0.4% | |||
| Internet Retail - 0.4% | |||
| China Internet Plus Holdings Ltd. Series A- 11(c) | 2,802,162 | 10,818,307 | |
| TOTAL PREFERRED STOCKS | |||
| (Cost $32,961,897) | 51,907,993 | ||
| Money Market Funds - 9.2% | |||
| Fidelity Cash Central Fund, 0.40% (d) | 60,223,002 | 60,223,002 | |
| Fidelity Securities Lending Cash Central Fund, 0.44% (d)(e) | 196,441,138 | 196,441,138 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $256,664,140) | 256,664,140 | ||
| TOTAL INVESTMENT PORTFOLIO - 109.1% | |||
| (Cost $2,785,312,298) | 3,031,032,037 | ||
| NET OTHER ASSETS (LIABILITIES) - (9.1)% | (253,686,440) | ||
| NET ASSETS - 100% | $2,777,345,597 |
Legend
(a) Non-income producing
(b) Security or a portion of the security is on loan at period end.
(c) Restricted securities - 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 $51,907,993 or 1.9% 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.
Additional information on each restricted holding is as follows:
| Security | Acquisition Date | Acquisition Cost |
| China Internet Plus Holdings Ltd. Series A- 11 | 1/26/15 | $8,857,214 |
| China Internet Plus Holdings Ltd. Series B | 12/11/15 | $15,128,435 |
| Nutanix, Inc. Series E | 8/26/14 | $976,230 |
| Uber Technologies, Inc. Series D, 8.00% | 6/6/14 | $8,000,018 |
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 | $75,013 |
| Fidelity Securities Lending Cash Central Fund | 1,420,446 |
| Total | $1,495,459 |
Investment Valuation
The following is a summary of the inputs used, as of February 29, 2016, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used 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 | $2,722,459,904 | $2,629,054,756 | $93,405,148 | $-- |
| Preferred Stocks | 51,907,993 | -- | -- | 51,907,993 |
| Money Market Funds | 256,664,140 | 256,664,140 | -- | -- |
| Total Investments in Securities: | $3,031,032,037 | $2,885,718,896 | $93,405,148 | $51,907,993 |
The following is a summary of transfers between Level 1 and Level 2 for the period ended February 29, 2016. Transfers are assumed to have occurred at the beginning of the period, and are primarily attributable to the valuation techniques used for foreign equity securities, as discussed in the accompanying Notes to Financial Statements:
| Transfers | Total |
| Level 1 to Level 2 | $31,127,048 |
| Level 2 to Level 1 | $0 |
The following is a reconciliation of Investments in Securities for which Level 3 inputs were used in determining value:
| Investments in Securities: | |
| Preferred Stocks | |
| Beginning Balance | $27,182,329 |
| Total Realized Gain (Loss) | -- |
| Total Unrealized Gain (Loss) | 9,597,229 |
| Cost of Purchases | 23,985,649 |
| Proceeds of Sales | (8,857,214) |
| Amortization/Accretion | -- |
| Transfers in to Level 3 | -- |
| Transfers out of Level 3 | -- |
| Ending Balance | $51,907,993 |
| The change in unrealized gain (loss) for the period attributable to Level 3 securities held at February 29, 2016 | $9,597,229 |
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. 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.
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 | 71.5% |
| Cayman Islands | 9.7% |
| Taiwan | 5.3% |
| Bermuda | 2.9% |
| Japan | 2.3% |
| Korea (South) | 2.0% |
| Netherlands | 1.7% |
| Singapore | 1.5% |
| Others (Individually Less Than 1%) | 3.1% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Technology Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2016 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $193,876,781) — See accompanying schedule: Unaffiliated issuers (cost $2,528,648,158) | $2,774,367,897 | |
| Fidelity Central Funds (cost $256,664,140) | 256,664,140 | |
| Total Investments (cost $2,785,312,298) | $3,031,032,037 | |
| Foreign currency held at value (cost $1,715,317) | 1,715,855 | |
| Receivable for investments sold | 62,737,643 | |
| Receivable for fund shares sold | 1,050,000 | |
| Dividends receivable | 1,197,477 | |
| Distributions receivable from Fidelity Central Funds | 225,351 | |
| Prepaid expenses | 9,746 | |
| Other receivables | 111,639 | |
| Total assets | 3,098,079,748 | |
| Liabilities | ||
| Payable for investments purchased | $119,717,116 | |
| Payable for fund shares redeemed | 2,642,006 | |
| Accrued management fee | 1,237,243 | |
| Other affiliated payables | 491,256 | |
| Other payables and accrued expenses | 205,392 | |
| Collateral on securities loaned, at value | 196,441,138 | |
| Total liabilities | 320,734,151 | |
| Net Assets | $2,777,345,597 | |
| Net Assets consist of: | ||
| Paid in capital | $2,603,657,289 | |
| Distributions in excess of net investment income | (2,876,339) | |
| Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (69,155,745) | |
| Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 245,720,392 | |
| Net Assets, for 25,770,896 shares outstanding | $2,777,345,597 | |
| Net Asset Value, offering price and redemption price per share ($2,777,345,597 ÷ 25,770,896 shares) | $107.77 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 29, 2016 | ||
| Investment Income | ||
| Dividends | $23,482,911 | |
| Interest | 47 | |
| Income from Fidelity Central Funds (including $1,420,446 from security lending) | 1,495,459 | |
| Total income | 24,978,417 | |
| Expenses | ||
| Management fee | $15,739,480 | |
| Transfer agent fees | 5,103,390 | |
| Accounting and security lending fees | 874,389 | |
| Custodian fees and expenses | 343,128 | |
| Independent trustees' compensation | 52,865 | |
| Registration fees | 72,730 | |
| Audit | 54,039 | |
| Legal | 40,015 | |
| Interest | 3,169 | |
| Miscellaneous | 30,987 | |
| Total expenses before reductions | 22,314,192 | |
| Expense reductions | (407,900) | 21,906,292 |
| Net investment income (loss) | 3,072,125 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers (net of foreign taxes of $70,608) | 27,966,382 | |
| Foreign currency transactions | (723,276) | |
| Total net realized gain (loss) | 27,243,106 | |
| Change in net unrealized appreciation (depreciation) on: Investment securities (net of decrease in deferred foreign taxes of $28,176) | (259,234,643) | |
| Assets and liabilities in foreign currencies | 48,140 | |
| Total change in net unrealized appreciation (depreciation) | (259,186,503) | |
| Net gain (loss) | (231,943,397) | |
| Net increase (decrease) in net assets resulting from operations | $(228,871,272) |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 29, 2016 | Year ended February 28, 2015 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $3,072,125 | $3,378,469 |
| Net realized gain (loss) | 27,243,106 | 245,932,035 |
| Change in net unrealized appreciation (depreciation) | (259,186,503) | (1,732,966) |
| Net increase (decrease) in net assets resulting from operations | (228,871,272) | 247,577,538 |
| Distributions to shareholders from net investment income | (2,586,864) | (3,638,905) |
| Distributions to shareholders from net realized gain | (119,537,749) | (405,886,858) |
| Total distributions | (122,124,613) | (409,525,763) |
| Share transactions | ||
| Proceeds from sales of shares | 678,111,909 | 635,387,636 |
| Reinvestment of distributions | 117,321,605 | 393,674,884 |
| Cost of shares redeemed | (491,970,948) | (453,687,865) |
| Net increase (decrease) in net assets resulting from share transactions | 303,462,566 | 575,374,655 |
| Redemption fees | 31,329 | 29,839 |
| Total increase (decrease) in net assets | (47,501,990) | 413,456,269 |
| Net Assets | ||
| Beginning of period | 2,824,847,587 | 2,411,391,318 |
| End of period (including distributions in excess of net investment income of $2,876,339 and distributions in excess of net investment income of $777,431, respectively) | $2,777,345,597 | $2,824,847,587 |
| Other Information | ||
| Shares | ||
| Sold | 5,668,453 | 5,243,944 |
| Issued in reinvestment of distributions | 965,142 | 3,511,964 |
| Redeemed | (4,237,584) | (3,831,448) |
| Net increase (decrease) | 2,396,011 | 4,924,460 |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Technology Portfolio
| Years ended February 28, | 2016 A | 2015 | 2014 | 2013 | 2012 A |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $120.85 | $130.70 | $104.11 | $101.57 | $102.37 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .13 | .16 | .06 | .01 | (.27) |
| Net realized and unrealized gain (loss) | (8.26) | 10.26 | 36.34 | 2.53 | (.53) |
| Total from investment operations | (8.13) | 10.42 | 36.40 | 2.54 | (.80) |
| Distributions from net investment income | (.10) | (.17) | (.09)C | – | – |
| Distributions from net realized gain | (4.85) | (20.10) | (9.72)C | – | – |
| Total distributions | (4.95) | (20.27) | (9.81) | – | – |
| Redemption fees added to paid in capitalB,D | – | – | – | – | – |
| Net asset value, end of period | $107.77 | $120.85 | $130.70 | $104.11 | $101.57 |
| Total ReturnE | (7.16)% | 9.97% | 36.20% | 2.50% | (.78)% |
| Ratios to Average Net AssetsF,G | |||||
| Expenses before reductions | .78% | .78% | .80% | .81% | .82% |
| Expenses net of fee waivers, if any | .77% | .78% | .80% | .81% | .82% |
| Expenses net of all reductions | .76% | .78% | .77% | .79% | .81% |
| Net investment income (loss) | .11% | .13% | .05% | .01% | (.29)% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $2,777,346 | $2,824,848 | $2,411,391 | $2,028,324 | $2,349,926 |
| Portfolio turnover rateH | 130% | 144% | 181% | 140% | 196% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C The amounts shown reflect certain reclassifications related to book to tax differences that were made in the year shown.
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, 2016
1. Organization.
Communications Equipment Portfolio, Computers Portfolio, Electronics Portfolio, IT Services Portfolio, Software and IT Services Portfolio(formerly Software and Computer 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.
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 Fidelity Investments Money Management, Inc. (FIMM), an affiliate of the investment adviser. Annualized expenses of the Money Market Central Funds as of their most recent shareholder report date are less than .005%.
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.
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 Fidelity SelectCo, LLC (SelectCo) Fair Value Committee (the Committee). 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. Utilizing these techniques may result in transfers between Level 1 and Level 2. 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.
The following provides information on Level 3 securities held by the Technology Portfolio that were valued at period end based on unobservable inputs. These amounts exclude valuations provided by a broker.
| Asset Type | Fair Value at 02/29/16 | Valuation Technique(s) | Unobservable Input | Amount or Range/Weighted Average | Impact to Valuation from an Increase in Input(a) |
| Equities | $ 51,907,993 | Last transaction price | Transaction price | $3.86 - $48.77 / $25.97 | Increase |
| Market comparable | Discount rate | 10.0% | Decrease | ||
| EV/Sales multiple | 2.3 | Increase |
(a) Represents the expected directional change in the fair value of the Level 3 investments that would result from an increase in the corresponding input. A decrease to the unobservable input would have the opposite effect. Significant changes in these inputs could result in significantly higher or lower fair value measurements.
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, 2016, including information on transfers between Levels 1 and 2, 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 may 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. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. Subsequent to ex-dividend date the Funds determine the components of these distributions, based upon receipt of tax filings or other correspondence relating to the underlying investment. 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, Electronics Portfolio, Software and IT Services Portfolio and Technology Portfolio, independent Trustees may elect 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 are included in the accompanying Statement of Assets and Liabilities.
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, 2016, 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. Technology Portfolio is subject to a tax imposed on capital gains by certain countries 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), market discount, deferred trustees compensation, net operating losses, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows for each Fund:
| Tax cost | Gross unrealized appreciation | Gross unrealized depreciation | Net unrealized appreciation (depreciation) on securities | |
| Communications Equipment Portfolio | 181,691,292 | 9,413,142 | $(20,453,380) | $(11,040,238) |
| Computers Portfolio | 338,844,729 | 99,741,115 | (34,152,471) | 65,588,644 |
| Electronics Portfolio | 1,516,316,657 | 61,324,286 | (209,342,990) | (148,018,704) |
| IT Services Portfolio | 1,728,015,442 | 341,294,969 | (124,447,845) | 216,847,124 |
| Software and IT Services Portfolio | 2,346,018,695 | 957,343,781 | (247,235,627) | 710,108,154 |
| Technology Portfolio | 2,820,166,757 | 486,640,489 | (275,775,209) | 210,865,280 |
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 | $366,406 | $- | $(11,040,859) |
| Computers Portfolio | 726,404 | – | 65,495,636 |
| Electronics Portfolio | 871,125 | 50,543,017 | (148,021,943) |
| IT Services Portfolio | – | – | 216,838,958 |
| Software and IT Services Portfolio | 1,168,030 | 19,001,142 | 710,028,237 |
| Technology Portfolio | – | – | 210,859,705 |
Certain of the Funds intend to elect to defer to the next fiscal year capital losses recognized during the period November 1, 2015 to February 29, 2016, and ordinary losses recognized during the period January 1, 2016 to February 29, 2016. Loss deferrals were as follows:
| Capital losses | Ordinary Loss | |
| Communications Equipment Portfolio | $(1,742,121) | $- |
| Computers Portfolio | (6,642,875) | – |
| Electronics Portfolio | (22,604,428) | – |
| IT Services Portfolio | (28,005,860) | – |
| Technology Portfolio | (34,301,286) | (2,807,969) |
The tax character of distributions paid was as follows:
| February 29, 2016 | |||
| Ordinary Income | Long-term Capital Gains | Total | |
| Communications Equipment Portfolio | $4,760,923 | $1,387,952 | $6,148,875 |
| Computers Portfolio | 5,463,090 | 14,901,951 | 20,365,041 |
| Electronics Portfolio | 177,902,476 | 73,755,702 | 251,658,178 |
| IT Services Portfolio | 16,214,259 | 32,829,916 | 49,044,175 |
| Software and IT Services Portfolio | 19,876,770 | 141,962,211 | 161,838,981 |
| Technology Portfolio | 47,875,554 | 74,249,059 | 122,124,613 |
| February 28, 2015 | |||
| Ordinary Income | Long-term Capital Gains | Total | |
| Communications Equipment Portfolio | $9,479,649 | $6,344,168 | $15,823,817 |
| Computers Portfolio | 4,392,350 | 16,530,803 | 20,923,153 |
| Electronics Portfolio | 60,712,404 | – | 60,712,404 |
| IT Services Portfolio | 4,165,539 | 67,216,115 | 71,381,654 |
| Software and IT Services Portfolio | 76,425,484 | 241,623,157 | 318,048,641 |
| Technology Portfolio | 177,853,518 | 231,672,245 | 409,525,763 |
Trading (Redemption) Fees. Shares held by investors in the Funds less than 30 days may be subject to a redemption fee equal to .75% of the NAV of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Funds and accounted for as an addition to paid in capital.
Restricted Securities. The Funds may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities is included at the end of each applicable Fund's Schedule of Investments.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities and in-kind transactions, are noted in the table below.
| Purchases ($) | Sales ($) | |
| Communications Equipment Portfolio | 64,340,254 | 108,567,517 |
| Computers Portfolio | 178,226,395 | 448,627,025 |
| Electronics Portfolio | 3,104,197,935 | 3,837,875,287 |
| IT Services Portfolio | 1,397,705,996 | 354,746,768 |
| Software and IT Services Portfolio | 1,158,313,830 | 1,036,879,456 |
| Technology Portfolio | 3,913,119,632 | 3,690,038,685 |
5. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity SelectCo, 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 average net assets of all the mutual funds advised by Fidelity Management & Research Company (FMR) and the investment adviser. 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% | .25% | .55% |
| Computers Portfolio | .30% | .25% | .55% |
| Electronics Portfolio | .30% | .25% | .55% |
| IT Services Portfolio | .30% | .25% | .55% |
| Software and IT Services Portfolio | .30% | .25% | .55% |
| Technology Portfolio | .30% | .25% | .55% |
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (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 | .25% |
| Computers Portfolio | .20% |
| Electronics Portfolio | .17% |
| IT Services Portfolio | .20% |
| Software and IT Services Portfolio | .18% |
| Technology Portfolio | .18% |
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. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. Certain Funds placed a portion of their portfolio transactions 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 | $5,736 |
| Computers Portfolio | 15,099 |
| Electronics Portfolio | 178,607 |
| IT Services Portfolio | 29,454 |
| Software and IT Services Portfolio | 35,103 |
| Technology Portfolio | 79,851 |
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Funds, along with other registered investment companies having management contracts with FMR or other affiliated entities of FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. Each applicable fund's 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 | |
| Communications Equipment Portfolio | Borrower | $8,173,400 | .34% | $384 |
| Computers Portfolio | Borrower | 6,133,792 | .35% | 4,332 |
| Electronics Portfolio | Borrower | 12,235,077 | .37% | 3,250 |
| IT Services Portfolio | Borrower | 10,711,091 | .66% | 2,163 |
| Software and IT Services Portfolio | Borrower | 4,511,556 | .66% | 740 |
| Technology Portfolio | Borrower | 11,793,214 | .35% | 3,169 |
Interfund Trades. The 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:
| Communications Equipment Portfolio | $330 |
| Computers Portfolio | 949 |
| Electronics Portfolio | 2,754 |
| IT Services Portfolio | 1,914 |
| Software and IT Services Portfolio | 4,258 |
| Technology Portfolio | 4,079 |
During the period, the Funds did not borrow on this line of credit.
7. Security Lending.
Certain Funds lend portfolio securities through a lending agent from time to time in order to earn additional income. 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.
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. At period end, there were no bank borrowings outstanding. Each applicable Fund's activity in this program during the period for which loans were outstanding was as follows:
| Average Loan Balance | Weighted Average Interest Rate | Interest Expense | |
| Communications Equipment Portfolio | $19,645,000 | .62% | $338 |
| Computers Portfolio | 5,203,541 | .63% | 3,367 |
| Electronics Portfolio | 11,698,600 | .63% | 2,054 |
| IT Services Portfolio | 2,751,000 | .88% | 67 |
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, 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 reduction | Custody expense reduction | |
| Communications Equipment Portfolio | $4,515 | $– |
| Computers Portfolio | 39,521 | – |
| Electronics Portfolio | 418,176 | – |
| IT Services Portfolio | 45,364 | 80 |
| Software and IT Services Portfolio | 48,904 | 221 |
| Technology Portfolio | 330,455 | – |
In addition, during the period the investment adviser reimbursed and/or waived a portion of operating expenses as follows:
| Amount | |
| Communications Equipment Portfolio | $8,085 |
| Computers Portfolio | 20,638 |
| Electronics Portfolio | 48,555 |
| IT Services Portfolio | 35,800 |
| Software and IT Services Portfolio | 90,061 |
| Technology Portfolio | 77,445 |
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.
At the end of the period, the following mutual funds managed by the investment adviser or its affiliates were the owners of record of 10% or more of the total outstanding shares of the following Funds.
| VIP FundsManager 60% Portfolio | |
| Technology Portfolio | 12% |
Mutual funds managed by the investment adviser or its affiliates, in aggregate, were the owners of record of more than 20% of the total outstanding shares of the following Funds.
| % of shares held | |
| Technology Portfolio | 23% |
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Select Portfolios and the Shareholders of Communications Equipment Portfolio, Computers Portfolio, Electronics Portfolio, IT Services Portfolio, Software and IT Services Portfolio (formerly Software and Computer Services Portfolio) and Technology Portfolio :
In our opinion, the accompanying statements of assets and liabilities, including the schedules of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Communications Equipment Portfolio, Computers Portfolio, Electronics Portfolio, IT Services Portfolio, Software and IT Services Portfolio and Technology Portfolio (each a fund of Fidelity Select Portfolios) (the "Funds") at February 29, 2016, 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 then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Funds' management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at February 29, 2016 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 19, 2016
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. Each of the Trustees oversees 75 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. Brian B. Hogan 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. Michael E. Wiley 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 sector portfolios. Other Boards oversee Fidelity's equity and high income funds, and Fidelity's investment grade bond, money market, and asset allocation funds. 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 SelectCo 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 SelectCo, 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 and Audit Committees. Appropriate personnel, including but not limited to the funds' Chief Compliance Officer (CCO), SelectCo's internal auditor, the independent accountants, the funds' Treasurer and portfolio management personnel, make periodic reports to the Board's committees, as appropriate. 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+
Brian B. Hogan (1964)
Year of Election or Appointment: 2014
Trustee
Chairman of the Board of Trustees
Mr. Hogan also serves as Trustee or Vice President of other funds. Mr. Hogan serves as a Director of FMR Investment Management (U.K.) Limited (investment adviser firm, 2015-present) and Fidelity SelectCo, LLC (investment adviser firm, 2014-present) and President of the Equity Division of FMR (investment adviser firm, 2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager.
* 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 SelectCo.
+ 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+
David A. Rosow (1942)
Year of Election or Appointment: 2013
Trustee
Mr. Rosow also serves as Trustee of other Fidelity® funds. Prior to his retirement in 2006, Mr. Rosow was the Chief Executive Officer, owner and operator of a number of private companies, which encompassed oil refining, drilling and marketing of petroleum products (including specialty petroleum products), the recreation industry, and real estate development. Mr. Rosow currently serves as a Director of Oxbow Carbon LLC (upgraders, marketers, and distributors of petroleum byproducts of the oil refining process, 2015-present) and Oxbridge Academy of the Palm Beaches (2015-present). Previously, Mr. Rosow served on the Fairfield Country Day School Board for 27 years, including as its President for 3 years, stepping down in 2006, as Lead Director and Chairman of the Audit Committee of Hudson United Bancorp (1996-2006), Chairman of the Board of Westport Bank and Trust (1992-1996), and as a Director of TD Banknorth (2006-2007). In addition, Mr. Rosow served as a member (2008-2014) and President (2009-2014) of the Town Council of Palm Beach, Florida. Mr. Rosow also served as a Member of the Advisory Board of other Fidelity® funds (2012-2013).
Garnett A. Smith (1947)
Year of Election or Appointment: 2013
Trustee
Mr. Smith also serves as Trustee of other Fidelity® funds. Prior to Mr. Smith's retirement, he served as Chairman and Chief Executive Officer of Inbrand Corp. (manufacturer of personal absorbent products, 1990-1997). He also served as President (1986-1990) of Inbrand Corp. Prior to his employment with Inbrand Corp., he was employed by a retail fabric chain and North Carolina National Bank. In addition, Mr. Smith served as a Member of the Advisory Board of other Fidelity® funds (2012-2013) and as a board member of the Jackson Hole Land Trust (2009-2012).
Michael E. Wiley (1950)
Year of Election or Appointment: 2008
Trustee
Chairman of the Independent Trustees
Mr. Wiley also serves as Trustee of other Fidelity® funds. Mr. Wiley serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), a Director of Tesoro Logistics LP (natural resources logistics, 2015-present), and a Director of Bill Barrett Corporation (exploration and production, 2005-present). In addition, Mr. Wiley also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a Trustee of other Fidelity® funds (2008-2013), as a Director of Asia Pacific Exploration Consolidated (international oil and gas exploration and production, 2008-2013), as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-2010), as a Senior Energy Advisor of Katzenbach Partners, LLC (consulting, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production, 2001-2005).
+ 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:
Except for Anthony R. Rochte, correspondence intended for an officer may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210. Correspondence intended for Mr. Rochte may be sent to SelectCo, 1225 17th Street, Denver, Colorado 80202-5541. Officers appear below in alphabetical order.
Name, Year of Birth; Principal Occupation
Donald F. Donahue (1950)
Year of Election or Appointment: 2015
Member of the Advisory Board
Mr. Donahue also serves as a Member of the Advisory Board of other Fidelity® funds. Mr. Donahue is President and Chief Executive Officer of Miranda Partners, LLC (risk consulting for the financial services industry, 2012-present) and a consultant for the Institute for Defense Analyses (national security, 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 serves as a Member and Treasurer of the Board of Directors of United Way of New York (2012-present), Member of the Board of Directors of NYC Leadership Academy (2012-present) and Physicians for Human Rights (2013-present), and Member of the Board of Advisors of Ripple Labs, Inc. (financial services, 2015-present). He also served as Chairman (2010-2012) and Member of the Board of Directors (2012-2013) of Omgeo, LLC (financial services) and Member of the Board of Directors of XBRL US (financial services non-profit, 2009-2012) and the International Securities Services Association (2009-2012).
Christopher S. Bartel (1971)
Year of Election or Appointment: 2009
Vice President
Mr. Bartel also serves as Vice President of other funds. Mr. Bartel serves as a Director of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2016-present) and Fidelity Management & Research (Hong Kong) (investment adviser firm, 2012-present) and Head of Global Equity Research (2010-present). Previously, Mr. Bartel served as a Director, President, and Chief Executive Officer of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2012-2016), Senior Vice President of Equity Research (2009-2010), Managing Director of Research (2006-2009), and an analyst and portfolio manager (2000-2006).
Marc R. Bryant (1966)
Year of Election or Appointment: 2013
Secretary and Chief Legal Officer (CLO)
Mr. Bryant also serves as Secretary and CLO of other funds. Mr. Bryant serves as CLO, Secretary, and Senior Vice President of Fidelity Management & Research Company (investment adviser firm, 2015-present) and FMR Co., Inc. (investment adviser firm, 2015-present); Secretary of Fidelity SelectCo, LLC (investment adviser firm, 2015-present) and Fidelity Investments Money Management, Inc. (investment adviser firm, 2015-present); and CLO of Fidelity Management & Research (Hong Kong) Limited and FMR Investment Management (U.K.) Limited (investment adviser firms, 2015-present) and Fidelity Management & Research (Japan) Limited (investment adviser firm, 2016-present). He is Senior Vice President and Deputy General Counsel of FMR LLC (diversified financial services company). Previously, Mr. Bryant served as Secretary and CLO of Fidelity Rutland Square Trust II (2010-2014) and Assistant Secretary of Fidelity's Fixed Income and Asset Allocation Funds (2013-2015). Prior to joining Fidelity Investments, Mr. Bryant served as a Senior Vice President and the Head of Global Retail Legal for AllianceBernstein L.P. (2006-2010), and as the General Counsel for ProFund Advisors LLC (2001-2006).
William C. Coffey (1969)
Year of Election or Appointment: 2009
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 Vice President and Associate General Counsel of FMR LLC (2005-2009).
Jonathan Davis (1968)
Year of Election or Appointment: 2010
Assistant Treasurer
Mr. Davis also serves as Assistant Treasurer of other funds, 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).
Adrien E. Deberghes (1967)
Year of Election or Appointment: 2013
President and Treasurer
Mr. Deberghes also serves as an officer of other funds. He is an employee of Fidelity Investments (2008-present). Prior to joining Fidelity Investments, Mr. Deberghes was Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005). Previously, Mr. Deberghes served in other fund officer roles.
Joseph DeSantis (1959)
Year of Election or Appointment: 2015
Vice President
Mr. DeSantis also serves as Vice President of other funds. Mr. DeSantis serves as Group Chief Investment Officer, Equities (2010-present) and is an employee of Fidelity Investments.
Stephanie J. Dorsey (1969)
Year of Election or Appointment: 2010
Assistant Treasurer
Ms. Dorsey also serves as an officer of other funds. She is an employee of Fidelity Investments (2008-present) and has served in other fund officer roles. Prior to joining Fidelity Investments, Ms. Dorsey served as Treasurer (2004-2008) of the JPMorgan Mutual Funds and Vice President (2004-2008) of JPMorgan Chase Bank.
Howard J. Galligan III (1966)
Year of Election or Appointment: 2014
Chief Financial Officer
Mr. Galligan also serves as Chief Financial Officer of other funds. Mr. Galligan serves as President of Fidelity Pricing and Cash Management Services (FPCMS) (2014-present) and as a Director of Strategic Advisers, Inc. (investment adviser firm, 2008-present). Previously, Mr. Galligan served as Chief Administrative Officer of Asset Management (2011-2014) and Chief Operating Officer and Senior Vice President of Investment Support for Strategic Advisers, Inc. (2003-2011).
Scott C. Goebel (1968)
Year of Election or Appointment: 2015
Vice President
Mr. Goebel serves as Vice President of other funds and is an employee of Fidelity Investments (2001-present). Previously, Mr. Goebel served as Secretary of Fidelity SelectCo, LLC (investment adviser firm, 2013-2015), Fidelity Investments Money Management, Inc. (FIMM) (investment adviser firm, 2010-2015), and Fidelity Research and Analysis Company (FRAC) (investment adviser firm, 2010-2015); General Counsel, Secretary, and Senior Vice President of Fidelity Management & Research Company (investment adviser firm, 2008-2015) and FMR Co., Inc. (investment adviser firm, 2008-2015); Assistant Secretary of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2008-2015) and Fidelity Management & Research (U.K.) Inc. (investment adviser firm, 2008-2015); Chief Legal Officer (CLO) of Fidelity Management & Research (Hong Kong) Limited (investment adviser firm, 2008-2015); Secretary and CLO of certain Fidelity® funds (2008-2015); Assistant Secretary of FIMM (2008-2010), FRAC (2008-2010), and certain funds (2007-2008); and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007).
James D. Gryglewicz (1972)
Year of Election or Appointment: 2014
Chief Compliance Officer
Mr. Gryglewicz also serves as Chief Compliance Officer of other funds. Mr. Gryglewicz serves as Compliance Officer of Strategic Advisers, Inc. (investment adviser firm, 2015-present) and Fidelity SelectCo, LLC (investment adviser firm, 2014-present), Senior Vice President of Asset Management Compliance (2009-present), and is an employee of Fidelity Investments (2004-present).
Brian B. Hogan (1964)
Year of Election or Appointment: 2009
Vice President
Mr. Hogan also serves as Trustee or Vice President of other funds. Mr. Hogan serves as a Director of FMR Investment Management (U.K.) Limited (investment adviser firm, 2015-present) and Fidelity SelectCo, LLC (investment adviser firm, 2014-present) and President of the Equity Division of FMR (investment adviser firm, 2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager.
Chris Maher (1972)
Year of Election or Appointment: 2013
Assistant Treasurer
Mr. Maher serves as Assistant Treasurer of other funds. Mr. Maher is Vice President of Valuation Oversight and is an employee of Fidelity Investments. Previously, Mr. Maher served as 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).
John F. Papandrea (1972)
Year of Election or Appointment: 2016
Anti-Money Laundering (AML) Officer
Mr. Papandrea also serves as AML Officer of other funds. Mr. Papandrea is Vice President of FMR LLC (diversified financial services company, 2008-present) and is an employee of Fidelity Investments (2005-present).
Kenneth B. Robins (1969)
Year of Election or Appointment: 2013
Deputy Treasurer
Mr. Robins also serves as an officer of other funds. Mr. Robins serves as Executive Vice President of Fidelity Investments Money Management, Inc. (FIMM) (investment adviser firm, 2013-present) and is an employee of Fidelity Investments (2004-present). Previously, Mr. Robins served in other fund officer roles.
Anthony R. Rochte (1968)
Year of Election or Appointment: 2013
Vice President
Mr. Rochte also serves as Vice President of other funds. Mr. Rochte serves as President of Fidelity SelectCo, LLC (investment adviser firm, 2012-present) and is an employee of Fidelity Investments (2012-present). Prior to joining Fidelity Investments, Mr. Rochte served as Senior Managing Director and head of State Street Global Advisors' North American Intermediary Business Group (2006-2012).
Stacie M. Smith (1974)
Year of Election or Appointment: 2013
Assistant Treasurer
Ms. Smith also serves as an officer of other funds. She 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 (1996-2009). Previously, Ms. Smith served as Deputy Treasurer of certain Fidelity funds (2013-2016).
Renee Stagnone (1975)
Year of Election or Appointment: 2013
Deputy Treasurer
Ms. Stagnone also serves as an officer of other funds. Ms. Stagnone is an employee of Fidelity Investments (1997-present). Previously, Ms. Stagnone served as Deputy Treasurer of certain Fidelity funds (2013-2016).
Joseph F. Zambello (1957)
Year of Election or Appointment: 2011
Deputy Treasurer
Mr. Zambello also serves as Deputy Treasurer of other funds. Mr. Zambello is an employee of Fidelity Investments (1991-present). Previously, Mr. Zambello served as Deputy Treasurer of certain Fidelity funds (2011-2016), Vice President of the Program Management Group of FMR (investment adviser firm, 2009-2011), and Vice President of the Transfer Agent Oversight Group (2005-2009).
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including redemption fees 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, 2015 to February 29, 2016).
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. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. 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. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. 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, 2015 | Ending Account Value February 29, 2016 | Expenses Paid During Period-B September 1, 2015 to February 29, 2016 | |
| Communications Equipment Portfolio | .88% | |||
| Actual | $1,000.00 | $949.30 | $4.27 | |
| Hypothetical-C | $1,000.00 | $1,020.49 | $4.42 | |
| Computers Portfolio | .81% | |||
| Actual | $1,000.00 | $896.60 | $3.82 | |
| Hypothetical-C | $1,000.00 | $1,020.84 | $4.07 | |
| Electronics Portfolio | .77% | |||
| Actual | $1,000.00 | $1,011.90 | $3.85 | |
| Hypothetical-C | $1,000.00 | $1,021.03 | $3.87 | |
| IT Services Portfolio | .81% | |||
| Actual | $1,000.00 | $960.40 | $3.95 | |
| Hypothetical-C | $1,000.00 | $1,020.84 | $4.07 | |
| Software and IT Services Portfolio | .77% | |||
| Actual | $1,000.00 | $1,007.30 | $3.84 | |
| Hypothetical-C | $1,000.00 | $1,021.03 | $3.87 | |
| Technology Portfolio | .78% | |||
| Actual | $1,000.00 | $989.50 | $3.86 | |
| 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 | |
| Communications Equipment Portfolio | 04/18/16 | 04/15/16 | $0.060 | $0.000 |
| Computers Portfolio | 04/18/16 | 04/15/16 | $0.119 | $0.003 |
| Electronics Portfolio | 04/18/16 | 04/15/16 | $0.045 | $2.500 |
| IT Services Portfolio | 04/18/16 | 04/15/16 | $0.000 | $0.000 |
| Software and IT Services Portfolio | 04/18/16 | 04/15/16 | $0.045 | $0.706 |
| Technology Portfolio | 04/18/16 | 04/15/16 | $0.000 | $0.000 |
The funds hereby designate as capital gain dividend the amounts noted below for the taxable year ended February 29, 2016, or, if subsequently determined to be different, the net capital gain of such year.
| Communications Equipment Portfolio | $1,385,468 |
| Computers Portfolio | $14,897,625 |
| Electronics Portfolio | $103,547,142 |
| IT Services Portfolio | $1,939,858 |
| Software and IT Services Portfolio | $117,891,600 |
| Technology Portfolio | $48,695,130 |
A percentage of the dividends distributed during the fiscal year for the following funds qualify for the dividends–received deduction for corporate shareholders:
| April 2015 | December 2015 | |
| Communications Equipment Portfolio | 44% | 74% |
| Computers Portfolio | 100% | 100% |
| Electronics Portfolio | 4% | 28% |
| IT Services Portfolio | 0% | 45% |
| Software and IT Services Portfolio | 21% | 100% |
| Technology Portfolio | 22% | 38% |
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 2015 | December 2015 | |
| Communications Equipment Portfolio Portfolio | 43% | 78% |
| Computers Portfolio | 100% | 100% |
| Electronics Portfolio | 4% | 32% |
| IT Services Portfolio | 0% | 53% |
| Software and IT Services PortfolioPortfolio | 22% | 100% |
| Technology Portfolio | 23% | 47% |
The funds will notify shareholders in January 2017 of amounts for use in preparing 2016 income tax returns.
Board Approval of Investment Advisory Contracts and Management Fees
Communications Equipment Portfolio
Computers Portfolio
Electronics Portfolio
IT Services Portfolio
Software and IT Services Portfolio (f/k/a Software and Computer Services Portfolio)
Technology Portfolio
Each year, the Board of Trustees, including the Independent Trustees (together, the Board), votes on the renewal of the management contract with Fidelity SelectCo, LLC (SelectCo), an affiliate of Fidelity Management & Research Company (FMR), and the sub-advisory agreements with affiliates of FMR (together, the Advisory Contracts) for each fund. 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.
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 each fund's Advisory Contracts, including the services and support provided to each fund and its shareholders. The Board has established four standing committees (Committees) — Operations, Audit, Fair Valuation, and Governance and Nominating — 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 Operations Committee, of which all of the Independent Trustees are members, meets regularly throughout the year and considers, among other matters, information specifically related to the annual consideration of the renewal of each fund's Advisory Contracts. The Board, acting directly and through its Committees, requests and receives information concerning the annual consideration of the renewal of each fund's Advisory Contracts. The Board also meets as needed to consider 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 ad hoc joint committees to discuss certain matters relevant to all of the Fidelity funds.
At its January 2016 meeting, the Board unanimously determined to renew each 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 to be provided to each fund and its shareholders (including the investment performance of each fund); (ii) the competitiveness of each fund's management fee and total expense ratio relative to peer funds; (iii) the total costs of the services to be provided by and the profits to be realized by Fidelity from its relationships with each fund; and (iv) the extent to which, if any, economies of scale exist and would be realized as each fund grows, and whether any economies of scale are appropriately shared with fund shareholders.
In considering whether to renew the Advisory Contracts for each 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 each 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 each fund have a broad range of investment choices available to them, including a wide choice among funds offered by Fidelity's competitors, and that each 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 that fund, which is part of the Fidelity family of funds.
Nature, Extent, and Quality of Services Provided. The Board considered the staffing of SelectCo and the sub-advisers (together with SelectCo, the Investment Advisers) as it relates to the funds, including the backgrounds of investment personnel of SelectCo, and also considered the funds' investment objectives, strategies, and related investment philosophies. 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 each 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 reviewed the general qualifications and capabilities of the investment staff of the Investment Advisers, including their 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 each 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, each 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 or convenience of the Fidelity funds as investment vehicles. These services include 24-hour access to account information and market information through telephone representatives and over the Internet, investor education materials and asset allocation tools, and the expanded availability of Fidelity Investor Centers.The Board noted that in 2014 the ad hoc Committee on Transfer Agency Fees was formed by it and the boards of certain other Fidelity funds to review the variety of transfer agency services and fee structures throughout the mutual fund industry compared to Fidelity's.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 investment research 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 making other enhancements to meet client needs; (iv) reducing management fees and total expenses for certain index funds; (v) continuing to launch dedicated lower cost underlying funds to meet portfolio construction needs related to expanding underlying fund options for Fidelity funds of funds, specifically for the Freedom Fund product lines; (vi) rationalizing product lines and gaining increased efficiencies through fund mergers; (vii) continuing to develop, acquire and implement systems and technology to improve services to the funds and shareholders, strengthen information security, and increase efficiency; (viii) implementing investment enhancements to further strengthen Fidelity's target date product line to increase investors' probability of success in achieving their goals; (ix) modifying the eligibility criteria for certain share classes to accommodate roll-over assets from employer-sponsored retirement plans; (x) launching a new Class W of the Freedom Index Funds to attract and retain Fidelity record-kept retirement plan assets; and (xi) implementing changes to Fidelity's money market fund product line in response to recent regulatory reforms.Investment Performance. The Board considered whether each 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 with representatives of the Investment Advisers about fund investment performance that occur at Board meetings throughout the year. 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 each fund, for different time periods, measured against a securities market index ("benchmark index"). In its evaluation of fund investment performance at meetings throughout the year, the Board gave particular attention to information indicating underperformance of certain Fidelity funds for specific time periods and discussed with the Investment Advisers the reasons for such 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. Depending on the circumstances, the Independent Trustees may be satisfied with a fund's performance notwithstanding that it lags its benchmark index for certain periods.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 each fund and an appropriate benchmark index for the most recent one-, three-, and five-year periods ended June 30, 2015.Based on its review, the Board concluded that the nature, extent, and quality of services provided to each fund under the Advisory Contracts should benefit the shareholders of each fund.Competitiveness of Management Fee and Total Expense Ratio. The Board considered each fund's management fee and total expense ratio compared to "mapped groups" of competitive funds and classes created for the purpose of facilitating the Trustees' analysis of the competitiveness of management fees and total expenses. Fidelity creates "mapped groups" by combining similar Lipper investment objective categories that have comparable investment mandates. For this purpose, all sector focused equity funds are grouped in the same mapped group. Combining Lipper investment objective categories aids the Board's management fee and total expense ratio comparisons by broadening the competitive group used for comparison.Management Fee. The Board considered two proprietary management fee comparisons for the 12-month periods ended June 30 shown in basis points (BP) in the charts below. The group of Lipper funds used by the Board for management fee comparisons is referred to below as the "Total Mapped Group." The Total Mapped Group comparison focuses on a fund's standing in terms of gross management fees before expense reimbursements or caps relative to the total universe of funds with comparable investment mandates (i.e., sector equities), regardless of whether their management fee structures also are comparable. Funds with comparable management fee structures have similar management fee contractual arrangements (e.g., flat rate charged for advisory services, all-inclusive fee rate, etc.). "TMG %" represents the percentage of funds in the Total Mapped Group that had management fees that were lower than a fund's. For example, a hypothetical TMG % of 20% would mean that 80% of the funds in the Total Mapped Group had higher, and 20% had lower, management fees than a fund. The funds' actual TMG %s and the number of funds in the Total Mapped Group are in the charts below. The "Asset-Size Peer Group" (ASPG) comparison focuses on a fund's standing relative to a subset of non-Fidelity funds within the Total Mapped Group that are similar in size and management fee structure. For example, if a fund is in the first quartile of the ASPG, the fund's management fee ranks in the least expensive or lowest 25% of funds in the ASPG. The ASPG represents at least 15% of the funds in the Total Mapped Group with comparable asset size and management fee structures, subject to a minimum of 50 funds (or all funds in the Total Mapped Group if fewer than 50). Additional information, such as the ASPG quartile in which a fund's management fee rate ranked, is also included in the charts and considered by the Board.Communications Equipment Portfolio
Computers Portfolio
Electronics Portfolio
IT Services Portfolio
Software and Computer Services Portfolio
Technology Portfolio
SELTEC-ANN-0416
1.813669.111
Item 2.
Code of Ethics
As of the end of the period, February 29, 2016, 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 David A. Rosow is an audit committee financial expert, as defined in Item 3 of Form N-CSR. Mr. Rosow is independent for purposes of Item 3 of Form N-CSR.
Item 4.
Principal Accountant 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, Communications Equipment Portfolio, Computers Portfolio, Construction and Housing Portfolio, Consumer Discretionary Portfolio, Consumer Finance Portfolio, Consumer Staples Portfolio, Defense and Aerospace Portfolio, Electronics Portfolio, Energy Portfolio, Energy Service Portfolio, Environment and Alternative Energy Portfolio, Financial Services Portfolio, Gold Portfolio, Health Care Portfolio, Health Care Services Portfolio, Industrial Equipment Portfolio, Industrials Portfolio, Insurance Portfolio, IT Services Portfolio, Leisure Portfolio, Materials Portfolio, Medical Equipment and Systems Portfolio, Multimedia Portfolio, Natural Gas Portfolio, Natural Resources Portfolio, Pharmaceuticals Portfolio, Retailing 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, 2016 FeesA
| Audit Fees | Audit-Related Fees | Tax Fees | All Other Fees |
Air Transportation Portfolio | $40,000 | $- | $3,500 | $1,900 |
Automotive Portfolio | $36,000 | $- | $2,800 | $1,800 |
Banking Portfolio | $37,000 | $- | $2,800 | $1,900 |
Biotechnology Portfolio | $60,000 | $- | $14,500 | $6,200 |
Brokerage and Investment Management Portfolio | $37,000 | $- | $3,500 | $1,900 |
Chemicals Portfolio | $39,000 | $- | $2,800 | $2,100 |
Communications Equipment Portfolio | $39,000 | $- | $4,600 | $1,800 |
Computers Portfolio | $38,000 | $- | $3,500 | $1,900 |
Construction and Housing Portfolio | $36,000 | $- | $2,800 | $1,900 |
Consumer Discretionary Portfolio | $42,000 | $- | $2,800 | $2,100 |
Consumer Finance Portfolio | $37,000 | $- | $3,900 | $1,800 |
Consumer Staples Portfolio | $45,000 | $- | $2,800 | $2,600 |
Defense and Aerospace Portfolio | $37,000 | $- | $3,500 | $2,000 |
Electronics Portfolio | $40,000 | $- | $2,800 | $2,300 |
Energy Portfolio | $41,000 | $- | $3,100 | $2,400 |
Energy Service Portfolio | $38,000 | $- | $2,800 | $1,900 |
Environment and Alternative Energy Portfolio | $36,000 | $- | $2,800 | $1,800 |
Financial Services Portfolio | $41,000 | $- | $5,900 | $2,100 |
Gold Portfolio | $59,000 | $- | $6,800 | $2,300 |
Health Care Portfolio | $47,000 | $- | $2,800 | $4,700 |
Health Care Services Portfolio | $37,000 | $- | $2,800 | $2,000 |
Industrial Equipment Portfolio | $41,000 | $- | $2,800 | $1,800 |
Industrials Portfolio | $42,000 | $- | $2,800 | $2,100 |
Insurance Portfolio | $37,000 | $- | $2,800 | $1,900 |
IT Services Portfolio | $38,000 | $- | $2,800 | $2,100 |
Leisure Portfolio | $39,000 | $- | $2,800 | $1,900 |
Materials Portfolio | $45,000 | $- | $5,600 | $2,300 |
Medical Equipment and Systems Portfolio | $38,000 | $- | $2,800 | $2,300 |
Multimedia Portfolio | $37,000 | $- | $4,200 | $2,000 |
Natural Gas Portfolio | $39,000 | $- | $3,500 | $1,900 |
Natural Resources Portfolio | $36,000 | $- | $2,800 | $1,900 |
Pharmaceuticals Portfolio | $40,000 | $- | $2,800 | $2,400 |
Retailing Portfolio | $37,000 | $- | $2,800 | $2,100 |
Software and IT Services Portfolio | $38,000 | $- | $2,800 | $2,600 |
Technology Portfolio | $42,000 | $- | $2,800 | $2,600 |
Telecommunications Portfolio | $43,000 | $- | $2,800 | $1,900 |
Transportation Portfolio | $39,000 | $- | $2,800 | $2,000 |
Utilities Portfolio | $40,000 | $- | $2,800 | $2,000 |
Wireless Portfolio | $36,000 | $- | $2,800 | $1,800 |
February 28, 2015 FeesA
| Audit Fees | Audit-Related Fees | Tax Fees | All Other Fees |
Air Transportation Portfolio | $35,000 | $- | $5,300 | $- |
Automotive Portfolio | $34,000 | $- | $2,800 | $- |
Banking Portfolio | $34,000 | $- | $2,800 | $- |
Biotechnology Portfolio | $48,000 | $- | $3,200 | $- |
Brokerage and Investment Management Portfolio | $35,000 | $- | $3,600 | $- |
Chemicals Portfolio | $35,000 | $- | $6,900 | $- |
Communications Equipment Portfolio | $34,000 | $- | $6,300 | $- |
Computers Portfolio | $35,000 | $- | $2,800 | $- |
Construction and Housing Portfolio | $34,000 | $- | $2,800 | $- |
Consumer Discretionary Portfolio | $34,000 | $- | $7,700 | $- |
Consumer Finance Portfolio | $35,000 | $- | $3,900 | $- |
Consumer Staples Portfolio | $40,000 | $- | $5,300 | $- |
Defense and Aerospace Portfolio | $36,000 | $- | $2,800 | $- |
Electronics Portfolio | $35,000 | $- | $5,300 | $- |
Energy Portfolio | $38,000 | $- | $7,500 | $- |
Energy Service Portfolio | $37,000 | $- | $3,600 | $- |
Environment and Alternative Energy Portfolio | $35,000 | $- | $2,800 | $- |
Financial Services Portfolio | $36,000 | $- | $6,700 | $- |
Gold Portfolio | $57,000 | $- | $8,400 | $- |
Health Care Portfolio | $41,000 | $- | $2,800 | $- |
Health Care Services Portfolio | $35,000 | $- | $2,800 | $- |
Industrial Equipment Portfolio | $39,000 | $- | $2,800 | $- |
Industrials Portfolio | $35,000 | $- | $5,300 | $- |
Insurance Portfolio | $35,000 | $- | $2,800 | $- |
IT Services Portfolio | $35,000 | $- | $2,800 | $- |
Leisure Portfolio | $35,000 | $- | $6,400 | $- |
Materials Portfolio | $41,000 | $- | $6,500 | $- |
Medical Equipment and Systems Portfolio | $36,000 | $- | $2,800 | $- |
Multimedia Portfolio | $35,000 | $- | $2,800 | $- |
Natural Gas Portfolio | $35,000 | $- | $5,300 | $- |
Natural Resources Portfolio | $35,000 | $- | $4,800 | $- |
Pharmaceuticals Portfolio | $36,000 | $- | $5,300 | $- |
Retailing Portfolio | $35,000 | $- | $2,800 | $- |
Software and IT Services Portfolio | $36,000 | $- | $2,800 | $- |
Technology Portfolio | $37,000 | $- | $2,800 | $- |
Telecommunications Portfolio | $38,000 | $- | $5,300 | $- |
Transportation Portfolio | $35,000 | $- | $5,300 | $- |
Utilities Portfolio | $36,000 | $- | $5,700 | $- |
Wireless Portfolio | $33,000 | $- | $2,800 | $- |
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A Amounts may reflect rounding.
The following table presents 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 Funds and that are rendered on behalf of Fidelity SelectCo, LLC (“SelectCo”) and entities controlling, controlled by, or under common control with SelectCo (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 Funds (“Fund Service Providers”):
Services Billed by PwC
| February 29, 2016A | February 28, 2015A |
Audit-Related Fees | $5,695,000 | $5,900,000 |
Tax Fees | $- | $- |
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 Funds, SelectCo (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 Funds are as follows:
Billed By | February 29, 2016 A | February 28, 2015 A,B |
PwC | $6,315,000 | $8,270,000 |
A Amounts may reflect rounding.
B Reflects current period presentation.
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 audit of the Funds, taking into account representations from PwC, in accordance with Public Company Accounting Oversight Board rules, regarding its independence from the Funds and their related entities and SelectCo’s review of the appropriateness and permissibility under applicable law of such non-audit services prior to their provision to the Fund 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 on a periodic basis.
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 Funds’ last two fiscal years relating to services provided to (i) the Funds or (ii) any Fund Service Provider that relate directly to the operations and financial reporting of the Funds.
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 second fiscal quarter of 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.
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) | Certification pursuant to Rule 30a-2(a) under the Investment Company Act of 1940 (17 CFR 270.30a-2(a)) is filed and attached hereto as Exhibit 99.CERT. |
(a) | (3) | Not applicable. |
(b) |
| Certification pursuant to Rule 30a-2(b) under the Investment Company Act of 1940 (17 CFR 270.30a-2(b)) is furnished and attached hereto as Exhibit 99.906CERT. |
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/Adrien E. Deberghes |
| Adrien E. Deberghes |
| President and Treasurer |
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Date: | April 26, 2016 |
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/Adrien E. Deberghes |
| Adrien E. Deberghes |
| President and Treasurer |
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Date: | April 26, 2016 |
By: | /s/Howard J. Galligan III |
| Howard J. Galligan III |
| Chief Financial Officer |
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Date: | April 26, 2016 |